Fenerjian v. Nong Shim Company, Ltd et al

Filing 740

ORDER FOLLOWING APRIL 16, 2018 PRETRIAL CONFERENCE by Judge William H. Orrick. (Filed on 4/24/2018)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
Case No. 13-cv-04115-WHO

7
8

IN RE KOREAN RAMEN ANTITRUST
LITIGATION

9

ORDER FOLLOWING APRIL 16, 2018
PRETRIAL CONFERENCE

10

United States District Court
Northern District of California

11
Having heard argument at the April 16, 2018 Further Pretrial Conference, the following

12
13

pretrial legal issues and motions are resolved as follows.

14

I.

REMAINING MOTIONS IN LIMINE
Plaintiffs’ MILs

15

A.

16

Plaintiffs’ MIL No. 1 – Preclude Evidence Regarding DPPs’ Ability, if Any, to Pass On

17
18

Defendants’ Unlawful Overcharges and Suggestions of Multiple Liability.
GRANTED in part. Defendants are allowed, for IPP claims, to show that DPPs did not

19

pass on the full amount of overcharge, but defendants are not allowed to make a pass-on defense

20

against the DPPs or argue that DPP damages should be reduced because of the pass on. Therefore,

21

the propriety of pass-on evidence will be determined on case-by-case basis and curative/limiting

22

instructions issued as necessary.

23
24

Plaintiffs’ MIL No. 2 – Exclude Evidence Regarding Plaintiffs’ Failure to Mitigate Their
Damages

25

GRANTED. Mitigation is not normally an issue in horizontal price-fixing cases and given

26

plaintiffs’ theory that defendants’ positioned themselves as unique ramen products (at least during

27

the relevant timeframe); functionally identical supplier cases are inapposite.

28

Plaintiffs’ MIL No. 5 – Exclude Any Reference to the Amount of the Samyang Foods Co.,

1
2

Ltd Settlement.
GRANTED. The fact of the settlement can be introduced by defendants to show bias.

3
4

However, the amount of the settlement is not, in and of itself, so exceptionally low to make

5

additional inferences regarding the amount of the settlement relevant to bias (unlike the cases

6

relied on by defendants).1 On the other hand, the risk of the jury using the settlement amount

7

improperly is high per Federal Rule of Evidence 408.

8

Plaintiffs’ MIL No. 6 – Exclude Witnesses From the Courtroom

9

GRANTED: Fact witnesses are excluded by Standing Order. Expert witnesses are not.2
Plaintiffs’ MIL No. 9 – Issue a Finding That a Foundation Exists to Admit Statements

10

United States District Court
Northern District of California

11

Under the Co-Conspirator Exception (FRE 801(d)(2)(E))
GRANTED. Generally, a sufficient foundation of a “conspiracy” has been shown such

12
13

that statements, if otherwise admissible, could be considered co-conspirator statements. Each

14

statement sought to be introduced, however, will be analyzed on a case-by-case basis.

15

Plaintiffs’ MIL No. 11 – Exclude References to Pornography on Samyang Hard Drive

16

DENIED. Defendants are allowed to challenge plaintiffs’ characterization of and purpose

17

of the SHD by noting the SHD contained pornography that was deleted by the Samyang auditor.
Plaintiffs’ MIL No. 12 – Exclude Certain Statements of Daesik Hong

18

“Ottogi searched the documents kept internally but was only able to
locate a portion of the documents generated in the price-increase
decisionmaking processes in 2002 and 2004.” Hong Merits Report
[ECF No. 620-4] at ¶18.

19
20
21

Plaintiffs argue Hong has no personal knowledge of what Ottogi did in response to
22
receiving a subpoena from the KFTC and he should not be allowed to sponsor such evidence in
23
24
1

25

Plaintiffs offer a host of unrebutted reasons why the amount of the Samyang settlement is so
much lower than the amount of damages they seek from defendants at trial.

26

2

27
28

In my February 2, 2018 Order, I addressed Plaintiffs’ MIL No. 7/Ottogi’s MIL No. 2 and granted
Plaintiffs’ MIL No. 8. I laid out the parameters of how the parties may refer to the KFTC
investigation and provided a preliminary version of a jury instruction addressing the KFTC
investigation and Korean Supreme Court decision. The final form of the jury instruction (which
defendants address in Dkt. No. 727), will be determined on May 10, 2018.
2

1
2

the event that Ottogi declines to bring those with knowledge to testify before the jury.
DENIED without prejudice to being raised at trial. Any objection will be GRANTED and

3

testimony excluded unless Hong’s knowledge of and foundation for what Ottogi did and what

4

Ottogi found can be established.

5
6
7
8

“In light of the on-site investigation where KFTC conducted the
investigation practically in a manner of search and seizure and did
not specify what documents they had in possession, Ottogi was
neither incentivized nor capable of withholding documents or
discarding them.” Id.
Plaintiffs argue Hong is not a psychologist or trained interrogator and he is not qualified to
testify about Ottogi’s response to the KFTC subpoena (because he lacks personal knowledge), or

10

what motivated Ottogi to respond in the manner that it did (because he has no training as to what

11
United States District Court
Northern District of California

9

“incentivizes” certain conduct).

12

DENIED as to “incentivized,” as long as a foundation is laid at trial (i.e., that the KFTC

13

typically does not disclose the aim of its investigation or what documents are taken). GRANTED

14

as to “capable” because it is unclear what, if any, basis Hong has for that statement.

15

“By the time the relevant person at Ottogi received the request for
document submission, the investigative official had already entirely
searched the PC of the relevant persons and Ottogi Korea was not in
a position to know what documents the investigative officials
secured.” Hong Merits Rebuttal [ECF No. 616-6] at ¶18.

16
17
18
19
20

Plaintiffs argue Hong has no personal knowledge of what Ottogi knew about the scope of
the KFTC’s onsite investigation.
GRANTED in part. This hearsay statement presumably serves as a basis for Hong’s

21

opinion that Ottogi was not “incentivized” to withhold or destroy evidence. Hong has explained

22

the basis for his understanding that, generally, companies being investigated do not know what

23

documents the KFTC has secured, but he cannot opine on what Ottogi in fact knew or didn’t know

24

unless there is a basis for that opinion.

25
26
27
28

“Given the volume of materials to which the KFTC already had
access, it does not make sense that Ottogi Korea would modify the
‘unaltered’ memoranda and attempt to pass them off as original,
final memoranda, without informing the KFTC.” Hong Merits
Rebuttal [ECF No. 620-4] at ¶18.
Plaintiffs argue Hong is not the proper vehicle for bringing before the jury what Ottogi’s
3

1

subjective intent was in altering certain documents before submitting them to the KFTC. He’s not

2

a psychologist or trained interrogator, and the introduction of hearsay about why Ottogi thought it

3

was proper to alter the documents is not substantially outweighed by the prejudicial effect of

4

presenting these justifications to the jury.

