Proceeding
`Party
`
`Correspondence
`Address
`
`Submission
`Filer's Name
`Filer's e-mail
`
`Signature
`Date
`Attachments
`
`Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA719370
`ESTTA Tracking number:
`01/08/2016
`
`Filing date:
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`92060411
`Plaintiff
`She Hong- Industrial Co. Ltd
`KAMWAH LI
`PROCOPIO CORY HARGREAVES & SAVITCH LLP
`525 B STREET, SUITE 2200
`SAN DIEGO, CA 92101
`UNITED STATES
`calendar-
`ing@procopio.com,kam.li@procopio.com,hac@procopio.com,mmc@procopio.c
`om,nah@procopio.com
`Response to Board Order/Inquiry
`Kamwah Li
`calendar-
`ing@procopio.com,kam.li@procopio.com,hac@procopio.com,martha.zarate@pr
`ocopio.com
`/Kamwah Li/
`01/08/2016
`She Hong Response to Board Order 01-08-2016.pdf(14349 bytes )
`Docket 1.pdf(1532653 bytes )
`Docket 17.pdf(1748443 bytes )
`Docket 22.pdf(545731 bytes )
`Docket 24.pdf(150607 bytes )
`Docket 26.pdf(89411 bytes )
`Docket 29.pdf(1070679 bytes )
`Docket 31.pdf(58374 bytes )
`Docket 38.pdf(945455 bytes )
`Docket 42.pdf(129099 bytes )
`Docket 43.pdf(51072 bytes )
`Docket 43-1 and 43-2.pdf(5407145 bytes )
`Docket 44.pdf(214234 bytes )
`Docket 44-1.pdf(132094 bytes )
`Docket 45.pdf(117958 bytes )
`
`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`
`
`
`
`In the Matter of Trademark Registration No. 4,632,409
`For the mark HARTFORD
`Date Registered: November 4, 2014
`
`
`
`_____________________________________
`
`
`
`
`
`
` )
`SHE HONG INDUSTRIAL CO. LTD.,
` )
`
`
`
`
` )
`Petitioner,
`
`
` )
`
`
`
`
` )
`
`
` )
`v. ) Cancellation No.: 92060411
`
`
`
` )
`
`
`
` )
`MIGHTY ENTERPRISES, INC.,
`
` )
`DBA Mighty U.S.A. Inc.
`
`
` )
`
`
`
`
`
`
` )
`Registrant.
`
`
` )
`_____________________________________)
`
`PETITIONER SHE HONG INDUSTRIAL CO. LTD.’S RESPONSE TO BOARD ORDER
`
`Pursuant to the Order issued in this mater by the Board on December 21, 2015, Petitioner
`
`She Hong Industrial Co., Ltd. (“She Hong”) files herewith a copy of the following pleadings and
`
`court orders in the pending district court action stylized as Mighty Enterprises, Inc. v. She Hong
`
`Industrial, Ltd., Case No. 14-CV-06516 before the United States District Court for the Central
`
`District of California, Western Division (the “District Court case”), filed on August 19, 2014:
`
`Dkt.No.1 (August 19, 2014): Complaint, filed by Mighty Enterprises, Inc. (“Mighty”)
`
`Dkt. No. 17 (October 30, 2014): Answer and Counterclaim, filed by She Hong
`
`Dkt. No. 22 (November 21, 2014): First Amended Answer and Counterclaims, filed by
`
`She Hong
`
`Dkt. No. 24 (December 9, 2014): Motion to Dismiss Counterclaims, filed by Mighty
`1
`
`
`
`

`
`
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`
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`
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`
`
`Dated: January 8, 2016
`
`
`
`
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`
`
`
`
`
`Dkt. No. 26 (January 5, 2015): Opposition to Motion to Dismiss, filed by She Hong
`
`Dkt. No. 29 (January 12, 2015): Reply In Support of Motion to Dismiss, filed by Mighty
`
