Quick Fitting, Inc. v. Wai Feng Trading Co. LTD et al
Filing
132
ORDER granting in part and denying in part 73 Motion to Dismiss for Lack of Jurisdiction; adopting 104 Report and Recommendations. So Ordered by Chief Judge William E. Smith on 9/29/2015. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
QUICK FITTING, INC.,
)
)
Plaintiff,
)
)
v.
)
)
WAI FENG TRADING CO.,
)
LTD.; et al.,
)
)
Defendants.
)
___________________________________)
C.A. No. 13-056 S
ORDER
WILLIAM E. SMITH, Chief Judge.
On
February
27,
2015,
United
States
Magistrate
Judge
Patricia A. Sullivan issued a Report and Recommendation (“R&R”)
in the above-captioned matter (ECF No. 104) recommending that
Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction
(ECF No. 73) be GRANTED as to Defendant Jacky Yung and DENIED as
to
Defendant
Andrew
Yung.
Plaintiff,
Quick
Fitting,
Inc.
(“Quick Fitting”), filed an objection to the R&R (ECF No. 111),
and Defendants Andrew and Jacky Yung (collectively, “the Yungs”)
filed a response to that objection (ECF No. 117).
Because this
Court agrees with Judge Sullivan’s analysis, it hereby accepts,
pursuant to 28 U.S.C. § 636(b)(1), the R&R.
The relevant facts,
procedural background, and analysis are fully set forth in the
R&R.
The Court limits its discussion to and presents only those
facts pertinent to Plaintiff’s objections.
Generally, “[i]n considering an objection to an R&R, the
Court conducts ‘a de novo determination of those portions of the
[R&R] to which objection is made’ and ‘may accept, reject, or
modify, in whole or in part, the findings or recommendations
made by the magistrate judge.’”
Emissive Energy Corp. v. SPA-
Simrad, Inc., 788 F. Supp. 2d 40, 42 (D.R.I. 2011) (quoting 28
U.S.C. § 636(b)(1)).
to
dismiss
dispositive
for
However, Defendants suggest that a motion
lack
motion,
of
and
personal
therefore
jurisdiction
the
Court
is
a
should
nonuse
a
“clearly erroneous or contrary to law” standard to review the
R&R.
(Defs.’ Resp. 5-6, ECF No. 117.)
Defendants cite case law
where a motion to remand was deemed to be non-dispositive and
reason that, like a motion to remand, a motion to dismiss on
jurisdictional grounds “is without prejudice to Quick Fitting’s
purported claims against the Yungs,” and “this litigation would
continue without the Yungs as parties.”
(Id. at 6.)
The Court is not convinced that a motion to dismiss for
lack
of
jurisdiction
is
a
non-dispositive
motion:
unlike
a
motion to remand, granting a motion to dismiss “involuntarily
dismiss[es]
an
action,”
28
U.S.C.
636(b)(1)(A),
sending it to be heard by another court.
2
rather
than
In any event, under
either
level
of
review,
the
Court
accepts
the
R&R
for
the
reasons that follow.
Quick
Fitting
first
contests
Judge
Sullivan’s
conclusion
that the only basis for personal jurisdiction over Andrew Yung
was the fact that he “signed [the 2010 License Agreement] with
Quick Fitting on behalf of an entity he did not have authority
to bind, which agreement includes a Rhode Island forum selection
clause.”
(R&R 2, ECF No. 104.)
According to Quick Fitting,
“[t]he court should have found jurisdiction due to Andrew Yung’s
execution
of
the
2010
License
Agreement
–
regardless
of
the
inclusion of the forum-selection – coupled with his activities
in
supplying
thereafter.”
push-fit
(Pl.’s
plumbing
Objection
products
4,
ECF
to
No.
Quick
111.)
Fitting
However,
because the Court agrees with Judge Sullivan’s recommendation to
exercise pendant personal jurisdiction over all claims against
Andrew Yung (R&R 16 n.10, ECF No. 104), it need not reach the
question of whether the 2010 License Agreement, combined with
“his activities in supplying push-fit plumbing products to Quick
Fitting,” are sufficient to establish personal jurisdiction over
all claims against him.
Quick
Fitting
next
argues
that
Judge
Sullivan
erred
in
finding no personal jurisdiction over either Andrew or Jacky
Yung
based
on
their
execution
3
of
the
2011
Non-Disclosure
Agreement (“NDA”) on behalf of Eastern Foundry & Fittings, Inc.
(“EFF”) before it was incorporated.
with
Judge
Sullivan’s
Quick Fitting takes issue
supposedly
“broad
and
unsupported
assumption” that “if Andrew and Jacky were not acting for EFF
Trading [EFF Inc.] because it was not yet incorporated, they
were
acting
for
its
predecessor,
Wai
Feng
Trading.”
