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

Filing 91

MEMORANDUM OPINION AND ORDER granting in part and denying in part 58 Petitioner's Motion for Attorney Fees; Linix shall pay $15,000 in attorneys' fees to Power Electric. Granting in part and denying in part 78 Respondent's Mot ion for Relief from Judgment or an Extention of Time to Appeal. The request to vacate the Judgment Confirming Award 15 is denied, and that Judgment remains valid. The request to vacate the Judgment for Attorneys' Fees 33 is denied, and that Judgment remains valid. The request to vacate the Modified Judgment 47 is granted, and that Judgment is VACATED as void for lack of proper service (Written Opinion). Signed by Judge Ann D. Montgomery on 03/02/2015. (TLU)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Power Electric Distribution, Inc.,
Petitioner,

MEMORANDUM OPINION
AND ORDER
Civil No. 13-199 ADM/HB

v.
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.
______________________________________________________________________________
I. INTRODUCTION
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.

II. BACKGROUND
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

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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

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Article 18 of the International Arbitration Rules provides that “all notices, statements
and written communications may be served on a party by air mail, air courier, facsimile
transmission, telex, telegram or other written forms of electronic communication addressed to
the party or its representative at its last known address or by personal service.” See Second Post
Decl. Ex. 1.
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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 [e-mail]. See id. Also on February 1, 2013, Linix’s
arbitration counsel sent an email to Power Electric’s counsel stating: “I understand PE is going
to US District court to confirm the Arbitration Award. PE has every right to do so. . . . [I]t is
perfectly fine to forward all the future correspondence to Mr. Wang.” Id. at 1.
On February 7, 2013, Power Electric sent a copy of the Petition to Linix’s counsel via
email and requested that Linix consent to entry of a judgment confirming the Arbitration Award.
Second Post Decl. Ex. 6. Power Electric explained that consenting to entry of the judgment

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would minimize Linix’s liability for service costs and fees. Id. Linix’s arbitration counsel
responded that he was not authorized by Linix to accept service, and that Linix may hire another
law firm to represent it in the U.S. District Court proceedings. Id.
By April 2013, Linix had satisfied the requirements of the Arbitration Award that it pay
approximately $1.5 million in money damages and return Power Electric’s tooling. However,
the parties disputed whether Linix had fully accounted for all motor sales to FBD, and whether
Linix had fully complied with its obligation to pay pre-arbitration royalties. See, e.g., Second
Post Decl. Exs. 3-5.
On June 4, 2013, Power Electric served the Summons and Petition on Linix by personal
service. See Summons and Compl. Return of Service [Docket No. 6]. On June 19, 2013, Wang
sent Pula an email from email the [e-mail] address. The email stated in part: “We
have received notice from your attorney Shanghai office this month. [P]ls kindly refer
attachment. Could you pls explain it?” Second Post Decl. Ex. 8. On June 24, 2013, Linix sent
the Summons and Petition to Power Electric’s counsel in Shanghai with a letter stating: “Please
proceed according to the Hague Convention.” Kramer Aff., Sept. 5, 2014 [Docket No. 68]
(“First Kramer Aff.”) ¶ 6; Kramer Aff., Sept. 15, 2014 [Docket No. 73] (“Supplemental Kramer
Aff.”) Ex. 6.
E. Judgment Confirming Arbitration Award
On August 7, 2013, Power Electric filed a motion to confirm the Arbitration Award. See
Mot. Confirm Arbitration Award [Docket No. 7]. Power Electric sent a copy of the motion by
email to Wang at [e-mail], as well as an additional Linix email address of
[e-mail]. Aff. Service [Docket No. 10]; Second Post Decl. Ex. 9. The motion was
also emailed to Linix’s arbitration counsel. Id. A hearing was scheduled for September 5, 2013.

