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

Filing 26

Judge Denise J. Casper: ORDER entered. MEMORANDUM AND ORDER - the Court DENIES without prejudice Defendants' motion to dismiss as to counts I, II, III and IV. The Court permits a sixty-day period, until February 14, 2016, of limited jurisdicti onal discovery to resolve whether the corporation contemplated by Paragraph 2 of the Cooperation Agreement was formed and registered. The Defendants then have until February 28, 2016 to renew any motion to dismiss on this ground. The Court DENIES with prejudice Defendants' motion to dismiss as to counts V, VI, VII, VIII and IX as they are raised by Xiao Wei Yang Catering-China. The Court ALLOWS Defendants' motion to dismiss as to counts V, VI, VII, VIII and IX as they are raised by Xie. (Hourihan, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
)
)
Xiao Wei Yang Catering Linkage in Inner
)
Mongolia Co., LTD., and Fei Xie
)
Plaintiffs,
)
)
v.
)
Civil Action 15-cv-10114-DJC
)
)
Inner Mongolia Xiao Wei Yang USA, Inc., d/b/a, )
Xiao Wei Yang and/or Little Lamb Restaurant, )
Cheng Xu, and Yonghua Qin,
)
)
Defendants.
)
)
)
__________________________________________)
MEMORANDUM AND ORDER
CASPER, J.
I.

December 14, 2015

Introduction
Plaintiffs Xiao Wei Yang Catering Linkage in Inner Mongolia Co., LTD. (“Xiao Wei Yang

Catering-China”) 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 (“Inner Mongolia USA”), Cheng Xu (“Xu”) and Yonghua Qin (“Qin”) (collectively,
“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),
trademark infringement (Count V), false designation of origin (Count VI), trademark dilution
(Count VII), unfair competition (VIII) and unfair and deceptive trade practices (Count IX). D.1.
Defendants have now moved to dismiss. D. 8. For the reasons stated below, the Court DENIES

1

the motion in part with prejudice (as to trademark claims) and in part without prejudice (as to the
contract claims) and grants limited jurisdictional discovery regarding the forum selection clause.
II.

Standard of Review
On a motion to dismiss for failure to state a claim upon which relief can be granted

pursuant to Fed. R. Civ. P. 12(b)(6), the Court must determine if the facts alleged “plausibly
narrate a claim for relief.” Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st
Cir. 2012) (citation omitted). Reading the complaint “as a whole,” the Court must conduct a
two-step, context-specific inquiry. García-Catalán v. United States, 734 F.3d 100, 103 (1st Cir.
2013).

First, the Court must distinguish the factual allegations from the conclusory legal

allegations contained therein. Id. Factual allegations must be accepted as true, while conclusory
legal conclusions are not entitled to credit. Id. Second, the Court must determine whether the
factual allegations present a “reasonable inference that the defendant is liable for the misconduct
alleged.” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011). In sum, the complaint must
provide sufficient factual allegations for the Court to find the claim “plausible on its face.”
García-Catalán, 734 F.3d at 103 (internal quotation marks and citation omitted).
III.

Factual Background
The following allegations are drawn from the complaint, D.1, and are accepted as true for

the purpose of the motion to dismiss. Xiao Wei Yang Catering-China is one of the leading and
best known restaurant chains, brand names and franchises in China. D.1 ¶ 1. Xie is a master and
expert chef for the chain. Id. ¶ 2. Inner Mongolia USA is a Massachusetts corporation that
operates the “Little Lamb Restaurant” located in Boston, Massachusetts. Id. ¶ 3. Xu, a resident
of Massachusetts, is the president of Inner Mongolia USA. Id. ¶ 4. Qin, also a resident of
Massachusetts, is the treasurer and secretary of Inner Mongolia USA. Id. ¶ 5. At all times

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relevant to this lawsuit, Xu and Qin have been “de facto and/or legal spouses.” Id. ¶ 6. Xu and
Qin are also owners and principals of Little Lamb USA, LLC, a limited liability company
organized under the laws of Massachusetts. Id.
In or about early 2011, Xu and Qin traveled to Xiao Wei Yang Catering-China’s
headquarters in Inner Mongolia to engage in negotiations on Xiao Wei Yang Catering-China’s
franchise, brand-name licensing and related business developments in the United States. Id. ¶
11.