5

GRANTED in part. Hong can testify generally that because a company does not know

6

what the KFTC has secured or has access to, it does not make sense that a company would alter

7

documents. But he cannot opine on what Ottogi knew or did unless there is a basis for that

8

testimony.
“If Ottogi Korea intended to conceal that these approximations were
composed based on draft memoranda, it would make no sense that
these documents were still available and produced in this litigation.”
Id.

9
10
11
United States District Court
Northern District of California

Plaintiffs argue Hong is not a psychologist or trained interrogator and cannot properly
12

testify about Ottogi’s intentions, or why it responded to the KFTC in the manner that it did.

13
GRANTED in part. Hong can opine generally on what a company might do or intend to do, but
14
not specifically on what Ottogi intended or did unless there is a basis for that testimony.
15

Plaintiffs’ MIL No. 13 – Exclude Testimony of Sung-Joo Maeng Unless and Until

16
Plaintiffs Offer Testimony Subject to Impeachment with Extrinsic Evidence
17
DENIED. If Kang is a witness for plaintiffs, defendants can challenge his credibility using
18
his prior allegedly untruthful statements.
19
20

B.

Nongshim’s MILs

Nongshim’s MIL No. 1 – Exclude Reference to and Admission of SHD Documents

21
because: (a) Unauthenticated; (b) Inadmissible Under the Rule of Completeness; (c) Inadmissible
22
Under the Best Evidence Rule; (d) Inadmissible Hearsay Without Exception
23
DENIED. Admissibility will be determined on a case-by-case basis. Authentication may
24

be provided by Samyang witnesses in conjunction with plaintiffs’ expert Vaughn and forensic

25
analysis. The rule of completeness and best evidence rule do not preclude admission. Hearsay
26
will be determined on a case-by-case basis.
27
28
4

1

Nongshim’s MIL No. 2 – Exclude Statements and Testimony by Certain Samyang

2

Employees as Inadmissible for Lack of Personal Knowledge and Hearsay Without Exception,

3

including (a) Testimony Regarding the Alleged Representatives’ Meeting in Late 2000/ Early

4

2001; (b) Testimony About Alleged Information Exchanges Between Competitors; and (c)

5

Samyang Witness Statements Submitted to the Korean Fair Trade Commission

6

DENIED. Admissibility will be determined on a case-by-case basis. Generally, as

7

discussed in the Order on the motions for summary judgment, the Samyang witnesses provide

8

some basis for their opinions (even if disputed or “walked back” in deposition). The Samyang

9

witness statements also appear to be made adequately close in time to the at issue events, many
were subject to later adoption through deposition or otherwise under oath, and they may otherwise

11
United States District Court
Northern District of California

10

be admissible under various hearsay exceptions.

12

Nongshim’s MIL No. 3 – Exclude Statements of Alleged Co-Conspirators

13

DENIED. Admissibility, including applicability of hearsay exceptions, for alleged co-

14
15
16

conspirator statements will be determined on a case-by-case basis.
Nongshim’s MIL No. 4 – Exclude Rhetoric or Generalizations about Korean or Asian
Business Culture, Including “Chaebol”

17

DENIED in part. Consistent with my prior ruling on defendants’ motion to exclude the

18

testimony Professor Haggard, “plaintiffs should be careful when eliciting testimony on Korean

19

business ‘culture’ from Haggard at trial. Attempts to suggest that Korean corporate culture

20

tolerates or encourages illegal activity (on behalf of its executives or lower-level employees) will

21

not be permitted.” Dkt. No. 668 at 49.

22
23
24
25

Nongshim’s MIL No. 5 – Prohibit Counsel From Commenting On The Absence Of
Witnesses Who Are Not Within The Subpoena Power Of This Court
GRANTED generally. Counsel shall not comment about missing witnesses who are not
within the subpoena power of the court.

26
27
28
5

C.

1

Ottogi’s MILs

Ottogi’s MIL No. 4 – To Exclude References To Unrelated Business Practices, Corruption,

2
And Politics
3
GRANTED, as agreed.
4

Ottogi’s MIL No. 5 – Exclude Reference to Ottogi America, Inc.’s Former Attorney,

5
Stephan Y. Kang, who is in litigation against Ottogi America in Superior Court in Southern
6
California
7
Plaintiffs argue the litigation in Superior Court might be relevant to level of managerial
8
control exercised by Ottogi America (OA, as opposed to the more-distant Ottogi Korea, OK), and
9

Cox’s profitability analyses might be implicated by allegations in state court case that OA was

10
significantly defrauded.
11
United States District Court
Northern District of California

GRANTED, unless plaintiffs can show how testimony from the Superior Court case is
12
directly relevant to specific issues in this trial.
13
14
15

II.

DISPUTED LEGAL ISSUES
1.

Pass-on Defense

Generally, only evidence directed to showing what portion of the overcharge IPPs paid
16
(consistent with the underlying state laws) is permissible and defendants shall not solicit evidence
17

for the sole purpose of showing that DPPs “passed on” the overcharge or argue that the DPP

18
damages should be reduced because of the pass-on defense. Jury instructions should be sufficient
19
to avoid prejudice to the DPPs and ensure the jury awards only the damages available under the
20
different sets of applicable law.
21
22

2.

Classwide/Aggregate Damages

Plaintiffs are allowed to pursue classwide/aggregate damages and defendants may not
23
argue otherwise.
24
25

3.

Treble, Duplicative Damages

If the DPPs are awarded the full amount of the alleged overcharges and the IPPs are
26
awarded the amount of damages available under the various state laws (i.e., in at least some
27
instances, the portion of the overcharges they paid), there is no due process problem with respect
28
6

1
2

to “duplicative” damages or trebling any awards.
4.

Applicability and Scope of Royal Printing

3

In Royal Printing, the Ninth Circuit held that Illinois Brick “does not bar an indirect

4

purchaser’s suit where the direct purchaser is a division or subsidiary of a co-conspirator.” Royal

5

Printing v. Kimberly Clark Corp., 621 F.2d 323, 326 (9th Cir. 1980). The concern recognized by

6

Royal Printing was that the direct purchasers (there, wholesalers) were owned or controlled by the

7

parent conspirator and, therefore, the direct purchasers would not be inclined to sue and the injury

8

would go unchallenged. In that limited exception, the Ninth Circuit has approved an action under

9

federal antitrust laws by an otherwise indirect purchaser (and allowed Royal Printing to sue for the

10

United States District Court
Northern District of California

11

entire amount of the injury, even if some amount was passed on).
Defendants argue first that the Ninth Circuit’s exception is contrary to Supreme Court

12

precedent and has been abrogated by Kansas v. UtiliCorp United, Inc., 497 U.S. 199 (1990),

13

where the Supreme Court cautioned against the creation of exceptions to federal antitrust standing.

