Daredevil, Inc. v. ZTE Corp.

• Decision Date: 18 June 2021
• Docket Number: No. 19-3769,19-3769
• Parties: DAREDEVIL, INC., a Missouri Corporation, Plaintiff - Appellant v. ZTE CORPORATION, a corporation incorporated under the laws of the People's Republic of China, Defendant - Appellee
• Court: U.S. Court of Appeals — Eighth Circuit

1 F.4th 622

DAREDEVIL, INC., a Missouri Corporation, Plaintiff - Appellant

v.ZTE CORPORATION, a corporation incorporated under the laws of the People's Republic of China, Defendant - Appellee

No. 19-3769

United States Court of Appeals, Eighth Circuit.

Submitted: January 14, 2021

Filed: June 18, 2021

Joshua Evan Austin, Daredevil, Inc., Columbia, SC, S. Jay Dobbs, McCarthy & Leonard, Chesterfield, MO, for Plaintiff-Appellant.

Laura Eve Besvinick, Stroock & Stroock, Miami, FL, David M. Slaby, Paule & Camazine, Saint Louis, MO, Frank T. Spano, Britton L. St. Onge, Polsinelli, PC, Saint Louis, MO, for Defendant-Appellee.

Before SMITH, Chief Judge, KELLY and ERICKSON, Circuit Judges.

SMITH, Chief Judge.

Daredevil, Inc. ("Daredevil") sued ZTE USA for breach of contract, fraud, and unjust enrichment. The case went to arbitration in Florida. Daredevil then sought to add ZTE Corporation ("ZTE Corp."), the parent company of ZTE USA, to its arbitration claims. The arbitrator rejected the request to add ZTE Corp., ruling that Daredevil's claims against ZTE Corp. were outside the scope of arbitration because Daredevil had not sued ZTE Corp. at the time arbitration began. Daredevil then filed this suit against ZTE Corp., alleging breach of contract, fraud, unjust enrichment, and tortious interference with contract. This case was stayed pending the arbitration with ZTE USA.

The arbitrator ultimately denied each of Daredevil's claims against ZTE USA. The arbitration award was confirmed by the United States District Court for the Middle District of Florida and affirmed by the Eleventh Circuit Court of Appeals.

Daredevil subsequently reopened this case in the Eastern District of Missouri against ZTE Corp. ZTE Corp. moved for summary judgment on the grounds that Daredevil's claims were precluded by the arbitration award and confirmation. The district court¹ agreed; applying Florida law, it held that Daredevil's claims met the requirements for claim preclusion and were therefore barred. We affirm.

I. Background

Seeking to develop a cellphone network in St. Louis, Missouri, Daredevil contracted with ZTE Corp. and ZTE USA. ZTE Corp. is a Chinese technology firm that manufactures and sells telecommunications infrastructure and cellular-network equipment and handsets; ZTE USA is a wholly owned subsidiary of ZTE Corp., based in New Jersey. In September 2008, two representatives of ZTE USA—Neil Kushner and Joey Jia—met with Eric Steinmann, Daredevil's owner, in California. After their discussions, the parties entered a contract now referred to as the "Missouri MSA." The Missouri MSA provided the terms for establishing Daredevil's St. Louis cellphone network. It consisted of (1) a five-page "Agreement" and (2) a standardized "Master Supply Agreement" (MSA). The Agreement notes that "the terms of the attached [MSA] will apply." Compl., Ex. A, at 1, Daredevil, Inc. v. ZTE Corp. , No. 4:12-cv-01166-RWS, 2019 WL 6324538 (E.D. Mo. 2019), ECF No. 1-1. It concludes with: "Additional terms as included. If there is any conflict this initial five[-]page agreement will take precedence." Id. at 5. The Agreement consistently refers to "ZTE" and says "ZTE Inc." under the signature block, see id. at 1, 5, and the MSA refers to "ZTE USA, Inc." and says "ZTE USA, Inc." under the signature block. See Compl., Ex. B, at 1, 15, Daredevil, Inc. v. ZTE Corp. , No. 4:12-cv-01166-RWS, 2019 WL 6324538 (E.D. Mo. 2019), ECF No. 1-2. Jia signed both the Agreement and the MSA.

Over time, the parties’ business relationship broke down. On May 4, 2011, Daredevil sued ZTE USA in the Eastern District of Missouri for breach of contract, rescission, and unjust enrichment. Around the same time, several of Daredevil's affiliates—also owned and controlled by Eric Steinmann and referred to collectively as "ClearTalk"—sued ZTE USA in other jurisdictions.² Steinmann individually sued both ZTE USA and ZTE Corp. in California. Later that year, several of these cases were compelled to arbitration based on an arbitration provision in the MSA. Daredevil stipulated to a consolidated arbitration in Jacksonville, Florida. Then, the ClearTalk entities—including Daredevil—and Steinmann were joined in a unified arbitration proceeding against ZTE USA. Because Steinmann's suit was the only one to name ZTE Corp. as a defendant, ZTE Corp. stipulated to the arbitration only as it applied to Steinmann's claims.

