ORDER ADOPTING MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION
The court has reviewed Magistrate Judge Chen’s November 2, 2001, Report and Recommendation Re: Plaintiffs Motion for Entry of default Judgment. No objections have been filed. The court finds the Report correct, well-reasoned and thorough, and adopts it in every respect. Accordingly, plaintiffs motion (Docket No. 47) is GRANTED. A separate judgment will be entered against defendants Dennis Kuei, Micro Link Systems, Inc., Microlink Data Systems, Inc., Cipher Instrument, Inc., and MIG, Inc. The remaining defendant, Matthew Tsai has filed a petition in bankruptcy and this matter is stayed as to him.
IT IS SO ORDERED.
REPORT AND RECOMMENDATION RE: PLAINTIFFS’ MOTION FOR ENTRY OF DEFAULT JUDGMENT (No. 47)
CHEN, United States Magistrate Judge.
Before the Court is the motion by plaintiffs Shanghai Automation Instrument Co., Ltd. and Shanghai Microlink Electronic Co., Ltd. for entry of default judgment against Dennis Kuei, Microlink Data System, Inc., Micro Link Systems,, Inc., Cipher Instrument, Inc., and Micro-link International Group, Inc. For the below reasons, the Court recommends that this motion be granted and default judgment entered.
BACKGROUND
In May 1993, Shanghai Automation Instrument Co., Ltd. (hereinafter referred to “Shanghai Automation”), a company based in the People’s Republic of China, orally agreed with Dennis Kuei, and Matthew Tsai, citizens and residents of the state of California, to enter into a joint venture (hereinafter referred to as the “Joint Venture”). (First Am. Compl. ¶ 15.) Shanghai Automation, Kuei and Tsai sought to assemble laptop computers in China for, inter alia, export to California. Id. Shanghai Automation contributed 75 percent of the initial costs of the Joint Venture and Kuei and Tsai contributed 25 percent. (First Am. Compl. ¶ 16.) Accordingly, Shanghai Automation was entitled to 75 percent of the profits of the Joint Venture, and Kuei and Tsai, the remaining 25 percent. Id.
On May 20, 1993, the parties reduced the oral agreement to enter the Joint Venture to a writing (hereinafter referred to
Thereafter, the parties formed and registered in China, Shanghai Microlink Electronic Company, Ltd. (hereinafter referred to as “SMEC”) to facilitate the goals of the Joint Venture. (First Am. Compl. ¶ 20.) Kuei was made Vice-Chairman of the Board of Directors of SMEC and Tsai, a director. (First Am. Compl. ¶ 24.)
With control of the daily operations of SMEC, Kuei and Tsai purchased laptop computer components exclusively from a Taiwanese corporation, Cypher Corporation (hereinafter referred to as “Cypher (Taiwan)”), manufactured the laptops in China and sold the laptops to Cipher Instrument, Inc. (hereinafter referred to as “Cipher (CA)”), a California corporation. (First Am. Compl. ¶¶ 25-26.) Unbeknownst to Shanghai Automation, these transactions were not arm’s-length deals as Kuei and Tsai owned and controlled both Cypher (Taiwan) and Cipher (CA). Id. To further complicate matters, Kuei and Tsai directed SMEC to make payments to Microlink Data Systems, Inc. (hereinafter “Microlink Data”), a California corporation owned by Kuei and Tsai, for the laptop computer components purchased from Cypher (Taiwan). (First Am. Compl. ¶¶ 8, 13 and 25.) For the laptops sold to Cipher (CA), the Joint Venture received partial payment from Cipher (CA) and Microlink Data and from Tsai personally. (First Am. Compl. ¶ 26.)
In 1998, Kuei and Tsai entered into eight separate sales agreements for the Joint Venture’s sale of 8,000 laptop computers to Cipher (CA). (First Am. Compl. ¶ 31.) At Kuei and Tsai’s direction, the Joint Venture shipped 7,000 of the 8,000 laptops to Cipher (CA) and the remaining 1,000 to Solar Technology Limited, a Hong Kong corporation not alleged to be owned and controlled by defendants Kuei and Tsai. Id. Neither Cipher nor any other entity or individual made payment for the 7,000 laptops. Id.