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On August 14, 2013, Power Electric sent a Notice of Hearing to Linix by first-class mail and by
email to Wang’s email address of [e-mail], additional Linix email addresses
[e-mail] and [e-mail], as well as to Linix’s arbitration counsel. Notice Hrg.
[Docket 11] Attach. 1. Linix did not file a response and did not appear at the hearing. See
Order, Sept. 5, 2013 [Docket No. 14].
Following the September 5, 2013 hearing, the Court granted Power Electric’s motion and
entered judgment confirming the Arbitration Award. See id.; J. Confirming Arb. Award [Docket
No. 15]. Power Electric sent the Order and Judgment Confirming Arbitration Award by firstclass mail and email to Linix and Linix’s arbitration counsel. Certif. Service [Docket No. 16];
Second Post Decl. Ex. 10. There is no record of Linix taking any action to challenge the
Judgment Confirming Arbitration Award.
F. Judgment for Attorneys’ Fees
On October 25, 2013, Power Electric filed a motion for attorneys’ fees incurred in
obtaining the Judgment Confirming Arbitration Award. Mot. Attorneys’ Fees [Docket No. 17].
The motion and notice of hearing were served on Linix and its arbitration counsel via mail and
email. Certif. Service [Docket No. 21]; Certif. Service [Docket No. 22], Attach. 1; First Post
Decl. Ex. C at 1-2. A hearing was held December 12, 2013. Linix did not respond to the motion
or appear at the hearing. See Order, Dec. 17, 2013 [Docket No. 32]. The Court granted the
motion for attorneys’ fees and entered judgment for Power Electric for $52,627. Id.; J.
Attorneys’ Fees [Docket No. 33]. Power Electric served the Order and Judgment for Attorneys’
Fees on Linix and Linix’s arbitration counsel by first-class mail and email on December 19,
2013. Certif. Service [Docket No. 34].
After obtaining the Judgment for Attorneys’ Fees, Power Electric garnished one of

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Linix’s customers in Minnesota. See Kramer Aff. Ex. 1. In March 2014, Linix expressed
frustration about the Judgment to the customer being garnished. See Second Post Decl. Ex. 11.
However, there is no evidence that Linix took any action to challenge the Judgment for
Attorneys’ Fees or to stop the garnishment. The Judgment for Attorneys’ Fees was satisfied in
full on or before April 3, 2014. See Notice Partial Satisfaction J. [Docket No. 35].
G. Modified Judgment
On May 28, 2014, Power Electric filed a motion [Docket No. 37] seeking to modify the
Judgment Confirming Arbitration Award by converting the award of future royalties to a current
money judgment for $876,255.24. Power Electric argued that modifying the Judgment was
necessary because Linix was evading its royalty obligations under the Arbitration Award by
failing to fully report sales for which royalties were owed. Power Electric averred that it had
subpoenaed documents from customer FBD showing that Linix sold 580 more motors to FBD
than had been reported to Power Electric. Kelley Decl., May 28, 2014 [Docket No. 39] (“First
Kelley Decl.”) ¶¶ 2-4. Linix reported that it had sold 2,073 motors to FBD, and Linix
accordingly paid Power Electric $45,245 in royalties on those motors. However documents
subpoenaed from FBD showed Linix had actually sold 2,653 motors to FBD, leaving a shortfall
of $21,306 in royalty payments. Id. Power Electric argued that unless the Court reduced the
award of future royalties to present money damages, it would be forced to repeatedly return to
the Court to enforce the Judgment Confirming Arbitration Award.
Power Electric sent a copy of its motion to modify and supporting documents to Linix by
U.S. mail and email on May 28, 2014. See Certif. Service, May 28, 2014 [Docket No. 41].

