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Power Electric Distribution, Inc. v. Hengdian Group Linix Motor Co., Ltd.

United States District Court, D. Minnesota

March 2, 2015

Power Electric Distribution, Inc., Petitioner,
Hengdian Group Linix Motor Co., Ltd. Respondent.

Jeffrey W. Post, Esq., Fredrikson & Byron, PA, Minneapolis, MN, on behalf of Petitioner.

Douglas R. Peterson, Esq., and Elizabeth C. Kramer, Esq., Stinson Leonard Street LLP, Minneapolis, MN, on behalf of Respondent.


ANN D. MONTGOMERY, District Judge.


On January 12, 2015, the undersigned United States District Judge heard oral argument on Respondent Hengdian Group Linix Motor Co., Ltd. and its successor Zhejian Linix Motor Co., Ltd.'s (together, "Linix") Amended Motion for Post Judgment Relief or an Extension of Time to Appeal [Docket No. 78]. Linix seeks relief from three judgments [Docket Nos. 15, 33, 47] that have been entered against it in this action, arguing that the judgments are void because Petitioner Power Electric Distribution, Inc. ("Power Electric") failed to serve Linix using the approved Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents ("Hague Convention") method for service of process on Chinese companies. The Court also heard oral argument on Power Electric's Amended Motion for Attorneys' Fees and Costs [Docket No. 58]. Power Electric seeks recovery of its fees incurred in obtaining the third judgment. For the reasons set forth below, Linix's Amended Motion is granted in part and denied in part, and Power Electric's Amended Motion is granted in part and denied in part.


A. Parties

Power Electric is a Minnesota corporation that supplies customized electric and gear motors to U.S. manufacturers. Petition [Docket No. 1] ¶¶ 1, 7. Power Electric works with overseas motor manufacturers to design motors that meet its customers' needs. Power Electric then purchases the custom-made motors from the foreign motor manufacturers and resells them to its customers in the U.S. Id . ¶ 7.

Linix is a Chinese company that manufactures motors. Linix has no offices or agents in the United States. Pro Se Mot. Extend Time Filing Notice Appeal [Docket No. 52] ("Pro Se Mot.") 2.

B. Supplier Agreement

In 2005, Power Electric and Linix entered into a Supplier Agreement in which Linix agreed to manufacture motors for use by Power Electric's customers. Post Decl., Sept. 5, 2014 ("First Post Decl.") [Docket No. 63] Ex. A ("Supplier Agreement"). The Supplier Agreement is governed by Minnesota law. Id . ¶ 7.

Paragraph 7 of the Supplier Agreement states that disputes arising out of the Supplier Agreement will be settled through "arbitration carried on in the English language, administered by the American Arbitration Association under its Commercial Arbitration Rules using three arbitrators, and shall be held in Minneapolis, Minnesota, U.S.A." Id.

The Supplier Agreement further provides that "judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof." Id . Each party to the Supplier Agreement fully consented to the jurisdiction of the federal and state courts in Minnesota. Id.

The Supplier Agreement also states that Power Electric "shall be entitled to recover its costs and expenses (including reasonable attorneys' fees) incurred to enforce the terms of th[e] Agreement." Id . ¶ 5.

C. Arbitration

In 2012, Power Electric commenced arbitration against Linix over disputes arising out of the Supplier Agreement. See generally Petition, Ex. A ("Arbitration Award"). Almost every significant filing in the arbitration-including the initial arbitration demand, notices, briefs, exhibits, and final notice of the Arbitration Award-was served by email, which is a permissible form of service under the American Arbitration Association's International Dispute Resolution Procedures.[1] Post Decl., Sept. 15, 2014 [Docket No. 76] ("Second Post Decl.") ¶ 2, Ex. 1 at 28. Linix appeared at the arbitration in Minneapolis, Minnesota and contested liability on all counts of Power Electric's claims.

On December 4, 2012, a panel of three arbitrators issued an Arbitration Award requiring Linix to: (1) pay $1, 544, 835.55 in money damages; (2) return Power Electric's tooling; (3) provide quarterly accountings of all gear motors sold by Linix to Power Electric customer FBD, and (4) pay a royalty of $18.43 for each of the first 50, 000 gear motors that Linix sells to FBD. Arbitration Award at 2-4.

The arbitrators further determined that the provision in the Supplier Agreement entitling Power Electric to recover attorneys' fees was applicable to fees incurred by Power Electric to enforce Linix's royalty obligations. Id. at 19. However, attorneys' fees were not awarded at the time of arbitration because the royalties owed by Linix had arisen only recently, and "it was reasonable for Linix to await resolution of all claims [in the arbitration] before paying the roughly $3, 000 in royalties owed." Id . Nevertheless, the arbitrators explicitly noted that "this ruling does not deny or limit Power Electric's right to recover attorneys' fees, if any, that may hereafter be incurred to enforce its rights to future accountings and/or royalties." Id. at 19-20.

D. Power Electric Files Action to Confirm Arbitration Award

On January 24, 2013, Power Electric filed a Petition to confirm the Arbitration Award. See generally Petition. At the time the Petition was filed, Linix had not complied with any of the requirements under the Arbitration Award.

The record establishes that as early as February 2013, Linix was aware of the District Court proceeding even though Power Electric had not yet served Linix with the Summons and Petition. On February 1, 2013, Linix manager Songwei Wang sent Power Electric's president Dick Pula an email identifying "U S Court Arbitration" as the subject. Second Post Decl. Ex. 4 at 3. Wang's email stated that Linix's "Head office law dept" would be in charge of the matter and requested that Power Electric "pls kindly contact me in future." Id . The email was sent from Linix email address See id. Also on February 1, 2013, Linix's arbitration counsel sent an email to Power Electric's counsel stating: "I understand PE ...

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