Jinro America, Inc. v. Secure Investments, Inc

Appellants are a group of companies involved in international trade; Appellees are a group lead by Brian Bishop, a businessman who entered into an agreement with Appellants for the international sale of frozen chicken. Appellants claim the contract was a legitimate one, and brought suit to when Appellees were in breach. Appellees claim Appellants entered into the agreement to engage in a “roll program,” an illegal investment scheme. The contract’s terms provided that one Appellant company would buy large amounts of chicken and sell it to Appellees, who would then re-sell the product at a higher price. Appellants forwarded Appellees $10 million to cover expenses, and Appellees agreed to assign $10 million worth of Treasury securities to Appellants as collateral. When months went by and no chicken was bought or sold, Appellants declared Appellees in breach and brought suit, demanding repayment of the advance. At trial, Appellees relied on the testimony of David Herbert Pelham (Pelham) as an expert witness. Pelham testified that Korean companies have a propensity to engage in fraudulent activity, “including the avoidance of Korean currency laws.” Pelham’s testimony was offered as expert testimony, despite the fact that Pelham, “had no formal education or training in business or as a cultural expert.” According to Appellees, “Pelham’s . . . purported qualifications were that he had ‘served five tours of duty in Korea,’ lived there for about 12 years and was married to a Korean woman.” Appellants objected to the testimony, but the lower court denied the motions n a minute order, and without explanation, the district court denied Jinro’s motions, “as to Pelham’s general testimony on Korean culture and business practice, although it ruled that Pelham could not testify as an expert in Korean law.”