Uthe Tech. Corp. v. Aetrium, Inc.
| Decision Date | 11 December 2015 |
| Docket Number | No. 13–16917.,13–16917. |
| Citation | 808 F.3d 755 |
| Parties | UTHE TECHNOLOGY CORPORATION, Plaintiff–Appellant, v. AETRIUM, INC.; Harry Allen, Defendants–Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Myron Moskovitz argued, Piedmont, CA, for Plaintiff–Appellant.
Archana Nath argued and David B. Potter, Oppenheimer Wolf & Donnelly LLP, Minneapolis, MN; Ann E. Johnston, Coblentz, Patch, Duffy & Bass LLP, San Francisco, CA, for Defendants–Appellees.
Appeal from the United States District Court for the Northern District of California, William Alsup, District Judge, Presiding. D.C. No. 3:95–cv–02377–WHA.
Before: FERDINAND F. FERNANDEZ and MILAN D. SMITH, JR., Circuit Judges, and SHIRA A. SCHEINDLIN,* Senior District Judge.
Approximately two decades ago, Plaintiff UTHE Technology Corporation (Uthe), a manufacturer and distributor of semiconductor products, brought suit against Harry Allen and Aetrium Incorporated (collectively, the Defendants) and a number of individuals in Singapore (the Foreign Defendants), alleging a conspiracy to unlawfully take over one of Uthe's overseas subsidiaries. In its original federal court action, Uthe brought claims for, inter alia, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961 –68, against both the Defendants and the Foreign Defendants. The action against the Foreign Defendants was dismissed on the basis of forum non conviens because an arbitration clause in a relevant agreement required that Uthe arbitrate its claims against the Foreign Defendants in a proceeding governed by Singapore law (the Singapore arbitration). Uthe's suit against the Defendants was stayed by the district court pending the resolution of the Singapore arbitration against the Foreign Defendants.
The Singapore arbitration, which lasted nearly two decades, resulted in an award of over 12 million Singapore dollars (approximately $9 million USD) against the Foreign Defendants to compensate Uthe for actual losses stemming from the conspiracy. That award has now been paid in full. Following the conclusion of the Singapore arbitration, Uthe reinstated the present action against the Defendants, requesting relief under RICO's treble damages provision. The district court granted summary judgment in favor of the Defendants, holding that an award of additional damages under RICO would violate the "one satisfaction" rule (one satisfaction rule), an equitable principle designed to prevent double recovery of damages arising from the same injury.
We reverse and remand. Because the arbitral award did not constitute full satisfaction of Uthe's pre-existing RICO claim, we hold that Uthe is entitled to seek treble damages under RICO against the Defendants.1
Uthe alleges that the Defendants, in conjunction with the Foreign Defendants working inside its foreign subsidiary Uthe Technology Singapore Private Limited (Uthe Singapore), engaged in a campaign to poach customers and divert business from Uthe Singapore to a secret corporation they had formed for this purpose. Uthe Singapore distributed semi-conductor equipment manufactured by Uthe and other suppliers throughout Asia. During this time, Uthe Singapore was a party to a long-term distribution agreement to sell Aetrium Incorporated's (Aetrium) products to customers in Asia. Aetrium was one of Uthe Singapore's largest suppliers, and Harry Allen served as Aetrium's officer in charge of sales in Asia.
Around July 1992, the Foreign Defendants solicited the assistance of the Defendants in the conspiracy. During a conference call, the Defendants allegedly agreed that they would withhold payments from Uthe Singapore arising from its distribution agreement with Aetrium, encourage customers to transact business with Aetrium directly rather than through Uthe Singapore, and covertly amend the terms of the distribution agreement, so that Aetrium could terminate the contract on short notice and transfer its business from Uthe Singapore to the secret corporation. Uthe contends that the Defendants engaged in predicate acts of mail and wire fraud during the months of July through September to effectuate their scheme.
In October 1992, after being severely damaged by the efforts of the conspiracy, Uthe agreed in a stock purchase agreement (the Purchase Agreement) to sell its shares in Uthe Singapore to the Foreign Defendants at a significantly depressed price. The Purchase Agreement contained an arbitration clause, which provided for binding arbitration of any disputes arising from the agreement. It also contained a choice of law clause that selected Singapore law as the governing law for any arbitration proceedings.
