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Richmark Corp. v. Timber Falling Consultants

United States Court of Appeals for the Ninth Circuit

January 8, 1992, Argued and Submitted, Portland, Oregon ; March 30, 1992, Filed

Nos. 91-35966, 91-36059

Opinion

 [*1471]  OPINION

D.W. NELSON, Circuit Judge:

This case presents a number of difficult questions regarding a sensitive area of law and foreign relations. Timber Falling Consultants, Inc. (TFC) won a default judgment for fraud and breach of contract against Beijing Ever Bright Industrial Co. (Beijing), a corporation organized under the laws of the People's Republic of China (PRC) and an arm of the PRC government. As part of an effort to execute that judgment, TFC sought discovery of Beijing's assets worldwide. Beijing resisted those discovery efforts, and refused to comply when ordered to do so by the district court. The district court imposed discovery sanctions, held Beijing in contempt, and ordered contempt fines of $ 10,000 a day. Beijing contends that [**2]  PRC secrecy laws prevent it from complying with the discovery order and that it would be subject to prosecution in the PRC were it to comply. It appeals the discovery order, the discovery sanction, the contempt order, and the district court's refusal to vacate the contempt order. 1

 [**3]  While we acknowledge the importance of the interests the State Secrecy statute is designed to protect, we conclude in the circumstances of this case that the PRC's laws limiting disclosure cannot excuse Beijing's failure to comply with the district court's orders. For this reason, we affirm the discovery and contempt orders. We modify the contempt order, however, to make it payable to the court, rather than to TFC.

FACTUAL AND PROCEDURAL BACKGROUND 

Beijing contracted to purchase lumber from Richmark Corp. Richmark in turn retained TFC to procure the timber. After the contract fell through, Richmark sued TFC. TFC counterclaimed against Richmark and cross-claimed against all other parties involved, including Beijing, alleging fraud and breach of contract. Beijing failed to appear, apparently because of the  [*1472]  interruption in United States-PRC relations which followed the Tienanmen square incident. All other claims on both sides were dismissed by the district court, but TFC was awarded a $ 2.2 million default judgment against Beijing. This judgment was entered on June 5, 1990.

Beijing appealed this judgment to the Ninth Circuit. 2 Beijing did not post a supersedeas bond or letter [**4]  of credit, however, so TFC was free to begin efforts to collect the judgment while the appeal was pending. In an attempt to do so, TFC served Beijing with a number of discovery requests and interrogatories which sought to identify Beijing's assets worldwide. Beijing did not respond to those requests, and instead moved for a stay of discovery pending resolution of its Rule 60(b) motion for relief from the judgment. TFC in turn filed a motion to compel discovery.

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959 F.2d 1468 *; 1992 U.S. App. LEXIS 5430 **; 22 Fed. R. Serv. 3d (Callaghan) 703; 92 Cal. Daily Op. Service 2662; 92 Daily Journal DAR 4234

Richmark Corp., a California Corporation, Plaintiff, v. Timber Falling Consultants, an Oregon Corporation, Defendant. Timber Falling Consultants, an Oregon Corporation, Counterclaim Plaintiff- Appellee, v. Richmark Corp., a California corporation; Peacock Mfg. Co. a Texas corporation; Zhu Yuanchang; Eugene Wang; James Yang; and Francis Tong, Counterclaim Defendants, and Beijing Ever Bright Industrial Co., a foreign corporation, Conterclaim Defendant- Appellant.

Prior History:  [**1]  Appeal from the United States District Court for the District of Oregon. D.C. No. CV-88-1203 FR. Helen J. Frye, District Judge, Presiding.

CORE TERMS

district court, discovery order, contempt, discovery, secrecy, disclosure, contempt sanction, sanctions, civil contempt, compliance, complied, contempt order, discovery request, contends, disclose information, coercive, orders, documents, disclose, vacate, weighs, discovery sanction, factors, Timber, subpoena, courts, fine, good faith, confidentiality, hardship

Civil Procedure, Sanctions, Contempt, Civil Contempt, Criminal Law & Procedure, Standards of Review, Abuse of Discretion, Discovery, General Overview, Appeals, De Novo Review, Methods of Discovery, Interrogatories, Discovery & Disclosure, Discovery, Foreign Discovery, Inspection & Production Requests, Relevance of Discoverable Information, Undue Burdens in Discovery, Judgments, Enforcement & Execution, Writs of Execution, International Law, Foreign & International Immunity, Sovereign Immunity, Remedies, Injunctions, Contempt, Misconduct During Discovery, Energy & Utilities Law, Discovery, Exploration & Recovery, Obstruction of Administration of Justice, Relief From Judgments