Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA799313
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`ESTTA Tracking number:
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`Filing date:
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`02/03/2017
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
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`Proceeding
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`Party
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`Correspondence
`Address
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`Submission
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`Filer's Name
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`Filer's e-mail
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`Signature
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`Date
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`Attachments
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`92061514
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`Defendant
`Hui Kun LI
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`MICHAEL N LAU
`LAU & ASSOCIATES LLC
`10517 WEST DRIVE , UNIT B
`FAIRFAX, VA 22030
`UNITED STATES
`M-Lau@Michaelnlau.com, www. michaelnlau.com
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`Motion to Dismiss - Rule 12(b)
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`Michael N. Lau
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`M-Lau@Michaelnlau.com
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`/Michael Lau/
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`02/03/2017
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`D 2nd MTD1.pdf(1362726 bytes )
`252 Order.pdf(712204 bytes )
`ExhB5.pdf(301095 bytes )
`ExhB6.pdf(324810 bytes )
`Plaintiff Exhibit V-1second.pdf(2230534 bytes )
`Plaintiff Exhibit V-5.pdf(1894201 bytes )
`Plaintiff Exhibit V-19.Part1.pdf(2066484 bytes )
`Plaintiff Exhibit V-19.Part2.pdf(2263825 bytes )
`Plaintiff Exhibit V-19.Part3.pdf(2783327 bytes )
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`SHUMAN V. LI
`Cancellation No. 92061514
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`IN THE UNITED STATES PATENT AND
`TRADEMARK OFFICE BEFORE THE TRADEMARK
`TRIAL AND APPEAL BOARD
`
`Mailing Address:
`Commissioner for Trademarks
`P.O. Box 1451
`Alexandria, VA 22313-1451
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`Street Address:
`600 Dulany Street
`Alexandria, VA 22314
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`John E. Shuman
`PLAINTIFF
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`Shuman’s Registration No. None
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`FILED: May 18, 2015
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`Cancellation No. 92061514
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`Hui Kun LI
`DEFENDANTS
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`Li’s Registration No. 4216849
`Li’s Registration No. 4265943
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`SECOND MOTIONS TO DISMISS
`UNDER FEDERAL RULE OF CIVIL PROCEDURE RULE 12(b)(6)
`FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED
`AND
`UNDER FEDERAL RULE OF CIVIL PROCEDURE
`RULE 12(b)(1) FOR LACK OF STANDING
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`COME NOW, Defendant, Hui Kun Li, via her Legal Counsel, Michael N. Lau,
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`Esq., hereby motions the Trademark Trial and Appeal Board, to dismiss Plaintiff’s
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`Petition to Cancel. This is a second Motion to Dismiss incorporating by reference the
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`first Motion To Dismiss filed to this honorable Trademark Trial and Appeal Board as
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`document number #4 on June 1, 2015. After suspension of proceeding due to civil
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`action (#13 on January 11, 2016), the United States District Court, Western District of
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`Virginia made clear Li is the creator of the Trademarks and Shuman at times was just
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`benefited from the trademarks due to an implied license. (See Memorandum Opinion, P.
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`34, line 17). At other times, Shuman used the license entirely outside the scope of the
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`implied license. (See Memorandum Opinion, P. 34, line 2).
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`Page 1 of 6
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`SHUMAN V. LI
`Cancellation No. 92061514
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`1. The Federal Court finds that Hui Kun Li is the creator of the trademarks with the
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`help of her son in using a computer. (See memorandum opinion at p. 35). The
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`trademarks were created and put into commercial use years before Li and Lu
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`knew Shuman. A copy of the trademark designs from as early as November 9,
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`5
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`2007 is attached as Plaintiff Exhibit V-19.
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`2. Hui Kun Li applied for and secured a permit to install a number of commercial
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`signage featuring her trademark on January 11, 2008. The application contains
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`a hand-sketch depiction showing both of her trademark designs. A copy of the
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`application is shown in Plaintiff Exhibit V-1.
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`3. The trademarks were put into commercial usage as soon as three separate
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`publicly displayed trademark signs were installed shortly after January 11, 2008.
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`Actual trademarks used in commerce are shown in Plaintiff Exhibit V-5.
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`4. These trademarks are still being used until the present date.