In July 1993, Uthe filed suit against the Defendants and the Foreign Defendants in California state court, seeking damages arising from the conspiracy. After the case was removed to federal court in the Northern District of California, Uthe filed an amended complaint alleging RICO violations, among other causes of action.
The Foreign Defendants then moved to compel arbitration of Uthe's claims against them pursuant to the arbitration clause contained in the Purchase Agreement. Unlike the Foreign Defendants, the Defendants were not signatories to the Purchase Agreement or otherwise bound to arbitrate Uthe's claims against them.
Over Uthe's vigorous objections, the district court dismissed the Foreign Defendants from the case on the basis of forum non conviens and stayed its proceedings with respect to the Defendants pending the outcome of the Singapore arbitration, noting that "the arbitration may narrow or limit the issues raised by the claims alleged against Aetrium and Allen."
In so ruling, the district court acknowledged that the Singapore arbitration could conclusively resolve Plaintiff's claims against the Foreign Defendants. It concluded that Singapore would serve as an "adequate alternative forum in which to adjudicate Plaintiff's claims against [the Foreign Defendants]," noting that "Plaintiff's federal securities claims are trumped by the choice of law provision specifying the application of Singapore law." In contrast, Uthe's right to eventually pursue its own claims against the Defendants in federal court remained unaffected by the district court's order.
The Singapore arbitration spanned almost two decades. The arbitration commenced in August 1994, but the arbitral proceedings were interrupted several times by legal challenges brought by the parties in Singapore courts, and by the appointment of a replacement arbitrator.
On June 30, 2005, the arbitrator found that the Foreign Defendants were liable to Uthe. The arbitrator also ordered:
[T]here shall be no further or other actions or proceedings ... by [Uthe] against [the Foreign Defendants] ... without prejudice to [Uthe's] rights in the U.S. action against [the Foreign Defendants] and the other defendants in the U.S. Action....2
Subsequently, on March 23, 2012, the arbitrator issued a damages award against the Foreign Defendants and in favor of Uthe amounting to 12,286,350 Singapore dollars (the equivalent of approximately $9,180,771 USD) with yearly interest of 1.5%. The arbitrator determined that the damages figure reflected the difference between the depressed sale price of Uthe Singapore's stock and the projected value of the stock absent the effects of the conspiracy. The arbitrator also found that Uthe had suffered losses of approximately 500,000 Singapore dollars as a result of diverted business opportunities. However, he chose to award Uthe the greater amount of 12,286,350 Singapore dollars in damages, reasoning that an award for both the depressed stock price and diverted business opportunities would be duplicative. The Foreign Defendants have since paid Uthe the full amount of the arbitration award.
Upon the conclusion of the Singapore arbitration, Uthe filed a motion in May 2012 to reopen its original suit against the Defendants in federal district court and to lift the stay. The district court granted Uthe's motion and permitted it to file an amended complaint. Following the conclusion of discovery, the Defendants filed a motion for summary judgment. On September 9, 2013, the district court granted the Defendants' motion for summary judgment, holding that the full satisfaction of the arbitration damages award extinguished Uthe's claim against the Defendants for treble damages under RICO. This timely appeal followed.
We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the district court's decision to grant summary judgment de novo by "viewing the evidence in the light most favorable to the nonmoving party to determine whether any genuine issues of material fact exist and whether the district court correctly applied the relevant substantive law." Trs. of Const. Indus. & Laborers Health & Welfare Trust v. Hartford Fire Ins. Co., 578 F.3d 1126, 1129 (9th Cir.2009). Summary judgment is appropriate when the facts and pleadings "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rosenbaum v. Washoe Cty., 663 F.3d 1071, 1075 (9th Cir.2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ).
RICO provides the statutory remedy of treble damages for any individual "injured in his business or property by reason of a violation" of the statute. 18 U.S.C. § 1964(c). The statutory remedy of treble damages reflects Congress's intent to remedy the injuries caused by organized crime as well as to "bring to bear the pressure of ‘private attorneys general’ on a serious national problem." Agency Holding Corp. v. Malley–Duff & Assocs., Inc., 483 U.S. 143, 151, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987). As the...
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