ClearTalk soon filed an amended statement of claim in arbitration, in which each ClearTalk entity asserted claims against ZTE USA and ZTE Corp. Not surprisingly, ZTE Corp. objected to being included in these new arbitration claims because it had only agreed to arbitrate Steinmann's claims, not ClearTalk's. The arbitrator agreed with ZTE Corp. and ruled that "the scope of the arbitration will be all the claims, counterclaims, and defenses that exist or may arise between and among the parties subject to the jurisdiction of the courts in the lawsuits pending at the time of the agreement to arbitrate." Def.’s Decl. Supp. Mot. Summ. J., Ex. 1, at 2, Daredevil, Inc. v. ZTE Corp. , No. 4:12-cv-01166-RWS, 2019 WL 6324538 (E.D. Mo. 2019), ECF No. 78-1. The arbitration was thus confined to ClearTalk's claims against ZTE USA and Steinmann's claims against ZTE USA and ZTE Corp.

After the arbitrator determined that ClearTalk (and, as a result, Daredevil) could not proceed against ZTE Corp. in arbitration, Daredevil filed this action against ZTE Corp. in the Eastern District of Missouri. Daredevil's first amended complaint ("Complaint"), filed in August 2012, alleged breach of contract, fraud, unjust enrichment, and tortious interference with contract. The Complaint was nearly identical to Daredevil's claims in ClearTalk's final statement of claim in arbitration ("Arbitration Statement"), where Daredevil alleged breach of contract, fraud, and unjust enrichment against ZTE USA. The only notable difference was that the Complaint added a claim for tortious interference with contract and referred only to "ZTE Corp." in places where the Arbitration Statement had referred to both "ZTE Corp. and ZTE USA."

ZTE Corp. moved for a stay of this case pending arbitration. In April 2013, the district court granted the motion after finding that "[t]he virtually identical facts and issues in the case against ZTE Corporation and the pending arbitration between Daredevil and ZTE USA warrant a stay of the present litigation." Daredevil, Inc. v. ZTE Corp. , No. 4:12-cv-01166-TIA, 2013 WL 1342363, at *2 (E.D. Mo. Apr. 3, 2013).

The arbitration hearing began in August 2013. It included ten days of live testimony from about 30 witnesses and hundreds of exhibits. Steinmann, Kushner, and Jia testified. The arbitrator's final decision ("Final Award"), issued in February 2014, rejected all of ClearTalk's claims. The arbitrator ruled that "[t]he ClearTalk entities shall take nothing from this action and the Respondents, namely ZTE [Corp.], a company incorporated under the laws of the People's Republic of China and ZTE (USA), Inc., a New Jersey corporation owe nothing in regard to those claims." Def.’s Decl. Supp. Mot. Summ. J., Ex. 7, at 18, Daredevil, Inc. v. ZTE Corp. , No. 4:12-cv-01166-RWS, 2019 WL 6324538 (E.D. Mo. 2019), ECF No. 78-7. The Final Award addressed the Missouri-specific claims and evidence, including details about the "St. Louis, Missouri network" and "considerable testimony about the circumstances surrounding the execution of the Missouri MSA." Id. at 14. It concluded that the award was "in full settlement of all claims submitted to this arbitration." Id. at 18. The Middle District of Florida confirmed the arbitration award in October 2015, and the Eleventh Circuit affirmed the confirmation in December 2016.

Following the Final Award, Daredevil sought to reopen this case in November 2018, and the district court lifted the stay. ZTE Corp. moved for summary judgment, arguing that Daredevil's claims were precluded by the arbitration award and confirmation. The district court granted summary judgment to ZTE Corp. after determining that Florida law applies and that, under Florida's claim-preclusion law, Daredevil is barred from bringing its claims against ZTE Corp. Daredevil timely appealed.

II. Discussion

Daredevil makes two arguments on appeal. First, it argues that the district court erred when it applied Florida law, rather than Missouri law, to the question of claim preclusion. Second, it argues that its claims against ZTE Corp. are not barred under Florida law because the parties and the causes of action do not meet Florida law's requirement of "identity."

We review a grant of summary judgment de novo, viewing the evidence in the light most favorable to the nonmoving party. Austin v. Super Valu Stores, Inc. , 31 F.3d 615, 617 (8th Cir. 1994). Summary judgment is proper if there is no genuine dispute of material fact, and the burden is on the nonmoving party "to designate specific facts creating a triable controversy." Crossley v. Georgia-Pac. Corp. , 355 F.3d 1112, 1113 (8th Cir. 2004) (per curiam) (quoting Jaurequi v. Carter Mfg. Co. , 173 F.3d 1076, 1085 (8th Cir. 1999) ).

A. Applicable State Law

First, we must determine which law applies to the claim-preclusion analysis. "[F]ederal common law governs the claim-preclusive effect of" a judgment rendered "by a federal court sitting in diversity." Semtek Int'l Inc. v. Lockheed Martin Corp. , 531 U.S. 497, 508, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001). It is well-settled in our circuit that "[t]he law of the forum that rendered the first judgment controls the res judicata analysis." St. Jude Med. S.C., Inc. v. Cormier , 745 F.3d 325, 327 (8th Cir. 2014) (quoting St. Paul Fire & Marine Ins. Co. v. Compaq Comput. Corp. , 539 F.3d 809, 821 (8th Cir. 2008) ). Thus, when a federal court, exercising diversity jurisdiction, renders the first judgment, then "[a]s a matter of federal common law, we must give that federal diversity judgment the same claim-preclusive effect that [the...