United States v. Hui Hsiung , 758 F.3d 1074 ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 12-10492
Plaintiff-Appellee,
D.C. No.
v. 3:09-cr-00110-
SI-8
HUI HSIUNG, AKA Kuma,
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 12-10493
Plaintiff-Appellee,
v. D.C. No.
3:09-cr-00110-
HSUAN BIN CHEN, AKA H.B. Chen, SI-9
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 12-10500
Plaintiff-Appellee,
D.C. No.
v. 3:09-cr-00110-
SI-10
AU OPTRONICS CORPORATION,
Defendant-Appellant.
2 UNITED STATES V. HSIUNG
UNITED STATES OF AMERICA, No. 12-10514
Plaintiff-Appellee,
D.C. No.
v. 3:09-cr-00110-
SI-11
AU OPTRONICS CORPORATION
AMERICA, INC.,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Northern District of California
Susan Illston, Senior District Judge, Presiding
Argued and Submitted
October 18, 2013—San Francisco, California
Filed July 10, 2014
Before: Sidney R. Thomas and M. Margaret McKeown,
Circuit Judges, and Virginia M. Kendall, District Judge.*
Opinion by Judge McKeown
*
The Honorable Virginia M. Kendall, District Judge for the U.S. District
Court for the Northern District of Illinois, sitting by designation.
UNITED STATES V. HSIUNG 3
SUMMARY**
Criminal Law
The panel affirmed the convictions of all defendants, and
the sentence of the only defendant to challenge the sentence,
in a criminal antitrust case that stems from an international
conspiracy between Taiwanese and Korean electronics
manufacturers to fix prices for Liquid Crystal Display panels
known as TFT-LCDs in violation of the Sherman Act.
The panel held that venue in the Northern District of
California was proper.
The panel held that the defendants waived the argument
that an extraterritoriality defense bars their convictions, and
held that, viewing the jury instructions as a whole, nothing
misled the jury as to its task.
The panel held that the district court properly applied a
per se analysis under the Sherman Act, rather than the rule of
reason, to this horizontal price-fixing scheme.
The panel held that the Foreign Trade Antitrust
Improvements Act of 1982, 15 U.S.C. § 6a (FTAIA), is not
a subject-matter jurisdiction limitation on the power of the
federal courts but a component of the merits of a Sherman
Act claim involving nonimport trade or commerce with
foreign nations.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4 UNITED STATES V. HSIUNG
The panel held that the indictment contained the factual
allegations necessary to establish that the FTAIA either did
not apply or that its requirements were satisfied. The panel
explained that import trade does not fall within the FTAIA at
all; it falls within the Sherman Act without further
clarification or pleading. The panel therefore disagreed with
the defendants’ view that the indictment was insufficient
because it did not allege import trade under the FTAIA. The
panel held that the government sufficiently pleaded and
proved that the conspirators engaged in import commerce
with the United States and that the price-fixing conspiracy
violated § 1 of the Sherman Act.
The panel explained that if the government proceeds on
a domestic effects theory, which it did here, the government
must plead and prove the requirements for the domestic
effects exception to the FTAIA, namely that the defendants’
conduct had a “direct, substantial, and reasonably foreseeable
effect” on United States commerce. The panel held that the
indictment sufficiently alleged such conduct.
The panel held that the domestic effects instruction did
not result in a constructive amendment of the indictment.
Without deciding whether the evidence was sufficient to
affirm on the basis of the domestic effects instruction, the
panel concluded that the FTAIA did not bar the prosecution
because the government sufficiently proved that the
defendants engaged in import trade.
The panel affirmed a $500 fine imposed on AU Optronics
pursuant to the Alternative Fine Statute, 18 U.S.C. § 3571(d).
The panel held that § 3571(d) permits the fine to be based on
the gross gains to all the coconspirators rather than on the
gains to AU Optronics alone. The panel wrote that no
UNITED STATES V. HSIUNG 5
statutory authority or precedent supports AU Optronics’
interpretation of the statute as requiring joint and several
liability or imposition of a “one recover” rule.
COUNSEL
Kristen C. Limarzi (argued), Peter K. Huston, Heather S.
Tewksbury, E. Kate Patchen, Jon B. Jacobs, John J. Powers
III, James J. Fredericks, and Adam D. Chandler, Attorneys,
United States Department of Justice, Antitrust Division,
Washington, D.C., for Plaintiff-Appellee United States of
America.
Neal Kumar Katyal (argued), Christopher T. Handman, and
Elizabeth Barchas Prelogar, Hogan Lovells US LLP,
Washington, D.C., for Defendant-Appellant Hui Hsiung;
Michael A. Attanasio (argued) and Jon F. Cieslak, Cooley
LLP, San Diego, California, for Defendant-Appellant, Hsuan
Bin Chen; Dennis P. Riordan (argued) and Donald M.
Horgan, Riordan & Horgan, San Francisco, California, and
Ted Sampsell-Jones, William Mitchell College of Law, St.
Paul, Minnesota, for Defendants-Appellants AU Optronics
Corporation and AU Optronics Corporation America; and
John D. Cline, Law Office of John D. Cline, San Francisco,
California, for Defendant-Appellant AU Optronics
Corporation America.
Dr. Chang C. Chen, Law Offices of Chang C. Chen, San
Francisco, California; John Shaeffer and Carole E. Handler,
Lathrop & Gage LLP, Los Angeles, California; Sang N. Dang
and Andrew B. Chen, Blue Capital Law Firm, PC, Costa
Mesa, California, for Amicus Curiae Professor Andrew
Guzman.
6 UNITED STATES V. HSIUNG
OPINION
McKEOWN, Circuit Judge:
This criminal antitrust case stems from an international
conspiracy between Taiwanese and Korean electronics
manufacturers to fix prices for what is now ubiquitous
technology, Liquid Crystal Display panels known as “TFT-
LCDs.”1 After five years of secret meetings in Taiwan, sales
worldwide including in the United States, and millions of
dollars in profits to the participating companies, the
conspiracy ended when the FBI raided the offices of AU
Optronics Corporation of America (“AUOA”) in Houston,
Texas.
The defendants, AU Optronics (“AUO”), a Taiwanese
company, and AUOA, AUO’s retailer and wholly owned
subsidiary (collectively, “the corporate defendants”), and two
executives from AUO, Hsuan Bin Chen, its President and
Chief Operating Officer, and Hui Hsiung, its Executive Vice
President, were convicted of conspiracy to fix prices in
violation of the Sherman Act after an eight-week jury trial.2
Their appeal raises complicated issues of first impression
1
TFT-LCD, which is an abbreviation for Thin-Film-Transistor
Liquid-Crystal Display, is a display technology used in flat panel
computer monitors, notebook computers, flat panel televisions, and other
devices. A “TFT display” is “[a] display using a refinement of LCD
technology in which each liquid-crystal cell, or pixel, is controlled by
three separate transistors, one each for red, blue, and green.” Stephen
Kleinedler (ed.), Dictionary of Computer and Internet Words: An A to Z
Guide to Hardware, Software, and Cyberspace 270 (2001).
2
Seven other individuals who are not parties to this appeal were named
as coconspirators in the operative indictment.
UNITED STATES V. HSIUNG 7
regarding the reach of the Sherman Act in a globalized
economy. More specifically, they contend that the rule of
reason applies to this price-fixing conspiracy because of its
foreign character. This proposition, pegged to foreign
involvement, does not override the long standing rule that a
horizontal price-fixing conspiracy is subject to per se analysis
under the antitrust laws. The defendants also urge that
because the bulk of the panels were sold to third parties
worldwide rather than for direct import into the United States,
the nexus to United States commerce was insufficient under
the Sherman Act as amended by the Foreign Trade Antitrust
Improvements Act of 1982, 15 U.S.C. § 6a (“FTAIA”). The
defendants’ efforts to place their conduct beyond the reach of
United States law and to escape culpability under the rubric
of extraterritoriality are unavailing. To begin, the defendants
waived their challenge that Morrison v. National Australia
Bank Ltd., 561 U.S. 247 (2010), displaced the Supreme
Court’s landmark case regarding antitrust and
extraterritoriality, Hartford Fire Insurance v. California,
509 U.S. 764 (1993). In light of the substantial volume of
goods sold to customers in the United States, the verdict may
be sustained as import commerce falling within the Sherman
Act; thus, the nexus to United States commerce is a given and
is not at issue. We need not reach the alternate theory under
the FTAIA relating to the domestic effects of the transactions.
