In the most recent episode in the litigation variously referred to and here involving specifically claims by Motorola Credit Corp. against Kemal Uzan and an entity he controls, Libananco, styled Motorola Credit Corp. v. Uzan, 02 Civ. 0666 (S.D.N.Y. 9/27/10), Judge Rakoff addressed the issue whether judgments entered against the defendants could be enforced against the nonparty, Libananco Holdings Co. The Court enforced the judgments against Libananco following the procedure previously set out in an earlier appeal by the Second Circuit, which ruled that the District Court would be required “(1) to give notice to any entities against whom plaintiffs judgment might be enforceable, and (2) to the extent the District Court believes that enforcement of the judgment against any nonparties is appropriate, to make findings sufficient to support piercing the corporate veils of those entities under applicable state law”. 388 F.3d 39, 62 (2d Cir. 2004).
Noteworthy is that, in performing the second requirement above, the District Court did not conduct a choice of law or conflicts of law analysis to determine which jurisdiction’s law should apply to the issue of piercing. Rather, it applied New York law, since “New York is the forum state”. The Court found the stringent standard for veil piercing under New York law satisfied.
The District Court then addressed whether a turnover order should issue. As to this issue, the Federal Rules provided the answer to which jurisdiction’s law would apply. Fed. R. Civ. P. 69(a)(1) provides: “The procedure on execution — and in proceedings supplementary to and in aid of judgment or execution — must accord with the procedure of the state where the court is located”. The Court then applied New York turnover law but also applied the powerful federal principle that “turnover orders directed against judgment debtors are effective against assets regardless of their location”. Citing In re Feit & Drexler, Inc., 760 F.2d 406, 414 (2d Cir. 1985).