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State v. LG Electronics, Inc.

Court of Appeals of Washington, Division 1

January 12, 2015

The State of Washington, Appellant ,
v.
LG Electronics, Inc., et al., Respondents

Oral Argument November 12, 2014.

Page 347

[Copyrighted Material Omitted]

Page 348

Appeal from King County Superior Court. Docket No: 12-2-15842-8. Judge signing: Honorable Richard D Eadie. Judgment or order under review. Date filed: 03/28/2013.

Robert W. Ferguson, Attorney General, and David M. Kerwin, Assistant, for appellant.

David C. Lundsgaard (of Graham & Dunn PC ); Robert D. Stewart (of Kipling Law Group PLLC ); Molly A. Terwilliger (of Summit Law Group PLLC ); Timothy W. Snider and Aric H. Jarrett (of Stoel Rives LLP ); and Larry S. Gangnes and John R. Neeleman (of Lane Powell PC ) ( Hojoon Hwang and Laura K. Sullivan of Munger Tolles & Olson, of counsel) ( John M. Taladay, Charles M. Malaise, and Erik T. Koons of Baker Botts LLP, of counsel) ( Andrew J. Wiener, Eliot A. Adelson, and J. Maxwell Cooper of Kirkland & Ellis, of counsel) ( David L. Yohai, Adam C. Hemlock, and David E. Yolkut of Weil Gotshal & Manges LLP, of counsel) ( Jeffrey L. Kessler, Eva W. Cole, and Molly M. Donovan of Winston & Strawn LLP, of counsel) ( Gary L. Halling, James L. MacGinnis, and Michael Scarborough of Sheppard Mullin Richter & Hampton LLP, of counsel), for respondents.

Authored by Stephen J. Dwyer. Concurring: Michael S. Spearman, Ronald Cox.

OPINION

[185 Wn.App. 399] Stephen J. Dwyer, J.

Page 349

[¶1] In resolving this appeal, which requires us to consider the due process limitations on

Page 350

the exercise of personal jurisdiction over certain foreign corporations, we hold that because a product manufactured by these foreign corporations was sold--as an integrated component part of retail consumer goods--into Washington in high volume over a period of years, the corporations " purposefully" established " minimum contacts" in Washington. Owing to our conclusion that the Attorney General alleged sufficient " minimum contacts" to support an exercise of specific jurisdiction by Washington courts, and in view of our further conclusion that such exercise would not offend notions of " fair play and substantial justice," we reverse the trial court's order dismissing the Attorney General's complaint for lack of personal jurisdiction and remand for further proceedings.

I

[¶2] On May 1, 2012, the Attorney General,[1] acting on behalf of the State and as parens patriae on behalf of persons residing in Washington, brought suit against more than 20 foreign corporate entities.[2] While geographically diffuse, the defendants had a common characteristic--past participation in the global market for cathode ray tubes [185 Wn.App. 400] (CRTs).[3] The Attorney General broadly alleged that the defendants had, in violation of the Washington Consumer Protection Act[4] (CPA), participated in a worldwide conspiracy to raise prices and set production levels in the market for CRTs, which caused Washington State residents and state agencies to pay supracompetitive prices for CRT products.[5]

[¶3] The Attorney General claimed that the defendants manufactured, sold, and/or distributed CRT products, directly or indirectly, to customers throughout the United States and, specifically, in Washington. He further alleged that the actions of the defendants were intended to and did have a direct, substantial, and reasonably foreseeable effect on United States domestic import trade and commerce, and on import trade and commerce into and within Washington. Indeed, he averred that the defendants' alleged conspiracy to fix prices affected billions of dollars in United States commerce and damaged a large number of Washington State agencies and residents.

[¶4] In support of this, the Attorney General maintained that because, until recently, CRTs were the dominant technology used in displays such as televisions and computer monitors, this translated into the sale of millions of CRT products during the alleged conspiracy period, which resulted in billions of dollars in annual profits to the defendants. The Attorney General alleged that, during the entirety of the alleged conspiracy period, North America represented the largest market for CRT televisions and computer monitors and that the 1995 worldwide market for CRT monitors was 57.8 million units, 28 million of which [185 Wn.App. 401] were purchased in North America. The Attorney General claimed that CRT monitors accounted for over 90 percent of the retail market for computer monitors in North America in 1999 and that CRT televisions accounted for 73 percent of the North American television market in 2004. The Attorney General averred that, during the alleged conspiracy period, the CRT industry was dominated by relatively few companies and that, in 2004, four of the defendants in this case together held a collective 78 percent share of the global CRT markets.

[¶5]

Page 351

By way of relief, the Attorney General sought (1) injunctive relief, (2) civil penalties, (3) damages for state agencies, and (4) restitution for consumers who purchased CRTs or CRT products, whether directly or indirectly.

[¶6] After accepting service of process, and prior to any discovery being conducted, certain defendants (collectively Companies[6]) filed motions, supported by affidavits and declarations, to dismiss the Attorney General's complaint for lack of personal jurisdiction pursuant to CR 12(b)(2). These affidavits and declarations contained testimony that the Companies had never sold CRTs or CRT products to Washington customers or done any business in Washington.

[¶7] In response, the Attorney General maintained that, for purposes of resolving the Companies' dispositive motions, the aforementioned affidavits and declarations should not be considered by the trial court. In the event that they were considered, however, the Attorney General requested an opportunity to conduct both general and jurisdictional discovery. The Companies opposed the Attorney General's request.

[¶8] The trial court granted the Companies' motions and dismissed the Attorney General's complaint as against [185 Wn.App. 402] them. In doing so, the trial court denied the Attorney General's request to conduct discovery. Upon an agreed motion, the trial court entered final judgment with prejudice pursuant to CR 54(b).[7] The Attorney General filed a timely appeal.

[¶9] Additionally, the trial court authorized the Companies to request attorney fees and costs. With the exception of the Philips entities, the Companies submitted briefing requesting fees, along with supporting affidavits. The trial court granted their request for fees pursuant to RCW 4.28.185(5).[8] The Attorney General appeals from this award pursuant to RAP 2.4(g).[9]

[¶10] Certain defendants[10] sought and obtained discretionary review of two issues related to whether certain claims of the Attorney General were time barred. That [185 Wn.App. 403] matter has been resolved by separate opinion. State v. LG Electronics. Inc., 185 Wn.App. 123, ...


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