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Xiao Wei Yang Catering Linkage In Inner Mongolia Co., Ltd. v. Inner Mongolia Xiao Wei Yang USA, Inc.

United States District Court, D. Massachusetts

February 6, 2017

XIAO WEI YANG CATERING LINKAGE IN INNER MONGOLIA CO. LTD et al., Plaintiffs,
v.
INNER MONGOLIA XIAO WEI YANG USA, INC. et al., Defendants.

          MEMORANDUM AND ORDER

          Denise J. Casper United States District Judge

         I. Introduction

         Plaintiffs 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.

         II. Standard of Review

         The 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)).

         Once 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. 2008)).

         III. Factual Background

         The 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.

         In or 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.

         On or 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.

         IV. Procedural History

         Plaintiffs 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.

         V. Discussion

         A. Rule 12(b)(6) is the Procedural Mechanism for Addressing a ...


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