`Dkt. No. 31 (January 22, 2015): Order Granting Motion to Dismiss She Hong’s
`
`Counterclaims
`
`Dkt. No. 38 (August 26, 2015): Motion for Order Granting Leave to Amend, etc., filed by
`
`Mighty
`
`Dkt. Nos. 42 - 43-2 (September 2, 2015): Opposition to Motion for Leave to Amend, and
`
`supporting documents, filed by She Hong
`
`Dkt. Nos. 44 - 44-1 (September 9, 2015): Reply In Support of Motion for Leave to
`
`Amend, filed by Mighty
`
`Dkt. No. 45 (September 17, 2015): Order Denying Leave to Amend
`
`
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`
`Respectfully submitted,
`
`
`
`
`PROCOPIO, CORRY, HARGREAVES &
`SAVITCH LLP
`
` By: /Kamwah Li/
`
`Anthony J. Dain
`
`Kamwah Li
`
`Heather A. Cameron
`
`
`
`
`
`PROCOPIO, CORRY, HARGREAVES &
`SAVITCH LLP
`525 B Street, Suite 2200
`San Diego, CA 92101
`docketing@procopio.com; heather.cameron@procopio.com; martha.zarate@procopio.com
`
`2
`
`
`
`

`
`
`
`
`
`CERTIFICATE OF SERVICE
`
`I hereby certify that a true and complete copy of the foregoing PETITIONER SHE
`
`HONG INDUSTRIAL CO. LTD.’S RESPONSE TO BOARD ORDER has been served on
`
`Registrant’s attorneys of record via U.S. First Class Mail and electronically on this January 8,
`
`2016, addressed as follows:
`
`Thomas T. Chan
`Jeff Grant
`Lisa A. Karczewski
`FOX ROTHSCHILD LLP
`997 Lenox Drive, Building 3
`Lawrenceville, NJ 08648
`Telephone: (609) 896-3600
`Facsimile: (609) 896-1469
`ipdocket@foxrothschild.com
`
`
`Attorneys of Record for Registrant MIGHTY ENTERPRISES, INC. DBA MIGHTY U.S.A.,
`INC.
`
`
`
`
`/Kamwah Li/
`Date: January 8, 2016
`
`
`
`3
`
`
`
`
`
`

`
`02:14-cv-06516-ODW-R=Z Documentel Filed O8/19/14 Page1of24 Page|D#:12 ‘
`
`93U3......JD_._
`
`11
`
`S uire Patton Boggs (US) LLP
`C 's M. Amantea (State Bar # 147339)
`chris.amantea@squ1repb.com
`555 South Floweg Street, 31st Floor
`-Los Angeles, Cahfomla 90071
`Telephone: +1 213 624 2500
`Facs1m11e:
`+1 213 623 4581
`
`Patterson, Boyd & Lowery, P.C.
`W1111am C. Boyd
`wbo1yd@pa_ttersonboyd.com
`210 Lou1s1ana Street
`Houston, Texas 77002
`‘ Telephone: +1 713 222 0351
`2
`Facslmilez
`+1 713 759 0642
`(Pro Hac Vice Application pending)
`
`Attorne s for Plaintiff
`MIGH'lyY ENTERPRISES, INC. dba
`MIGHTY USA
`
`UNITED STATES DISTRICT COURT
`
`CENTRAL DISTRICT OF CALIFORNIA-——WESTERN DIVISION
`
`MIGHTY ENTERPRISES, INC. dba
`MIGHTY USA,
`V
`
`Plaintiff,
`
`V.
`
`uv1h-6516‘W 111
`
`Case No.
`
`PLAINTIFF’S COMPLAINT FOR
`DAMAGES:
`
`(1) BREACH OF CONTRACT;
`
`SHE HONG INDUSTRIAL CO. LTD,
`and DOES 1 through 10,
`
`E2) BREACH OF I1\/IPLIED
`ONTRACT;
`
`Defendants
`
`gt) BREACH OF DUTIES OF
`OOD FAITH AND FAIR
`DEALING, LOYALTY AND
`-_ CARE;
`
`E5) INTERFERENCE WITH
`ONTRACTUAL BUSINESS
`RELATIONS; AND
`
`(6) FRAUD
`
`[DEMAND FOR JURY TRIAL]
`
`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
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`‘Case
`
`:14—cv—06516—ODW—RZ Documentl Filed 08/19/14 Page2of 24 Page ID #:13
`
`Plaintiff MIGHTY ENTERPRISES, INC. dba MIGHTY USA (“Plaintiff”)
`
`for its Complaint against Defendant SHE HONG INDUSTRIAL CO. LTD
`
`(“Defendant”), hereby alleges as follows:
`
`I.
`
`NATURE OF ACTION
`
`1.
