Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 1 of 23
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`The Honorable Robert S. Lasnik
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`No. 2:18-cv-00525-RSL
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`DEFENDANT DOUBLE DOWN
`INTERACTIVE LLC’S
`OPPOSITION TO PLAINTIFFS’
`MOTION FOR A TEMPORARY
`RESTRAINING ORDER
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`Plaintiffs,
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`ADRIENNE BENSON AND MARY
`SIMONSON, individually and on behalf of all
`others similarly situated,
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`v.
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`DOUBLE DOWN INTERACTIVE, LLC, et al.,
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`Defendants.
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`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
`(2:18-CV-00525-RSL)
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 2 of 23
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`I.
`INTRODUCTION
`The timing of Plaintiffs’ Motion for a Temporary Restraining Order (“Motion”) is not
`coincidental. It comes in the midst of good faith settlement negotiations involving substantial
`monies, guided by Judge Layn Philips (Ret.), with one mediation session having been completed
`on July 28, 2022, and another set for August 26, 2022. As these negotiations are ongoing,
`Plaintiffs’ Motion is a transparent attempt to create artificial settlement leverage as their
`requested relief has no bearing on the actual merits of the underlying claims. Plaintiffs instead
`hope that by preventing DDI from conducting its business operations, DDI will be forced to pay
`a higher settlement amount than the facts and law require. The judicial process should not be an
`unwitting co-conspirator in Plaintiffs’ efforts.
`Plaintiffs’ conspiracy theory supporting their Motion is rooted in the unfounded notion
`that Defendant Double Down Interactive, LLC (“DDI”) has not negotiated in good faith. What
`this really means is that DDI simply has not agreed to pay the ever-changing amounts
`unilaterally demanded by Plaintiffs. Rather than rely on Plaintiffs’ self-serving representations
`and waste this Court’s time with factual rebuttals, DDI instead invites the Court to contact
`Judge Phillips (Ret.) directly to confirm its good faith participation in the mediation process. He
`can be reached through Phillips ADR’s main office line: (949) 760-5280. DDI is confident that
`Judge Phillips (Ret.) and his co-mediator, Niki Mendoza, will reject Plaintiffs’ allegations
`regarding DDI’s alleged mediation conduct and will instead confirm DDI’s active and good faith
`participation in the settlement negotiations that have been ongoing throughout July 2022 and to
`this day. What will become apparent is that after Plaintiffs filed their Motion, substantive
`settlement communications ceased—the opposite of good faith negotiations.
`Plaintiffs’ smokescreens aside, the factual and legal merit of their Motion is also
`deficient. What Plaintiffs essentially seek here is an extraordinary restraint upon Double Down
`Interactive Co., Ltd. (“DDI Co. Ltd.”), a Korean non-party corporation that filed the Form 6-K
`attached to the Motion. Without any actual evidence of wrongdoing or asset dissipation,
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`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
`(2:18-CV-00525-RSL) - 1
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 3 of 23
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`Plaintiffs’ counsel admitted weeks ago that (a) any issues concerning DDI Co. Ltd.’s corporate
`actions arise under Korean law, and (b) they are completely ignorant regarding such Korean law:
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`Under the Korean Commercial Code (and any other applicable law),
`may DDI tap into its capital reserve to resolve pending litigation?
`We know very little about Korean law, but because our instinct is
`that the answer to this question is "yes," we are deeply troubled by
`the notion that DDI will be pulling cash out of its capital reserve the
`day before our August 26 mediation--all while DDI hopes to have
`the case stayed.
`June 23, 2022 e-mail from Plaintiffs’ counsel to DDI’s counsel. Dkt. 483-2 at 5 (emphasis
`added).
`But “instincts” about the effect of DDI Co. Ltd.’s Form 6-K cannot replace Korean law.
