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State v. AU Optronics Corp.

Court of Appeals of Washington, Division 1

May 5, 2014

The State of Washington, Appellant,
v.
AU Optronics Corporation et al., Defendants, LG Display Company, Ltd., et al., Respondents

Oral Argument January 8, 2014.

Page 920

Appeal from King County Superior Court. Docket No: 10-2-29164-4. Date filed: 08/23/2012. Judge signing: Honorable Laura Inveen.

Robert W. Ferguson, Attorney General, Brady R. Johnson, Senior Counsel, and Jonathan A Mark, Assistant, for appellant.

Michael K. Vaska and Kathryn C. McCoy (of Foster Pepper PLLC ) ( Lee F. Berger of Paul Hastings LLP, of counsel), for respondents.

David J. Burman, Cori G. Moore, and Steven D. Merriman on behalf of Costco Wholesale Corporation, amicus curiae.

AUTHOR: J. Robert Leach, J. WE CONCUR: James Verellen, A.C.J., Mary Kay Becker, J.

OPINION

Page 921

Leach, J.

[180 Wn.App. 907] ¶ 1 In this case we consider the due process limitations on a Washington court's exercise of personal jurisdiction over two foreign corporations, LG Display Co. Ltd. and LG Display America Inc. (collectively LG Display). LG Display manufactures and distributes components for retail consumer goods that third parties mass-market throughout the United States. It does not manufacture or distribute any component within the state of Washington.

¶ 2 After LG Display admitted participating in a worldwide conspiracy to fix the prices of LCD (liquid crystal display) panels, the State sued it in King County Superior Court. The State alleged that the conspiracy resulted in higher prices for Washington citizens and state agencies that purchased products containing these panels. The State appeals the trial court's dismissal of LG Display for lack of personal jurisdiction. The State also challenges the court's award of attorney fees to LG Display under RCW 4.28.185(5). Because the State alleges sufficient minimum contacts with this state for due process to allow a Washington court to exercise specific jurisdiction over LG Display for harm allegedly caused here by its conspiracy and LG Display fails to show that this exercise of jurisdiction would be constitutionally unreasonable, we reverse and remand.

[180 Wn.App. 908] FACTS

¶ 3 LG Display Co. Ltd. is a Korean corporation with its principal place of business in Seoul, South Korea. It has an American subsidiary, LG Display America Inc., located in San Jose, California. LG Display designs and manufactures thin film transistor LCD panels. LG Display sells these flat screen LCD panels to original equipment manufacturers, systems integrators, original design manufacturers, and resellers.[1] Many of these third parties integrate the flat screens into computer monitors, laptop computers, televisions, mobile phones, and other finished products that they sell to indirect purchasers--consumers who purchase the finished products from retailers.

¶ 4 LG Display is not licensed or qualified to do business in Washington state. It maintains no offices, real property, telephone listing,

Page 922

mailing address, assets, employees, or designated agent for service of process in Washington.

¶ 5 LG Display pleaded guilty in federal court to participating in a price-fixing scheme from the late 1990s until 2006.[2] In August 2010, the Washington State attorney general sued 20 defendants, including LG Display, in the name of the State and as parens patriae on behalf of consumers residing in the state. In its complaint, the State alleged that from at least January 1, 1998, through at least December 1, 2006, LG Display participated in a worldwide conspiracy to fix the prices of LCD panels that resulted in [180 Wn.App. 909] higher prices for Washington citizens and state agencies that purchased products containing these panels. It claimed that LG Display manufactured, marketed, sold, and/or distributed LCD panels and LCD products to customers throughout the United States and in Washington state. The State's complaint contained the following statement about the court's jurisdiction and venue:

5. This action alleges violations of the Washington Consumer Protection Act (" CPA" ), RCW 19.86. Jurisdiction exists pursuant to RCW 19.86.160.
6. Venue is proper in King County because the Plaintiff resides therein; a significant portion of the acts giving rise to this action occurred in King County; the Defendants and their co-conspirators [sic] activities were intended to, and did have a substantial and foreseeable effect on U.S. and Washington State trade or commerce; the conspiracy affected the prices of LCD panels and LCD products purchased in Washington; and all Defendants knew or expected that products containing their LCD panels would be sold in the U.S. and into Washington.