14

But see In re ATM Fee Antitrust Litigation, 686 F.3d 741, 749 (9th Cir. 2012) (affirming that the

15

Royal Printing exception is still controlling law in the Ninth Circuit).

16

Defendants also argue that the Royal Printing exception does not apply here because some

17

of the sales went to direct purchasers not owned and controlled by the Korean companies (e.g.,

18

OK’s use of domestic Korean exporters prior to 2005 [when OA was formed] and Nongshim

19

Korea (NSK) sold to independent wholesalers who were not associated with Nongshim America,

20

NSA). They also contend that even the Ninth Circuit in Royal Printing did not allow the indirect

21

purchasers to sue the owned or controlled wholesalers – the liability remained with the defendant-

22

manufacturers – and therefore Royal Printing cannot be used to make NSA or OA liable.

23

Royal Printing was primarily concerned with standing for entities who would (given a first

24

sale to an owned/control subsidiary or other related entity) hold the right to assert Sherman Act

25

claims as direct purchasers. It is unclear whether and how the Royal Printing standing exception

26

might apply in this case. I conclude that Royal Printing is still valid and applicable precedent in

27

this circuit, but I defer determining how and whether it might apply to the parties and claims in

28

this case until I see how the evidence comes in and whether there is a need to issue a jury
7

1

instruction under Royal Printing.

2

5.

3

Alter Ego

In the first round of pre-trial briefing, defendants argued that plaintiffs were belatedly
attempting to assert alter ego as a “last ditch” theory to keep NSA and OA on the hook despite the

5

lack of direct evidence of their participation in any alleged conspiracy. Plaintiffs responded that

6

the operative complaint is replete with assertions that the Korean and American defendants has

7

“interlocking control” and the American subsidiaries were “owned and controlled” by the Korean

8

companies. Plaintiffs, however, seemed to acknowledge that alter-ego was not expressly pleaded

9

by relying on cases and Rule 15(b)(1) suggesting they are allowed to raise issues and/or seek

10

amendment (if necessary) up to the eve of trial. Plaintiffs also asserted that is no prejudice to

11
United States District Court
Northern District of California

4

defendants from their assertion of alter ego, noting that Professor Haggard opined extensively on

12

ownership and control of NSA and OA by the Korean defendants and that defendants had the

13

opportunity to depose him and counter those opinions with their own expert.

14

Following the first Pretrial Conference, I allowed the parties to file additional briefs on

15

alter ego and heard argument at the Further Pretrial Conference. In defendants’ supplemental

16

briefing, they argue that plaintiffs’ alter ego theory is based on “outside reverse corporate veil

17

piercing” which does not exist under California law. Also, they contend that they have been

18

prejudiced by plaintiffs’ failure to plead and raise this theory as they have not identified an expert

19

or prepared witnesses and exhibits to rebut it.

20

As to their first point, I agree with defendants that California courts have rejected attempts

21

by outsiders to reach corporate assets based on the liability of a corporate shareholder. See, e.g.,

22

Postal Instant Press, Inc. v. Kaswa Corp., 162 Cal. App. 4th 1510 (Cal. App. 4th Dist. 2008). The

23

concerns that animate those decisions include protecting “innocent” shareholders and corporate

24

creditors, preventing judgment creditors from avoiding “normal judgment collection procedures,”

25

and the availability of other remedies. Id. at 1513. However, the aim of plaintiffs’ theory here is

26

different; that the Korean defendants will still be liable for sales of ramen in America by their

27

American subsidiaries, even if the American subsidiaries did not actively participate in the price-

28

fixing conspiracy in light of the control and influence of the Korean parent companies over their
8

1

subsidiaries. The concerns in the cases that have rejected outside reverse corporate veil piercing

2

do not apply to this situation where both the parent and subsidiaries were directly involved in the

3

transactions that gave rise to plaintiffs’ claims (if not direct liability for all involved). The

4

allegations here are more akin to direct alter ego liability. See, e.g., Clark v. Dana Woody &

5

Associates, Inc., 09CV2931-CAB DHB, 2013 WL 544030, at *3 (S.D. Cal. Feb. 12, 2013)

6

(“Reverse corporate piecing has nothing to do with alter ego liability between parentsubsidiary or

7

sister companies.”).

8

As to prejudice, plaintiffs reiterate their argument that they have continually alleged

9

corporate control by the Korean defendants over the American subsidiaries since the beginning of
the case, and that Haggard opined extensively on the control as well as the overlap of personnel

11
United States District Court
Northern District of California

10

and evidence of the Korean companies making decisions for the American companies. I recognize

12

that defendants have not had the opportunity to retain an expert on alter ego – although experts on

13

that issue are not typical, as alter ego is a question of law based on facts – but defendants do have

14

Daesik Hong to rebut Haggard on the issues of control by the Korean defendants over the

15

American defendants. With respect to preparing witnesses or gathering documents, defendants did

16

not make a persuasive showing that they would not be able to readily do so at this juncture. If

17

defendants need to designate additional witnesses and/or rely on as-yet unproduced documents

18

that are directly relevant to the issue of alter ego, they may do so.3
As a final word on alter ego and the somewhat atypical theory plaintiffs raise, as

19
20

defendants pointed out during the Further Pretrial Conference, almost all of the cases cited by both

21

sides in their supplemental briefing are post-judgment collections cases. This issue may be

22

revisited post-trial as necessary.

23

6.

Discovery or Injury Statute of Limitations Rule

I will not rule on this issue pre-trial, but will address it post-trial as necessary.4

24
25
3

26
27
28

And plaintiffs cannot complain, given that they failed to mention “alter ego” by its name until
December 2017.
4
The remaining two legal issues – No. 7, the scope of the duty, if any, to preserve documents and
materials under Korean and No. 8, defendants’ notice of intent to rely upon foreign law pursuant
to F.R.C.P. 44.1 – will be addressed below.
9

1

III.

MOTIONS TO EXCLUDE
A.