`Under that set of laws, as explained in an expert declaration by Joonsup Yoon, who specializes in
`corporate law at a top Korean law firm, the Form 6-K filed by DDI Co. Ltd. means something far
`different. First, the complained of corporate action by DDI Co. Ltd. is routine under Korean law
`and does not actually have the effect of removing money from DDI Co. Ltd.—let alone DDI, the
`actual defendant here. Second, Mr. Sigrist has no power to thwart the scheduled shareholder
`vote and would face civil and criminal penalties in Korea for attempting to do so. Third, even
`crediting Plaintiffs’ speculation that DDI Co. Ltd. plans to issue a dividend, it could not do so
`until 2023 at the earliest. Put simply, under Korean law, nothing Plaintiffs allege justifies their
`emergency TRO or claim of harm, irreparable or otherwise.
`That their TRO is instead directed at Joe Sigrist is a transparent end run around Korean
`(and U.S.) law and cannot fix their inability to prove a likelihood of success on the merits as to
`the Korean non-party. Plaintiffs instead confusingly direct the Court to their February 25, 2021
`motion for preliminary injunction, but that motion involved only defendant DDI and the
`requested relief—enjoining operation of an allegedly illegal online casino—was directly related
`to the underlying claims. Here, DDI Co. Ltd. is not a defendant and Plaintiffs do not ask the
`Court to exercise jurisdiction over it. For the same reasons, Plaintiffs’ reliance on a Washington
`statute that permits injunctive relief where a “defendant” intends to fraudulently convey assets to
`avoid a judgment is equally unavailing.
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`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
`(2:18-CV-00525-RSL) - 2
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 4 of 23
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`Apart from these technical deficiencies, there still is no evidence linking DDI Co. Ltd.’s
`public announcement of a routine shareholder vote pursuant to Korean law (one that primarily
`involves the election of directors) to an intent to dissipate assets. It is also worth noting that the
`proposed reduction in “capital reserve” balance is approximately $50 million, which would
`represent less than a 10 percent reduction of that balance, which is not material in light of
`Plaintiffs’ damages demands. This fact alone rebuts any inference of a specific intent to
`dissipate an amount of assets that would be material to the alleged claims.
` If TROs were granted in this manner based on “instincts” and inference, then any pre-
`judgment use of monies by DDI or any recipient of monies from DDI, including DDI Co. Ltd.,
`would be automatically prohibited. If the Court were to accept this protocol, then a publicly-
`traded corporate defendant and its ultimate parent company could not engage in a host of
`ordinary corporate actions to benefit its shareholders, such as issuing dividends, buying back
`stock, while a lawsuit is pending.
`Perhaps the most telling irony here is that for DDI to settle this lawsuit, it would need a
`modification of the TRO to do so. But this contradiction highlights what should now be obvious:
`Plaintiffs’ true motivation in bringing this TRO is not to remedy some actual wrong but rather to
`hold DDI’s funds hostage and force DDI to pay whatever settlement demand is forthcoming if
`and to the extent that a TRO is issued. This Court should follow the facts and the law and reject
`Plaintiffs’ attempt to create such artificial settlement leverage.1
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`A.
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`II.
`RELEVANT FACTUAL BACKGROUND
`DDI Mediated, and Continues to Engage in Settlement Discussions, in Good
`Faith.
`On July 1, 2022, the parties agreed to mediate with Hon. Layn Phillips (Ret.) and Niki
`Mendoza of Phillips ADR on July 28, 2022, and August 26, 2022. Declaration of Ekwan Rhow
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`Mr. Sigrist will attend the hearing as ordered. Without waiving any jurisdictional objections DDI Co. Ltd.
`1
`may have, he is prepared to represent to the Court that DDI Co. Ltd. has not engaged and does not intend to engage
`in any actions to render a potential judgment in this case ineffectual. Further, as DDI Co. Ltd. is a publicly traded
`company, to the extent that the Court questions Mr. Sigrist about DDI Co. Ltd.’s anticipated corporate actions, any
`such questioning should be conducted in camera so that Mr. Sigrist remains in compliance with SEC regulations
`regarding the disclosure of certain corporate events.
`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
`(2:18-CV-00525-RSL) - 3
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 5 of 23
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`(“Rhow Decl.”), ¶ 3. Prior to this, the concept of a stay was initially requested by co-defendant
`IGT and agreed to by Plaintiffs. Id. ¶ 4. DDI was the last party to confirm participation in the
`mediation and assented to the concept of a mediation subject to a stay. Id. Contrary to
`Plaintiffs’ implication otherwise, while recognizing the value of a stay to all parties pending
`mediation, DDI did not demand a stay as a precondition to mediating nor did it initially request
`the stay. Id. On June 17, 2022, the Court granted a stay through June 24, 2022. Id.; Dkt. 469.
