Select Creations, Inc. v. Paliafito America, Inc.

• Decision Date: 21 December 1992
• Docket Number: No. 91-C-1240.,91-C-1240.
• Citation: 828 F. Supp. 1301
• Parties: SELECT CREATIONS, INC., a Wisconsin corporation, Plaintiff, v. PALIAFITO AMERICA, INC., an Illinois corporation, Defendant/Third Party Plaintiff, v. Miryoung (a/k/a "Joy") LEE; Jerrold Lee; Mantae Company, Limited; Sam Petrovich; Thomas Meisenheimer and Select Creations, Inc.; Third Party Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

828 F. Supp. 1301

SELECT CREATIONS, INC., a Wisconsin corporation, Plaintiff, v. PALIAFITO AMERICA, INC., an Illinois corporation, Defendant/Third Party Plaintiff, v. Miryoung (a/k/a "Joy") LEE; Jerrold Lee; Mantae Company, Limited; Sam Petrovich; Thomas Meisenheimer and Select Creations, Inc.; Third Party Defendants.

No. 91-C-1240.

United States District Court, E.D. Wisconsin.

December 1, 1992.

Order Correcting Opinion December 21, 1992.

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Kenneth R. Nowakowski, Whyte & Hirschboeck, Milwaukee, WI, Robert H. Storm, Canellos & Storm, Wauwatosa, WI, for plaintiff.

Harold A. Laufer, Davis & Kuelthau, Milwaukee, WI, John K. Lyons, Skadden, Arps, Slate, Meagher & Flom, Chicago, IL, for defendant Paliafito, Inc.

David R. Cross, Mitchell S. Moser, Quarles & Brady, Milwaukee, WI, Kenneth L. Bressler, Lieberman Rudolph & Nowak, New York City, for defendants Miryoung Lee, Jerrold Lee and Mantae Co., Ltd.

DECISION AND ORDER

WARREN, Senior District Judge.

I. FINDINGS OF FACT

A. ACTORS

1. Paliafito America, Inc. ("Paliafito") is an Illinois corporation with its principal place of business at 1420 Kensington Road, Suite 207, Oak Brook, Illinois. (1 Tr. 157-58:22-25, 1-4 (Paliafito).)¹ Paliafito was previously known as Wisconsin Area Athletic Clinics ("WAAC"). WAAC is incorporated in Wisconsin. (1 Tr. 147:23 — 148:2; 2 Tr. 363:5-11 (Paliafito).)

2. Paliafito had the same rights under the Agreement as WAAC did since the Agreement was assigned by WAAC to Paliafito, as permitted under Section 16 of the Agreement ("Mantae acknowledges that WAAC contemplates assignment of its rights herein to Paliafito America, Inc. ... and agrees that this Agreement may be assigned to such an entity...."). (1 Tr. 147-48:23-25, 1-6 (Paliafito); DX 11A § 16.)

3. Third party defendants Miryoung ("Joy") Lee and Jong Sik ("Jerrold" or "Jerry") Lee (collectively, "the Lees") are husband and wife (Third Party Defendants' Answer to First Amended Counterclaim and Third Party Complaint and Jury Demand ("Mantae's Ans." or "Mantae's Ctcl.") ¶¶ 6, 7) and are Korean nationals residing in the United States. (Mantae's Ans. ¶¶ 6, 7.) Joy Lee, who has been living in the United States fourteen years, is a resident alien with permanent resident status. (2 Tr.2d 205:24-25; 206:1-11; 207:22 — 208:10, 10 Tr.2d 1031:6-8 (Lee).) Jerrold Lee spends ninety to ninetyfive percent of his time in Korea. (3 Tr.2d 261:5-7 (Lee).)

4. Joy Lee is also known as Miryoung Song, Miryoung Song Deering, Miryoung Deering, Miryoung Melody Lee, and Miryoung Joy Lee. (10 Tr.2d 1032:3-20 (Joy Lee).) The name on her passport is Mi Ryoung Deering Song. (2 Tr.2d 205:5-8 (Joy Lee); DX 713.) Joy Lee was born Miryoung Song and married into the name Deering, becoming Miryoung Song Deering. Sometimes she used her maiden name as her middle name. Joy Lee divorced, eventually married Jerrold Lee and adopted the name Lee. Though given the name Melody by her English teacher when she came to the U.S. because Miryoung is hard to remember, she did not like the name Melody and changed it to Joy. Joy Lee testified that many Koreans adopt American names as "nicknames." She further testified that she has not used any of the above names in order to deceive Paliafito. (10 Tr.2d 1031:24 — 1033:14 (Joy Lee).)