On February 8, 1998, Kuei was arrested in China for alleged fraud in connection with a business venture and requested that Shanghai Automation make loans to Kuei in the total amount of $2,187,000.00. (First Am. Compl. ¶ 32.) Kuei represented to Shanghai Automation that, as long as he was in custody, he was not in a position to facilitate the repayment of the monies owed to the Joint Venture by “Microlink” 1 and Cipher (CA). Id. Shanghai Automation made personal loans to Kuei on July 12, August 6 and 9, October 8, 1999 and January 31, 2000, which he did not repay. Id.
Shanghai Automation also made loans, in the total amount of $1,190,000.00, to Kuei and Tsai based on their representations that they needed operating expenses for their “Microlink” companies. (First Am. Compl. ¶ 33.) Shanghai Automation made loans to Kuei and Tsai on October 16 and 17, 1996, July 16, 1997, February 24 and May 13, 1998, which were also not repaid. Id.
During the course of the Joint Venture, Kuei, Tsai and Shanghai Automation, as joint venturers, borrowed monies from the Commercial and Industrial Bank of China that were to be used for operating expenses for the Joint Venture. (First Am. Compl. ¶ 37.) These loans, in the amount
On February 8, 2001, Shanghai Automation, on behalf of itself and SMEC, filed the Complaint herein against defendants Kuei, Tsai, Microlink Data, Micro Link Systems, Cipher (CA) and Microlink International Group, Inc., a California corporation purportedly owned and controlled by Kuei and Tsai (hereinafter referred to as “MIG, Inc.”), alleging: conversion, fraud, intentional misrepresentation, fraudulent concealment, breach of fiduciary duty, breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing and tortuous interference with contract. The Complaint was served on all defendants including all corporate entities who were served through the California Secretary of State as per Judge Hamilton’s order.
On May 3, 2001, defendant Tsai, individually, filed an answer to the Complaint. The remaining defendants, however, failed to answer and on May 14, 2001, defaults were entered. Default was not entered against Tsai.
On June 1, 2001, in anticipation of this motion for entry of default judgment, eventually filed on July 6, 2001, Judge Hamilton referred this matter to the Court for a report and recommendation.
REPORT
Federal Rule of Civil Procedure 55(b)(2) permits the Court, following a defendant’s default, to enter a final judgment in a case. There is no matter of right to the entry of a default judgment, and its entry is entirely within this Court’s discretion.
See Draper v. Coombs,
The Court considered the pleadings and other papers filed with this motion for entry of default judgment as well as considered the arguments of counsel for the plaintiffs at hearings on the motion conducted on September 5 and 25, 2001.
Defendants Kuei, Microlink Data, Micro Link Systems, Cipher (CA) and MIG, Inc. were served with both the Complaint and the current motion, yet failed to respond or enter any appearance in this case. (Ba-sombrio Deck ¶¶ 6-10, Ex. 5-9.)
The Complaint alleges,
inter alia,
that defendants Kuei, Microlink Data, Micro Link Systems, Cipher (CA) and MIG, Inc.: [1] wrongfully converted property; [2] intentionally misrepresented and intended to defraud Plaintiffs; [3] fraudulently concealed information from Plaintiffs; [4] breached fiduciary duties; [5] breached contracts; [6] unjustly enriched themselves; [7] breached the implied covenant of good faith and fair dealing; and [8] tortuously interfered with contracts. Some of the claims are brought on behalf
Where, as here, a default has been entered, the factual allegations of the Complaint together with other competent evidence submitted must be taken as true.
See TeleVideo Systems, Inc. v. Heidenthal,
In a diversity case, absent a choice-of-law contractual provision and under California choice of law rules, the Court presumes California law to apply unless there exists a compelling reason to displace state law with the law of a foreign jurisdiction.
