The start of Judge Andrew Oldham’s opinion in Hewlett-Packard Co. v. Quanta Storage captures the essence of high-stakes litigation. Faced with a major antitrust claim by Hewlett-Packard, “Quanta risked bet-the-company litigation and lost, so the district court ordered it to hand over the company.”
The opinion goes on to affirm a $438.65 million damages award, along with a series of turnover orders enforcing that award. Even though this is a major “bet the company” case, the opinion’s review of the trial of a damages claim is broadly applicable to all commercial cases.
Judges Jacques Wiener and Kurt Engelhardt joined the opinion. Judges Oldham and Engelhardt are recent appointees by President Trump, while Judge Wiener was appointed by President George H.W. Bush and has now taken senior status.
Quanta did not dispute its violation of the antitrust laws on appeal. The court took as a given that Quanta, a maker of optical disk drives, “took part in a conspiracy with other Drive manufacturers to fix process for the product.” This case arose when, “[a]fter foreign antitrust regulators caught wind of the cartel, so did the plaintiff’s bar.”
Quanta focused its appeal on damages. The key question was whether the purchases were made by the plaintiff, Hewlett-Packard Company, or a subsidiary. “[I]f HP purchased computers containing Drives from its subsidiary abroad, it would be an indirect purchaser of the Drives and hence prohibited from suing Quanta for damages related to them.” The answer involved review of expert and fact testimony from the trial.
As to expert testimony, the court focused on this basic question from HP’s counsel to its damages expert: “From the data that you looked at, was it your understanding that the purchases of the DVD[] [drives] were by the plaintiff HP, Inc.?” The expert answered “Yes,” over objections to hearsay and lack of foundation.
The Fifth Circuit found no error in allowing that testimony. It observed that under Federal Rule of Evidence 703, “[a]lthough the data might have been hearsay, the facts on which experts rely ‘need not be admissible for the opinion to be admitted.’” And here, HP’s damages expert had been retained and offered to review precisely this information: “… to sift through HP’s sales data and calculate the losses caused by the cartel’s price-fixing. It was this sales data that told her which entity made which purchases….”
Quanta further attacked the expert for alleged inconsistency in her statements about exclusion of sales to HP’s foreign subsidiaries. The court rejected these arguments, reminding that in an appeal after jury trial, “our review of the record affords the nonmovant all the benefit of all reasonable inferences, and we do not engage in a reweighing of the evidence.” Because a “permissible reading” of the expert’s testimony supported the conclusion that she excluded foreign sales, “that is the reading we must adopt for purposes of this appeal.”
As to fact testimony, Quanta said that a key HP executive “testified that if [drives] were purchased outside the United States, they would have been purchased by HP’s foreign subsidiaries.” The court called this claim “a misrepresentation of the record” and quoted the full excerpt of testimony in the opinion.
In that testimony, the witness said that the purchaser “was some form of HP. I don’t know that it was HP, Inc., but it was a legal entity of HP, somewhere in the region that these were purchased, that purchased the drives.” “[T]he most this testimony shows,” wrote the court, “is that [the executive] wasn’t sure which entities made which purchases.”
This “apparent uncertainty” was not enough to reverse the verdict and resulting judgment: “Dr. Aron [the damages expert] was sure—and she explained why. If there’s any disparity between the two witness’ answers, the verdict reveals that the jury chose to give more weight to Dr. Aron’s testimony. And we will not interfere with the jury’s credibility determination.”
This opinion illustrates review of a major jury verdict by a “conservative” panel of Fifth Circuit judges. It shows that “conservatism” includes respect for the work of juries, as evidenced by the opinion’s careful review of the actual testimony heard by this jury and by its repeated citation to the deferential standard of review given to judgments based on a jury verdict.
The full citation of the case is Hewlett-Packard Co. v. Quanta Storage, Inc., Nos. 19-20799 & 20-20235 (5th Cir. June 5, 2020).
David Coale is a partner at Lynn Pinker Hurst & Schwegmann. He specializes in appellate law and operates the popular blog 600 Camp, which monitors cases at the U.S. Court of Appeals for the Fifth Circuit.