Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc. et al, No. 3:2011cv02861 - Document 309 (N.D. Cal. 2013)
Court Description: ORDER GRANTING 273 MOTION to Alter Judgment or Amend filed by Toll Global Forwarding (Americas) Inc., Seamaster Logistics, Inc.. Signed by Judge Samuel Conti on 7/18/2013. (sclc1, COURT STAFF) (Filed on 7/18/2013)
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Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc. et al Doc. 309 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 MITSUI O.S.K. LINES, LTD., ) ) Plaintiff, ) ) v. ) ) SEAMASTER LOGISTICS, INC., SUMMIT ) LOGISTICS INTERNATIONAL, INC., ) KESCO CONTRAINER LINE, INC.; KESCO ) SHIPPING, INC., and DOES 1 through ) 20, ) ) Defendants. ) ) ) For the Northern District of California United States District Court 10 11 12 13 14 15 16 17 Case No. 11-cv-02861-SC ORDER GRANTING SUMMIT LOGISTICS INTERNATIONAL, INC.'S MOTION TO ALTER OR AMEND THE JUDGMENT 18 19 I. 20 INTRODUCTION The Court issued Findings of Fact ("FF") and Conclusions of 21 Law ("CL") in the above-captioned matter on March 21, 2013. 22 No. 261.1 23 Logistics International ("Summit US") and Kesco Container Line, 24 Inc. ("Kesco") liable for intentional misrepresentation and 25 conspiracy. 26 conspired together to induce Plaintiff Mitsui O.S.K. Lines, Ltd. ECF Among other things, the Court found Defendants Summit Specifically, the Court found that the defendants had 27 1 28 Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc., 11-CV02861-SC, 2013 WL 1191213, 2013 U.S. Dist. LEXIS 40466 (N.D. Cal. Mar. 21, 2013). Dockets.Justia.com 1 ("MOL") to pay for fake truck shipments. The Court held Summit US 2 and Kesco jointly and severally liable for the entire scheme, which 3 ran from 2000 through June 2010. 4 motion to alter or amend the judgment pursuant to Rule 59(e). 5 No. 273 ("Mot."). 6 agreed with Summit US's argument that Summit US could not be held 7 liable for torts completed before it joined the conspiracy. 8 However, the Court deferred ruling on the motion and asked for 9 supplemental briefing on whether Summit US could be held liable for Summit US subsequently filed a ECF In an Order issued on May 30, 2013, the Court United States District Court For the Northern District of California 10 shipments completed before its incorporation under a theory of 11 successor liability. 12 requested supplemental briefing on the issue of whether the Court 13 had held the defendants liable for damages attributable to 14 shipments made after June 2010. 15 supplemental briefs on these issues. 16 Liability Br."), 300 ("MOL Damages Br."), 301 ("MOL Liability 17 Br."), 303 ("Summit Damages Br."). 18 for determination without oral argument pursuant to Civil Local 19 Rule 7-1(b). 20 to alter or amend the judgment is GRANTED. ECF 296 ("May 30 Order"). The Court also Summit US and MOL have since filed ECF Nos. 298 ("Summit The matter is now appropriate For the reasons set forth below, Summit US's motion 21 22 II. BACKGROUND 23 A. 24 MOL is a vessel-operating common carrier ("VOCC") that Factual Background 25 operates ships that carry cargo between foreign ports and the 26 United States. 27 operating common carriers ("NVOCC(s)") that contracted for space on 28 MOL's vessels and re-sold that space to their own customers. Defendants Summit US and Kesco are non-vessel 2 When 1 moving cargo from Asia to the United States, MOL sometimes arranged 2 trucking for its NVOCC customers through third-party truckers. 3 example, at the behest of its customers, MOL sometimes paid third 4 parties for trucking between factories in inland China to ports in 5 Hong Kong. 6 customers a higher rate for through carriage. For MOL would recover the trucking costs by charging its In this case, Kesco and Summit US conspired with Michael Yip, 7 8 a high-level MOL employee, to induce MOL to pay for trucking that 9 never actually occurred. Under this so-called "Shenzhen door United States District Court For the Northern District of California 10 arrangement," Summit US and Kesco requested that MOL arrange for 11 trucking between inland ports (typically in Shenzhen) and Hong 12 Kong, and nominated Rainbow Trucking ("Rainbow") to perform the 13 trucking services. 