Court Opinion

ID: 807759
Source: CourtListenerOpinion
Date Created: 2012-08-30 20:15:30+00
Date Added: 2024-06-11T18:00:26.889687
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                         FILED
                            FOR THE NINTH CIRCUIT                           AUG 30 2012

                                                                        MOLLY C. DWYER, CLERK
                                                                         U .S. C O U R T OF APPE ALS

RUBICON GLOBAL VENTURES, INC.,                   No. 10-36148
et al,
                                                 D.C. Nos. 3:09-cv-00818-HA
              Plaintiffs - Appellants,                     3:09-cv-01397-HA
                                                           3:10-cv-00833-HA
  v.
                                                 MEMORANDUM *
CHONGQUING ZONGSHEN GROUP
IMPORT/EXPORT CORP., et al,

              Defendants - Appellees.

RUBICON GLOBAL VENTURES, INC.,                   No. 11-35045
et al,
                                                 D.C. No. 3:05-cv-01809-HA
              Plaintiffs - Appellants,

  v.

CHONGQUING ZONGSHEN GROUP
IMPORT/EXPORT CORP., et al,

              Defendants - Appellees.

RUBICON GLOBAL VENTURES, INC.,                   No. 11-35090
et al,
                                                 D.C. Nos. 3:09-cv-00818-HA
              Plaintiffs - Appellees,                      3:09-cv-01397-HA

       *     This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                                              3:10-cv-00833-HA
  v.

CHONGQUING ZONGSHEN GROUP
IMPORT/EXPORT CORP., et al,

              Defendants - Appellants.

                    Appeal from the United States District Court
                       for the District of Oregon, Portland
                    Ancer L. Haggerty, District Judge, Presiding

                         Argued and Submitted July 9, 2012
                                 Portland, Oregon

Before: B. FLETCHER and PREGERSON, Circuit Judges, and WALTER, Senior
District Judge.**

       Appellants Rubicon Global Ventures, Inc. and Z Motors, Inc. appeal, inter

alia: (a) the district court’s setting aside of the default judgments in District Court

Docket Nos. 3:05-cv-01809 (“Rubicon I”), 3:09-cv-00818 (“Rubicon II”), and

3:09-cv-01397 (“Rubicon III”) on the basis of insufficiency of service; and (b) the

district court’s dismissal of Ying Zuo and Zongshen USA Holdings, Inc. for lack

of personal jurisdiction. For the reasons below, we find that service was sufficient

on all appellees other than Zongshen Zuo. As to the dismissals for lack of personal

jurisdiction, we find that the district court erred only as to Ying Zuo. We therefore

       **   The Honorable Donald E. Walter, Senior United States District Judge
for Western Louisiana, sitting by designation .

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affirm in part, reverse in part, and remand for further proceedings.

      The district court set aside the defaults and default judgments on the grounds

that such judgments were void for insufficiency of service of process. The Ninth

Circuit has found that “[a] final judgment is ‘void’ for purposes of Rule 60(b)(4)

only if the court that considered it lacked jurisdiction, either as to the subject

matter of the dispute or over the parties to be bound, or acted in a manner

inconsistent with due process of law.” United States v. Berke, 170 F.3d 882, 883

(9th Cir. 1999) (internal citations omitted). As the district court’s rulings fit

squarely within the ambit of Rule 60(b)(4), this Court reviews said rulings de novo.

See Thomas P. Gonzalez Corp. v. Consejo Nacional De Produccion De Costa

Rica, 614 F.2d 1247, 1256 (9th Cir. 1980) (“[t]here is no question of discretion on

the part of the court when a motion is under Rule 60(b)(4)”).

      “Service of process has its own due process component, and must be ‘notice

reasonably calculated . . . to apprise interested parties of the pendency of the action

and afford them an opportunity to present their objections.’” S.E.C. v. Ross, 504
F.3d 1130, 1138 (9th Cir. 2007) (quoting Mullane v. Cent. Hanover Bank & Trust

Co., 339 U.S. 306, 314 (1950)). “Under the federal rules, foreign corporations

may be served either (1) in accordance with the law of the state in which the

district court is located, Fed. R. Civ. P. [4(h)(1)(A)], or (2) by delivering a copy of

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the summons and the complaint ‘to an officer, a managing or general agent, or to

any other agent authorized by appointment or by law to receive service of process.'

Fed. R. Civ. P. [4(h)(1)(B)].” Chan v. Soc’y Expeditions, Inc., 39 F.3d 1398, 1404

(9th Cir. 1994).

