Case of the Day: Armadillo Distribution Enterprises v. Hai Yun Musical Instruments

The case of the day is Armadillo Distribution Enterprises, Inc. v. Hai Yun Musical Instruments Manufacture Co. (M.D. Fla. 2015). Armadillo distributes musical instruments to dealers in the US and abroad. In particular, it distributes the ddrum® “Diablo” line of drum kits. It had a contract with Hai Yun, a Chinese company, to manufacture the drum kits and deliver them to Armadillo’s offices in Tampa.

In 2010, Armadillo placed an order with Hai Yun for a thousand drum kits. As the contract provided, Hai Yun manufactured some samples for Armadillo, which Armadillo inspected and approved. Hai Yun then manufactured and delivered the thousand instruments, and Armadillo began distributing them to retailers. But the retailers complained that many customers were returning the drums, and when Armadillo investigated the drums remaining at its offices, it claims it found that the drums “were catastrophically defective at an alarming rate.” Armadillo says it had to cease distribution of the drums, and indeed, it had to retire the “Diablo” line of drums altogether, due to the loss of goodwill.

Armadillo sued Hai Yun in the District Court in Tampa. Hai Yun initially defaulted, but it then appeared, and the court set aside the default. In its answer, Hai Yun asserted a counterclaim for recognition of a Chinese judgment that, it claimed, had awarded damages to Hai Yun against Armadillo. But Hai Yun’s counsel then withdrew for reasons that are unclear. Under the general American practice, a corporation cannot appear pro se, and so Armadillo sought a default judgment on its claims against Hai Yun and involuntary dismissal of Hai Yun’s counterclaim for failure to prosecute. The court granted the motions.

The case is not particularly interesting or novel, but it is a good example of application of one of the barriers a foreign firm faces when seeking recognition of a judgment in the United States. Because it’s necessary to bring an action on the foreign judgment (rather than simply to register it, as one does when seeking to enforce a sister-state judgment), at a bare minimum it is necessary to retain US counsel. A natural person would be a fool to go it alone; a corporation cannot go it alone.

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