The State sought injunctive relief, civil penalties, damages for state agencies, and restitution for consumers.[3]

¶ 6 LG Display moved to dismiss the State's complaint, claiming that it did not have " the continuous and systematic contacts with Washington necessary to support general jurisdiction." It also alleged that the State's claims did not support specific jurisdiction because " they do not arise from any conduct by [LG Display] in Washington. The alleged conspiracy took place outside of Washington State."

¶ 7 To resolve the personal jurisdiction issue, the trial court considered the following allegations.[4] LG Display Co. Ltd. sold its LCD panels to a particular global consumer [180 Wn.App. 910] electronics brand, which sold computer monitors and televisions containing these panels throughout the United States and in Washington " by making use of 'key electronic appliance distribution chains in the U.S.'" [5] Another Washington-based consumer electronics retailer purchased products containing LG Display's LCD panels from the same global consumer electronics brand. In 2002, 2003, and 2004, sales by LG Display Co. Ltd. to this global consumer electronics brand accounted for 19.4 percent, 25.1 percent, and 19.3 percent, respectively, of its revenues.

¶ 8 LG Display America Inc. sold over $600 million worth of LCD panels to a particular original equipment manufacturer between 2001 and 2005. Between 2001 and 2007, the State purchased " in excess of 100 Million dollars of product ... . includ[ing] LCD Products" from this same particular

Page 923

original equipment manufacturer. In 2003, this manufacturer's purchases accounted for 10 percent or more of net sales by LG Display America Inc. Also in 2003, LG Display Co. Ltd. entered into a master purchase agreement with this particular original equipment manufacturer. The purchase agreement stated that LG Display Co. Ltd. agreed to obtain and retain U.S. regulatory approval for its products. It also contained an indemnification provision obligating LG Display Co. Ltd. to " defend, indemnify, and hold harmless" this manufacturer, as well as the manufacturer's customers.[6]

¶ 9 Although LG Display Co. Ltd. had no direct sales to Washington consumers between January 1, 2001, and October 31, 2011,[7] LG Display America Inc. sold one LCD panel to Bell Microproducts USA, a former computer wholesaler [180 Wn.App. 911], in Washington in November 2006.[8] From July 2001 through March 2003, LG Display America Inc. sold 84 units in 15 separate transactions to General Dynamics Itronix Corporation, a mobile computer manufacturer.[9]

¶ 10 Between January 1, 2001, and October 31, 2011, LG Display Co. Ltd. made pass-through shipments of 14,348 units of LCD panels to the Port of Tacoma. LG Display Co. Ltd. sold these shipments in European markets. It neither shipped nor sold these panels to any customers in Washington. LG Display Co. Ltd. or its non-U.S. subsidiaries negotiated the contracts for these shipments with companies outside of Washington.

¶ 11 Between 2001 and 2010, representatives from LG Display Co. Ltd. made 13 trips to Washington to meet with representatives from the Microsoft Corporation and to perform market research. LG Display Co. Ltd. states that " [t]he majority of these trips included visits to several states, and the duration of the Washington visit was generally one or two days." LG Display Co. Ltd. also states that these meetings with Microsoft resulted in no business. Between 2001 and 2010, representatives from LG Display America Inc. made 26 business trips to Washington to meet with representatives from Microsoft, Best Buy, Target, Itronix, Costco, and Rockwell/APC.

¶ 12 The trial court granted LG Display's motion to dismiss for lack of personal jurisdiction. The court relied upon the United States Supreme Court's opinion in J. McIntyre Machinery Ltd. v. Nicastro [10] and concluded,

[T]here is no " something more", [sic] no state related design, advertising, or marketing directed to Washington, no showing [180 Wn.App. 912] that the LG Defendants have purposefully availed themselves of the privilege of conducting themselves in Washington, or have delivered their product into the stream of commerce with the expectation that it would be purchased by Washington users. ... Under the ...

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