We affirm the convictions of all defendants and the sentence
of AUO, the only defendant to challenge the sentence.
FACTUAL AND PROCEDURAL BACKGROUND
I. THE CONSPIRACY
From October 2001 to January 2006, representatives from
six leading TFT-LCD manufacturers met in Taiwan to “set[]
8 UNITED STATES V. HSIUNG
the target price” and “stabilize the price” of TFT-LCDs,
which were sold in the United States principally to Dell,
Hewlett Packard (“HP”), Compaq, Apple, and Motorola for
use in consumer electronics. This series of meetings, in
which Chen, Hsiung, and other AUO employees participated,
came to be known as the “Crystal Meetings.”
Following each Crystal Meeting, the participating
companies produced “Crystal Meeting Reports.” These
reports provided pricing targets for TFT-LCD sales, which,
in turn, were used by retail branches of the companies as
price benchmarks for selling panels to wholesale customers.
More specifically, AUOA used the Crystal Meeting Reports
that AUO provided to negotiate prices for the sale of TFT-
LCDs to United States customers including HP, Compaq,
ViewSonic, Dell, and Apple. AUOA employees and
executives routinely traveled to the United States offices of
Dell, Apple, and HP in Texas and California to discuss
pricing for TFT-LCDs based on the targets coming out of the
Crystal Meetings. Chen and Hsiung played the most “critical
role[s]” in settling price disputes with executives at Dell.
Crystal Meeting participants stood to make enormous
profits from TFT-LCD sales to United States technology
retailers. During the conspiracy period, the United States
comprised approximately one-third of the global market for
personal computers incorporating TFT-LCDs, and sales of
panels by Crystal Meeting participants to the United States
generated over $600 million in revenue. Sales to key United
States companies, Dell, Compaq, and HP, were particularly
important because they were bellwether companies—if they
accepted a price increase, “the entire market could also accept
the price increase.”
UNITED STATES V. HSIUNG 9
II. PROCEEDINGS IN THE DISTRICT COURT
The defendants were indicted in the Northern District of
California and charged with one count of conspiracy to fix
prices for TFT-LCDs in violation of the Sherman Act,
15 U.S.C. § 1 et seq. The indictment also contained a
sentencing allegation pursuant to the Alternative Fine Statute,
18 U.S.C. § 3571(d), alleging that AUO and AUOA, along
with their coconspirators, “derived gross gains of at least
$500,000,000.”
The defendants twice moved to dismiss the indictment.
The district court denied the first motion and rejected the
arguments that (i) the rule of reason should apply pursuant to
Metro Industries v. Sammi Corp., 82 F.3d 839 (9th Cir.
1996), and (ii) the government was required to plead and
prove that the defendants acted with knowledge that their
conduct would have anticompetitive effects on United States
commerce. The district court held that the rule of reason did
not apply because horizontal price-fixing historically has
been considered a per se violation of the Sherman Act, Metro
Industries notwithstanding.
The district court also denied the second motion to
dismiss the indictment and rejected the argument that the
indictment was deficient for failing to allege an “intended and
substantial effect” on United States commerce as required by
the FTAIA. According to the district court, “[b]y its express
terms, the [FTAIA] is inapplicable to [the] import activity
conducted by defendants.” The district court also concluded
that the FTAIA did not bar prosecution of this price-fixing
conspiracy involving both foreign and domestic conduct.
10 UNITED STATES V. HSIUNG
At trial, the government presented evidence regarding the
defendants’ extensive involvement in the Crystal Meetings
and their sales of price-fixed TFT-LCDs to customers in the
United States, including evidence that the defendants
specifically targeted United States technology companies,
principally, Apple, Compaq, and HP. Government experts
testified regarding the financial impact of those sales,
specifically that the defendants derived hundreds of millions
of dollars in profits from sales of price-fixed TFT-LCDs in
the United States.
In closing arguments, defense counsel argued, among
other things, that the government had not met its burden of
proving venue by a preponderance of the evidence. On
rebuttal, the government responded and directly addressed
venue for the first time, explaining that venue was appropriate
in the Northern District of California because “[t]he
conspirators’ negotiation of price-fixed panels with HP in
Cupertino were acts in furtherance of this conspiracy.”
Defense counsel objected on the ground that the
government’s representation misstated the evidence. The
district court overruled the objection, relying on the
government’s representation that this fact was in evidence.
During the jury instruction conference, as well as in
pretrial proceedings, the reach of the Sherman Act to conduct
occurring outside of the United States was a contentious
subject. In describing the application of the Sherman Act, the
district judge settled on the following charge:
The Sherman Act [] applies to conspiracies
that occur entirely outside the United States if
they have a substantial and intended effect in
the United States. Thus, to convict the
UNITED STATES V. HSIUNG 11
defendants you must find beyond a reasonable
doubt one or both of the following:
(A) that at least one member of the
conspiracy took at least one action
in furtherance of the conspiracy
within the United States, or
(B) that the conspiracy had a
substantial and intended effect in
the United States.
The jury found the defendants guilty of conspiracy to fix
prices in violation of the Sherman Act. The jury also found
that the “combined gross gains derived from the conspiracy
by all the participants in the conspiracy” were “$500 million
or more.”
The defendants moved for a judgment of acquittal under
Federal Rule of Criminal Procedure 29, and, in the
alternative, for a new trial under Federal Rule of Criminal
Procedure 33. They argued that (i) the government had failed
to establish venue in the Northern District of California,
(ii) the rule of reason should have applied pursuant to Metro
Industries, (iii) the defendants did not have notice of the
unlawfulness of their conduct, (iv) the government had failed
to prove an exception to the FTAIA, and (v) the evidence was
insufficient as a matter of law to establish the $500 million or
more loss amount. AUOA also claimed that the government
did not prove that any agent of AUOA knowingly and
intentionally participated in the price-fixing agreement. The
district court denied the motions.
12 UNITED STATES V. HSIUNG
The district court sentenced Hsiung and Chen principally
to a term of thirty-six months’ imprisonment and a $200,000
fine each. The district court sentenced the corporate
defendants principally to a three-year term of probation with
conditions. The district court also imposed a $500 million
fine on AUO. All of the defendants appeal their convictions,
and AUO appeals its sentence.
ANALYSIS
I. VENUE CHALLENGE
As a preliminary matter, the defendants appeal on the
basis of improper venue.3 Four issues are subsumed in the
venue challenge: (i) our standard of review, (ii) the proper
standard for proof at trial, (iii) whether the government’s
representation in closing arguments constituted prosecutorial
misconduct, and (iv) whether the government proved venue.
Although the defendants suggest otherwise, we review de
novo whether venue was proper. United States v. Liang,
224 F.3d 1057, 1059 (9th Cir. 2000). The defendants argue
that the standard of review should be whether “a rational jury
could not fail to conclude that . . . the evidence establishes
venue,” because the district court “in substance” decided the
issue of venue as a matter of law when it overruled the
objection to the government’s representation in rebuttal that
negotiations of price-fixed TFT-LCDs occurred in the
Northern District of California. See United States v.
Lukashov, 694 F.3d 1107, 1120 (9th Cir. 2012). That’s a
3
Hsiung and Chen raise the issue of improper venue; however, all of the
defendants adopt by reference and join in all arguments raised by their
co-defendants for purposes of this appeal. See Fed. R. App. P. 28(i).
UNITED STATES V. HSIUNG 13
mouthful. Nonetheless, the district court’s evidentiary ruling
did not decide venue as a matter of law. See id. at 1112–13,
1120 (finding venue decided as a matter of law when the jury
did not find venue proper, and the district court ruled that
venue was proper on a Rule 29 motion). The proper standard
of review remains de novo.
It is well established that a preponderance of the evidence
is the proper standard of proof for venue. See, e.g., id. at
1120. The defendants’ position that the standard is beyond a
reasonable doubt has no support in the law. The district court
appropriately instructed the jury on the standard of proof for
venue.
Next, we consider the government’s timing in addressing
venue. The issue of venue was affirmatively highlighted for
the first time in the defendants’ closing argument, and the
government then responded in its rebuttal argument. The
defendants argue that it was prosecutorial misconduct and
reversible error for the prosecutor to represent in rebuttal that
“[t]he conspirator’s negotiation of price-fixed panels with HP
in Cupertino were acts in furtherance of this conspiracy.”
