E.I. du Pont de Nemours and Company, Plaintiff,
Kolon Industries, Inc., Defendant.
MEMORANDUM AND ORDER
ALLISON J. NATHAN, District Judge.
Plaintiff, E.I. du Pont de Nemours & Company ("Du Pont"), seeks to enforce an approximately $920 million judgment it obtained against Defendant Kolon following a trial in the Eastern District of Virginia. At issue is Du Pont's November 7, 2012 motion for a turnover order against Kolon, which Kolon opposes solely on the grounds that this Court lacks personal jurisdiction. An evidentiary hearing was conducted over the course of three days from April 30-May 2, 2013, to assess whether Kolon has engaged in continuous and systematic contacts with New York sufficient for general personal jurisdiction to be exercised over it here. The Court is bound to conclude that Du Pont has failed to establish by a preponderance of the evidence that general jurisdiction may be exercised over Kolon in New York and, as a result, the Court DENIES Du Pont's motion for a turnover order.
I. PROCEDURAL HISTORY
Du Pont obtained a judgment against Kolon for approximately $920 million in the United States District Court for the Eastern District of Virginia in November of 2011. On April 13, 2012, Du Pont registered that judgment in this district pursuant to 28 U.S.C. § 1963, thereby commencing a miscellaneous action here. See E.I. Du Pont De Nemours and Co. v. Kolon Indus., Inc., No. 12-MC-120 (S.D.N.Y.). On May 14, 2012, Du Pont sought a turnover order pursuant to N.Y. C.P.L.R. § 5225(b) against Shinhan bank, which was alleged to possess Kolon's assets. Dkt. No. 5. On May 9, 2012, Judge Stein, presiding in Part 1, issued a temporary restraining order ("TRO") barring Shinhan Bank from dispersing any of Kolon's assets. See Dkt. Nos. 16, 22. On May 18, 2012, Judge Stein extended that order through June 1, 2012, and put the parties on a briefing schedule for Du Pont's motion for a turnover order. Id. On May 24, 2012, Du Pont filed a motion for a turnover order against Kolon itself. Dkt. No. 17. And on May 30, 2012, Du Pont filed motions for turnover orders against additional banks who it alleged was in possession of Kolon's assets. Dkt. Nos. 31, 34, 38, 41.
On June 1, 2012, Judge Koeltl, presiding in Part 1, denied Du Pont's motion for a preliminary injunction and stayed a ruling on the turnover order sought against Shinyan Bank pending resolution of Du Pont's motion for a turnover order against Kolon Industries itself. See 6/1/12 Tr. at 64-77; Dkt. No. 71. Then, on June 12, 2012, Judge Koeltl denied the motion for a turnover order against Kolon, concluding that the evidence presented was insufficient to support a determination that this Court may exercise personal jurisdiction over Kolon to enforce the Virginia judgment. 6/12/12 Tr. at 40-44; Dkt. Nos. 74, 77. Judge Koeltl granted Du Pont leave to conduct jurisdictional discovery regarding Kolon's contacts with and ties to New York. Id.
Following jurisdictional discovery, Du Pont renewed it motion for a turnover order against Kolon on November 7, 2012. Dkt. No. 83. The November 7, 2012 motion was brought before Judge Kaplan, then presiding in Part 1, and, following an application for a single judge to preside over this matter in the interests of continuity and judicial economy, Chief Judge Preska ordered that this matter be assigned a civil docket number. See Dkt. No. 88. The case was thereafter assigned to Judge Sweet on November 19, 2012.
After the case was assigned as a civil matter to Judge Sweet, Kolon opposed Du Pont's renewed motion for a turnover order, again asserting the absence of personal jurisdiction, and moved to strike references in the motion to the October 18, 2012 indictment in the Eastern District of Virginia of Defendant and five of its current and former employees. Dkt. Nos. 93, 95. During oral argument held on January 30, 2013, Judge Sweet determined that an evidentiary hearing would be necessary to decide whether this Court may exercise personal jurisdiction over Kolon Industries in this matter.
The evidentiary hearing was commenced on April 29, 2013. Shortly after opening arguments were completed, Judge Sweet raised a potential judicial conflict, and Kolon sought his recusal. See Dkt. No. 139. As a result, on April 30, 2013, this case was reassigned to the undersigned Judge. The evidentiary hearing commenced anew on the afternoon of April 30, 2013, and was completed on May 2, 2013.
At the hearing, Du Pont called three witnesses who were available to testify: (1) Michael Ahn, a New Jersey-based independent contractor who has a relationship with a Kolon subsidiary, (2) Hung Kyu Kim, a Kolon employee called to testify about Kolon's internal corporate structure, and (3) Jae Won Choi, the manager of Kolon Global, which is a subsidiary of Kolon Corporation. Because the arguments proffered by Du Pont at the hearing differed from those that were presented clearly in the pre-hearing briefs, the Court requested post-hearing briefing to allow both parties to fully address in writing the bases upon which Du Pont asserts that general personal jurisdiction may be obtained over Kolon in New York.
II. STANDARD OF REVIEW
In a case involving federal question jurisdiction and a foreign defendant, the Court applies the forum state's personal jurisdiction rules if the federal statute does not specifically provide for national service of process. Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 22 (2d Cir. 2004). Thus, if, as in this case, a party seeks enforcement of a judgment in this district pursuant to 28 U.S.C. § 1963, which does not provide for national service of process, the Court must first assess whether New York law allows for the exercise of personal jurisdiction. Estate of Ungar v. Palestinian Auth., 400 F.Supp.2d 541, 547 (S.D.N.Y. 2005) (McMahon, J.); accord 6/12/12 Tr. at 40 (Dkt. No. 77) (Koeltl, J.). The Court must also determine whether the exercise of personal jurisdiction comports with constitutional due process guarantees. Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 94 (2d Cir. 2000).
A district court has "considerable procedural leeway" in determining how to resolve a question as to personal jurisdiction. See Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., ___ F.3d ___, 2013 WL 3335784, at *5 (2d Cir. July 3, 2013). Here, in light of the parties' having been granted jurisdictional discovery and an evidentiary hearing having been conducted, Plaintiff must establish the existence of personal jurisdiction by a preponderance of the evidence. See Commercial Union Ins. Co. v. Alitalia Airlines, S.p.A., 347 F.3d 448, 469-70 (2d Cir. 2003); Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566-67 (2d Cir. 1996). Du Pont does not contest that it bears this burden. See Du Pont Post-Hearing Br. at 1-2.
III. BACKGROUND ON THE KOLON ENTITIES
Resolution of the present motion requires some understanding of the web of related entities within the broader corporate structure existing under the parent, Kolon Corp., a Korean company. In 2009, the Kolon conglomerate underwent an internal restructuring resulting in Kolon Industries, Inc., the parent company within the structure, changing its name to "Kolon Corporation" while maintaining the same ticker signal on the Korea Stock Exchange. Ex. 61. Du Pont has insinuated that this restructuring was an elaborate attempt to avoid paying the Virginia judgment, but there is no evidence in the record presently before the Court requiring such a conclusion.
At the time that Kolon Industries, Inc. changed its name to Kolon Corp., it created a subsidiary named Kolon Industries, Inc. ("Kolon Industries"). Kolon Corp. is also the parent of a third entity relevant to this litigation, Kolon Global. Kolon Global was formed in 2011 through the merger of three other Kolon entities. Ex. 140 at 5. Kolon Global ...