Thursday, April 19, 2018

Case of the Day: Dandong Old North-East Agric. & Animal Husbandry Co. v. Pasternak Baum & Co., 2018 U.S. Dist. LEXIS 45588 (S.D.N.Y. Mar. 19, 2018)

Summary:

Plaintiff, a Chinese soybean oil and meal manufacturer, sued the defendant grain company for allegedly overcharging for soybeans. The parties then entered into a settlement agreement, which included a clause that the accountants for the two parties jointly would ascertain how much the defendant owed to the plaintiff. During the accountants' meeting, however, the parties could not agree whether the defendant owed any money to the plaintiff. Plaintiff then filed a motion for an order to show cause, seeking an order for specific performance of the settlement agreement.

Both parties offered differing interpretations for enforcing the settlement agreement, but the court rejected both. Instead, the court held there could be no enforcement, because the differing stances between the parties meant there were no meeting of the minds and mutual assent. The court also found that the language of the agreement suggested two equally plausible outcomes.

Takeaway:

Bad lawyering! Ultimately, this is what it comes down to--that the attorneys for the two parties did not hammer out the settlement terms with sufficient particularity, to a point that they might have to return to the lawsuit that they supposedly settled.

Tuesday, April 17, 2018

Case of the Day: Tera Res. Co. v. Lee, 2018 Bankr. LEXIS 801 (Bankr. D. Haw. Mar. 20, 2018)

Summary:

The bankrupt company, Cuzco USA, is a Hawaiian limited liability company, whose sole member is Cuzco Korea, a Korean corporation. Plaintiff Tera Resources is a shareholder of Cuzco Korea, who alleges that Cuzco USA's bankruptcy is a scheme to divert assets away from Cuzco Korea. Tera Resources filed the complaint alleging a number of claims including fraud on court, fraud against Tera, breach of fiduciary duty, etc. The defendants moved to dismiss by offering a number of theories.

The court granted in part and denied in part the motion to dismiss. Notably, the court rejected the defendants' argument that this action was essentially a shareholder derivative suit as to a Korean corporation, and the Korean law provides that such a suit can only be brought in the Seoul District Court. The court found that a foreign statute cannot change the subject matter jurisdiction of a United States court. However, the court dismissed the plaintiff's claims that relate solely to Cuzco Korea, as those claims were not sufficiently related to the core bankruptcy action.

Takeaway:

Nothing very new in this action, but an interesting object lesson for how complicated a multinational bankruptcy case could be.

Monday, April 16, 2018

Case of the Day: Huawei Techs. Co. v. Samsung Elecs. Co., 2018 U.S. Dist. LEXIS 63052 (N.D. Cal. Apr. 13, 2018)

Summary:

Plaintiff Huawei filed near-simultaneous actions in both China and the United States against defendant Samsung in May 2016, alleging violation of a licensing agreement on certain patent portfolio. The Chinese action progressed faster than the U.S. action, such that the court in China issued an injunction against Samsung. Samsung filed motion with the U.S. court to stop the enforcement of the injunction from the Chinese court.

The court issued an anti-suit injunction, finding that the issues were virtually identical and so were the parties. The court rejected the plaintiff's offer to bifurcate the issues so as to avoid the anti-suit injunction, as the court found the separation impractical.

Takeaway:

Wow, wow, wow. In international litigation, this is about as big a blockbuster one can see: U.S. court's most closely guarded weapon (anti-suit injunction,) wielded against the world's second largest economy, in a field of business worth trillions. 

Wonder why Samsung was not inclined to file an anti-suit injunction earlier in the process. Strategically, it ended up being the right move to wait until the Chinese court produced a result that defeated the U.S. court action--but what a tough decision to litigate in two countries rather than come out firing with an anti-suit injunction application right away.

Thursday, April 12, 2018

Case of the Day: Underwriters at Lloyds v. Expeditors Korea Ltd., 2018 U.S. App. LEXIS 3743 (11th Cir. Feb. 16, 2018)

Summary:

Defendant shipping companies damaged a shipment of semiconductors that was supposed to be delivered from Incheon, South Korea to Orlando, Florida via air cargo. The shipment was supposed to go directly to Orlando, but ended up transiting through Miami, from which the shipment was delivered to Orlando by truck. The damage occurred between Miami and Orlando. Plaintiff insurer paid out approximately $900,000 to the owner of the shipment, and sued the shipping companies. District Court found the Montreal Convention capped the damages because the shipment was delivered as air cargo, and capped the damages at a little less than $200,000. Plaintiff appealed.