See Browne v. McDonnell Douglas Corp.,
1. The Proper Plaintiff
Shanghai Automation contends that by their acts, specifically their conversion of the assets of the Joint Venture for their own benefit, defendants Kuei and Tsai repudiated the Joint Venture and in effect withdrew the 25 percent of Joint Venture capital that had been defendants Kuei and Tsai’s original contribution to the Joint Venture. Shanghai Automation further contends that the actions of defendants Kuei and Tsai left Shanghai Automation, through subrogation, as the 100 percent beneficial owner of the Joint Venture’s main, if not sole, asset — the corporate entity, SMEC.
Where a joint venturer wrongfully repudiates a joint venture agreement and converts the assets of the joint venture to his own use and benefit, the victim possesses the following remedies; he or she may: [1] waive any tort and sue to specifically enforce the joint venture agreement; [2] submit to defendant’s repudiation and sue for conversion; [3] submit to the repudiation and sue for breach of the joint venture agreement (i.e. lost profits); and [4] sue in tort.
Gherman v. Colburn,
While Shanghai Automation may advance these remedies, it fails to provide any authority for the proposition that it may also maintain claims on behalf of the Joint Venture or SMEC, through subrogation. It also fails to provide any authority to find that the actions taken by any defendant “in effect withdrew the 25 percent of the capital of the Joint Venture that they had originally contributed,” (First Am. Compl. ¶ 29), effectively resulting in a complete forfeiture by Kuei and Tsai of their equity in the Joint Venture. Absent authority to the contrary, it appears that neither the Joint Venture nor SMEC has standing to sue in this case. Only Shanghai Automation (hereinafter referred to as “Plaintiff’), the victimized Joint Venture partner, is entitled to pursue any or all of the aforementioned claims set forth by Gherman v. Colburn, supra. It may sue to recover its 75 percent entitlement for the acts committed against the Joint Venture.
2. The Proper Defendants
Plaintiff Shanghai Automation alleges that co-defendants Microlink Data, Micro Link Systems, Cipher (CA) and MIG, Inc. were the alter egos of defendants Kuei and Tsai, and thus Kuei may be sued directly for liabilities incurred by these defendánt corporations.
A corporation’s veil may be pierced and the corporation may be deemed an alter ego of an individual where: [i] an unity of interest and ownership exists between the personality of the corporation and the individual owner; and [ii] failure to disregard their separate identities would result in an inequitable result.
See AT&T Co. v. Compagnie Bruxelles Lambert,
In determining whether there exists an unity of interest and ownership between corporation and individual, the Court must look to a totality of circumstances, where no one factor is conclusive in consideration of factors such as: failing to adequately capitalize a corporation; commingling funds and other assets; treating the assets of the corporation as one’s own; diverting corporate assets to non-corporate uses without authority to do so; holding out as personally liable for corporate debts; having sole ownership of all the stock in a corporation by an individual or members of a family; contracting with another with intent to avoid performance by using a corporation as a shield against personal liability; using the corporation as a mere shell for a single venture or business of an individual or another corporation; concealing personal business activities; failing to maintain adequate corporate records; disregarding legal formalities; the use of the same office or business location; and the use of the corporate entity to procure labor, services or merchandise for another person or entity.
See Sonora Diamond,
Applying these factors to the evidence in the record, the Court concludes
First, according to the allegations of the Complaint, defendants Kuei and Tsai refer to and use Micro Link Systems, Mierolink Data and MIG, Inc. interchangeably. (First Am. Compl. ¶ 23.) For example, although they very clearly intended for Micro Link Systems to be party to the Joint Venture, (First Am. Compl. ¶¶ 18-22.), defendants Kuei and Tsai filed documentation in support of the application of the formation of SMEC with the Shanghai Commission on Foreign Trade and Economic Cooperation that listed Mierolink Data instead. (First Am. Compl. ¶¶ 20, 27.) Additionally, while the three companies are slightly different in name, the fact remains that Micro Link Systems, Micro-link Data and MIG, Inc. share two business addresses: 46600 Landing Parkway in Fremont, California and 1900 Wyatt Drive # 4-5 in Santa Clara, California. (Basombrio Decl. ¶¶ 2-4, Ex. 1-3.)