5.² Joy Lee currently owns 100% of third party defendant Many Amazing Ideas, Inc. ("MAI"). (2 Tr.2d 219:2-6 (Joy Lee).) MAI was formerly known as Mantae America, Inc. (DX 59.) Mantae's predecessor company was Best International, which was also owned by the Lees. (4 Tr.2d 287:5-11 (Joy Lee); DX 24 ¶ 6.)

6. Joy Lee also controls Grip Toys, Inc., as president of the corporation. (DX 262; DX 263.)

7. Joy Lee and Jerrold Lee work together in the production and marketing of GRIP BALL: Jerrold Lee is in charge of manufacturing, and Joy Lee is in charge of sales worldwide. (3 Tr.2d 259, 260-61:6-13, 18-25, 1 (Joy Lee).)

8. Third party defendant MAI is a New York corporation with its principal place of business in California. (Mantae's Ctcl. ¶ 1; DX 12; DX 9.)

9. MAI also has an office at 990 Avenue of the Americas, Suite 18-S, New York, NY. (DX 5.)

10. MAI is the assignee of all of the right, title and interest in and to a "pitch and catch" game marketed in association with the mark "GRIP BALL" (the "GRIP BALL Game" or the "Game"). (DX 105.)

11. Third party defendant Mantae Company, Limited ("MCL") is an alien corporation organized under the laws of the Republic of Korea with its principal place of business in or near Seoul, Korea. (DX 11A, at 1, ¶ 1; DX 248; DX 248T; DX 249; DX 249T.)

12. MCL manufactures GRIP BALL. (1 Tr. 168:7-9, 19-23 (Paliafito); 10 Tr.2d 1034:7-18 (Joy Lee); DX 11A, at 1, ¶ 3.)

13. Joy Lee owns fifty percent of MCL. (Mantae's Ans. ¶ 8.) Jae Duc Kim, a Korean national, owns the other half. (2 Tr.2d 219:7-12 (Joy Lee); 10 Tr.2d 1034:13-18 (Joy Lee).)

14. Puff Pac Production, Limited ("Puff Pac") is an alien corporation organized under the laws of the Republic of Korea with its principal place of business in Korea. (DX 267; DX 268.)

15. Puff Pac also manufactures the Game. (DX 241 ¶ 7; 10 Tr.2d 1039:2-4 (Joy Lee).)

16. Jerrold Lee and his family own Puff Pac. (10 Tr.2d 1034:2-3 (Joy Lee).)

17. MAI, Ltd. ("MAI, Ltd.") is an alien corporation organized under the laws of the Republic of Korea with its principal place of business in Korea. (DX 265; DX 266.) MAI, Ltd. was created in March 1991. (10 Tr.2d 1036:14-17 (Joy Lee); DX 265 at ¶ 7; DX 266 at ¶ 7.)

18. MAI, Ltd. manufactures the Game. (10 Tr.2d 1039: 2-4 (Joy Lee).)

19. Jerrold Lee and his family own MAI, Ltd. (10 Tr.2d 1037:14-15 (Joy Lee).)

20. Best General Merchandise Corp. (a/ k/a "Chusik Hosea Kyongyong" and Maru Joint Stock Trading Company) ("Best General") is an alien corporation organized under the laws of the Republic of Korea with its principal place of business in Korea. (DX 246; DX 247; DX 268A.)

21. Jaeil Kim owns Best General and is a friend of Joy and Jerrold Lee. (10 Tr.2d 1039:15-24 (Joy Lee).)

22. Best General is affiliated with MAI. (DX 243.)

23. Joy Lee used her office as an American contact office for Best General's U.S. business operations. (10 Tr.2d 1073:9-25 (Joy Lee); DX 245.)