Plaintiff insurer argued the air transit ends when the cargo is loaded onto the truck to leave the airport, while the defendant shippers argued the air transit ends when the cargo left the airport premises. Rejecting both arguments, the court held that the air carriage ended when the shipment arrived at Miami and was unloaded into the warehouse outside of the airport premises. The court then found the Convention did not apply because the damages occurred either at the warehouse or in the truck transit, and remanded to the district court to find damages in accordance with the waybill.

Takeaway:

Yet another Montreal Convention case that involves very difficult line-drawing! The court concludes with a remark Justice Scalia about the Warsaw Convention: "How many smart people from how many countries came up with this—with this formulation? You think they . . . could have said it more clearly." Tr. of Oral Argument at 21, El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155, 119 S. Ct. 662, 142 L. Ed. 2d 576 (1999)  (referring to Articles 17 and 24 of the Warsaw Convention).

Friday, April 6, 2018

Case of the Day: Zhang v. Chinese Anti-Cult World Alliance, 2018 U.S. Dist. LEXIS 43865 (E.D.N.Y. Mar. 14, 2018)

Summary:

Plaintiffs are New York residents who are practitioners of Falun Gong. Defendant organization is a New York non-profit whose mission is to expose Falun Gong as "an evil and dangerous threat to society." In addition to circulating pamphlets denouncing Falun Gong, members of the defendant organization alleged engaged in harassment and altercation with the plaintiffs. Plaintiffs sued alleging conspiracy to violate civil rights under 42 U.S.C. s. 1985. Defendants moved to dismiss.

The magistrate judge recommended denying the motion, and the court accepted. The court found there were adequate allegations for hindrance and deprivation of civil rights as required under the law, and rejected the defendant's arguments that it had First Amendment protection and Falun Gong was not religion.

Takeaway:

As a nation of immigrants, the United States through its courts end up taking on some of the world's disputes as well. Thankfully, we have the capacity to decide these points based on the rule of law--at least for now.


Wednesday, April 4, 2018

Case of the Day: Korea Trade Ins. Corp. v. ActiveON, Inc., 2018 U.S. Dist. LEXIS 39283 (S.D. Cal. Mar. 9, 2018)

Summary:

Plaintiff is trade insurance company backed by the Korean government, with a branch office in Los Angeles. Defendants are a set of affiliated Delaware corporations and their officers and directs. Plaintiff alleged that the defendants fraudulently induced the plaintiff to provide insurance to certain Korean banks, which in turn provided financing to the defendants. When the defendants did not repay the loans to the banks, the plaintiff was forced to pay out the insurance. The plaintiff alleged RICO violation, fraud and misrepresentation.

The court dismissed the RICO claim, citing RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016) and noting that the damage occurred in Korea where the plaintiff paid the banks pursuant to the insurance policies. Then the court dismissed the fraud and misrepresentation claim because the federal law claims were dismissed and there was no longer any basis to exercise pendant jurisdiction.

Takeaway:

This appears to be the correct reading of RJR Nabisco, which is another important case that further pulled back the U.S. court's extraterritorial reach. But it is a bit strange why the plaintiff's attorneys did not allege the obvious alternative basis of jurisdiction for the fraud claim: diversity jurisdiction.

Monday, April 2, 2018

Case of the Day: Feinberg v. Enova Tech. Corp., 2018 Cal. App. Unpub. LEXIS 1582 (Cal. Ct. App. Mar. 7, 2018)

Summary:

Attorney sued the former client over unpaid legal fees. The defendant was a Taiwanese corporation with principal place of business in Taiwan. The plaintiff served the defendant by serving the California residence of the corporation's CEO. The process server delivered the summons to a woman at the residence who identified herself as the president's wife. The defendant moved to dismiss based on improper service.

The court found that even though it was not clearly established that the CEO receives mail at the California residence, the personal delivery combined with emailing the summons to the CEO (who acknowledged receipt) was sufficient to establish valid service. 

Takeaway:

Do be very careful with this case, because it is an unpublished case and therefore uncitable under California rules. That said, it is interesting how service of process on a foreign defendant can often be cobbled together in this manner. It is not the recommended route, but sometimes it may be the only path available.