The negotiations resulted in a contract, the Cooperation Agreement (“Cooperation

Agreement”).

Id. ¶ 12.

Under the terms of the Cooperation Agreement, Xu and Qin

incorporated Inner Mongolia USA. Id. ¶ 16.
During the negotiation of the Cooperation Agreement, Plaintiffs allege that Xu and Qin
fraudulently represented themselves as making an arms-length transaction. Id. ¶ 13. They
contend that Xu and Qin concealed material facts, including that they were married and were
self-dealing in this matter. Id. Xu and Qin expressly denied Xiao Wei Yang Catering-China’s
inquiry on this issue. Id. ¶ 14. Xu and Qin allegedly used their misrepresentations to induce
Xiao Wei Yang Catering-China to enter into the Cooperation Agreement. Id. ¶¶ 13-14. Xiao
Wei Yang Catering-China would not have entered into the Cooperation Agreement had they not
relied upon Xu and Qin’s fraudulent representations and concealment of material facts. Id. ¶ 15.
In the process of incorporating Inner Mongolia USA, it is further alleged that Xu and Qin
misappropriated Plaintiffs’ brand-name, confidential and specialized knowledge. Id. ¶ 16. Xu
and Qin conducted business as “Xiao Wei Yang and/or Little Lamb Restaurant at 326 Cambridge
Street, Boston, Massachusetts,” purportedly as Xiao Wei Yang Catering-China’s first franchisee
and/or brand-name restaurant in the United States.

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Id.

Moreover, Plaintiffs alleged that

Defendants “violated and are in continuous violation of” their federal trademark registration and
common law rights and other intellectual property rights. Id. ¶ 17.
Plaintiffs also contend that Defendants gained substantial business revenues, monies and
profits as a purported franchisee, party to and/or beneficiary of the Cooperation Agreement with
Xiao Wei Yang Catering-China. Id. ¶ 18. Pursuant to the Cooperation Agreement, Xiao Wei
Yang Catering-China has transferred capital investment and monies to Defendants. Id. ¶ 19.
Xiao Wei Yang Catering-China also sent Xie, its expert chef with specialized knowledge, to the
United States to train and monitor Inner Mongolia USA’s business and operations. Id. During
Xie’s stay in the United States, Defendants requested and obtained loans and other advances of
operation expenses from Xie as a representative of Xiao Wei Yang Catering-China. Id. ¶ 20.
Those loans and advances amounted to $66,125.88. Id. According to Plaintiffs, Defendants
were thereby unjustly enriched. Id.
Plaintiffs further allege that Defendants also breached the Cooperation Agreement by
unilaterally withdrawing Xie’s U.S. visa sponsorship and/or its renewal. Id. ¶ 19. Defendants
also allegedly exploited Xie’s work, specialized knowledge and trade secrets while refusing to
pay his compensation, accommodations, translation and transportation as required under
Paragraph 11 of the Cooperation Agreement.

Id.

Defendants also failed to submit 50%

franchise fees or applicable profits to Xiao Wei Yang Catering-China as required by the
Cooperation Agreement. Id. ¶ 22.
IV.

Procedural History
Plaintiffs instituted this action on January 16, 2015. D.1. Defendants have now moved

to dismiss. D. 8. The Court heard the parties on the pending motion on October 14, 2015 and
took the matter under advisement. D. 23.

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V.

Discussion
A. Whether the Forum Selection Clause Has Been Triggered
1. Forum Selection Clauses
“The prevailing view towards contractual forum-selection clauses is that ‘such clauses

