Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Direct Link CT, LLC v. Fuling Plastic USA, Inc.

United States District Court, D. Connecticut

August 9, 2019



          Stefan R. Underhill, United States District Judge.

         This case arose from a dispute over an alleged joint venture between Direct Link CT, LLC (“DLCT”) and Fuling Plastic USA, Inc. (“Fuling”) to create a commercial entity called Direct Link USA, LLC (“DLUSA”). DLUSA was intended to design and implement a direct sales program to sell in the United States specialty items, including plastic food utensils, made in China. The purported partnership broke down and DLCT filed this case alleging seven causes of action against Fuling: breach of contract (count one); trademark infringement (count two); false designation of origin (count three); misappropriation of trade secrets (count four); interference with business opportunity (count five); breach of fiduciary duty (count six); and CUTPA violations (count seven). See Am. Compl., Doc. No. 31. In response, Fuling asserted four counterclaims against DLCT: declaratory judgment of non-infringement of trademark (counterclaim one); cancellation of the trademark registration (counterclaim two); breach of contract (counterclaim three); and unjust enrichment (counterclaim four). See Counterclaims, Doc. No. 34. Fuling moved for summary judgment on all of DLCT's claims and all of Fuling's counterclaims. See Mem. in Supp. Mot. Summ. J. (“Def. Mem. in Supp.”), Doc. No. 40.

         At oral argument on April 4, 2019, I granted Fuling's motion with respect to counts two, three, four, five, six, and seven of the Amended Complaint and counterclaim one. See Order, Doc. No. 53. Further, I denied Fuling's motion with respect to counterclaims two, three, and four. See Id. The only remaining issue, therefore, is Fuling's Motion for Summary Judgment with respect to count one, breach of contract. For the following reasons, Fuling's motion is granted.

         I. Standard of Review

         Summary judgment is appropriate when the record demonstrates that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986) (plaintiff must present affirmative evidence in order to defeat a properly supported motion for summary judgment). When ruling on a summary judgment motion, the court must construe the facts of record in the light most favorable to the nonmoving party and must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson, 477 U.S. at 255; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970); see also Aldrich v. Randolph Cent. Sch. Dist., 963 F.2d 520, 523 (2d Cir. 1992) (court is required to “resolve all ambiguities and draw all inferences in favor of the nonmoving party”). When a motion for summary judgment is properly supported by documentary and testimonial evidence, however, the nonmoving party may not rest upon the mere allegations or denials of the pleadings, but must present sufficient probative evidence to establish a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir. 1995).

         “Only when reasonable minds could not differ as to the import of the evidence is summary judgment proper.” Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir. 1991); see also Suburban Propane v. Proctor Gas, Inc., 953 F.2d 780, 788 (2d Cir. 1992). If the nonmoving party submits evidence that is “merely colorable”, or is not “significantly probative”, summary judgment may be granted. Anderson, 477 U.S. at 249-50. The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact. As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted. Id. at 247-48. To present a “genuine” issue of material fact, there must be contradictory evidence “such that a reasonable jury could return a verdict for the non-moving party”. Id. at 248.

         If the nonmoving party has failed to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof at trial, then summary judgment is appropriate. Celotex, 477 U.S. at 322. In such a situation, “there can be ‘no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Id. at 322-23; accord Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995) (movant's burden satisfied if he can point to an absence of evidence to support an essential element of nonmoving party's claim). In short, if there is no genuine issue of material fact, summary judgment may enter. Celotex, 477 U.S. at 323.

         II. Background

         The allegations here arise from an alleged joint venture between DLCT and Fuling to create the commercial entity DLUSA. Am. Compl., Doc. No. 31 at ¶ 7. Essentially, DLCT alleges that a joint venture was agreed upon and created, and Fuling breached the agreement by terminating the joint venture; Fuling alleges that negotiations broke down before an agreement was reached and, therefore, no joint venture was created.

