United States District Court, D. Massachusetts
XIAO WEI YANG CATERING LINKAGE IN INNER MONGOLIA CO. LTD et al., Plaintiffs,
INNER MONGOLIA XIAO WEI YANG USA, INC. et al., Defendants.
MEMORANDUM AND ORDER
J. Casper United States District Judge
Xiao Wei Yang Catering Linkage in Inner Mongolia Co., LTD.
(“Linkage”) and Fei Xie (“Xie”)
(collectively, the “Plaintiffs”) have filed this
lawsuit against Defendants Inner Mongolia Xiao Wei Yang USA,
Inc., d/b/a Xiao Wei Yang and/or Little Lamb Restaurant
(“Xiao Wei USA”), Cheng Xu (“Xu”) and
Yonghua Qin (“Qin”) (collectively, the
“Defendants”) alleging breach of contract (Count
I), breach of the implied covenant of good faith and fair
dealing (Count II), fraudulent inducement (Count III), unjust
enrichment (Count IV), statutory and common law trademark
infringement (Count V), false designation of origin under 15
U.S.C. § 1125(a) (Count VI), trademark dilution under
Mass. Gen. L. c. 110H (Count VII), unfair competition (VIII)
and unfair and deceptive trade practices under Mass. Gen. L.
c. 93A (Count IX). D.1. The Defendants renewed their motion
to dismiss Counts I, II, III and IV, on jurisdictional
grounds, D. 63, after the Court allowed jurisdictional
discovery, and then moved for summary judgment as to those
claims. D. 73. For the reasons stated below, the Court ALLOWS
the motion, D. 63; D.73.
Standard of Review
Court grants a motion for summary judgment when there is no
genuine dispute of material facts and the moving party is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).
“[A]t the summary judgment stage the judge's
function is not . . . to weigh the evidence and determine the
truth of the matter but to determine whether there is a
genuine issue for trial.” Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986). In doing so, the
Court “must scrutinize the record in the light most
favorable to the summary judgment [opponent].”
Alliance of Auto. Mfrs. v. Gwadosky, 430 F.3d 30, 34
(1st Cir. 2005) (citing Houlton Citizens' Coal v.
Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999)).
the moving party has satisfied its burden, the burden shifts
to the non-moving party to set forth specific facts showing
that there is a genuine, triable issue. Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986). Although the Court
“view[s] the record in the light most favorable to the
nonmovant, drawing reasonable inferences in his favor,
” Noonan v. Staples, Inc., 556 F.3d 20, 25
(1st Cir. 2009) (citing Franceschi v. U.S. Dep't of
Veterans Affairs, 514 F.3d 81, 84 (1st Cir. 2008)),
“conclusory allegations, improbable inferences, and
unsupported speculation” proffered by the non-movant
are insufficient to create a genuine issue of material fact
to survive summary judgment. Sullivan v. City of
Springfield, 561 F.3d 7, 14 (1st Cir. 2009) (quoting
Prescott v. Higgins, 538 F.3d 32, 39 (1st Cir.
background facts of this case were previously laid out in the
Court's December 14, 2015 Order, D. 26, addressing the
Defendants' initial motion to dismiss and the Court
incorporates that background, by reference, here. Thus, for
present purposes, the Court only recounts facts relevant to
the forum-selection clause at issue. Unless otherwise noted,
the facts below are undisputed.
about early 2011, Xu and Qin, residents of Massachusetts,
traveled to Xiao Wei Yang Catering Linkage in Inner Mongolia
Co., Ltd.'s (“Linkage”) headquarters in Inner
Mongolia to engage in negotiations regarding Linkage's
franchise. D. 75 ¶ 6. Linkage is one of the leading and
best known restaurant chains in China and the Defendants were
interested in discussing opportunities to license
Linkage's brand name, as well as negotiate related
business developments that could bring Linkage restaurants to
the United States. Id. ¶¶ 1, 6. The
negotiations resulted in a contract, the Cooperation
Agreement, Contract No.: XWYOS/001/20110706
(“Cooperation Agreement”). Id. ¶ 9.
According to the Cooperation Agreement, all parties agreed to
form and invest in a corporation in China called the Inner
Mongolia Xiao Wei Yang Catering Chain Overseas Management
Company (the “Overseas Management Company”). D.
76-1 ¶ 2. The Cooperation Agreement noted, however, that
the corporation's name was a “temporary name,
” with “actual name . . . subjected [sic] to
registration.” Id. The Cooperation Agreement
also contemplated the formation of a new corporation in the
United States that would be registered as a subsidiary of
Linkage (“Xiao Wei USA”). Id. Within one
year of the formation of both Xiao Wei USA and the Overseas
Management Company, Linkage also agreed to transfer its
entire interest in Xiao Wei USA to the Overseas Management
Company. Id. ¶ 3. This, in effect, would result
in Xiao Wei USA being wholly owned by the Overseas Management
Company in China. Id. Additionally, under the
Cooperation Agreement, any arbitration or litigation
resulting from a dispute over the contract would be
“the place of registration” of the Overseas
Management Company. Id. ¶ 15.
about October 8, 2011, a limited liability company called
Inner Mongolia Xiao Wei Yang Catering Chain Management, Co.,
Ltd. (“Catering Chain Management”), located at
Floor 6, Xiao Wei Yang Plaza, No. 77, Wenhua Road, Qingshan
District, Baotou City, was formed and registered in China. D.
76-2 at 1. According to a foreign investment census, the
corporate shares of Catering Chain Management were held by
Qin, Xu and Inner Mongolia Xiao Wei Yang Stock Raising
Science & Technologies Co., Ltd., with the parties
holding 43%, 42% and 15% of the shares, respectively. D.
65-12 at 4. The first and only shareholders meeting of
Catering Chain Management took place in September 2012 and
was attended by Xu, Qin and a representative of Linkage,
Jiarong Yu (“Yu”). D. 65-6. At the meeting, Yu
discussed the need to transfer Linkage's stock holdings
in Xiao Wei USA from Linkage to Catering Chain Management.
Id. at 3. The shareholders passed a resolution
agreeing to this transfer. D. 65-7. The foreign investment
census, which shows that, as of 2013, Catering Chain
Management held 100% of Xiao Wei USA's stock, confirms
the transfer took place. D. 65-12 at 2.
instituted this action on January 16, 2015. D.1. The
Defendants originally moved to dismiss all counts. D. 8. The
Court heard the parties on that motion, D. 23, and denied the
motion to dismiss without prejudice as to Counts I, II, III
and IV (the “contract claims”). D. 26. As to the
contract claims, the Court was unable to determine at that
time whether the forum-selection clause had been triggered.
Id. As a result, the Court granted limited discovery
on the forum-selection clause issue and also noted that it
would permit the Defendants to file for a renewed motion to
dismiss once this discovery had been completed. Id.
The Defendants subsequently filed a renewed motion to dismiss
the contract claims. D. 63, 65, 66. The Court heard the
parties on the motion. D. 70. At that hearing, and for the
reasons discussed below, the Court informed the parties that
it would be treating the motion to dismiss as a motion for
summary judgment and invited supplemental briefing. The
Defendants subsequently filed a motion for summary judgment,
which supplemented the original motion to dismiss. D. 73.
Rule 12(b)(6) is the Procedural Mechanism for Addressing a