      We agree with the district court that it was not necessary in this case for the

appellants to comply with the Convention on Service Abroad of Judicial and

Extrajudicial Documents in Civil Commercial Matters, November 15, 1965 (Hague

Service Convention), [1969] 20 U.S.T. 361, T.I.A.S. No. 6638. Instead, we must

apply Oregon law. In determining whether service is adequate under Oregon law,

the question is: “was the method of service selected . . . ‘reasonably calculated to

apprise the defendant of the existence and pendency of the action?’” Baker v. Foy,

797 P.2d 349, 352 n. 6 (Or. 1990); Or. R. Civ. P. 7(D)(1). ORCP 7(D)(1) provides

guidance for types of service that “may meet the ‘reasonable notice’ standard of

adequate service,” and ORCP 7(D)(2) describes particular, non-exclusive methods

of service which may be used. Id. at 352. Rather than absolute compliance with

one of the methods specified in ORCP 7(D), “[w]hat is mandatory is that whatever

manner or method of service is employed by a plaintiff, it must satisfy the

aforementioned ‘reasonable notice’ standard of adequate service of ORCP

7(D)(1).” Id. Based on the totality of circumstances unique to this case, we find

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that both ZS Group and ZSIE had sufficient, reasonable notice of the pendency of

the actions against them.

      We first address service on Chongquing Zongshen Group (“ZS Group”),

which we understand to be one and the same as the entities commonly referred to

in this case as Zongshen Industrial Group, Co. Ltd. (“ZIGCL”) and Zongshen

Industrial Group (“ZIG”). ZS Group was served through Zongshen, Inc., as agent

of ZS Group. The record reflects that Zongshen, Inc. was 95% owned by ZS

Group, with the other 5% ownership held by Dexiu Yuan, who has positions in

both companies. We conclude that ZS Group had sufficient, reasonable notice via

service on Zongshen, Inc., given the following factors: (a) the substantial common

ownership links between the two entities; (b) Mr. Xie Yenong’s 2004 letter to the

EPA representing Zongshen, Inc. to be the agent for ZS Group; and (c) the decision

in Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694 (1988), affirming

an Illinois court’s finding that a domestic subsidiary was an involuntary agent

based on similar, even less compelling facts.

      ZIGCL is the ultimate parent company of Chongquing Zongshen Group

Import/Export Corp. (“ZSIE”). As was the case with the domestic subsidiary in

Schlunk, supra, Zongshen, Inc. was listed as the agent for service of process for

ZSIE for the purpose of receiving notices under the National Traffic and Motor

                                          5
Vehicle Safety Act (“NTMVSA”). Not only was Zongshen, Inc. placed in the

foreground as the American face of all Chinese Zongshen entities, it was registered

as ZSIE’s agent for suits arising under the NTMVSA and shared officers with the

other Zongshen entities. Based on Schlunk, we find that ZSIE and Zongshen, Inc.

were so closely related that the latter was ZSIE’s agent for service as a matter of

law, “notwithstanding [ZSIE’s] failure or refusal to appoint [Zongshen, Inc.]

formally as an agent.” See Schlunk, 486 U.S. at 697.

      As to Zongshen Zuo, the only service attempted was substitute service on his

spouse, Dexiu Yuan, at her usual place of abode in Florida. We agree with the

district court’s assessment that Zongshen Zuo was not served pursuant to ORCP

7(D)(2)(b), as the Florida residence was not his usual place of residence or abode.

Likewise, such service did not provide reasonable notice of suit as there is no

evidence that the summons and complaint were mailed to Zongshen Zuo in China

or that he otherwise received notice of the pendency of the actions against him.

Thus, we affirm the district court’s ruling as to insufficiency of service of process

on Zongshen Zuo.

      The only remaining issue which this Court must address is the district

court’s dismissal of Ying Zuo and Zongshen USA Holdings, Inc. (“ZUSA”) for

lack of personal jurisdiction. We review a dismissal for lack of personal

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jurisdiction de novo. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218,

1223 (9th Cir. 2011), cert. denied, 132 S. Ct. 1101 (2012) (citing Boschetto v.

Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008)). “Where, as in this case, the trial

court ruled on the issue relying on affidavits and discovery materials without

holding an evidentiary hearing, dismissal is appropriate only if the plaintiff has not

made a prima facie showing of personal jurisdiction.” Fields v. Sedgwick

Associated Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986). In determining whether

the appellants have met their burden, uncontroverted allegations in the complaint

must be taken as true, and conflicts over statements contained in affidavits must be

resolved in the appellants’ favor. Love v. Associated Newspapers, Ltd., 611 F.3d
601, 608 (9th Cir. 2010).

