Arg091714Citirequest of Judicial Notice

Case: 14-2689 Document: 157 Page: 1 09/17/2014 1322452 54

EXHIBIT 1

113934cv(L)
Gucciv.BankofChina
UNITEDSTATESCOURTOFAPPEALS 1
FORTHESECONDCIRCUIT 2
3
AugustTerm2013 4
5
6
Argued:December6,2013 7
Decided:September17,2014 8
9
No.113934cv;124557cv 10
11
_____________________________________ 12
13
GUCCIAMERICA,INC.,BALENCIAGAAMERICA,INC.,BALENCIAGA,S.A.,BOTTEGA 14
VENETAINTERNATIONALS.A.R.L.,BOTTEGAVENETA,INC.,LUXURYGOODS 15
INTERNATIONALS.A.,YVESSAINTLAURENTAMERICA,INC., 16
PlaintiffsAppellees, 17
18
v 19
20
BANKOFCHINA, 21
Appellant, 22
23
WEIXINGLI,DBAREDTAGPARTY,DBAMYLUXURYBAGS.COM,DBA 24
XPRESSDESGINERS.COM,DBAXPRESSDESIGNER.NET,DBADESIGNERHANDBAGS, 25
AKAXINLI,ETAL., 26
Defendants. 27
_____________________________________ 28
29
30
Before: LIVINGSTON,LYNCH,andLOHIER,CircuitJudges. 31
32
1
Appeal from: (1) an August 23, 2011 order granting plaintiffs motion to 1
compel nonparty Bank of China (the Bank or BOC) to comply with a 2010 2
document subpoena and a 2010 asset freeze injunction; (2) a May 18, 2012 order 3
denyingtheBanksmotiontoreconsider;and(3)aNovember15,2012orderholding 4
the Bank in civil contempt and imposing civil monetary penalties for failure to 5
complywiththeAugust23,2011order.Weconcludethatthedistrictcourtproperly 6
issueditsJune25,2010andJuly12,2010ordersfreezingthedefendantsassetsand 7
restrain[ing]andenjoin[ing]thedefendantsfromtransferringassetsandothers 8
withnoticeoftheorderfromactinginconcertorinparticipationwithanyof[the 9
defendants]todoso.However,wevacatetheAugust23,2011order,aswellasthe 10
May 18, 2012 order, denying the Banks motion to reconsider. On remand, the 11
districtcourtmayconsideritsjurisdictionovertheBankand,ifjurisdictionexists, 12
applyprinciplesofcomitytodeterminewhethercompliancewithitsordersshould 13
becompelled.WereversetheNovember15,2012orderholdingtheBankincivil 14
contemptandimposingcivilmonetarypenalties. 15
16
AFFIRMEDINPART,REVERSEDINPART,VACATEDINPART,ANDREMANDED. 17
ANDREW RHYS DAVIES (Bradley Stephen Pensyl, 18
PamelaRogersChepiga,onthebrief,)Allen&Overy 19
LLP,NewYork,NY,forAppellant. 20
21
ROBERT L. WEIGEL (Howard S. Hogan, Anne M. 22
Coyle,JenniferC.Halter,onthebrief),Gibson,Dunn 23
& Crutcher LLP, New York, NY, for Plaintiffs 24
Appellees. 25
26
DEBRAANNLIVINGSTON,CircuitJudge: 27
Thiscasearisesoutofthelegaleffortsofanumberofluxurygoodsretailers 28
toprotecttheirintellectualpropertyandstopallegedcounterfeitersfrommarketing 29
fakemerchandiseovertheInternetandthenhidingtheprofitsfromthesaleoftheir 30
2
counterfeitproducts.Thiscasewasarguedintandemwitharelatedcase,Tiffany 1
LLCv.China Merchants Bank,etal.,Nos.122317;122330.WedecidetheTiffany 2
appealinasummaryorderissuedsimultaneouslywiththisopinion. 3
PlaintiffsAppelleesGucciAmerica,Inc.(Gucci),BalenciagaAmerica,Inc., 4
Balenciaga,S.A.,BottegaVenetaInternationalS.A.R.L.,BottegaVeneta,Inc.,Luxury 5
GoodsInternationalS.A.,andYvesSaintLaurentAmerica,Inc.(plaintiffs)are 6
manufacturersofwellknownluxuryhandbags,clothing,jewelry,fragrances,and 7
other products. Over the years, millions of consumers have been exposed to 8
plaintiffstrademarksthroughextensiveadvertisingcampaigns.Asaresultofthis 9
advertising, plaintiffs brands and trademarks are among the most widely 10
recognizedintheUnitedStates. 11
Plaintiffs assert that in or around June 2010, they discovered that certain 12
unauthorized parties, including the defendants in this action, were selling 13
counterfeitversionsofplaintiffsproductsontheInternet.Defendantsadvertised 14
theseproductsasguaranteedauthentic.Plaintiffscontendthatthedefendantsnot 15
onlycopiedthedesigns,patterns,andcolorschemesassociatedwiththeplaintiffs 16
products, but also expressly identif[ied] the counterfeit products as Gucci, 17
3
Balenciaga,BottegaVenetaandYSLproducts.J.A.630.Defendantsdisplayed 1
authentic pictures of the plaintiffs goods on websites, but purchasers received 2
counterfeitversionsthatwerenotproducedbytheplaintiffs.
1
Plaintiffsallegethat 3
defendants have manufactured and sold these counterfeit products without the 4
permission,authorization,orapprovaloftheplaintiffs.Alltold,defendantshave 5
allegedly violated at least 20 of plaintiffs trademarks and have sold millions of 6
dollarsworthofcounterfeitproductstoAmericanconsumers. 7
ThepresentappealbyBankofChina(theBankorBOC),thenonparty 8
appellant,concernstheplaintiffseffortsbothtofreezethedefendantsassetssothat 9
theprofitsofdefendantsallegedcounterfeitingcanberecoveredandtoobtainthe 10
assistanceoftheBankingatheringevidenceofdefendantspurportedlyunlawful 11
conduct.BOCappealsfrom:(1)anAugust23,2011ordergrantingplaintiffsmotion 12
to compel the Bank to comply with a document subpoena and an asset freeze 13
injunctionanddenyingtheBankscrossmotiontomodifythecourtsorders;(2)a 14
May18,2012orderdenyingtheBanksmotiontoreconsider;and(3)aNovember 15
15,2012orderholdingtheBankincivilcontemptandimposingmonetarypenalties. 16
1
Guccisinvestigatorallegesthathepurchaseditemsfromoneofthedefendants 1
andwascharged$220foraGucciwalletand$850foraBottegaVenetahandbagin 2
Internettransactions.Neitheritemwasauthentic. 3
4
Forthereasonssetforthherein,wefirstconcludethatBOCsclaimthatthe 1
districtcourtwaswithoutauthoritytoissueordersrestrainingthedefendantsassets 2
pending adjudication, either because it lacks jurisdiction over the Bank or, 3
alternatively, pursuant to the Supreme Courts decision in Grupo Mexicano de 4
Desarrollo,S.A.v.AllianceBondFund,Inc.,527U.S.308(1999),iswithoutmerit.We 5
vacate the August 23, 2011 and the May 18, 2012 orders, however, so that, on 6
remand,thedistrictcourtmayconsiderwhetheritmayexercisespecificpersonal 7
jurisdictionovertheBanktocompelcompliancewithitsorders
2
and(ifso)whether 8
it should exercise such jurisdiction, properly applying principles of comity. We 9
reverse the November 15, 2012 order holding the Bank in civil contempt and 10
imposingcivilmonetarypenalties. 11
I.Background 12
On June 25, 2010, plaintiffs brought an action in the United States District 13
Court for the Southern District of New York against Weixing Li, Lijun Xu, and 14
certainJohnDoes,doingbusinessas,interalia,Redtagparty,DesignerHandbags, 15
Myluxurybags.com,Xpressdesigners.com,andXpressdesigner.net,pursuanttothe 16
2
InlightofDaimlerAGv.Bauman,134S.Ct.746(2014),andforthereasonssetforth 1
infra,weconcludethatthedistrictcourterredinexercisinggeneraljurisdictionoverthe 2
Bank. 3
5
Lanham Act, 15 U.S.C. 1501, et seq., and related state law causes of action. 1
PlaintiffsfiledaFirstAmendedComplaintonOctober4,2010toincludeTingXu 2
andKuelala.comasadditionaldefendants.Plaintiffssubsequentlyenteredintoa 3
settlementagreementwithdefendantLijunXu.Nootherdefendantshaveappeared 4
inthisaction. 5
Simultaneously with their initial complaint, plaintiffs filed a motion for a 6
temporary restraining order (TRO) in the district court. On June 25, 2010, the 7
United States District Court for the Southern District of New York (Sullivan, J.) 8
grantedthismotion,freezingdefendantsassetsandenjoiningthedefendantsfrom 9
sellingcounterfeitgoods.OnJuly12,2010,thedistrictcourtconvertedtheTROinto 10
apreliminaryinjunction(AssetFreezeInjunction).ThisAssetFreezeInjunction, 11
issuedpursuanttoRule64oftheFederalRulesofCivilProcedure,providesthat: 12
13
Defendantsandtheir...agents...andallpersonsactinginconcertor 14
inparticipationwithanyofthem,andanybanks...whoreceiveactual 15
notice of this order . . . without prior approval of the Court [are] 16
restrainedandenjoinedfromtransferring,disposingof,orsecreting 17
anymoney...orotherassetsofDefendants.... 18
J.A.240.Theplaintiffshadgatheredevidencethat,followingtheissuanceofthe 19
TRO, certain defendants wired proceeds of their counterfeit sales to accounts at 20
6
BOC.Therefore,theAssetFreezeInjunctionexpresslystatesthatitappliesto(but 1
isnotlimitedto)anyandallBankofChinaaccountsassociatedwithorutilizedby 2
Weixing Li, Lijun Xu, Redtagparty, Myluxurybags.com and/or any of the other 3
Defendants.J.A.241.PlaintiffsservedtheBankwiththeAssetFreezeInjunction 4
atitsNewYorkCitybranchonJuly13,2010. 5
BOC,thenonpartyappellant,isnotincorporatedorheadquarteredanywhere 6
in the United States and maintains its principal place of business in China. The 7
Bank,whichisownedinmajorpartbytheChinesegovernment,hasasignificant 8
globalpresence(maintainingfourbranchesintheUnitedStates)butonlyaportion 9
of the Banks worldwide activity takes place in New York. Gucci ECF No. 288 10
(citing OCC Evaluation Aug. 18, 2008) (At yearend 2007, [BOC] had 10,145 11
domesticbranches,689overseasbranchesandsubsidiariesin27countriesaround 12
the world and 1200 correspondent banks. Id. at 1). BOC contends that bank 13
officialswhoworkinitstwoNewYorkbranchescannotsearchtherecordsofthe 14
Chinabasedoffices,norcantheyascertainwhetherindividualshaveaccountsat 15
BOCbranchesoutsideoftheUnitedStates. 16
7
Having served the Bank with the Asset Freeze Injunction, plaintiffs 1
proceeded,onJuly16,2010,byservingBOC,atitsNewYorkCitybranch,witha 2
subpoena requesting all documents concerning the Defendants and the 3
Defendants accounts (the 2010 Subpoena). J.A. 1152. The 2010 Subpoena 4
definesAccountstoincludeavarietyoftypesofaccountsatBankofChinaheld 5
byDefendants;including,butnotlimitedto,anyaccountordepositinthenameof 6
LijunXua/k/aJackLondonwithanaccountnumberendingin1235or2443.J.A. 7
1150.The2010SubpoenadefinesDefendantsasWeixingLi,LijunXua/k/aJack 8
London,alldoingbusinessasRedtagparty,Myluxurybags.com,Xpressdesigner.net, 9
Xpressdesigners.com,DesignerHandbags,ABCCompaniesandJohnDoes,aswell 10
astheirofficers,directors,agents,representatives,andallpersonsactingontheir 11
behalf.J.A.1150. 12
BOC informed plaintiffs that its New York City branch does not have 13
possessionorcontroloverinformationlocatedinanyotherbranchorofficeofthe 14
BankofChinaandthatcompliancewiththesubpoenawouldviolateChineselaw. 15
J.A.773.TheBankproducedresponsivedocumentsthatwereinthepossessionof 16
itsNewYorkbranch.Itrefusedtoproduceresponsivedocumentslocatedinanyof 17
its branches or offices in China, however, notwithstanding plaintiffs evidence 18
8
suggestingthattheproceedsofdefendantsunlawfulactivityhadbeentransferred 1
there.
