FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
IN RE: TFT-LCD (FLAT PANEL) No. 14-15916
ANTITRUST LITIGATION,
__________________________ D.C. Nos.
3:12-cv-02214-SI
SONY ELECTRONICS, INC.; SONY 3:07-md-10827-SI
COMPUTER ENTERTAINMENT
AMERICA, LLC,
Plaintiffs-Appellants, OPINION
v.
HANNSTAR DISPLAY
CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Susan Illston, District Judge, Presiding
Argued and Submitted August 8, 2016
San Francisco, California
Filed September 1, 2016
2 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG.
Before: J. Clifford Wallace and Susan P. Graber, Circuit
Judges, and Barbara M. G. Lynn,* Chief District Judge.
Opinion by Judge Graber
Dissent by Chief Judge Lynn
SUMMARY**
Law of Privilege
The panel reversed the district court’s order denying
plaintiff’s motion for summary judgment in plaintiff’s action
to enforce a settlement agreement, and remanded.
The parties engaged a mediator to resolve a price-fixing
dispute, and the mediator proposed settlement in an email
exchange. Both parties accepted by email, but defendant
refused to comply and plaintiff sued to enforce the settlement
agreement. The district court denied plaintiff’s motion for
summary judgment, holding that the California Evidence
Code’s mediation privilege barred introduction of settlement
emails. The parties stipulated to a final judgment.
The panel held that because, at the time the parties
engaged in mediation, their negotiations concerned (and the
mediated agreement settled) both federal and state law
*
The Honorable Barbara M. G. Lynn, United States Chief District Judge
for the Northern District of Texas, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG. 3
claims, the federal law of privilege applied. The panel
therefore concluded that the district court erred in applying
California privilege law to resolve the dispute.
Dissenting, Chief District Judge Lynn would hold that the
district court correctly determined that state privilege law
governed and that California Evidence Code § 1123(b)
precluded admission of the email exchange and the resulting
settlement contract.
COUNSEL
Stephen V. Bomse (argued), David M. Goldstein, and
Shannon C. Leong, Orrick Herrington & Sutcliffe LLP, San
Francisco, California; Brian D. Ginsburg, Orrick Herrington
Sutcliffe LLP, New York, New York; for Plaintiffs-
Appellants.
Harrison J. Frahn IV (argued) and James G. Kriessman,
Simpson Thacher & Bartlett LLP, Palo Alto, California, for
Defendant-Appellee.
OPINION
GRABER, Circuit Judge:
Plaintiffs Sony Electronics, Inc., and Sony Computer
Entertainment America, LLC (collectively “Sony”), and
Defendant HannStar Display Corporation engaged a mediator
to resolve a price-fixing dispute. The mediator proposed
settlement in an email exchange. Both parties accepted by
email. But HannStar refused to comply, and Sony sued to
4 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG.
enforce the agreement. The district court denied Sony’s
motion for summary judgment, holding that the California
Evidence Code’s mediation privilege bars introduction of the
settlement emails. The parties stipulated to a final judgment,
and this appeal followed. We review de novo, Padfield v.
AIG Life Ins. Co., 290 F.3d 1121, 1124 (9th Cir. 2002), and
reverse and remand. We hold that federal, rather than
California, privilege law applies.
This case stems from a major price-fixing scheme and
long-running litigation. E.g., In re TFT-LCD (Flat Panel)
Antitrust Litig., 637 F. App’x 981 (9th Cir. 2016)
(unpublished) (consolidating appeals of price-fixing suits).
HannStar Display Corporation is a Taiwanese company in the
business of manufacturing and selling LCD panels and
products. Sony is an electronics company, offering a broad
range of consumer electronic products throughout the United
States and elsewhere. In 2010, HannStar entered into a plea
agreement in which it admitted that, for more than four years,
it participated in a conspiracy to fix the prices of LCDs sold
in the United States and elsewhere. Sony purchased many
price-fixed HannStar products and contemplated bringing its
own suit against HannStar for antitrust damages.
In December 2010, Sony entered into a tolling agreement
with HannStar and began investigating the damage that the
price-fixing cartel had caused it. Sony and HannStar agreed
to mediate their dispute. They turned to Professor Eric Green
for mediation assistance. Both HannStar and Sony authorized
counsel to make an agreement. At first, Professor Green was
unable to secure an agreement between the parties. Sony
informed HannStar and Professor Green that it would file a
complaint against HannStar on March 28, 2012, if the parties
could not reach an agreement before that date.
IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG. 5
On March 25, 2012, Professor Green sent an email to
counsel for both HannStar and Sony. His email stated that he
had been authorized to make a Mediator’s Proposal. He
proposed that the matter be settled for “$4.1 million, to be
paid on March 30, 2012, subject to the execution of an
appropriate Settlement Agreement, MOU, or Agreement in
Principle.” Professor Green also wrote:
I ask that each of you inform me privately
and confidentially by close of business (5:00
pm PDT) Tuesday, March 27, 2012 whether
you “ACCEPT” or “REJECT” the Mediator’s
Proposal. These double-blind responses will
be kept confidential by me so that if one side
accepts the Mediator’s Proposal but the other
side does not, the side not accepting the
Mediator’s Proposal will never know what the
other side responded. This protects both the
parties from being leveraged. Of course, if
both sides accept the Mediator’s Proposal, I
will inform you immediately that the matter is
settled.
The next day Professor Green wrote to both parties: “I would
like to remind you that it is in the nature of a Mediator’s
Proposal that your response can only be ‘ACCEPT’ or
‘REJECT.’ No negotiation is permitted.” Both counsel
responded “Understood.”
