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Law360 (April 23, 2020, 7:21 PM EDT ) Quanta Storage Inc. was ordered to turn over by May 1 property to satisfy HP's $438 million victory in an antitrust suit over optical disk drives, as a Texas federal judge said Quanta was skating close to contempt by failing to pony up.
HP Inc. won the blockbuster judgment in an action accusing Quanta of artificially jacking up prices for disk drives. The computer maker initially scored $176 million in a jury verdict, but the court later more than doubled the amount.
Quanta earlier told U.S. District Judge David Hittner that the impact of the coronavirus shutdown has made it problematic to meet the judgment's demands, primarily because its overseas factories are in Taiwan and China and that it has been "divested of its manpower and managerial and operational capacities in order to comply with Taiwanese emergency regulations."
On April 13, HP asked for a court hearing to demand that Quanta show why it should not be held in contempt for not fulfilling payment of the judgment, which the court has sought to enforce through an earlier property turnover order. But on Wednesday, Judge Hittner turned HP down, instead directly telling Quanta to comply with the turnover order in just over a week — or start incurring tens of thousands of dollars in court penalties.
"The court determines Quanta should be ordered to fully comply with the turnover order by May 1, 2020, or to show cause as to why Quanta should not be immediately held in contempt — without further action by HP — and sanctioned a rate of $50,000 per day until it fully complies with the turnover order," Judge Hittner wrote.
HP had sought the $50,000-a-day sanction amount in the event Quanta was found in contempt of the April 1 turnover order. But Quanta countered on April 14 that Judge Hittner's order contained "no deadline," and that HP can't "unilaterally create" a deadline for Quanta's compliance.
The case dates to 2013, when HP accused several companies that make optical disk drives of price-fixing, following a U.S. Department of Justice investigation into the industry. Most of the companies, including Toshiba Corp., Hitachi-LG Data Storage Inc., Panasonic Corp. and Samsung Electronics Co. Ltd., had entered into confidential settlements by 2017, leaving Quanta as the sole defendant at trial.
In Wednesday's order, Judge Hittner noted that the turnover order was issued after Quanta had failed to post an appeal bond in the case and HP sought to execute the judgment. At the time, Quanta was ordered to turn over nonexempt property "and to further turn over all documentary evidence of Quanta's nonexempt property" under the Texas turnover statute, according to Wednesday's order.
HP's counsel declined to comment Thursday.
A Quanta representative did not immediately respond to a press inquiry Thursday.
HP is represented by Alistair B. Dawson, Alex B. Roberts and Garrett S. Brawley of Beck Redden LLP.
Quanta is represented by Marie R. Yeates, Harry Reasoner, Michael A. Heidler and Bryan U. Gividen of Vinson & Elkins LLP.
The case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 4:18-cv-00762, in the U.S. District Court for the Southern District of Texas. The appellate case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 19-20799, in the U.S. Court of Appeals for the Fifth Circuit.
--Additional reporting by Michelle Casady and Matthew Perlman. Editing by Jay Jackson Jr.
For a reprint of this article, please contact reprints@law360.com.