3
2
OnDecember6,2010,plaintiffsfiledamotiontocompelcompliancewithboth 3
theAssetFreezeInjunctionandthe2010Subpoena.TheBankfileditsopposition 4
and crossmoved to modify the district courts orders so as to terminate any 5
provisionsrequiringtheBanktofreezedefendantsassetsheldbyBOCinChina. 6
ThemotionswerefullysubmittedtothedistrictcourtasofJanuary3,2011. 7
After the motion to compel compliance with the 2010 Subpoena was 8
submitted, on February 23, 2011, plaintiffs served a second subpoena (2011 9
Subpoena)onBOC.The2011Subpoenarequestsdocumentsconcerningaccounts 10
heldbyDefendantsorintowhichDefendantstransferredfundsandspecifically 11
identifiessixnewBOCaccountsbyaccountnumber.The2011Subpoenadefines 12
Defendantsmuchthesamewayasthe2010Subpoena.
4
J.A.1162.Afterserving 13
3
PlaintiffsalsomadeseveralrequestsforconfirmationfromtheBankthatithad 1
frozendefendantsassets.TheBankrefusedtoprovidesuchconfirmation,respondingthat 2
itdisagree[d]with[plaintiffs]assertionthattheCourtsordersrequire[d]thattheBank 3
ofChinafreezeaccountslocatedinChina.J.A.339. 4
4
Namely, as Weizing Li, Lijun Xu a/k/a Jack London, and Ting Xu, all doing 1
business as Redtagparty, Myluxurybags.com, Kuelala.com, Xpressdesigner.net, 2
Xpressdesigners.com,DesignerHandbags,ABCCompaniesandJohnDoes,aswellastheir 3
officers,directors,agents,representatives,andallpersonsactingontheirbehalf.J.A.1162. 4
9
the 2011 Subpoena, plaintiffs sought and were granted leave to file a Second 1
Amended Complaint. On March 10, 2011, plaintiffs filed a Second Amended 2
Complaintwhich,amongotherchanges,namedsevennewdefendants.
5
3
On August 23, 2011, the district court denied the Banks crossmotionto 4
modifytheAssetFreezeInjunctionandorderedtheBanktocomplybothwiththe 5
2010SubpoenaandwiththeInjunction(August23Order).BOCtimelynoticed 6
an appeal.
6
In September, BOC produced some documents, all concerning the 7
accountsendingin1235and2443specificallyrequestedinthe2010Subpoena. 8
TheBankthenmoved,pursuanttoRule60(b)oftheFederalRulesofCivil 9
Procedure,forthedistrictcourttoreconsideritsAugust23Order.TheBankrelied 10
principallyonaletter,datedNovember3,2011,fromtworegulatoryagenciesin 11
China:thePeoplesBankofChinaandtheChinaBankingRegulatoryCommission 12
5
TheSecondAmendedComplaintaddedthefollowingdefendants:WenyingGuo, 1
Xiaochao Shang, Lei Xu, Fengyuan Zhao, Liqun Zhao, Ming Zhao, and Peiyuan Zhao 2
(collectively,theNewDefendants). 3
6
Following the Banks notice of appeal, plaintiffs moved to dismiss for lack of 1
jurisdiction.Amotionspanelofthiscourtdeniedthemotiontodismiss,concludingthat 2
28 U.S.C. 1292(a)(1) provides appellate jurisdiction over interlocutory appeals from 3
orders declining to modify injunctions. See Official Comm. of Unsecured Creditors of 4
Worldcom, Inc. v. SEC, 467 F.3d 73, 78 (2d Cir. 2006) (concluding that nonparties have 5
standing to appeal in this context when they can demonstrate a plausible affected 6
interest). 7
10
(theNovember3RegulatorsLetter).Inthisletter,theChinesebankingregulators 1
informed the district court that Chinas laws prohibit commercial banks from 2
freezingaccountsorturningoveraccountrecordspursuanttoforeigncourtorders, 3
thattheBanksSeptember2011documentproductioninresponsetotheAugust23 4
Order violated those laws, and that the Chinese regulators had issued a severe 5
warningtotheBankandwereevaluatingappropriatesanctions.Thedistrictcourt 6
deniedthemotionforreconsiderationinanorderdatedMay18,2012,holdingthat 7
theBanksRule60(b)motionwasprocedurallyprematurebecausetherewasnofinal 8
orderandthatevenifitweretoconsiderthemotiononthemerits,itwasdeficient 9
becausetheNovember3RegulatorsLetterwasnotnewlydiscoveredevidence 10
and was cumulative of expert declarations before the court prior to its original 11
decision.S.P.A.19.TheBankagainnoticedatimelyappeal. 12
OnSeptember27,2012,thedistrictcourtorderedtheBanktoshowcausewhy 13
itshouldnotbesanctionedforfailingtocomplywiththeAugust23Order,insofar 14
asitcompelledcompliancewiththe2010Subpoena.Followingadditionalbriefing 15
andargument,inaNovember15,2012order,thedistrictcourtheldBOCincivil 16
contemptforitsfailuretocomplywiththeOrder.Thedistrictcourtorderedthe 17
Banktopay(1)aninitialcoercivefineintheamountof$75,000foritsallegedpast 18
11
noncompliance with the August 23 Order; (2) an additional coercive fine of 1
$10,000perdayforanyfuturenoncompliance;and(3)attorneysfeesandcosts. 2
J.A.129192.ThedistrictcourtdidnotaddresswhetherBOCwasincompliance 3
withtheAssetFreezeInjunction,whichwasalreadythesubjectofappeal.Bankof 4
ChinatimelyappealedtheNovember15,2012order.
7
5
Afteroralargumentinconnectionwiththismatter,thisCourtreceivedaletter 6
dated December 19, 2013 signed in the names of Huai Peng Mu, the Director 7
General of the Legal Affairs Department of the Peoples Bank of China, and Yi 8
Huang,theDirectorGeneraloftheSupervisoryRulesandRegulationsDepartment 9
oftheChinaBankingRegulatoryCommission.Theviewsexpressedinthisletterare 10
notnecessarytoourdecisiontodayandthereforeweneednotanddonotdecide 11
whethertheletterisproperlybeforethisCourt.
8
Finally,uponinvitationfromthe 12
7
AmotionspanelofthisCourtthereaftergrantedBOCsmotionforastay,pending 1
appeal,ofthedistrictcourtscivilcontemptorderandconsolidatedtheBanksappeals. 2
8
Filings of this sort by nonparties must generally be made in accordance with 1
FederalRuleofAppellateProcedure29.Alternatively,apartymaymovetosupplement 2
therecordorrequestthattheCourttakejudicialnoticeofsuchaletterandtheCourtmay 3
take such action provided it is proper to do so and, inter alia, the letter is properly 4
authenticated.Uponremand,thedistrictcourtmayconsiderinthefirstinstancewhether 5
thisletterisrelevantandshouldbeconsidered. 6
12
panel,theUnitedStatesGovernment,asamicuscuriae,filedabriefexpressingits 1
viewsonthiscase. 2
*** 3
Weaddresstheissuesinturn.First,asaninitialmatter,weconcludethatthe 4
BanksargumentthatthedistrictcourtlackedtheauthoritytoissuetheAssetFreeze 5
Injunctionhasnomerit.Thecourthadpersonaljurisdictionoverthedefendants, 6
aswellastheequitableauthoritytoissuetheprejudgmentfreeze.However,asto 7
theportionoftheAugust23OrdercompellingtheBanktocomplywiththeAsset 8
Freeze Injunction and the May 18, 2012 order denying the Banks motion to 9
reconsider,wevacate.WeconcludethatinlightofDaimlerAGv.Bauman,134S.Ct. 10
at746,decidedonlythisyear,thedistrictcourterredinfindingthatBOCisproperly 11
subject to general jurisdiction. We remand for the district court to consider: 12
(1) whether it may exercise specific jurisdiction over the Bank to order such 13
compliance;and(2)whether,assumingthenecessaryjurisdictionispresent,such 14
anorderisconsistentwithprinciplesofinternationalcomity.Wealsovacatethat 15
portionoftheAugust23Order(andtheMay18,2012order)compellingcompliance 16
with the 2010 Subpoena for the district court to consider whether it has specific 17
13
jurisdictionovertheBankandmayorderittocomplywiththesubpoena.Finally, 1
wereversetheNovember15,2012orderholdingtheBankincivilcontemptand 2
imposingcivilmonetarypenalties. 3
II.AssetFreezeInjunction 4
BOCfirstchallengesthedistrictcourtsauthoritytoissuetheAssetFreeze 5
Injunctionrestrainingandenjoiningthedefendantsfromtransferring,disposing 6
of,orsecretinganymoneyorotherassets.J.A.240.TheBankarguesthattheAsset 7
Freeze Injunction was impermissible because: (1) the district court lacked 8
jurisdictionovertheBanktoissueit;and(2)thecourtlackedtheequitableauthority 9
pursuanttoGrupoMexicanotodoso.Astobotharguments,wedisagree. 10
A.PersonalJurisdictiontoEnjoinDefendants 11
We reject BOCs argument that personal jurisdiction over the Bank was 12
requiredforthedistrictcourttoissuetheJune25,2010TROandthesubsequent 13
AssetFreezeInjunctionrestrainingthedefendantsassets.BOCdoesnotarguethat 14
the defendants are not subject to personal jurisdiction in New York State. And 15
personaljurisdictionoverthedefendants,nottheBank,isallthatwasneededforthe 16
districtcourttorestrainthedefendantsassetspendingtrial.UnitedStatesv.First 17
14
NatlCityBank,379U.S.378,384(1965)(Oncepersonaljurisdictionofapartyis 1
obtained,theDistrictCourthasauthoritytoorderittofreezepropertyunder[the 2
partys]control,whetherthepropertybewithinorwithouttheUnitedStates.). 3
ThispropositionisclearfromourdecisioninNMLCapital,Ltd.v.Republicof 4
Argentina,727F.3d230(2dCir.2013),cert.denied,134S.Ct.2819(2014).There,we 5
notedthatbecausetheinjunctionsinthatcased[id]notdirectlyenjoinpayment 6
systemparticipants[suchasbanks],it[was]irrelevantwhetherthedistrictcourt 7
ha[d] personal jurisdiction over them in issuing such injunctions. Id. at 243. 8
Granted, once a district court issues a preliminary asset freeze order enjoining 9
partiesoverwhomithasjurisdiction,thatinjunctionautomaticallyforbidsothers 10
whoarenotdirectlyenjoinedbutwhoactinactiveconcertorparticipationwith 11
an enjoined party from assisting in [its] violation. Id. (citing Fed. R. Civ. P. 12
65(d)). But such injunctions do not directly restrain the conduct of nonparties. 13
Instead,theyprovidethesenonpartieswithnoticethattheycouldbecomeliable 14
through Rule 65 if they assist . . . in violating the district courts orders.
