Quanta Must Pay HP Full $439 Million After Failing to Post Bond

Quanta Storage Inc. must immediately pay a $439 million antitrust judgment won by Hewlett-Packard Co. after it failed to post an $85 million bond pending appeal, citing pandemic-related business restrictions, a Houston federal judge ruled.

“Quanta Storage alleges, three days after the deadline, it is unable to secure the reduced bond due to restrictions on nonessential business put in place by the Taiwanese government in light of the Covid-19 pandemic,” Judge David Hittner wrote Wednesday. “Quanta Storage fails to produce any documentation showing restrictions on its business.”

He ordered the Taiwanese electronics company to turn over virtually all of its assets—“including any patents, trademarks, and copyrights, and all licensing revenue”—to satisfy the judgment, which exceeds Quanta’s total value following a recent steep decline in its stock.

Quanta has asked the U.S. Court of Appeals for the Fifth Circuit to reverse the ruling against it. The decision came in a lawsuit alleging a widespread scheme by Quanta and other electronics companies to inflate the price of optical disk drives, a critical computer component.

HP filed the case in the U.S. District Court for the Southern District of Texas. The other electronics makers—including Sony and Panasonic—settled, but Quanta went to trial. The move backfired in October, when a jury handed down a $176 million verdict.

Hittner raised the amount to $439 million in early January based on the trebling provisions of federal antitrust laws, minus deductions reflecting the settlements.

After Quanta appealed, HP sought to have it post a bond equaling the full judgment, or, in the alternative, $133 million. Hittner rejected the request last month, saying it would kneecap Quanta, which claims to have less than $400 million in assets.

Even if its self-reported financials involve some creative accounting, the lower amount would still constitute an “undue financial burden,” the judge said.

He instead imposed the $85 million bond—20% of the judgment—and issued a temporary restraining order barring Quanta from transferring any assets worth $100,000 or more without court permission.

After Quanta failed to post the bond, HP sought a writ of execution and asked Hittner to appoint a receiver.

The judge rejected the receiver request Wednesday, calling it “drastic,” but otherwise granted the motion. His order requires Quanta to turn over all “non-exempt property,” along with any “documentary evidence” concerning what assets it actually has.

HP is represented by Beck Redden LLP. Quanta is represented by Vinson & Elkins LLP.

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The case is Hewlett-Packard Co. v. Quanta Storage Inc., S.D. Tex., No. 18-cv-762, 4/1/20.