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Linix states that it did not receive Power Electric’s emails notifying it of the motion,2 and that
the documents sent by U.S. mail did not arrive until June 28, 2014. Id. at 1. Linix further avers
that it was “puzzled” to be receiving documents directly from Power Electric, because in China
all litigation-related documents are served by the court. Pro Se Mot. 2. The receipt of
documents directly from Power Electric caused Linix to doubt whether the documents were
legitimate.
Nevertheless, after receiving the documents, Linix met with a law firm in Shaghai on
July 4, 2014 to prepare a response, and wired $23,056 to Power Electric on July 8, 2014 for
outstanding royalties owed on motors sold prior to 2013. Id.; He Aff. ¶¶ 7-8. This payment
accounted for the vast majority of outstanding royalties at issue in the Motion to Amend
Judgment. See Mem. Supp. Mot. Modify J. [Docket No. 38] at 4. Because the money was wired
directly to Power Electric, personnel at Power Electric did not become aware of Linix’s payment
until after Linix provided a notice of payment on July 24, 2014. Kelley Decl., Sept. 5, 2014
[Docket No. 62] (“Second Kelley Decl.”) ¶ 2, Ex. A.
On July 16, 2014, the Court granted Power Electric’s Motion to Modify Judgment. See
Order, July 16, 2014 [Docket No. 46]; Modified Judgment [Docket No. 47]. Power Electric sent
Linix a copy of the Order and Modified Judgment by U.S. mail. Certif. Service [Docket No. 48].
Linix avers it received the Order granting the Motion for Modified Judgment by mail on
August 8, 2014. He Aff. ¶ 3. The next day, Linix’s legal counsel contacted the Clerk of Court to
confirm that this was a validly filed case. Id.; Pro Se Mot. 1-2. On August 14, 2014, Linix filed

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Linix avers that its “system blocks Power Electric, Inc. email traffic.” He Aff. [Docket
No. 67] ¶ 2. However, Linix does not state whether its system also blocks email traffic from
Power Electric’s counsel, who sent the email notices pertaining to the Judgments at issue.
Additionally, Linix has requested that Power Electric use email to communicate with Linix in
this matter. See Pro Se Mot. 1.
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a Pro Se Motion requesting that this case be stayed or the time for filing a notice of appeal
extended. See generally id. In the Pro Se Motion, Linix stated that “[t]o ensure a timely
communication for this matter, the Court and the Petitioner and its counsel are advised to contact
[Linix] via the following email addresses: [e-mail]; [e-mail];
[e-mail] (who are in charge of the matter) . . . .” Id. at 1. Two of these email
addresses are the same as those used to send Linix notice of the Motion to Confirm Arbitration
Award, Motion for Attorneys’ Fees, and Motion to Modify Judgment. See Aff. Service [Docket
No. 10]; Second Post Decl. Ex. 9; Notice Hr’g [Docket 11] Attach. 1; First Post Decl. Ex. C.
H. Present Motions
After filing the Pro Se Motion, Linix retained counsel in Minnesota who filed an
Amended Motion for Post Judgment Relief or an Extension of Time to Appeal. The briefs and
proposed order submitted in connection with this motion reflect that Linix is seeking relief from
all judgments entered to date in this matter. Power Electric opposes the request.
Additionally, Power Electric has filed an Amended Motion for Attorneys’ Fees and
Costs. Power Electric argues that the Supplier Agreement entitles it to recover the attorneys’
fees and costs it incurred in bringing the Motion to Modify Judgment and obtaining the Modified
Judgment.
III. DISCUSSION
A. Linix’s Motion for Post Judgment Relief
Linix requests that all three Judgments [Docket Nos. 15, 33, 47] entered in this case be
vacated under Federal Rule of Civil Procedure 60(b)(4) for lack of proper service. Linix argues
that Federal Rule of Civil Procedure 4(f)(1) required Power Electric to comply with the Hague