9
Id. 15
9
Rule65,concerninginjunctionsandrestrainingorders,providesbyitstermsthat 1
suchordersbindonlythosenonpartieswhoreceiveactualnoticeandwhoareinactive 2
concertorparticipationwithapartytowhomtheinjunctionorrestrainingorderapplies, 3
oritsofficer,agent,servant,employee,orattorney.SeeFed.R.Civ.P.65.Nonparties,of 4
course,mayseekclarificationfromdistrictcourtswhenquestionsariseastowhoisbound 5
15
[B]eforeanyfindingofliabilityorsanctionagainstanonparty,aswesaidinNML 1
Capital,questionsofpersonaljurisdictionmaybeproperlyraised.Id.Seealsoid. 2
(observing that questions of personal jurisdiction . . . are premature until the 3
nonparties are summoned to answer for assisting in a violation of the district 4
courtsinjunctions).Butthedistrictcourtneednothavepersonaljurisdictionover 5
nonpartiestoissueapreliminaryinjunctionrequiringapartybeforeittorefrain 6
frommovingassetsduringthependencyoftheproceedings. 7
B.EquitableAuthoritytoIssueAssetFreezeInjunction 8
WeturnnexttoBOCsargumentthatthedistrictcourtlackedtheequitable 9
authorityunderGrupoMexicanodeDesarrollo,S.A.v.AllianceBondFund,Inc.,527U.S. 10
at308,toissuetheprejudgmentAssetFreezeInjunction.Thisargumentiswithout 11
merit.Plaintiffsintrademarkinfringementactionsmayrecoverdefendantsprofits. 12
15U.S.C.1117(a).Plaintiffshereseektheequitableremedyofanaccountingof 13
profits.Insuchcircumstances,thedistrictcourthadtheinherentequitableauthority 14
toissuetheAssetFreezeInjunction. 15
byaninjunctionthroughoperationofRule65.NMLCapital,727F.3dat243.SeealsoRegal 1
KnitwearCo.v.NLRB,324U.S.9,15(1945)(expressingexpectationthatdistrictcourtswill 2
notinsuchcircumstanceswithholdaclarificationinthelightofaconcretesituation). 3
16
In Grupo Mexicano, the Supreme Court held that a district court had no 1
authoritypursuanttoRule65oftheFederalRulesofCivilProceduretoissuea 2
preliminary injunction preventing [a defendant] from disposing of [its] assets 3
pendingadjudicationof[a]contractclaimformoneydamages.527U.S.at333. 4
Thiswasbecausethepreliminaryrelieftheplaintiffssoughtwasnottraditionally 5
accordedbycourtsofequityinthecontextoflegalclaimsformoneydamagesand 6
the general availability of injunctive relief [is] not altered by [Rule 65] and 7
depend[s]ontraditionalprinciplesofequityjurisdiction.Id.at31819(second 8
alterationinoriginal)(quoting11ACharlesAlanWright,ArthurR.Miller&Mary 9
KayKane,FederalPracticeandProcedure2941,at31(2ded.1995)).TheCourts 10
holding was limited to actions for money damages in which plaintiffs seek a 11
preliminaryinjunctiontopreventthedefendantfromtransferringassetsinwhich 12
nolienorequitableinterestisclaimed.Id.at310.Accordingly,theSupremeCourt 13
carefullydistinguisheditsearlierdecisioninDeckertv.IndependenceSharesCorp.,311 14
U.S.282(1940),onthegroundsthatinDeckertwhereaprejudgmentassetfreeze 15
waspermissiblethebillstatedacauseofactionfor...equitableremediesthat 16
included rescission of the contracts and restitution of the consideration paid. 17
GrupoMexicano,527U.S.at325(emphasisadded).AstheSupremeCourtexplained, 18
17
[t]hepreliminaryreliefavailableinasuitseekingequitablereliefhasnothingtodo 1
withthepreliminaryreliefavailableinacreditorsbillseekingequitableassistance 2
inthecollectionofalegaldebt.Id. 3
PursuanttoGrupoMexicano,then,districtcourtshavenoauthoritytoissuea 4
prejudgment asset freeze pursuant to Rule 65 where such relief was not 5
traditionally accorded by courts of equity. Id. at 319. But they maintain the 6
equitablepowertodosowheresuchreliefwastraditionallyavailable:wherethe 7
plaintiffispursuingaclaimforfinalequitablerelief,seeid.,andthe preliminary 8
injunctionisancillarytothefinalrelief.SeeDeBeersConsol.Minesv.UnitedStates, 9
325U.S.212,21920(1945).
11
10
Suchisthecasehere.Plaintiffsareseekinganaccountingofthedefendants 11
profits,inadditiontoinjunctivereliefandmonetarydamages,undertheLanham 12
Act.J.A.671(GucciscomplaintrequeststhatdefendantsaccounttoPlaintiffsfor 13
theirprofits).Seealso15U.S.C.1117(a).Andasplaintiffscorrectlycontend,the 14
commonlawactionofaccountisoneoftheearliestexamplesofarestitutionary 15
11
Adistrictcourtmayalsoissueapreliminaryinjunctionrestrainingadefendant 1
fromdissipatingassetsifithasspecificstatutoryauthoritytodoso.SeeGrupoMexicano, 2
527U.S.at326(distinguishingUnitedStatesv.FirstNatlCityBank,379U.S.at385,onthe 3
groundthatitinvolvednottheCourtsgeneralequitablepowersundertheJudiciaryAct 4
of1789,butitspowersunderthestatuteauthorizingissuanceoftaxinjunctions). 5
18
action in equity, imposing on a defendant the obligation to disclose and return 1
profitsfromtheuseoftheplaintiffsproperty,3W.Holdsworth,AHistoryofEnglish 2
Law42628(3ded.1923);Barbour,TheHistoryofContractinEarlyEnglishEquity,in 3
4 Oxford Studies in Social and Legal History 13, 1314 (1914), and founded in the 4
Chancellorsequitablepowertocompelanaccountingofwronglygainedassets. 5
See S.E.C. v. Cavanagh, 445 F.3d 105, 119 (2d Cir. 2006) (citing Joseph Story, 6
CommentariesonEquityJurisprudenceasAdministeredinEnglandandAmerica423504 7
(photo.reprint1972)(1835),whichdescribestheremedyofaccount,bywhich 8
chanceryorderedanaccountingofassetssothatwronglygainedprofitsmightbe 9
recovered). 10
TheSupremeCourt,inHamiltonBrownShoeCo.v.WolfBros.&Co.,240U.S. 11
251(1916),hasexplainedthatatrademarkinfringerisrequiredinequitytoaccount 12
forandyielduphisgainstothetrueowner,andprofitsarethenallowedasan 13
equitablemeasureofcompensation.Id.at259(emphasesadded);accordSheldonv. 14
MetroGoldwynPicturesCorp.,309U.S.390,399(1940)([R]ecovery[ofprofits]had 15
beenallowedinequity[priortothestatutoryremedy]bothincopyrightandpatent 16
casesasappropriateequitablereliefincidenttoadecreeforaninjunction.).Seealso 17
Petrellav.MetroGoldwynMayer,Inc.,134S.Ct.1962,1967n.1(2014)(notingthat 18
19
recoveryofprofitsisnoteasilycharacterizedaslegalorequitable,buttreating 1
profitrecovery remedy under Copyright Act as equitable) (citation omitted)); 2
United States v. Louisiana, 339 U.S. 699, 706 (1950) (referring to action to recover 3
royaltiesandothermoneyreceivedbythestatepursuanttoleasesonlandclaimed 4
bythegovernmentasanequityactionforaninjunctionandaccounting).This 5
Court, moreover, has expressly attested to the ancient roots of this remedy, 6
explaining that the ancient remedies of accounting, constructive trust, and 7
restitution have compelled wrongdoers to disgorge i.e., account for and 8
surrendertheirillgottengainsforcenturies.Cavanagh,445F.3dat119(citing 9
UnitedStatesexrel.Taylorv.Gabelli,No.03cv8762,2005WL2978921,at*5(S.D.N.Y. 10
Nov.4,2005)).Seealso1DanB.Dobbs,LawofRemedies4.3(1),at58789(2ded. 11
1993) (discussing equitable remedies of constructive trust and accounting for 12
profits). 13
Giventheweightofthisauthority,itisnotsurprisingthatallthreeofour 14
sister circuits to have considered the issue have unanimously held that district 15
courtshavetheauthoritytoissueaprejudgmentassetrestraintinjunctioninfavor 16
of plaintiffs seeking an accounting against allegedly infringing defendants in 17
LanhamActcases.SeeAnimaleGrp.Inc.v.SunnysPerfumeInc.,256Fed.Appx707, 18
20
709(5thCir.2007)(percuriam)(rulingthatthedistrictcourtwasauthorizedto 1
preserve the status quo by entering a limited asset freeze in a Lanham Act 2
infringementcase);LeviStrauss&Co.v.SunriseIntlTradingInc.,51F.3d982,987 3
(11thCir.1995)(concludingthatthedistrictcourthadtheauthoritytofreezethose 4
assetswhichcouldhavebeenusedtosatisfyanequitableawardofprofits ina 5
LanhamActcase);ReebokIntl,Ltd.v.MarnatechEnters.,Inc.,970F.2d552,562(9th 6
Cir.1992)(Thedistrictcourtsinherentequitablepowertofreezedefendantsassets 7
incasesinwhichanaccountingistheultimatereliefsoughtisthereforenotlimited 8
bytheLanhamAct.);seealsoCSCHoldings,Inc.v.Redisi,309F.3d988,996(7thCir. 9
2002)(notingthatbecauseplaintiffsoughtanaccountingandprofitsremedyas 10
analternativeformofreliefundertheCableCommunicationsPolicyAct,anasset 11
freeze [was] thus proper under Grupo Mexicano). Countless district courts, 12
moreover,havedeterminedthatafterGrupoMexicanotheymaintaintheauthority 13
toissuepreliminaryinjunctionsfreezingtheassetsofdefendantsinthiscontext.
