UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Aero Products International, Inc., a 

Florida corporation, and Robert B. 

Chaffee, an individual,

Plaintiffs,

v.

Intex Recreation Corp., a California 

corporation, Quality Trading, Inc., a 

California corporation, and Wal-Mart 

Stores Inc., a Delaware corporation,

Defendants.

Case No. 02 C 2590

Judge John W. Darrah

Magistrate Judge Geraldine Soat Brown

aero’s memorandum in support of the court’s ruling that

intex must POST SECURITY FROM a united states institution

Intex was ordered at the November 3, 2005 hearing “to post appropriate security 

with a U.S. national institution. . . .” (Ex. A, at 3-4.) This is the correct ruling and it 

should not be reconsidered. Intex’s proposed letter of credit is from a Chinese bank and 

is presentable only in China. It is likely that this Court does not have jurisdiction over the 

Chinese bank and, even if it does, enforcement of the letter would be hindered by complex 

issues of international banking and diplomacy. Intex obtained security for the judgment 

from a U.S. institution last year and it should do the same this year. 

I. THE COURT HAS DISCRETION TO DETERMINE THE SUFFICIENCY OF 

INTEX’S PROPOSED SECURITY 

A judgment may be stayed if the Court determines that the defendant has posted 

sufficient security. Fed. R. Civ. P. 62. Local Rule 62.1 requires that the security must “be 

conditioned for satisfaction of the judgment . . . .” The interpretation and application 

of this Rule, including whether Intex’s letter of credit is “conditioned for satisfaction,” 

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is within the sole discretion of this Court. See Federal Trade Commission v. Bay Area 

Business Council, Inc., 423 F.3d 627, 633 (7th Cir. 2005) (enforcement of local rules is 

discretionary with the district court).

II. INTEX’S PROPOSED LETTER OF CREDIT IS NOT “CONDITIONED 

FOR SATISFACTION” 

Intex’s proposed letter of credit was issued by Hong Kong and Shanghai Bank 

Corp. (Ex. B.) The credit “is available at the counters of Hong Kong and Shanghai Bank 

Corp., Mongkok, Kowloon, Hong Kong.” (Id.) Intex’s previous letter credit, dated 

October 22, 2004, was issued by Wells Fargo Bank in San Francisco, California. (Ex. C.) 

Intex has not provided any reasonable explanation why its renewed letter of credit was 

not issued from Wells Fargo Bank, or any other U.S. institution.

Intex’s letter of credit from Hong Kong and Shanghai Bank Corp. is fraught with 

risk and uncertainty. First, it is not clear whether this Court has jurisdiction over a Hong 

Kong or Shanghai Bank. See Lasalle Business Credit, LLC v. GCR Eurodraw SPA, No. 

03 C 6051, 2004 WL 1880004, at *8 (N.D. Ill. Aug. 18, 2004) (a court does not have 

jurisdiction over issuing bank, simply by virtue of issuance of letter of credit). A letter of 

credit provides no security at all if this Court does not have the power and authority to 

force the issuing bank to make payment. Second, even if this Court were able to obtain 

jurisdiction over Hong Kong and Shanghai Bank, it is not clear if Chinese laws would 

allow this Court to order a Chinese bank to disgorge substantial funds to a U.S. company. 

Any action to enforce the letter of credit would require a substantial amount of time 

and money and would force this Court and Aero to wrestle with complicated issues of 

international banking and diplomacy. Aero obtained a judgment in U.S. court, against a 

U.S. company, based on actions that took place on U.S. soil. Aero should not have to go 

to China to get its money.

Moreover, the risk and uncertainty associated with Intex’s proposed security is 

completely unnecessary. Intex’s first security for the judgment was issued from a U.S. 

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institution (Ex. C), and there is no reason why Intex cannot obtain security from a U.S. 

institution this time. Intex availed itself of the privilege of doing business in the United 

States. Intex set up a U.S. corporation and imports millions of products into the United 

States each year. Having reaped the benefits of U.S. laws and U.S. customers, it is hardly 

unfair that Intex be required to obtain security from a U.S. institution.

Aero is particularly concerned about Intex obtaining proper security in this case 

because Intex has a track record of lying about the security it is posting to secure a 

judgment. In prior patent litigation, Intex was sanctioned for misrepresentations made 

to the United States District Court for the Northern District of California in conjunction 

with its obtaining a stay of judgment. (Ex. D.) Intex must be kept on a short leash and 

required to post proper security.

III. CONCLUSION

If Intex wishes to stay the $12.9 million judgment against it, Intex must post 

appropriate security from a United States institution. 

