Global Master International Group, Inc. v. Esmond Natural, Inc.

Opinion

CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Case No. 2:19-cv-10360-RGK-PLA Date September 18, 2023 Title Global Master International Group, Inc. v. Esmond Natural, Inc. et al

Present: The Honorable R. GARY KLAUSNER, UNITED STATES DISTRICT JUDGE Joseph Remigio (not present) Not Reported N/A Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiff: Attorneys Present for Defendants: Not Present Not Present Proceedings: (IN CHAMBERS) Order to Show Cause Why the Court Should Not Uphold Its Grant of Summary Judgment For Failure to Present Evidence of a RICO Conspiracy

Global Master International Group, Inc. (“GMI”) and Global Master Company (“GMC”) are sister companies that import nutritional supplements from the United States and market them to consumers in China. Whereas GMI is located and headquartered in California, GMC is located and headquartered in China. On March 16, 2020, GMI and GMC filed the operative First Amended Complaint (“FAC”) against Esmond Natural, Inc. and Paul Chia-Yin Wei (collectively, “Defendants”) seeking damages arising from fraudulently nonconforming shipments of nutritional supplements. (ECF No. 19.) Plaintiffs asserted claims for violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, fraud, and breach of warranty. On March 9, 2021, the Court granted Defendants’ Motion for Summary Judgment, dismissing GMI and GMC’s RICO claims. (ECF No. 106.) The Court found that GMC’s RICO claim failed for two reasons. First, GMC had not suffered a domestic injury as required to establish standing. GMC was a foreign company that imported products from the United States but sold them abroad. Any nonconforming products were sold or intended to be sold abroad, and thus GMC’s injury was felt abroad, not within the United States. Second, notwithstanding the lack of domestic injury, GMC failed to present evidence of a RICO conspiracy. On these two grounds, the Court granted Defendants’ Motion for Summary Judgment and dismissed GMC’s claim. The case proceeded to a jury trial on the remaining claims. During the trial, the Parties stipulated to the dismissal of GMI, leaving only GMC’s claims against Defendants. (ECF No. 166.) Following the conclusion of GMC’s case in chief, Defendants moved for judgment as a matter of law, which the Court granted. (ECF No. 169.) CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES - GENERAL Case No. 2:19-cv-10360-RGK-PLA Date September 18, 2023 Title Global Master International Group, Inc. v. Esmond Natural, Inc. et al

GMC subsequently appealed. On August 11, 2023, the Ninth Circuit found that the Court applied the incorrect legal standard for analyzing whether GMC had suffered a domestic injury. Global Master Int’l Grp., Inc.v. Esmond Nat., Inc., 76 F.4th 1266, 1277 (9th Cir. 2023). The Ninth Circuit, relying on the Supreme Court’s recent decision in Yegiazaryan v. Smagin, found that GMC had suffered a domestic injury because GMC received deliveries and assumed legal title of the nonconforming property in California. Id. at 1276 (citing Yegiazaryan v. Smagin, 143 S. Ct. 1900, 1912 (2023)). The Ninth Circuit accordingly reversed and remanded the case back to this Court for further proceedings. On September 13, 2023, the Parties filed a Joint Status Report. (ECF No. 189.) The Parties offer wildly different positions on how the case should proceed. GMC argued that the Ninth Circuit’s mandate requires a new trial on the RICO claim, and that this trial requires five months of additional discovery. Meanwhile, Defendants argue that no new trial is necessary because the Ninth Circuit reversed only the Court’s finding that GMC lacked standing, leaving intact the Court’s ruling on the alternative ground that GMC failed to present evidence of a RICO conspiracy. Indeed, the Ninth Circuit opinion makes no mention of this aspect of the Court’s ruling. GMC does not address this issue in the Joint Status Report. Accordingly, the Court ORDERS GMC to SHOW CAUSE IN WRITING by September 25, 2023 why the Court should not uphold its grant of summary judgment for failure to present evidence of a RICO conspiracy. GMC’s filing must be no more than five (5) pages in length.

IT IS SO ORDERED.

: Initials of Preparer JRE/sf