On March 27, counsel for HannStar wrote to Professor
Green:
Pursuant to your emails of March 25th and
26th, HannStar authorizes acceptance by
6 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG.
HannStar of the Mediator’s Proposal for
settlement as set forth in your March 25th
email to Sony counsel and me. If the proposal
is accepted by Sony, would also appreciate a
brief call with you about a couple of logistical
matters arising out of the enunciated proposal.
That same day, counsel for Sony wrote to Professor Green:
“Thanks much for your efforts. Sony accepts.” After Sony
accepted, Professor Green wrote to both parties:
I am pleased to be able to inform you that
I have received written confirmation from
each of you that both Sony and HannStar have
accepted the Mediator’s Proposal pursuant to
my email of March 25. This case is now
settled subject to agreement on terms and
conditions in a written settlement document.
Sony refrained from filing suit against HannStar in March
2010, though it sued several other participants in the price-
fixing scheme. But HannStar refused to abide by the
mediated settlement agreement and informed counsel for
Sony that it did not intend to pay the settlement amount
contained in the Mediator’s Proposal. Sony filed this action.
It alleged federal and state antitrust claims and breach of
contract for HannStar’s alleged reneging on the settlement
agreement.
After concluding its antitrust cases against other
defendants, Sony dismissed its antitrust claims against
HannStar. It continued to litigate its state-law breach of
contract claim for HannStar’s failure to abide by the
settlement. HannStar filed a motion to dismiss for lack of
IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG. 7
federal jurisdiction. The district court denied the motion;
federal diversity jurisdiction allowed the case to remain in
federal court. Sony moved for summary judgment on its
contract claim. The district court denied the motion because,
it ruled, California Evidence Code section 1123(b) precluded
admission of the email exchange (and the resulting contract)
without some express statement to the effect that the
settlement was intended to be enforceable or binding. A final
judgment, and this appeal, followed.
Pursuant to Federal Rule of Evidence 501, federal
common law generally governs claims of privilege. “Where
there are federal question claims and pendent state law claims
present, the federal law of privilege applies.” Agster v.
Maricopa County, 422 F.3d 836, 839 (9th Cir. 2005). “But
in a civil case, state law governs privilege regarding a claim
or defense for which state law supplies the rule of decision.”
Fed. R. Evid. 501. In Wilcox v. Arpaio, 753 F.3d 872 (9th
Cir. 2014), we clarified the meaning of this rule for a state
suit to enforce a settlement of both federal and state claims.
In Wilcox, Mary and Earl Wilcox had filed an action
against Maricopa County and several of its officials. Id. at
874. The plaintiffs filed both federal claims, under § 1983,
and supplemental state claims. Id. They asserted that their
claims had been settled through a county-established
mediation program. Id. The plaintiffs attempted to enforce
their settlement and, in support of their motion, submitted an
email from the county mediator stating that the claim had
been settled. Id. at 874. The county argued that the emails
from the county mediator were inadmissible under Arizona
privilege law. Id. at 875. The plaintiffs claimed that federal
privilege law applied. Id.
8 IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG.
We agreed with the plaintiffs. Although state contract
law governed whether the parties had reached a settlement,
the underlying action that was allegedly settled contained
both federal and state claims. Id. at 876. We held that
“federal common law generally governs claims of privilege.”
Id. at 876. Because the evidence in Wilcox related to a
federal as well as a state claim—the plaintiffs had sued under
both federal and state law—federal law applied. Id. “Where,
as here, the same evidence relates to both federal and state
law claims, we are not bound by Arizona law on privilege.
Rather, federal privilege law governs.” Id. (internal quotation
marks omitted).1
Here, as in Wilcox, Sony initially filed suit under both
state and federal law. The settlement negotiations concerned
both issues; the evidence that Sony seeks to admit “relates”
to both federal and state law claims. At the time of
mediation, both parties would have expected to litigate both
federal and state law issues. Counsel for HannStar
conceded—as the later-filed complaint confirmed—that the
settlement negotiations related to all claims, both federal and
state.
Unlike in Wilcox, Sony ultimately dismissed the federal
law claims, and the action ultimately proceeded under the
court’s diversity jurisdiction. But the eventual dismissal of
federal claims does not govern whether the evidence related
to federal law. Because, here, at the time the parties engaged
in mediation, their negotiations concerned (and the mediated
settlement settled) both federal and state law claims, the
1
Wilcox was published approximately two months after the district court
entered judgment and thus the district judge did not have the benefit of
Wilcox when she denied Sony’s summary judgment motion.
IN RE: TFT-LCD (FLAT PANEL) ANTITRUST LITIG. 9
federal law of privilege applies. Accordingly, the district
court erred in applying California privilege law to resolve this
dispute.
REVERSED and REMANDED.
LYNN, Chief District Judge, dissenting:
I respectfully dissent.
The question of whether to apply this Court’s holding in
Wilcox v. Arpaio, 753 F.3d 872 (9th Cir. 2014), should be
analyzed against the backdrop of the claims pending in a
lawsuit when the admission of the evidence is sought. In this
case, only state law claims remained at the time Sony sought
to admit evidence of the email exchange, in support of its
motion for summary judgment. Because at that time the
action no longer involved any federal issue, the evidence
could not relate to a federal claim.
The district court thus correctly determined that state
privilege law governed and that California Evidence Code
§ 1123(b) precluded admission of the email exchange, and the
resulting settlement contract. Fair v. Bakhtiari, 147 P.3d 653
(Cal. 2006). For these reasons, I dissent.