`
`For approximately 339 years, Plaintiff served as the exclusive
`
`distributor and warranty service provider of Defendant’s heavy equipment products
`
`throughout
`
`the United States. The parties, as was tradition with Taiwanese
`
`companies at the time, entered into an oral agreement (“Agreement”) whereby
`
`Defendant would manufacture its machinery and Plaintiff would thereafter market
`
`and distribute the machinery in the U.S. to its established dealers.
`
`2.
`
`In early 2014, without any notice, and in breach of its contractual
`
`obligations to Plaintiff, Defendant terminated Plaintiffs exclusive distribution deal
`
`causing substantial damage to Plaintiff. Even worse, prior to notifying Plaintiff of
`
`its decision to terminate the contract, Defendant intentionally concealed its decision
`
`to terminate the contract, inducing Plaintiff to purchase $6,000,000.00 of additional
`
`inventory at the end of 2013, knowing full well that its termination of Plaintiffs
`
`exclusive distribution deal would severely jeopardize Plaintiff’ s ability to sell off
`
`the purchased inventory. As such, Plaintiff has been left holding the bag for the
`
`bulk of this additional inventory as well as for costs associated with warranty
`
`repairs and the repurchasing of Defendant’s defective equipment that Defendant
`
`1 2
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`.
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`3 4 5 6 7 8 9
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`10
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`ll
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`refuses to reimburse to Plaintiff.
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`23
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`25
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`26
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`27
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`28
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`II.
`
`THE PARTIES
`
`3. MIGHTY ENTERPRISES, INC. DBA MIGHTY USA (“Plaintiff”) is,
`
`and at all times herein mentioned was, a California corporation authorized to do and
`
`doing business in the State of California. Plaintiff’ s principal place of business is
`
`located at 19706 S. Normandie Avenue, Torrance, California 90502.
`
`’ 2 ’
`
`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`
`
`
`
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`‘Case :14-cv-06516-ODW—RZ Documentl Filed 08/19/14 Page3of24 Page ID#:14
`
`4.
`
`SHE HONG INDUSTRIAL CO. LTD (“Defendant”) is a Taiwan
`
`Company having its principal place of business and home office at No. 6 6”‘ Rd.
`
`Industrial Park Taichung TAIWAN R.O.C. On information and belief, Defendant
`
`does not maintain a registered agent
`
`in California. However, Plaintiff has
`
`knowledge that Defendant’s managers and officers, including Alex Tseng, Daniel
`
`Lu, and Andrew Chen, regularly attend business conferences and meetings in the
`
`United States.
`
`Further, Defendant conducts millions of dollars of business
`
`throughout California and the United States and had an exclusive contractual
`
`relationship with Plaintiff for the sale of its products in the United States, which has
`
`been jeopardized and essentially obliterated due to Defendant’s unlawful actions.
`
`5.
`
`The acts and/or omissions complained of by Plaintiff were committed by
`
`officers, agents, representatives and/or employees of Defendant acting with either
`
`expressed, implied, or apparent authority, or if not, whose acts were ratified, adopted
`
`and approved by Defendant or which benefits of such acts and omissions were
`
`accepted by Defendant.
`6.
`DOES 1 through 10 are entities or individuals who are responsible for
`
`damage to Plaintiff as a result of acts and/or omissions alleged in this
`
`complaint. Plaintiff presently does not know the names of these entities or
`
`individuals and, therefore, sues them by their fictitious names. Plaintiff will amend
`
`this complaint when their true names are ascertained.
`
`III.
`
`,! QBISDICTION AND VENUE
`
`7.
`
`This Court has subject matter Jurisdiction over this action pursuant to
`
`28 U.S.C. § 1332(a). The amount involved in this case exceeds $7,000,000.00.
`
`1 2 3 4 5 6 7 8 9
`
`10
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`ll
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`12
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`13
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`14
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`15
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`177
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`1 8
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`19
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`23
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`24
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`25
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`,26
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`There is complete diversity of citizenship between the parties and the amount in
`
`controversy exceeds $75,000.00 exclusive of interest and costs.
`
`27
`
`28
`
`' 3 '
`
`CONIPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`
`
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`8.