Second, Cipher (CA) also shares 46600 Landing Parkway in Fremont, California, as its business address. (Basombrio Decl. ¶ 5, Ex. 4.)
Third, defendant Kuei is the chief executive officer of Mierolink Data and the chief executive officer, secretary, chief financial officer, director and registered agent of Cipher (CA). (Basombrio Deck ¶¶ 2, 5, Ex. 1 and 4.) Defendant Tsai is the president of Micro Link Systems, a director and registered agent of Mierolink Data, the president of MIG, Inc. and a director of Cipher (CA). (Basombrio Deck ¶¶ 2-5, Ex. 1-4.) More importantly, according to the Complaint, defendant Kuei’s and Tsai’s conduct clearly indicates that between the two of them they had control of these corporations by, inter alia, signing legal documents on behalf of MIG, Inc., Micro-link Data and Micro Link Systems and Cipher (CA). (First Am. Compl. ¶¶ 34, 35, 38.)
Fourth, the Complaint alleges that defendants Kuei and Tsai commingled the funds of Cipher (CA) and Mierolink Data by transferring funds from Mierolink Data to the Joint Venture for laptop computers received by Cipher (CA). (First Am. Compl. ¶¶ 25-26.) Additionally, payments due from the Joint Venture to Cypher (Taiwan) for computer components were made to Mierolink Data instead. Id.
The Complaint alleges that defendants Kuei and Tsai held themselves out to be personally liable for the debts of Cipher (CA) by making a personal payment for Cipher (CA)’s debt to the Joint Venture for the laptop computers. (First Am. Compl. ¶ 26.) Also, in 1998, defendants Kuei and Tsai personally borrowed money from Plaintiff by representing that the money was necessary on behalf of their struggling “Mierolink” entities. (First Am. Compl. ¶ 33.)
Finally, the record indicates that these corporate entities have all been suspended by the Franchise Tax Board. 4
An inequitable result exists where an unsatisfied creditor exists in connection with an abuse of the corporate form.
See United States v. Standard Beauty Supply Stores, Inc.,
Here, given the allegations against defendant Kuei which are taken as true, the Court disregards the corporate entities of Microlink Data, Micro Link Systems, Cipher (CA) and MIG, Inc. and considers the corporate defendants the alter ego of defendant Kuei.
See Say & Say, Inc. v. Ebershoff,
3. The Sufficiency and Merits of Plaintiff Shanghai Automation’s Claims
As to the substantive claims, the Complaint is supported by detailed allegations as well as affidavits and documentary evidence submitted in support of this motion.
Plaintiff Shanghai Automation establishes claims for conversion under California law by alleging: [1] ownership or right to possession of property; [2] wrongful disposition of that property right; and [3] monetary damages.
See Kingvision Pay-Per-View, Ltd. v. Chavez,
No. C00-2270 CRB,
Under California law, a breach of contract claim may be established where a party demonstrates: [1] the existence of a contract; [2] performance by the plaintiff; [3] breach by the defendant; and [4] damages.
