Tatung Co. v. Shu Tze Hsu
217 F. Supp. 3d 1138
C.D. Cal.2016Background
- Tatung (plaintiff), a foreign corporation doing business in the U.S., obtained arbitration awards and a California judgment against Westinghouse Digital Electronics (WDE) but could not collect; alleges a multinational scheme siphoned WDE assets to defeat collection.
- Plaintiff filed a Fourth Amended Complaint asserting RICO (18 U.S.C. §§1962(c), (d)), fraud, civil conspiracy, fraudulent-transfer and alter-ego claims against many individuals and entities (Houng family members, former WDE employees, corporate transferees).
- Defendants moved for summary judgment in groups: Bird Marella defendants (family members and related entities), Former Employee defendants, and David Chen; Tatung also moved for partial summary judgment on many affirmative defenses.
- Central factual disputes: who directed/benefitted from transfers (notably LED TV Assets transfer), whether WDE was insolvent (trust-fund doctrine), timing/discovery of injuries for RICO statute-of-limitations, and whether certain defendants operated or managed the alleged enterprise.
- Court held numerous discrete rulings: denied summary judgment on most RICO, fraud, conspiracy, alter-ego, and fiduciary-duty claims for several defendants; granted summary judgment for specific defendants on particular counts (listed in disposition); granted much of Tatung’s partial summary judgment cleaning up many defenses but left seven defenses for some defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Tatung suffered a "domestic" injury under §1964(c) for civil RICO | Injury was domestic because defendants targeted California (arbitration in LA; judgment confirmed in CA) and assets were siphoned in U.S. | Defendants: Tatung is a foreign corp and its injury is foreign, so RICO private action does not apply post-RJR Nabisco | Court: Tatung has a domestic injury (denied summary judgment on RICO on this basis) |
| Whether individual defendants (Chen, Lin, Huang, others) "conducted or participated" in enterprise under §1962(c) (operation/management test) | Tatung: emails, transactions, board actions, loan guarantees, fund transfers and other evidence show direction/participation | Defendants: limited/ministerial roles, no control or awareness of enterprise; some mere service providers | Court: triable issues exist as to many defendants (denied summary judgment for Chen, Lin, Huang and several family defendants); granted as to Rui-Lin Hsu and Douglas Woo on §1962(c) |
| RICO statute of limitations and accrual (four-year rule; discovery/injury date) | Tatung: injury accrued when judgment became uncollectable due to transfers (within limitations); equitable tolling/fraudulent concealment creates triable issues | Defendants: injury discovered earlier (e.g., 2009 arbitration demand) so claims time-barred; some predicate acts outside period cannot sustain RICO | Court: factual disputes about when particular injuries were discovered and equitable tolling—claims not dismissed on statute grounds; damages tied to injuries within or discovered within four years |
| Whether a RICO conspiracy (§1962(d)) exists as to various defendants | Tatung: agreement can be inferred from communications, coordinated transfers, common purpose to bust out WDE | Defendants: lack of agreement/knowledge; agent-immunity (employees acting for principals) | Court: denied summary judgment for Chen, Lin, Huang and some family/related entities (triable issues); granted for Araki, Salcedo, Moore and others where evidence insufficient |
| Alter ego and veil-piercing liability for family/related entities (Count X) | Tatung: equitable ownership, commingling, guarantees, use of personal/related-company assets show unity of interest and inequitable result if veil respected | Defendants: lack of share ownership or control; parent/owner activity insufficient to pierce veil | Court: genuine disputes exist for several family defendants (denied summary judgment); granted as to Chin‑Ying Hsu on alter-ego claim |
| Fiduciary duty/trust‑fund doctrine (direct duty to creditors) | Tatung: WDE was insolvent and officers/directors (and certain parent directors) diverted assets; duty owed to creditors; former employees and certain advisers participated | Defendants: WDE solvent through relevant period; some defendants were mere employees/attorneys (agent immunity); some lacked managerial authority | Court: triable issues as to insolvency and fiduciary breaches for many; summary judgment granted for Moore on Count VIII (insufficient de facto officer evidence); other fiduciary claims survive against several defendants |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary-judgment burdens and standards)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary-judgment standard and "scintilla" rule)
- Reves v. Ernst & Young, 507 U.S. 170 (operation and management test under RICO §1962(c))
- Turkette, United States v., 452 U.S. 576 (definition of RICO enterprise)
- RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (domestic-injury requirement for civil RICO)
- Chaset v. Fleer/Skybox Int'l, LP, 300 F.3d 1083 (elements of civil RICO)
- Odom v. Microsoft Corp., 486 F.3d 541 (RICO background and enterprise analysis)
- Berg & Berg Enterprises, LLC v. Boyle, 178 Cal.App.4th 1020 (California trust-fund doctrine and creditor duties)
- Filip v. Bucurenciu, 129 Cal.App.4th 825 (fraudulent-transfer badges of fraud under California UVTA)