are prima facie valid and should be enforced unless enforcement is shown by the resisting party
to be ‘unreasonable’ under the circumstances.’” Silva v. Encyclopedia Britannica Inc., 239 F.3d
385, 386 (1st Cir. 2001) (quoting M/S Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 10 (1972)).
The burden to establish that enforcement of the clause would be unreasonable and unjust belongs
to the party resisting the forum selection clause. See Claudio-De Leon v. Sistema Universitario
Ana G. Mendez, 775 F.3d 41, 48 (1st Cir. 2014).
The Court “treat[s] a motion to dismiss based on a forum selection clause as a motion
alleging the failure to state a claim for which relief can be granted under Rule 12(b)(6).” Rivera
v. Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009) (citing Silva, 239 F.3d at 387,
n.3). As such, the Court “accept[s] as true the well-pleaded factual allegations of the complaint,
draw[s] all reasonable inferences therefrom in the plaintiff's favor, and determine[s] whether the
complaint, so read, limns facts sufficient to justify recovery on any cognizable theory.” Id.
(quoting LaChapelle v. Berkshire Life Ins. Co., 142 F.3d 507, 508 (1st Cir.1998)). Generally,
courts are limited to considering “only facts and documents that are part of or incorporated into
the complaint.” Id. However, a court may consider the following: “documents the authenticity
of which are not disputed by the parties; . . . official public records; . . . documents central to
plaintiffs' claim; . . . [and] documents sufficiently referred to in the complaint.” Alt. Energy,
Inc. v. St. Paul Fire and Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.2001) (internal quotation marks
and citation omitted).

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Defendants attached a translation of the Cooperation Agreement, originally written in
Chinese, and a Certificate of Translation as exhibits to their motion to dismiss. D. 9-1; 9-2.
Although Plaintiffs raise certain challenges to a portion of the translation not material to this
motion,1 Plaintiffs do not dispute its authenticity and agree that “the Court may use Defendants’
translation to resolve the present motion.” D. 13 at 1 n.1; D. 24 at 8.
2. The Substance of the Forum Selection Clause
Paragraph 15 of the Cooperation Agreement states in relevant part:
In the event of dispute, and arbitration or litigation is needed, the location shall be
the place of registration of the Overseas Management Company.
Paragraph 2 of the Cooperation Agreement states:
All 3 parties agreed to form and invest in a corporation in China. The name of the
corporation to be formed shall be Inner Mongolia Xiao Wei Yang Catering Chain
Overseas Management Company (temporary name, actual name is subjected to
registration) (hereafter referred as “Overseas Management Company”). Party A
will invest 15% of the corporate shares for its right to use the trademarks
“LITTLE LAMB” and “HAPPY GRASSLAND”; Party B will hold 42%, Party C
will hold 43%. Party A is responsible for registration issues of Overseas
Management Company in China. Parties B and C are responsible for sharing the
actual registered capital and registration fees. After registration of the Overseas
Management Company, to ensure it operates properly, Parties B and C shall be
responsible for the regular maintenance and annual renewal fees. Party A shall be
responsible for any issues of annual renewal and taxation, as well as providing
supporting directly or through the Overseas Management Company in China to
Xiao Wei Yang USA Subsidiary.
D. 9-1 at 1-2, 5 (emphasis in original).

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Plaintiffs contend: “Defendants in this litigation matter attached an English-language
translation of the Cooperation Agreement as an Exhibit to their Motion to Dismiss (D. 9-1);
however, upon review, at least on the point of parent Company, Xiao Wei Yang – China’s
ownership, stock holding percentage and related terms, the purported translation is not clear or
accurate.” D. 14 at 1. As such, Plaintiffs’ challenge to Defendants’ translation of the
Cooperation Agreement does not extend to Paragraph 15, which contains the forum selection
clause.
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Determining whether this forum selection clause is permissive or mandatory is “the
threshold question.” Claudio-De Leon, 775 F.3d at 46. Because the Cooperation Agreement
uses the term “shall” to describe the parties’ commitment to resolving any arbitration or litigation
in “the place of registration of the Overseas Management Company,” it is a mandatory clause.
Id. (holding that the forum selection clause was mandatory because “it is axiomatic that the word
‘shall’ has a mandatory connotation”).
3. Registration of Overseas Management Company Was a Condition
Precedent to the Forum Selection Clause
“A condition precedent defines an event which must occur before an obligation to
perform arises under a contract.” Santana-Colon v. Houghton Mifflin Harcourt Pub. Co., 81 F.
Supp. 3d 129, 138 (D.P.R. 2014) (citing Sands v. Ridefilm Corp., 212 F.3d 657, 661-62 (1st Cir.
2000).