See First Commercial Mortgage Co. v. Reece,
4. The Factors Weigh in Favor of Entry of Default Judgment
In consideration of the other factors listed above, all relevant factors weigh in favor of entry of default judgment against defendant Kuei and his alter egos. Shanghai Automation seeks to recover an amount well in excess of $22,000,000.00, a substantial amount. Plaintiff is likely to suffer significant prejudice were recovery delayed as the operations of Micro Link Systems, Microlink Data, Cipher (CA) and MIG, Inc. have all been suspended and
The Court has not been presented with anything that suggests there is a serious dispute concerning the material facts. Defendant Tsai, filed an conclusory answer asserting several affirmative defenses without tendering any specific facts or allegations which contradict the allegations of the Complaint. As previously mentioned, the documentary evidence submitted by Plaintiff substantiates its claims. Most importantly, it appears that defendant Tsai, the sole non-defaulting defendant, is not likely to defend this suit. Other than filing an answer and appearing at one ease management conference, defendant Tsai has not appeared at other conferences, has completely failed to respond to discovery requests, and has not appeared or filed any opposition to the motion for default judgment. Furthermore, defendant Tsai filed a petition in the Bankruptcy Court and the case against him in this matter has been stayed. (Notice of Automatic Stay by Matthew Tsai, filed October 17, 2001.) While there remains a theoretical possibility that the Bankruptcy Trustee could assume the defense of this action, there is a substantial likelihood that this suit will not be defended.
The default of defendant Kuei and his defendant alter egos cannot be attributed to excusable neglect. All were properly served with the Complaint, the notice of entry of default, as well as the papers in support of the instant motion.
While there is a strong policy favoring decisions of the merits, every other factor under Eitel v. McCool, supra, weighs in Shanghai Automation’s favor in this case.
5. The Entry of Default Judgment Against Less Than All Defendants— Frow v. De La Vega
However, because one defendant, Tsai, answered the Complaint and is not in default (at least at this juncture), the question arises as to whether the Court has the discretion under Federal Rule of Civil Procedure 54(b) (judgments) to enter a default judgment against less than all the defendants. Rule 54(b) provides in pertinent part:
.. .when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.
See Curtiss-Wright Corp. v. General Elec. Co.,
As indicated above, the factors that militate in favor of entering a default judgment here would also tend to indicate “there is no just reason for delay.” However, in
Frow v. De La Vega,
In
Frow,
the appellant was one of fourteen defendants charged with the conspiracy to defraud in a land transaction. The appellant defaulted while the remaining thirteen defendants answered on the merits. The trial court entered a “decree
pro confesso
” followed by a “final decree absolute” against the appellant (latter day default and default judgment). The Su
“where a bill makes a joint charge against several defendants, and one of them makes default, [the trial court should] simply [ ] enter a default and a formal decree pro confesso against him, and proceed with the cause upon the answers of the other defendants. The defaulting defendant has merely lost his standing in court. He will not be entitled to service of notices in the cause, nor to appear in it in any way. He can adduce no evidence; he cannot be heard at the final hearing.”
Id. at 554. The Frow Court further stated that if a final judgment were to be entered, “there might be one decree of the court sustaining the charge of joint fraud committed by the defendants, and another decree disaffirming the said charge, declaring it to be entirely unfounded and dismissing the complainant’s bill.” Id.
Frow stands for the proposition that “when one of several defendants who is alleged to be jointly liable defaults, judgment should not be entered against that defendant until the matter has been adjudicated with regard to all defendants, or all defendants have defaulted.” 10A ChaRles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil 3D § 2690 (2001).
While
“Frow
undoubtedly stands for the proposition that in certain circumstances it is inappropriate to enter a default judgment against one defendant when other defendants in the same case have prevailed,” subsequent courts have pointed out that the precise holding of what those circumstances is unclear.
See Farzetta v. Turner & Newall, Ltd.,
As a result, the scope of Frow’s injunction against entering default judgments while claims are pending against other defendants has been stated variously. Some courts have focused on whether the complaint seeks to hold defendants
jointly
liable — such as where a tortuous act is committed by several persons acting in concert wherein each tortfeasor is entirely responsible for the resulting damage — in contrast to cases in which there is “several” or “joint
and
several” liability wherein a finding of liability as to one defendant is consistent with a finding of no liability as to others.