12
14
12
See, e.g., NFL v. Sunmei, No. 13cv2572 (S.D.N.Y. Apr. 24, 2013) (No. 5) 1
(preliminaryinjunctionorder);SalvatoreFerragamo,S.p.A.v.Does115,No.13cv 2
0542(S.D.N.Y.Feb.25,2013)(No.14)(preliminaryinjunctionorder);StuartWeitzman 3
IP, LLC v. Doe 1, No. 13cv0732 (S.D.N.Y. Feb. 4, 2013) (No. 4) (temporary 4
restrainingorder);RolexWatchU.S.A.,Inc.v.Kulyk,No.13cv0391(S.D.N.Y.Jan.31, 5
2013)(No.15)(temporaryrestrainingorder);Burberry,Ltd.(US)v.Doe,No.12cv 6
8815(S.D.N.Y.Dec.20,2012)(No.7)(preliminaryinjunctionorder);SweetPeople 7
21
BOCassertsthreeargumentstothecontrary,butnonehasmerit.TheBank 1
argues first that pursuant to Dairy Queen, Inc. v. Wood, 369 U.S. 469 (1962), an 2
accountingofprofitsisalegalremedy.ButcontrarytotheBanksreading,Dairy 3
Queendoesnotabrogatethelongstandingtreatmentofanaccountingofprofitsasan 4
equitableremedy,norcoulditchangehowtheremedywastreatedatthetimeofthe 5
CourtofChancery.InDairyQueen,theSupremeCourtheldthatadefendantina 6
trademarkactionwasentitledtoajurytrialundertheSeventhAmendment,despite 7
thefactthattheplaintiffscomplaintincludedarequestforanaccounting.369U.S. 8
at47679.DairyQueen,however,involvedaclaimentirelydifferentfromtheoneat 9
issuehere.PlaintiffsinDairyQueendidnotseekanawardofprofits,butamounts 10
owedunderacontractanddamagesfortrademarkinfringement.Id.at476.The 11
Courtconcludedthatbothanactionfordebtdueunderacontractandanactionfor 12
Apparel,Inc.v.XYZCo.,No.12cv07506(S.D.N.Y.Nov.5,2012)(No.9)(preliminary 1
injunctionorder);InnovationVentures,LLCv.UltimateOneDistrib.Corp.,No.12cv 2
5354 (E.D.N.Y. Oct. 31, 2012) (No. 14) (order to show cause for a temporary 3
restrainingorderandpreliminaryinjunction);KlipschGrp.,Inc.v.BigBoxStoreLtd., 4
No. 12cv6283 (S.D.N.Y. Aug. 29, 2012) (No. 10) (preliminary injunction order); 5
Richemont N. Am., Inc. v. Huang, No. 12cv4443 (S.D.N.Y. July 19, 2012) (No. 39) 6
(preliminaryinjunctionorder);RolexWatchU.S.A.,Inc.v.CityStyles313,LLC,No. 7
12cv4754 (S.D.N.Y. July 2, 2012) (No. 25) (preliminary injunction order); Este 8
Lauder Cosmetics Ltd. v. Chen, No. 12cv3046 (S.D.N.Y. May 18, 2012) (No. 19) 9
(temporaryrestrainingorder);Hillv.Doe1,No.12cv3014(S.D.N.Y.May1,2012) 10
(No.8)(preliminaryinjunctionorder). 11
22
damagesbaseduponachargeoftrademarkinfringementarelegalclaims.Id.at477. 1
Incontrasthere,plaintiffsaskforanawardofthedefendantsprofits.Andthereis 2
nobasistoconcludethattheequitablecharacterofsuchreliefasrecognizedby 3
theCourtinHamiltonBrownShoeisaffectedbytheCourtstreatmentofthelegal 4
formsofmonetaryreliefatissueinDairyQueen. 5
TheBanknextarguesthattheAssetFreezeInjunctionexceededthecourts 6
equitableauthoritybecauseitfailedtoidentifytheparticularpropertyderived 7
fromthedefendantsallegedlyunlawfulactivitiesthattheplaintiffsseektorecover. 8
Weknowofnorequirement,however,andcertainlythereisnoneintheLanham 9
Act,thatwouldobligateplaintiffstomakethisidentificationpriortoobtaininga 10
preliminaryinjunction.Tothecontrary:aplaintiffseekinganaccountingofprofits 11
isrequiredtoprovedefendantssalesonly.15U.S.C.1117(a).Andthenthe 12
burdenshiftstothedefendantstoproveallelementsofcostordeduction.Louis 13
VuittonS.A.v.SpencerHandbagsCorp.,765F.2d966,973(2dCir.1985)(quoting15 14
U.S.C.1117(a)). 15
Finally(andimplicitlyconcedingtheweaknessofitsargumentthatthiscase 16
isgovernedbyGrupoMexicano)theBankmaintainsthattheplaintiffsaccounting 17
claimisillusory.UndertheLanhamAct,however,plaintiffsmayelectbetween 18
23
statutoryoractualdamagesatanytimebeforefinaljudgmentisrendered.15 1
U.S.C.1117(c).Eachofplaintiffsthreecomplaintshassoughtanaccountingof 2
profits(oractualdamages)andthereisnobasis,onthisrecord,toconcludethat 3
plaintiffs are not seeking what they ask for. We conclude, accordingly, that the 4
districtcourthadtheequitableauthoritytoissuetheAssetFreezeInjunctionand 5
thatBOCsargumenttothecontraryiswithoutmerit. 6
III.TheAugust23OrderandtheAssetFreezeInjunction 7
ThedistrictcourtsAugust23OrdercompelstheBanktocomplywiththe 8
Asset Freeze Injunction and denies its motion to modify that injunction so as to 9
makeclearthattheBankisundernoobligationtofreezethedefendantsassetsheld 10
in China. As to the August 23 Order, we conclude that in light of the Supreme 11
Courts recent decision in Daimler, 134 S. Ct. at 746, the district court erred in 12
subjectingtheBanktoallpurposegeneraljurisdictioninNewYork.Weconclude 13
thatboththeAugust23Order,asitrelatestotheAssetFreezeInjunction,andthe 14
related May 28, 2012 order denying the Banks motion to reconsider should be 15
vacated and remanded for two reasons: first, for the district court to consider 16
whether it has specific jurisdiction over the Bank to compel compliance with the 17
AssetFreezeInjunction;andsecond,assumingsuchjurisdictionexists,forthedistrict 18
24
courttoperformapropercomityanalysisdrawingupontheframeworksetforthin 1
403oftheRestatement(Third)ofForeignRelationsLaw. 2
A.PersonalJurisdictiontoCompelBanksCompliance 3
Aswehavesaid,adistrictcourtneednotpreliminarilyestablishpersonal 4
jurisdiction over a nonparty bank to restrain a defendants assets. However, a 5
districtcourtcanenforceaninjunctionagainstanonpartysuchasBOConlyifithas 6
personal jurisdiction over that nonparty. See Canterbury Belts Ltd. v. Lane Walker 7
Rudkin,Ltd.,869F.2d34(2dCir.1989)(concludingthatthedistrictcourtdidnot 8
have personal jurisdiction to enforce an injunction in a case where plaintiff 9
requestedthedistrictcourttoimposecontemptsanctions);seealsoHeymanv.Kline, 10
444F.2d65(2dCir.1971);11C.Wright&A.Miller,FederalPracticeandProcedure 11
2960 (2014). Following oral argument in this case, the Supreme Court decided 12
DaimlerAGv.Bauman,134S.Ct.at746.BOCasserts,inpostargumentletterbriefs, 13
that in light of Daimler the district court erred in concluding that the Bank was 14
properlysubjecttoallpurposegeneraljurisdiction.Weagree.Wealsoconclude, 15
however,thatthismattershouldberemandedsothatthedistrictcourtmayconsider 16
whetherithasspecificjurisdictiontoenforcetheAssetFreezeInjunctionagainstthe 17
Bankandmayexercisesuchjurisdiction,consistentwithdueprocess. 18
25
SinceInternationalShoeCo.v.Washington,thetouchstonedueprocessprinciple 1
has been that, before a court may exercise jurisdiction over a person or an 2
organization,suchasabank,thatpersonorentitymusthavesufficientminimum 3
contactswiththeforum suchthatthemaintenanceofthesuitdoesnotoffend 4
traditional notions of fair play and substantial justice. 326 U.S. 310, 316 (1945) 5
(quotingMillikenv.Meyer,311U.S.457,463(1940)).Thisprinciplepresagedthe 6
development of two categories of personal jurisdiction: general and specific 7
personaljurisdiction.Daimler,134S.Ct.at754.SeegenerallyArthurT.vonMehren 8
&DonaldT.Trautman,JurisdictiontoAdjudicate:ASuggestedAnalysis,79Harv.L. 9
Rev.1121(1966).General,allpurposejurisdictionpermitsacourttohearanyand 10
allclaimsagainstanentity.