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Convention when serving Linix, and that the Hague Convention requires translated documents
and service by a government entity. Therefore, Linix argues that Power Electric’s service by
mail or email was insufficient to establish proper service under the Federal Rules and the Hague
Convention.
Power Electric argues that full compliance with Rule 4 was not required for valid service
under the Federal Arbitration Act (“FAA”) because Linix agreed to personal jurisdiction under
the Supplier Agreement, and thus the sole purpose of service was to alert Linix of the Court
proceedings of which it was aware. The Court will analyze the parties’ arguments with respect
to each of the three Judgments.
1. Judgment Confirming Award
The service of petitions to confirm arbitration awards is governed by § 9 of the FAA,
which states in pertinent part:
If the adverse party is a resident of the district within which the
award was made, . . . service [of the notice of application to confirm]
shall be made upon the adverse party or his attorney as prescribed by
law for service of notice of motion in an action in the same court. If
the adverse party shall be a nonresident, then the notice of the
application shall be served by the marshal of any district within
which the adverse party may be found in like manner as other process
of the court.
9 U.S.C. § 9 (emphasis added).
As the emphasized language demonstrates, the statute does not provide a method of
service for a foreign party who is not a resident of any district in the United States. However,
courts interpreting the application of § 9 to foreign entities have construed the phrase “in like
manner as other processes of the court” to refer to Rule 4 of the Federal Rules of Civil
Procedure. See Reed & Martin, Inc. v. Westinghouse Elec. Corp., 439 F.2d 1268, 1277 (2d Cir.
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1971); Marine Trading Ltd. v. Naviera Comercial Naylamp S.A., 879 F.Supp. 389, 391-92
(S.D.N.Y. 1995).
Federal Rule of Civil Procedure 4(f)(1) provides for extraterritorial service on a foreign
corporation “by any internationally agreed means of service that is reasonably calculated to give
notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and
Extrajudicial Documents.” China is a party to the Hague Convention, and service on a Chinese
entity under the Convention requires documents to be presented to the Chinese Central Authority
in Beijing, which then sends the documents to the appropriate local court. The local court then
effects service on the Chinese entity. See Convention on Service Abroad of Judicial and
Extrajudicial Documents Civil and Commercial Matters arts. 2, 5, Nov. 15, 1965, 20 U.S.T. 361,
T.I.A.S. No. 6638; accord China - Central Authority & Practical Information, HAGUE
CONFERENCE ON PRIVATE INT’L LAW,
http://www.hcch.net/index_en.php?act=authorities.details&aid=243 (last visited March 2, 2015)
(listing the practical methods of service information provided by Chinese authorities).
Nevertheless, in cases arising from arbitration proceedings, “[d]efects in service of
process may . . . be excused where considerations of fairness so require.” In re InterCarbon
Bermuda, Ltd., v. Caltex Trading & Transp. Corp., 146 F.R.D. 64, 68 (S.D.N.Y. 1993); accord
In re Lauritzen Kosan Tankers v. Chem. Trading Co., 903 F. Supp. 635, 637 (S.D.N.Y. 1995).
In cases resulting from arbitration proceedings where the parties have consented to the
jurisdiction of the district court, the sole purpose of service is to provide notice that a court
action has commenced. Victory Transp., Inc. v. Comisaria Gen’l de Abastecimientos y
Transportes, 336 F.2d 354, 364 (2d Cir. 1964); MidOil USA, LLC v. Astra Project Fin. Pty Ltd.,

