Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Cal.: Forum selection clause bars Sharp’s claims against Toshiba in U.S. court, (Mar 17, 2014)

By Linda O’Brien, J.D., LL.M.

Price fixing claims brought by Sharp Electronics Corporation against cathode ray tube manufacturer Toshiba Corporation were governed by a forum selection clause in the main transaction agreement between the parties’ parent companies, according to the federal district court in San Francisco. In light of the forum-selection clause, the court dismissed Sharp’s claims against Toshiba (In re Cathode Ray Tube (CRT) Antitrust Litigation, March 13, 2014, Conti, S.).

Sharp opted out of multidistrict class action antitrust litigation against cathode ray tube (CRT) manufacturers. It filed suit against Toshiba and other CRT makers. The parent companies of Sharp and Toshiba had entered into a basic transaction agreement (BTA), which contained a forum-selection clause. The clause stated: “In terms of litigation related to this agreement or the individual agreement, the Osaka District Court shall be the court of competent jurisdiction.” Toshiba moved for dismissal based on the agreement.

The court determined that the BTA and its forum-selection clause should be read to apply to the subsidiaries since any relationship between Sharp and Toshiba took place as part of the larger contractual relationship between the two parent companies. Contractual forum-selection clauses are prima facie valid and enforceable absent a strong showing that enforcement would be unreasonable or unjust, or the clause is invalid for fraud or overreaching.

The court rejected Sharp’s argument that the BTA governed only Japanese transactions and the purchase orders were the real governing agreements. On the face of the agreement, Sharp and Toshiba explicitly agree to handle all litigation related to the BTA, which includes individual agreements and purchase orders, in Japan. The BTA clearly states that it governs individual agreements which were established upon the delivery of the purchase order describing the transaction details, therefore, Sharp’s purchase order were related to the BTA by the contract’s terms. Moreover, the purchase orders did not preclude application of the BTA’s forum-selection clause because the purchase orders included no such terms.

Finally, enforcement of the BTA forum-selection clause did not violate public policy. Sharp did not argue that its parent would be deprived of the ability to sue on behalf of its subsidiaries or affiliates. Additionally, Sharp failed to demonstrate that it was deprived of reasonable recourse. The availability of remedies in the clause’s designated court need not be identical. Although an award of treble damages was unavailable in Japan, Sharp would be able to recover actual damages, the court concluded.

The case is No. C-07-5944-SC.

Attorneys:  Stephen E. Taylor (Taylor & Company Law Offices, LLP) for Sharp Electronics Corp. Eliot A. Adelson (Kirkland & Ellis LLP) for Hitachi, Ltd.

Companies: Sharp Electronics Corp.; Toshiba Corp.

Cases: Antitrust CaliforniaNews