WEI MON INDUSTRY CO. LTD v. CHIEN et al
Filing
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OPINION. Signed by Judge Stanley R. Chesler on 10/21/2016. (ld, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
WEI MON INDUSTRY CO., LTD.,
Plaintiff,
v.
JIMMY CHIEN, LI CHU CHOU CHIEN,
and KT SUPERWIN CORP.,
Defendants.
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Civil Action No. 14-7853 (SRC)
OPINION
CHESLER, District Judge
This matter comes before the Court upon the motion of Plaintiff Wei Mon Industry, Co.,
Ltd. (“Plaintiff”) to voluntarily dismiss its complaint against Defendants Jimmy Chien
(“Chien”), Li Chu Chou Chien (“Chou”), and KT Superwin Corp. (“KT”) without prejudice,
pursuant to Federal Rule of Civil Procedure 41(a)(2). (Doc. No. 42.) Defendants Chien and
Chou oppose the motion. (Doc. No. 45.) The Court has reviewed the parties’ submissions and
proceeds to rule without oral argument. See Fed. R. Civ. P. 78(b). For the reasons stated herein,
Plaintiff’s motion will be granted.
I.
BACKGROUND
Plaintiff is a Taiwanese manufacturer of disposable tableware and food storage products.
(Compl. ¶¶ 3, 7.) KT is a New Jersey corporation that, at least until 2014, had been engaged in
the import and sale of plastic goods to corporate customers in the United States. (Compl. ¶¶ 4,
13.) At all times relevant to this litigation, Chien and Chou allegedly co-owned KT. (Compl. ¶¶
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5-6.) They are alleged to have served as its executive officers until early 2014. (Compl. ¶¶ 5-6,
53, 60.)
The underlying matter arises out of a series of transactions between Plaintiff and KT,
commenced in 2012 and 2013, involving the sale of disposable food and beverage containers.
(Compl. ¶¶ 15-19, 23-24, 26-27, 41-42.) Through those agreements, Plaintiff allegedly sold and
delivered goods to KT; designated KT as its exclusive sales agent for the mainland U.S.; and
agreed to pay KT a service charge in exchange for the latter’s assistance in arranging the delivery
of Plaintiff’s merchandise to other customers. (Compl. ¶¶ 19, 41-42, 47-48, 63.) In December
2014, Plaintiff initiated this action against Defendants, seeking damages for, inter alia, breach of
contract, breach of fiduciary duty, negligent misrepresentation, and fraud. (Compl. ¶¶ 66, 73,
85-87, 99-102.) In its Complaint, Plaintiff asserts that Defendants failed to make payments for
goods sold and delivered; misrepresented the nature of KT’s ability to pay based on its
purportedly existing contracts with downstream customers; and failed to satisfy other obligations
incident to KT’s role as Plaintiff’s sales and delivery agent. (Compl. ¶¶ 66, 70, 77-81, 89, 108.)
In April 2015, Chien and Chou served an Answer. (Doc. No. 8). KT has failed to plead or
otherwise defend, and default as to it was entered in August 2015. (Doc. No. 18). Plaintiff now
seeks an order of voluntary dismissal, without prejudice, pursuant to Rule 41(a)(2).
II.
LEGAL STANDARD
Under Rule 41(a)(2), if a defendant has served an answer or a motion for summary
judgment and has not consented to a stipulation of dismissal, as is the case here, “an action may
be dismissed at the plaintiff’s request only by court order, on terms that the court considers
proper.” Fed. R. Civ. P. 41(a)(2). Whether a Rule 41(a)(2) dismissal should be granted is within
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the sound discretion of the court. Quality Improvement Consultants, Inc. v. Williams, 129 Fed.
App'x 719, 722 (3d Cir. 2005) (citing Ferguson v. Eakle, 492 F.2d 26, 28 (3d Cir. 1974)).
“Generally, a motion for dismissal should not be denied absent substantial prejudice to
the defendant.” CPS Medmanagement LLC v. Bergen Reg'l Med. Ctr., L.P., 940 F. Supp. 2d
141, 171 (D.N.J. 2013) (internal quotation marks omitted) (quoting Sporn v. Ocean Colony
Condo. Ass’n, 173 F. Supp. 2d 244, 255 (D.N.J. 2001)). “‘Rule 41 motions should be allowed
unless defendant will suffer some prejudice other than the mere prospect of a second lawsuit.’”
Pappas v. Twp. of Galloway, 565 F. Supp. 2d 581, 593 (D.N.J. 2008) (quoting In re Paoli R.R.
Yard PCB Litigation, 916 F.2d 829, 863 (3d Cir. 1990)); see also Environ Prods., Inc. v. Total
Containment, Inc., No. 94-7118, 1995 U.S. Dist. LEXIS 10855, 1995 WL 459003, at *5 (E.D.
Pa. July 31, 1995) (“Plain legal prejudice simply does not result . . . when plaintiff may gain
some tactical advantage by a voluntary dismissal”) (citing In Re Paoli 916 F.2d at 863).
In determining whether a voluntary dismissal is likely to result in prejudice to a
defendant, Courts in this district have considered several factors. These factors include “(1) the
expense of a second litigation; (2) the effort and expense incurred by a defendant in preparing for
trial in the current case; (3) the extent to which the case is progressing; and (4) plaintiff’s
diligence in bringing the motion to dismiss.” Sporn, 173 F. Supp. 2d at 255 (citation and internal
quotation marks omitted).
III.
DISCUSSION
The foregoing factors weigh in favor of dismissal without prejudice in the present case.