The plain language of the Cooperation Agreement supports the conclusion that

registration was a condition precedent triggering the forum selection clause. D. 9-1 at 5. The
forum selection clause does not identify a specific geographic location or point to a specific court
or dispute resolution body. Instead, it rests on the fulfillment of the parties’ obligation to register
Overseas Management Company so that “the place of registration” with which the forum
selection clause is concerned exists. Thus, based on the language of the Cooperation Agreement,
the registration of the Overseas Management Company constitutes a condition precedent to the
enforceability of the forum selection clause.
If the condition precedent has not been fulfilled, Plaintiffs will have met their burden of
demonstrating that the forum selection clause was not triggered. See Knopick v. UBS Fin.
Servs., Inc., 14-cv-05639, 2015 WL 1650070, at *4 (E.D. Pa. Apr. 14, 2015) (ruling that “[t]he
language preceding the forum selection clause describes a condition precedent to its
applicability” and explaining that “[t]he non-occurrence of this condition precedent renders the
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forum selection clause inapplicable”); Visalus Inc. v. Bohn, No. 13-cv-10366, 2013 WL
1759420, at *3 (E.D. Mich. Apr. 24, 2013) (holding that the forum selection clause was not
binding because “[a] condition precedent must be performed before a contract becomes
binding”); see also Kemper Mortg., Inc. v. Russell, No. 3:06-cv-042, 2006 WL 355613, at *3
(S.D. Ohio Feb. 16, 2006) (declining to enforce or rewrite an arbitration clause that pointed to a
location that did not exist); BP Marine Americas, a Div. of BP Expl. & Oil Corp.v. Geostar
Shipping Co. N.V., 94-cv-2118, 1995 WL 131056, at *4 (E.D. La. Mar. 22, 1995) (denying
motion to enforce forum selection clause because the clause described a court that did not exist).
4. Whether the Company Registered in China was the “Overseas
Management Company”
Defendants assert that the “Overseas Management Company” referenced in the forum
selection clause was registered in China on October 8, 2011.

D. 17 at 2.

According to

Defendants, the name of the registered company is “Inner Mongolia Xiao Wei Yang Catering
Chain Management Co., Ltd.” Id. at 3. As to the name change, Defendants explain that “[t]he
temporary name of the ‘Overseas Management Company’ referred to in Paragraph 2 of the
Cooperation Agreement was amended from ‘Inner Mongolia Xiao Wei Yang Catering Chain
Overseas Management Company’ to ‘Inner Mongolia Xiao Wei Yang Catering Chain
Management Co., Ltd.’” Id. at 3 n.1. Defendants have provided a certified translation of a
Chinese business license reflecting that a company called “Inner Mongolia Xiao Wei Yang
Catering Chain Management, Co., Ltd” was registered in China on October 8, 2011, D. 17-1 at 2,
and rely on this document to contend that Inner Mongolia Xiao Wei Yang Catering Chain
Management, Co., Ltd is the Overseas Management Company contemplated in the Cooperation
Agreement. D. 17 at 2.

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The Cooperation Agreement allows for a name change of the entity post-registration. D.
9-1 at 1. Thus, the fact that the entity Defendants identify has a name other than “Overseas
Management Company” is not determinative. Nonetheless, the facts contained in the business
license, D. 17-1 at 2, do not alone establish that Inner Mongolia Xiao Wei Yang Catering Chain
Management, Co., Ltd is the Overseas Management Company contemplated by the Cooperation
Agreement, an assertion that Plaintiffs hotly contest. D. 18 at 3. That is, the business license
reflects that a company named the Inner Mongolia Xiao Wei Yang Catering Chain Management,
Co., Ltd. was registered in China, but not necessarily that this company is the Overseas
Management Company that meets the other elements enumerated in Paragraph 2 of the
Cooperation Agreement, including, inter alia, sharing of the actual registered capital and
registration fees, distribution of the regular maintenance and annual renewal fees and the specific
division of shares. D. 18 at 3. Whatever relative responsibilities the parties bore regarding the
registering of the Overseas Management Company, D. 9-1 at 1-2, there remains a factual dispute
about the registration of same. Compare D. 18 at 3 (citing Yu affidavit) with D. 17 at 2-4, 6
(relying on business license and disputing Yu affidavit).
In light of these considerations, the Court cannot conclude with certainty that the
corporation contemplated by Paragraph 2 of the Cooperation Agreement was registered. The
Court denies the motion to dismiss without prejudice as to the contract related claims2 and will
allow limited jurisdictional discovery on this point. See Skwira v. United States, 344 F.3d 64, 72
(1st Cir. 2003) (noting that “district court enjoys broad authority to order discovery, consider