Neither the timing of this statement nor its substance
constitutes misconduct. The defendants accuse the
government of sandbagging by relying on “late-breaking
theories” of venue in rebuttal. However, the defense invited
a response by raising the venue issue in the first place. A
prosecutor may respond in rebuttal to an attack made in the
defendant’s closing argument. See Lawn v. United States,
355 U.S. 339, 359 n.15 (1958). The substance of the
government’s response was not new evidence or allegations;
instead, it was permissible argument based on the
indictment’s allegations and the evidence produced at trial.
The indictment alleged that the charged conspiracy “was
14 UNITED STATES V. HSIUNG
carried out, in part, in the Northern District of California.”
Trial testimony established that AUO employees negotiated
prices for TFT-LCDs with HP in Cupertino, California. See
United States v. Reyes, 660 F.3d 454, 462 (9th Cir. 2011) (“It
is certainly within the bounds of fair advocacy for a
prosecutor, like any lawyer, to ask the jury to draw inferences
from the evidence that the prosecutor believes in good faith
might be true.” (quoting United States v. Blueford, 312 F.3d
962, 968 (9th Cir. 2002))). The jury also was instructed that
closing arguments were not evidence. Accordingly, the
prosecutor did not commit misconduct by making these
statements during closing argument, and the district court
properly overruled the defendant’s objection.
Finally, the evidence referenced by the government was
sufficient to establish venue by a preponderance of the
evidence. “It is by now well settled that venue on a
conspiracy charge is proper where . . . any overt act
committed in furtherance of the conspiracy occurred.”
United States v. Gonzalez, 683 F.3d 1221, 1224 (9th Cir.
2012). In addition to the HP negotiations, the government
introduced evidence that AUOA representatives negotiated
sales of price-fixed TFT-LCDs with Apple in the Northern
District of California and that AUOA maintained offices in
the Northern District of California from which it conducted
price negotiations by e-mail and phone. This evidence is
sufficient to establish by a preponderance of the evidence that
overt acts in furtherance of the conspiracy occurred in the
Northern District of California. Thus, venue was proper.
UNITED STATES V. HSIUNG 15
II. J U R Y I N S T R U C T I O N C H A L L E N G E A N D
EXTRATERRITORIALITY OF THE SHERMAN ACT
The Supreme Court’s seminal case on antitrust and
foreign conduct is Hartford Fire, in which the Court held that
“the Sherman Act applies to foreign conduct that was meant
to produce and did in fact produce some substantial effect in
the United States.” 509 U.S. at 796. The district court
instructed the jury to this effect: “to convict the defendants
you must find beyond a reasonable doubt one or both of the
following [] (A) that at least one member of the conspiracy
took at least one action in furtherance of the conspiracy
within the United States, or (B) that the conspiracy had a
substantial and intended effect in the United States.”
Before trial, the defendants moved to dismiss the
indictment on the basis that it did not allege adequately the
Hartford Fire “substantial and intended effects” test. At the
jury instructions conference, the defendants urged the district
court to give the Hartford Fire instruction, while also
claiming that part A of the instruction was erroneous because
it permitted the jury to convict on the basis of one domestic
act. Although the defendants contested part A, they all
concurred that part B “is a correct statement of the Hartford
Fire requirements for establishing extraterritorial jurisdiction
over foreign anticompetitive conduct, and should be given.”
In an about face, in post-trial motions, the defendants
rejected the principle of Hartford Fire and argued for the first
time that the Sherman Act cannot be used to prosecute
foreign conduct because there is no affirmative indication that
the Sherman Act applies extraterritorially. They cited to the
Supreme Court’s decision in Morrison, which addressed the
extraterritorial reach of the federal securities laws.
16 UNITED STATES V. HSIUNG
At the time of the jury instructions conference, in
February 2012, Morrison had been on the books for more
than eighteen months. Commentary about the case was
extensive. See, e.g., Nathan Koppel & Ashby Jones,
Securities Ruling Limits Claims of Fraud, Wall St. J., Sept.
28, 2010, at C1; Hogan Lovells, US Supreme Court rejects
extraterritorial reach of Securities Exchange Act antifraud
provisions, June 30, 2010. The opinion was hardly breaking
news. In light of the defendants’ request that the court give
the Hartford Fire jury instruction and their untimely
objection to the instruction in post-trial motions, we hold that
the defendants waived the argument that Morrison overruled
Hartford Fire and that an extraterritoriality defense bars their
convictions.
Because the defendants were the ones who proposed the
instruction in the first place, they cannot now claim that
giving the instruction was error. The defendants considered
the effects of the instruction and intentionally relinquished
the right to argue that the Sherman Act does not apply
extraterritorially. See United States v. Baldwin, 987 F.2d
1432, 1437 (9th Cir. 1993) (“Where the defendant himself
proposes the jury instruction he later challenges on appeal, we
deny review under the invited error doctrine.”). To be sure,
the defendants point out that they raised the extraterritoriality
argument in post-trial motions. However, the complete
reversal of their position after the verdict and in post-trial
motions “was so untimely as to amount to a waiver,” with
respect to the Morrison objection to the jury instruction. See
United States v. Stapleton, 600 F.2d 780, 782 (9th Cir. 1979)
(internal quotation marks omitted). This case falls squarely
within the “invited error” doctrine, which covers “known
rights that have been intentionally relinquished or
UNITED STATES V. HSIUNG 17
abandoned.”4 United States v. Perez, 116 F.3d 840, 842 (9th
Cir. 1997) (en banc) (quoting United States v. Olano,
507 U.S. 725, 733 (1993)) (internal quotation marks and
alterations omitted). This is not a case of forfeiture, where
defense counsel simply failed “to make a timely assertion of
a [claimed] right.” Id. at 845. Waiver occurred here because,
despite having knowledge of the law, the defendants
“proposed or accepted” what they now claim to be “a flawed
instruction.” See id. That this election was knowing is
underscored by the defendants’ challenge to part A of the
instruction versus their support for part B, the Hartford Fire
formulation.
As to part A of the instruction, the defendants objected on
the basis that it “would render Hartford Fire entirely
nugatory, as, having proven the most minimal act in
furtherance of a charged agreement, the government would
never have to prove an intended and substantial effect on US
commerce.” In support of this argument, the defendants rely
4
We note that we would reach the same conclusion if the defendants’
conduct were characterized as forfeiture subject to plain error review. See
United States v. Olano, 507 U.S. 725, 733 (1993); United States v. Perez,
116 F.3d 840, 846–48 (9th Cir. 1997) (en banc). “The Supreme Court
mandated a four-part inquiry to determine whether an error may be
corrected under Rule 52(b): (1) there must be error; (2) it must be plain;
and (3) it must affect substantial rights. Even after a reviewing court finds
plain error under this three-part rubric, relief remains discretionary under
Olano’s fourth and final requirement. The Court of Appeals should
correct a plain forfeited error affecting substantial rights if the error
seriously affect[s] the fairness, integrity or public reputation of judicial
proceedings.” Perez, 116 F.3d at 846 (internal quotation marks omitted).
No plain error resulted from the jury instruction because neither the
Supreme Court nor this court has determined that Morrison overruled
Hartford Fire. See Johnson v. United States, 520 U.S. 461, 467–68
(1997).
18 UNITED STATES V. HSIUNG
on the following statement in Hartford Fire: “[I]t is well
established by now that the Sherman Act applies to foreign
conduct that was meant to produce and did in fact produce
some substantial effect in the United States,” 509 U.S. at 796,
and United States v. Aluminum Co. of America, 148 F.2d 416,
444 (2d Cir. 1945) (L. Hand, J.). As to part B, the defendants
agreed that the instruction was accurate.
We have held that the FTAIA’s requirement that the
defendants’ conduct had a “direct, substantial, and reasonably
foreseeable effect” on domestic commerce displaced the
intentionality requirement of Hartford Fire where the FTAIA
applies. See United States v. LSL Biotechnologies, 379 F.3d
672, 678–79 (9th Cir. 2004). To the extent that the
prosecution was not subject to the FTAIA, the jury
instructions as a whole belie the assertion that the jury could
have convicted on the basis of one, unintentional domestic
act. See United States v. Frega, 179 F.3d 793, 806 n.16 (9th
Cir. 1999) (“In reviewing jury instructions, the relevant
inquiry is whether the instructions as a whole are misleading
or inadequate to guide the jury’s deliberation.”). Immediately
following the Hartford Fire instruction, the district court
instructed the jury that it must find the following beyond a
reasonable doubt:
[T]hat the members of the conspiracy engaged
in one or both of the following activities:
(A) fixing the price of TFT-LCD panels
targeted by the participants to be sold in the
United States or for delivery to the United
States; or
UNITED STATES V. HSIUNG 19
(B) fixing the price of TFT-LCD panels
that were incorporated into finished products
such as notebook computers, desktop
computer monitors, and televisions, and that
this conduct had a direct, substantial, and
reasonably foreseeable effect on trade or
commerce in those finished products sold in
the United States or for delivery to the United
States. In determining whether the conspiracy
had such an effect, you may consider the total
amount of trade or commerce in those
finished products sold in the United States or
for delivery to the United States; however, the
government’s proof need not quantify or value
that effect.