13
SeeDaimler,134S.Ct.at755(quotingGoodyearDunlop 11
13
UnlikeBOC,thepartycontestingjurisdictioninDaimlerwasacivildefendant. 1
SeeDaimler,134S.Ct.at750.TheSupremeCourtsotherdecisionsaddressinggeneral 2
jurisdiction have also involved defendants, not nonparties. Helicopteros Nacionales de 3
Colombia,S.A.v.Hall,466U.S.408,416(1984);Perkinsv.BenguetConsol.MiningCo.,342U.S. 4
437,438(1952).ButBOCsnonpartystatusdoesnotaltertheapplicabilityofthesecases 5
tothequestionpresentedhere.Theessenceofgeneralpersonaljurisdictionistheability 6
toentertainanyandallclaimsagainstanentitybasedsolelyontheentitysactivitiesin 7
theforum,ratherthanontheparticularsofthecasebeforethecourt.SeeDaimler,134S.Ct. 8
at762n.20(decidingthat[w]henacorporationisgenuinelyathomeintheforumthe 9
districtcourtneednotassessthereasonablenessofentertainingthecase).Thus,ifacourt 10
hasgeneralpersonaljurisdictionoveranentity,thatentity,bydefinition,issubjectboth 11
tosuitandtojudicialordersaffectingnonparties. 12
13
26
TiresOperations,S.A.v.Brown,131S.Ct.2846,2851(2011)).Specificjurisdiction,on 1
theotherhand,permitsadjudicatoryauthorityonlyoverissuesthataris[e]outof 2
or relat[e] to the [entitys] contacts with the forum. Helicopteros Nacionales de 3
Colombia,S.A.v.Hall,466U.S.408,414n.8(1984). 4
In Daimler, the Supreme Court for the first time addressed the question 5
whether,consistentwithdueprocess,aforeigncorporationmaybesubjectedtoa 6
courtsgeneraljurisdictionbasedonthecontactsofitsinstatesubsidiary.134S. 7
Ct. at 759. Assuming without deciding that such contacts may in some 8
circumstancesbeimputedtotheforeignparent,theCourtheldthatacorporation 9
maynonethelessbesubjecttogeneraljurisdictioninastateonlywhereitscontacts 10
aresocontinuousandsystematic,judgedagainstthecorporationsnationaland 11
globalactivities,thatitisessentiallyathomeinthatstate.Id.at76162.Aside 12
fromanexceptionalcase,theCourtexplained,acorporationisathome(andthus 13
subjecttogeneraljurisdiction,consistentwithdueprocess)onlyinastatethatisthe 14
companysformalplaceofincorporationoritsprincipalplaceofbusiness.Id.at761 15
&n.19.Insoholding,theCourtexpresslycastdoubtonpreviousSupremeCourt 16
andNewYorkCourtofAppealscasesthatpermittedgeneraljurisdictiononthe 17
basisthataforeigncorporationwasdoingbusinessthroughalocalbranchofficein 18
27
theforum.Seeid.at735n.18(citingBarrowS.S.Co.v.Kane,170U.S.100(1898),and 1
Tauzav.SusquehannaCoalCo.,220N.Y.259(1917)(Cardozo,J.)).AndtheCourt, 2
reversing the Ninth Circuits determination that general jurisdiction was 3
appropriatelyexercisedoveraGermancorporationbasedontheCaliforniacontacts 4
ofitsDelawareandNewJerseybasedsubsidiary,expresslywarnedagainstthe 5
riskstointernationalcomityofanoverlyexpansiveviewofgeneraljurisdiction 6
inconsistentwiththefairplayandsubstantialjusticedueprocessdemands.Id. 7
at763(quotingIntlShoe,326U.S.at316). 8
WeconcludethatapplyingtheCourtsrecentdecisioninDaimler,thedistrict 9
courtmaynotproperlyexercisegeneralpersonaljurisdictionovertheBank.Just 10
like the defendant in Daimler, the nonparty Bank here has branch offices in the 11
forum,butisincorporatedandheadquarteredelsewhere.Further,thisisclearlynot 12
anexceptionalcasewheretheBankscontactsaresocontinuousandsystematic 13
astorender[it]essentiallyathomeintheforum.Daimler,134S.Ct.at761&n.19 14
(alterationinoriginal)(quotingGoodyear,131S.Ct.at 2851).BOChasonlyfour 15
branch offices in the United States and only a small portion of its worldwide 16
businessisconductedinNewYork.GucciECFNo.288(citingOCCEvaluation 17
Aug. 18, 2008) (At yearend 2007, [BOC] had 10,145 domestic branches, 689 18
28
overseas branches and subsidiaries in 27 countries around the world and 1200 1
correspondent banks. Id. at 1); Bank of China America Branches, Bank of China, 2
http://www.bankofchina.com/en/aboutboc/ab6/200812/t20081216_494260.html(last 3
visitedAug.19,2014).Thus,BOCsactivitieshere,aswiththoseofthedefendant 4
inDaimler,plainlydonotapproachtherequiredlevelofcontact.134S.Ct.at761 5
n.19.FollowingDaimler,thereisnobasisconsistentwithdueprocessforthedistrict 6
courttohaveexercisedgeneraljurisdictionovertheBank. 7
AlthoughtheBankappearedinthedistrictcourtanddidnotarguetherethat 8
the court lacked personal jurisdiction, we also conclude that its objection to the 9
exerciseofgeneraljurisdictionhasnotbeenwaived.Whileargumentsnotmadein 10
thedistrictcourtaregenerallywaived,seeDatskowv.Teledyne,Inc.,ContlProds.Div., 11
899 F.2d 1298, 1303 (2d Cir. 1990), a party cannot be deemed to have waived 12
objectionsordefenseswhichwerenotknowntobeavailableatthetimetheycould 13
firsthavebeenmade,Hawknet,Ltd.v.OverseasShippingAgencies,590F.3d87,92(2d 14
Cir.2009)(citationomitted).Accordingly,wehaveheldthatadefendantdoesnot 15
waiveapersonaljurisdictionargumentevenifhedoesnotmakeitinthedistrict 16
court if the argument that the court lacked jurisdiction over [the] defendant 17
29
wouldhavebeendirectlycontrarytocontrollingprecedentinthisCircuit.Id.
14
1
PriortoDaimler,controllingprecedentinthisCircuitmadeitclearthataforeign 2
bank with a branch in New York was properly subject to general personal 3
jurisdictionhere.See,e.g.,Wiwav.RoyalDutchPetroleumCo.,226F.3d88,9395(2d 4
Cir. 2000) (discussing New Yorks rule that a business is subject to personal 5
jurisdictionwhenitisdoingbusinessintheStateandfindinggeneraljurisdiction 6
over a large international corporation based on the maintenance of an affiliate 7
investorrelationsofficeinNewYorkCity);HoffritzforCutlery,Inc.v.Amajac,Ltd., 8
763F.2d55,5758(2dCir.1985)(discussingtherequirementsofNewYorksdoing 9
businesstest);Dietrichv.Bauer,No.95cv7051,2000WL1171132,at*4n.4(S.D.N.Y. 10
Aug.16,2000)(holdingthataforeignbankwithabranchinNewYorkisdoing 11
business in New York for purposes of personal jurisdiction). Under prior 12
controllingprecedentofthisCircuit,theBankwassubjecttogeneraljurisdiction 13
becausethroughtheactivityofitsNewYorkbranch,itengagedinacontinuous 14
and systematic course of doing business in New York. Hoffritz, 762 F.2d at 58. 15
14
TotheextentthatplaintiffsattempttogroundtheirwaiverargumentonFederal 1
Rule of Civil Procedure 12(h), we note that the waiver provisions of that rule are 2
inapplicable because the Bank is not a party that could fail to assert its personal 3
jurisdictiondefenseinanansweroramotiontodismiss.Fed.R.Civ.P.12(h). 4
30
Therefore,weconcludethattheBankdidnotwaiveitspersonaljurisdictionobjection. 1
Evenwithoutgeneralpersonaljurisdiction,thedistrictcourtmaybeableto 2
requireBOCscompliancewiththeAssetFreezeInjunctionbyexercisingspecific 3
jurisdiction.
15
To assert specific personal jurisdiction over civil defendants, the 4
SupremeCourtrequiresatwostepanalysis.SeeLicciexrel.Licciv.LebaneseCanadian 5
Bank, SAL, 732 F.3d 161, 169 (2d Cir. 2013). First, the court must decide if the 6
defendant has purposefully directed his activities at . . . the forum and the 7
litigation...arise[s]outoforrelate[s]tothoseactivities.BurgerKingCorp.v. 8
Rudzewicz,471U.S.462,472(1985)(citationomitted).Second,oncethecourthas 9
established these minimum contacts, it determine[s] whether the assertion of 10
personaljurisdictionwouldcomportwithfairplayandsubstantialjustice.Id.at 11
476(quotingIntlShoe,326U.S.at320).SeealsoAsahiMetalIndus.Co.v.SuperiorCt. 12
of Cal., Solano Cnty., 480 U.S. 102, 11314 (1987) (identifying fairness factors that 13
courtsshouldconsider).TheSupremeCourthasnot,however,addressedspecific 14
15
The district court may also consider whether BOC has consented to personal 1
jurisdictioninNewYorkbyapplyingforauthorizationtoconductbusinessinNewYork 2
anddesignatingtheNewYorkSecretaryofStateasitsagentforserviceofprocess.N.Y. 3
Bus.Corp.Law1301(a),1304(a)(6);N.Y.BankingLaw200;Bagdonv.Phila.&Reading 4
Coal & Iron Co., 217 N.Y. 432 (1916) (Cardozo, J.). See also Daimler, 134 S. Ct. at 75556 5
(notingthatgeneraljurisdictiondefinesthescopeofacourtsjurisdictionwhenanentity 6
hasnotconsentedtosuitintheforum(quotingGoodyear,131S.Ct.at2856)). 7
31
jurisdictionovernonparties.
16
Lowerfederalcourtspresentedwiththeissuehave 1
adaptedthetestforcivildefendantsforuseinassessingthequestionwhetherthey 2
mayproperlyexercisejurisdictionoveranonparty.Thesecourtsfirstassessthe 3
connectionbetweenthenonpartyscontactswiththeforumandtheorderatissue, 4
andthendecidewhetherexercisingjurisdictionforthepurposesoftheorderwould 5
comportwithfairplayandsubstantialjustice.Seeinfrapp.3233,43.