2

The contract related claims are count I (breach of contract), II (breach of the covenant of good
faith and fear dealing), III (fraudulent inducement) and IV (unjust enrichment). Counts III and
IV are “contract-related tort claims involving the same operative facts as a parallel claim for
breach of contract” and so they “should be heard in the forum selected by the contracting
parties.” Lambert v. Kysar, 983 F.2d 1110, 1121-22 (1st Cir. 1993).
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extrinsic evidence, and hold evidentiary hearings in order to determine its own jurisdiction”)
(quoting Valentin v. Hosp. Bella Vista, 254 F.3d 358, 363 (1st Cir. 2001)). The parties are
permitted sixty days from this Order, until February 14, 2015, to conduct discovery regarding
the formation and registration of the “Overseas Management Company” contemplated in the
Cooperation Agreement. After the completion of such discovery, but no later than February 28,
2016, Defendants may file a renewed motion to dismiss as to this matter.
B. The Trademark Claims Are Not Governed by the Forum Selection Clause
Since resolution of any renewed motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6)
regarding the forum selection clause would have to address whether any non-contract based
claims remain before the Court, the Court will now address the Fed. R. Civ. P. 12(b)(6) grounds
to dismiss the trademark-related claims. As a preliminary matter, the Court concludes that the
individual Plaintiff, Xie, has no plausible theory of recovery on the trademark infringement
claim (count V), false designation of origin claim (count VI), state dilution claim (count VII),
unfair competition claim (count VIII) and unfair and deceptive trade practices claim (count IX)
because Plaintiffs allege that only Plaintiff “Xiao Wei Yang-China is the rightful owner of the
Trademark.” D.1 ¶¶ 46-47; see D. 24 at 23 (Defendants’ argument at hearing regarding same).
As such, those claims as raised by Xie are dismissed.
As to those same claims raised by Xiao Wei Yang Catering-China, they pose the
question of whether such claims are subject to the forum selection clause. The parties agree that
the First Circuit has not squarely addressed this question. D. 18 at 5; D. 24 at 21.
The Court finds the reasoning of the Second Circuit in Phillips v. Audio Active Ltd. to be
instructive. Phillips, 494 F.3d 378, 391 (2d Cir. 2007). In that case, the court ruled that the
plaintiff’s copyright claims were not subject to a forum selection clause mandating that any

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proceedings arising out of the contract were to be litigated in England. Id. at 393. The court
reasoned that the copyright claims did not “originate from the recording contract” that contained
the forum selection clause because the plaintiff did “not rely on the recording contract to
establish his ownership of the relevant copyrights, but on his authorship of the work.” Id. at 390.
In the court’s view, the plaintiff “ha[d] asserted no rights or duties under that contract” in the
intellectual property claims. Id. at 391.
The substance of Xiao Wei Yang Catering-China’s trademark-related claims is that
Defendants have improperly used its trademark and in so doing violated multiple statutes (15
U.S.C. § 1114, 15 U.S.C. § 1125(a), Mass. Gen. Law c. 110H, Mass. Gen. Law c. 93A) and
common law (unfair competition). D. 1 at 10-13. Like the plaintiff in Phillips, Xiao Wei Yang
Catering-China “does not rely on the [Cooperation Agreement] to establish [its] ownership” of
the trademark, but instead relies on its rights as a trademark holder. Phillips, 494 F.3d at 390;
see Altvater Gessler-J.A. Baczewski Int'l (USA) Inc. v. Sobieski Destylarnia S.A., 572 F.3d 86,
91 (2d Cir. 2009) (holding that forum selection clause did not apply to trademark claims because
those claims “d[id] not sound in contract and [were] not based on rights originating from the
licensing agreements”); Cheever v. Acad. Chicago Ltd., 685 F. Supp. 914, 916-17 (S.D.N.Y.
1988) (ruling that forum selection clause mandating that “contractual rights arising from th[e]
agreement . . . clearly belong[] in Chicago” did not apply to copyright claims because those
claims “[were] not a part of the publishing agreement”). At issue in Xiao Wei Yang CateringChina’s trademark claims is the vindication of rights grounded in a federal statute, the
Trademark Act. See e.g., Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d 679, 681 (2d
Cir. 1993) (declining to subject copyright claims to the forum selection clause after adopting