`
`Venue is proper in this judicial district (“District”) pursuant to 28
`
`U.S.C. § 1391, because Defendant has breached its oral contract with Plaintiff and
`
`fraudulently misrepresented its intent to continue business relations with Plaintiff in
`an effort to induce Plaintiff to purchase millions of dollars of inventory meant to be
`
`sold in the District and throughout the United States, and a substantial part of the
`
`events giving rise to these claims occurred in this District. Further, Defendant is
`
`transacting and doing business in this District, and Defendant has performed acts in
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`furtherance of the illegal and wrongful conduct alleged in this Complaint which
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`acts have had substantial effects in this District.
`
`FACTUAL ALLEGATIONS COMMON T0 ALL CLAIMS
`
`IV.
`
`A. The Parties Entered Into a Valid Oral Agreement—Over Thiifl Years
`Ago--for Plaintiff‘ to Serve as Defendant’s Exclusive U.S. Distributor
`
`, 9.
`
`Plaintiff is a US. distributor of heavy equipment and has been since its
`
`inception. Defendant manufactures heavy equipment under the product name
`
`“Hartford” (hereafter referred to as “Defendant’s Products”).
`
`10.’
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`For approximately 33 years Plaintiff has been the exclusive U.S.
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`distributor of Defendant’s Products.
`
`11. Over the years Plaintiff has expended a great deal of money and time
`
`building up a network of U.S. dealers across the United States to acquire Defendant’s
`
`products and to market and sell Defendant’s products to ultimate consumers. This
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`network of dealers is crucial to Plaintiff’ s business. The dealers not only acquire
`
`Defendant’s products from Plaintiff but other products as well.
`
`Plaintiff has
`
`developed a relationship of loyalty and trust with its dealers and has invested
`
`enormous amounts of time and money in maintaining the relationship with its dealers.
`
`’ 4 '
`
`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`

`
`'Case 2:14-cv-06516-ODW-RZA Document 1 Filed 08/19/14 Page 5 of 24 Page ID #216
`
`12.: Over the 33 years of doing business, Plaintiff and Defendant have
`
`developed a special and significant relationship with one another that
`
`included
`
`Plaintiff investing substantial time and money into the sale of Defendant’s Products.
`
`13.
`
`Specifically, Defendant knew that, among other things:
`
`a.
`
`Plaintiff was expending significant amounts of money and time in
`
`developing a market for Defendant’s Products;
`
`b.
`
`Plaintiff was engaging in annual advertising campaigns for
`
`Defendant’s Products;
`
`e.
`
`d.
`
`Plaintiff was establishing a network of dealers;
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`Plaintiff was increasing its warehouse capacity to accommodate
`
`Defendant’s inventory; and
`I
`e.
`Plaintiff was acquiring significant amounts of Defendant’s parts
`
`and products to meet the anticipated market demands.
`
`_
`
`14. Defendant
`
`and Plaintiff have
`
`a
`
`contractual
`
`relationship which
`
`encompasses, among other things, the marketing and selling of Defendant’s Products
`
`throughout
`
`the United States. Under their Agreement, Plaintiff also routinely
`
`performs warranty work required of Defendant and the customers.
`
`15.
`
`This contractual relationship between Plaintiff and Defendant is one of
`
`good faith,
`
`loyalty and trust. Plaintiff has always acted in accordance with its
`
`contractual and legal duties to and obligations with Defendant.
`
`16.
`
`As is the Taiwanese custom,
`
`the Agreement between Plaintiff and
`
`Defendant was verbal and based on trust. Its terms were negotiated in good faith over
`
`three decades ago and have been established based on the course of dealing of the
`
`Plaintiff and Defendant over the past 33 years.
`
`17.
`
`Plaintiff has faithfully performed under the terms of the Agreement with
`
`Defendant for over 33 years. Defendant has accepted Plaintiff” s performance and the
`
`benefits and profits from Plaintiff’ s performance.
`
`‘ 5 ’
`
`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`1
`
`2
`
`3
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`26
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`27
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`'Case 2:14—cv-06516-ODW-RZ Document 1 Filed 08/19/14 Page 6 of 24 Page ID #:17
`
`18.
`
`Plaintiff has, at times, even assisted Defendant in expanding its product
`
`line. For example, when the relationship first began, Defendant did not manufacture a
`
`CNC machine. Peter Tsai, Plaintiff’ s President, provided information, designs and
`
`equipment to Defendant to assist in Defendant’s manufacture of the CNC machine.
`
`19.