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No. 12 Civ. 8484, 2013 WL 4400825, at *2 (S.D.N.Y. Aug. 15, 2013); Scandinavian
Reinsurance Co. Ltd. v. St. Paul Fire & Marine Ins. Co., 732 F. Supp. 2d 293, 305 (S.D.N.Y.
2010), rev’d on other grounds, 668 F.3d 60 (2d Cir. 2012) (“[T]he only purpose of process in
cases resulting from arbitration proceedings within a court’s jurisdiction is to alert the opposing
party that a court action has commenced . . . .”). If this purpose has been achieved by a party’s
actual notice of the proceedings, “no injustice results from giving effect to that notice.”
Lauritzen, 903 F. Supp. at 637; see also Marine Trading, 879 F. Supp. at 392 (stating that the
“standards for service are to be liberally construed in the context of arbitration.”).
This presumption applies to foreign entities who reside in countries that participate in the
Hague Convention. See MidOil, 2013 WL 4400825, at *2 (holding petitioner’s failure to effect
service pursuant to the Hague Convention did not warrant dismissal on non-jurisdictional
grounds where respondent received actual notice of the proceedings). The failure to strictly
adhere to the agreed means of service in the Hague Convention “is not automatically fatal to
effective service,” because “the Convention ‘should be read together with [Federal Rule of Civil
Procedure] Rule 4, which stresses actual notice, rather than strict formalism.’” Id. at *2, n.3
(quoting Burda Media, Inc. v. Viertel, 417 F.3d 292, 301 (2d Cir. 2005) (emphasis in original)).
Here, Linix concedes that it consented in the Supplier Agreement to this Court’s
jurisdiction.3 Additionally, Linix does not dispute that it received actual notice of the Petition

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The Court’s jurisdiction over Linix is a significant distinction from the cases relied on
by Linix for the proposition that a judgment entered against a defendant is void if the defendant
was not properly served. For example, in Printed Media Servs., Inc. v. Solna Web, Inc., which
Linix cites in its opening brief, the judgment was held to be void because the plaintiff’s improper
service on the defendant caused the federal court to lack jurisdiction over the defendant. 11 F.3d
838, 843 (8th Cir. 1993). Because jurisdiction is not at issue here, Printed Media does not apply.
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and motion to confirm the Arbitration Award. Indeed, Linix informed Power Electric on June
19, 2013 that it received notice of the Petition from Power Electric’s counsel in Shanghai and
asked Power Electric to explain it. The motion for the Judgment Confirming Award was
emailed to Linix’s arbitration counsel and to Wang, who had earlier informed Power Electric by
email that he was in charge of the arbitration proceedings in U.S. Court and that Power Electric
should direct future correspondence to him. Additionally, notice of the motion hearing was sent
by first-class mail and email to Linix’s arbitration counsel and to Linix. Therefore, Linix had
actual knowledge that these proceedings had been commenced.
Despite having received actual notice, Linix argues it is an entity in a Chinese and not an
English-speaking country, and therefore, Power Electric’s failure to follow the service required
under the Hague Convention—including the translation of documents—distinguishes this case
from cases where defects in service from one English-speaking party to another have been
excused based on the respondent’s actual notice of the proceedings. This argument is undercut
by Linix’s agreement to arbitrate disputes “in the English language, Supplier Agreement ¶ 7.
Additionally, emails sent from Linix in China to Power Electric were in English.
Therefore, any defects in the service of the Petition and motion underlying the Judgment
Confirming Arbitration Award will be excused here, because Linix had actual notice of these
proceedings and no unfairness results from giving effect to that notice.
2. Attorneys’ Fee Judgment
Linix next argues that the Attorneys’ Fee Judgment that awarded Power Electric fees
incurred in confirming the Arbitration Award must be vacated for lack of proper service. Linix
makes no argument that it lacked actual notice of the attorneys’ fee proceedings. Rather, Linix,

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however, contends that the requested fees were beyond the scope of the Arbitration Award, and
so the fee request constituted a “new claim” under Rule 5 of the Federal Rules of Civil
Procedure that required a return to formal and proper service.4
The request for attorneys’ fees underlying the Judgment was not a “new claim.” The
Arbitration Award specifically recognized “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.”
Arbitration Award 19-20. Therefore, Power Electric’s recovery of attorneys’ fees incurred in
confirming the Arbitration Award is relief that was authorized in the Award. Moreover,
confirmation of an award is an integral part of the arbitration process. Brown v. Brown-Thill,
762 F.3d 814, 826 (8th Cir. 2014) (“The enforceability of an award is an essential part of
arbitration as authorized by the FAA.”).5 A claim for attorneys’ fees incurred in confirming an
award is one that arises in the arbitration context, and the same liberal standards for service
apply.
Applying those standards here, the Court finds that Power Electric’s service on Linix
satisfies considerations of fairness and due process. Power Electric served the motion
underlying the Judgment for Attorneys’ Fees on Linix by mail and by email to Linix email
addresses identified by Linix itself as “ensur[ing] a timely communication for this matter.” Pro