17
6
Inthecontextofassetfreezeinjunctions,othercircuitshavepermittedthe 7
exerciseofspecificjurisdictionoverdomesticnonpartieswho,withknowledgeofan 8
injunction,intentionallyaidedinitsviolation.See,e.g.,Waffenschmidtv.MacKay,763 9
F.2d 711, 71819 (5th Cir. 1985) (holding that a domestic nonpartys knowing, 10
intentional violation of an injunction is sufficient on its own to create specific 11
personal jurisdiction to enforce the injunction against that party); ClearOne 12
16
TheSupremeCourthasaddressedjurisdictionoverabsentplaintiffs,seePhillips 1
PetroleumCo.v.Shutts,472U.S.797(1985),butithasnotaddressedjurisdictionoverentities 2
whoarenotpartiestothesuit. 3
17
ThisCourthas,atdifferenttimes,observedthatnonpartystatusmayalterthe 1
equitiesofassertingjurisdiction.Ontheonehand,apersonwhoissubjectedtoliability 2
...farfromhomemayhavebettercausetocomplainofanoutragetofairplaythana 3
nonparty.FirstAm.Corp.v.PriceWaterhouseLLP,154F.3d16,20(2dCir.1998).Butonthe 4
otherhand,anonpartywithfewifanyconnectionstotheactivitiesgivingrisetothesuit 5
mayhaveastronginterestinitsfreedomtotakeactionsthataregenuinelyindependent 6
ofanyintenttofrustrateacourtsinjunction.Heymanv.Kline,444F.2d65,6566(2dCir. 7
1971). 8
9
32
Commcns,Inc.,v.Bowers,651F.3d1200,121516(10thCir.2011)(affirmingthata 1
district court may properly exercise personal jurisdiction over a nonparty for 2
purposesofenteringcontemptorders,whenthenonparty,withactualnoticeofan 3
injunctiveorderissuedbythedistrictcourt,andinactiveconcertorparticipation 4
withaparty,violatesthatorder);SECv.Homa,514F.3d661,67375(7thCir.2008) 5
(affirming contempt order against two American nonparties living abroad who 6
knowingly aided and abetted the violation of an order to freeze the defendants 7
assets). Following the framework discussed above, these decisions rely on the 8
theorythatintentionallyviolatinganassetfreezeinjunctionisconductdesigned 9
tohavepurposeandeffectintheforum,andthattheauthoritytoforcecompliance 10
is necessary to the proper enforcement and supervision of a courts injunctive 11
authority and offends no precept of due process. E.g., Homa, 514 F.3d at 675 12
(quotingWaffenschmidt,763F.2dat716);ClearOneCommcns,651F.3dat1215.See 13
alsoCalderv.Jones,465U.S.783,78889(1984).Usingthatsameapproach,thisCourt 14
has permitted a district court to exercise specific jurisdiction over a domestic 15
nonpartywhoviolatedaprotectiveorder.SeeEliLilly&Co.v.Gottstein,617F.3d 16
186,19596(2dCir.2010).
18
17
18
This Court has not resolved this issue in the context of asset freezes. See 1
Canterbury Belts, 869 F.2d at 40 (suggesting, in passing, that [a] district court cannot 2
33
Wehavefoundnocase,however,applyingsuchananalysisinthecontextof 1
aforeignnonpartywithonlylimitedcontactsintheforum.
19
Thequestionwhether 2
theexerciseofpersonaljurisdictionisappropriateinthiscontextmaydepend,in 3
part, on the nature of the foreign nonpartys contacts with the forum. BOCs 4
presenceandactivityintheforummaythusberelevantfordeterminingwhether 5
specific jurisdiction to force compliance with the Asset Freeze Injunction is 6
appropriateinthiscase.CompareHoma,514F.3dat675(notingthatnonpartieswere 7
requiredtoobeythedistrictcourtsorderbecausetheywerecitizens),withReebok 8
IntlLtd.v.McLaughlin,49F.3d1387,139293(9thCir.1995)(refusingtosubjectaforeign 9
bank with no American branches to an asset freeze). After all, [i]t must be 10
remembered that the relatedness test is but a part of a general inquiry . . . to 11
determinewhethertheexerciseofpersonaljurisdiction...doesordoesnotoffend 12
exercisepersonaljurisdictionoveranonparty...onthebasisthatthenonpartyisacting 1
inactiveconcertorparticipation,withinthemeaningofFed.R.Civ.P.65(d),withaparty 2
who is subject to an injunction, unless personal jurisdiction is established over the 3
nonparty). 4
19
The Ninth Circuit has concluded that district courts lack specific personal 1
jurisdictiontoorderforeign,nonpartybankswithnocontactsintheUnitedStatestocomply 2
withanassetfreezeinjunction.SeeReebokIntlLtd.v.McLaughlin,49F.3d1387,139193(9th 3
Cir. 1995). In that opinion, the Ninth Circuit emphasized that Waffenschmidt was 4
grounded...onthesimplefactthatthemandateofaninjunctionissuedbyafederal 5
district court runs nationwide, and therefore did not apply to a situation where [a] 6
nationalofaforeigncountry...followedthelaw...ofitsowncountry...whenitdidacts 7
withinthatcountry.Id.at1391,1394(quotingWaffenschmidt,763F.2dat716). 8
34
traditionalnotionsoffairplayandsubstantialjustice.Chewv.Dietrich,143F.3d 1
24,29(2dCir.1998)(quotingIntlShoe,326U.S.at316). 2
Sincethefactualrecordhasnotbeendevelopedandthepanelhasnothadthe 3
benefit of oral argument or full briefing on the subject, we express no view on 4
whether the exercise of specific jurisdiction is appropriate in this case. Prior to 5
Daimler, courts in this Circuit often asserted general jurisdiction over nonparty 6
foreigncorporationsbasedonthepresenceofcorporatebranches,subsidiaries,or 7
affiliatesintheCircuit.See,e.g.,Wiwa,226F.3dat9395;Dietrich,2000WL1171132, 8
at*4.InlightofthatpreDaimlercaselaw,thedistrictcourthadnoneedtoconsider 9
specificjurisdictionortodeveloparecordsufficientforthatpurpose.Onremand, 10
thedistrictcourtmustgivetheissuedueconsideration. 11
B.DistrictCourtsObligationtoConductaComityAnalysis 12
BOCnextarguesthatthedistrictcourtsAugust23Order(compellingthe 13
BanktocomplywiththeAssetFreezeInjunctionanddenyingtheBanksmotionto 14
modifyit)mustalsobevacatedbecausethedistrictcourtfailedproperlytoconsider 15
legalprinciplesofcomity.Althoughweneednotreachthisissue,wedosoinorder 16
togiveguidancetothedistrictcourtintheeventthatthedistrictcourtconcludes 17
thattheexerciseofpersonaljurisdictionoverBOCisappropriate.Ifitsoconcludes, 18
35
thedistrictcourtshouldundertakeacomityanalysisbeforeorderingtheBankto 1
complywiththeAssetFreezeInjunction. 2
Beforethedistrictcourt,theBank,whichisdomiciledandprincipallybased 3
in China, identified an apparent conflict between the obligations set forth in the 4
AssetFreezeInjunctionandapplicableChinesebankinglaws.Specifically,theBank 5
introducedadeclarationfromaChineselawexpert,ProfessorZhipanWu,asserting 6
thatChinesebankinglawsprohibitBOCfromfreezingbankaccountspursuantto 7
aforeigncourtorder,andthatdoingsocouldrenderitcivillyandcriminallyliable. 8
The Bank also submitted the November 3 Regulators Letter with its motion for 9
reconsideration,whichstatesthatChinascommercialbanks...maynot...freeze 10
or deduct funds from such accounts pursuant to a U.S. courts order. J.A. 834. 11
According to the Banks expert and the November 3 Regulators Letter, Chinas 12
sovereign interest in such laws is to engender client confidence in the banking 13
system and therefore promote the further development of the banking system. 14
J.A.834. 15
Insuchcircumstances,wheretheBankobjectedtoapplicationoftheAsset 16
FreezeInjunctiontoit,specificallycitinganapparentconflictwiththerequirements 17
ofChinesebankinglaw,comityprinciplesrequiredthedistrictcourttoconsiderthe 18
36
Bankslegalobligationspursuanttoforeignlawbeforecompellingittocomplywith 1
theAssetFreezeInjunction.Comityistherecognitionwhichonenationallows 2
within its territory to the legislative, executive or judicial acts of another nation, 3
havingdueregardbothtointernationaldutyandconvenience,andtotherightsof 4
itsowncitizens,orofotherpersonswhoareundertheprotectionofitslaws.Hilton 5
v.Guyot,159U.S.113,164(1895).Thedoctrineofinternationalcomityreferstothe 6
spiritofcooperationinwhichadomestictribunalapproachestheresolutionofcases 7
touching the laws and interests of other sovereign states. Socit Nationale 8
IndustrielleArospatialev.U.S.Dist.Ct.fortheS.Dist.ofIowa,482U.S.522,543n.27 9
(1987). 10
We have previously suggested that when a court order will infringe on 11
sovereigninterestsofaforeignstate,districtcourtsmayappropriatelyconductan 12
analysis using the framework provided by 403 of the Restatement (Third) of 13
ForeignRelationsLaw,entitledLimitationsonJurisdictiontoPrescribe.SeeUnited 14
Statesv.Davis,767F.2d1025,103639(2dCir.1985)(using403factorstoholdthat 15
district court properly ordered a litigant to terminate litigation in the Cayman 16
Islands);seealsoRepublicofArg.v.NMLCapital,Ltd.,134S.Ct.2250,2258n.6(2014). 17
(notingthatothersourcesoflawincludingcomityinterestsmightlimit 18
37
district courts discretion when issuing orders extraterritorially). As the district 1
courtrecognizedwithregardto442andthe2010Subpoena,courtsinthiscircuit, 2
beforeorder[ing]apartytoproducedocumentsincontraventionofthelawsofa 3
foreigncountry,alreadyconductacomityanalysispursuanttoRestatement(Third) 4
ofForeignRelationsLaw442(1)(c),entitledRequestsforDisclosure:Lawofthe 5
UnitedStates.J.A.776.SeealsoGucciAm.,Inc.v.CurvealFashion,No.09cv8458, 6
2010WL808639,at*2(S.D.N.Y.Mar.8,2010);Straussv.CreditLyonnais,S.A.,249 7
F.R.D.429,438(E.D.N.Y.2008).Acomityanalysisdrawingupon403issimilarly 8
appropriate before ordering a nonparty foreign bank to freeze assets abroad in 9
apparentcontraventionofforeignlawtowhichitissubject.
20
10
20
Section403instructsthatwhenastatehasjurisdiction,itshouldnotexerciseitto 1
prescribelawwithrespecttoapersonoractivityhavingconnectionswithanotherstate 2
whentheexerciseofsuchjurisdictionisunreasonable.Restatement(Third)ofForeign 3
RelationsLaw403(1).Section403identifieseightnonexclusivefactorstobeevaluated 4
indeterminingwhethertheexerciseofjurisdictionisunreasonableinagivencase: 5
6
(a)thelinkoftheactivitytotheterritoryoftheregulatingstate,i.e.,theextent 7
to which the activity takes place within the territory, or has substantial, 8
direct,andforeseeableeffectuponorintheterritory; 9
(b) the connections, such as nationality, residence, or economic activity, 10
betweentheregulatingstateandthepersonprincipallyresponsibleforthe 11
activitytoberegulated,orbetweenthatstateandthosewhomtheregulation 12
isdesignedtoprotect; 13
(c)thecharacteroftheactivitytoberegulated,theimportanceofregulation 14
to the regulating state, the extent to which other states regulate such 15
activities, and the degree to which the desirability of such regulation is 16
generallyaccepted; 17
38
Acknowledging that the district court did not conduct such ananalysis, 1
plaintiffsmakethreeargumentsopposingvacaturandremandonthisbasis,but 2
nonearepersuasive.First,theyarguethatremandwouldservenopurposebecause 3
the district court, in analyzing whether to order BOC to produce documents in 4
responsetothe2010Subpoena,consideredthecomityfactorslistedin442,which 5
overlap with the factors in 403. Ordering compliance with an asset freeze, 6
however,implicatesdifferentconcernsfromthoseimplicatedbyanorderforthe 7
production of documents. And while the factors in 403 and 442 of the 8
(d)theexistenceofjustifiedexpectationsthatmightbeprotectedorhurtby 1
theregulation; 2
(e)theimportanceoftheregulationtotheinternationalpolitical,legal,or 3
economicsystem; 4
(f)theextenttowhichtheregulationisconsistentwiththetraditionsofthe 5
internationalsystem; 6
(g)theextenttowhichanotherstatemayhaveaninterestinregulatingthe 7
activity;and 8
(h)thelikelihoodofconflictwithregulationbyanotherstate. 9
10
Id.403(2).Importantly,even[w]henitwouldnotbeunreasonableforeachoftwostates 11
toexercisejurisdictionoverapersonoractivity,iftheprescriptionsbythetwostatesare 12
in conflict, each state has an obligation to evaluate its own as well as the other states 13
interestinexercisingjurisdiction,inlightofalltherelevantfactors.Id.403(3).[A]state 14
shoulddefertotheotherstateifthatstatesinterestisclearlygreater.Id. 15
39
Restatement partially overlap, subsections 403(2)(a), (c), (d), (e), (g), and (h), in 1
particular,arenotfullyreflectedin442.
