Integrated Commc'ns & Techs., Inc. v. Hewlett-Packard Fin. Servs. Co.

• Decision Date: 22 November 2021
• Docket Number: Civil No. 16-10386-LTS
• Citation: 573 F.Supp.3d 513
• Parties: INTEGRATED COMMUNICATIONS & TECHNOLOGIES, INC. et al., Plaintiffs, v. HEWLETT-PACKARD FINANCIAL SERVICES COMPANY et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

573 F.Supp.3d 513

INTEGRATED COMMUNICATIONS & TECHNOLOGIES, INC. et al., Plaintiffs,

v.HEWLETT-PACKARD FINANCIAL SERVICES COMPANY et al., Defendants.

Civil No. 16-10386-LTS

United States District Court, D. Massachusetts.

Filed November 22, 2021

Alex S. Zuckerman, Pro Hac Vice, Luke Nikas, Pro Hac Vice, Alexander B. Spiro, Pro Hac Vice, Jonathan Oblak, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, New York, NY, Michael T. Packard, Quinn Emanuel Urquhart & Sullivan LLP, Boston, MA, for Plaintiffs Integrated Communications & Technologies, Inc., Jade Cheng, Jason Yuyi, Cathy Yu.

Luke Nikas, Quinn Emanuel Urquhart & Sullivan, New York, NY, for Plaintiffs Alexander Styller, Caroline Marafao Cheng, Pushun Cheng, Changzhen Ni, Junfang Yu, Meixiang Cheng, Fangshou Yu, Changhua Ni.

Christian A. Stueben, Pro Hac Vice, Paul A. Saso, Pro Hac Vice, Anthony P. Callaghan, Pro Hac Vice, Gibbons, P.C., New York, NY, Christina T. Lau, Kevin C. Quigley, Michael H. Bunis, G. Mark Edgarton, Choate, Hall & Stewart LLP, Boston, MA, for Defendant Hewlett-Packard Financial Services Company.

Christian A. Stueben, Pro Hac Vice, Paul A. Saso, Pro Hac Vice, Gibbons, P.C., New York, NY, Christina T. Lau, Kevin C. Quigley, Michael H. Bunis, G. Mark Edgarton, Choate, Hall & Stewart LLP, Boston, MA, for Defendant Hewlett-Packard Financial Services (India) Private Limited.

Christina T. Lau, Kevin C. Quigley, Michael H. Bunis, G. Mark Edgarton, Choate, Hall & Stewart LLP, Boston, MA, for Defendants Hewlett Packard Enterprise Company, David Gill, HP Inc.

MEMORANDUM AND ORDER ON DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT AND TO STRIKE

SOROKIN, United States District Judge

I. BACKGROUND

A terrible course of events happened to Jade Cheng, Cathy Yu, and Jason Yuyi ("the Individual Plaintiffs") in 2012. At that time, the Individual Plaintiffs were Chinese citizens living in China. Unified Statement of Facts¹ ("SOF"), Doc. No. 526 ¶ 81.² The Individual Plaintiffs worked together in China selling used computer equipment for their employer Integrated Communications & Technologies, Inc. ("ICT") (Alexander Styller Aff., Doc. No. 101-2 ¶ 35), a company based in Massachusetts (Doc. No. 520-91, Ex. 88). During this time, the Individual Plaintiffs were marketing equipment branded by H3C Technologies Co., Ltd. ("H3C"), some of which ICT obtained from the Defendant HPFS India and some obtained from another source. Alexander Styller Aff., Doc. No. 331-15 ¶ 10. In December 2012, H3C, a Chinese company and a subsidiary of Hewlett Packard, complained to the Beijing Public Safety Bureau ("PSB") that the Individual Plaintiffs were selling counterfeit H3C goods in China. Stuart Patterson Dep., Doc. No. 520-95, Ex. 92 at 116:15-18. Apparently in response to H3C's complaint, the Chinese authorities searched the apartment that the Individual Plaintiffs used as an office/warehouse, seized goods, and apprehended Yu and Yuyi, who were present at the time of the raid. SOF, Doc. No. 526 ¶¶ 6, 84. About ten or eleven days later, Cheng went to the Chinese authorities to investigate the disappearance of his colleagues; he was then apprehended as well. Id. ¶ 7, Jade Cheng Aff., Doc. No. 101-1 ¶¶ 33, 76-77.

The Individual Plaintiffs spent the next seven months in jail. During the time the three spent at the Haidian Detention Center in Beijing, they allege (1) that guards in the prison abused and mistreated them; (2) that other prisoners threatened them without intervention by the guards; (3) that the Chinese authorities cut them off from communication with their families; and (4) that the Chinese authorities violated various Chinese laws governing arrest, detention, and prosecution. SOF, Doc. No. 526 ¶¶ 133-35; Jade Cheng Aff., Doc. No. 101-1 ¶¶ 78-79, 86-88, 91-92, 101-102, 111, 144; Cathy Yu Aff., Doc. No. 520-106, Ex. 103 ¶¶ 11-18; Jason Yuyi Aff., Doc. No. 520-107, Ex. 104 ¶¶ 13-22; Daniel Chow Report, Doc. No. 515-17 ¶ 98. The Chinese authorities released the Individual Plaintiffs from jail two days after Yuyi's criminal defense lawyer informed the Chinese prosecutor that H3C's own online product authentication tool verified that the goods seized by the police were genuine H3C products. SOF, Doc. No. 526 ¶ 10. Thereafter, the criminal charges were dismissed. There is no indication in the record that H3C ever objected to or challenged the results of the authentication check or the dismissal of charges.