2

Motion to Exclude Mangum

Defendants move, again, to exclude Mangum’s testimony arguing: (1) he fails to

3
accurately define the product market, by defining Korean noodles as a distinct product without
4
adequate support and by ignoring cross-price elasticities and consumer sensitivity to price
5
changes; and (2) his overcharge model does not measure what it purports to measure.
6
7

Relevant market. Defendants contend that Mangum’s market definition is arbitrary and
unsupported. Defendants argue Mangum’s limiting his analysis to Korean noodles, and excluding

8
Japanese and Chinese products that dominated the broader market, cannot stand because it is not
9
supported by a cross-elasticity or other economic analysis (the predominant tools used to define
10

antitrust markets) and is based only his own “qualitative” assessments (based itself on a few

11
United States District Court
Northern District of California

instances of marketing statements made by defendants) and an inaccurate price-point analysis.
12
Defendants argue that in his effort to carve out Korean Ramen from other ramen products being
13
14

sold in the U.S., Mangum failed to conduct any cross-price elasticity study, consider SSNIP,5 and
rigorously consider the Brown Shoe “practical indicia.”6 His opinions, according to defendants,

15
are excludable under Daubert.
16
Plaintiffs respond that in a horizontal price-fixing case under Section 1 of the Sherman Act
17
(as opposed to a monopoly case under Section 2) there is no need to define a relevant market
18
within which defendants exercised market power. Knevelbaard Dairies v. Kraft Foods, Inc., 232
19

F.3d 979, 986 (9th Cir. 2000). They assert, nonetheless, that Mangum looked to defendants’ own

20
documents and the concentrated nature of the market in Korea and addressed the Brown Shoe
21
practical indicia. They claim Mangum then went farther in his analysis of the relevant market to
22

rebut Cox’s belief – stated in Cox’s reply report, the first time that “market” definition was fully

23
24
5

25

As discussed in the DOJ & FTC Horizontal Merger Guidelines considering impacts of “small but
significant and non-transitory increase in price” (SSNIP) on market.

26

6

27
28

The Brown Shoe practical indicia are: (1) industry or public recognition of the market as a
separate economic entity; (2) the product’s peculiar characteristics and uses; (3) unique production
facilities; (4) distinct customers; (5) distinct prices; (6) sensitivity to price changes; and (7)
specialized vendors. Brown Shoe Co. v. U.S., 370 U.S. 294, 325 (1962).
10

1

engaged with by any expert – that competition from Nissin and Maruchan could restrain

2

defendants’ pricing. Finally, plaintiffs challenge Cox’s own price-elasticity study, pointing out

3

that Cox used products from after the conspiracy period, from a single geographic area, and for

4

only 4 products; all errors that Mangum criticizes in his Daubert declaration submitted in

5

opposition to this motion.7
Defendants’ attacks on Mangum’s market definition are, for purposes of this horizontal

7

price fixing case, more appropriate for cross-examination than exclusion under Daubert. As a

8

starting point, Mangum’s opinions regarding the alleged overcharge on products sold in the U.S.

9

were based not only on an analysis of defendants’ market power (and related market definition)

10

but more so on other, significant (albeit disputed) evidence. That evidence includes the strong

11
United States District Court
Northern District of California

6

institutional connections between the Korean and American companies (such that pricing in Korea

12

necessarily, according to Mangum, impacted prices in the U.S.), price correlations between

13

Korean price increases and increases in the U.S., and Mangum’s regression analysis showing price

14

increases outstripped cost increases (generally) by a significant margin.
In addition to these analyses, admittedly to bolster his other evidence of overcharge and

15
16

damage, Mangum also looked to market power and relatedly market definition to confirm his view

17

that the relevant market is limited to Korean ramen noodles. There is no dispute that Mangum did

18

not perform any cross-elasticity of demand studies or show how the market reacted to SSNIP. But

19

Mangum did consider some of the more significant – as relevant to the allegations in this case8 –

20

Brown Shoe practical indicia to support his belief that the relevant market is limited to Korean

21

ramen noodles. That defendants believe Mangum ignored “third-party” market research that

22

lumped all instant noodle manufacturers together, “cherry-picked” statements from defendants’

23

own documents, or that some of the non-Korean instant noodle manufacturers started making

24

“Korean-style” products (according to plaintiffs, only at the end of or after the relevant conspiracy

25
7

26

Defendants separately move to exclude Mangum’s “Daubert” declaration, because it allegedly
asserts new opinions.

27

8

28

Defendants point out that Mangum failed to consider some of the Brown Shoe indicia like
“unique production facilities.” But not all Brown Shoe factors apply in all cases.
11

1

period), can be explored on cross-examination.
Overcharge Model. Defendants argue, again, that Mangum’s model is “misspecified” and

2
3

exhibits “extreme” multicollinearity and absurd results such that it must be excluded under

4

Daubert.9 Defendants point out that Mangum made changes to his regression model after class

5

certification and now includes new composite data series, 2010 through 2012 transaction data

6

(despite his prior concerns), and changes to some of the explanatory variables. According to

7

defendants, Mangum still fails to account for what they consider are “significant variables,”

8

including changes in taste, increased advertising, expansions into new markets, and global

9

economic trends. Mangum also continues to include, according to defendants, problematic
variables (including incorrect time trends and trans-pacific shipping costs), and continues to use

11
United States District Court
Northern District of California

10

only one Nongshim product (and no Ottogi products) to create his cost variable. These errors,

12

among others, lead to defendants’ characterized “severe multicollinearity” and implausibility

13

(because, according to them, the consideration of the correct inputs shows that the defendants

14

made essentially no profit during relevant timeframe).
Plaintiffs respond that I have already largely rejected these exact arguments at class

15
16

certification and the question of whether the wrong data was used or variables not included or

17

improperly included, goes to weight and is subject to attack at trial. The opposition then points to

18

evidence that substantiates Mangum’s opinions (chaebol/institutional arrangements, correlation

19

between prices changes in Korea and U.S., and the fact that U.S.-produced products increased in

20

price around the same time imported U.S.-sold products increased in price).
The essence of defendants’ arguments is the same as the ones I have already rejected.

21
22

Defendants’ points about errors and failures incorporated into Mangum’s model may be well-

23
24
25
26
27
28

9

“Multicollinearity occurs when several variables are correlated with each other—that is, they
overlap in the sense that they each capture some part of the same effect—such that it is impossible
from the data set to objectively determine the influence of one variable as opposed to the influence
of these others.” In re Elec. Books Antitrust Litig., No. 11 MD 2293 DLC, 2014 WL 1282293, at
*26 n.34 (S.D.N.Y. Mar. 28, 2014). As “predictors become more correlated, the estimate of
individual regression coefficients become more unreliable and, thus, the effects of the individual
independent variables become difficult to measure accurately.” Realcomp II, Ltd. v. F.T.C., 635
F.3d 815, 834 n.13 (6th Cir. 2011).
12

1
2

taken by the trier of fact, but they go to weight and not admissibility.
Non-Economic Opinions. Finally, defendants move to exclude “non-economic opinions”

3

outside of Mangum’s expertise; specifically: (a) opinions on spoliation, (b) expectations of U.S.

4

customers about whether Korean price increases would impact the U.S. market and (c) comments

5

about chaebols. Plaintiffs contend Mangum should be allowed to opine that the “altered

6

documents,” the industry recognition that Korean prices would impact U.S. prices, and Professor

7

Haggard’s analysis about control in chaebols all support his economic theories and analyses.

8
9
10

These topics are not outside his expertise or bounds of the topics for which Mangum was
disclosed and he can rely on them, as he relied on defendants’ own documents and industry trends,
to support his opinions.

United States District Court
Northern District of California

11

The motion to exclude is DENIED.