14 Kesco for each truck move. 15 was less than the extra charge to Defendants, MOL would lose money 16 on each truck move. 17 perform any trucking, but it kicked back a portion of MOL's 18 payments to Defendants to compensate them for requesting and paying 19 for trucking services that they neither needed nor used.2 MOL would pay Rainbow and charge Summit US and Because the price MOL paid to Rainbow Unbeknownst to MOL, Rainbow did not actually 20 The Shenzhen door arrangement began sometime in 2000. At that 21 time, Yip proposed the arrangement to one of Kesco's high-level 22 officers, Raymond Cheng. 23 with the help of two of his subordinates, Winnie Lau and Geoff 24 Tice. 25 trucking rates with MOL representatives. 26 /// Cheng carried out the scheme at Kesco Lau booked the fake truck moves, and Tice negotiated 27 2 28 Findings of Fact paragraphs 10 through 68 provide a more detailed description of the Shenzhen door arrangement and Defendants' involvement in the scheme. 3 1 Much of the cargo moving under the Shenzhen door arrangement 2 was connected to Fashion Merchandising Inc. ("FMI"), a company that 3 performed warehousing and trucking services for a number of garment 4 manufacturers, including Jones Apparel. 5 strategic partners. 6 States, Kesco acted as FMI's local handling agent in Hong Kong, and 7 the two companies had a profit sharing agreement. 8 player in the Shenzhen door arrangement, worked for both Kesco and 9 FMI at various times. United States District Court For the Northern District of California 10 FMI and Kesco were FMI acted as Kesco's sales agent in the United Tice, a key In 2006, FMI was acquired by the newly formed Summit Group, 11 which is not a defendant in this case. 12 Kesco continued to act as the local handling agent for the Jones 13 Apparel business. 14 under the Shenzhen door arrangement. 15 to the Summit Group, where he continued to negotiate Shenzhen 16 trucking rates without informing MOL that no trucking was actually 17 taking place. 18 After the acquisition, It also continued to move Jones Apparel cargo Tice eventually transitioned In 2008, the Summit Group and its various subsidiaries, 19 including FMI, went through a strategic bankruptcy. The companies 20 were eventually liquidated, and their assets were purchased by 21 TriDec Acquisition Co., Inc. ("TriDec"), which was managed by a 22 number of Summit Group executives. 23 acquisition did not interrupt the operations of the former Summit 24 Group companies. 25 before, during, and after the bankruptcy. 26 these companies continued to accept customer bookings, issue bills 27 of lading, and manage the movement of cargo. 28 incorporated in March 2008 and primarily serviced beneficial cargo The bankruptcy and the TriDec The same managers continued to run the companies 4 Throughout the process, Summit US was 1 owners. From May 25, 2008 through the end of 2008, Summit US used 2 Kesco as its handling agent in Hong Kong. 3 Summit US's shipments using the Shenzhen door arrangement. Kesco booked many of 4 In an effort to completely transition the Jones Apparel 5 business away from Kesco, Summit US created Summit Logistics 6 International (SCM HK) Limited ("Summit SCM") in 2009. 7 was a joint venture between Summit US and the three principal 8 owners of Kesco. 9 2009 and supplanted Kesco as the agent in Hong Kong for Summit US Summit SCM The joint venture commenced operations in January United States District Court For the Northern District of California 10 shipments. 11 arrangement at Kesco were brought on to run Summit SCM. 12 initially hired as a consultant to assist with the start-up of 13 Summit SCM's operations, and Lau was later hired to run day-to-day 14 operations. 15 moved from Kesco to Summit SCM. 16 Rainbow to perform Summit SCM's trucking. 