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Zhao v. Ye

United States District Court, D. Oregon, Portland Division

September 29, 2014

CHENGWU (Kevin) ZHAO, and FEI-CUI (Faye), individuals, Plaintiffs,
v.
GUO QIANG YE (William) and JIN XU, husband and wife, ZHENYONG WANG, an individual, UANGO.COM, LTD., an Oregon corporation, FENCONN TECH CO., LTD., an Oregon corporation, FUJI CHINA HOLDINGS CO., LTD., a corporation, Defendants.

OPINION AND ORDER

MICHAEL W. MOSMAN, District Judge.

Plaintiffs Chengwu Zhao and Fei Cui filed suit, setting out eight claims for: (1) federal securities fraud under Rule 10b-5; (2) Oregon securities fraud; (3) common law fraud; (4) breach of contract; (5) seeking to pierce the corporate veil as to Defendant William, Jin Xu, and Defendant Zhenyong Wang, on the grounds that they have treated the three corporate defendants as alter egos; (6) injunctive relief; (7) under the Guaranty signed by Defendant Fuji, and (8) quantum meruit, or unjust enrichment. Defendants moved to dismiss under the doctrine of forum non conveniens. Having concluded that jurisdiction is not proper in the United States, I GRANT Defendants' motion to dismiss [72].

BACKGROUND

Plaintiffs Chengwu Zhao and Fei Cui, who also go by Kevin and Faye, are husband and wife. They are Chinese nationals who were in Oregon on temporary B-1 visas, but have since returned to China when their visas expired. Plaintiffs allege that they were approached while in China by Defendant Guo Qiang Ye, also known as William, about the opportunity to invest in a company he intended to form in Oregon. They allege that William represented to them that the company would engage in the business of forwarding freight to China, that he was also going to be a shareholder in the company, and that Defendant Fuji Holdings would also be a shareholder. Plaintiffs allege that they were to move to Oregon and actively participate in the running of the new company. The company at issue was eventually created, and it is Defendant Uango.com, Ltd.

While in China, Kevin and Faye transferred their investments to William's personal Chinese bank account. It was their understanding that they would receive stock certificates in the company when they arrived in Oregon and that the company would pay them a salary while they were here. Upon their arrival to the United States, Kevin and Faye allege that William and his wife, Defendant Jin Xu, have refused to provide them with their stock certificates, have not given them any involvement with the business, and have not provided them with working keys to the company's empty warehouse in Oregon.

LEGAL STANDARDS

On a motion to dismiss, the court reviews the sufficiency of the complaint. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The court considers allegations in the complaint, any exhibits attached to the complaint, and judicially noticeable materials. Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007). When reviewing a motion to dismiss, the court must "accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party." Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

DISCUSSION

I. Method for Determining Proper Forum

Before dismissing a case on the grounds of forum non conveniens, a district court must make a choice of law analysis to determine whether a United States statute, like the Jones Act requiring venue in the United States, is applicable. Zipfel v. Halliburton Co., 832 F.2d 1477, 1482 (9th Cir. 1987), amended on other grounds by 861 F.2d 565 (9th Cir.1988); see also Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th Cir. 2001), Creative Tech. Ltd. v. Aztech System Pte., Ltd., 61 F.3d 696, 700 (9th Cir. 1995) (noting that the Jones Act, 46 U.S.C. app. § 688(a) and the Federal Employers' Liability Act, 45 U.S.C. § 56, "contain special provisions mandating venue in the United States district courts.") If no such applicable law is appropriate to tip the scale towards venue in the United States, then the court should proceed in its forum non conveniens analysis. See Lueck, 236 F.3d at 1148, citing Lockman Found v. Evangelical Alliance Mission, 930 F.2d 764, 771 (9th Cir. 1991) (where "no such law is implicated, the choice of law determination is given much less deference on a forum non conveniens inquiry"). In a forum non conveniens analysis, the court must determine whether: 1) an adequate forum is available for the plaintiffs and 2) whether the balance of private and public interest factors favors dismissal. Gutierrez v. Advanced Medical Optics, Inc., 640 F.3d 1025, 1029 (9th Cir. 2011). There is no such applicable United States statute in this case, therefore this court can engage in a forum non conveniens inquiry. See Gemini Capital Group v. Yap Fishing Corp., 150 F.3d 1088, 1092 (9th Cir. 1998) (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 247 (1981).

II. Adequate Alternative Forum

"A district court has discretion to decline to exercise jurisdiction by invoking the doctrine of forum non conveniens in a case where litigation in a foreign forum would be more convenient for the parties." Gutierrez, 640 F.3d at 1029 (citing Lueck, 236 F.3d at 1142). However, the court is instructed that this is an "exceptional tool" to be applied sparingly. Id. In order to dismiss a claim on forum non conveniens grounds, the court must review the adequacy of the forum available to Plaintiffs and whether the balance of private and public interest factors favors dismissal of the case. Id.

The district court must first determine whether an adequate alternative forum is available to the plaintiff. See Lueck v. Sundstrand Corp., 236 F.3d at 1143. "An alternative forum ordinarily exists when defendants are amenable to service of process in the foreign forum" and "when the entire case and all parties can come within the jurisdiction of that forum.'" Dole Food Co. v. Watts, 303 F.3d 1104, 1118 (9th Cir. 2002) (emphasis omitted) (quoting Alpine View Co. Ltd. v. Atlas Copco, 205 F.3d 208, 221 (5th Cir.2000). "Ordinarily, to show an available forum, all that is required is that the defendant is amenable to service of process in the foreign jurisdiction." Gutierrez, 640 F.3d at 1029-30, citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n. 22 (1981). Here, all defendants who have appeared in this matter have agreed to stipulate to service of process in China and have consented to jurisdiction there.

Defendants' legal experts state that under Chinese law, plaintiffs will be able to bring a breach of contract action arising from the facts alleged in their complaint. Even more compelling is the fact that in April 2014, plaintiffs filed suit in China for a case arising out of the same facts and contracts at issue in this case. The court in Beijing has accepted jurisdiction. In Carijano v. Occidenta, the Ninth Circuit held that the requirement that the alternative forum offer some remedy for a plaintiff's harm is "easy to pass; typically, a forum will be inadequate only where the remedy provided is so clearly inadequate or unsatisfactory, that it is no remedy at all.'" Carijano v. Occidental Petroleum Corp., 643 F.3d 1216, 1225-26 (9th Cir. 2011) (citing Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1178 (9th Cir. 2006)). Additionally, in determining whether an adequate alternative forum exists, "courts ask only whether some remedy exists; whether the remedy afforded is less favorable in the foreign forum is not determinative." ...


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