12

B.

13

Similar to the attacks on Mangum, defendants argue that Ackerberg failed to define the

Motion to Exclude Ackerberg

14

relevant market or employ a reliable economic analysis to do so, and they again attack his

15

damages model because it does not reflect economic reality and is based on unsupported

16

assumptions.

17

Market Definition. Ackerberg relies on similar practical indicia as Mangum to argue

18

Korean Noodles are a distinct market. Defendants challenge Ackerberg’s reliance on these

19

qualitative indicators without “rigorously” reviewing the Brown Shoe indicia and note that he did

20

not consider SSNIP or perform a cross-elasticity analysis.

21

Plaintiffs respond, as above, that because proving the relevant market is not an element of

22

their claim, they did not need to perform a cross-elasticity test or determine the impact of SSNIPs.

23

Instead, Ackerberg “as part of his qualitative evaluation of injury and damages” considered any

24

restraints on defendants’ ability to raise prices. Plaintiffs admit that Ackerberg did not do a cross-

25

elasticity of demand analysis. However, he analyzed data to show that prices for the Korean

26

ramen increased 3 to 5 times the amount of non-Korean “noodles” in the general noodle market,

27

yet demand still grew by 3 times during the same period. This indicates no cross-elasticity of

28
13

1

demand and supports plaintiffs’ position that the relevant market is Korean Noodles.10 Finally, as

2

above, plaintiffs note alleged weaknesses in Cox’s last-minute cross-elasticity study – it relies on

3

post-class period data, is of limited geographic scope, and concerns limited products.

4

As with Mangum, in light of the nature of the claim here and Ackerberg’s other evidence

5

of overcharge and damage, defendants’ attacks on Ackerberg go to weight and not admissibility;

6

they are appropriate for cross-examination, not exclusion.
Damages Model. Defendants initially challenge the collusion coefficient variables on

7

which Ackerberg relies, arguing that as a result his model behaves “bizarrely” and contains highly

9

correlated variables. Plaintiffs respond that high multicollinearity itself is not problematic where

10

the underlying standard error is within range, as all variables were in Ackerberg’s model. These

11
United States District Court
Northern District of California

8

challenges are repeats of the arguments made with respect to Mangum (and on class certification)

12

and are rejected.
Particular to Ackerberg’s analysis, however, defendants additionally challenge: (a) the way

13
14

Ackerberg determined the “pass-through” rate of 100% (looking at data from two distributors and

15

four retailers and ignoring Ottogi data); and (b) how he estimated the volume by state of end-

16

purchaser purchasers, based on Korean-population and using incomplete sales data that post-dated

17

the class period multiplied by All-Commodity-Volume (ACV) percentage data across all states.

18

Defendants point out that Ackerberg didn’t even have ACV data for six states plus the District of

19

Columbia (so he used the percentage of people identifying as Korean, Hispanic, or Chinese in

20

2010 as a basis for his calculations for those states).
Plaintiffs respond that, with respect to the pass-through argument, I found Ackerberg’s

21
22

analysis robust enough at class certification and should conclude the same now, as defendants do

23

not put forward new or additional arguments. With respect to the second argument, plaintiffs

24

acknowledge that Ackerberg had to create a model (given the lack of data) and argue that his

25

model utilized reasonable data to estimate the state-by-state percentages of sales. While

26

defendants make much of the fact that Ackerberg’s regression analysis for sales predicts twenty

27
10

28

Defendants argue the “noodle market” is flooded by less expensive products and Ackerberg
should have made a more refined analysis of comparable products.
14

1

five instances of negative sales per capita, plaintiffs argue that is the result of extremely low sales

2

in three states (Alabama, Arkansas and Wyoming) and statistically speaking is insignificant

3

“noise” that Ackerberg appropriately corrected to zero (instead of negative).

4
5

Defendants’ attacks, again, go primarily to the weight of Ackerberg’s opinions and not
their admissibility. The motion to exclude is DENIED.
Motion to Strike Mangum and Ackerberg’s Daubert Declarations

C.

7

As noted above, in opposing the motions to exclude their testimony, Mangum and

8

Ackerberg filed “Daubert” declarations in opposition. Defendants move to exclude those

9

declarations, arguing that plaintiffs are using the Daubert motions as an excuse to “shore up” and

10

offer new “opinions.” The allegedly new Mangum opinions address his use of pricing variables,

11
United States District Court
Northern District of California

6

benchmark data, additional analysis based on newly produced documents, and analysis of Ottogi

12

data. Dkt. No. 650 at 3. Allegedly new Ackerberg opinions address his thoughts on cross-

13

elasticity, why he failed to perform a quantitative analysis of market definition, and a discussion of

14

Horizontal Merger Guidelines. Id.

15

Defendants argue that many (but admittedly, not all) of these topics were addressed in

16

Cox’s opening merits report, giving Mangum and Ackerberg sufficient opportunity to redress

17

them in their rebuttal merits reports. Plaintiffs respond that because the parties filed simultaneous

18

reports and defendants’ first relied on some of Cox’s opinions in their Daubert motions, they

19

should be allowed to rely on the Mangum and Ackerberg Daubert declarations. They argue that

20

the most significant arguments – about cross-elasticity and SSNIP and regarding the antitrust

21

market definition – were not included in Cox’s opening merits report but only in rebuttal and so

22

they should be allowed to respond as they are the prime basis of the Daubert motions. They also

23

argue that any other opinions are responses to defendants’ reliance on new or fleshed out opinions

24

in Cox’s reply and raised in the Daubert motions.

25

In light of the way the reports were sequenced in this litigation, the motion to strike is

26

DENIED. The Mangum and Ackerberg declarations submitted in support of plaintiffs’

27

oppositions to the motions to exclude were filed primarily (but not solely) in response to the

28

defendants’ expert (Cox) addressing market definition and cross-elasticity in the U.S. ramen
15

1

market for the first time in his rebuttal declaration. Mangum and Ackerberg are entitled to address

2

Cox’s new opinions, whether through the Daubert declarations or at trial. As to the other

3

allegedly new information in Mangum’s Daubert declaration (pricing variables, benchmark data,

4

additional analysis based on newly produced documents, and further analysis of Ottogi data), these

5

opinions are not obviously new, although perhaps refined in light of additional information, and

6

are certainly not outside the scope of the opinions and topics about which he has already opined

7

and been deposed.

8

D.

9

Defendants move to exclude the opinions of Vaughn (plaintiffs’ computer forensic

Motion to Exclude Vaughn

investigator) regarding: (a) how NSK responded to the KFTC investigation (Vaughn Report ¶¶

11
United States District Court
Northern District of California

10

100-107); (b) his view as to the credibility of Ottogi Korea testimony regarding preservation of

12

documents (Id. ¶¶ 36-39); and (c) his opinions as to why Ottogi documents did not appear in the

13

production in this case given his lack of knowledge of Ottogi’s document retention policies. Id. ¶¶

14

33-35. Defendants argue Vaughn’s background in forensics and limited experience with U.S. law

15

enforcement do not qualify him to opine on whether NSK and OK employees’ conduct was

16

suspicious and whether those employees or companies should have been required to keep and/or

17

produce documents for this case.