`Subsequently, and while the parties worked to confirm mediation dates, the issue of extending
`the stay continued to be raised. Id., ¶ 5. The request for a one-week extension of the stay on
`June 24, 2022 was made solely “[a]s a courtesy to IGT,” not at DDI’s request. Id., Dkt. 473.
`On July 1, 2022, as is often the case when parties are engaged in settlement discussions
`or awaiting mediation, the parties agreed to extend the stay of this action by one month until
`August 1, 2022. Dkt. 475. Prior to the initial July 28, 2022 session, the parties engaged with
`Ms. Mendoza in several pre-mediation discussions designed to narrow the issues and monetary
`spread. Id., ¶ 7. The parties continued their discussions during their July 28, 2022 session with
`Ms. Mendoza, which lasted more than nine hours. Id., ¶ 7. Subsequent to that session, the
`parties continued to engage in settlement discussions with Plaintiffs, who engaged separately and
`extensively in writing and orally with DDI and IGT. Without disclosing settlement-privileged
`information, and despite Plaintiffs’ claims to the contrary, DDI mediated in good faith and
`intends to continue to do so in advance of and during the August 26, 2022 in-person session with
`Judge Phillips. Id., ¶ 11.
`Indeed, Defendants were engaged in settlement discussions guided by Phillips ADR as
`recently as yesterday. Again, DDI invites the Court to contact Phillips ADR to confirm DDI’s
`good faith mediation efforts.
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`B.
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`Plaintiffs’ Motion Is Pure Gamesmanship, Which Started During the
`Mediation Process.
`On July 23, 2022, the week before the July 28, 2022 mediation session with Niki
`Mendoza, Plaintiffs’ counsel began accusing DDI of “playing games with its on-hand cash while
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`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 6 of 23
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`the case is stayed.” Dkt. 483-2 at 5. In doing so, Plaintiffs’ counsel directed DDI to a securities
`filing by DDI Co. Ltd.. In that email, while admitting that DDI Co. Ltd. is subject to Korean
`law, Plaintiffs’ counsel confessed he knew “very little about Korean law” but his “instinct” was
`that DDI intended to “pull[] cash out of its capital reserve the day before our August 26
`mediation.” Id. Plaintiffs’ counsel stated in full:
`
`Under the Korean Commercial Code (and any other applicable law),
`may DDI tap into its capital reserve to resolve pending litigation?
`We know very little about Korean law, but because our instinct is
`that the answer to this question is "yes," we are deeply troubled by
`the notion that DDI will be pulling cash out of its capital reserve the
`day before our August 26 mediation--all while DDI hopes to have
`the case stayed.
`Id. (emphasis added).
`Plaintiffs’ counsel then took their absurd allegations even further and proceeded to imply
`that both well-respected law firms representing DDI were somehow involved in a conspiracy to
`fraudulently convey cash out of the Korean entity. Id. (“Your email implies that, before
`Thursday, Bird Marella had no knowledge of the planned capital reserve reduction. Will you
`confirm that is in fact the case? Further, will you please confirm that, before Thursday, Davis
`Wright Tremaine had no knowledge of the planned capital reserve reduction?”). These serious
`allegations against officers of this Court remain unsupported.
`On July 27, 2022, DDI’s counsel responded: “We have inquired on this and have been
`told that the securities filing has nothing to do with our case. We were not aware of it, which is
`not surprising given that fact. Our intent remains to mediate in good faith.” Id. at 7.