The Individual Plaintiffs never sued the Chinese authorities for the alleged violations of Chinese law. They never sued the guards for the abuse they describe. They never sued the inmates for the harm they inflicted. They never sued H3C for making the complaint or, indeed, any of its actions, even though it was H3C's complaint that resulted in their arrest and imprisonment. Nor did any other Plaintiff—ICT, its CEO Alexander Styller, or the family members of the Individual Plaintiffs—sue any of the foregoing.

Instead, in this case, the Individual Plaintiffs, ICT, Styller, and many family members of the Individual Plaintiffs seek compensation for these injuries from others. Second Amended Complaint ("SAC"), Doc. No. 101 ¶¶ 1-14. Lawsuits seeking compensation for injuries allegedly suffered at the hands of police allegedly violating the law are not unusual in federal court. This case is, however, unusual. It is a lawsuit brought (substantially) by citizens of China seeking compensation under the laws of Massachusetts for injuries suffered in China in the course of a criminal prosecution under the laws of China due to the activities of Chinese law enforcement officials undertaken at the request of a Chinese company and prompted by events that occurred within China. There are other unusual features of this case:

• As soon as the Chinese police detained Jade Cheng, he instructed ICT to "destroy" all the emails and other documents possessed by the Individual Plaintiffs. ICT complied, immediately destroying the documents. Order on Mot. for Spoliation Sanctions, Doc. No. 368 at 2-3.

• Although the Individual Plaintiffs secured their release and the termination of their criminal prosecution by producing evidence that they were selling genuine H3C goods, in this lawsuit they contend that they were not selling genuine H3C goods. See generally Pls.’ Opp. to Defs.’ Mot. for Summ. J., Doc. No. 519.

• The lawyer representing the Plaintiffs for the vast majority of this lawsuit repeatedly committed misconduct. See Order Concerning Att'y Discipline Under Local Rule 83.6.5, Doc. No. 448; Farrell v. Joffe, No. 21-91017-WGY (D. Mass. Sept. 7, 2021); Notice of Appeal of Order Imposing Discipline, No. 21-91017-WGY, Doc. No. 15. Plaintiffs are now represented by different counsel who bear no relationship to or responsibility for that misconduct.

The Court notes the unusual features of the case as they, along with the serious nature of the harm described by the Individual Plaintiffs, largely explain the five-year duration of this lawsuit. During this time, the parties have had ample opportunity to conduct discovery, mediate the case to attempt to reach a voluntary settlement of their dispute, and raise for consideration by the Court any matter of concern to any party. Trial in this matter commences on February 7, 2022. Pending before the Court now is the Defendants’ Motion for Summary Judgment. The parties have briefed the Motion extensively, the Court having permitted each side to file briefs substantially longer than permitted by the Local Rules in light of the myriad issues raised by the claims and defenses. The Court now turns to resolve the Motion, addressing each claim advanced in the SAC in turn and thereafter the Counterclaims advanced by the Defendants upon which they seek partial summary judgment. In doing so, the Court also resolves a related Motion to Strike filed by the Defendants. As in all matters, the Court starts with subject matter jurisdiction.

II. JURISDICTION

The Court is "under an unflagging duty to ensure that it has jurisdiction over the subject matter of the cases it proposes to adjudicate." Am. Policyholders Ins. Co. v. Nyacol Prod., Inc., 989 F.2d 1256, 1258 (1st Cir. 1993). Accordingly, the Court sua sponte examines its subject matter jurisdiction here and finds that diversity jurisdiction exists. Plaintiffs do not advance a federal claim, have never sought to advance a federal claim, and have never contended that a state law claim implicates a question of federal law sufficiently to give rise to a federal question. Thus, the Court lacks so-called federal question subject matter jurisdiction under 28 U.S.C. § 1331. Pursuant to 28 U.S.C. § 1332(a)(3), the Court has diversity jurisdiction where a matter in controversy exceeds $75,000 and is between "citizens of different States and in which citizens or subjects of a foreign state are additional parties[.]"

Here, the Plaintiffs are Alexander Styller (a citizen of Massachusetts (SAC, Doc. No. 101 ¶ 1)), ICT (a citizen of Massachusetts (SAC, Doc. No. 101 ¶ 2)), Jade Cheng (a citizen of New Hampshire (SAC, Doc. No 101 ¶ 3)), Caroline Marafao Cheng (a citizen of Brazil³ (SAC, Doc. No 101 ¶ 7)), and Jason Yuyi, Cathy Yu, Pushun Cheng, Changzhen Ni, Junfang Yu, Meixiang Cheng, Fangshou Yu, and Changhua Ni (all citizens of China (SAC, Doc. No 101 ¶¶ 4-5, 8-13)). The Defendants are HPFS India (a citizen of India (Answer by HPFS India, Doc. No. 108 at 47)), Hewlett-Packard Financial Services Company ("HPFS") (a citizen of Delaware and New Jersey (Answer by HPFS, Doc. No. 107 at 46)), HP Inc., ("HPI") (a citizen of Delaware and California (Answer by HPI, Doc. No. 123 at 46)), Hewlett Packard Enterprise Company ("HPE") (a citizen of Delaware and California (Answer by HPE, Doc. No. 106 at 47)), and David Gill (a citizen of New South Wales, Australia (Answer by David Gill, Doc. No. 131 ¶ 20)).

The requirements of diversity of citizenship jurisdiction are met here because there is complete diversity between the U.S. Plaintiffs and Defendants. The...