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

United States District Court, D. Massachusetts

April 9, 2018

XIAO WEI CATERING LINKAGE IN INNER MONGOLIA CO. LTD., AND FEI XIE, Plaintiffs, and Defendants-in-Counterclaim,


          M. Page Kelley, United States Magistrate Judge

         I. Introduction.

         This case involves an agreement gone awry between a hot-pot restaurant chain headquartered in China, and the owners of a restaurant in Boston, Massachusetts, who wanted to become a franchisee of the Chinese company. The suit has been marked by frequent, acrimonious discovery disputes, which in large part have been caused by plaintiffs' failure to follow the rules of discovery. In a previous Order, this court found that plaintiffs' counsel, Attorney Frank Xu, admitted to this court pro hac vice from New York, should pay reasonable attorneys' fees and costs to defendants' counsel under 28 U.S.C. § 1927 for defendants' work on a motion for a protective order and to quash subpoenas issued by plaintiffs. (#147.) The court further ordered under its inherent authority that Attorney Xu should be formally sanctioned for gratuitously accusing defendants' counsel, Attorney Elizabeth Brady Murillo, of fabricating documents. Id. In this Order, the court allows defendants' motion to deem their requests for admission admitted. (#140.) The court will hold a hearing on the request for sanctions.

         The facts of this case are described in detail in Judge Casper's Order on defendants' motion for summary judgment, in which she dismissed counts I-IV of the nine-count complaint. (#81 at 2-4, 15.)[1] The facts are repeated here in abbreviated form. Plaintiffs, Xiao Wei Catering Linkage in Inner Mongolia Co., Ltd. (Linkage), and Fei Xie, a chef employed by Linkage, brought suit against defendants Inner Mongolia Xiao Wei Yang USA, Inc. (Inner Mongolia), and two individuals, Cheng Xu and Yonghua Qin. (#1.) Plaintiff Linkage is a large, well-known restaurant chain in China; defendant Inner Mongolia is a Massachusetts corporation that operated a restaurant in Boston, Massachusetts called the “Little Lamb Restaurant.” (#1 ¶¶ 1-3; #90 at 10.) Defendants Xu and Qin are married, live in Massachusetts, and are president and treasurer of Inner Mongolia, respectively. Id. ¶¶ 4-6.

         In 2011, Xu and Qin traveled to China and negotiated a Cooperation Agreement with Linkage so that they could become Linkage's first franchisee in the United States. Id. ¶¶ 11-12. The complaint alleges that Xu and Qin fraudulently represented themselves to Linkage, concealed material facts, and so induced Linkage to enter into the Cooperation Agreement, which Linkage would not have done but for Xu and Qin's misrepresentations.[2] Id. ¶¶ 13-15. Xu and Qin are also alleged to have misappropriated Linkage's brand-name and confidential knowledge, and are said to have violated Linkage's federal trademark registration and other intellectual property rights. Id. ¶¶ 16-17.

         Plaintiffs allege that defendants breached the Cooperation Agreement by withdrawing visa sponsorship for Xie, the chef Linkage sent to work with Xu and Qin, and exploited Xie's specialized knowledge and trade secrets while refusing to pay for his expenses as the Cooperation Agreement required them to do. Id. ¶ 19.

         Finally, plaintiffs claim that defendants gained business revenues as a franchisee, but did not pay franchise fees as the Cooperation Agreement provided. Id. ¶¶ 18, 22. Pursuant to the Agreement, Linkage transferred capital and money to defendants, including loans totaling approximately $66, 000. Id. ¶ 20.

         II. The Motion for Requests for Admission to be Deemed Admitted.

         As noted in the court's previous Order sanctioning Attorney Xu, plaintiffs in this case repeatedly have failed to comply with the rules of discovery. (#147 at 3.) The court set out several examples in its previous Order and will not repeat them here. Id. at 4-10. The court concluded there

. . . that Attorney Xu, by issuing the seven subpoenas and forcing defendants to file and then litigate a motion to quash, and then further litigate a frivolous motion for sanctions against defendants, engaged in conduct warranting a sanction of attorneys' fees and costs under § 1927 . . . [D]efendants were in good faith attempting to negotiate a discovery dispute when plaintiffs improperly issued the subpoenas under Rule 45 as an end-run around Rule 34. Plaintiffs responded to the motion to quash with fallacious legal arguments and promptly filed a baseless cross-motion for sanctions that, among other things, wrongly accused opposing counsel of falsifying documents. This conduct was in keeping with Mr. Xu's conduct throughout this litigation, in which he has demonstrated that he will not follow the rules of discovery, is not willing to engage in meaningful discussions with opposing counsel, maintains legal positions that are not supported by law, and lacks “a firm grasp of the rules and responsibilities of attorneys practicing before this court.”

Id. at 11-12 (quoting Irwin Indus. Tool Co. v. Bibow Indus., Inc., No. 11-cv-30023-DPW, 2014 WL 1323744, at *6 (D. Mass. Mar. 31, 2014)).

         Here, defendants move that their requests for admission be deemed admitted. (#140.) First, defendants argue, plaintiffs' responses were outside the 30-day response period established by Fed.R.Civ.P. 36 (3). Defendants served their first set of requests for admission on October 27, 2017, and received responses from plaintiffs on November 30, 2017. (#141 at 2.) The court finds that because Fed.R.Civ.P. 6 (a)(1)(C) allows three extra days for requests served by mail, plaintiffs' response was not late.[3] In any event, defendants wrote to plaintiffs' counsel to address deficiencies in the response on December 7, 2017. Id. Plaintiffs never responded. Id.

         In January 2018, in a filing pertaining to another discovery dispute, defendants again raised the issue of the deficient responses to the request for admissions. Id. Again, plaintiffs did not respond. Id.

         Three months after defendants sent their first communication regarding the deficiencies in plaintiffs' response, on March 2, 2018, defendants again contacted counsel for plaintiffs and informed them that if they did not respond, defendants intended to file a motion with the court. Id. at 3. On March 9, plaintiffs filed a “supplemental answer” which contained no amended responses, only legal arguments about why plaintiffs would not agree to any of the admissions. Id. ...

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