First, the expense of a second litigation would not be excessive or duplicative. Aside from an
initial exchange of written discovery, the action is still in its preliminary stages. Although
depositions of Plaintiff’s representatives, Defendants, and other fact witnesses have been
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requested, none have been conducted. No dispositive motions have been filed, and a trial date
has not been set. Plaintiff in its moving papers also concedes that it would not object in any
subsequent action to the use of evidence obtained through discovery in the present litigation.
(Doc. No. 42-1, Plaintiff’s Brief in Support of Plaintiff’s Motion for Voluntary Dismissal
Without Prejudice (“Pl. Mov. Br.”), at 9). There is, moreover, no indication that the evidence
discovered thus far would be either unnecessary or unusable in a future action. See Tyco Labs.,
Inc. v. Koppers Co., Inc., 627 F.2d 54, 56 (7th Cir. 1980) (per curiam) (extensive discovery is
not prejudicial where the results of discovery may be used in any subsequent litigation); accord
Davis v. USX Corp., 819 F.2d 1270, 1276 (4th Cir. 1987); Conafay v. Wyeth Labs., Div. of Am.
Home Products Corp., 793 F.2d 350, 353 n.5 (D.C. Cir. 1986). Furthermore, Plaintiff has agreed
to “transfer all pleadings . . . to any future proceeding[,]” should one be initiated. (Pl. Mov. Br.
at 9.) At minimum, this promise implies that Plaintiff would be limited to the facts and claims
that it has alleged here. Thus, Defendants are unlikely to incur, in any future action, the
expenses they have incurred in the present litigation; there would also be minimal cost in
bringing any future action to the present posture.
Defendants’ arguments to the contrary are unpersuasive. They argue that the work their
counsel has performed thus far is unlikely to be ‘used’ in any future action because the most
likely forum for that action would be in Taiwan. (Doc. No. 45, Affidavit of James Scott Yoh
(“Defs.’ Opp’n”), at 2-3). Defendants point to choice-of-forum clauses selecting Taiwan courts
in several of the parties’ agreements and the fact that many of the potential witnesses in the
matter are citizens and residents of Taiwan as bases for this assumption. (Id. at 2, 3 n. 1.) They
argue that, due to differences between Taiwan’s and the U.S.’s legal systems, their efforts in the
present case—presumably, in drafting pleadings and undertaking discovery—are likely to be
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wasted because the fruits of those efforts either could not or would not be used in a Taiwanese
proceeding. (Id. at 2-3.) Defendants cite, as relevant differences, Taiwan’s general adherence to
a civil law tradition and the role of a judge as the ultimate finder-of-fact in that tradition. (Id. at
3.) Defendants fail to explain, however, why these differences would prevent them from using
evidence that they have obtained thus far in a future Taiwanese proceeding, and nothing about
the civil law tradition or a judge’s role therein bespeaks such a limit. Indeed, even if one were to
assume arguendo that a Taiwan court would not have permitted the parties to obtain the evidence
exchanged thus far, this fact only implies that Defendants may now enter any future Taiwanese
proceeding with the benefit of having first availed themselves of American discovery rules. This
consequence certainly does not constitute prejudice sufficient to prevent dismissal under Rule
41(a)(2).
Second, Defendants have not exerted substantial effort or incurred substantial expense in
preparing this case for trial. Since filing their Answer, Defendants have directed their efforts
primarily at obtaining written discovery, which may be re-used, not at defending the merits of
this case. They have produced and received such written discovery, participated in discoveryrelated teleconferences with the court, and responded to Plaintiff’s unsuccessful request to stay
the proceeding. As the Court has noted, no dispositive motions have been filed, much less
briefed or argued, and no trial date has been set. Defendants do not represent that they have
made any other preparation for trial. At this stage in the litigation, none of the aforementioned
activities may be regarded as a “substantial expense” incurred in preparing the matter for trial.
Third, this case has not progressed far beyond the pleadings. Defendants served their
Answer in April 2015, and Plaintiff filed the subject motion to dismiss in July 2016. Although,
as Defendants argue, this action has been pending for nearly eighteen months, a substantial
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amount of work must still be completed in order to bring the case to a disposition on the merits.
Fact discovery, including depositions and any supplemental written discovery, has yet to be
completed. There is no indication that expert discovery, if any, has commenced. Viewed in this
light, the matter cannot be said to have progressed so far beyond the pleadings that dismissal
would substantially prejudice Defendants.
Fourth, the timing of Plaintiff’s motion to dismiss does not warrant denial of it. Although
the motion was filed roughly fifteen months after Defendants served their Answer, the motion
was filed a mere five months after Plaintiff learned that the Court had denied its request to stay
this action (Doc. No. 20, 30) and only two months after Plaintiff learned that the Court would not
require discovery to proceed in a manner that Plaintiff, subjectively, believes is necessary for it
to continue litigating this case. (Doc. No. 37; Pl. Mov. Br. at 4-5). Thus, Plaintiff cannot be said
to have waited unnecessarily in bringing this motion, and any lack of diligence exhibited by it
cannot be regarded as substantially prejudicial to Defendants.
IV.
CONCLUSION
In sum, each of the above factors favors dismissal in this case. Other than the ‘mere
prospect of a second lawsuit,’ this Court can find no basis for concluding that voluntary
dismissal would result in substantial prejudice to Defendants. Accordingly, for the foregoing
reasons, Plaintiff's motion to dismiss this action pursuant to Fed. R. Civ. P. 41(a)(2) is
GRANTED. An appropriate order shall issue.
/s Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
Dated: October 21, 2016
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