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Rule 5 states in relevant part: “No service is required on a party who is in default for
failing to appear. But a pleading that asserts a new claim for relief against such a party must be
served on that party under Rule 4.” Fed. R. Civ. P. 5(a)(2).
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In Brown, the Eighth Circuit denied a party’s request for attorneys’ fees incurred in
defending an arbitration award because the parties’ Arbitration Agreement did not authorize
attorneys’ fees incurred the arbitration process. Brown, 762 F.3d at 825-26. Here, in contrast,
the Arbitration Award and the Supplier Agreement authorize attorneys’ fees incurred by Power
Electric in enforcing its rights to future royalties.
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Se Mot. 1. Linix does not argue that it lacked notice of the motion or the entry of the Judgment
for Attorneys’ Fees. Indeed, Linix knew that Power Electric was garnishing one of its customers
to satisfy the Judgment but made no effort to stop the garnishment and did not challenge the
Judgment until several months after the Judgment had been fully satisfied. Therefore, the
Judgment for Attorneys’ Fees will not be vacated.
3. Modified Judgment
Linix also argues that the Modified Judgment is a new claim for relief requiring service
under the Hague Convention. The Modified Judgment amended the Judgment Confirming
Arbitration Award by converting Linix’s obligation to pay royalties on future sales of up to
50,000 motors into an obligation to pay immediate royalties on 50,000 motors, regardless of
whether the motors have been or will be sold. This relief exceeded the scope of the Arbitration
Award, which only entitled Power Electric to royalties on motors actually sold. The money
judgment of $876,255.24, which constitutes royalties on motors that have not been sold and may
never be sold, is therefore a new claim for relief that was not at issue in the parties’ arbitration
and was not contemplated in the Supplier Agreement. Accordingly, Power Electric is not
entitled to a liberal application of the service rules for this claim. The Modified Judgment will
be vacated and the Judgment Confirming Award will be reinstated.
B. Power Electric’s Amended Motion for Attorneys’ Fees
Power Electric argues that the Supplier Agreement entitles it to recover $45,763.47 in
attorneys’ fees and costs incurred in bringing the Motion for Modified Judgment. Linix
disagrees, arguing that the fees are beyond the scope of the Supplier Agreement and were
explicitly denied under the Arbitration Award.

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“Under Minnesota law, attorney fees are permitted if authorized by contract or statute.”
Hinz v. Neuroscience, Inc., 538 F.3d 979, 987 (8th Cir. 2008). Here, the fees are contractually
authorized by the Supplier Agreement, which provides that Power Electric “shall be entitled to
recover its costs and expenses (including reasonable attorneys’ fees) incurred to enforce the
terms of this Agreement.” Supplier Agreement ¶ 5. Power Electric’s right to recover attorneys’
fees incurred in enforcing Linix’s royalty obligations is also authorized by the Arbitration
Award, which explicitly states that Power Electric has the “right to recover attorneys’ fees, if
any, that may hereafter be incurred to enforce its rights to future accountings and/or royalties.”
Arbitration Mem. 19-20. Therefore, Power Electric is entitled to recover attorneys’ fees to the
extent the fees were necessarily incurred to enforce Linix’s royalty obligations. 6
Linix argues that the fees were unnecessary because Linix had become current on its
royalty obligations by the time the Modified Judgment had been entered. However, Linix did
not bring its pre-arbitration royalties current until after the Motion for Modified Judgment was
filed. Indeed, the timing of Linix’s July 8, 2014 payment for pre-arbitration royalties strongly
suggests that the payment was prompted by Linix’s receipt of the Motion for Modified Judgment
on June 28, 2014. Additionally, Linix did not inform Power Electric that it had become current
on its pre-royalty obligations until after the Modified Judgment had been entered. Therefore, the