The effect of foreign conduct in the United States was a
central point of controversy throughout the trial.
Nonetheless, the conduct always was linked, as in the above
instruction, to targeting for sale or delivery in the United
States. Part A of the instruction required the jury to find that
the defendants fixed the prices of TFT-LCDs “targeted” for
sale or delivery in the United States. This “targeting”
language subsumed intentionality. See Oxford English
Dictionary 642 (2d ed. 1989) (defining “targeted” as
“[d]esignated or chosen as a target”). There is no way that
the defendants could have unintentionally designated or
chosen the United States market as a target of the conspiracy.
Viewing the instructions as a whole, nothing misled the jury
as to its task. The Hartford Fire jury instruction was neither
a surprise nor was it improper. Part A of the instruction
passes legal muster, and the defendants solicited part B.
20 UNITED STATES V. HSIUNG
III. PER SE LIABILITY FOR HORIZONTAL PRICE-FIXING
Having determined that the prosecution was not barred by
an extraterritoriality defense, we address the appropriate
standard for judging liability in this price-fixing scheme. For
over a century, courts have treated horizontal price-fixing as
a per se violation of the Sherman Act. See, e.g., United
States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940)
(“[F]or over forty years this Court has consistently and
without deviation adhered to the principle that price-fixing
agreements are unlawful per se under the Sherman Act and
that no showing of so-called competitive abuses or evils
which those agreements were designed to eliminate or
alleviate may be interposed as a defense.”). Twice in recent
years, the Supreme Court reiterated this principle. The
directive in Leegin Creative Leather Prods., Inc. v. PSKS,
Inc., 551 U.S. 877, 893 (2007), is unequivocal: “A horizontal
cartel among competing manufacturers or competing retailers
that decreases output or reduces competition in order to
increase price is, and ought to be, per se unlawful.” And just
last year, the Chief Justice emphasized that “it is per se
unlawful to fix prices under antitrust law.” F.T.C. v. Actavis,
Inc., 133 S. Ct. 2223, 2239 (2013) (Roberts, C.J., dissenting
on other grounds).
Consistent with Supreme Court precedent, the district
court treated this price-fixing case as governed by the per se
rule. The defendants claim that the district court erred by not
adopting the rule of reason as the benchmark and that the
indictment, jury instructions, and proof were deficient under
rule of reason analysis. We hold that the price-fixing scheme
as alleged and proven is subject to per se analysis under the
Sherman Act.
UNITED STATES V. HSIUNG 21
According to the defendants, this is not a per se case
because under Metro Industries, “application of the per se
rule is not appropriate where the conduct in question occurred
in another country,” 82 F.3d at 844–45. This approach
invites us to read our circuit precedent in Metro Industries as
out of sync with the well established tradition of analyzing
price-fixing under the per se rule and recent Supreme Court
precedent emphasizing that price-fixing ought to be analyzed
under the per se rule. We decline the invitation. Although
the language from Metro Industries may have created some
ambiguity based on the unusual facts of that case, we do not
read the case as controlling. In any event, the Supreme
Court’s subsequent confirmation that courts should continue
to treat horizontal price-fixing as a per se violation of the
Sherman Act laid to rest any uncertainty. See United States
v. Golden Valley Elec. Ass’n, 689 F.3d 1108, 1112 (9th Cir.
2012).
Invoking the language in Metro Industries to suggest that
price-fixing cases involving foreign conduct always should be
analyzed under the rule of reason is “clearly irreconcilable”
with Supreme Court precedent. See id. (internal quotations
marks omitted). To begin, Metro Industries was not a price-
fixing case; rather, it involved a horizontal market division
for stainless steamers by a group of Korean companies.
82 F.3d at 843–44. The Korean Holloware Association (the
“Association”) established a design committee consisting of
Korean manufacturers, traders, patent attorneys, and
government officials. Id. at 841. The Association prohibited
trading companies from holding a patent to a design, unless
it was held jointly with a manufacturing company. Id. When
Metro Industries, a manufacturer, experienced a disruption in
stainless steamer supply from its trading counterpart, Sammi
Corporation, the Association blocked its attempts to partner
22 UNITED STATES V. HSIUNG
with another trading company. Id. at 841–42. Based on that
interference, Metro Industries brought suit against Sammi and
its American subsidiaries alleging, among other claims,
violations of §§ 1 and 2 of the Sherman Act. Id. at 842; see
15 U.S.C. §§ 1, 2. The district court granted summary
judgment in the defendants’ favor and denied Metro
Industries’s cross-motion for summary judgment on the claim
“that the Korean design registration system under which
Sammi had the exclusive rights to manufacture a particular
steamer design constituted a market division that was illegal
per se under § 1 of the Sherman Act.” Metro Indus., 82 F.3d
at 843.
We affirmed and held that because the market division at
issue was “not a classic horizontal market division
agreement,” the rule of reason applied. Id. at 844 (emphasis
added). We then went on to write that even if the registration
system constituted a market division that would ordinarily be
treated as a per se violation of the Sherman Act, the rule of
reason applied because the allegedly unlawful conduct
occurred in a foreign country. Id. at 844–45. This broad
statement, which was wholly superfluous, and unnecessary to
the holding, has not been repeated in subsequent cases and
appears to be limited to the unique facts of the Association’s
efforts centered solely in Korea. Not surprisingly, this
statement also has been the subject of scholarly criticism.
See, e.g., Phillip E. Areeda & Herbert Hovenkamp, Antitrust
Law ¶ 273b (3d ed. 2006) (“Perhaps the court’s conclusion
that restraints abroad always require rule of reason analysis
would have been more qualified had the restraint before it
belonged more clearly in the per se category without
offsetting considerations of comity.”); Stephen Calkins, The
Antitrust Year in Review: Antitrust Olympics 1995-96, 11 Fall
Antitrust 22, 22, 25 (1996) (“Surely a classic international
UNITED STATES V. HSIUNG 23
cartel that substantially affects U.S. commerce ought to
qualify for per se treatment. Metro Industries was a
procedurally unusual case, in which the record from one
unsuccessful proceeding was offered to support a second in
which there was ‘no evidence of actual injury to competition
in the United States.’ Courts in future cases should limit
Metro Industries’s language to its facts.” (quoting Metro
Indus., 82 F.3d at 848)).
Unlike Metro Industries, this case centers on a classic
horizontal price-fixing scheme subject to the per se rule. See
Leegin Creative, 551 U.S. at 893. Also unlike Metro
Industries, in which there was “no evidence of actual injury
to competition in the United States,” 82 F.3d at 848, the
voluminous evidence here documents substantial effects on
the United States. The conduct here did not occur in a solely
foreign bubble. Although the agreement to fix prices
occurred in Taiwan, the sale of price-fixed TFT-LCDs
occurred in large part in the United States.
In reiterating the applicability of the per se rule for
horizontal price-fixing, a result that Supreme Court precedent
compels, we also join the reasoning of other circuits. See,
e.g., United States v. Nippon Paper Indus. Co., 109 F.3d 1,
2–3, 7, 9 (1st Cir. 1997) (upholding an indictment alleging a
per se violation of the Sherman Act against a Japanese fax
paper manufacturer that entered into a price-fixing conspiracy
overseas for fax paper that was sold to companies in the
United States at fixed prices.). The district court was bound
24 UNITED STATES V. HSIUNG
to apply the per se rule and appropriately rejected the rule of
reason defense.5
IV. THE FOREIGN TRADE ANTITRUST IMPROVEMENTS
ACT
The international implications of this case are not limited
to the challenges to the jury instructions or the per se rule.
The defendants also argue that the indictment and proof did
not satisfy the requirements of the FTAIA. The FTAIA
provides that the Sherman Act “shall not apply to conduct
involving trade or commerce (other than import trade or
import commerce) with foreign nations unless—(1) such
conduct has a direct, substantial, and reasonably foreseeable
effect—(A) on trade or commerce which is not trade or
commerce with foreign nations . . . .” 15 U.S.C. § 6a.
