Opinion ID: 2775174
Heading Depth: 2
Heading Rank: 1

Heading: venue challenge

Text: 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 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). 14 UNITED STATES V. HSIUNG 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 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; UNITED STATES V. HSIUNG 15 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 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. 16 UNITED STATES V. HSIUNG 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. UNITED STATES V. HSIUNG 17 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 18 UNITED STATES V. HSIUNG 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). UNITED STATES V. HSIUNG 19 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 20 UNITED STATES V. HSIUNG (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. UNITED STATES V. HSIUNG 21 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. 22 UNITED STATES V. HSIUNG 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 ignore the significant differences between Metro Industries and this case. We decline to do so. To begin, Metro Industries was not a price-fixing case; rather, it involved an unusual 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 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 Industries, 82 F.3d at 843. Our court affirmed and held that because the market division at issue was “not a classic horizontal market division UNITED STATES V. HSIUNG 23 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 844–45.5 Unlike Metro Industries, this case centers on a classic horizontal price-fixing scheme. 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 in 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. So, too, did part of the conspiracy to carry out that price-fixing agreement. We are unwilling to extend Metro Industries to a case where both part of the conduct and the effects of that conduct occurred in the United States. 5 Not surprisingly, this statement 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 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)). 24 UNITED STATES V. HSIUNG In invoking the per se rule for horizontal price-fixing, we 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 appropriately rejected the rule of reason defense.6