18
19
20
21
22
23
24
25
26
27
28

In paragraphs 33-35 (re Ottogi document production) Vaughn opines:
Ottogi Memos Produced by the KFTC Show Communication
and Involvement of Ottogi and Samyang, but Ottogi Failed to
Produce these Original Memos to Plaintiffs.
33. The documents OTGKR-0001011T and OTGKR-0001014T are
Ottogi memos dated June 2007 and July 2007 respectively, which I
understand were KFTC exhibits because these documents have the
KFTC’s “SoGap” marking. I understand that these memos were
introduced into evidence against Ottogi in a KFTC proceeding that
was pending in the Korean court system.
34. OTGKR-0001011T (which is marked as SoGap 132), drafted by
Jae-Hwan Jung, purports to “analyze the market trends and sales
reaction after the ramen price increase of Nongshim and Samyang to
determine the timing of our price increase.” Among other
discussions concerning Nongshim and Samyang, this memo
suggests that the author had communicated with “the Samyang
Marketing Office” regarding sales and giveaway products. OTGKR0001014T (marked as SoGap No. 133), which was authored by an
16

1
2
3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12

unnamed member of “Marketing Team 3”, states that the author had
a “Phone conversation with Jong-Moon Yui, Assistant Manager of
Samyang – Reaction following the price increase”.
35. I was interested in reviewing the metadata of the natives of
OTGKR-0001011 and OTGKR-0001014 and requested that counsel
search for them in Ottogi’s document production and provide them
to me. I was informed that the natives of these documents were not
located in the Ottogi production. I was provided with the testimony
from Bang-Wan Ku—a witness that Ottogi designated as its person
most knowledgeable on a number of subjects, including the KFTC
investigation. Mr. Ku stated that he deleted emails from his
computer starting from June 3, 2008: “There’s just too many things.
I can’t recall them specifically one by one.” Bang-Wan Ku Tr. (4-82016) at 85:11-86:21. Ku further testified that deletion of documents
by Ottogi’s Marketing Team during the KFTC investigation was
“entirely possible within the company.” Id. at 90:6-23. Ottogi’s
inability to produce these documents in native format means that I
am not able to analyze who is recorded as the Author and/or Last
Author in the metadata.
Vaughn Report, ¶¶ 33-35.
There is nothing in these paragraphs that is outside of Vaughn’s area of expertise. He

13

states facts regarding what Ku said and facts of what was produced or not produced, as shown by

14

plaintiffs’ view of the record in this case. He does not opine on why documents weren’t produced.

15
16
17
18
19
20
21
22
23
24
25
26
27
28

In paragraphs 36-39 (credibility of Ottogi witnesses), Vaugh states:
Declarations from Ottogi Korea Employees, Counsel Attempt to
Explain the Altered Memos
36. I have read the Declarations from Young-Hyun Doh and BangWan Ku of Ottogi Korea. They state that when asked for historical
pricing information by the Korea Fair Trade Commission, they
could not find the final versions of the 2004 and 2002 memos, and
instead they sent their “best approximations” of the memos to the
KFTC. My understanding is that by “best approximations” they are
referring to the altered memos that were identified. As stated above,
the difference in content and length between the Unaltered Jan. 2004
Memo and the Altered Jan. 2004 Memo was roughly half – the
Unaltered Jan. 2004 Memo is twice as long as its Altered 2004
counterpart. In Paragraph 7 of his Declaration, Mr. Ku states that the
length of the 2004 Memo was “reduced in length from seven pages
to three pages, in order to conform to the length and style similar to
the final memoranda used in other years.”
37. While the overall length of the memo was certainly changed, it
is also clear that substantial edits and deletions were also made –
whole product pricing table summaries were removed along with
each of the nineteen references to “Nongshim.” The Altered Feb.
2005 Memo removed every reference to Samyang and Paldo (aka
Yakult), and only maintained 1 reference to Nongshim, but not in
the “Purpose” statement where Nongshim had been listed in the
17

1
2
3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18

Unaltered Feb. 2005 Memo. I believe this calls into question
whether the edits and deletions were entirely based on memo
“length and style.” When one considers that the stated “Purpose” in
the altered memos were changed – the unaltered memos specifically
mentioned the price increase of Ottogi’s competitor(s) as being the
cause for price increases whereas the altered memos make no
mention of these companies as the reason, and instead refer only to
“raw material” prices – it begs the question as to whether the
alterations made were based on document length. Again, the letter
from the KFTC explicitly indicated that submitting false information
would result in fines.
38. As a retired law enforcement investigator, these discrepancies
raise suspicion. During my 16-year career, I investigated many
matters and have reviewed many documents containing conflicting
statements. I was also assigned to the fraud unit as a full-time
investigator during the final years of my law enforcement career. In
my investigative capacity, the underlying nature of the investigation
is not for me to ultimately opine on, but it was common practice for
me to point out discrepancies of this nature.
39. I have an understanding that the general nature of the dispute in
this matter is an alleged conspiracy to increase pricing. I also
understand that the KFTC was investigating this allegation and as
such received these altered memos rather than the draft memos. The
timing of the alteration of these memos, combined with the removal
of all references to companies Nongshim, Samyang, and Yakult,
removal of certain pricing charts, and the changing of the purpose of
the memos all seem suspect.
Vaughn’s testimony in paragraphs 36 and 37 are permissible and within the scope of his
expertise. As to paragraphs 38 and 39, Vaughn’s characterization of the edits as “suspicious” or
“suspect” is not apparently supported by his prior experience. He can opine on discrepancies
between versions of documents that call into question the “editing” justification, given the nature

19
and significance of the information removed.
20
In paragraphs 100-107 (how NSK responded to KTFC investigation), Vaughn states:
21
22
23
24
25
26
27
28

The Statements of Nongshim’s Joong-Rak Lee Regarding
Knowledge of the 2008 KFTC Letter and Investigation
100. I have reviewed a translation of OTGKR-0018191T which is a
translated letter from the KFTC dated June 27, 2008. This letter
requests that materials be submitted by July 6, 2008 and goes on to
detail the documents that are being requested.
101. I have also reviewed the Declaration of Joong-Rak Lee. In it,
Mr. Lee indicates he had “…never seen or otherwise heard about
Plaintiffs’ Exhibit 12, which is dated June 27, 2008 and bears a
marking of OTGKR-0018191…”. Mr. Lee also says that it was not
until January 31, 2012 that “…Nongshim Korea acquired
meaningful knowledge or information regarding the KFTC’s
18

