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Sonera Holding B.V v. Cukurova Holding A.Ş

December 21, 2012

SONERA HOLDING B.V., PETITIONER,
v.
CUKUROVA HOLDING A.Ş, RESPONDENT.



The opinion of the court was delivered by: Denise Cote, District Judge:

OPINION AND ORDER

This is an action by petitioner Sonera Holding B.V. ("Sonera") to confirm a $932 million arbitral award (the "Award") obtained against respondent Cukurova Holding A.Ş. ("Cukurova") in Geneva, Switzerland in September 2011. An Opinion and Order of September 10, 2012, granted Sonera's petition to confirm the Award. See Sonera Holding B.V.

Cukurova Holding A.Ş., No. 11 Civ. 8909 (DLC), 2012 WL 3925853 (S.D.N.Y. Sept. 10, 2012) (the "September 10 Opinion"). The holding of the September 10 Opinion was memorialized in a judgment of September 21 (the "Judgment"). Currently before the Court are Cukurova's motion to vacate the Judgment and Sonera's motion for an order confirming service of a restraining notice on Cukurova. For the reasons that follow, both motions are denied.

BACKGROUND

The September 10 Opinion comprehensively sets out the factual and procedural background of this litigation, which are averted to here only as necessary to decide the instant motions. As noted, the September 10 Opinion granted Sonera's petition to confirm the Award, rejecting, inter alia, Cukurova's argument that it is not subject to this Court's personal jurisdiction. Cukurova did not seek reconsideration of the September 10 Opinion within the fourteen days permitted for such a motion pursuant to Local Civil Rule 6.3. Rather, on October 19, it filed a notice of appeal from the Judgment and the September 10 Opinion.

Because Cukurova did not file a bond to stay enforcement of the Judgment pending adjudication of its appeal, post-judgment discovery has proceeded in this Court. On October 12, Sonera served on Cukurova's counsel in New York an information subpoena, a subpoena for documents and a deposition subpoena (the "Discovery Requests"). The Discovery Requests sought information about Cukurova's corporate structure and assets, about the company's relationship to firms that Sonera suspects may be Cukurova affiliates, and about money transfers between those firms and Cukurova. After Cukurova objected to the breadth of the Discovery Requests and the time period they covered, the Court entered an Order permitting Sonera to take discovery of "the entire period since 1/15/07, and any transfer of assets by Cukurova, and information sufficient to identify the relationship between the transferee and Cukurova."

At the same time that Sonera served the Discovery Requests on Cukurova's counsel, it also served a post-judgment restraining notice dated October 9, 2012 (the "Restraining Notice"). The Restraining Notice, which was issued by Sonera's counsel, provides, in relevant part:

NOW TAKE NOTICE, that pursuant to Rule 69 of the Federal Rules of Civil Procedure and C.P.L.R § 5222(b) . . . you are hereby forbidden to make or suffer any sale, assignment, transfer or interference with any property in which you have an interest, or pay over or otherwise dispose of any such debt, except upon direction of the sheriff, a U.S. marshal, deputy U.S. marshal, or other person or officer specifically appointed by the court or pursuant to an order of the court, until the judgment is satisfied and vacated . . . .

In an e-mail to Sonera dated October 15 and a subsequent letter dated October 22, counsel for Cukurova asserted that it was not authorized to accept service of the Restraining Notice and that Cukurova would need to be served with the Notice pursuant to the Hague Convention. On November 16, Sonera filed this motion for a judicial order confirming that service of the Notice upon Cukurova by means of its New York counsel was proper. On November 21, Cukurova moved pursuant to Rule 60(b)(4) to vacate the Judgment for lack of personal jurisdiction. Both motions were briefed and became fully submitted on December 6. On November 29, Cukurova filed a motion for a stay of post-judgment discovery and enforcement proceedings pending disposition of the November 21 motion to vacate the Judgment. Briefing of the November 29 Motion was stayed by an Order of December 3.

DISCUSSION

I. Motion for Relief from Judgment Rule 60(b)(4) of the Federal Rules of Civil Procedure provides, in relevant part, "On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding" where "the judgment is void." Although a district court generally has discretion over whether to grant or deny a motion made under Rule 60(b), "if the underlying judgment is void for lack of jurisdiction, it is a per se abuse of discretion for a district court to deny a movant's motion to vacate the judgment under Rule 60(b)(4)." City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 138 (2d Cir. 2011) (citation omitted).

That is not to say, however, that Rule 60(b)(4) permits parties to re-litigate issues that have previously been litigated on the merits and decided. As the Second Circuit recognized in Mickalis, a defendant who disagrees with the plaintiff's assertion that she is subject to jurisdiction in a particular forum is faced with a procedural choice. One option is to "'ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding'" pursuant to Rule 60(b)(4). Id. at 139 (quoting Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 706 (1982)). Such a collateral proceeding may never occur if the forum rendering the judgment truly lacks personal jurisdiction and the holder of the judgment never takes steps to enforce it against the defaulting defendant or her property in a forum where jurisdiction is proper. See "R" Best Produce, Inc. v. DiSapio, 540 F.3d 115, 123 (2d Cir. 2008).

Alternatively, "when a defendant appears and challenges jurisdiction, we interpret that to constitute its agreement to be bound by the court's determination on the jurisdictional issue." Mickalis, 645 F.3d at 139 (citation omitted). In the event that the defendant chooses this latter option and then finds herself in disagreement with the district court's personal jurisdiction ruling, her remedy is to "seek reversal of that ruling on appeal." Id. "A party may not use a Rule 60(b)(4) motion" -- or other proceeding distinct from the merits -- "as a substitute for a timely appeal." Kocher v. Dow Chemical Co., 132 F.3d 1225, 1229 (8th Cir. 1997).

In Mickalis, this "critical distinction between defendants who 'appear' in court -- even if only to challenge the court's jurisdiction -- and those who do not," led the Second Circuit to reject an effort to overturn a default judgment on the ground that it was void for want of personal jurisdiction. 645 F.3d at 139-42. The defendants in question had initially appeared to challenge personal jurisdiction but later withdrew from the proceedings after the district court suggested it was inclined to rule against them. After judgment, they re-entered the case and filed a notice of appeal arguing, inter alia, that the district court lacked jurisdiction to enter the default. Id. at 127-28. The Second Circuit held that by failing to litigate to judgment, the defendants had forfeited their personal jurisdiction defense. Id. at 141. ...


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