Bank of Hope v. Miye Chon

• Decision Date: 17 September 2019
• Docket Number: No. 18-1567,18-1567
• Parties: BANK OF HOPE, as successor to Wilshire Bank v. MIYE CHON, also known as Karen Chon; Suk Joon Ryu, also known as James S. Ryu; Tae Jong Kim; Bergenfield Bagel & Cafe, doing business as Cafe Clair; Maywood Bagel Inc.; UB’S Pizza & Bagel Inc. ; UB’s Bagel & Cafe Inc.; UBK Bagels Corp., doing business as Franklin Bagels & Cafe Suk Joon Ryu, a/k/a James S. Ryu, Third Party Plaintiff v. Kwon Ho Jung; Jae Whan Yoo; Steven S. Koh; Lisa Pai, Third Party Defendants Suk Joon Ryu, Appellant
• Court: U.S. Court of Appeals — Third Circuit

938 F.3d 389

BANK OF HOPE, as successor to Wilshire Bank

v.MIYE CHON, also known as Karen Chon; Suk Joon Ryu, also known as James S. Ryu; Tae Jong Kim; Bergenfield Bagel & Cafe, doing business as Cafe Clair; Maywood Bagel Inc.; UB’S Pizza & Bagel Inc. ; UB’s Bagel & Cafe Inc.; UBK Bagels Corp., doing business as Franklin Bagels & Cafe

Suk Joon Ryu, a/k/a James S. Ryu, Third Party Plaintiff

v.Kwon Ho Jung; Jae Whan Yoo; Steven S. Koh; Lisa Pai, Third Party Defendants

Suk Joon Ryu, Appellant

No. 18-1567

United States Court of Appeals, Third Circuit.

Argued June 4, 2019

Filed: September 17, 2019

David V. Dzara, Stephen G. Harvey [ARGUED], Steve Harvey Law, 1880 John F. Kennedy Boulevard, Suite 1715, Philadelphia, PA 19103, Counsel for Appellant

Michael M. Yi [ARGUED], Lee Anav Chung White Kim Ruger & Richter, 99 Madison Avenue, 8th Floor, New York, NY 10016, Counsel for Appellee Bank of Hope

Before: JORDAN, BIBAS, and MATEY, Circuit Judges

OPINION OF THE COURT

BIBAS, Circuit Judge.

Courts have inherent power to keep their proceedings fair and orderly. They can use that power to order the parties before them not to talk with each other, the press, and the public. But that power comes with limits. The First Amendment requires that we tread carefully when we restrict speech. A court must thus explain why restricting speech advances a substantial government interest, consider less-restrictive alternatives, and ensure that any restriction does not sweep too broadly.

Here, Bank of Hope sued Suk Joon Ryu for embezzling money from its customers. As the case went on, Ryu began sending letters to the Bank’s shareholders. Those letters alleged that the Bank’s claims were baseless and were ruining his reputation. He hoped that the letters would pressure the Bank to settle. The Bank then asked the magistrate judge to ban Ryu from contacting its shareholders. The magistrate judge agreed, and the District Court affirmed. But the District Court marshaled no evidence that this restriction on speech was needed to protect this trial’s fairness and integrity. And it considered no less-restrictive alternatives. So its order violates Ryu’s First Amendment rights, and we will vacate and remand.

I. BACKGROUND

A. The Bank accused Ryu of embezzlement

Ryu helped found Wilshire Bank and worked there for decades as a high-level executive. Things changed in 2013: Wilshire Bank went through a series of mergers and eventually became Bank of Hope. That same year, Ryu left to work for another bank.

About a year later, the Bank found out that one of its employees, Miye Chon, had stolen money from dozens of customers. She had managed to embezzle more than a million dollars. The Bank fired her, and she later pleaded guilty.

Chon tried to take Ryu down with her. She alleged that Ryu had taken part in the embezzlement and taken a sizable cut of the proceeds. The Bank believed her and jumped into action: It froze Ryu’s personal account at the Bank. It shared its suspicions with Ryu’s new employer, which then fired him. And it sued both Chon and Ryu to recover the embezzled funds.

Ryu denied any wrongdoing, and the government never charged him. He also filed counterclaims against the Bank for various torts and breach of contract. Thus began this litigation.

B. The District Court restrained Ryu’s speech

Litigation can take a long time. Ryu grew impatient, so he took matters into his own hands. He sent a letter to the Bank’s chief executive, denying any role in the embezzlement and disparaging the evidence against him. He claimed that the litigation was ruining his professional reputation and had pained members of his family. And he advised the Bank to settle.

Ryu heard only radio silence, but that did not stop him. Almost a year later, he sent a longer letter to the same executive, similarly blaming the Bank for his and his family’s maladies and financial straits. The second letter came with a threat: if the Bank did not settle, he would start lobbying its shareholders.

Once again, his letter changed nothing. So Ryu followed through and wrote to dozens of institutional shareholders. These letters accused the Bank of a years-long campaign to defame him and hurt his family. And they warned that the lawsuit would sap shareholders’ confidence in the Bank and undercut its value. Ryu hoped that the letters would pressure the Bank to settle on favorable terms.