`Undeterred, and admittedly without any knowledge regarding Korean law or any evidence of
`wrongdoing, that same day, Plaintiffs’ counsel proclaimed that “none of this is plausible,”
`proceeding to attribute various representations to DDI and its counsel that were never actually
`made. Id. at 9. Then, on June 29, 2022, Plaintiffs’ counsel copied Defendant International Game
`Technology and IGT’s counsel into the email chain, presumably in an effort to gain leverage
`during mediation. Id. at 9. Plaintiffs’ counsel noted that “[i]f this issue is going to be resolved
`without court intervention, that must happen before Monday.” Id. (emphasis in original). But,
`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
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`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 7 of 23
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`indicative of Plaintiffs’ real motives, Plaintiffs never filed a motion by that Monday (August 1,
`2022)—instead, they sought to extend the stay (at the request of IGT) for another week as they
`continued to negotiate a potential settlement. Rhow Decl., ¶ 9; Dkt. 477.
`DDI’s counsel responded on July 29, 2022, noting that: “Double Down Interactive Co.,
`Ltd. (which I take to be the “DDI” you are referencing) is a Korean entity and is not a defendant
`in this pending litigation. What that DDI chooses to do is not germane to this litigation. And as
`to your conspiracy accusations, we assume that they will be supported by facts and not
`speculation, especially those made against the attorneys involved.” Dkt. 483-2 at 11. That same
`day, Plaintiffs’ counsel responded by inaccurately “confirm[ing]” DDI’s “positions,” and then
`proceeding (again) to attribute representations to DDI and its counsel regarding the securities
`filing of a foreign non-party that were never actually made. Id. at 16. Plaintiffs’ counsel then
`increased the vitriol, accusing DDI and its counsel of lying “repeatedly” and engaging in a
`“scheme to lull us into a stay as it moves money around (and, of course, lie about that as well).”
`Id. at 21.
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`C.
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`Plaintiffs Publicly—Without a Shred of Evidence or Any Analysis of Korean
`Law—Accuse DDI of Fraud.
`Stripped of their rhetoric, Plaintiffs’ primary accusation underpinning their Motion is that
`DDI used the mediation process to seek a stay to “raid its corporate treasury,” orchestrating an
`August 25, 2022 shareholder vote before the initial August 26, 2022 mediation session with
`Judge Phillips (Ret.). Dkt. 479. As explained above, DDI did not demand the stay as a
`prerequisite to mediating, but after IGT and Plaintiffs had agreed to proceed subject to the stay,
`DDI assented to this arrangement. DDI does not deny that the stay made sense while the parties
`negotiated, but there simply is no evidence that DDI somehow secured the initial stay in order to
`“raid its corporate treasury.”
`And after the initial July 28, 2022 session with Judge Phillips’ office, DDI conveyed to
`Plaintiffs that it had no objection to the stay lapsing on August 8, 2022. Rhow Decl., Ex. 1 (“We
`did not ask for a stay in yesterday’s filing to allow you to seek the relief you have indicated you
`
`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 8 of 23
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`wanted. We simply asked that the court not rule on currently-pending motions while settlement
`discussions continued.”). As such, Plaintiffs’ conspiracy theory also makes no sense. After the
`July 28, 2022 mediation session, Plaintiffs had ample time – and still have ample time – to seek
`whatever relief they purportedly need and have done so.
`Critically, Plaintiffs’ theory also makes no sense in light of Korean law. As the
`shareholder vote is scheduled for August 25, 2022, and no dividends comprising any of the
`“capital reserve” reduced in connection with that vote could be issued until early 2023 at the
`earliest – both long after the stay was set to expire – the activities of DDI Co. Ltd. simply have
`no relationship to the ongoing settlement discussions. Moreover, the proposed reduction in the
`“capital reserve” balance is less than 10 percent. Declaration of Joe Sigrist (“Sigrist Decl.”), ¶ 5.
` As explained in the Declaration of Joonsup Yoon (“Yoon Decl.”), a Korean law expert
`and partner at one of Korea’s leading full-service law firms, there is nothing unusual or improper
`about DDI Co. Ltd.’s planned shareholder vote to reduce its capital reserve. Yoon Decl., ¶ 10,
`n.2; ¶¶ 14–16. It is expressly provided for under Korean law. See id.
