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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

September 20, 2018




         I. Introduction

         Plaintiffs Xiao Wei Yang Catering Linkage in Inner Mongolia Co., LTD. (“Linkage”) and Fei Xie (“Xie”) (collectively, “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, “Defendants”). D.1. The Court previously allowed Defendants' motion for summary judgment as to the claims for 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), D. 81. Defendants now move for summary judgment as to the remaining claims against them, namely for 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 (Count VIII) and unfair and deceptive trade practices under Mass. Gen. L. c. 93A (Count IX) and their counterclaims against Plaintiffs, alleging breach of contract (Counterclaim I), breach of the covenant of good faith and fair dealing (Counterclaim II), breach of fiduciary duty (Counterclaim III), misrepresentation (Counterclaim IV), conversion (Counterclaim V) and unjust enrichment (Counterclaim VI). D. 90; D. 180. For the reasons stated below, the Court ALLOWS Defendants' motion as to Plaintiffs' remaining claims and DENIES Defendants' motion with respect to their counterclaims against Plaintiffs. The Court also DENIES Defendants' request for attorney's fees, D. 180 at 19-20, without prejudice.

         II. Standard of Review

         Summary judgment is proper when there is no genuine dispute as to any material fact and the undisputed facts establish that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A fact is material if it carries with it the potential to affect the outcome of the suit under the applicable law.” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000) (quoting Sánchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)). A genuine dispute of material fact occurs when the factual evidence “is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party carries the burden of establishing the absence of a genuine dispute of material fact and that it is entitled to judgment as a matter of law. Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000). If the movant satisfies this burden, the non-moving party may not merely refer to allegations or denials in her pleadings. Anderson, 477 U.S. at 256. Instead, he “must, with respect to each issue on which he would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in her favor.” Borges ex rel. S.M.B.W. v. Serrano- Isern, 605 F.3d 1, 5 (1st Cir. 2010). “As a general rule, this requires the production of evidence that is ‘significant[ly] probative.'” Id. (quoting Anderson, 477 U.S. at 249) (alteration in original). The Court must “view 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).

         III. Factual Background

         As an initial matter, the Court notes that Defendants contend that Plaintiffs did not comply with Local Rule 56.1. D. 188 at 1. Pursuant to Local Rule 56.1, the party opposing a motion for summary judgment must “include a concise statement of the material facts of record as to which it is contended that there exists a genuine issue to be tried, with page references to affidavits, depositions and other documentation.” Local Rule 56.1. Plaintiffs have failed to do so consistently here. In disputing certain of Defendants' statement of material facts, they have “objected” or otherwise pointed to non-probative exhibits which do not constitute a sufficient basis for this Court to find a disputed issue of fact. See D. 187; see also Change Climate, Inc. v. Massachusetts Bay Transp. Auth., 202 F.R.D. 43, 53 (D. Mass. 2001) (noting that “[t]he facts in genuine dispute must be significantly probative in order for the court to deny summary judgment; ‘conclusory allegations, improbable inferences, and unsupported speculation will not suffice'”) (quoting Cadle Co. v. Hayes, 116 F.3d 957, 960 (1st Cir.1997)). Although the Court declines to strike Plaintiffs' statement of facts, it has only considered those portions that point to specific, admissible facts contradicting the material facts assertions made by Defendants.

         A. Summary of Undisputed Material Facts

         1. Linkage and the Cooperation Agreement

         The following facts are taken primarily from the parties' statement of material facts and supporting materials, and are undisputed unless otherwise noted. D. 182; D. 187. It is also based upon the requests for admissions (No. 1-7, 9-10, 12-13 and 15) from Plaintiffs, D. 140, which this Court (Kelley, M.J.) declared admitted. D. 153.[1] Defendant Xiao Wei USA, a Massachusetts corporation, operated, at times relevant to this action, as the “Little Lamb” restaurant in Boston. D. 182 ¶ 2. Defendants Xu and Qin, who are married, serve as the President and Treasurer/Secretary, respectively of Xiao Wei USA. Id. ¶¶ 3, 5. On July 6, 2011, Xu and Qin entered into an agreement with Linkage that lead to the formation of Xiao Wei USA. (the “Cooperation Agreement”). Id. ¶¶ 9A-9G; D. 184-1 ¶ 1. It is this Cooperation Agreement that lays at the core of Plaintiffs' trademark infringement claims and Defendants' defenses to same.