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plaintiff’s position that “[w]hat [was] fundamentally at stake . . . [was] the vindication of rights
under the Copyright Act, not the interpretation of a contract”).
At most, the Cooperation Agreement is a defense to Xiao Wei Yang Catering-China’s
trademark claims. In Phillips, the defendants intended to raise the agreement there as a defense
to the copyright claims. See Phillips, 494 F.3d at 391. The court did not consider that limited
invocation of the agreement to constitute sufficient cause to conclude that the forum selection
clause applied. See id. (explaining that “[b]ecause the recording contract is only relevant as a
defense in this suit, we cannot say that Phillips' copyright claims originate from . . . the
contract”).

Similarly, in Pixel Enhancement Labs., Inc. v. McGee, a court in this district

declined to transfer a theft of trade secret claim because, even though the defendant’s “alleged
misappropriation of [plaintiff’s] trade secrets [might have] implicate[d] the License Agreement,
it [did] so only by way of a . . . defense.” Pixel, 97-cv-12283-RGS, 1998 WL 518187, at *3 (D.
Mass. Aug. 5, 1998). For these reasons, Xiao Wei Yang Catering-China’s trademark claims are
not governed by the forum selection clause.
In support of their argument that forum selection clauses categorically capture intellectual
property claims, Defendants rely upon Omron Healthcare, Inc. v. Maclaren Exps. Ltd., 28 F.3d
600 (7th Cir. 1994) and Warner & Swasey Co. v. Salvagnini Transferica S.p.A., 633 F. Supp.
1209 (W.D.N.Y.) aff'd, 806 F.2d 1045 (Fed. Cir. 1986). Omron is distinguishable, however,
because it involved a distribution agreement and the particular trademark concerns that arise
after a distribution agreement is terminated but one party retains a surplus of inventory that it no
longer has the rights to sell. Omron, 28 F.3d at 601. Under those particular circumstances, the
court ruled that the trademark claims “engage[d] both the parties' compact and the rules of
trademark law” because the agreement dictated how the parties were supposed to dispose of

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excess inventory. Id. at 602; see Payne v. N. Tool & Equip. Co., No. 2:13-cv-109 JD, 2013 WL
6019299, at *6 (N.D. Ind. Nov. 12, 2013) (holding that forum selection clause applied to contract
claims but did not apply to trademark infringement claims and distinguishing Omron on the
grounds that the Payne plaintiff alleged that the defendant was placing the plaintiff’s trademark
on products the defendant had manufactured). As the Second Circuit has explained, Warner is
distinguishable from bona fide intellectual property claims because Warner involved “an action
for breach of contract masquerading as patent infringement.” Corcovado, 981 F.2d at 682.
Accordingly, the motion to dismiss as to counts V, VI, VII, VIII and IX is denied.
C. Xiao Wei Yang Catering-China Has Met the Heightened Pleading Standard
for Fraudulent Inducement (Count III)
To raise a fraud claim, a plaintiff must “state with particularity the circumstances
constituting fraud or mistake.” U.S. ex rel. Heineman-Guta v. Guidant Corp., 718 F.3d 28, 34
(1st Cir. 2013) (internal quotation marks and citations omitted); Fed. R. Civ. P. 9(b). The
allegations “must specify ‘the time, place, and content of an alleged false representation.” Id.
The heightened pleading requirement serves to “give notice to defendants of the plaintiffs' claim
. . . and to prevent the filing of suits that simply hope to uncover relevant information during
discovery.” Doyle v. Hasbro, Inc., 103 F.3d 186, 194 (1st Cir. 1996).
Xiao Wei Yang Catering-China has made sufficient allegations as to the fraudulent
inducement claim (Count III). Xiao Wei Yang Catering-China alleges that Xu and Qin made the
fraudulent statements. D. 1 ¶ 13. Xiao Wei Yang Catering-China specifies that the fraudulent
statements included Defendants’ failure to disclose that Xu and Qin were married and the
misrepresentation that they were competing merchants. Id. ¶ 11, 13, 14. Xiao Wei Yang
Catering-China alleges that the statements were made during the negotiation of the Cooperation
Agreement, entered on July 6, 2011, which occurred at Xiao Wei Yang Catering-China’s
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headquarters in China. Id. ¶ 11. Plaintiffs allege that these negotiations occurred in or about
early 2011, id., but presumably leading up to the July 6, 2011 contract. Xiao Wei Yang
Catering-China makes clear that it “would not have entered into the Cooperation Agreement in
question except for its reliance upon Defendants’ concealment of material facts and their
fraudulent misrepresentations.” Id. ¶ 15. Thus, dismissal of this claim on this ground is
unwarranted.
D. The Complaint Satisfies the Amount in Controversy Requirement
In deciding whether the amount-in-controversy requirement for diversity jurisdiction is
met on a motion to dismiss, the amount claimed by the plaintiff is controlling if it is made in
“good faith.” Coventry Sewage Assocs. V. Dworkin Realty Co., 71 F.3d 1, 4 (1st Cir. 1995).
Dismissal requires “a legal certainty that the claim is really for less than the jurisdictional
amount.” Spielman Genzyme Corp., 251 F.3d 1, 5 (1st Cir. 2001) (quoting St. Paul Mercury
Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938)). Ordinarily, a plaintiff’s general
allegation of damages that satisfy the amount-in-controversy requirement is sufficient