`
`Additionally, prior to its relationship with Plaintiff, not only did
`
`Defendant not have a market share in the U.S., but it did not even have a competitive _
`
`product to market. Today, through Plaintiffs efforts, Defendant’s Products are well
`
`known in the US. and enjoy a share of the U.S. heavy machine market. Plaintiff has
`expended enormous amounts of time and expense in the marketing and selling
`
`Defendant’s Products and in creating a significant market share for Defendant in the
`
`United States.
`
`B. Only After Inducing Plaintiff to Purchase an Additional $§,000,000 in
`Inventog, Did Plaintiff Discover that Defendant Intended to Terminate
`Its Agreement for the Exclusive Sale of Defendant’s Products in the U.S.
`
`20. Among other terms, because of the exclusive relationship between
`
`Plaintiff and Defendant, and other aspects of the course of dealing between the Parties
`over 33+ years, a primary condition of their agreement was that the Agreement would
`
`not be terminated without good cause; and that if a party intended to terminate the
`
`Agreement for good cause, the terminating Party would provide the other party
`
`reasonable notice and allow the party a reasonable opportunity to cure. The Parties
`
`further agreed that if the Agreement were terminated with or without good cause,
`
`Defendant would repurchase Plaintiff’ s inventory of machines and parts at cost
`
`inclusive of importation duties and costs.
`
`21.
`
`In May 2014, Plaintiff was _advised by one of its U.S. dealers that,
`
`unbeknownst to Plaintiff,
`
`the dealer had been solicited by Defendant to replace
`
`I Plaintiff as Defendant’s U.S. distributor of Defendant’s Products. Upon information
`
`and belief, Defendant advised Plaintiff’ s dealer, at that time, that the Agreement
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`between Plaintiff and Defendant had been terminated.
`
`In Defendant’s email to the
`
`dealer, Defendant not only solicited Plaintiff’ s dealer but made derogatory, untrue
`
`remarks about Plaintiff. Defendant stated in Defendant’s email:
`
`“We are now looking for new Dealers in your area. . ..the reason we are looking
`for dealers is that our current ‘partner’ Mighty USA is not performing as we
`expected in the US market; so we want to make sure we have a right partner
`this time.”
`
`Interestingly, Defendant waited 33 years—after Plaintiff developed a significant U.S.
`
`market for Defendant’s Products and a network of U.S. dealers——to determine it did
`
`not have the so—called “right partner.”
`
`22. Until Plaintiff’ s dealer disclosed the email and solicitation to Plaintiff,
`
`Plaintiff had absolutely no knowledge,
`
`let alone any oral or written notice, that
`
`Defendant was terminating the 33 year relationship with Plaintiff.
`
`23.
`
`In fact, shortly before this revelation, between September and December
`
`of 2013, Plaintiff acquired from Defendant approximately $6,000,000.00 worth of
`
`Defendant’s Products. Had Plaintiff known Defendant was
`
`terminating the
`
`relationship, Plaintiff would not have acquired Defendant’s Products.
`
`24. Upon information and belief, Defendant knew and intentionally
`
`concealed the fact
`
`that
`
`it was terminating its exclusive distribution and sales
`
`Agreement with Plaintiff at the time Plaintiff purchased the additional $6,000,000.00
`
`of inventory from Defendant at the end of 2013.
`
`25.
`
`The act of Defendant
`
`terminating Plaintiff as
`
`its exclusive U.S.
`
`distributor, as well as Defendant’s behind-the-scenes efforts to sell direct to Plaintiffs
`
`dealers, and otherwise undermine Plaintiffs U.S. dealer network, drastically limited
`
`(and continues to limit) Plaintiffs ability to market and sell Defendant’s Products.
`26.
`Based on information and belief, the prices reportedly charged (or I
`
`offered) by Defendant to Plaintiffs dealer network were substantially less than the
`
`' 7 ‘
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`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`

`
`
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`
`
`SQUIREPATTONBOGGS(US)LLP
`
`
`
`
`
`555SouthFlowerShut.31::FloorLuA:-ads.
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`California90011
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`‘Case 2:14-cv-06516-ODW—RZ Document 1 Filed 08/19/14 Page 8 of 24 Page ID #219
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`amount Plaintiff could have reasonably charged for the same products, further
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`undermining Plaintiff’ s business.
