Case of the Day: AVR Communications v. American Hearing Systems

The case of the day is AVR Communications, Ltd. v. American Hearing Systems, Inc. (Minn. Ct. App. 2005). American Hearing Systems, a Minnesota firm in the hearing aid business, got into a contract dispute with AVR, an Israeli firm. In 2007, AVR commenced an arbitration against AHS in Israel that resulted in an award in favor of AVR for $2.675 million in damages and ₪ 1 million in fees and expenses. In other words, the award was partly denominated in dollars and partly in shekels. In 2014, the U.S. District Court for the District of Minnesota confirmed the award. Its judgment required payment of a portion of the judgment in shekels, just as the award had. AVR then sought to register the federal judgment in the Minnesota state district court. The decision said AVR did this “so [it] could begin collection proceedings.” Of course, registration of the federal judgment in the state courts was hardly necessary—the federal courts have ample remedies for judgment creditors, and indeed, FRCP 69 incorporates the remedies the judgment creditor would have in the state courts.

In any event, the state district court refused to enter a judgment denominated in both dollars and shekels. Instead, it entered a judgment denominated in dollars only, at a particular conversion rate. AHS appealed.

It turns out that Minnesota has enacted an unusual statute, Minn. Stat. § 548.46(g), which provides: “On a foreign-money claim, the judgment must be docketed in United States dollars …” This is at odds with the Uniform Foreign Money Claims Act. The decision mostly involved the details of the Minnesota statutory analysis leading to the conclusion that the statute meant what it said and that it trumped earlier-enacted provisions that seemed to permit recognition of judgments in non-US currency. Interested Minnesota readers can find the details in the decision.

I’m noting the case because it seems to provide another twist on Greg Shill’s judgment arbitrage idea. I suspect, but do not know, that AVR’s lawyers thought, when they brought the Minnesota state proceeding, that the shekel was going to depreciate against the dollar. Why else do what they did, in light of the fact that federal law incorporates the state law mechanisms for collecting money judgments? I don’t know whether other states have adopted Minnesota’s variant of the UFMCA, but it will be interesting to see whether judgment creditors who have non-dollar-denominated foreign judgments seek recognition in Minnesota or similar states in order to play the currency markets, as it were.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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