17 Lau and Cheng, Summit SCM took part in the Shenzhen door 18 arrangement. 19 Two of the principal managers of the Shenzhen door Cheng was Lau continued to report to Cheng at Kesco after she In January 2009, Cheng nominated Under the direction of Kesco and Summit terminated the Shenzhen door arrangement in 20 June 2010, when MOL inexplicably raised its rates for Shenzhen 21 trucking. 22 represents that Kesco is now a dead company and suggests that Kesco 23 is essentially judgment-proof. 24 25 B. Kesco ceased operations in December 2010. MOL Procedural History MOL brought the instant action on June 10, 2011. MOL's second 26 amended complaint, the operative pleading in this matter, asserts 27 causes of action for, inter alia, intentional misrepresentation and 28 conspiracy. ECF No. 72 ("SAC"). The Court held a bench trial from 5 1 January 28 through February 19, 2013. In addition to hearing oral 2 arguments, the Court requested pre- and post-trial briefs, which 3 the parties submitted. 4 trial brief, MOL argued that, under California law, all of the 5 defendants should be held jointly and severally liable as co- 6 conspirators. 7 conspiracy issue until after judgment was rendered. ECF Nos. 172, 193, 253, 255. In its pre- Summit US did not substantively address the 8 In their post-trial briefs, the parties disputed whether 9 Summit US could be held liable for shipments moving under the United States District Court For the Northern District of California 10 Shenzhen door arrangement prior to Summit US's incorporation in 11 March 2008. 12 actions taken prior to its corporate existence and, in any event, 13 MOL had not asserted a claim for successor liability. 14 countered that its second amended complaint adequately pleaded 15 facts to put Summit US on notice of a claim for successor 16 liability. 17 moved to amend its complaint to add such a cause of action. 18 No. 254. 19 Summit US argued that it could not be held liable for MOL Post-Trial Br. at 22. MOL In the alternative, MOL ECF In its Findings of Fact and Conclusions of Law, the Court 20 found in favor of MOL on its claims for intentional 21 misrepresentation and conspiracy, holding Summit US and Kesco 22 jointly and severally liable for $8,294,393.11. 23 MOL's conspiracy claim, the Court found that Kesco had entered a 24 conspiracy with Yip as early as 2000, when Yip and Cheng agreed to 25 the Shenzhen door arrangement. 26 joined the conspiracy as late as 2009 through Summit SCM, its joint 27 venture with the Kesco partners. 28 conspirators, Summit US and Kesco could be held jointly and With respect to The Court also found that Summit US The Court held that, as co- 6 1 severally liable for the entire conspiracy, including acts 2 committed in furtherance of the conspiracy prior to Summit US's 3 incorporation. 4 U.S. 640, 646-47 (1946)). 5 not need to reach the issue of successor liability. CL at 61-62 (citing Pinkerton v. United States, 328 As a result, the Court found that it did Id. at 68-69. Summit subsequently filed a motion to alter or amend the 6 7 judgment pursuant to Rule 59(e).3 8 had erred in two ways: (1) by holding Summit US jointly and 9 severally liable for torts completed before it entered the Summit US argued that the Court United States District Court For the Northern District of California 10 conspiracy, and (2) by holding Summit US and Kesco liable for 11 shipments made between July 2010 and December 2010, after the 12 termination of the conspiracy. 13 agreed with Summit US on both counts, but deferred entering an 14 amended judgment pending supplemental briefing on two major issues: 15 (1) whether Summit US could be held liable for the acts of the 16 Summit Group under a theory of successor liability and (2) what 17 portion of the damages previously awarded were attributable to 18 shipments made after June 2010. 