Shen v. Leo A. Daly Co.

United States Court of Appeals for the Eighth Circuit · 2000 · Torts

Tortsagencyfiduciary dutyinjunctive relieffalse imprisonmentintentional infliction of emotional distressres judicataattorney's fees

Facts

Daly operated in Taiwan and designated Shen, its managing director there, as its legally required "responsible person." After Daly terminated Shen and withdrew from Taiwan, it failed to remove or replace him, even after tax authorities audited and then assessed taxes against Daly and Shen repeatedly asked Daly to resolve the matter and indemnify him. Daly neither paid nor appealed the tax assessment, and Taiwan ultimately prohibited Shen from leaving the country until the tax issue was resolved. Shen pursued relief in Taiwan unsuccessfully and then sued Daly in Nebraska federal court.

Issue

Whether Daly could avoid liability based on the Taiwan judgment, whether Daly owed Shen fiduciary duties arising from an agency relationship that justified injunctive relief and damages, and whether Shen could recover on false imprisonment, intentional infliction of emotional distress, attorney's fee, and related set-off issues. The case also presented whether the district court properly denied Daly a set-off for undisputed money Shen owed Daly.

Rule

A foreign-country judgment is recognized only if the proponent shows the foreign forum provided a full and fair trial in a competent court, impartial justice, and proceedings free from prejudice or fraud, with proper jurisdiction and no violation of public policy. Under Nebraska law, an agency relationship depends on the facts and may be implied from words, conduct, or circumstances; because principal and agent are in a fiduciary relationship, the principal owes duties of good faith, fair dealing, indemnity, and protection. False imprisonment requires unlawful restraint of personal liberty, but confinement to an entire country is too broad an area to qualify here; IIED requires intentional or reckless conduct that is extreme and outrageous and causes distress so severe that no reasonable person should be expected to endure it. Attorney's fees are generally unavailable absent statute in the case being litigated, but fees incurred in separate litigation to protect one's interests may be recovered as compensatory damages for tortious breach of fiduciary duty; and set-off may be allowed when tried by implied consent under Rule 15(b).

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Nora Kim sued Prairie Vista Engineering, a fictional Nebraska firm, in federal court in Omaha after a court in Seoul had rejected her earlier request for relief against the company. Prairie Vista argues the Seoul judgment bars Nora's suit, but it submits only a translated copy of the judgment and counsel's statement that South Korean courts are reputable. It offers no evidence about the forum's procedures, impartiality, jurisdiction, or compatibility with public policy.

Should the federal court give the foreign judgment preclusive effect?

Explanation. The majority applied Hilton-type factors and placed the burden on the party asserting preclusion to prove recognition is proper. That party must establish a full and fair trial in a competent court, impartial administration of justice, proceedings free from prejudice or fraud, proper jurisdiction, and no violation of public policy. Mere assertions and an untranslated or translated judgment, without supporting proof, do not satisfy that burden. (Derived from Shen v. Leo A. Daly Co. (n.d.).)