See In re Uranium Antitrust Litigation,
Other courts, including the Ninth Circuit, have held that
Frow
is not limited to claims asserting joint liability, but extend to certain circumstances in which the defendants have closely related defenses or are otherwise similarly situated.
See In re
In First T.D., supra, two mortgage investment companies, involved in schemes to defraud, went into bankruptcy proceedings. The companies’ bankruptcy trustee filed an action against 132 investors, apparent creditors in the bankruptcy proceedings, alleging that the investors had imperfect (unsecured) interests, because they did not have physical possession of the notes and deeds originally assigned by the companies. 88 of 132 individuals failed to answer and default was entered against those individuals. 6 18 of the 44 individuals who answered, moved for, and were granted, summary judgment as the trial court determined that the California Business and Professions Code protected perfection of the individuals’ interests without physical possession of notes or deeds. In essence, the trial court determined that all defendants’ interests were perfected by statute. Thereafter, however, the trial court granted the trustee’s motion for entry of default judgment against the 88 non-answering defendants.
On appeal, the Ninth Circuit recognized the general rule created by
Frow
extended to similarly-situated defendants, even if not jointly and severally hable, where necessary to avoid an inherent inconsistent result.
See First T.D.,
The two most authoritative treatises on the Federal Rules of Civil Procedure, Moore’s Federal Practice and Procedure and Federal Practice and Procedure by Wright, Miller
&
Kane, are sometimes cited as presenting these ostensibly two divergent views — Moore’s representing the joint liability position and Wright, Miller and Kane’s, the allegedly more expansive view of
Frow.
For instance, the Virginia District Court in
Phoenix Renovation, supra,
quotes Moore’s in support of the statement that “[m]ost jurisdictions have narrowly construed
Frow
to bar entry of default judgment against one of several defendants only if ‘the theory or recovery is one of true join liability, such that, as a matter of law, no one defendant may be liable unless all defendants are liable, or the nature of the relief demanded is such that, in order to be effective, it must be granted against each and every defendant.’ ”
Phoenix Renovation,
197 F.R.D.
However, upon close examination it appears that these two lines of cases may be reconciled, for a single principle runs through all these cases. As explained by the court in
In re Uranium Antitrust Litigation, supra,
“[t]he result in
Frow
was clearly mandated by the Court’s desire to
avoid logically inconsistent adjudications
as to liability.”
In re Uranium Antitrust Litigation,
So viewed, these two lines of cases are not at odds but reflect a more general principle. Frow’s applicability turns not on labels such as “joint liability” or “joint and several liability,” but rather on the key question of whether under the theory of the complaint, liability of all the defendants must be uniform.
8
Where
Frow
applies, it would be an abuse of discretion to enter a default judgment against some but not all defendants prior to adjudication of the claims against answering defendants.
See Gulf Coast Fans,
On the other hand, where uniformity of liability is not logically required by the facts and theories of the case, the risk of
As noted by the lower court in
In re Uranium Antitrust Litigation,
In the instant case, Frow does not bar the exercise of discretion to enter a default judgment against the defaulting defendants. This is not a case of “joint” liability where the theory of the case demands uniformity of judgment among all defendants. Plaintiffs have alleged “joint and several” liability, not strictly “joint” liability against the defendants. More important than the label, however, is the fact that judgment against the other defendants would not necessarily be inconsistent with a judgment in favor of defendant Tsai should he choose to defend. The claims of conversion and breach of contract can stand against the other defendants without necessarily finding defendant Tsai individually liable as well. Defendant Tsai’s liability, either derivative of the corporate defendants under an alter ego theory or as a joint participant with defendant Kuei, turns on the facts proven with respect to his own conduct and involvement. For example, while Shanghai Automation may be entitled to judgment on its claim against Cipher (CA) for the conversion of the laptop computers, defendant Tsai may be able to prove that Cipher (CA) was an alter ego of only defendant Kuei due to their differences in conduct, control, and culpability. Differences could obtain with respect to other causes of action as well. For instance, the claim for recovery of loans advanced to defendant Kuei may not be recoverable from defendant Tsai if he proves he had no direct involvement in and did not unlawfully benefit from that transaction. Likewise, it is possible that the bank loans guaranteed by Shanghai Automation where solely or primarily converted by defendant Kuei.