19 successor liability was now relevant since Summit US could no 20 longer be held liable for pre-2008 shipments under the principles 21 of conspiracy law. In a May 30, 2013 Order, the Court The Court found that the issue of 22 23 III. DISCUSSION As discussed above, the Court has already found that Summit US 24 25 may not be held jointly and severally liable for torts completed 26 before it entered the conspiracy and that neither Summit US nor 27 Kesco may be held liable for shipments made after June 2010, the 28 3 That motion is fully briefed. ECF Nos. 285, 288. 7 1 date the conspiracy ended. Thus, the issues remaining before the 2 Court are: (1) whether Summit US is liable for the acts of its 3 purported predecessor; (2) if not, whether Summit US may still be 4 held liable for Shenzhen door shipments made between the time of 5 its incorporation in 2008 and formation of Summit SCM in 2009; and 6 (3) the total damages attributable to Summit US and Kesco. 7 A. 8 MOL contends that Summit US should be held liable for 9 Successor Liability shipments made under the Shenzhen door arrangement as early as United States District Court For the Northern District of California 10 2006, when the Summit Group began operations. 11 arguing that it cannot be held liable for the acts of its 12 predecessor. 13 MOL's attempt to impose successor liability on Summit US is 14 procedurally improper. 15 could assert a claim for successor liability, it has failed to 16 prove that claim. 17 18 1. Summit US disagrees, For the reasons set forth below, the Court finds that Further, the Court finds that even if MOL Procedural Considerations As a procedural matter, MOL may assert a claim for successor 19 liability if such a claim is properly pled in its SAC, or if MOL 20 establishes that its SAC may be amended to conform to the evidence 21 adduced at trial. 22 condition applies here. 23 As set forth below, the Court finds that neither A claim for successor liability must generally be pled in a 24 manner which comports with the requirements of Federal Rule of 25 Civil Procedure 8. 26 2012 U.S. Dist. LEXIS 154435, at *15-16 (N.D. Cal. Oct. 25, 2012). 27 Here, MOL did not expressly assert a claim for successor liability 28 in its SAC, the operative pleading in this matter. See Owens v. Bank of Am., N.A., 11-cv-4580-YGR, 8 MOL contends 1 that the SAC makes it clear that MOL was seeking to recover damages 2 from Summit US for a period of time that pre-dates its 3 incorporation in 2008. 4 portions of the SAC cited by MOL indicate that the alleged 5 conspiracy pre-dated 2008, not that MOL seeks to hold Summit US 6 liable for the acts of its predecessor. 7 also argues that allegations of successor liability should be 8 reviewed under the liberal notice pleading standards of Rule 8. 9 MOL Liability Br. at 17. MOL Liability Br. at 16. However, the See SAC ¶¶ 6, 79, 86. MOL But the authority cited by MOL addresses United States District Court For the Northern District of California 10 pleadings that expressly allege that one party is the successor-in- 11 interest of another and that the successor should be held liable 12 for the acts of its predecessor. 13 L.L.C., 08-2501-JWL, 2009 WL 564381, at *1-2 (D. Kan. Mar. 5, 14 2009). 15 liability alleged. See Chao v. Concrete Mgmt. Res., MOL's pleading is far less clear about the scope of MOL's pleading defects are not necessarily fatal, since 16 17 Federal Rule of Civil Procedure 15(b) allows the amendment of 18 pleadings during and after trial. 19 to correct its pleadings to conform with the evidence adduced at 20 trial. 21 on an issue not raised by the pleadings where that issue is tried 22 by parties' express or implied consent. 23 expressly consent to Plaintiff's claims for successor liability, 24 and its repeated objections to MOL's proffer of evidence of 25 successor liability throughout trial indicates that the issue was 26 not tried by implied consent. 27 1630. 