1
2
3
4
5
6
7
8
9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20

material allegations…”. I have also reviewed Mr. Lee’s deposition
transcript in which he denies that Nongshim Korea received a letter
from the KFTC “Nongshim America first learned of an investigation
by the KFTC concerning companies in the food industry in Korea in
or around June 2008.”
102. I have reviewed Defendant’s response to IPP’s Interrogatory
Number 15, which states “Nongshim America first learned of an
investigation by the KFTC concerning companies in the food
industry in Korea in or around June 2008.”
103. Included as Nongshim’s response to Request #9 of the June
2008 KFTC letter was document NSK00776374T which includes
the “Breakdown of employees involved in the determination of
ramen price” at various points in time. This document contains the
exact information requested in the June 2008 letter from the KFTC.
Below is an example of NSK00776374T:
...
104. For comparison, below is #9 from the June 2008 Letter from
the KFTC (example below) which included the #9 chart/request:
...
105. A declaration from Stephanie Cho confirms that the Korean
characters used in the heading of the #9 chart in both OTGKR0018191 and NSK0076374 are identical to one another.
106. I have examined the native instance of NSK0076374 which is a
PowerPoint document. When viewing the document using a
computer set to Pacific Daylight time, the Created date of the
document is July 1, 2008 10:06 PM and the Last Modified date of
the document was July 1, 2008 11:29 PM. As indicated in the above
paragraphs, this date is just a few days before the requested deadline
of material submissions to the KFTC of July 6, 2008.
107. These observations lead to me to believe that NSK0076374 is a
document Nongshim prepared in response to KFTC’s June 27, 2008
letter. This is significant as an investigator in that the documents and
metadata squarely contradict what Mr. Lee has testified to under
oath.
These statements are within his area of expertise. Although some opinion may be based on

21

assumptions (e.g., that OTGKR-0018191T is a translated letter from the KFTC as opposed to a

22

letter “purporting” to be), he supports them with details and evidence from his forensic review

23

and the record, and can be challenged on cross-examination. However, his testimony as to the

24

“significance” of different versions of documents (e.g., paragraph 107) goes too far.

25

In sum, the motion is DENIED as to paragraphs 33-35; DENIED as to paragraphs 36-37;

26

GRANTED as to opinions of “suspicious” or “suspect” activities given the lack of foundation;

27

DENIED as to paragraphs 100-106; and GRANTED in part as to paragraph 107, limiting

28

Vaughn’s testimony to pointing out contradictions in witness testimony given metadata in
19

1

documents.

2

E.

3

Defendants’ motion to exclude the testimony of Professor Haggard is DENIED because it

Motion to Exclude Haggard

4

simply repeats grounds already rejected on summary judgment. As I held in the summary

5

judgment Order, Dkt. No. 668, Haggard’s opinions are generally admissible, but “plaintiffs should

6

be careful when eliciting testimony on Korean business “culture” from Haggard at trial. Attempts

7

to suggest that Korean corporate culture tolerates or encourages illegal activity (on behalf of its

8

executives or lower-level employees) will not be permitted.” Id. at 49.

9
10

F.

Motion to Exclude Lee

Defendants move to exclude the opinions of attorney and former Judge San Hun Lee, who

United States District Court
Northern District of California

11

is offered by plaintiffs to rebut the opinions of defendants’ Korean-law expert Professor Daesik

12

Hong regarding what, if any, responsibilities the Korean defendants had in light of the KFTC

13

investigation.

14

Defendants argue that plaintiffs are attempting a “second bite at the apple” after I denied

15

plaintiffs’ sanctions motions by relying on Lee to support an inference that defendants acted

16

contrary to Korean law in not preserving/destroying documents during the pendency of the KFTC

17

investigation. Defendants argue that Lee has no experience in KFTC investigations (unlike their

18

expert Hong) or in litigating cases under the Korean Fair Trade Act (FTA), and that his opinions

19

are unsupported by Korean law; therefore, his opinions must be excluded because they are without

20

foundation.

21

In their written opposition, plaintiffs do not address Lee’s lack of experience or expertise.

22

Instead, they point to Lee’s conclusions that Hong’s position as to duties of preservation prior to,

23

during, and after a KFTC investigation makes no sense under Korean law when the provisions of

24

the Korean Monopoly Regulation and Fair Trade Act (FTA) are read in full and in context of the

25

purpose of KFTC investigations. Plaintiffs also note that Lee relies on KFTC resolutions and

26

general provisions of criminal law regarding criminal investigations (where he does have

27

experience). During the Further Pretrial Conference, plaintiffs argued that despite his

28

inexperience with the KTA and KFTC investigations, Lee should nonetheless be able to testify
20

1

based on his status as a former judge in Korea who was frequently required to understand and

2

apply Korean law.
The question here is whether Lee will provide necessary assistance to the jury or under

3
4

Rule 44.1, discussed below, to me. Given his total lack of experience with the FTA and the

5

KFTC, I GRANT defendants’ motion to exclude Lee’s testimony in full.

6

G.

7

Following the initial Pretrial Conference, defendants sought and were granted leave to file

Motion to Exclude Use of Deposition Transcripts of J.S. Kim

8

a new motion; to exclude the use of deposition transcripts of J.S. Kim, the president of Samyang

9

Korea. Kim is a central witness for plaintiffs’ efforts to show the creation and existence of a
conspiracy to fix prices in Korea. Kim has been identified by plaintiffs as one of the two Samyang

11
United States District Court
Northern District of California

10

witnesses they intended to bring live to testify in the trial of this case.11
Kim’s videotaped deposition was taken in Korea. Since that time, she has been subject to

12
13

a criminal investigation and (apparently) within the past few weeks was indicted on claims of

14

embezzlement and breach of trust. The current Korean investigation (“2018 Investigation”) is

15

apparently centered on allegations that starting in 2008 and continuing through 2017, Kim and her

16

husband (the Samyang Korea chairman) created false companies and false transactions between

17

legitimate Samyang affiliates and the false companies in order to enrich themselves.
Defendants argue these breach of trust and falsification allegations and charges are directly

18
19

relevant to the attack they have and will continue to make against Kim’s credibility and

20

trustworthiness. They contend testimony about these recent events from Kim will be key to

21

defendants’ efforts to portray Samyang and its executives as willing to lie and engage in fraud

22

(e.g., they lied to KFTC to avoid fines/bankruptcy and continue to lie here, that they fabricate

23

documents). Defendants note that Kim is the exclusive witness on the inception of the alleged

24

conspiracy in Korea and the only witness who will testify about the “Representatives Meeting”

25

where the conspiracy was allegedly hatched. Kim and others’ willingness to use fraudulent

26

documents will be used to attack the legitimacy of the SHD documents.