`Pursuant to the Korean Commercial Code, a Korean corporation must record its profits
`from any trade of its capital as a “capital reserve” in compliance with the accounting standards
`prescribed in Korean Commercial Code Decrees. Yoon Decl., ¶ 13. Recording the profits as
`“capital reserve” does not mean that the corporation designates specific assets as capital reserve,
`nor does it require that the corporation keep cash in hand in a separate account equal to the
`amount of the capital reserve. Id., ¶ 14. Rather, the “capital reserve” is an abstract accounting
`concept, not a specific asset or a cash account. Id., ¶ 15. It is a number that must be subtracted
`from the company’s total cash reserve to arrive at the amount of cash that is deemed available to
`spend under the Korean Commercial Code. Id.
`A Korean corporation’s capital reserve may be reduced pursuant to the Korean
`Commercial Code by a shareholder vote, such as the one DDI Co. Ltd. has proposed here. If the
`capital reserve is reduced pursuant to Korean Commercial Code Article 461-2, the funds are then
`recorded as “profit surplus.” Id., ¶ 16. Though a change in an abstract accounting classification
`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 9 of 23
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`occurs, no money actually leaves the company. Id. Nor is the money immediately available to
`be used to, for example, pay dividends. Id., ¶ 17. The corporation must wait until the following
`fiscal year for a General Shareholder Meeting to approve the corporation’s financial statements,
`and then vote to declare dividends. Id. Alternatively, the Board of Directors may declare
`dividends after an outside audit of financial statements, which also must wait for the following
`fiscal year. Id., ¶ 18. Until then, the corporation may not declare dividends that include the
`capital surplus so reduced as their source. Id., ¶¶ 14–18. Put simply, from a timing perspective,
`Plaintiffs’ unfounded accusations of a conspiracy to dissipate assets are an impossibility under
`Korean law.
`Nonetheless, to buttress their transparent goal of enhancing settlement leverage, Plaintiffs
`have offered serious allegations of misconduct against DDI and its attorneys but have done so
`based on, at best, coincidence and, at worst, self-serving “instinct” without bothering to consult a
`single Korean law reference. Neither can substitute for actual evidence, which the record is
`devoid of.
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`D.
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`Double Down Co., Ltd.—a Foreign, Two-Layers Removed Parent of DDI—Is
`Not a Party to this Lawsuit.
`Plaintiffs seek relief against a non-party, foreign entity, DDI Co. Ltd. DDI Co. Ltd. is a
`corporation organized under the laws of the Republic of Korea with its headquarters in Seoul,
`Korea. The defendant in this case, DDI, is a Washington limited liability company with its
`headquarters in Seattle. As Plaintiffs admit, DDI Co. Ltd. is DDI’s two-layers-above parent
`corporation. Mot. at 3 n.9 (“[t]echnically, DDI Korea is the 100% owner of a Delaware LLC
`named ‘DoubleUDiamond LLC,’ which is in turn the 100% owner of DDI-US.”); Sigrist Decl.,
`¶¶ 2-3. The accompanying declaration of Joe Sigrist lays out this corporate structure in detail.
`III. ARGUMENT
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`A.
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`Plaintiffs Cannot Make the “Clear Showing” Required to Obtain the
`“Extraordinary Remedy” of a TRO.
`A TRO is “an extraordinary remedy that may only be awarded upon a clear showing that
`the plaintiff is entitled to such relief.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24
`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
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`LAW OFFICES
`920 Fifth Avenue, Suite 3300
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 10 of 23
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`(2008). A TRO “will not issue if the moving party merely shows a possibility of some remote
`future injury, or a conjectural or hypothetical injury,” as Plaintiffs have done here. See Park
`Village Apartment Tenants Ass’n v. Mortimer Howard Trust, 636 F.3d 1150, 1160 (9th Cir.2011)
`(internal citations and quotation marks omitted); AR Pillow Inc. v. Cottrell, 2012 WL 868109, at
`*1 (W.D. Wash. Mar. 13, 2012) (same). Plaintiffs cannot meet the four required elements
`necessary to obtain a temporary restraining order. See Winter, 555 U.S. at 20 (identifying the
`four elements).2 First, Plaintiff must show a likelihood of success on the merits on a “claim
`sufficient to justify the injunctive relief sought.” Glasser v. Blixseth, No. C14-1576 RAJ, 2014
`WL 5421255, at *3 (W.D. Wash. Oct. 22, 2014). Second, Plaintiff must demonstrate that
`irreparable harm is likely, and not merely possible, without the restraining order. See Johnson v.