(Pl.’s
Objection 6, ECF No. 111 (quoting R&R 18, ECF No. 104).)
The
crux
and
of
Quick
Fitting’s
argument
is
that
because
Andrew
Jacky Yung executed the 2011 NDA on behalf of an entity that had
not
yet
period
been
incorporated,
between
their
their
signing
actions
of
the
in
the
contract
five-month
and
EFF’s
incorporation – including one visit to Rhode Island in September
2011 – confer personal jurisdiction.
As Defendants point out, the cases Quick Fitting cites in
support
those
of
cases
this
argument
found
are
personal
easily
distinguishable
liability
corporation had failed to pay its debts.
where
a
in
that
non-existent
(Defs.’ Resp. 17-18,
ECF No. 117); see Kingsfield Wood Products, Inc. v. Hagan, 827
A.2d 619 (R.I. 2003); Bricklayers & Allied Craftsmen Local Union
No. 3 v. Union Stone, Inc., C.A. No. 13-138-ML, 2013 WL 5701851
(D.R.I. Oct. 17, 2013); DBA/Delaware Sys. Corp. v. Greenfield,
636 A.2d 1318 (R.I. 1994).
Quick Fitting contends that “[t]here
is no reason the same principle should not apply to a business
4
prior to its incorporation.” (Pl.’s Objection 9, ECF No. 111.)
If this were a situation in which the Yungs had incurred debts
on behalf of EFF prior to its incorporation and EFF refused to
pay them, this assertion might hold water.
Here, however, there
are no debts for which EFF has shirked responsibility.
To the
contrary, it appears that EFF ratified Andrew and Jacky Yung’s
actions and assumed liability under the 2011 NDA, as EFF was
entitled to do under Rhode Island law.
No. 117.)
and
(Defs.’ Resp. 15, ECF
EFF as a corporate entity is a defendant in this case
does
not
contest
personal
jurisdiction.
Nothing
in
Kingsfield, Bricklayers, or DBA suggests that actions taken on
behalf of a company prior to its incorporation confer personal
jurisdiction
where
the
company
still
exists
and
has
assumed
responsibility for those actions.
Moreover, Quick Fitting does not address Judge Sullivan’s
conclusion – with which this Court agrees - that:
even if Quick Fitting can establish that Andrew and Jacky
are somehow liable for their actions taken between May and
October 2011 before EFF Trading was incorporated, this
argument collapses because neither Andrew’s nor Jacky’s
contacts with Rhode Island on behalf of EFF Trading are
sufficient to support personal jurisdiction.
(R&R 18, ECF No. 104.)
As Quick Fitting admits, a contract
alone is not sufficient to confer personal jurisdiction.
Objection 9, ECF No. 111.)
(Pl.’s
Quick Fitting instead argues that
5
“the
2011
Non-Disclosure
Agreement
with
the
non-existent
EFF
Inc., and the continuous business carried on by Andrew and Jacky
Yung prior to the company’s incorporation more than five months
later,
satisfies
the
First Circuit.”
‘contract-plus’
(Id. at 9-10.)
analysis
adopted
in
the
The problem is that aside from
the signing of the contract, the passage of five months, and one
visit
to
Rhode
evidence in
Island,
support
of
Quick
its
Fitting
claim
has
that
not
there
presented
was
any
“continuous
business carried on by Andrew and Jacky Yung” in Rhode Island
before EFF incorporated.
Quick Fitting fails to cite any cases
where
of
a
similar
level
contact
has
conferred
personal
jurisdiction, nor does it attempt to distinguish the cases on
which the R&R relied to determine that “[m]erely coming to a
jurisdiction to visit a business without more, is insufficient
to invoke personal jurisdiction.” 1
1
(R&R 18, ECF No. 104); see
Quick Fitting contests Judge Sullivan’s conclusion based
on Jacky Yung’s deposition testimony that the Yungs were “[j]ust
visiting” in September 2011 and “did not discuss any written
agreements with Quick Fitting.”
(Pl.’s Objection 8 n.12, ECF
No. 111 (citing R&R 18, ECF No. 104).)
Even taking as true
Quick Fitting’s claims that “the September 2011 trip to Quick
Fitting was in the middle of the business relationship between
the entities and at a time Quick Fitting had communicated a
series of complaints to the Yungs concerning the quality of the
products it was receiving” and that “Andrew Yung emailed Quick
Fitting prior to the visit stating that the visit was to ‘disuse
[sic] about the future business plan,’” this Court is still not
persuaded that the one meeting rises to the level of contact
sufficient to establish personal jurisdiction.