      The appellants allege specific personal jurisdiction over Ying Zuo, which is

personal jurisdiction arising out of a defendant’s contacts with the forum. See

Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 412-413 (9th Cir.

1977). On June 7, 2010, the district court’s order regarding motions to set aside

the defaults and default judgments included the following ruling:

      This court will not exercise general personal jurisdiction over
      defendant Ying Zuo. During the relevant time frame, defendant Ying
      Zuo was a college student and was not involved in the day-to-day
      activities of the corporate defendants and had no involvement with the
      alleged fraud that occurred. Accordingly, this court lacks specific
      personal jurisdiction over her.

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The district court ordered further briefing on matters unresolved by its June 7 th

order. The appellees also filed motions for dismissal based on the district court’s

June 7 th rulings. On August 25, 2010, the district court dismissed Ying Zuo for

lack of personal jurisdiction, ruling that there had “been no allegations of any

conduct by Ying Zuo that would subject her to this court’s jurisdiction or subject

her to any liability in these cases, through RICO or otherwise.”

      Thereafter, the district court seems to have reversed itself in its November

19, 2010 ruling, by stating:

      Plaintiffs’ new allegation that Ying Zuo actively participated in the
      alleged fraud by meeting with plaintiffs and making representations
      that induced plaintiffs to enter the agreement with defendants provides
      prima facie evidence to support jurisdiction over her.

However, this Court can find no “new” allegations, creating jurisdiction where

none existed before. In the operative Rubicon II complaint, the appellants had

alleged:

      The individual defendants include. . . (3) Ying Zuo, who on
      information and belief resides in Florida and is vice president,
      secretary, treasurer and director of [ZUSA]. Defendant Zuo met with
      plaintiffs and made certain false representations to them in order to
      induce them to market Zongshen products as discussed below. Both
      defendants Dexiu and Ying conspired with the other defendants to sell
      illegal motorbikes in the United States through Zongshen, Inc.,
      plaintiffs and other persons like plaintiffs.

It is clear that the relevant complaint included allegations that Ying Zuo met with

                                           8
the appellants in her capacity as a Zongshen officer and made false representations

upon which the appellants, corporations registered in the forum state, relied. Even

if these allegations were considered “bare bones” or legal conclusions, they are

supported by the declarations of Tracy Titus (paralegal to appellants’ counsel) and

Mohammad Rahman (main investor in the corporate appellants).

      Although the appellants offered extensive affidavits, only the declaration of

Tracy Titus was specifically offered in opposition to the motion to dismiss. The

other referenced affidavit, that of Mohammad Rahman, was only offered in

opposition to the appellees’ motions to set aside default judgments. However, both

affidavits were filed and made part of the record before the district court ruled on

the motion to dismiss Ying Zuo. See Dist. Council No. 16 of Int'l Union of

Painters & Allied Trades, Glaziers, Architectural Metal & Glass Workers, Local

1621 v. B & B Glass, Inc., 510 F.3d 851, 855 (9th Cir. 2007) (noting that the

district court may rely on affidavits and discovery materials). Rahman swore that

Ying Zuo was represented as a Zongshen officer by her father, Zongshen Zuo, and

further that Rahman met with Ying Zuo in Florida as an officer of Zongshen, Inc.

to discuss the proposed joint venture. “Conflicts between the parties over

statements contained in affidavits must be resolved in the plaintiff's favor.”

Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008) (quoting

                                           9
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir.2004)).

Typically, the only relevant affidavits are those offered in opposition to a specific

motion. However, the facts of this case encourage us to allow a wider margin.

Based on the law favoring plaintiffs, and the district court’s November 19, 2010

ruling above, the appellants’ allegations were sufficient to survive a Rule 12(b)(2)

motion to dismiss Ying Zuo. See Swartz v. KPMG LLP, 476 F.3d 756, 766 (9th

Cir. 2007) (citing Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co.,

284 F.3d 1114, 1119 (9th Cir. 2002) (plaintiff generally required only to make out

a prima facie showing of personal jurisdiction to overcome 12(b)(2) motion)).

      The appellants attempted to allege personal jurisdiction over ZUSA by

virtue of the fact that ZUSA is a Zongshen entity, and all other Zongshen entities

are subject to personal jurisdiction. However, this cannot suffice to make out a

prima facie case for personal jurisdiction over ZUSA. Because the appellants

failed to allege sufficient facts for the court to assert personal jurisdiction over

ZUSA, there was no error in dismissing ZUSA.

      Each party should bear their own costs.

      AFFIRMED IN PART, REVERSED IN PART AND REMANDED.

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