18
2
Second, plaintiffs posit that by not requesting that the district courtapply 3
403below,theBankhaswaivedtheissue.ItiscorrectthattheBankdidnotmake 4
this argument below. However, given the important role that comity plays in 5
ensuring the recognition which one nation allows within its territory to the 6
legislative,executiveorjudicialactsofanothernation,havingdueregardbothto 7
internationaldutyandconvenience,seeInreMaxwellCommcnCorp.,93F.3d1036, 8
1046 (2d Cir. 1996) (quoting Hilton, 1259 U.S. at 164), we do not deem the issue 9
forfeited. 10
Finally,plaintiffsreviewavarietyofthecomityfactorsandurgethatremand 11
isnotnecessarybecauseevenuponafullanalysisemploying403sfactors,the 12
18
Restatement(Third)ofForeignRelationsLaw442(1)(c)provides: 1
2
Indecidingwhethertoissueanorderdirectingproductionofinformation 3
locatedabroad,andinframingsuchanorder,acourtoragencyintheUnited 4
States should take into account the importance to the investigation or 5
litigation of the documents or other information requested; the degree of 6
specificityoftherequest;whethertheinformationoriginatedintheUnited 7
States;theavailabilityofalternativemeansofsecuringtheinformation;and 8
the extent to which noncompliance with the request would undermine 9
important interests of the United States, or compliance with the request 10
wouldundermineimportantinterestsofthestatewheretheinformationis 11
located. 12
40
August 23 Order properly issued. We express no view on this question, but 1
concludesimplythatthedistrictcourtonremandshouldconductacomityanalysis 2
inthefirstinstanceifitdeterminesthatithasspecificjurisdictionoverthebank.In 3
doingso,itshouldgivedueregardtothevariousinterestsatstake,including:(1)the 4
Chinese Governments sovereign interests in its banking laws; (2) the Banks 5
expectations, as a nonparty, regarding the regulation to which it is subject in its 6
homestateandalsointheUnitedStates,byreasonofitschoicetoconductbusiness 7
here;and(3)theUnitedStatesinterestinenforcingtheLanhamActandproviding 8
robustremediesforitsviolation.
19
9
IV.TheAugust23Orderandthe2010Subpoena 10
As already noted, before ordering the Bank to comply with the 2010 11
Subpoena,thedistrictcourtperformedacomityanalysispursuantto442ofthe 12
Restatement(Third)ofForeignRelationsLaw.Wediscernnoabuseofdiscretionin 13
thisanalysisandconcludethatBOCsargumentstothecontraryarewithoutmerit. 14
AllstateLifeIns.Co.v.LinterGrp.Ltd.,994F.2d996,999(2dCir.1993)(recognizing 15
19
Onremand,whenanalyzingthelastfactorof403(thelikelihoodofconflictwith 1
regulationbyanotherstate)thedistrictcourtshouldgiveproperweighttotheDecember 2
4, 2013 Civil Judgment issued by the Second Intermediate Peoples Court of Beijing 3
Municipality,andanysubsequentcourtdecisionsinthismatterthatitdeemsappropriate 4
toconsider. 5
41
that the extension or denial of comity is within the courts discretion, [and 1
therefore] we will reverse the courts decision only when we find an abuse of 2
discretion). A district court, however, must have personal jurisdiction over a 3
nonparty in order to compel it to comply with a valid discovery request under 4
Federal Rule of Civil Procedure 45.
20
Because the district court erroneously (if 5
20
See, e.g., First Am. Corp., 154 F.3d at 20 (holding that personal service of a 1
subpoenaonageneralpartnerestablishedpersonaljurisdictionoverapartnershipand 2
allowedacourttocompelittocomplywithasubpoena);InreSealedCase,141F.3d337,341 3
(D.C.Cir.1998)(recognizingthatinRule45discoverytransfermotionsatransfereecourt 4
...wouldoftenlackpersonaljurisdictionoverthenonpartyandthat[t]heprinciplethat 5
courtslackingjurisdictionoverlitigantscannotadjudicatetheirrightsiselementary,and 6
cases have noted the problem this creates for the prospect of transferring nonparty 7
discoverydisputes);InreApplicationtoEnforceAdmin.SubpoenasDucesTecumoftheS.E.C. 8
v. Knowles, 87 F.3d 413, 418 (10th Cir. 1996) (requiring that a Bahamian nonparty have 9
minimumcontactswiththeUnitedStatesbeforeholdingitsubjecttoanadministrative 10
agency subpoena); Ariel v. Jones, 693 F.2d 1058, 1061 (11th Cir. 1982) (upholding the 11
quashing of a subpoena [i]n view of the minimal contacts of the [nonparty] with [the 12
forum]); Estate of Ungar v. Palestinian Auth., 400 F. Supp. 2d 541, 549 (S.D.N.Y. 2005) 13
(holdingthatapartymustmakeoutaprimafaciecaseforpersonaljurisdictioninorder 14
totakeanydiscoveryevenjurisdictionaldiscoveryfromaforeigncorporation); 15
ElderBeermanStoresCorp.v.FederatedDeptStores,Inc.,45F.R.D.515,516(S.D.N.Y.1968) 16
(quashingadocumentsubpoenabasedoncompletelackofcontactswiththeforum);see 17
alsoWright&Miller,9AFederalPracticeandProcedure2454,at39899(3ded.2008)(A 18
corporationisamenabletoserviceofasubpoenaunderRule45(b)inanyforuminwhich 19
ithassufficientminimumcontacts.);16Mooreetal.,MooresFederalPractice108.125,at 20
10848(3ded.2008)(Anonpartywitnesscannotbecompelledtotestifyatatrial,hearing, 21
ordepositionunlessthewitnessissubjecttothepersonaljurisdictionofthecourt.);Gary 22
B.Born,InternationalCivilLitigationinUnitedStatesCourts865(3ded.1996)([A]nonparty 23
witnesscanonlybecompelledtoproducedocumentsifitissubjecttothecourtspersonal 24
jurisdiction.). 25
26
42
understandably)assumedthatithadgeneraljurisdictionoverBOCinorderingitto 1
complywiththe2010Subpoena,wemustalsovacatetheAugust23Orderandthe 2
May 18, 2012 order insofar as they relate to this Subpoena. In light of Daimler, 3
BOCscontactswiththeforumwereinsufficienttosupporttheexerciseofgeneral 4
personaljurisdiction.Seesuprapp.2528. 5
Butonceagain,specificpersonaljurisdictionmaypermitthedistrictcourtto 6
ordertheBanktocomplywithparticulardiscoverydemands,aquestionweleave 7
tothedistrictcourttoaddressonremand.Asalreadystated,thetestforspecific 8
jurisdiction over defendants examines whether a cause of action arises out of or 9
relatestothedefendantscontactswiththeforum.SeeBurgerKing,471U.S.at472. 10
At least one circuit has translated this test to nonparty discovery requests by 11
focusingontheconnectionbetweenthenonpartyscontactswiththeforumandthe 12
discoveryorderatissue.SeeApplicationtoEnforceAdmin.SubpoenasDucesTecumof 13
theS.E.C.v.Knowles,87F.3d413,418(10thCir.1996)(findingspecificjurisdiction 14
wherethesubpoenaenforcementactionatissuear[ose]outof[thenonpartys] 15
contactswiththeforum);seealsoRyanW.Scott,Note,MinimumContacts,NoDog: 16
EvaluatingPersonalJurisdictionforNonpartyDiscovery,88Minn.L.Rev.968,100506 17
(2004)(suggestingthattheinquiryinthiscontextshouldfocusontherelationship 18
43
between(1)thediscoveryrequestand(2)thenonpartyscontactswiththeforum). 1
InevaluatingBOCscontactswiththeforum,thedistrictcourtmaywishtoconsider 2
whethertherelevantcontactsforthisinquiryarewiththeUnitedStates,ratherthan 3
with New York.
21
In the event the district court concludes on remand that the 4
exerciseofjurisdictionovertheBankisappropriate,moreover,itshouldconsider 5
the question of comity again in light of the newly available December 4, 2013 6
JudgmentoftheSecondIntermediatePeoplesCourtofBeijingMunicipality,andany 7
subsequentjudgmentsitfindsrelevant. 8
III.OrderHoldingBankinCivilContemptandImposingCivilMonetary 9
Penalties 10
11
Finally,weturntothedistrictcourtsNovember15,2012orderholdingthe 12
BankincivilcontemptandimposingcivilmonetarypenaltiesfortheBanksfailure 13
to comply with the August 2010 Subpoena. We conclude that the Bank did not 14
21
Federal Rule of Civil Procedure 45(b)(2), as amended, permits service of a 1
subpoenaanyplacewithintheUnitedStates.Severalofoursistercircuitshaveendorsed 2
thepositionthat,whenacivilcasearisesunderfederallawandafederalstatuteauthorizes 3
nationwideserviceofprocess,therelevantcontactsfordeterminingpersonaljurisdiction 4
arecontactswiththeUnitedStatesasawhole.See,e.g.,InreOilSpillbyAmocoCadizOff 5
CoastofFr.onMar.16,1978,954F.2d1279,1294(7thCir.1992);MaxDaetwylerCorp.v.R. 6
Meyer,762F.2d290,29397(3dCir.1985).ThisCourthasnotyetdecidedthatissue.See 7
Chew,143F.3dat27n.3.Wenotethatthedistrictcourtmightalsoappropriatelyconsider 8
whethernationwidecontactsarerelevantinevaluatingitsspecificjurisdictiontoenforce 9
theAssetFreezeInjunctionasagainsttheBank. 10
11
44
violateaclearandunambiguousprovisionofthe2010Subpoena(andthereforethe 1
August23Order)bynotproducingdocumentsrelatingtotheNewDefendants.We 2
thereforereversethefindingofcontempt.