for

jurisdiction. See Abdel-Aleem v. OPK Biotech LLC, 665 F.3d 38, 41-42 (1st Cir. 2012).
However, once the amount is challenged, the party invoking federal jurisdiction bears the burden
of “alleging with sufficient particularity facts indicating that it is not a legal certainty that the
claim involves less than the jurisdictional amount.” Spielman, 251 F.3d at 5 (internal quotations
and citation omitted).
Defendants allege that this Court lacks subject matter jurisdiction over Xie’s claims since
he has not met the jurisdictional threshold of $75,000. D. 9 at 11. The Court, however,
concludes that Xie has met the amount-in-controversy requirement. Plaintiffs allege damages of
$66,125.88 arising out of loans and advances that Xie made, as a representative of Plaintiff Xiao

14

Wei Yang China, to Defendants. D.1 ¶ 20. Defendants, relying on this $66,125.88 damage
claim, argue that Plaintiff Xie has failed to meet the $75,000 amount-in-controversy requirement.
D. 9 at 11-12. The $66,125.88 figure specific to Xie’s loans and advances, however, is “not the
sum total of the damage done to Mr. Xie, just the amount for that category of harm.” D. 13 at 10.
Plaintiffs also allege that Defendants “unilaterally withdrew Mr. Xie’s U.S. visa sponsorship
and/or its renewal, exploited his work as a master Chef, specialized knowledge and trade secrets,
and . . . refused to pay . . . his ‘compensation, accommodations, translation and transportation’”
as agreed to within the Cooperation Agreement. D. 1 ¶ 19; see D. 1 at 13 (seeking not only
actual and consequential damages, but punitive damages as well). In light of the small gap
between the $66,125.88 pleaded for loans and advances and the $75,000 amount in controversy
requirement and the allegations in the complaint regarding additional categories of damages that
Xie has pled, the Court cannot rule that it is a “legal certainty that the claim is really for less than
the jurisdictional amount.” Coventry Sewage, 71 F.3d at 6.
Finally, Defendants assert that “the [c]omplaint fails to articulate which Plaintiff seeks
remedies as to each count, and which Defendant is allegedly liable.” D. 9 at 2. While the Court
agrees that Plaintiffs’ pleadings could be more specific, any lack of clarity in light of the entirety
of the allegations in the complaint is not sufficient to warrant dismissal on this ground.
VI.

Conclusion
For the foregoing reasons, the Court DENIES without prejudice Defendants’ motion to

dismiss as to counts I, II, III and IV. The Court permits a sixty-day period, until February 14,
2016, of limited jurisdictional discovery to resolve whether the corporation contemplated by
Paragraph 2 of the Cooperation Agreement was formed and registered. The Defendants then
have until February 28, 2016 to renew any motion to dismiss on this ground. The Court

15

DENIES with prejudice Defendants’ motion to dismiss as to counts V, VI, VII, VIII and IX as
they are raised by Xiao Wei Yang Catering-China. The Court ALLOWS Defendants’ motion to
dismiss as to counts V, VI, VII, VIII and IX as they are raised by Xie.
So Ordered.
/s/ Denise J. Casper
United States District Judge

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