Respectfully submitted,

Dated: November 17, 2005 By: s/ David H. Bluestone 

William H. Frankel

Michael P. Chu

Mark H. Remus

David H. Bluestone

Brinks Hofer Gilson & Lione

NBC Tower, Suite 3600

455 North Cityfront Plaza Drive

Chicago, Illinois 60611-5599

(312) 321-4200

Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE

I hereby certify that on November 17, 2005, I caused aero’s memorandum 

in support of the court’s ruling that intex must POST SECURITY 

FROM a united states institution to be filed by electronic filing, which provides service for the following counsel:

Mark E. Phelps 

Leydig, Voit & Mayer, Ltd. 

Two Prudential Plaza 

180 N. Stetson Ave. #4900 

Chicago, IL 60601-6780 

(312) 616-5600

Courtesy copies were also served upon the following counsel via email:

M. Daniel Heffner 

Leydig, Voit & Mayer, Ltd. 

Two Prudential Plaza 

180 N. Stetson Ave. #4900 

Chicago, IL 60601-6780 

(312) 616-5600

Thomas S. Kiddé 

Lewis Brisbois Bisgaard & Smith LLP 

221 North Figueroa Street 

Suite 1200 

Los Angeles, CA 90012 

(213) 250-1800 

	 	 	 	

	 	 	 	 s/ David H. Bluestone 

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EXHIBIT A

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EXHIBIT B

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EXHIBIT C

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EXHIBIT D

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CARTWRIGHT, SLOBODIN , BOKELMAN, 

BOROWSKY, WARTNICK, MOORE C HARRIS, INC. 

JACK L. SLOBODIN, ESQ. 

RICHARD KIRK CANNON, ESQ. 

101 CALIFORNIA ST., STE. 2600 . 

SAN FRANCISCO, CA 94111 

PHONE: (415) 433-0440 

FLEHR, HOHBACK, TEST, ALBRITTON C HERBERT 

EDWARD S. WRIGHT, ESQ. 

850 HANSEN WAY, STE. 200 

PAL0 ALTO, CA 94304 

PHONE: (415) 494-8700 

ATTORNEYS FOR DEFENDANTS AND 

COUNTERCLAIMANTS CHARLES PRIOR HALL 

& WBX PARTNERS 

IN THE UNITED STATES DISTRICT COURT 

J 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

INTEX PLASTICS SALES CO., 

a ~alifornia corporation, 

Plaintiff, 

v. 

CHARLES PRIOR HALL, 

an individual, 

Defendant. 

CIV. ACTION NO. 

C 85-2987 JPV 

ORDER IMPOSING SANCTIONS 

AND ORDER OF EXAMINATION 

As sanctions for misrepresentation made to this Court in 

obtaining a stay of execution of the judgment in this matter and 

for failure to comply with the stipulation to pay the balance of 

the judgment, with interest at the legal rate, by May 21, 1992, 

IT IS HEREBY ORDERED AS FOLWWS: 

1. Sanctions are imposed on TIEN ZEE, President of Intex 

ORDER XMPOSING SANCTIONS 

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Plastics corporation, and JACK KRAMER, Vice President and General 

Manager of Intex Plastics Corporation, in the amount of Six 

Million, Three Hundred Thousand Dollars ($6,300,000.00)~ 

2. Charles Prior Hall and WBX Partners ("Hall") are 

enjoined and restrained from attempting to enforce the aforesaid 

sanctions until authorized to do so by this Court. 

3. On June 2, 1992, at 10:OO a.m., before a Magistrate of 

this Court, TIEN ZEE, JACK KRAMER and ROBERT T. BOWE, Assistant 

Secretary of Intex Plastics Corporation, shall appear for 

examination by Hall pursuant to Order of this Court dated April 

22, 1992, and shall bring with them all records and other 

documents necessary for a full and complete examination as to the 

following: 

TIEN BEE AND JACK KRAMBR - The financial condition and 

assets of Intex Plastics corporation (formerly Intex Plastics 

Sales Company) and Intex ~ecreation Corporation and their own 

personal financial condition and assets; 

ROBERT T. HOWE - The financial condition and assets of Intex 

Plastics corporation (formerly Intex Plastics Sales Company) and 

Intex Recreation Corporation. 

4. This Order is without prejudice to the right of Hall to 

seek additional relief in the form of additional sanctions, or 

otherwise, in this matter 

5. The hearing on Hall's motion for sanctions is continued 

from May 21, 1992, to June 18, 1992. 

6. This matter is referred to CHIEF MAGISTRATE JUDGE F. 

STEELE LANGFORD, ROOM 18022, 18TH FLOOR, 450 GOLDEN GATE AVENUE, 

ORDER IMPOSING SANCTIONS 

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SAW FRANCISCO, CALIFORNIA, for assignment to a Magistrate Judge 

for examination pursuant to Paragraph 3 hereof, until completed. 

BML\INTA.200 

ORDER IMPOSING SANCTIONS 

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