24. Third party defendant Samuel Petrovich resides in Wisconsin and is President of Select Creations, Inc. ("Select"). (Answer and Defenses of Counter-defendants Select Creations, Inc., Sam Petrovich and Thomas Meisenheimer ("Select Ans.") ¶ 10; DX 406.) Petrovich is the sole owner of Select. (3 Tr. 468:8-10 (Petrovich).)

25. Third party defendant Thomas Meisenheimer resides in Wisconsin and is an employee of Select holding the title of Vice President of Marketing and New Product Development. (Select Ans. ¶ 11; DX 406, at 2; DX 407.)

26. Plaintiff/third party defendant Select is a Wisconsin corporation with its principal place of business in Milwaukee, Wisconsin. (Select Ans. ¶ 12.) Select also maintains an office in California. (Select Ans. ¶ 12.)

27. Select's California office, Select Creations West, employs Robert Hooper ("Hooper") and John Burke ("Burke"). (1 Tr. 170:4-6 (Paliafito); DX 50.)

28. Hooper is Select's Executive Vice President. (DX 406, at 1; DX 407.)

29. Burke is Select's Vice President for Sales. (DX 406, at 1; DX 407.)

30. At one time, Paliafito was the exclusive United States distributor of GRIP BALL, by virtue of a contract with MAI and MCL, and had hired Select to serve as its mass-marketing consultant. (DX 11/11A; DX 65; 1 Tr. 169:9-18 (Paliafito).)

B. FACTS RELATING TO REQUESTS FOR ATTACHMENT AND INJUNCTIVE RELIEF

1. Corporate pool

31.³ The Lees, husband and wife, sell GRIP BALL internationally. Joy is in charge of sales. Jerrold is in charge of manufacturing. (3 Tr.2d 260:18-24 (Joy Lee).)

32. The Lees control MCL, Puff Pac, and MAI Ltd., the Korean manufacturers of the Game. (FF ¶¶ 12, 15, 18.)

33. The Lees control MAI and Grip Toys, Inc., the sellers of the Game. (FF ¶¶ 5, 6.)

34. Best General shares Korean and U.S. offices with MAI. (FF ¶¶ 80-83.)

35. Joy Lee testified that she created this corporate pool because she did not want to "put ... all eggs in one basket." That is, if something happened at one facility so that it could not continue to produce the Game, another facility could provide it. (10 Tr.2d 1037:4-9 (Joy Lee).)

2. Evolving corporate names

36. In the mid-1980s, the Lees conducted business in the United States through Best International. (DX 272 ¶ 1.)

37. They later incorporated this business in New York. (DX 257.)

38. The Lees incorporated the business under the name Mantae America, Inc. in New York. (DX 12; DX 272 ¶ 1.)

39. Last year, the Lees changed the name of the business from Mantae America, Inc. to Many Amazing Ideas, Inc. (PFF ¶ 92.)

40. In April 1991, the Lees formed a company, MAI, Ltd., under the laws of Nevada. (DX 262.)

41. In November 1991, they changed the name of MAI, Ltd. to Grip Toys, Inc. (DX 262; DX 263.)

3. Evolving corporate relationships

42. MAI's contract with Kiddie Wonder states "Mantae America, Inc. is the exclusive world-wide distributor of the ... line of removable stickers which are manufactured by Mantae America, Inc.'s parent company Mantae Co., Ltd. of Korea...." (DX 250 (emphasis added).)

43. A plaque outside Mantae's Walnut Office reads "Mantae America, Inc., a branch of Mantae Co., Ltd. Korea." (DX 251 (emphasis added).)

44. MAI's company stationery reads "Mantae America, Inc., a division of Mantae Co., Ltd." (DX 251A (emphasis added).)

45. In September 1991, Joy Lee testified in her deposition in the New Market Concepts case that Mantae Co., Ltd. was owned fifty percent by Mantae America, Inc. (3 Tr.2d 240-41, 45:22-25, 1-22, 1-23 (Joy Lee).)

46. Joy Lee testified to the Court that MAI and MCL were related because she owned fifty percent of MCL and, at the time in question, fifty percent of MAI. (3 Tr.2d 246-47:8-16, 8-11 (Joy...