Although the statute is a web of words, it boils down to
two principles. First, the Sherman Act applies to “import
trade or import commerce” with foreign nations. Id. Put
differently, the FTAIA does not alter the Sherman Act’s
coverage of import trade; import trade is excluded from the
FTAIA altogether. Second, under the FTAIA, the Sherman
Act does not apply to nonimport trade or commerce with
foreign nations, unless the domestic effects exception is met.
Id. For the Sherman Act to apply to nonimport trade or
commerce with foreign nations, the conduct at issue must
have a “direct, substantial, and reasonably foreseeable
effect—(A) on trade or commerce which is not trade or
commerce with foreign nations . . . .” Id.
5
In light of our holding and Supreme Court precedent, we cannot
embrace the defendants’ argument that adopting a per se standard violates
the fair notice principle of the Due Process Clause.
UNITED STATES V. HSIUNG 25
Congress enacted the FTAIA in 1982 in “respon[se] to
concerns regarding the scope of the broad jurisdictional
language in the Sherman Act.” In re Dynamic Random
Access Memory (DRAM) Antitrust Litig., 546 F.3d 981, 985
(9th Cir. 2008). As the Supreme Court explained, “[t]he
FTAIA seeks to make clear to American exporters (and to
firms doing business abroad) that the Sherman Act does not
prevent them from entering into business arrangements (say,
joint-selling arrangements), however anticompetitive, as long
as those arrangements adversely affect only foreign markets.”
F. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155,
161 (2004) (citing H.R. Rep. No. 97–686, at 1–3, 9–10
(1982), U.S. Code Cong. & Admin. News 1982, 2487,
2487–2488, 2494–2495). Empagran teaches that the FTAIA
removes from the reach of the Sherman Act “(1) export
activities and (2) other commercial activities taking place
abroad, unless those activities adversely affect domestic
commerce, imports to the United States, or exporting
activities of one engaged in such activities within the United
States.” 542 U.S. at 161. We now consider the multiple legal
issues the FTAIA challenge raises.
A. JURISDICTION VERSUS MERITS
Whether the FTAIA “affects the subject-matter
jurisdiction of the district court or if, on the other hand, it
relates to the scope of coverage of the antitrust laws,” is our
first inquiry. Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845,
851 (7th Cir. 2012) (en banc). We start here because “[a]
court has a duty to assure itself of its own jurisdiction,
regardless of whether jurisdiction is contested by the parties,”
Peterson v. Islamic Republic of Iran, 627 F.3d 1117, 1125
(9th Cir. 2010), and “the Supreme Court has emphasized the
need to draw a careful line between true jurisdictional
26 UNITED STATES V. HSIUNG
limitations and other types of rules,” Minn-Chem, 683 F.3d at
851–52 (citing Morrison, 561 U.S. 247 and Henderson ex rel.
Henderson v. Shinseki, 131 S. Ct. 1197, 1202 (2011)). We
hold that the FTAIA is not a subject-matter jurisdiction
limitation on the power of the federal courts but a component
of the merits of a Sherman Act claim involving nonimport
trade or commerce with foreign nations.
We have not definitively addressed this issue in the past.
In LSL Biotechnologies, 379 F.3d at 680, we rejected the
argument that foreign conduct having only a “substantial”
effect on United States commerce satisfied the FTAIA and
held that the FTAIA “created [a] jurisdictional test” requiring
“a direct, substantial, and reasonably foreseeable effect” on
domestic commerce. Id. at 679 (internal quotation marks
omitted). Despite our use of the term “jurisdictional,” we did
not analyze whether the FTAIA provided a jurisdictional
limitation on the power of the federal courts nor did we
discuss our use of the term “jurisdictional.” Seven years
later, in In re Dynamic Random Access Memory (DRAM)
Antitrust Litigation, we observed that “[i]t is unclear,
however, whether the FTAIA is more appropriately viewed
as withdrawing jurisdiction from the federal courts . . . or as
simply establishing a limited cause of action” and “decline[d]
to resolve the question.” 546 F.3d at 985 n.3.
As a consequence of clarification by the Supreme Court,
much has changed since LSL Biotechnologies. The Court
has made a point of distinguishing between a true
jurisdictional limitation and a merits determination, noting
that “Courts—including this Court—have sometimes
mischaracterized claim-processing rules or elements of a
cause of action as jurisdictional limitations, particularly when
that characterization was not central to the case, and thus did
UNITED STATES V. HSIUNG 27
not require close analysis.” Reed Elsevier, Inc. v. Muchnick,
559 U.S. 154, 161 (2010). The Court emphasized that “[its]
recent cases evince a marked desire to curtail [] drive-by
jurisdictional rulings, which too easily can miss the critical
difference[s] between true jurisdictional conditions and
nonjurisdictional limitations on causes of action.” Id.
(internal quotation marks and citation omitted).
As the Court framed the issue in Morrison, “to ask what
conduct § 10(b) [of the Securities Exchange Act] reaches is
to ask what conduct § 10(b) prohibits, which is a merits
question. Subject-matter jurisdiction, by contrast, refers to a
tribunal’s power to hear a case.” 561 U.S. at 254 (internal
quotation marks omitted). The FTAIA, like § 10(b) of the
Securities Exchange Act, plainly “remov[es conduct] from
the Sherman Act’s reach.” Empagran, 542 U.S. at 161. To
the extent LSL Biotechnologies signaled the contrary,
intervening Supreme Court precedent clarifies that the issue
of “what conduct [the FTAIA] prohibits” is a merits question,
not a jurisdictional one. See Morrison, 561 U.S. at 254. In
concluding that the FTAIA is not a jurisdictional limitation
on the court’s power, we bring our precedent into line with
the Court’s admonition “to bring some discipline to the use
of” the term “jurisdictional.” See Henderson, 131 S. Ct. at
1202 (“We have urged that a rule should not be referred to as
jurisdictional unless it governs a court’s adjudicatory
capacity, that is, its subject-matter or personal jurisdiction.”).
Other circuits that have considered the question post-
Morrison are in accord.6 Relying on Morrison, the Seventh
6
A number of courts have referred to the FTAIA as jurisdictional, but
did so prior to the Supreme Court’s decisions in Reed Elsevier and
Morrison and without analyzing whether the FTAIA concerns subject-
28 UNITED STATES V. HSIUNG
Circuit held that “the FTAIA sets forth an element of an
antitrust claim, not a jurisdictional limit on the power of the
federal courts.” Minn-Chem, 683 F.3d at 852. The Second
and Third Circuits reached the same conclusion. See Lotes
Co., Ltd. v. Hon Hai Precision Indus. Co., —F.3d—, No.
13-2280, 2014 WL 2487188, at *8 (2d Cir. June 4, 2014)
(“[W]e have little difficulty concluding that the requirements
of the FTAIA go to the merits of an antitrust claim rather than
to subject matter jurisdiction.”); Animal Sci. Prods., Inc. v.
China Minmetals Corp., 654 F.3d 462, 467–68 (3d Cir. 2011)
(“[T]he FTAIA constitutes a substantive merits limitation
rather than a jurisdictional limitation.”). The FTAIA does not
limit the power of the federal courts; rather, it provides
substantive elements under the Sherman Act in cases
involving nonimport trade with foreign nations.
B. THE FTAIA CHALLENGES
The following jury instruction sums up the heart of the
Sherman Act violation:
[T]he government must prove each of the
following elements beyond a reasonable
doubt:
First, that the conspiracy existed at or
about the time stated in the indictment;
matter jurisdiction or the scope of coverage of antitrust laws. See, e.g.,
United States v. Anderson, 326 F.3d 1319, 1329–30 (11th Cir. 2003); Dee-
K Enters., Inc. v. Heveafil Sdn. Bhd, 299 F.3d 281, 287 (4th Cir. 2002);
Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420, 429–30
(5th Cir. 2001); Nippon Paper Indus. Co., 109 F.3d at 3–4; see also
Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430, 439 n.4 (6th Cir. 2012)
(“sav[ing] the resolution of this issue for another day” post-Morrison).
