Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-01741/USCOURTS-casd-3_11-cv-01741-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

UPPER DECK INTERNATIONAL B.V., a

Netherlands corporation,

Plaintiff,

CASE NO. 11cv1741-LAB (CAB)

[Hon. Judge Larry Alan Burns]

ORDER DENYING PLAINTIFF’S

EX PARTE APPLICATION FOR

STAY OF CASE

Complaint Filed: August 4, 2011

vs.

THE UPPER DECK COMPANY, a

California corporation; THE UPPER

DECK COMPANY, a Nevada

Corporation; RICHARD McWILLIAM, an

individual; and DOES 1-10,

Defendants.

Upper Deck International initiated this action on August 4, 2011. Since then, UDI has

entered into bankruptcy in the Netherlands, and the bankruptcy representative has

determined it cannot continue to pay UDI’s legal fees. On this basis, UDI recently filed an

ex parte motion for a six-month stay. The motion is DENIED.

There are four factors to consider in determining whether a stay is proper: (1)

whether the applicant has made a strong showing that it is likely to succeed on the merits;

(2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of

a stay will substantially injure the other parties interested in the proceeding; and (4) where

the public interest lies. Hilton v. Braunskill, 481 U.S. 770, 776 (1987). When the basis for a

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stay is the pendency of another case, the Court must also consider how long that case is

expected to last. Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 545 (5th Cir. 1983).

With respect to the first Hilton factor, UDI asserts that it will win on its claim for

tortious interference because Upper Deck California has admitted to counterfeiting Yu-GiOh! cards and jeopardizing UDI’s own European distribution contract with Konami:

Under these facts, at a minimum, UDI will establish at trial that

defendants: (a) knew of UDI’s contract with Konami for

European Yu-Gi-Oh! distribution rights; (b) knew with

substantial certainty that, if they engaged in unlawful conduct

that gave cause for termination of the U.S. contract, Konami

would invoke the domino clause and terminate UDI’s European

distribution rights; © nonetheless, defendants engaged in an

unlawful counterfeiting scheme, thereby tortiously and

unlawfully interfering with UDI’s existing European contractual

distribution rights; (d) causing millions of dollars of damage to

UDI as a result. In other words, UDI will likely prevail on its

claim for tortious interference. 

(Dkt. No. 64 at 6:15-21).

First of all, UDI doesn’t assert a claim for “tortious interference.” It asserts claims for

breach of contract, intentional interference with contractual relations, intentional interference

with prospective economic advantage, negligent interference with prospective advantage,

breach of fiduciary duty, and aiding and abetting breach of fiduciary duty. Moreover, UDI

cites and relies on Little v. Amber Hotel Co., 303 Cal.App.4th 280, 291-92 (2011) and the

standard for intentionally interfering with the performance of a contract: “It requires that a

plaintiff prove: (1) he had a valid and existing contract with a third party; (2) defendant had

knowledge of the contract; (3) defendant committed intentional and unjustified acts designed

to interfere with or disrupt the contract; (4) actual interference with or disruption of the

relationship; and (5) resulting damages.” In the end, though, the elements of a tortious

interference claim are the same. Hahn v. Diaz-Barba, 194 Cal.App.4th 1177, 1196 (2011).

Whatever the claim is labeled, UDI hasn’t shown that it is likely to prevail, and for a

simple reason: UDI doesn’t even allege that UDC’s counterfeiting was designed to interfere

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with or disrupt UDI’s Konami contract.1 In fact, that allegation would be nonsensical

because UDC’s counterfeiting was self-destructive. Konami sued UDC over it. Because of

this pleading deficiency, UDI can’t establish that its tortious interference claim is likely to

succeed on the merits. And this means a stay is unwarranted.2

The Court should also address UDI’s suggestion that Badalament, Inc. v. Mel-O-Ripe

Banana Brands, Ltd., 265 B.R. 732, 736-37 (E.D. Mich. 2001) supports a stay of district

court proceedings pending foreign bankruptcies. The stay was issued in Badalament

because the defendants were bankrupt and requested it. Id. at 736. UDI offers no authority

for a stay on the request of a bankrupt plaintiff, particularly when the only basis offered is

that the plaintiff cannot afford to proceed.

The Court now turns to UDC’s argument that the rules of international comity require

dismissal of this case. The cases UDC cites aren’t on point. They support dismissal when

foreign bankruptcy proceedings will resolve the plaintiff’s claims, or when consideration of

claims in multiple fora would be inefficient, and that’s not the situation here. The resolution

of UDI’s bankruptcy proceedings in the Netherlands has little to do with UDI’s tort claims

against UDC. For example, in Victrix S.S. Co. of Canada v. Century Int’l Arms, Inc., 825

F.2d 709, 711 (2d Cir. 1987), the plaintiff was a creditor who filed a complaint in England, 

the United States, and bankruptcy court in Sweden, attempting to recover money from the

bankrupt Swedish Defendant. The court held that comity required the foreign bankruptcy

proceedings be given deference, as the Swedish court would be able to determine the

plaintiff’s appropriate recovery. Id. at 715. Similarly, in Curran v. Hindu Credit Union Co-Op

Society Ltd., 2011 WL 1131107 at *1 (S.D. Fla. Mar. 25, 2011), the plaintiff aimed to

1

 UDI correctly identified the elements of a claim for intentional interference with the

performance of a contract when it cited Little. (Dkt. No. 64 at 6:15-21). When explaining why

it was likely to prevail, however, UDI omitted the third element requiring intentional

interference with the contract. (Dkt. No. 64 at 6:22-27). 

2

 The Court doesn’t need to consider UDC’s argument that UDI’s motion for a stay

should be dismissed simply because: (1) it fails to meet ex parte specifications; (2) its

motives are impure; or (3) there needs to be more substantial briefing of the issues.

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recover money owed to it by a defendant who was currently involved in bankruptcy

proceedings in Trinidad and Tobago. The court found that the foreign bankruptcy

examinations could resolve the plaintiff’s claims, as the plaintiff had already filed a claim with

the bankruptcy court. Id. at 4. These cases aren’t any help to UDI, whose tort claims

against UDC aren’t implicated at all by its bankruptcy proceedings in the Netherlands.

The ex parte motion to stay this case is DENIED. Whether UDI chooses to proceed

is, of course, up to UDI and its lawyers. But if it does, the parties must comply with the dates

set in Magistrate Judge Crawford’s May 23 order. 

IT IS SO ORDERED.

DATED: June 18, 2012

HONORABLE LARRY ALAN BURNS

United States District Judge

United States District Judge 

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