28 objects to evidence that is not within the issues raised in the ECF No. 254. Pursuant to Rule 15, MOL moved Rule 15(b)(2) provides that a Court may rule Summit US did not See, e.g., Tr. 986-987, 1453-1455, Rule 15(b)(1) applies to situations where an opposing party 9 1 pleadings. The rule provides that, in such cases, "[t]he Court 2 should freely permit an amendment when doing so will aid in 3 presenting the merits and the objecting party fails to satisfy the 4 Court that the evidence would prejudice that party's action or 5 defense on the merits." 6 that allowing MOL to amend now would prejudice Summit US. 7 point early in the trial, MOL represented that it was introducing 8 evidence concerning the predecessor companies merely for 9 background, Tr. at 87, and at a later point the Court sustained Fed. R. Civ. P. 15(b)(1). The Court finds At one United States District Court For the Northern District of California 10 Summit US's relevance objections to evidence concerning the 11 predecessor companies, id. at 1454-55. 12 have been working under the assumption that it did not need to 13 introduce evidence concerning successor liability. 14 Accordingly, Summit US may Trial objections aside, Summit US would be prejudiced if the 15 Court now allowed MOL to amend its pleading. 16 Section III.A.2 infra, successor liability raises distinct 17 evidentiary issues, including whether the successor is a mere 18 continuation of the predecessor and whether the successor paid 19 adequate consideration for the predecessor. 20 did not put Summit US on notice of its claims for successor 21 liability, Summit US did not have an opportunity to develop these 22 issues during discovery or at trial. 23 As discussed in Because MOL's pleading For these reasons, the Court finds that MOL's assertion of 24 successor liability is procedurally improper and DENIES MOL's 25 motion to amend its pleadings. 26 27 28 2. Substantive Considerations Even if MOL could assert a cause of action for successor liability, the Court finds that MOL failed to prove it at trial. 10 equitable considerations. 3 (Cal. 1977); see also Rosales v. Thermex-Thermatron, Inc., 67 Cal. 4 App. 4th 187, 196 (Cal. Ct. App. 1998). 5 liability must be assessed on its own unique set of facts. 6 CenterPoint Energy, Inc. v. Super. Ct., 157 Cal. App. 4th 1101, 7 1122 (Cal. Ct. App. 2007). 8 that purchases the assets of another does not assume the 9 liabilities of the selling corporation unless: "(1) there is an 10 United States District Court The decision whether to impose successor liability involves broad 2 For the Northern District of California 1 express or implied agreement of assumption, (2) the transaction 11 amounts to a consolidation or merger of the two corporations, (3) 12 the purchasing corporation is a mere continuation of the seller, or 13 (4) the transfer of assets to the purchaser is for the fraudulent 14 purpose of escaping liability for the seller's debts." 15 Cal. 3d at 28. 16 See Ray v. Alad Corp., 19 Cal. 3d 22, 34 Each case of successor See Under California law, a corporation Ray, 19 MOL focuses on the third ground for liability, arguing that 17 Summit US is a "mere continuation" of the Summit Group, though MOL 18 has yet to identify which particular Summit Group subsidiary 19 constitutes the predecessor company. 20 Supreme Court held that courts should only impose liability under 21 the mere continuation theory where the plaintiff shows "one or both 22 of the following factual elements: (1) no adequate consideration 23 was given for the predecessor corporation's assets and made 24 available for meeting the claims of its unsecured creditors; (2) 25 one or more persons were officers, directors, or stockholders of 26 both corporations." 27 dispute that the second criterion is satisfied here. 28 Summit Group companies went into bankruptcy, their assets were Id. at 29. In Ray, the California There does not appear to be any 11 After the 1 purchased by TriDec, which was managed and owned by the same 2 individuals who managed and owned the Summit Group. 3 subsidiary of TriDec, was managed by some of these same 4 individuals. 5 Summit US, a The parties do dispute whether MOL must show that insufficient 6 consideration was paid for the Summit Group. 