Thus, because differing judgments would not necessarily be illogical,
Frow
does not apply, and the Court retains discretion to enter default judgments against
In short, the Court finds there is no “just reason for delay” in entering default judgments as to liability against the defaulting defendants. However, a further question is raised with respect to entry of a damages judgment at this juncture. In
In re Uranium Antitrust Litigation, supra,
the court permitted entering a default judgment against some defendants as to liability, but postponed a damages hearing until liability of all defendants were resolved. It did so because there could only be a single damage amount assessed on the basis of the plaintiffs claim of conspiracy involving joint and several liability.
See In re Uranium Antitrust Litigation,
Accordingly, entry of default judgment is appropriate under Rule 55(b). In order to obtain the entry of a default judgment, however, Plaintiff must prove the amount of damages to which it is entitled.
See Shop Ironworkers Local 79 Pension Trust v. United Safe, Inc.,
No. C99-2745 VRW,
Shanghai Automation fails to submit any evidence or argument in support of attorney’s fees and costs and appears to have abandoned its claim in this regard.
RECOMMENDATION
GOOD CAUSE APPEARING, IT IS HEREBY RECOMMENDED that the motion by plaintiff Shanghai Automation for entry of default judgment (No. 47) be GRANTED and judgment entered against defendants Kuei, Micro Link Systems, Inc., Microlink Data Systems, Inc., Cipher Instrument, Inc. and MIG, Inc. as follows:
75 percent of the 7,000 laptop computers converted $16,012,500.00
75 percent of SMEC’s monies converted $ 2,872,500.00
loans made to defendants Kuei and Tsai, jointly $ 3,377,000.00.
TOTAL $22,262,000.00
A judgment in favor of plaintiff Shanghai Automation and against defendants Kuei, Micro Link Systems, Inc., Microlink Data Systems, Inc., Cipher Instrument, Inc. and MIG, Inc. should be entered for general and compensatory damages in the amount of $22,262,000.00.
Any party may file objections to this Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure 72(b) and Local Civil Rule 72-3.
Nov. 2, 2001.
Notes
. As discussed infra, defendants Kuei and Tsai use Microlirik Data, Micro Link Systems and Microlinlc International, Inc. interchangeably.
. As indicated by Amended Proposed Judgment by Default submitted by Shanghai Automation on September 18, 2001.
. To the extent the Complaint alleges the acts of defendant Kuei and Tsai as interwoven, the Court assumes the truth of factual allegations regarding alter ego liability that implicate both defendants Kuei and Tsai.
See, e.g., United States v. Local 1804-1, Intern. Longshoremen Assn,
. Mierolink Data was suspended in November 1993. (Basombrio Deck ¶ 2, Ex. 1.) Micro Link Systems was suspended in August 1995. (Basombrio Deck ¶ 3, Ex. 2.) MIG, Inc. was suspended in August 1995. (Basombrio Deck
. The Third Circuit in
Farzetta, supra,
noted that the
Frow
Court did not identify what the Court intended to be "certain circumstances,'' largely in part due to the Court's ambiguity and failure to identify the relationship between the co-defendants.
See Farzetta,
. The lawsuit would have the effect denying these 132 individuals priority in asset distribution.
. In
Frow,
the inconsistency flowed not only the fact of allegation of joint liability, but the fact that there was a single
res
in controversy.
See In re Uranium Antitrust Litigation,
. To be sure, a few courts appear to have declined to enter default judgment without closely considering whether the different judgment would result in inconsistency.
See Federal Deposit Ins. Corp. v. Manatt,
. The Second Circuit has suggested but not held that it is unlikely that
Frow
retains any force subsequent to the adoption of Rule 54(b).
See International Controls,