UNITED STATES V. HSIUNG 29
Second, that the defendants knowingly -
that is, voluntarily and intentionally - became
members of the conspiracy charged in the
indictment, knowing of its goal and intending
to help accomplish it; and
Third, that the members of the conspiracy
engaged in one or both of the following
activities:
(A) fixing the price of TFT-LCD
panels targeted by the participants to be
sold in the United States or for delivery to
the United States; or
(B) fixing the price of TFT-LCD
panels that were incorporated into finished
products such as notebook computers,
desktop computer monitors, and
televisions, and that this conduct had a
direct, substantial, and reasonably
foreseeable effect on trade or commerce
in those finished products sold in the
United States or for delivery to the United
States. In determining whether the
conspiracy had such an effect, you may
consider the total amount of trade or
commerce in those finished products sold
in the United States or for delivery to the
United States; however, the Government’s
proof need not quantify or value that
effect.
30 UNITED STATES V. HSIUNG
The defendants argue that (i) the indictment was
insufficient because it did not name or cite the FTAIA, (ii) the
indictment and evidence are insufficient as to both import
trade and domestic effects, and (iii) the domestic effects
exception, which was not alleged in the indictment, is an
element of a Sherman Act offense that implicates the FTAIA
and thus this instruction constructively amended the
indictment.
1. THE FTAIA IN THE INDICTMENT
The defendants argue that the indictment was flawed for
failing to mention the FTAIA by name or statutory citation.
However, as explained in detail with regard to import trade
and domestic effects, the indictment contained the factual
allegations necessary to establish that the FTAIA either did
not apply or that its requirements were satisfied.
In any event, there was absolutely no prejudice from the
indictment’s failure to cite the FTAIA. “Unless the
defendant[s] w[ere] misled and thereby prejudiced, neither an
error in a citation nor a citation’s omission is a ground to
dismiss the indictment or information or to reverse a
conviction.” Fed. R. Crim. P. 7(c)(2); see United States v.
Vroman, 975 F.2d 669, 671 (9th Cir. 1992) (“Correct citation
to the relevant statute, though always desirable, is not fatal if
omitted.”). The parties raised the FTAIA requirements
throughout the proceedings, and the district court record is
full of briefing and argument on the FTAIA.
2. IMPORT TRADE AND THE FTAIA
The appropriate characterization of the import trade
provision of the FTAIA is essential to our analysis. The
UNITED STATES V. HSIUNG 31
statute provides that the Sherman Act “shall not apply to
conduct involving trade or commerce (other than import trade
or import commerce),” and then goes on to provide
limitations vis-a-vis nonimport commerce. 15 U.S.C. § 6a.
We agree with the defendants that this section should not be
labeled an FTAIA exception. Rather, more accurately,
import trade, as referenced in the parenthetical statement,
does not fall within the FTAIA at all. It falls within the
Sherman Act without further clarification or pleading.
Consequently, we disagree with the defendants’ view that the
indictment was insufficient because it did not allege import
trade under the FTAIA.
The indictment charged a violation of § 1 of the Sherman
Act and alleged that the defendants “entered into and engaged
in a combination and conspiracy to suppress and eliminate
competition by fixing the prices of thin-film transistor liquid
crystal display panels (“TFT-LCD”) in the United States and
elsewhere.” See United States v. Morrison, 536 F.2d 286,
288 (9th Cir. 1976) (“It is generally sufficient that an
indictment set forth the offense in the words of the statute
itself, as long as those words of themselves fully, directly,
and expressly, without any uncertainty or ambiguity, set forth
all the elements necessary to constitute the offence intended
to be punished.” (internal quotation marks omitted)). Apart
from tracking the language of the Sherman Act in the
indictment, the government did, in fact, plead and prove that
the defendants engaged in import trade.
In Empagran, the Supreme Court explained the somewhat
convoluted scope of the FTAIA:
[The FTAIA] initially lays down a general
rule placing all (nonimport) activity involving
32 UNITED STATES V. HSIUNG
foreign commerce outside the Sherman Act’s
reach. It then brings such conduct back
within the Sherman Act’s reach provided that
the conduct both (1) sufficiently affects
American commerce, i.e., it has a direct,
substantial, and reasonably foreseeable effect
on American domestic, import, or (certain)
export commerce, and (2) has an effect of a
kind that antitrust law considers harmful, i.e.,
the effect must giv[e] rise to a [Sherman Act]
claim.
542 U.S. at 162 (internal quotation marks omitted). Under its
plain terms, the FTAIA does not affect import trade. See id.;
Dee-K Enters., 299 F.3d at 287 (“Because this case involves
importation of foreign-made goods, however—conduct
Congress expressly exempted from FTAIA coverage as
involving . . . import trade or import commerce . . . with
foreign nations—the FTAIA standard obviously does not
directly govern this case.” (internal quotations marks and
citation omitted)).
The legislative history supports this statutory
interpretation. House Reports are clear that the FTAIA does
not implicate import trade. “A transaction between two
foreign firms, even if American-owned, should not, merely
by virtue of the American ownership, come within the reach
of our antitrust laws. Such foreign transactions should, for
the purposes of this legislation, be treated in the same manner
as export transactions—that is, there should be no American
antitrust jurisdiction absent a direct, substantial and
reasonably foreseeable effect on domestic commerce or a
domestic competitor. . . . It is thus clear that wholly foreign
transactions as well as export transactions are covered by the
UNITED STATES V. HSIUNG 33
Amendment, but that import transactions are not.” H.R. Rep.
97-686, at 9–10.
Although our circuit has not defined “import trade” for
purposes of the FTAIA, not much imagination is required to
say that this phrase means precisely what it says. As the
Seventh Circuit held in a case involving foreign cartel
members,“transactions that are directly between the [U.S.]
plaintiff purchasers and the defendant cartel members are the
import commerce of the United States . . . .” Minn-Chem,
683 F.3d at 855. Similarly, the Sixth Circuit labeled goods
manufactured abroad and sold in the United States “import
commerce.” Carrier Corp. v. Outokumpu Oyj, 673 F.3d 430,
438 n.3, 440 (6th Cir. 2012). So too are transactions between
the foreign defendant producers of TFT-LCDs and purchasers
located in the United States.7 See id.
The defendants’ conduct, as alleged and proven,
constitutes “import trade,” and falls outside the scope of the
FTAIA. The allegations in the indictment, which we review
de novo, United States v. O’Donnell, 608 F.3d 546, 555 (9th
Cir. 2010), must “ensure that [the defendants were]
prosecuted only on the basis of the facts presented to the
grand jury,” see United States v. Du Bo, 186 F.3d 1177, 1179
7
The Third Circuit also addressed the import trade exclusion, holding
that it applies to importers and to defendants whose “conduct is directed
at a U.S. import market,” even if the defendants did not engage in
importation of products into the United States. Animal Sci. Prods.,
654 F.3d at 471 & n.11. We need not determine the outer bounds of
import trade by considering whether commerce directed at, but not
consummated within, an import market is also outside the scope of the
FTAIA’s import provisions because at least a portion of the transactions
here involves the heartland situation of the direct importation of foreign
goods into the United States. See id.
34 UNITED STATES V. HSIUNG
(9th Cir. 1999) (internal quotation marks omitted). Thus,
“[a]n indictment must be specific in its charges and necessary
allegations cannot be left to inference. . . . [A]n indictment
should be read in its entirety, construed according to common
sense, and interpreted to include facts which are necessarily
implied.” O’Donnell, 608 F.3d at 555 (citations and internal
quotation marks omitted).
The indictment is replete with allegations that support the
government’s position that the defendants engaged in import
trade. The indictment alleged that, within the conspiracy
period, AUO and AUOA “engaged in the business of
producing and selling TFT-LCDs to customers in the United
States.” During the conspiracy period, AUO employees “had
one-on-one discussions in person or by phone with
representatives of coconspirator TFT-LCD manufacturers
during which they reached agreements on pricing of
TFT-LCD sold to certain customers, including customers
located in the United States.” The indictment went on to
allege that AUO attempted to attain the price goals set with
coconspirators by, during the conspiracy period, “regularly
instruct[ing] employees of [AUOA] located in the United
States to contact employees of other TFT-LCD manufacturers
in the United States to discuss pricing to major United States
TFT-LCD customers,” and that “[i]n response to these
instructions, employees of [AUOA] located in the United
States had regular contact through in-person meetings and
phone calls with employees of other TFT-LCD manufacturers
in the United States to discuss and confirm pricing, and at
times agree on pricing, to certain TFT-LCD customers in the
United States.”
