Baliga v. Link Motion Inc.

Background

Link Motion, Inc. and Wenyong Shi asked the court to issue an Order to Show Cause and emergency relief against court-appointed receiver Robert Seiden. They sought to prevent Seiden from convening extraordinary general meetings of Link Motion shareholders. They also asked the court to reconsider its September 15, 2022 order and alternatively sought a temporary restraining order and preliminary injunction.

The earlier order had treated the request for an injunction as moot because the parties agreed that the meetings could not proceed in the short term. It also ruled that Seiden could not convene the meetings unless and until Lilin “Francis” Guo, a major Link Motion shareholder who had disappeared, could attend. The earlier order separately addressed Seiden’s authority to convene the meetings.

Defendants relied on information that they described as newly discovered, including Seiden’s notice that Guo might reappear within 30 to 60 days and letters that Seiden had recently filed unsealed. They asked the court to reconsider the injunction factors, Seiden’s authority, and whether the time for convening the meetings had expired under Link Motion’s by-laws.

Legal standard

The court treated the motion primarily as a request for reconsideration under Federal Rule of Civil Procedure 60(b) and Local Civil Rule 6.3. It explained that reconsideration is an extraordinary remedy generally available only when the moving party identifies an overlooked controlling decision or fact, newly available evidence, an intervening change in controlling law, clear error, or the need to prevent manifest injustice. Reconsideration is not a way to relitigate issues already decided or present new theories that could have been raised earlier.

The court applied the same standard to the requested temporary restraining order and preliminary injunction. Defendants had to show likely success on the merits, irreparable harm, a favorable balance of hardships, and that an injunction would serve the public interest.

Discussion

The court denied the requests for reconsideration, a temporary restraining order, and a preliminary injunction. It rejected Defendants’ argument that the court’s earlier decision approving Seiden’s eventual discharge had ended his authority. The court stated that the earlier decision did not require Seiden to undo activities already taken on Link Motion’s behalf. Because Seiden had acted to convene the meetings before the earlier recommendation and decision were entered, the court concluded that he retained authority to convene them until he was fully discharged after the court approved his final accounting.

The court also found that Defendants had not shown irreparable harm. The alleged harm concerned 26 registered shareholders who were not parties to the case, and Link Motion and Shi were not among those shareholders. The court further found that the claimed harm was speculative because it depended on several unresolved events, including whether Guo’s voting power had been improperly obtained, how the shareholders would vote, and whether the shareholders would disagree with Guo. The timing of any harm was also uncertain because Guo’s expected return was based on information whose authenticity and reliability Seiden questioned.

The court found that the balance of hardships and public interest factors were neutral. It therefore concluded that Defendants had not established the requirements for emergency injunctive relief.

Receiver’s authority and meeting deadline

The court rejected Defendants’ argument that the earlier order improperly addressed an advisory or hypothetical issue. It stated that Seiden’s authority was a separate, live dispute that was likely to recur, including if Guo reappeared. The court therefore reaffirmed its earlier conclusion that Seiden retained authority to convene the meetings.

The court also rejected Defendants’ argument that the deadline in Article 55(d) of Link Motion’s by-laws had expired. It reasoned that Guo’s request to Seiden was not a formal shareholder requisition. Under Article 55(b), requisitioning shareholders had to hold at least one-third of the company’s share capital, while the court stated that Guo held approximately 13 percent. The court therefore concluded that the Article 55(d) time limits did not apply.

Order

The court denied Defendants’ proposed Order to Show Cause. It separately denied their renewed request for a temporary restraining order and preliminary injunction. The court ordered that Seiden maintained authority to convene the extraordinary general meetings, but only if Guo reappeared and could attend, and only before the court approved Seiden’s accounting and discharged him.