`
`27. Upon further information and belief, Defendant sent emails to other
`
`dealers working for Plaintiff and is in the process of appointing one or more of
`
`Plaintiff’s dealers as Defendant’s “exclusive distributors” of Defendant’s Products in
`
`assigned regions of the United States, thus preventing Plaintiff from selling in these
`
`regionséregions where Plaintiff has done business for many, many years.
`
`28. Defendant did not provide any notice whatsoever of Defendant’s intent
`
`to terminate the Agreement with Plaintiff, nor did Defendant provide Plaintiff a
`
`reasonable opportunity to cure any alleged defaults or any other undisclosed issues
`
`with Plaintiffs performance under the contract. To be sure, Plaintiff had no
`
`knowledge, at all, that Defendant had any issues with Plaintiff’ s performance under
`
`their Agreement.
`
`C. Due to Defendant’s Actions, Plaintiff Has Suffered and Continues to
`Suffer Damages Related to the Repair and Repurchase of Defendant’s
`Reguired “Manufacturer’s Warranty” and Its Inabilig to Market and
`Sell the Remainder of Defendant’s Inventory
`
`29. Defendant’s Products are sold by Plaintiff with a “Manufacturer’s
`
`Warranty.” To protect the reputation of Defendant’s products and to enhance the
`
`marketability of the Defendant’s products, Plaintiff has performed Defendant’s
`
`manufacturer’s warranty work for the past 33 years.
`
`30. When defects in Defendant’s products could not be corrected, Plaintiff
`
`repurchased Defendant’s products from the consumer, and Defendant agreed to
`
`reimburse Plaintiff for any costs incurred by Plaintiff in connection with the
`
`manufacturer’s warranty repairs and/or the repurchase of Defendant’s defective
`
`products. The following are just a few examplm of such repairs and/or repurchase
`
`costs incurred by Plaintiff since 2012:
`
`‘ 8 '
`
`COMPLAINT FOR DAMAGES; DEMAND
`ron JURY TRIAL
`
`

`
`
`
`SQUIREPATTONBOGGS(US)LLP
`
`
`
`
`
`‘Case :14-cv-06516-ODW-RZ Documentl Filed 08/19/14 Page9of24 Page |D#:20
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`a.
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`Plaintiff sold a She Hong VMC-3l00AG machine (one of
`
`Defendant’s products) to Plaintiffs dealer, Machine Tools, Inc. (“MTI”), who
`
`in turn sold it to a consumer, Moore Machines. Moore Machines claimed the
`
`machine was defective. Plaintiff spent a great deal of time and incurred
`
`significant expense attempting to repair the defects with the machine. The
`
`defects were in the manufacture of the machine and could not be repaired even
`
`though Plaintiff spent approximately $85,316.18 in service replacement parts.
`
`Upon demand by Moore Machines, and in order to protect the reputation of
`
`Defendant and Defendant’s Products, Plaintiff has agreed to repurchase the
`
`defective machine for $274,400.00;
`
`b.
`
`Plaintiff sold a She Hong VMC—3100AG machine to its customer
`
`Conroe Machine Industries (“Conroe”). Conroe claimed the machine was
`
`defective. Plaintiff spent $78,648.26 in service and replacement parts to repair
`
`the defects;
`
`c.
`
`Plaintiff sold a She Hong VMC—VW434OAG machine to its
`
`customer Service Steel. Service Steel claimed the machine was defective.
`
`Plaintiff spent $72,232.03 in service and replacement parts to repair the defects;
`
`d.
`
`Plaintiff sold a She Hong Pro-4150 machine to its dealer Ellison
`
`Technologies who in turn sold the machine to its customer CEF Industries
`(“CEF”) for $271,500.00. CEF claimed the machine was defective. To date,
`
`Plaintiff expended substantial efforts to repair the defects at a cost to Plaintiff
`
`of $184,814.20;
`
`e.
`
`On still another occasion Plaintiff sold another She Hong VMC-
`
`4000 5BC machine to its dealer Precision Technologies, Inc. who in turn sold
`
`it to its customer Teledyne Corporation. Teledyne Corporation complained this
`
`machine was also defective. Plaintiff expended approximately $681,251.45 to
`
`repair all of the defects. Teledyne Corporation kept the machine once the
`
`necessary repairs were made.
`
`_ 9 _
`
`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`

`
`
`
`
`
`SQUIREPATTONBOGGS(US)LL17555South
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`:14-cv-06516-ODW-RZ Documentl Filed 08/19/14 Page 10 of24 Page |D#:21
`
`31.