23
Wealsoconcludethatthecivilmonetary 3
penaltieswereimpermissiblypunitive. 4
Wereviewadistrictcourtsfindingofcontemptforabuseofdiscretion,Perez 5
v.DanburyHosp.,347F.3d419,423(2dCir.2003)(citationomitted),butaremindful 6
thatadistrictcourtscontemptpowerisnarrowlycircumscribed,id.Aswehave 7
said,contemptisapowerfulweapon.Chaov.GothamRegistry,Inc.,514F.3d280, 8
291(2dCir.2008).Todemonstrateit,amovantmustestablishthat(1)theorderthe 9
contemnor failed to comply with is clear and unambiguous, (2) the proof of 10
noncomplianceisclearandconvincing,and(3)thecontemnorhasnotdiligently 11
attemptedtocomplyinareasonablemanner.Perez,347F.3dat42324(quoting 12
Kingv.AlliedVision,Ltd.,65F.3d1051,1058(2dCir.1995)). 13
14
23
AswehavevacatedthedistrictcourtsAugust23ordercompellingcompliance 1
withthesubpoenatheorderthatthedistrictcourtdeterminedtohavebeenviolated 2
thefindingofcontemptdoesnotstand.Becausethecontemptfindingandthesanctions 3
themselves were impermissible for other reasons, however, we specifically reverse the 4
November15,2012ordertomakeclearthatthecourtmaynotimposesanctions,inthe 5
event it determines that personal jurisdiction is appropriately exercised over the Bank, 6
withoutfindinganewviolationofacourtorder. 7
45
A clear and unambiguous order is one that leaves no uncertainty in the 1
mindsofthosetowhom[theorder]isaddressed.Id.at424(alterationinoriginal) 2
(citation omitted). [T]he longstanding, salutary rule in contempt cases is that 3
ambiguitiesandomissionsinordersredoundtothebenefitofthepersoncharged 4
withcontempt.DrywallTapers&PointersofGreaterN.Y.,Local1974ofI.B.P.A.T. 5
AFLCIOv.Local530ofOperativePlasterers&CementMasonsIntlAssn,889F.2d389, 6
400(2dCir.1989)(quotingFordv.Kammerer,450F.2d279,280(3dCir.1971)).Thus, 7
unlessthepartiescanascertainfromthefourcornersoftheorderpreciselywhat 8
actsareforbidden,theordercannotformthebasisforcontempt.King,65F.3dat 9
1058(citationomitted). 10
ThedistrictcourtsNovember15,2012findingofcontemptisbasedonthe 11
Banks violation of the August 23 Order compelling compliance with the 2010 12
Subpoena.S.P.A.13(August23OrderrequiringBOCtoproduceallinformation 13
requestedbythe[2010]SubpoenawithinfourteendaysofthedateofthisOrder). 14
Thus, to support a finding of contempt, BOC must have failed to produce 15
informationthatisclearlyandunambiguouslysoughtinthe2010Subpoena. 16
ThedistrictcourtfoundthattheBankwasincontemptatleastinpart for 17
failingtoproducedocumentsrelatingtothesevenNewDefendantsfirstnamedin 18
46
theSecondAmendedComplaint.Specifically,thedistrictcourtdeterminedthat 1
referencesintheAugust23OrdertotheseNewDefendantsasrecipientsofwire 2
transfersma[de]clearthatthe2010Subpoenacoveredaccountsaffiliatedwith 3
theseDefendants.S.P.A.28.Weconclude,however,thatthe2010Subpoena(and 4
thereforetheAugust23Order)didnotclearlyandunambiguouslyrequiretheBank 5
toproducedocumentsastotheseNewDefendants.The2010Subpoenarequested 6
alldocumentsconcerningtheDefendantsandtheDefendantsaccounts.J.A. 7
1152.ItdefinedAccountsas[avarietyoftypesofbankaccounts]atBankof 8
ChinaheldbyDefendants;including,butnotlimitedto,anaccountordepositinthe 9
nameofLijunXua/k/aJackLondonwithaccountnumber[endingin2443]andan 10
accountinthenameofLijunXuwithaccountnumber[endingin1235].J.A.1150. 11
The 2010 Subpoena defined Defendants as Weixing Li, Lijun Xu a/k/a Jack 12
London,alldoingbusinessasRedtagparty,Myluxurybags.com,Xpressdesigner.net, 13
behalf.Id. 16
Afterreceivinganinadequateresponsetothe2010Subpoena,onDecember 17
6,2010,plaintiffsfiledamotiontocompel.Itwasnotuntilafterthismotionwas 18
47
fully submitted to the court that plaintiffs served the 2011 Subpoena on BOC, 1
specifically identifying additional accounts, and thereafter filed the Second 2
AmendedComplaintaddingtheNewDefendants.J.A.115657. 3
ThedistrictcourterroneouslyconcludedthatBOCwasrequiredtoproduce 4
documents as to the seven New Defendants on the theory that [t]he August 23 5
Order . . . made clear that the Second Amended Complaint identified the New 6
DefendantsbynameandallegedthattheNewDefendantsarerecipientsofwire 7
transfersfrom[BOC]accountsregisteredtoDefendants,thusmakingclearthatthe 8
2010SubpoenacoveredaccountsaffiliatedwitheventhoseDefendantsidentified 9
previouslyasonlyJohnDoes.S.P.A.28.Theplaintermsofthe2010Subpoena 10
establishotherwise,however,andcertainlytheNewDefendantsarenotclearlyand 11
unambiguouslyincludedinthedefinitionofDefendantsinthe2010Subpoena. 12
The2010SubpoenadoesnotdefineDefendantsinanopenendedfashion 13
toincludeallnewlynameddefendantsinthecase.Instead,theSubpoenadefines 14
DefendantsasincludingonlyWeixingLi,LijunXua/k/aJackLondon,alldoing 15
business as Redtagparty, Myluxurybags.com, Xpressdesigner.net, 16
48
behalf.TheNewDefendantsarenotLiorXu.Noraretherefactsintherecordto 1
showtheyweredoingbusinessasthelistedentities,orwereactingontheirbehalf. 2
Therefore, they are only included in the definition of Defendants if they are the 3
JohnDoesfromtheoriginalcomplaint.Therearenofactsintherecordtoshow 4
thattheNewDefendantsaretheJohnDoes.Certainly,therearenonetoshowthat 5
theNewDefendantsareclearlyandunambiguouslytheJohnDoes. 6
The courts August 23 Order does not provide any additional clarity. 7
AlthoughplaintiffsarguethattheAugust23Ordermadeclearthatall[newand 8
old defendants] were Defendants for purposes of the [2010] Subpoena, that is 9
simplynotthecase.ThedistrictcourtmentionsonlythatplaintiffsfiledaSecond 10
Amended Complaint including new defendants in the facts section of the Order. 11
Otherthanmentioningthisamendmentinthefactssection,thedistrictcourtdoes 12
nothintthatthe2010SubpoenaorAugust23OrderapplytotheNewDefendants. 13
And that makes sense. Plaintiffs moved to compel compliance with the 2010 14
Subpoenabeforetheysoughtaccountinformationconcerningadditionalspecified 15
accounts they believed to be associated with the New Defendants and before 16
plaintiffsnamedtheseNewDefendantsintheSecondAmendedComplaint.The 17
motionwasfullybriefedandsubmittedtothedistrictcourtbeforeplaintiffsissued 18
49
the2011Subpoenaoramendedtheircomplaint.Thus,theAugust23Orderdidnot 1
clearlyandunambiguouslyrequireproductionofdocumentsrelatingtotheNew 2
Defendants.Andforthatreason,thecontemptordermustbereversed. 3
Wealsoreversethedistrictcourtsimpositionofcivilmonetarysanctionsfor 4
theadditionalreasonthatthecivilcontemptsanctionswereimpermissiblypunitive. 5
Thedistrictcourtimposed:(1)aninitialcoercivefineintheamountof$75,000for 6
allegedpastnoncompliancewiththeAugust23Order,(2)anadditionalcoercive 7
fineof$10,000perdayiftheBankdidnotcomply,and(3)attorneysfeesandcosts. 8
J.A. 1292. The $75,000 sanction for past noncompliance, although labeled as 9
coercive,wasinfactimpermissiblypunitive. 10
Itisbasiclawthatacivilcontemptsanctionmustonlybecompensatoryor 11
coercive,andmaynotbepunitive.SeeUnitedStatesv.UnitedMineWorkersofAm., 12
330U.S.258,30304(1947);Hessv.N.J.TransitRailOperations,Inc.,846F.2d114,115 13
(2d Cir. 1988). The $75,000 sanction for past noncompliance provided no 14
compensatory relief. Instead, it was punitive and therefore impermissible. See 15
Mackler Prods., Inc. v. Cohen, 146 F.3d 126, 129 (2d Cir. 1998) (vacating litigation 16
sanctionswhere[t]heimpositionwasretrospective,byreasonofpastwrongful 17
conduct;itdidnotseektocoercefuturecompliance,andnoopportunitytopurge 18
50
wasprovided).Forthesereasons,wereversethefindingofcivilcontemptandthe 1
impositionofcivilmonetarysanctions. 2
CONCLUSION 3
Tosummarize,werejectBOCschallengetothedistrictcourtsauthorityto 4
issue the Asset Freeze Injunction, concluding that personal jurisdiction over the 5
Bank was not necessary to issue the injunction and that Grupo Mexicano is 6
inapplicable. We nevertheless vacate the August 23, 2011 and the May 18, 2012 7
orders enforcing the Asset Freeze Injunction and the 2010 Subpoena so that on 8
remandthedistrictcourtmayconsiderwhetheritmayexercisespecificpersonal 9
jurisdiction over the Bank to compel compliance with these orders and, if so, 10
whether properapplicationoftheprinciplesofcomitydemonstratesthatitmay 11
exercisesuchjurisdiction.Finally,wereversetheNovember15,2012orderholding 12
theBankincivilcontemptandimposingcivilmonetarypenalties.
24
13
14
24
We deny as moot the Banks pending motions to supplement the record or 1
alternativelytotakejudicialnoticeofcertainChinesecourtdecisions.Weleaveittothe 2
districtcourttotakeupthesemattersonremand. 3
51

Arg091714Citirequest of Judicial Notice

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Arg091714Citirequest of Judicial Notice

Uploaded by

Copyright:

Available Formats

Case: 14-2689 Document: 157 Page: 1 09/17/2014 1322452 54

Case: 14-2689 Document: 157 Page: 2 09/17/2014 1322452 54

You might also like