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Hyundai Motor America, Inc. v. Direct Technologies International, Inc.

United States District Court, W.D. North Carolina, Charlotte Division

July 26, 2019




         THIS MATTER is before the Court on a Motion for Preliminary Injunction, filed by Defendant Direct Technologies, International, Inc. See (Doc. No. 52). For the following reasons, the motion is denied.

         I. BACKGROUND

         A. The Lawsuit in this Court

         On December 21, 2017, Plaintiffs Hyundai Motor America, Inc. and Hyundai Motor Company (collectively “Hyundai” or “Plaintiff”) filed this action against Defendant Direct Technologies, International, Inc. (“DTI”), alleging that DTI is engaging in trademark infringement by purchasing Hyundai branded parts abroad, importing the Hyundai branded parts into the United States, and then reselling the Hyundai branded parts in the United States-thus, selling so-called “gray market” auto parts. (Doc. No. 1). After the Court denied DTI's motion to dismiss, DTI filed its Answer in May 2018 and counterclaimed for illegal restraint of trade in violation of the Sherman Act, 15 U.S.C. §§ 1 & 2, exclusive dealing in violation of the Clayton Act, 15 U.S.C. § 14, false advertising and unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a), and unfair competition under N.C. Gen. Stat. § 75-1.1 et seq. (Doc. No. 33). The Court denied Plaintiff's motion to dismiss the counterclaims in August 2018, (Doc. No. 44), and Plaintiff filed an Answer in October 2018. (Doc. No. 47). The parties are in discovery and trial in this matter is set for June 2020. See (Doc. No. 50).

         B. The Investigative Action Before the International Trade Commission

         On May 3, 2019, Hyundai initiated an action in the International Trade Commission (“ITC”), requesting that the ITC investigate DTI's and three of its foreign suppliers' purported unlawful importation and sale after importation of gray market replacement automotive service and collision parts and components, in violation of Section 337.[1] (Doc. No. 55-1: Decl. of Kenneth E. Keller, Ex. A). In addition to DTI, Hyundai identified three foreign entities believed to have violated Section 337. (Id. at 4-6). Hyundai has requested that the ITC issue cease-and-desist orders and a limited exclusion order directed at those gray market parts and components that the ITC determines are infringing. (Id. at 33-34).

         On May 9, 2019, notice that Hyundai's Complaint had been received by the ITC was published in the Federal Register. (Doc. No. 55-2: Keller Decl., Ex. B). On May 17, DTI submitted comments to the ITC in which DTI presented its antitrust and anti-competitive arguments and requested that the ITC either (1) refuse to institute an investigation or (2) have the Administrative Law Judge determine that the alleged anti-competitive acts were in the public interest, thereby preventing any remedial orders from taking effect. (Doc. No. 55-3: Keller Decl., Ex. C).

         On June 7, 2019, the ITC published a notice in the Federal Register to inform the public that it had instituted an investigation on May 31, 2019. (Doc. No. 55-4: Keller Decl., Ex. D). The ITC instituted the investigation after considering DTI's comments, including its antitrust and anti-competitive arguments, and refused DTI's request that the Administrative Law Judge make a determination regarding DTI's alleged anti-competitive arguments. (Id.). The notice defined the parties to the investigation and the scope of the articles under investigation. In addition to Hyundai and DTI, the parties to the investigation are three foreign entities which have supplied parts to DTI (the “Additional Respondents”). (Id.).

         DTI was served with the ITC Complaint on June 4, 2019. Two days later, DTI's counsel appeared in the ITC investigation. (Doc. No. 55-5: Keller Decl., Ex. E). DTI's response to the ITC complaint was due on June 25, 2019. Discovery in the ITC investigation began on June 7, 2019, and DTI served interrogatories and requests for production on Hyundai on June 10, 2019. (Doc. No. 55 at ¶ 8: Keller Decl.). DTI filed the pending motion on June 12, 2019. In the motion, DTI seeks an order from this Court, pursuant to 28 U.S.C. § 1651 (the “All Writs Act”), staying the ITC action. More specifically, DTI seeks an order from this Court enjoining Plaintiff from participating in the pending ITC action, and from pursuing, enforcing, or seeking to enforce, an exclusion order, cease and desist order, or other injunctive relief relating to certain replacement automotive service and collision parts and components thereof, pending the resolution of this action. This Court held a hearing in this matter on June 20, 2019, and this matter is now ripe for disposition.


         The ITC was enacted to investigate violations of the trade statute enumerated in Section 337 of the Tariff Act of 1930, as amended.[2] Congress authorized the ITC to investigate unlawful “importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that infringe a valid and enforceable United States trademark registered under the Trademark Act of 1946.” 19 U.S.C. § 1337(a)(1)(C). If the ITC determines that the trade statute has been violated, then the ITC may exclude the infringing articles from importation into the United States and prohibit domestic activities related to the sale, marketing, advertising, and distribution of infringing articles already within the United States. Id. § 1337(d) & (f).

         Congress authorized and anticipated parallel proceedings in the district courts and the ITC, as the district court and the ITC provide different remedies. Apparently recognizing the complications that may arise from parallel proceedings, in 1994 Congress enacted 28 U.S.C. § 1659(a), which states that “[i]n a civil action involving parties that are also parties to a proceeding before [the ITC], at the request of a party to the civil action that is also a respondent in the proceeding before the Commission, the district court shall stay, until the determination of the Commission becomes final, proceedings in the civil action with respect to any claim that involves the same issues involved in the proceeding before the Commission….” 28 U.S.C. § 1659.

         While Congress has enacted a statute allowing a district court action to be stayed pending an ITC action, there is no corresponding statute for the reverse of that procedure. DTI argues, however, that this Court may nevertheless stay the pending ITC action under the All Writs Act, which provides that the “Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and ...

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