These allegations directly describe that the defendants and
their coconspirators engaged in import commerce with the
UNITED STATES V. HSIUNG 35
United States—indeed, the conspiracy’s intent, as alleged,
was to “suppress and eliminate competition” by fixing the
prices for panels that AUO and AUOA sold to manufacturers
“in the United States and elsewhere” for incorporation into
retail technology sold to consumers in the United States and
elsewhere.
Going into trial, there was no surprise regarding the
import trade allegations; likewise, the evidence at trial was
ample on this aspect of the conspiracy. We review the
defendants’ sufficiency of the evidence challenge under the
well established standard of Jackson v. Virginia, 443 U.S.
307 (1979): “viewing the evidence in the light most favorable
to the prosecution,” we determine whether “any rational trier
of fact could have found the essential elements of the crime
beyond a reasonable doubt.” Id. at 319.
Trial testimony established that AUO imported over one
million price-fixed panels per month into the United States.
The Crystal Meeting participants earned over $600 million
from the importation of TFT-LCDs into the United States.
Although it was undisputed at trial that AUO and AUOA did
not manufacture any consumer products for importation into
the United States, the evidence revealed that AUO and
AUOA executives and employees negotiated with United
States companies in the United States to sell TFT-LCD panels
at the prices set at the Crystal Meetings. Importation of this
critical component of various electronic devices is surely
“import trade or import commerce.” To suggest, as the
defendants do, that AUO was not an “importer” misses the
point. The panels were sold into the United States, falling
squarely within the scope of the Sherman Act.
36 UNITED STATES V. HSIUNG
The defendants also claim that the transactions did not
“target” the United States. Targeting is not a legal element
for import trade under the Sherman Act, though it was
included in the jury instructions at the defendants’ request.
In any event, the negotiations in the United States and the
significant direct sales to the United States certainly qualify
as targeting. The challenge to the sufficiency of the evidence
fails.
In sum, the FTAIA does not apply to the defendants’
import trade conduct. The government sufficiently pleaded
and proved that the conspirators engaged in import commerce
with the United States and that the price-fixing conspiracy
violated § 1 of the Sherman Act.
3. DOMESTIC EFFECTS UNDER THE FTAIA
Unlike import trade, which is exempted from the FTAIA
altogether, if the government proceeds on a domestic effects
theory, which it did here, the government must plead and
prove the requirements for the domestic effects exception to
the FTAIA, namely that the defendants’ conduct had “a
direct, substantial, and reasonably foreseeable effect” on
United States commerce. See 15 U.S.C. § 6a. We hold that
the indictment sufficiently alleged such conduct. We do not
need to reach, however, the defendants’ sufficiency of the
evidence challenge on domestic effects because sufficient
evidence supported the alternate ground of conviction, the
import trade theory.
As with import commerce, it is important to place the
domestic effects exception within the statutory framework of
the FTAIA. We reject the government’s position that the
FTAIA is an affirmative defense to a Sherman Act offense.
UNITED STATES V. HSIUNG 37
The government’s interpretation is at odds with the plain
language of the statute, which establishes that when a case
involves nonimport trade with foreign nations, the Sherman
Act does not apply unless the FTAIA domestic effects
exception applies. See 15 U.S.C. § 6a; United States v.
Davenport, 519 F.3d 940, 945 (9th Cir. 2008) (contrasting
elements and affirmative defenses).
The government’s reliance on McKelvey v. United States,
260 U.S. 353, 356–57 (1922), and United States v.
Gravenmeir, 121 F.3d 526, 528 (9th Cir. 1997), which both
held that the government did not have to disprove an
exception to a criminal statute to obtain a conviction, is
misplaced. In those cases, the statutes at issue laid out
prohibited conduct and then provided an escape hatch
exception. See McKelvey, 260 U.S. at 356 (statute
prohibiting the obstruction of access to public lands
“[p]rovided, this section shall not be held to affect the right or
title of persons, who have gone upon, improved or occupied
said lands under the land laws of the United States, claiming
title thereto, in good faith” (citing Act of February 25, 1885,
c. 149, 23 Stat. 321 (Comp. St. §§ 4999, 5000)));
Gravenmeir, 121 F.3d at 528 (statute prohibiting the transfer
or possession of a machine gun except “with respect to . . .
(B) any lawful transfer or lawful possession of a machinegun
that was lawfully possessed before the date this subsection
takes effect” (alteration in original) (citing 18 U.S.C.
§ 922(o))). In contrast, as a default, the FTAIA provides that
when the alleged conduct involves nonimport trade with
foreign nations, the Sherman Act does not apply. 15 U.S.C.
§ 6a; see Empagran, 542 U.S. at 158. To allege a nonimport
trade claim under the Sherman Act, the claim must
encompass the domestic effects elements.
38 UNITED STATES V. HSIUNG
The indictment alleged that AUO “was engaged in the
business of producing and selling TFT-LCDs to customers in
the United States and elsewhere;” that, at Crystal Meetings,
in telephone conversations, and in e-mail messages with other
coconspirators, AUO employees reached agreements on
prices for TFT-LCDs sold in the United States; and that
“senior-level employees of [AUO] regularly instructed
employees of [AUOA] located in the United States to contact
employees of other TFT-LCD manufacturers in the United
States to discuss pricing to major United States TFT-LCD
customers.” The indictment also alleged that the price-fixed
TFT-LCDs were used in computers and other monitors that
were sold in and substantially affected interstate commerce.
Specifically, the indictment charged that “the substantial
terms” of the conspiracy were an agreement “to fix the prices
of TFT-LCDs for use in notebook computers, desktop
monitors, and televisions in the United States and elsewhere.”
The magic words—“domestic effects”—were not
necessary to make clear that the overseas sale of panels for
incorporation into products destined for sale in the United
States was a key focus of the indictment. From the outset, the
indictment targeted both import trade of panels and the
effects of foreign sales on domestic commerce. The scope of
the charges was not a mystery.
The defendants argue that the FTAIA jury instruction
worked a constructive amendment of the indictment because
it permitted the jury to convict based on either an import trade
or domestic effects theory when prior to trial the government
had only sought to rely on an import trade theory. We “have
found constructive amendment of an indictment where
(1) there is a complex of facts [presented at trial] distinctly
different from those set forth in the charging instrument, or
UNITED STATES V. HSIUNG 39
(2) the crime charged [in the indictment] was substantially
altered at trial, so that it was impossible to know whether the
grand jury would have indicted for the crime actually
proved.” United States v. Adamson, 291 F.3d 606, 615 (9th
Cir. 2002) (alterations in original) (internal quotation marks
omitted), modified on other grounds by United States v.
Larson, 495 F.3d 1094 (9th Cir. 2007).
Here, there was no constructive amendment because the
facts in the indictment necessarily supported the domestic
effects claim, namely by allegations that AUO and AUOA
sold price-fixed panels in the United States and abroad for use
in finished consumer goods sold in or delivered to the United
States. The allegations gave fair notice that the claimed
conduct had a “direct, substantial, and reasonably foreseeable
effect” on United States commerce. See 15 U.S.C.
§ 6a(1)(A). Based on the allegations, the domestic effects
instruction did not result in a constructive amendment of the
indictment.
Finally, we address the sufficiency of the evidence under
the domestic effects exception, which was directed at foreign
sales of panels that would be incorporated overseas into
finished consumer products that would ultimately be sold in
the United Sates. The defendants question whether the
government proved the domestic effects exception at trial.
Specifically, the defendants claim that evidence did not
support a “direct” effect on domestic commerce, nor was the
jury required to find “the elements of an intent to negatively
affect, and a substantial effect on, United States commerce.”
The essence of their objection is that the offshore conduct is
too attenuated from the United States; that the intervening
development, manufacture, and sale of the products
worldwide resulted in a diffuse effect; and that the evidence
40 UNITED STATES V. HSIUNG
does not support a “direct, substantial, and reasonably
foreseeable effect” on United States commerce.
Indeed, the government’s expert created some ambiguity
regarding “the exact flow of how panels go from the plants of
the Crystal Meeting participants into a product, to a — what
are called an ‘OEM’ — the computer maker — and get to the
United States.” Admitting that there was “not good data” on
how the price-fixed panels wound up in finished consumer
goods sold in the United States, the expert explained that
“[f]or example, Dell may have someone else put together the
monitor,” and that assemblers for panels were located in
China, Singapore, Taiwan, Japan, and Mexico. Although
negotiations took place in the United States, and there is no
dispute that customers in the United States purchased finished
products containing the price-fixed TFT-LCDs, such as
computer monitors and laptop computers, this testimony
raises a significant question regarding whether the effects
were sufficiently direct to uphold a verdict based on the
domestic effects claim.
