By Matthew Perlman

Law360 (April 2, 2020, 5:44 PM EDT) -- A Texas federal court is allowing HP to enforce a $438.7 million judgment against Quanta Storage in an optical disk drive price-fixing case, despite a pending appeal and contentions from Quanta that it's been unable to post bond partly due to complications from the COVID-19 pandemic.

U.S. District Judge David Hittner issued an order Wednesday granting HP Inc.'s bid for a writ of execution to enforce the judgment, a bid lodged after Quanta failed to post $85 million in bond by a March 27 deadline. The judge also ordered Quanta to turn over most of its assets and entered a restraining order against the disk drive maker.

Quanta told the court Monday that it was having trouble posting the bond partly because of closures and other restrictions imposed by the Taiwanese government on non-essential businesses due to the coronavirus pandemic. But Judge Hittner said in Wednesday's order that the company hadn't offered any documentation about its business being disrupted.

"Based on the motions, representations made at the hearing and Quanta Storage's failure to post the supersedeas bond, the court finds HP is entitled to post-judgment relief and a writ of execution to enforce the amended judgment," the order said.

HP had asked that a receiver be appointed to dispose of Quanta's patents, trademarks and copyrights, but Judge Hittner said HP hasn't shown that a receiver is necessary. But the judge did order Quanta to turn over certain property, which HP has said includes $167 million in cash, as well as intellectual property and licensing revenue. The order also granted HP's request for a temporary restraining order to prevent Quanta from liquidating its assets.

A Houston jury found in October that Taiwan-based Quanta had participated in a scheme to fix the price of optical disk drives, which are a key component for reading and writing data on CDs, DVDs, and Blu-ray discs and are used in computers, video game consoles, and other devices. The jury awarded HP $176 million, which Judge Hittner nearly tripled with a January judgment.

Quanta has appealed to the Fifth Circuit, arguing that the electronics giant didn't show how many drives it purchased itself rather than through foreign subsidiaries and is asking for the judgment to be reversed or for a new trial.

Despite the pending appeal, HP initially asked the district court to enforce the judgment in late February, calling for a receiver to be appointed and saying it could be left with "an empty judgment" if it's not enforced now. HP cited the difficulty in enforcing judgments against foreign entities and said that Quanta "has already shown a disregard for American laws."

Quanta responded that HP is trying to deprive it of its opportunity to appeal by "destroying" the company while the appeal is pending. Quanta also asked the court to stay execution of the judgment, arguing that enforcing it now would threaten the business's viability and contending that the amount exceeds the value of its assets. Quanta also said it had been unable to secure a bond because most of its assets are located overseas and offered instead to agree to an injunction preventing it from selling assets while the appeal is pending.

HP responded that it would agree to a stay if Quanta posted a bond of $133 million, an amount it said Quanta should have no trouble posting considering it represents half of the company's purported worth and less than the reported $167 million in cash it currently has.

Judge Hittner issued an order March 12 giving Quanta 15 days to post a bond of $85 million in exchange for staying execution of the judgment.

HP moved to enforce the judgment for a second time after the deadline passed, again asking for a receiver to be appointed to dispose of Quanta's assets. The company responded that while HP is seeking to "cripple" its business by enforcing the judgment immediately, HP has already obtained a 30-day extension from the Fifth Circuit for its response in the appeal.

In arguing against that extension, Quanta told the Fifth Circuit that given the circumstances surrounding COVID-19, it would like to be able to agree to an extension, but can't because of HP's efforts to enforce the judgment while the appeal is pending.

Quanta also told the Fifth Circuit that it had yet to post the reduced $85 million bond ordered by the district court, citing the difficulty of obtaining a bond for overseas assets and the added difficulty of the COVID-19 restrictions, and said it was at risk of Judge Hittner appointing a receiver or issuing a turnover order.

The Fifth Circuit granted HP's extension request March 25 and Judge Hittner issued the turnover order on Wednesday.

The case dates back to 2013, when HP accused several companies that make optical disk drives of price-fixing, following a U.S. Department of Justice investigation into the industry. Most of the companies, including Toshiba Corp., Hitachi-LG Data Storage Inc., Panasonic Corp. and Samsung Electronics Co. Ltd., had entered into confidential settlements by 2017, leaving Quanta as the remaining defendant.

A representative for HP declined to comment Thursday. Representatives for Quanta did not respond to a request for comment.

HP is represented by Alistair B. Dawson, Alex B. Roberts and Garrett S. Brawley of Beck Redden LLP.

Quanta is represented by Marie R. Yeates, Harry Reasoner, Michael A. Heidler and Bryan U. Gividen of Vinson & Elkins LLP.

The district court case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 4:18-cv-00762, in the U.S. District Court for the Southern District of Texas. The appellate case is Hewlett-Packard Co. v. Quanta Storage Inc. et al., case number 19-20799, in the U.S. Court of Appeals for the Fifth Circuit.

--Additional reporting by Katie Pohlman, Christopher Cole, Michelle Casady and Nadia Dreid. Editing by Michael Watanabe.

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