Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_95-cv-02377/USCOURTS-cand-3_95-cv-02377-17/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

UTHE TECHNOLOGY CORP,

Plaintiff,

 v.

HARRY ALLEN and AETRIUM

INCORPORATED,

Defendants. /

No. C 95-02377 WHA

ORDER DENYING

DEFENDANTS’ MOTION FOR

SUMMARY JUDGMENT

INTRODUCTION

In this action alleging a conspiracy to siphon business from a foreign distributor of

semiconductor equipment, defendants renew their motion for summary judgment following

remand. For the reasons stated below, defendants’ motion is DENIED.

STATEMENT

Plaintiff Uthe Technology Corporation, a manufacturer and distributor of semiconductor

equipment, claims that defendants Aetrium, Inc., a manufacturer of semiconductor equipment,

and its former officer in charge of Asian sales Harry Allen participated in a conspiracy in order

to divert business away from our plaintiff’s wholly-owned subsidiary, Uthe Technology

Singapore Private, Ltd. Uthe Singapore was the Asian distributor of semiconductor equipment

for our plaintiff and other semiconductor equipment manufacturers, including defendant

Aetrium. 

Case 3:95-cv-02377-WHA Document 227 Filed 04/12/16 Page 1 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

In July 1992, defendants participated in a conference call with several officers of Uthe

Singapore to discuss a plan to divert business and income away from Uthe Singapore. The

conspirators agreed to withhold commissions due to Uthe Singapore pursuant to its distribution

agreement with Aetrium, to encourage customers to transact with Aetrium directly, to covertly

amend the terms of Aetrium’s agreement with Uthe Singapore so it could terminate the

agreement on short notice, and to conceal this conduct from plaintiff and its principal. The

conspirators also set up a secret shell corporation to fulfill orders for semiconductor equipment

made to Uthe Singapore that the conspirators diverted. The scheme was carried out over

numerous phone calls and dozens of faxes (Yip. Decl. ¶¶ 4, 7–9). 

This matter was originally filed against the above-named defendants and the officers of

Uthe Singapore in state court in 1993. It was subsequently removed here on federal question

and diversity grounds. The Singapore defendants moved to dismiss the action as to them

because the agreement governing their acquisition of Uthe Singapore, which governed

plaintiff’s claims against them required the parties to arbitrate any claims relating to the sale in

Singapore. The remaining defendants — Aetrium and Allen — moved to stay the case pending

resolution of the arbitration in Singapore. Judge James Ware, then the assigned judge, granted

both motions.

Plaintiff pursued the arbitration in Singapore and, nineteen years later, received damages

in excess of nine million U.S. dollars, which represented the difference between the true value

of the shares in Uthe Singapore absent defendants’ conduct and the artificially depressed stock

price actually paid (Nath Decl., Exh D at 75, 86).

In May 2012, the action was reassigned to the undersigned judge. Plaintiff moved to lift

the stay and to file a second amended complaint, which motions were granted. Defendants

moved for summary judgment arguing that Uthe could not establish that it suffered an injury in

fact sufficient to confer standing, which motion was denied. Defendants again moved for

summary judgment, arguing, inter alia, that Uthe was not entitled to treble damages under the

Racketeer Influenced and Corrupt Organizations Act, inasmuch as the Singapore arbitration

award had already been paid in full, and plaintiff could not seek damages for a claim that had

Case 3:95-cv-02377-WHA Document 227 Filed 04/12/16 Page 2 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

already been paid in full. Defendants’ motion was granted and judgment was entered in their

favor.

Plaintiff appealed, and the court of appeals reversed, holding that plaintiff “is not barred

by the one satisfaction rule from pursuing treble damages under RICO against the Defendants,

provided there is an offset paid to Uthe by the Foreign Defendants as a result of the arbitral

award.” Uthe Technology Corp. v. Aetrium, Inc., 808 F.3d 755 (9th Cir. 2015). The case was

remanded for further proceedings. 

Defendants have renewed their motion for summary judgment solely on the theory that

Uthe has failed to establish continuity under RICO. This order follows full briefing and oral

argument as well as supplemental briefing submitted after the case returned on remand.

ANALYSIS

Under the Racketeer Influenced and Corrupt Organizations Act RICO, a plaintiff must

show “(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Brady

v. Dairy Fresh Products Co., 974 F.2d 1149, 1152 (9th Cir. 1992). To establish a “pattern”

under RICO, a plaintiff must demonstrate that the predicate acts that give rise to the claim

constituted a threat of continuing racketeering activity. H.J. Inc. v. N.W. Bell Tel. Co., 492 U.S.

229, 240 (1989). Defendants’ only argument in their renewed motion for summary judgment is

that Uthe has failed to present evidence of continuity sufficient to sustain a claim for RICO.

To prevail under RICO, plaintiffs must establish that the predicate acts were continuous. 