`
`Defendant’s Products have a history of problems and Plaintiff has
`
`continuously been required to perform the Manufacturer’s warranty for Defendant.
`
`Based on the past history of Defendant’s products Plaintiff believes other defect
`
`' claims are likely to be made in the future, which claims would expose Plaintiff to
`
`additional liability.
`32. Under the terms of the existing exclusive Agreement between Plaintiff
`
`and Defendant, Plaintiff is entitled to be reimbursed for its past and future costs in
`
`making necessary repairs and to repurchase defective products. The sum total of the
`
`above completed repairs and repurchased machines, alone, exceeds $1,100,000.00
`million dollars, none of which has been reimbursed to Plaintiff to date.
`I
`
`33. Of course, had Plaintiff known that Defendant intended to terminate its
`
`relationship with Plaintiff, Plaintiff would not have repurchased Defendant’s defective
`
`products or incurred substantial costs in performing the Manufacturer’s warranties,
`
`nor would Plaintiff have acquired an additional
`
`inventory of $6,000,000.00 in
`
`Defendant’s Products.
`
`34.
`
`Plaintiff has at the present time approximately $1,000,000.00 worth of
`
`Defendant’s products and approximately $1,500,000.00 in parts for Defendant’s
`
`products in its existing inventory not including the $6,000,000.00 worth of inventory
`
`recently acquired.
`
`35.
`
`Defendant has effectively eliminated the majority of Plaintiff’ s U.S.
`
`market share leaving Plaintiff with only a few western states to market and sell
`
`Defendant’s products. Thus, Plaintiff’ s ability to market and sell its inventory is
`
`significantly adversely affected by Defendant’s actions because Plaintiff’ s dealers can
`
`now buy Defendant’s products directly from Defendant at a much lower price than
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`36.
`Further, under its new distribution terms, Defendant now prohibits
`Plaintiff from marketing and selling Defendant’s products in regions of the U.S.
`
`assigned to other distributors.
`
`‘ 10 ‘
`
`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`

`
`
`
`SQUIREPATTONBOGGS(US)LLP
`
`
`
`
`
`
`
`555Scull:FlowerStrut.amFlnor
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`La:Angeles.California90011
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`Case :14-cv-06516-ODW-RZ Documentl Filed 08/19/14 Page 11 of 24 PagelD #122
`
`V.
`
`CAUSES OF ACTIONS
`
`FIRST CAUSE OF ACTION
`
`gfireach of Oral Contract!
`
`37.
`
`Plaintiff
`
`realleges and incorporates by reference each and every
`
`allegation set forth in paragraphs 1 through 36 as if fully set forth herein.
`
`38.
`
`There existed an oral agreement by which Plaintiff was the exclusive
`
`distributor in the United States of all of Defendant’s Products and parts for over
`
`thirty years.
`
`39.
`
`Plaintiff has continuously and fully performed according to its legal
`
`duties and obligations under the Agreement.
`
`40.
`
`Defendant’s conduct alleged above constitutes a breach of
`
`the
`
`Agreement, by inter alia:
`
`(a) terminating the Agreement without cause; (b) not
`
`providing Plaintiff with any advanced notice that Defendant intended to terminate the
`
`Agreement ;
`
`(c) failing to provide Plaintiff with advanced notice of Defendant’s
`
`intent to terminate the Agreement for cause (“default”) and allowing Plaintiff. a
`
`reasonable opportunity to cure the default; (d) contacting Plaintiff’s dealers directly to
`
`undercut Plaintiff’ s relationships with them; (e) by soliciting Plaintiff’ s dealers; (f) by
`
`refusing to reimburse Plaintiff for costs of performing warranty work and repurchase
`
`of defective Defendant’s products; and/or (g) by not repurchasing Plaintiff’ s inventory
`
`of parts and products.
`
`41.
`
`As a direct and proximate result of Defendant’s conduct which
`
`constitutes one or more material breaches as set forth herein, Plaintiff has suffered
`
`monetary damages in an amount not yet fully ascertained, but which far exceeds the
`
`jurisdictional minimum and shall be subject to proof at trial.