`Coutier, 572 F.3d 1067, 1081 (9th Cir. 2009) (citing Winter, 555 U.S. at 24). Third, the Court
`considers the balance of equities by weighing “each party’s claimed injury, as well as the effect
`of granting or denying Plaintiff’s motion would have on the parties.” Kater v. Churchill Downs
`Inc., 423 F. Supp. 3d 1055, 1064 (W.D. Wash. 2019) (quoting Quinault Indian Nation v.
`Kempthorne, 2009 WL 734682, at *3 (W.D. Wash. Mar. 18, 2009)). Finally, an injunction
`must be in the public interest.
`For the reasons discussed below, Plaintiffs cannot establish any of the four required
`elements.
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`1.
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`Plaintiffs Do Not, and Cannot, Establish a Likelihood of Success on
`the Merits of Any Claim Justifying the Far-Reaching TRO They Seek.
`Plaintiffs confuse the issue when they argue that they have demonstrated a likelihood of
`success on the merits based on their pending motion for preliminary injunction, filed a year-and-
`a-half ago, which seeks to enjoin DDI from operating what Plaintiffs allege is an illegal online
`casino. Mot. at 5 (citing Dkt. 164). But, that motion has nothing to do with the relief requested
`here—an injunction barring DDI Co. Ltd. from holding a previously authorized shareholder
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`A request for a temporary restraining order is evaluated under the same standard as a preliminary
`2
`injunction. Dawson v. Asher, 447 F. Supp. 3d 1047, 1049 (W.D. Wash. 2020).
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`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 11 of 23
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`vote.3 Plaintiffs must show a likelihood of success on the merits of a “claim sufficient to justify
`the injunctive relief sought.” Glasser, 2014 WL 5421255, at *3 (emphasis added). Thus, to
`establish they are likely to succeed on the merits of the claim they make in the instant motion,
`Plaintiffs would have to show that (1) non-party DDI Co. Ltd.’s corporate governance acts
`complained of are fraudulent or otherwise unlawful; (2) non-party DDI Co. Ltd. is subject to a
`TRO under RCW 7.40.020; and (3) all DDI-affiliated entities should be precluded from making
`“extraordinary expenditures.” Mot at 9. Plaintiffs do not and cannot establish any of these
`merits-based prerequisites.
`
`a.
`
`DDI Co. Ltd.’s Planned Shareholder Vote Is Entirely Proper
`Under Korean Law and Cannot Be Restrained.
`As explained above (and set forth in detail in the Declaration of Korean law expert
`Joonsup Yoon), there is nothing unusual or improper about DDI Co. Ltd.’s planned shareholder
`vote to reduce its capital reserve, which is expressly provided for under Korean law. Yoon
`Decl., ¶ 10, n.2; ¶¶ 14–16. Pursuant to the Korean Commercial Code, the “capital reserve” does
`not represent specific cash or assets, and is instead an abstract accounting concept. A Korean
`corporation’s capital reserve may properly be reduced pursuant to the Korean Commercial Code
`by a shareholder vote, such as the one DDI Co. Ltd. has proposed here. Though a change in an
`abstract accounting classification occurs, no money actually leaves the company. Id. Nor is the
`money immediately available to be used to, for example, pay dividends, which cannot be issued
`until the following fiscal year, i.e., 2023.
`Fundamentally, the proposed shareholder meeting and vote comply with Korean law, and
`Plaintiffs admittedly do not understand Korean law or argue otherwise. Korean law further
`provides that a corporation has a substantive legal right to take those actions properly authorized
`by Korean law. Even if DDI Co. Ltd.’s corporate actions could be enjoined by a U.S. court
`(which they cannot), a foreign Court’s order would have no effect on its obligations under
`
`
`See, e.g., Mot. at 5 (noting “[t]he purpose of a TRO is ‘preserving the status quo and preventing irreparable
`3
`harm just so long as is necessary to hold a hearing [on the preliminary injunction application], and no longer.’”)
`(citation omitted).