7 Supreme Court has yet to issue an unequivocal ruling on this issue. 8 As noted above, in Ray, the court held that a plaintiff must show 9 "one or both" of the factors involving insufficient consideration Since Ray was decided, several United States District Court For the Northern District of California 10 and the identity of officers. 11 courts have held that inadequate consideration is an essential 12 ingredient or a crucial factor in assessing successor liability. 13 See Katzir's Floor & Home Design, Inc. v. M-MLS.com, 394 F.3d 1143, 14 1150 (9th Cir. 2004) (inadequate consideration is an "essential 15 ingredient"); CenterPoint, 157 Cal. App. 4th at 1121 ("crucial 16 factor"); Franklin v. USX Corp., 87 Cal. App. 4th 615, 625 (Cal. 17 Ct. App. 2001) ("crucial factor"); Maloney v. Am. Pharm. Co., 207 18 Cal. App. 3d 282, 288-89 (Cal. Ct. App. 1988) ("essential 19 ingredient"). 20 Id. The California As MOL points out, one recent case has held that a showing of 21 inadequate consideration is not necessary to establish successor 22 liability. 23 23 (Cal. Ct. App. 2013), the defendant took money that the 24 plaintiff had invested in ISI, the defendant's internet provider 25 business, and used that money to fund a similar business, IS West. 26 Around the time of the asset transfer, ISI declared bankruptcy. 27 Id. at 1324. 28 other things, breach of contract, alleging that the defendants had In Cleveland v. Johnson, 209 Cal. App. 4th 1315, 1320- The plaintiff sued defendant and IS West for, among 12 1 "hijack[ed]" his investment "for [their] own use and profit without 2 the burden of the obligations owed to [the plaintiff]." 3 jury returned a verdict for the plaintiff. 4 defendants appealed, arguing that IS West could not be held liable 5 as a successor of ISI because there was no evidence IS West paid 6 inadequate consideration for the transferred assets. 7 The court of appeal held that the plaintiff did not need to show 8 inadequate consideration, reasoning that previous cases merely hold 9 that "no single factual element, standing alone, would establish or Id. at 1325. The The Id. at 1326. United States District Court For the Northern District of California 10 negate successor liability." 11 that the jury's verdict was sustainable on the separate ground that 12 successor liability could be imposed where "the transfer of assets 13 to the purchaser is for the fraudulent purpose of escaping 14 liability for the seller's debts." 15 28). 16 Id. at 1334. Id. Cleveland is distinguishable. The court also noted Id. (quoting Ray, 19 Cal. 3d at First, there is no indication 17 that the Summit Group's assets were transferred to Summit US for 18 the fraudulent purpose of escaping liability to MOL. 19 Agresti and Robert O'Neill, the Summit US/Summit Group principals 20 who arranged the bankruptcy and asset transfer, testified that they 21 had no knowledge of the Shenzhen door arrangement until this 22 lawsuit was filed. 23 a central issue in Cleveland because the defendant invested the 24 plaintiff's money in a successor organization to avoid the 25 obligations owed to the plaintiff. 26 Second, the court of appeals noted that Cleveland was distinct from 27 other successor liability cases because the individual defendant 28 and the successor corporation owed a fiduciary duty to the FF ¶ 48. Robert In contrast, successor liability was 13 209 Cal. App. at 1325, 1334. 1 plaintiff. Id. at 1332 n.7. Here, there is no indication that 2 Summit US or the Summit Group owed MOL any kind of fiduciary duty. 3 Third, MOL had an opportunity to file a claim with the bankruptcy 4 court. 5 predecessor files bankruptcy and its debts are discharged, . . . it 6 is the discharge and the lack of sufficient assets that deprive the 7 predecessor's creditors of their remedy[.]"). 