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`5. Shuman used the trademarks under a court created “guardianship” 1 beginning
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`on June 8, 2011. Ever since the guardianship is created by Virginia court, John
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`E. Shuman became a legal guardian who assumes the power to make decisions
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`about wards Hui Kun Li, Jian Lu and their business named Mimosa Asian Fusion,
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`LLC. The continued use of the trademarks by Shuman is on behalf of the
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`trademark owner Li. That guardianship is not yet dissolved. The court orders
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`are shown in Exhibit B5, item 4 and Exhibit B6.
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`1 Bla(cid:272)k’s La(cid:449) Di(cid:272)tio(cid:374)ary (cid:894)9th Ed. (cid:1006)(cid:1004)(cid:1004)9; (cid:1005)(cid:1004)th Ed. (cid:1006)(cid:1004)(cid:1005)4(cid:895) defi(cid:374)es (cid:862)guardia(cid:374)ship(cid:863) as: (cid:862)(cid:1005). The fidu(cid:272)iary relatio(cid:374)ship
`between a guardian and a ward or other incapacitated person, where the guardian assumes the power to make
`de(cid:272)isio(cid:374)s a(cid:271)out the (cid:449)ard’s perso(cid:374) or property. A guardia(cid:374)ship is al(cid:373)ost al(cid:449)ays a(cid:374) i(cid:374)(cid:448)olu(cid:374)tary pro(cid:272)edure i(cid:373)posed
`(cid:271)y the state o(cid:374) the (cid:449)ard.(cid:863) [E(cid:373)phasis added].
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`Page 2 of 6
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`SHUMAN V. LI
`Cancellation No. 92061514
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`6. Presently, the Federal Court determined that “Li cannot succeed on a claim of
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`infringement against her former business partner when the disentanglement of
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`partnership assets and rights flowing therefrom have not yet been resolved by
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`the state court.” (See memorandum opinion at p. 35). Corollary to this statement
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`is that Shuman cannot seek cancellation of the trademark of his former business
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`partner when the disentanglement of partnership assets and rights flowing
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`therefrom has not yet been resolved by state court.
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`7. The case of Kristin Marie Conolty d/b/a Fairway Fox Golf v. Conolty O’Conner
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`NYC LLC, 111 U.S.P.Q.2d 1302 (T.T.A.B. July 3, 2014) is not controlling due to
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`crucial distinguishable facts. In Kristin, partners Conolty and O’Conner jointly
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`and concurrently developed and commercialized the trademark. The fact is clear
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`neither Conolty nor O’Conner can claim with convincing evidence that the
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`trademark was created and commercialize by either person alone. In
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`Contradistinction, the Federal Court acknowledges that Hui Kun Li created the
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`trademarks and used them in commerce in 2008. (See Memorandum Opinion p.
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`4). Shuman allegedly became a partner in 2010. (See Memorandum Opinion p.
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`34, line 17). This means Li’s common law ownership of the trademarks was fully
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`established in 2008. Federal Court notes that Mimosa Asian Fusion LLC was
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`using Li’s trademarks under an implied license. (See Memorandum Opinion p.
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`34). Shuman as a partner of Mimosa Asian Fusion LLC merely benefited by the
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`implied license. Shuman never had ownership of Li’s trademarks. Whenever
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`Shuman used the trademarks inconsistent to the interest of Mimosa Asian Fusion
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`LLC, the implied license is revoked. (See Memorandum Opinion p. 35, line 2).
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`Page 3 of 6
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`SHUMAN V. LI
`Cancellation No. 92061514
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`Ultimately, the federal trademark infringement lawsuit did not succeed because
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`the disentanglement of partnership assets and rights flowing therefrom has not
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`been resolved by state court. (See Memorandum Opinion P. 34).
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`8. Federal Court takes note of the allegation that Shuman stole the business Li and
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`Lu owned from under their feet. (See Memorandum Opinion p. 2, line13; p. 12;
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`pp. 15-16; p. 18, lines 5-11). The Court acknowledges the real loss of Li and Lu
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`due to Shuman’s actions. The lawfulness of Shuman’s takeover of the family
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`business is questionable. The Federal Court mandates that the Frederick
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`County Circuit Court must determine the lawfulness of Shuman’s actions. (See
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`Memorandum Opinion p. 44).
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`WHEREFORE, Li’s First and Second Motion to Dismiss should be GRANTED
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`and Shuman’s Petition for Cancellation should be DISMISSED because:
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`1) Li’s common law ownership of the trademarks was established in 2008 which
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`is years before Shuman participated in Mimosa Asian Fusion LLC.
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`2) In 2010 when Shuman allegedly became a business partner of Li in Mimosa
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`Asian Fusion LLC, he received an implied license to use Li’s trademarks, not ownership
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`of Li’s trademarks.