`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
`(2:18-CV-00525-RSL) - 10
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`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 12 of 23
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`Korean law. Only the Korean courts have the power to abridge such legal rights in Korea,
`including stopping a Korean company from taking corporate governance actions. Yoon Decl., ¶¶
`19–20.
`
`b.
`
`Plaintiffs’ Proposed TRO Against DDI Co. Ltd. Cannot Issue
`Under RCW 7.40.020, Which Applies Only to a “Defendant.”
`Ignoring governing Korean law, Plaintiffs nonetheless argue that they are entitled to a
`TRO pursuant to RCW 7.40.020. However, as is plain on its face, RCW 7.40.020 applies only
`when “the defendant is doing … [some act] in violation of the plaintiff's rights respecting the
`subject of the action tending to render the judgment ineffectual,”4 or “the defendant threatens, or
`is about to remove or dispose of his or her property with intent to defraud his or her creditors[.]”
`RCW 7.40.020 (emphases added). Plaintiffs themselves acknowledge that RCW 7.40.020
`applies only when “a defendant is trying to make itself judgment proof[.]” Mot. at 3. But DDI
`Co. Ltd. is a separate entity and is not a defendant here. Plaintiffs do not cite to a single piece of
`authority for the novel proposition that this statute entitles them to an injunction against a third
`party, preventing it from holding a shareholder vote entirely unrelated to the allegations in the
`operative complaint. RCW 7.40.020 provides no authority for the TRO requested here. See
`also, e.g., Frank Lloyd Wright Found. v. Shmavonian, No. 18-CV-06564-MMC, 2019 WL
`3413479, at *2 (N.D. Cal. July 29, 2019) (refusing to issue requested third party injunction, “as
`plaintiff provides no authority showing that such an order enjoining a third party not before the
`Court would be proper”) (internal quotation marks, alterations and citations omitted).
`Nor is there any evidence that Plaintiffs are likely to succeed in enforcing any potential
`judgment against non-party DDI Co. Ltd. This case has been pending and heavily litigated for
`more than four years. The parties have conducted extensive discovery, and Plaintiffs have
`amended their complaint twice. Yet, at no point prior to filing the instant Motion did Plaintiffs
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`Washington law is clear that “the judgment” referenced in RCW 7.40.020 encompasses only the specific
`4
`relief requested in the underlying action, not ancillary relief requested in the injunction (or TRO) itself. See, e.g.,
`Bowers v. Dunn, 198 Wash. App. 1034 (2017) (rejecting injunction seeking to restrict defendants’ contact with
`plaintiffs under RCW 7.40.020, where “the subject of the Bowers’ action was their use of the private road. The
`action was focused on Dunn’s conduct regarding the road itself, not his conduct toward the Bowers personally.”).
`DOUBLE DOWN INTERACTIVE LLC’S OPP’N TO MOTION FOR TRO
`(2:18-CV-00525-RSL) - 11
`
`
`Davis Wright Tremaine LLP
`LAW OFFICES
`920 Fifth Avenue, Suite 3300
`Seattle, WA 98104-1610
`206.622.3150 main · 206.757.7700 fax
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`Case 2:18-cv-00525-RSL Document 489 Filed 08/15/22 Page 13 of 23
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`suggest that DDI Co. Ltd. had engaged in any misconduct; seek to add DDI Co. Ltd. as a
`defendant; or attempt to hold DDI Co. Ltd., or any other entity, financially responsible for
`Plaintiffs’ claims against defendants, as an alter ego or otherwise. Plaintiffs have no actual
`interest in or right to restrain the activities of a non-party, two-layers removed, parent
`corporation of a defendant in this case.
`
`c.
`
`Plaintiffs Proffer Zero Evidence in Support of a TRO Against
`DDI.
`Plaintiffs also assert, without any factual showing, that all DoubleDown entities,
`including DDI (the U.S. entity that is a defendant here), should be enjoined from making “any
`extraordinary expenditures of cash pending further order of the Court.” Mot. at 8. Plaintiffs
`never define what “extraordinary” means; they apparently ask the Court to defer to Plaintiffs’
`unilateral discretion regarding how much DDI and its affiliated non-party entiti