8 was not aware of the fraud until 2011, three years after the 9 bankruptcy petition was filed. See Katzir's Floor, 394 F.3d at 1151 ("Where the MOL argues that it However, the Court has already United States District Court For the Northern District of California 10 found that MOL had reason to investigate the Shenzhen door 11 arrangement much earlier than it did and that a reasonable 12 investigation would have uncovered the fraud. FF ¶ 73. Accordingly, the Court finds that MOL must show that TriDec 13 14 paid inadequate consideration for the assets of the Summit Group.4 15 The Court also finds that MOL has not met its burden. 16 indication that the Summit Group bankruptcy prejudiced the 17 company's creditors or deprived them of a remedy. 18 little evidence concerning the bankruptcy was introduced at trial. 19 Since MOL cannot show inadequate consideration, it cannot establish 20 successor liability on the part of Summit US for the bad acts of 21 the Summit Group. B. 22 23 There is no In fact, very Summit US's Liability for Shenzhen Door Shipments Made between May 2008 and January 2009 MOL argues that even if the Court decides that Summit US has 24 25 no successor liability for the pre-bankruptcy conduct of the Summit 26 Group, Summit US should still be held liable for the damages 27 4 28 Summit US argues that MOL must also show that Summit US is the alter ego of TriDec. The Court need not reach the issue since other elements of successor liability are absent. 14 1 attributable to the 3,110 Shenzhen door shipments made between May 2 25 and December 30, 2008 -- that is, those shipments made after the 3 bankruptcy but before the creation of Summit SCM. 4 agrees. 5 involved with the conspiracy as late as 2009, through Summit SCM, 6 its joint venture with the Kesco partners. 7 Summit US's liability predates 2009 since Kesco, its handling 8 agent, booked Shenzhen door shipments on behalf of Summit US during 9 this period. United States District Court The Court previously held that Summit US was directly CL at 61. However, FF ¶ 49. Summit US argues that it should not be held liable for these 10 For the Northern District of California The Court 11 shipments because Kesco did not inform anyone at Summit US about 12 the Shenzhen door arrangement. 13 regardless of whether Summit US had any direct knowledge of these 14 shipments, it can still be held liable under the basic principles 15 of agency law. 16 agent, its bad acts can be imputed to Summit US. 17 of Am., 30 Cal. App. 4th 1, 6 (Cal. Ct. App. 1994). 18 evidence shows that Summit US was involved in the conspiracy in the 19 period after the bankruptcy and prior to the formation of Summit 20 SCM. 21 door rates with MOL on behalf of the Summit Group. 22 making a fresh start after the 2008 bankruptcy, Summit US continued 23 to enjoy the benefits of the conspiracy and declined to disclose 24 the scheme to MOL. 25 Summit Group's misconduct, it cannot escape liability for its own 26 actions after the Summit Group bankruptcy. 27 /// 28 /// Summit US Br. at 14. But Since Kesco was acting as Summit US's handling See Black v. Bank Further, the Tice actively managed the conspiracy by negotiating Shenzhen Rather than While Summit US can avoid liability for the 15 1 C. Damages 2 The Court previously found that Summit US and Kesco were 3 jointly and severally liable to MOL for $8,284,393.11. 4 now finds that the judgment should be reduced so that (1) neither 5 Kesco nor Summit US is held liable for shipments made after June 6 2010, see May 30 Order at 14; and (2) Summit US is not held liable 7 for shipments made before May 25, 2008, see Section III.A-B supra. With respect to the first point, the Court previously held 8 9 The Court Kesco and Summit US liable for $603,149.89 in connection with United States District Court For the Northern District of California 10 Shenzhen door shipments made in 2010. It is now clear that many of 11 these shipments were made after June 2010 -- that is, after the 12 conclusion of the conspiracy. 13 these post-June 2010 shipments amount to $275,730.77.5 14 these post-June 2010 shipments are deducted, Kesco's total 15 liability is $8,008,662.34. 