6
Grange Consulting Grp. v. Bergstein, Civil Action Entry No. 13cv-06768 (PGS), 2014 WL 5422191, at *1-2 (D.N.J. Oct. 22, 2014)
(one visit to forum state insufficient to establish personal
jurisdiction);
Upstate
Networks,
Inc.
v.
Early,
No.
6:11-CV-
01154 LEK/DEP, 2012 WL 3643843, at *6 (N.D.N.Y. Aug. 23, 2012)
(two
or
three
meetings
in
forum
that
“did
not
occur
during
contract negotiations, but instead transpired as performance of
the contract was ongoing” did not confer personal jurisdiction).
At the end of the day, Quick Fitting has simply not made a
showing that the activities of Andrew and Jacky Yung between the
signing of the 2011 NDA in May and the incorporation of EFF five
months
later,
were
sufficient
to
establish
personal
jurisdiction.
Quick Fitting further contends that Judge Sullivan erred in
failing to find jurisdiction based on the intentional tortious
conduct alleged.
Specifically, Quick Fitting asserts that:
Quick Fitting’s jurisdictional argument is not that it
suffered harm in Rhode Island because the defendants
disseminated information here, but that it suffered harm
because the defendants acquired information here – the
confidential and trade secret information belonging to and
held by Quick Fitting in Rhode Island. The Court in Calder
[v. Jones, 465 U.S. 783 (1984)] reasoned that an element of
the tort of libel is the defendant reaching in to the forum
to communicate or disseminate information; one element of
the tort of misappropriation of trade secrets at issue here
involves the defendant reaching in to the forum to
appropriate and acquire information.
7
(Pl.’s Objection 12, ECF No. 111 (emphasis in original).)
As
Defendants note, “[t]o the extent Quick Fitting implies that the
Yungs or
Yung
Companies
physically
came
to
Rhode
Island
and
during that visit received the alleged trade secret information,
there is not [a] scintilla of fact, alleged or otherwise, to
support that contention.”
Indeed,
it
appears
the
(Defs.’ Resp. 9-10, ECF No. 117.)
evidence
supports
the
opposite
conclusion: that any alleged theft of trade secrets occurred
outside
Rhode
Island
when
Quick
Fitting’s
Vice
President
of
Operations, Michael Pappas, emailed the alleged trade secrets to
the Yung Companies in Canada and China.
fact
that
the
information
was
acquired
(Id. at 10 n.6.)
from
a
Rhode
The
Island
company is not enough to establish personal jurisdiction.
See
Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014) (“[T]he plaintiff
cannot be the only link between the defendant and the forum.”).
Quick Fitting’s reliance on Calder is misplaced:
“The crux
of Calder was that the reputation-based ‘effects’ of the alleged
libel connected the defendants to California, not just to the
plaintiff.
The
strength
of
that
connection
function of the nature of the libel tort.”
was
largely
a
Id. at 1123-24.
While it is conceivable that a trade secret misappropriation
claim could give rise to personal jurisdiction, on the facts of
this case, Quick Fitting has failed to establish a connection
8
with the state of Rhode Island beyond Defendants’ connection to
a Rhode Island company.
Finally, Quick Fitting argues that Judge Sullivan erred in
failing
to
pierce
the
corporate
veil.
Quick
Fitting
acknowledges that “[t]he R&R communicates a certain degree of
frustration concerning the detail provided by the plaintiff in
its First Amended Complaint, as well as the further detail set
forth
in
plaintiff’s
proposed
Second
Amended
Complaint,”
but
nonetheless “urges that the proffered level of detail strongly
suggests
that
the
individuals,
Jacky
and
Andrew
Yung,
have
indeed treated their respective entities as mere convenience,
intermingling assets, equipment, personnel, and even ownership,
without
regard
to
corporate
Objection 14, ECF No. 111.)
form
or
separation.”
(Pl.’s
It is not clear whether Quick
Fitting is attempting to argue that its admitted lack of detail
actually
supports
its
veil-piercing
argument,
or
that
Judge
Sullivan was incorrect in her assessment of the level of detail.
Regardless, the fact remains that Quick Fitting “has offered no
evidence of the use of a sham entity, of undercapitalization, of
the lack of corporate records, of insolvency, or of the improper
use of the corporate form by dominant shareholders.”
ECF No. 104.)
9
(R&R 21,
For
these
reasons,
the
R&R
is
ADOPTED,
and
Defendants’
Motion to Dismiss for Lack of Personal Jurisdiction is GRANTED
as to Jacky Yung and DENIED as to Andrew Yung.
IT IS SO ORDERED.
William E. Smith
Chief Judge
Date: September 29, 2015
10
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