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`///
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`'11"
`
`COMPLAINT FOR DAMAGES; DEMAND
`FORJURYTRIAL
`
`

`
`
`
`SQUIREPATTONBOGGS(US)LLP
`
`
`
`
`
`555SouthFlamStrut.amnearLa:Angles,
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`Case :14-cv-O6516—ODW-RZ Documentl Filed 08/19/14 Page 12 of24 Page lD#:23
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`SECOND CAUSE or ACTION
`
`gfireach of Implied Contract)
`
`42.
`
`Plaintiff realleges and incorporates by reference each and every
`
`allegation set forth in paragraphs 1 through 36 as if fully set forth herein.
`
`43.
`
`Alternatively, there exists an Agreement implied ir1 fact and Defendant
`
`breached said Agreement. At its inception, Defendant knew and in fact, intended, that
`
`Plaintiff would interpret its conduct as an express agreement to enter into a contract
`
`with Plaintiff for
`
`the exclusive sale and distribution of Defendant’s Products
`
`throughout the United States. Plaintiff performed according to this Agreement for
`
`over three decades.
`
`44.
`
`Among other things, Defendant knew that Plaintiff was expending
`
`significant amounts of money and time in developing a market for Defendant’s
`
`Products; that advertising was being placed by Plaintiff annually; a network of dealers
`
`was being established;
`
`that Plaintiff was increasing its warehouse capacity to
`
`accommodate Defendant’s inventory; that Plaintiff was acquiring significant amounts
`
`of Defendant’s parts and products to meet the anticipated market demands. _
`
`45.
`
`Defendant’s conduct alleged above constitutes a breach of an implied —
`
`in—fact agreement, by inter alia:' (a) terminating the Agreement without cause; (b) not
`
`providing Plaintiff with a reasonable amount of advanced notice that Defendant
`
`intended to terminate the Agreement without cause;
`
`(c) failing to provide Plaintiff
`
`with advanced notice of Defendant’s intent to terminate the agreement for cause
`
`(“default”) and allowing Plaintiff a reasonable opportunity to cure the default; (d)
`
`contacting Plaintiffs dealers directly to undercut Plaintiff’ s relationships with them;
`
`(e) by soliciting Plaintiffs dealers; (f) by refusing to reimburse Plaintiff for costs of
`
`performing warranty work and repurchase of defective Defendant’s products; and/or
`
`(g) by not repurchasing Plaintiffs inventory of parts and products.
`
`46.
`
`As a direct and proximate result of Defendant’s conduct which
`
`constitutes one or more material breaches as set forth herein, Plaintiff has suffered
`
`_
`
`_
`
`COMPLAINT FOR DAMAGES; DEMAND
`FOR JURY TRIAL
`
`

`
`
`
`SQUIREPATTONBOGGS(US)LLP
`
`
`
`
`
`
`
`555SamFlowersum.31::Floor
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`Case :14-cv-06516-ODW—RZ Documentl Filed 08/19/14 Page 13 of 24 PageID#:24
`
`monetary damages in an amount not yet fully ascertained, but which far exceeds the
`
`jurisdictional minimum and shall be subject to proof at trial.
`
`THIRD CAUSE OF ACTION
`
`Restitution/Unjust Enrichment
`
`47.
`
`Plaintiff realleges and incorporates by reference each and every
`
`allegation set forth in paragraphs 1 through 36 as if fully set forth herein.
`
`48.
`
`Over the past three decades, Plaintiff provided a beneficial service to
`
`Defendant and is entitled to reasonable compensation for the services rendered by
`
`Plaintiff. The services provided by Plaintiff benefited Defendant, including without
`
`limitation, by: developing a U.S. Market for Defendant’s products and parts;
`
`developing a network of U.S. dealers to market and sell Defendant’s products and
`
`parts; performing warranty based repairs on behalf of Defendant at substantial cost to
`
`Plaintiff;
`
`and purchasing substantial
`
`amounts of Defendant’s
`
`inventory for
`
`distribution.
`
`49.
`
`Defendant knew Plaintiff intended to be compensated for Plaintiff’ s
`
`services and performance of its obligations under the parties express or implied
`
`Agreement. Defendant was further aware that the types of services performed by
`
`Plaintiff are of a kind for which compensation is reasonably expected. As such,
`
`Defendant has been unjustly enriched by Plaintiff’ s performance of its services.
`
`As a direct and proximate result of the services performed by Plaintiff
`50.
`for Defendant as set forth herein, Plaintiff has suffered monetary damages in an
`
`amount not yet fully ascertained, but which far exceeds