16 with all Summit US and Kesco Shenzhen door shipments made from 2000 17 through June 2010. The total damages associated with Thus, after This represents the damages associated With respect to the second point, Summit US is jointly and 18 19 severally liable for that portion of the $8,008,662.34 associated 20 with Shenzhen door shipments made between May 25, 2008 and June 30, 21 2010. 22 shipments under the Summit US service contract from May 25, 2008 23 through June 30, 2010. The evidence shows that MOL carried 7,271 Shenzhen door See Ex. P-264. The damages associated with 24 5 25 26 27 28 The Court calculated this number based on Exhibits P-262 and P264, spreadsheets which contain the Bill of Lading ("B/L") data for Kesco and Summit US shipments, respectively. Each spreadsheet was sorted oldest to newest by B/L date. The Court then took the sum of the TPO Paid Amounts (Column AQ) for all shipments made between July 1, 2010 and December 30, 2010 (rows 11719 through 12313 in Exhibit P-262, and rows 7273 through 7297 in Exhibit in P-264). The Court then converted the figure from Hong Kong dollars to US dollars by dividing the sum by 7.8. 16 1 these shipments amount to $1,987,883.33.6 2 agency and conspiracy law, Summit US is also liable for Kesco's 3 Shenzhen door shipments between May 25, 2008 and June 30, 2010. 4 See Section III.B supra. 5 Kesco shipments amount to $242,648.72.7 6 liability is the sum of these two numbers: $2,230,532.05. Under principles of The total damages associated with these Thus, Summit US's total The parties have suggested alternative means for calculating 7 8 damages in their briefing. Summit US essentially asks the Court to 9 offset MOL's damages by any amounts that it paid MOL for the nonSee Summit US Damages Br. at 2-4. The Court United States District Court For the Northern District of California 10 existent trucking. 11 considered and rejected this methodology in its Conclusions of Law 12 and sees no reason to rule differently now. 13 the Court previously held, it would be inequitable to credit Summit 14 US or any of the other defendants for payments they made to conceal 15 their fraud. 16 of punitive damages and disgorgement of lost profits, which were 17 also addressed in the Conclusions of Law. 18 20. See id. See CL at 74-75. As MOL invites the Court to revisit the issues MOL Liability Br. at 19- The Court declines to do so. Accordingly, the Court finds that Kesco alone is liable to MOL 19 20 for $5,778,130.29 in damages. Further, Kesco and Summit US are 21 jointly and severally liable to MOL for an additional $2,230,532.05 22 in damages. 23 24 25 26 6 The Court derived this number by sorting Exhibit P-264 by B/L date, oldest to newest, and taking the sum of the TPO Amounts in column AQ, rows 2 through 7272. To convert from Hong Kong dollars to US dollars, the Court divided by 7.8. 7 27 28 The Court derived this number by sorting Exhibit P-262 by B/L date, oldest to newest, and taking the sum of the TPO Amounts in column AQ, rows 10937 through 11718. As before, the Court divided by 7.8 to convert from Hong Kong dollars to US dollars. 17 1 2 IV. CONCLUSION For the foregoing reasons and the reasons set forth in the 3 Court's May 30 Order, Defendant Summit US's motion to alter or 4 amend the judgment is GRANTED. 5 judgment entered on March 21, 2013 to reduce the damages 6 attributable to Summit US and Kesco in case number 11-cv-2861 SC. 7 The Court holds that Kesco is liable to MOL for $5,778,130.29 in 8 damages, and Kesco and Summit US are jointly and severally liable 9 to MOL for an additional $2,230,532.05 in damages. The Court hereby amends the The Court's United States District Court For the Northern District of California 10 findings and judgment with respect to Defendant SeaMaster 11 Logistics, Inc. and with respect to related case number 10-cv- 12 05591-SC remain undisturbed. 13 amended judgment. The Court will separately enter an 14 15 IT IS SO ORDERED. 16 17 18 Dated: July 18, 2013 UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 18
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