This can be done either by pleading closed-ended continuity or by pleading open-ended

continuity. Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1526 (9th Cir. 1995). Closed-ended

continuity may be shown with “a series of related predicates extending over a substantial period

of time.” H.J., Inc., 492 U.S. at 242. Open-ended continuity may be shown by the “threat that

criminal conduct will continue into the future.” Ibid. “The fact that the last of a series of

predicate acts may have completed the criminal scheme does not necessarily preclude a finding

of continuity. As long as a threat of continuing activity exists at some point during the

racketeering activity, the continuity requirement is satisfied.” Sun Savings and Loan Ass’n v.

Dierdorff, 825 F.2d 187, 194 n.5 (9th Cir. 1987).

Case 3:95-cv-02377-WHA Document 227 Filed 04/12/16 Page 3 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Defendants contend that plaintiff has failed to establish either type of continuity. This

order need not address whether plaintiff can establish closed-ended continuity because plaintiff

has raised a sufficient dispute of fact as to open-ended continuity to preclude summary

judgment, as now discussed.

Defendants argue that the record conclusively demonstrates that the goal of the alleged

conspiracy had a solitary goal: to steal all business from Uthe Singapore or destroy it or force

its sale at a depressed price. Defendants also claim that the Singapore arbitration has already

established that this case involved only a single act, rather than a series of acts, but the appellate

order in this case forecloses any argument that Uthe is limited to the arbitration record. There

remains contrary evidence from which a jury could find that the conspiracy presented a threat of

continued criminal activity. Specifically, Katherine Yip, one of the co-conspirators, averred:

Taking over Uthe Singapore was one step in the overall plan for

Aetrium and the employees and officers of Uthe Singapore to

profit by cutting Uthe USA out of the picture and preventing future

payments to Uthe USA. In fact, we knew that it might not be

possible to take over Uthe Singapore, if Uthe USA and Mr.

Goodson could not be convinced to sell it. That is why we set up a

secret shell corporation in 1992 — to divert Uthe Singapore orders

to and continue the business of distributing products to the Uthe

Singapore customers in the event that Uthe Singapore remained

under the control of Uthe USA. Taking over Uthe Singapore was

never the end goal of the conspiracy, it was simply a step in the

plan to profit by keeping all of the business and profits from the

company for ourselves. 

Defendants cite several decisions for the position that multiple predicate acts that were

merely “a series of steps that were part of a single plan” cannot establish open-ended continuity,

but defendants’ citations are inapposite. In Aviva USA Corp. v. Vazirani, 13-16858, 2015 WL

7888718, at *1 (9th Cir. Dec. 4, 2015), our court of appeals held that the defendants’ extortion

scheme, which included a series of threatening emails and publication of negative information

about the target company could not establish a “pattern” under RICO, because the conduct was

uniformly directed at a single plan — exposing the target’s allegedly unfair practice of using a

conspirator’s trademark on a website critical of the conspirator’s own business practices. 

Similarly, in GSI Technology v. United Memories, Inc., No. 13-01081, 2014 WL 1572358 (N.D.

Case 3:95-cv-02377-WHA Document 227 Filed 04/12/16 Page 4 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

*

 Uthe also contends that the Singapore defendants fabricated evidence in the Singapore arbitration in

1997, which it contends extended the time frame of any closed-ended conspiracy five years beyond the sale of

Uthe Singapore. This, Uthe contends, is sufficient to satisfy the “‘flexible concept’ of what constitutes a

substantial period of time” under closed-ended continuity. See Mexicanos v. Hewlett-Packard Co., No.

14-05292, 2015 WL 9592606, at *11 (N.D. Cal. July 13, 2015) (Judge Beth Labson Freeman) (citing Allwaste,

65 F.3d at 1528). Defendants respond that there is no evidence linking them to the alleged fabrication. 

The parties submitted supplemental briefing on this issue. This order need not address whether Uthe

has proffered any evidence that a closed-ended conspiracy continued throughout the Singapore arbitration. The

deposition of Katherine Yip raises a genuine dispute of fact as to whether defendants participated in an

open-ended conspiracy.

5

Cal. Apr. 18, 2014) (Judge Paul S. Grewal), the alleged series of predicate acts of mail and wire

fraud all operated with a single goal — the acquisition of a contract to design a memory chip. 

Here, our plaintiff offered evidence that, at least at its inception, the alleged conspiracy

intended to siphon off sales from Uthe Singapore indefinitely into the future. The scheme was

so effective that plaintiff sold Uthe Singapore at a discount after a matter of months, but there

remains evidence that this conspiracy posed a threat of repeated efforts to divert business from

Uthe Singapore to the secret shell corporation and to withhold commissions due to Uthe

Singapore from Aetrium’s sales. Possibly, under Rule 50, the Court will see it differently with

the benefit of a full trial record. For now, defendants are not entitled to summary judgment.*

CONCLUSION

For the reasons stated above, defendants’ motion for summary judgment is DENIED.

IT IS SO ORDERED.

Dated: April 12, 2016. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:95-cv-02377-WHA Document 227 Filed 04/12/16 Page 5 of 5