27
11

28

Under plaintiffs’ settlement agreement with Samyang, plaintiffs are able to call two Samyang
witnesses to testify at the trial in this case.
21

1

Defendants ask that if Kim is able to travel to the U.S. to testify live, Kim be produced 48

2

hours prior to her live testimony so that she can be deposed regarding the 2018 Investigation and,

3

perhaps, allegations of fraud that have been recently asserted in a case pending in the Central

4

District of California between Samyang USA and Samyang Korea. If Kim is not going to appear

5

live (because plaintiffs decline to call her or because she is prevented or dissuaded from leaving

6

Korea in light of the 2018 Investigation and pending criminal matters), then defendants want to

7

prevent plaintiffs from using Kim’s deposition transcripts in the trial.

8

Plaintiffs acknowledge that the situation with respect to Kim in Korea is fluid. During the
Further Pretrial Conference, they confirmed that it is still their intent to call her live and expect she

10

will appear live. They state that defendants had a full opportunity to challenge Kim’s veracity and

11
United States District Court
Northern District of California

9

credibility during her deposition on the matter that is factually relevant to this case – Samyang’s

12

leniency petition with the KFTC – so that jurors can adequately assess her demeanor and her

13

credibility. They argue that the 2018 Investigation and the Central District litigation have nothing

14

factually to do with the claims in this case and that allowing defendants to delve into those matters

15

in a second deposition is not only unnecessary but would devolve into a prejudicial side-show.

16

Plaintiffs assert the purpose of this motion is to intimidate or bully Kim into not testifying in this

17

case by threatening to depose her on matters subject to an ongoing investigation. Plaintiffs,

18

therefore, seek a ruling under Rule 608 precluding defendants from making any mention of the

19

2018 Investigation with any Samyang witness or otherwise at trial, unless at trial they are able to

20

show a factual connection between that investigation and the facts in this case and with prior court

21

approval.

22

On the record before me, defendants’ motion is DENIED. Extrinsic evidence to prove

23

specific instances of a witness’s conduct to attack credibility is inadmissible and creates real risks

24

under Federal Rule of Evidence 403 of confusion, delay, and waste of time. However, as

25

mentioned in the Further Pretrial Conference defendants may submit – as soon as practicable –

26

supplemental evidence regarding the scope of the 2018 Investigation and I will revisit this issue

27

(after plaintiffs file a prompt response) if that evidence shows a factual connection between the

28

allegations in this case and the 2018 Investigation. At this juncture, that type of connection has
22

1

not been shown with respect to the 2018 Investigation or the Central District litigation. Further

2

Defendants have sufficient information to use to undermine her credibility and Samyang’s and to

3

show bias, such as the KFTC leniency petition and Samyang’s settlement with plaintiffs, without

4

venturing into unrelated allegations.12

5

IV.

KOREAN LAW
Defendants seek a ruling under Rule 44.1 that they complied with all document-related

6
7

obligations under Korean law. Part of their motion appears to seek a somewhat narrow ruling on

8

document preservation under Korean law in general and more specifically after the inception of

9

the KFTC investigation. However, in their motion papers defendants also argue (yet again) that
plaintiffs should be precluded from “suggesting” or making inferences to the jury about spoliation

11
United States District Court
Northern District of California

10

or failures to preserve documents.
On the more general issue, I have already held and continue to hold that plaintiffs may

12
13

elicit testimony and argue to the jury adverse inferences from the fact that defendants may have

14

changed document preservation policies following the inception of the KFTC investigation, that

15

defendants edited and altered memos for submission to the KFTC to remove information

16

suggesting a coordinated price-fixing conspiracy, and that defendants submitted false information

17

to the KFTC.
On the more specific issue, as framed by defendants at the Further Pretrial Conference,

18
19

defendants seek rulings confirming the following issues of Korean law:


20

That Korean law does not impose a general duty to suspend routine document

21

retention practices and preserve documents upon the commencement of a KFTC

22

investigation.


23

The KFTC imposes two specific and limited duties on companies under

24

investigation: (a) to not interfere with onsite investigations and witness interviews

25

and (b) to submit information or documents specifically requested by the KFTC to

26

the extent they existed at the time of the request.

27
12

28

In the event Kim does testify live and I allow a question to which she would assert her right
against self-incrimination, she may do so outside the presence of the jury after a timely objection.
23

1
2
3



The KFTA does not have a general extraterritorial reach. Therefore it does not
impose any obligations on Nongshim America and Ottogi America.

After reviewing the parties’ briefing on these issues, as well as the expert declaration of

4

Daesik Hong and the FTA provisions at issue, I agree that the Korean defendants were not under a

5

duty imposed by the FTA to implement document preservation policies to prevent the destruction

6

of documents in the normal course of business upon the inception or during the KFTC onsite

7

investigations. I also agree that the FTA imposes, at least, the following duties on companies

8

under investigation: (a) to not interfere with onsite investigations and witness interviews and (b) to

9

submit information or documents specifically requested by the KFTC. Jury instructions will be

10

United States District Court
Northern District of California

11

issued consistent with these determinations of Korean law.
However, these rulings do not reach the issue of what duties are imposed on companies in

12

response to “Paragraph 9” “requests for submission of documents,” see Hong Report ¶¶ 8, 11,

13

Dkt. No. 700-7), including duties of preservation for specifically requested documents that Hong

14

indicates lasts until the “termination of the investigation.” Id. ¶ 20. It similarly does not reach the

15

question of the scope of duties with respect to submitting false or altered information to the KFTC

16

in response to “requests for submission of documents” or otherwise. Id. ¶ 8. Following the

17

introduction of evidence at trial, including testimony from Hong, I will make additional

18

determinations under Rule 44.1 as necessary.

19

As to the extraterritorial reach of the FTA, both parties seem to agree that under its express

20

terms, the FTA does not reach conduct that emanates from abroad unless that foreign conduct

21

affects the Korean domestic market. That issue does not seem to fit the evidence to be presented

22

in this trial. But the provisions of the FTA cited by defendants do not support their requested

23

determination that the FTA imposed no duties on the American subsidiaries, as the alleged control

24

of those subsidiaries by the Korean companies might (or might not) be an issue. After the

25

evidence has come in and Hong has testified, I will consider the scope of what instruction about

26

Korean law is necessary.

27
28

Finally, to the extent defendants seek a determination under Korean law that the Korean
government “exercised price controls” over ramen sold in the domestic market, their request is
24

1

DENIED. Defendants appear to rely solely on the decision of the Korean Supreme Court, which

2

used the undefined term “de facto control” to characterize the Korean government’s role with

3

respect to its discussions with Nongshim over the top price Nongshim could allegedly charge in

4

Korean for certain products. Absent some statute, regulation, or expert testimony, this issue is not

5

appropriate for a determination as a matter of law under Rule 44.1 on this record.

6
7

IT IS SO ORDERED.
Dated: April 24, 2018

8
9
William H. Orrick
United States District Judge

10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
25