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Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.

United States District Court, N.D. California

May 26, 2017

POWER INTEGRATIONS, INC., Plaintiff,
v.
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC., et al., Defendants.

          ORDER DENYING FAIRCHILD'S MOTION FOR WAIVER OF SUPERSEDEAS BOND; SETTING BOND AMOUNT; EXTENDING TEMPORARY STAY Re Dkt. No. 1041

          MAXINE M.CHESNEY UNITED STATES DISTRICT JUDGE

         Before the Court is defendants Fairchild Semiconductor International, Inc., Fairchild Semiconductor Corporation, and Fairchild (Taiwan) Corporation's (collectively “Fairchild”) “Motion for Order Staying Execution of Judgment and Waiver of Requirement to Post Supersedeas Bond.” The matter came on regularly for hearing on May 5, 2017. Frank E. Scherkenbach, Howard G. Pollack, and Michael R. Headley of Fish & Richardson P.C. appeared on behalf of plaintiff Power Integrations, Inc. (“Power Integrations”). Blair M. Jacobs and Christina A. Ondrick of Paul Hastings LLP appeared on behalf of Fairchild. The Court, having considered the papers filed by the parties, as well as the arguments of counsel at the hearing, rules as follows.

         BACKGROUND

         The parties are familiar with the procedural background of the above-titled action. As relevant to the instant motion, the Court, on March 10, 2017, entered final judgment in favor of Power Integrations and against Fairchild in the total amount of $146, 480, 598. On March 27, 2017, Fairchild filed a notice of appeal.

         By the instant motion, Fairchild asks the Court to stay enforcement of the judgment pending appeal, pursuant to Rule 62(d) of the Federal Rules of Civil Procedure, and further asks the Court to waive Rule 62(d)'s typical requirement of a supersedeas bond. By order filed March 29, 2017, the Court temporarily stayed execution of the judgment pending its ruling on the instant motion

         LEGAL STANDARD

         Rule 62 provides for the circumstances under which a court may “stay the execution of a judgment.” Fed.R.Civ.P. 62(b). Under Rule 62(d), “[i]f an appeal is taken, the appellant may obtain a stay by supersedeas bond.”[1] Fed.R.Civ.P. 62(d). “The stay takes effect when the court approves the bond.” Id. Such bond “protects the prevailing plaintiff from the risk of a later uncollectible judgment and compensates him for delay in entry of the final judgment.” See N.L.R.B. v. Westphal, 859 F.2d 818, 819 (9th Cir. 1988).

         “District courts have inherent discretionary authority in setting supersedeas bonds.” Rachel v. Banana Republic, Inc., 831 F.3d 1503, 1505. n.1 (9th Cir. 1987). “This includes the discretion to allow other forms of judgment guarantee, and broad discretionary power to waive the bond requirement if it sees fit.” Cotton ex rel. McClure v. City of Eureka, Cal., 860 F.Supp.2d 999, 1027 (N.D. Cal. 2012) (internal quotation and citation omitted).

         In determining whether to waive the bond requirement, courts have considered the following factors: “(1) the complexity of the collection process; (2) the amount of time required to obtain a judgment after it is affirmed on appeal; (3) the degree of confidence that the district court has in the availability of funds to pay the judgment; (4) whether the defendant's ability to pay the judgment is so plain that the cost of a bond would be a waste of money; and (5) whether the defendant is in such a precarious financial condition that the requirement to post a bond would place other creditors of the defendant in an insecure position.” See Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir. 1988) (internal quotation and citation omitted); see also Kranson v. Fed. Express Corp., 11-cv-05826-YGR, 2013 WL 6872495, at *1 (N.D. Cal. Dec. 31, 2013) (noting “[c]ourts in the Ninth Circuit regularly use the Dillon factors in determining whether to waive the bond requirement”). The appellant “has the burden to objectively demonstrate the reasons for departing from the usual requirement of a full supersedeas bond.” Cotton, 860 F.Supp.2d at 1028 (internal quotation and citation omitted).

         DISCUSSION

         As noted, Fairchild asks the Court to stay enforcement of the instant judgment pending Fairchild's appeal and without requiring it to post a supersedeas bond. Should the Court find such bond is required, Fairchild asks the Court to set the amount of the bond at 25% of the full judgment amount and to extend the temporary stay currently in place.

         A. Waiver of Supersedeas Bond

         In support of its request that the Court waive the bond requirement, Fairchild has submitted evidence as to the financial condition of its parent corporation, ON Semiconductor Corporation (“ON”), [2] and argues Fairchild and ON “are fully able to satisfy the judgment amount and are in no danger of default or bankruptcy.” (Mot. at 1:18-20.) As Power Integrations points out, however, ON itself has not made an express commitment to satisfy the judgment on behalf of Fairchild. Without such commitment, and given the absence of information as to Fairchild's own financial status, waiver of the supersedeas bond would not be appropriate. See Cotton, 860 F.Supp.2d at 1028 (“Until there is absolute certainty that the entity has agreed unconditionally to pay the judgment in [the] case, the mere existence of such possibility is an unacceptable substitute for the guarantees provided by a supersedeas bond.”) (internal quotation, citation, and alteration omitted).

         At the hearing, Fairchild represented that it could provide to the Court and to Power Integrations a commitment from ON that ON will satisfy the judgment within 30 days of the resolution of the appeal of the instant action. Although, to date, that commitment is not reflected in the docket, the Court, for purposes of ...


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