These letters irked the Bank, so it sent Ryu a cease-and-desist letter. And it told the District Court that "Ryu [was] attempting wrongfully and unlawfully to coerce Bank of Hope into making a settlement payment." App. 50. The magistrate judge then ordered Ryu not to contact the Bank’s shareholders "pending further briefing and decisions on these issues." App. 70. After more briefing, the magistrate judge finalized that ban in another order.

Ryu then appealed to the District Court, but to no avail. The District Court deferred to the magistrate judge’s recommendation and affirmed. Ryu now appeals to us.

II. THE DISTRICT COURT’S ORDER IS A COLLATERAL ORDER

We must first decide whether we have appellate jurisdiction. Our review is generally limited to "final decisions of the district courts." 28 U.S.C. § 1291. But we make a narrow exception for collateral orders. To be collateral, an order must satisfy three criteria. It must "[1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] be effectively unreviewable on appeal from a final judgment." Will v. Hallock , 546 U.S. 345, 349, 126 S.Ct. 952, 163 L.Ed.2d 836 (2006) (internal quotation marks omitted). Because the District Court’s order meets all three criteria, we have appellate jurisdiction.

First, the District Court conclusively determined Ryu’s ability to speak to the shareholders. It barred him from contacting the Bank or its shareholders and said that he could speak with the Bank only through his counsel. And it affirmed the magistrate judge’s second order without change. Nothing in this order suggests that it was non-final, conditioned on future events, or subject to revision. Cf. Lusardi v. Xerox Corp. , 747 F.2d 174, 177–78 (3d Cir. 1984) (finding an order non-final because it was expressly conditional and could be revisited).

Yet the Bank makes much ado about one line in the magistrate judge’s second order. The magistrate judge ordered Ryu "to cease such communications pending further order from the Court ." App. 227 (emphasis added). But that is not enough to escape the collateral-order doctrine.

To start, we review the District Court’s order, not that of the magistrate judge. But even if we consider the latter, the Bank’s argument still fails because it ignores context. The magistrate judge’s original order was entered "for the short period of time that it will take to develop the record and fully brief these issues." App 70. That order was tentative, but Ryu did not appeal it. Nor could he. Instead, he appealed the District Court’s order affirming the magistrate judge’s second order, which was entered months later, after detailed briefing. That order conclusively "precluded" him from contacting the shareholders. App. 224.

And an order can be collateral even if the lower court retains "discretionary power to reopen [its] ruling." United States v. Bertoli , 994 F.2d 1002, 1011 (3d Cir. 1993). A contrary rule would swallow up the collateral-order doctrine. Collateral orders are by definition not final, so courts usually can revisit them. Leaving this door ajar does not remove an order from the doctrine’s scope. If it did, almost no order would be collateral. That cannot be. In short, the doctrine’s first requirement is met.

Second, the District Court’s order resolved an important, non-merits issue. The order was important: It imposed a prior restraint on speech. And it weighed Ryu’s First Amendment rights against the Court’s inherent power to manage proceedings. The order was also unrelated to the merits. The Bank had sued Ryu to recover the embezzled funds, not to keep him from writing to its shareholders. And Ryu’s counterclaims sound in tort and contract. So the second requirement is also met.

Third, the District Court’s order will be effectively unreviewable after judgment. If Ryu prevails, he cannot appeal from a favorable judgment. And if he loses, we could strike down the restraint, but the damage will be done. Ryu wants to write to the shareholders now to get a favorable settlement. A victory after judgment would be empty; the reviewing court could not turn back the clock and let Ryu send his letters in time. "[R]eview postponed will, in effect, be review denied." Zosky v. Boyer , 856 F.2d 554, 561 (3d Cir. 1988), abrogated on other grounds by Green Tree Fin. Corp.-Ala. v. Randolph , 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). So the third requirement is met too. The collateral-order doctrine applies, and we have appellate jurisdiction.

III. EVEN IF RYU’S SPEECH WAS COMMERCIAL, THE COURT ERRED BY RESTRAINING HIS SPEECH

The District Court forbade Ryu to speak with the Bank’s shareholders. Such prior restraints on speech are presumptively unconstitutional and subject to strict scrutiny. See N.Y. Times Co. v. United States , 403 U.S. 713, 714, 91 S.Ct. 2140, 29 L.Ed.2d 822 (1971) (per curiam). A judgment "deeply etched in our law" underlies that rule: "a free society prefers to punish the few who abuse rights of speech after they break the law than to throttle them and all others beforehand." Se. Promotions, Ltd. v. Conrad , 420 U.S. 546, 559, 95 S.Ct. 1239, 43 L.Ed.2d 448 (1975).

But the Bank argues that the prior-restraint doctrine does not apply. It claims instead that our review should be less vigorous because Ryu’s letters are commercial speech. True enough, the "traditional prior restraint doctrine may not apply to [commercial speech]." Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y. , 447 U.S. 557, 571 n.13, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). But...