Cho v. CG Invites Co.
- William Orrick
- 3:24-cv-07112
- U.S. District Court · Northern District of California
- 15
In Cho v. CG Invites, Judge Orrick dismissed derivative claims, denied a motion to strike, and partly granted and partly denied Kim’s motion to dismiss.
Plaintiff Joong Myung Cho’s derivative claims were dismissed, while his aiding-and-abetting-fraud and non-derivative civil-conspiracy claims against Minkyu “Leo” Kim were allowed to proceed; his tortious-interference and derivative civil-conspiracy claims against Kim were dismissed.
What happened
In Joong Myung Cho v. CG Invites Co., LTD., et al., the court considered defendants’ requests to dismiss claims in Cho’s third amended complaint and Cho’s request to strike arguments from a reply brief. The dispute concerns ownership and control of CGP and related agreements.
The court ruled that Cho could not bring derivative claims—claims brought on behalf of a company—because he had not shown that CGP shares were issued to him when he filed the lawsuit. Cho’s motion to strike was denied because the defendants’ reply arguments responded to points in his opposition. Defendant Minkyu “Leo” Kim argued that all claims against him should be dismissed, while Cho argued that his claims were adequately pleaded.
Judge Hiam H. Orrick dismissed the derivative claims, granted Kim’s motion to dismiss Counts Eight and Twelve, and denied it as to Counts Ten and Eleven. Count Eight alleged tortious interference with contract; Count Ten alleged aiding and abetting fraud; Count Eleven alleged non-derivative civil conspiracy; and Count Twelve alleged derivative civil conspiracy. No further amendment was authorized absent good cause.
The detailed version
- Cho v. CG Invites Co. · No. 3:24-cv-07112
- William Orrick
- Dec. 4, 2025
Background
Joong Myung Cho filed a third amended complaint asserting claims concerning ownership and control of CGP, agreements involving CGP, and alleged conduct by CG Invites Co., LTD.; Inchul Chung; Soo Yeon Oh; Newlake Invites Investment, LTD.; Newlake Alliance Management, LTD.; Seung Hee Lee (“Randall Lee”); Yong Kyu Shin; and Minkyu “Leo” Kim. The CG Defendants moved to dismiss all derivative claims. Kim separately moved to dismiss all claims against him, including tortious interference with contract, aiding and abetting fraud, and civil conspiracy. Cho moved to strike portions of the CG Defendants’ reply as allegedly new arguments, or alternatively to file another reply.
Derivative standing
The court applied Federal Rule of Civil Procedure 23.1, which requires a complaint asserting derivative claims to allege that the plaintiff was a shareholder or member when the relevant transaction occurred, or that the ownership interest later passed to the plaintiff by operation of law. The court held that the contemporaneous ownership rule prevented Cho from bringing his derivative claims because he lacked standing when he filed the lawsuit as a non-shareholder of CGP.
Cho alleged that he invested in CGP and was entitled to shares, but the court found that the third amended complaint did not adequately allege that CGP shares were actually issued to him. The court also concluded that, because CGP’s articles of incorporation had not been amended, Cho could not have been issued the shares at issue. The court rejected an equitable-standing theory, stating that the Ninth Circuit had rejected an equitable exception to the continuous-ownership requirement.
The court dismissed the derivative claims. It also concluded that the issuance argument should not be stricken because it could reasonably be understood as responsive to Cho’s arguments about partial issuance of shares. The court denied Cho’s motion to strike.
Claims against Kim
Kim’s motion was granted in part and denied in part.
Count Eight: tortious interference with contract. The court dismissed this claim. It reasoned that Cho was not CGP’s majority owner during the June and July 2024 conduct on which the claim relied, and that the third amended complaint did not provide other information plausibly showing that Kim disrupted the relevant contractual relationship.
Count Ten: aiding and abetting fraud. The court denied the motion to dismiss this claim. Cho alleged that Kim accessed CGP’s and CG Invites’ servers hundreds of times, obtained confidential documents, destroyed information on his electronic devices, and that the information was used in furtherance of the alleged fraud. The court found the claim plausible and relaxed the heightened fraud-pleading requirement because the alleged destruction of evidence limited Cho’s ability to provide more specific allegations.
Counts Eleven and Twelve: civil conspiracy. The court denied the motion as to Count Eleven, the non-derivative civil-conspiracy claim. It found that the third amended complaint adequately alleged Kim’s knowledge of the agreements, his alleged interest in displacing Cho, his access to confidential information, and conduct allegedly undertaken with other defendants. The court stated that the strength of the conspiracy claim presented factual questions for a jury.
The court granted the motion as to Count Twelve, the derivative civil-conspiracy claim, for the same lack of derivative standing discussed above.
Disposition
The derivative claims identified in the conclusion were dismissed. Kim’s motion to dismiss was granted with respect to Counts Eight and Twelve and denied with respect to Counts Ten and Eleven. No further amendment of the third amended complaint was authorized absent a showing of good cause. The defendants were ordered to answer the third amended complaint by December 19, 2025.
Read the full 15-page opinion on CourtListener, the free public archive maintained by the Free Law Project.