         It is undisputed that Linkage is the owner of trademark Registration No. 3, 550, 357 (the “Trademark”) registered with the United States Patent Trademark Office (“USPTO”). D. 182 ¶ 6; D. 1-1. Under the Cooperation Agreement, in relevant part, Linkage agreed to “fully support [Xu] in promoting and developing restaurant franchise market under the trademarks ‘Little Lamb' and ‘Happy Grassland'” and also “appoint[ed] [Xu] [as] its exclusive agent of restaurant franchise market in the United States under the trademarks ‘Little Lamb' and ‘Happy Grassland.'” D. 184-1 ¶ 9; see D. 184-2. The Cooperation Agreement also indicates that Xu was “permitted to operate solely or jointly with other third party franchise restaurants under the above trademarks.” Id. Furthermore, the Cooperation Agreement noted that Xu was obligated to “open at least one restaurant/store or secure at least one franchise within [one] after the 1[st] “Little Lamb” store opening date” and if Xu failed to do so, “the right mentioned in Term 9 will be void.” Id. ¶ 10. The Defendants Xu and Qin and Jiarong Yu (“Yu”), a representative of Linkage, executed the Cooperation Agreement. Id. at 6. Plaintiff Xie, an employee of Linkage, was not a party to the Cooperation Agreement. See D. 184-1.

         On May 2, 2013, Defendants Xu and Qin opened the Little Lamb restaurant located at 326 Cambridge Street in Boston, Massachusetts. D. 182 ¶ 9I; D. 153. Plaintiff Linkage announced the opening of the Little Lamb restaurant in Boston in its corporate newsletter and included a photograph of the Trademark. D. 182 ¶ 9 H; D. 187 ¶ 9 H; D. 184-4 at 2-3. It further promoted the opening of the Boston Little Lamb restaurant on its website. D. 182 ¶ 51. Linkage's representative, Yu, also visited the Little Lamb restaurant in Boston in September 2012. D. 182 ¶ 9K. On December 29, 2013, Linkage filed two specimens, which consisted of photographs of a restaurant fixture and menu from the Little Lamb restaurant with the USPTO. D. 182 ¶ 9J; D. 183-5 at 51-52. Although the term of the Cooperation was for five years (until July 6, 2016), D. 184-1 at 6, Defendants ceased using the Trademark in February 2016, D. 182 ¶ 59; D. 184 ¶ 14, and changed the name of the restaurant from Little Lamb to “Hulun Beir.” D. 182 ¶ 60; D. 184 ¶ 14.

         2. Xie and the Jointly Investment

         On August 12, 2011, Defendants Xu and Qin, entered into a Jointly Investment and Business Agreement (the “Jointly Agreement” as the parties reference it) with Plaintiff Xie. D. 184-5. The Jointly Agreement contemplated the parties “jointly” developing the Little Lamb restaurant in Boston under its Trademark, D. 184-5. The Jointly Agreement recognized that Xu and Qin had “obtained exclusive right to the [Little Lamb] restaurant franchise and the exclusive right to operate any and all marketing and business operations associated with [Little Lamb] restaurant franchise system.” D. 184-5 ¶ 1. It also provided that Xie had “completed the initial technical training required by ‘Linkage,' and [] the preparation and investigation in relevant restaurants operations in China.” Id. Defendants contracted to open at least three Little Lamb restaurant chains in the U.S. within three years after setting up Xiao Wei Yang USA, Inc. D. 184-5 ¶ 2. Xie agreed to invest $100, 000 in exchange for 15% share of the first Little Lamb restaurant. Id. ¶ 3. The parties to this agreement each agreed to be investors and operation managers of the Little Lamb restaurant to be compensated by “salary according to the position, business profit and the local law and regulation, bonus and promotion.” Id. ¶ 6. It further provides that Xie was obligated to travel promptly to the United States to participate in the development of the Boston Little Lamb restaurant requiring Xie to participate in the “completion of the business and related qualification[, ]” engage in comprehensive training by Linkage, pass the English proficiency examination and apply for entry visa at the U.S. Embassy. Id. ¶ 5. Defendants Xu and Qin were obligated, under the Jointly Agreement, to work with Xie's attorney to assist Xie in applying for a United States entry visa. D. 184-5 ¶ 5. The Jointly Agreement also provided that for “any issue or conflict not addressed in [Agreement's] terms, all three parties shall negotiate friendly to resolve.” D. 184-5 ¶ 6.

         Plaintiffs allege that Defendants have infringed the Trademark and press their remaining claims regarding same. Defendants contend that Xie misrepresented his skills, received salary, food and transportation and then absconded with the Little Lamb restaurant's property without, among other things, sharing in the losses of the restaurant and going to work for other franchises in other cities.

         IV. Procedural History

         Plaintiffs instituted this action on January 16, 2015. D. 1. Defendants originally moved to dismiss all counts. D. 8. The Court denied that motion to dismiss without prejudice as to Counts I, II, III and IV (the “contract claims”), and denied the motion to dismiss as to the remaining claims with prejudice. D. 26. As to the contract claims, the Court granted limited discovery solely on the forum-selection clause issue and noted that it would allow for a renewed motion to dismiss once discovery had been completed. Id. Thereafter, Defendants filed a renewed motion to dismiss the contract claims, D. 63, which the Court converted into a motion for summary judgment. The Court allowed that motion as supplemented, D. 73, as to Counts I-IV. D. 81. Defendants have now moved for summary judgment with respect to the remaining Counts V, VI, VII, VIII, and IX (the “trademark infringement claims”) and Defendants' counterclaims against Plaintiffs. The Court heard the parties on the motion and took the matter under advisement. D. 116.

         V. ...

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