6

Linix further contends the arbitration provision of the Supplier Agreement requires the
claim for attorneys’ fees must be submitted to arbitration. However, “[i]ssues of compliance
with an arbitration award typically are not submitted to the arbitrator.” Domino Grp., Inc. v.
Charlie Parker Mem’l Found., 985 F.2d 417, 421 n.2 (8th Cir. 1993). The arbitrators have
already determined that Power Electric has the “right to recover attorneys’ fees, if any, that may
hereafter be incurred to enforce its rights to future accountings and/or royalties.” Arbitration
Mem. 19-20. Therefore, claims for fees incurred in this enforcement proceeding are properly
submitted to the Court, rather than to the arbitrators.
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fees incurred in bringing the Motion to Modify Judgment were necessary to enforce Linix’s
royalty obligations, even though the Modified Judgment has now been vacated.7 See, e.g., Leab
v. Streit, 584 F. Supp. 748, 762 (S.D.N.Y. 1984) (holding defendant liable for plaintiff’s cost in
obtaining default judgment even though judgment was void for defective service).
In determining the size of the fee award, a court must consider the “time and effort
required, novelty or difficulty of the issues, skill and standing of the attorney, value of the
interest involved, results secured at trial, loss of opportunity for other employment, taxed party’s
ability to pay, customary charges for similar services, and certainty of payment.” Jadwin v.
Kasal, 318 N.W.2d 844, 848 (Minn. 1982). Here, Power Electric seeks over $45,000 in fees and
costs incurred in obtaining the Modified Judgment. At the time the Modified Judgment was
requested, Power Electric asserted that Linix owed slightly over $21,000 on royalties for motors
that had been sold but not reported by Linix. Thus, the fees incurred by Power Electric more
than doubled the value of the interest involved at the time. Additionally, although the issues
involved are not common, they were narrow in scope, covered a limited time period, and
essentially involved serving a subpoena on one entity and bringing a single motion in this Court.
Therefore, $15,000 is a reasonable fee award under the circumstances.

7

Linix further argues Power Electric’s fees and costs to subpoena FBD were unnecessary
due to Power Electric’s knowledge of each motor Linix sells to FBD because Linix must buy
screw seals for those motors from Power Electric. However, the screw seal is a standard catalog
item that can be purchased from other sources. Kelley Decl., Sept. 15, 2014 [Docket No. 75] ¶ 3.
Therefore, the number of screw seals Power Electric sells to Linix is not necessarily an accurate
indicator of how many motors Linix sells to FBD.
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IV. CONCLUSION
Based upon the Petitioner’s briefs and declaration submitted herewith, and the entire file
herein, IT IS HEREBY ORDERED that:
1.

Petitioner Power Electric Distribution, Inc.’s Amended Motion for Attorneys’
Fees and Costs [Docket No. 58] is GRANTED IN PART and DENIED IN
PART. Linix shall pay $15,000 in attorneys’ fees to Power Electric.

2.

Respondent Hengdian Group Linix Motor Co., Ltd.’s Amended Motion for Post
Judgment Relief or an Extension of Time to Appeal [Docket No. 78] is
GRANTED IN PART and DENIED IN PART as follows:
a.

The request to vacate the Judgment Confirming Award [Docket No. 15] is
denied, and that Judgment remains valid.

b.

The request to vacate the Judgment for Attorneys’ Fees [Docket No. 33] is
denied, and that Judgment remains valid.

c.

The request to vacate the Modified Judgment [Docket No. 47] is granted,
and that Judgment is VACATED as void for lack of proper service.

LET JUDGMENT BE ENTERED ACCORDINGLY.
BY THE COURT:

s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: March 2, 2015.

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