         Fuling was run by its President Xinfu Hu, and DLCT was run by its managing member, Frank Lenge, later along with another member, Tom Melchiorre, who was a “salesperson familiar with the industry.” Lenge Depo., Ex. E to Mot. for Summ. J., Doc. No. 41-1 at 44:2-12; Pl. Opp. to 56(a)(1) Stmt of Mat'l Facts, Doc. No. 47 at ¶ 9. In 2009, Hu and Lenge met at a National Restaurant Association trade show and had discussions thereafter about entering into a joint venture. Pl. Opp. to 56(a)(1) Stmt of Mat'l Facts, Doc. No. 47 at ¶ 4-5. In its Amended Complaint, DLCT defined the potential business as one “which included designing and implementing a direct sales program to sell specialty items such as plastic food utensils and cutlery which were to be made in China and in the United States by [Fuling], and were to be sold to the customers in the United States through” DLUSA. Am. Compl., Doc. No. 31 at ¶ 8; Pl. Opp. to 56(a)(1) Stmt of Mat'l Facts, Doc. No. 47 at ¶ 14 (“DLCT would facilitate sales of … plastic cutlery products manufactured by Taizhou Fuling to U.S. customers”). The parties “agreed that Fuling would manufacture, ship and deliver products to customers and DLCT would facilitate the sale, generate the purchase order and invoice [and collect payment from] the customer.” Pl. Opp. to 56(a)(1) Stmt of Mat'l Facts, Doc. No. 47 at ¶ 16. DLUSA was formed on December 5, 2011 by Fuling's parent company in China, Taizhou Fuling Plastics Co., Ltd. (“Taizhou Fuling”), in order to “act as a sales agent for Fuling by facilitating the sale and payment of products manufactured by Taizhou Fuling and distributed in the United States.” Id. DLUSA “served as Fuling's U.S. sales agent” and gave a portion of sales generated to DLCT. Id. at ¶ 21.

         In February 2011, Lenge sent Hu a written business proposal memorializing the conversations they had about the potential business agreement and Lenge formed DLCT in October 2011 with himself and Melchiorre as the only members. Id. at ¶ 6-7, 13; Lenge Depo., Ex. E to Mot. for Summ. J., Doc. No. 41-1 at 205:22-25. In May 2011, Hu, Lenge, and Melchiorre “met to discuss each parties' roles” in DLUSA and in August 2011, the parties “discussed, but never executed” an agreement about DLUSA. Pl. Opp. to 56(a)(1) Stmt of Mat'l Facts, Doc. No. 47 at ¶ 8-10 (Fuling alleges it was a “draft joint venture agreement” that was never executed; DLCT alleges it was a “draft operating agreement for a Delaware [LLC] which was to memorialize the terms of their joint venture agreement” that was never executed).

         The parties dispute what occurred next in the formation and implementation of DLUSA. See Pl. Opp. to 56(a)(1) Stmt of Mat'l Facts, Doc. No. 47 at ¶ 11-12. DLCT alleges that a joint venture agreement was established in May 2011, when “DLCT and Fuling agreed to initiate all activities of the partners' agreement before final execution of the DLUSA operating agreement” and that, even without the executed agreement, “[s]ales and fulfillment to third parties commenced” and DLCT “began sales of Fuling's products as performance under its agreement with Fuling.” Id. DLCT alleges that the parties formed this “partners' agreement” in which they “put in place all necessary terms to commence operations” and undertook a joint venture. Id. ¶ 22. Further, DLCT alleges that from 2011 through June 2012, the parties, while operating under the valid partners' agreement, “engaged in ongoing negotiations to establish a Delaware [LLC] which would transform the partners' agreement from an entity with significant partner liabilities into an entity which would shield members from liability.” Id.

         Fuling, however, alleges that there was no agreement in May 2011, and that in late 2011 through June 2012, “Fuling and DLCT engaged in ongoing negotiations related to the parties' roles, procedures, and terms of the deal” but, nonetheless, DLCT “began sales efforts of Fuling's products” after the May 2011 meeting. Id. at ¶ 11-12. Fuling characterizes the negotiations in 2011 through June 2012 as discussions to create the joint venture and alleges that the parties “exchanged a draft joint venture agreement and drafts of an operating agreement.” Id. at ¶ 22. Fuling argues that those documents “reflect[ed] several unresolved material terms between Fuling and DLCT” including: sales exclusivity; sales commissions; Fuling's contribution of capital; Fuling's sole control of finances; liability for profits and losses; invoice and payment procedures; Fuling's final approval of sales and payment terms with customers; and trademark rights and uses. Id. at ¶ 23. DLCT, however, argues that those ongoing discussions and “open items for resolution” “did not reach or effect the material terms of the then ongoing partners' agreement between Fuling and DLCT.” Id.

         Overall, the parties agree that the operating agreement for DLUSA was never executed. Id. at ¶ 26. Fuling alleges, therefore, that there “was never a final joint venture agreement between DLCT and Fuling.” Id. DLCT alleges, however, that the parties entered into a valid “joint venture partners' agreement” based upon “the significant email and statements and conduct of the parties … pursuant to which the parties operated from more than a year”, which established the “material terms and agreement of the partners”. Id. Further, DLCT claims that “the agreement [was] validated by the Doctrine of Part-Performance ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.