Conduct has a “direct” effect for purposes of the domestic
effects exception to the FTAIA “if it follows as an immediate
consequence of the defendant[s’] activity.” LSL
Biotechnologies, 379 F.3d at 680–81 (“An effect cannot be
‘direct’ where it depends on such uncertain intervening
developments.”).8 The statute also requires that the direct
effect “gives rise to” the plaintiff’s injury. 15 U.S.C. § 6a.
8
We note that the Second Circuit recently disagreed with this definition
of “direct.” See Lotes, 2014 WL 2487188, at *13–16 (“Interpreting
‘direct’ to require only a reasonably proximate causal nexus”). It is not
necessary to address this disagreement because we do not rely on the
direct effects exception in affirming the convictions.
UNITED STATES V. HSIUNG 41
Thus, as we have noted, “‘but for’ causation cannot suffice
for the FTAIA domestic injury exception to apply and [we]
therefore adopt a proximate causation standard.” In re
Dynamic Random Access Memory (DRAM) Antitrust Litig.,
546 F.3d at 987; see also Empagran, 542 U.S. at 173
(“Congress would not have intended the FTAIA’s exception
to bring independently caused foreign injury within the
Sherman Act’s reach.”); Lotes, 2014 WL 2487188, at *16 (
“[I]n the wake of Empagran, three courts of appeals have
considered what kind of causal connection is necessary for a
domestic effect to “give[ ] rise to” a plaintiff’s claim. . . .
Agreeing with our sister circuits, we adopt that standard
here.” (citing In re Dynamic Random Access Memory,
546 F.3d at 987)).
In any event, we need not resolve whether the evidence of
the defendants’ conduct was sufficiently “direct,”9 or whether
it “give[s] rise to an antitrust claim,” because, as we noted
earlier, “any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt,”
with respect to import trade. See Jackson, 443 U.S. at 39.
The $600 million in panels that AUO and AUOA sold
directly in the United States are properly exempted from the
FTAIA as import commerce. The evidence that the
defendants engaged in import trade was overwhelming and
demonstrated that the defendants sold hundreds of millions of
dollars of price-fixed panels directly into the United States.
9
We note that the meaning of “direct effect” under the FTAIA was
addressed recently in Motorola Mobility LLC v. AU Optronics Corp., 746
F.3d 842 (7th Cir. 2014), reh’g granted and opinion vacated (July 1,
2014). However, soon after the opinion was issued, the Seventh Circuit
vacated the opinion and set the case for rehearing. Order, Motorola
Mobility LLC v. AU Optronics Corp., No. 14-8003, (7th Cir. July 1, 2014).
As a consequence, we do not address the substance of the original opinion.
42 UNITED STATES V. HSIUNG
See 15 U.S.C. § 6a. The evidence offered in support of the
import trade theory alone was sufficient to convict the
defendants of price-fixing in violation of the Sherman Act.
Reversal is not required when the jury returns a general
guilty verdict and “one of the possible bases of conviction
was . . . merely unsupported by sufficient evidence.” Griffin
v. United States, 502 U.S. 46, 55–56 (1991). “It is one thing
to negate a verdict that, while supported by evidence, may
have been based on an erroneous view of the law; it is another
to do so merely on the chance—remote, it seems to us—that
the jury convicted on a ground that was not supported by
adequate evidence when there existed alternative grounds for
which the evidence was sufficient.” Id. at 59–60 (quoting
United States v. Townsend, 924 F.2d 1385, 1414 (7th Cir.
1991)); see Sochor v. Florida, 504 U.S. 527, 538 (1992)
(explaining that in Griffin the Court “held it was no violation
of due process that a trial court instructed a jury on two
different legal theories, one supported by the evidence, the
other not. . . . [because] although a jury is unlikely to
disregard a theory flawed in law, it is indeed likely to
disregard an option simply unsupported by evidence”); see
also United States v. Barona, 56 F.3d 1087, 1098 (9th Cir.
1995). Without deciding whether the evidence was sufficient
to affirm on the basis of the domestic effects instruction, we
conclude that the FTAIA did not bar the prosecution because
the government sufficiently proved that the defendants
engaged in import trade.
V. THE ALTERNATIVE FINE STATUTE
The final basis for the defendants’ appeal is the $500
million fine the district court imposed on AUO pursuant to
the Alternative Fine Statute, 18 U.S.C. § 3571(d). The
UNITED STATES V. HSIUNG 43
Alternative Fine Statute provides: “If any person derives
pecuniary gain from the offense, or if the offense results in
pecuniary loss to a person other than the defendant, the
defendant may be fined not more than the greater of twice the
gross gain or twice the gross loss . . . .” 18 U.S.C. § 3571(d).
The jury found that the collective gain to the conspiracy
members was over $500 million. We analyze the fine from
two perspectives: (i) whether the fine was improper because
it was based on the collective gains to all members of the
conspiracy rather than the gains to AUO alone, and
(ii) whether the district court, in not imposing joint and
several liability, erred by failing to adhere to the “one
recovery” rule and failing to take into account any fines paid
by AUO’s coconspirators. These are issues of first
impression.
A. COLLECTIVE GAINS
Whether “gross gains” under § 3571 means gross gains to
the individual defendant or to the conspiracy as a whole is an
issue of statutory interpretation that we review de novo.
United States v. Marbella, 73 F.3d 1508, 1515 (9th Cir.
1996). The district court instructed the jury as follows:
In determining the gross gain from the
conspiracy, [the jury] should total the gross
gains to the defendants and the other
participants in the conspiracy from affected
sales of (1) TFT-LCD panels that were
manufactured abroad and sold in the United
States or for delivery to the United States; or
(2) TFT-LCD panels incorporated into
finished products such as notebook computers
and desktop computer monitors that were sold
44 UNITED STATES V. HSIUNG
in the United States or for delivery to the
United States. Gross gain is the additional
revenue to the conspirators from the
conspiracy.
This instruction was proper because the statute
unambiguously permits a “gross gains” calculation based on
the gain attributable to the entire conspiracy.
The statute does not require that the gain derive from the
defendant’s “own individual conduct,” as AUO reads it.
Indeed, AUO’s interpretation reads additional provisions into
the statute. AUO relies on United States v. Pfaff, 619 F.3d
172, 175 (2d Cir. 2010) (per curiam), which held that the jury
must find the gain or loss amount to impose a fine beyond the
limits set by § 3571. Id. Pfaff is not instructive because it
was not a conspiracy case; it did not address whether gross
gains could include gains to all coconspirators. Id. at 173.
Nor has AUO pointed to any case that supports its suggested
interpretation, which is contrary to the plain text of the
statute.10
AUO’s offense is the conspiracy to fix prices for TFT-
LCDs. The jury found $500 million in gross gains from that
offense. The unambiguous language of the statute permitted
the district court to impose the $500 million fine based on the
gross gains to all the coconspirators.
10
AUO also points to the legislative history, a comment from the
Sentencing Guidelines, and the rule of lenity. Because the text of the
statute is unambiguous, we stop with the text and do not refer to extrinsic
sources to divine its meaning. See O’Donnell, 608 F.3d at 555.
UNITED STATES V. HSIUNG 45
B. JOINT AND SEVERAL LIABILITY
AUO also argues that the district court erred by failing to
follow principles of joint and several liability in imposing the
fine, an approach that would have required a reduction from
the fine amount of the portion already paid by AUO’s
coconspirators. However, AUO offers no support for the
proposition that § 3571(d) incorporates principles of joint and
several liability. The cases it cites do not address whether the
“one recovery” rule of joint and several liability applies to
§ 3571(d), nor do they even discuss § 3571(d). At best, two
of the cited cases establish that joint and several liability is an
option available to a sentencing court. See United States v.
Pruett, 681 F.3d 232, 249 (5th Cir. 2012); United States v.
Radtke, 415 F.3d 826, 836 (8th Cir. 2005). The other cases,
which address the imposition of civil penalties in RICO
prosecutions and civil asset forfeiture, are similarly
inapposite because the purpose of criminal fines is to punish
the offender, not to compensate a victim or disgorge ill-gotten
gains. See Schachter v. Comm’r., 255 F.3d 1031, 1034–35
(9th Cir. 2001). No statutory authority or precedent supports
AUO’s interpretation of the Alternative Fine Statute as
requiring joint and several liability and imposing a “one
recovery” rule.
AFFIRMED.