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`3) In 2011 when the State court created a guardianship and appointed Shuman a
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`guardian of Mimosa Asian Fusion LLC, Shuman was using the trademarks under an
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`implied license from Li to enable him to conduct the businesses of Mimosa Asian Fusion
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`LLC. In 2011 while Li’s trademarks were used under an implied license, Li is at liberty
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`Page 4 of 6
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`SHUIVIAN V. Ll
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`Cancellation No. 92061514
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`to seek registered trademarks from the US Patent & Trademark Office. Since receiving
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`Li’s registered trademarks from the US. Patent & Trademark Office, Li never assigned
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`the trademarks to anyone else.
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`4) Whenever Shuman used Li's trademarks to conduct business solely for his
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`benefit at the expense of Li, Li’s implied license would naturally revoke.
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`5} Public policy dictates that Shuman should not be allowed to steal for himself
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`the business of another and use for himself the trademarks of another.
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`6) Public policy also dictates that Shuman, who stole another’s business
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`including it trademarks, should not have standing to Petition for the cancellation of the
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`registered trademarks so that he can continue to use the same trademarks to benefit
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`himself.
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`7') Li hereby re—asserts the Motion to Dismiss under FRCP 12(b) filed on June 1,
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`2015.
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`1 5
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`fiflflL(«My ‘3
`‘j'ian Lu for Hui Kun Ll
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`Respectfully submitted
`On behalf of Plaintiffs,
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`25
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`VSB 72614
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`Lau & Associates, LLC.
`10517 West Drive, Unit [3
`Fairfax, VA 22030, USA
`M—Lau@l\flichaeln!au.com
`7013-6370488 (Ph), 703-644-4303 (F)
`www.michaelnlaucom
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`Page 5 of 6
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`Certificate of Mailing & Electronic Filing
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`SHUMAN V. Li
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`Cancellation No. 92061514
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`I hereby certify that the foregoing document is being deposited with the United States
`Postal Service with sufficient postage as a First-class mail in an envelope addressed to:
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`ANDREW S BAUGHER
`LENHART PE'I'I'IT
`
`90 NORTH MAIN STREET, SUITE 201
`P 0 BOX 1287
`-
`
`HARRISONBURG, VA 22803
`UNITED STATES
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`asb@|p|aw.com
`Phone: 540—437—3138
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`I hereby certify that the foregoing document is electronically filed via the Electronic
`System for Trademark Trials and Appeals (ESTTA).
`
`
`../ AJWL‘
`
`Michael N. Lau, Esq.
`VSB 72614
`
`#31? 7
`
`Date
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`Lau & Associates, LLC.
`10517 West Drive, Unit B
`Fairfax, VA 22030, USA
`M—Lau@Michae|nlau.com
`703—63710488 (Ph), 703—644—4303 (F)
`www.michaelnlaucom
`
`U‘I
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`10
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`Page 6 of 6
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF VIRGINIA
`HARRISONBURG.DIVlSION
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`HUI KUN LI, et al.,
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`Plaintiffs,
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`v.
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`JOHN E. SHUMAN, et al.
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`Defendants.
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`Civil Action No. 5:14-cv-00030
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`By: Michael F. Urbanski
`United States District Judge
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`MEMORANDUM OPINION
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`The parties to this case are former business partners in an Asian restaurant venture.
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`For more than five years, their business dispute has been the subject of extensive state
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`litigation, which remains pending in the Circuit Court for Frederick County, Virginia.
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`Plaintiffs Hui Kun Li, Jian Lu, and Mimosa Asian Fusion, LLC filed this concurrent federal
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`action in July 2014, raising fifteen claims against defendants John Shuman, Nicole Edwards
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`and Mimosa Restaurant, LLC. All that remains of this federal case are two counts of
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`trademark infringement (Counts 1 ·& 2) and one count of misappropriation of trade secrets
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`in violation of Virginia Code§ 59.1-336 (Count 15).1 This matter is now before the court on
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`the parties' cross-motions for summary judgment.
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`As set forth in detail below, Li's trademark infringement claims fail as a matter of law
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`because she is unable to prove secondary meaning. In any event, Li used the marks
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`"Mimosa Asian Fusion" and -
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`· connection with the operation of Mimosa Asian
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`1 Although Nicole Edwards was named as a defendant in the amended complaint, none of the three surviving claims in
`this case concern her. Counts 1, 2, and 15 allege claims against Shuman and Mimosa Restaurant, LLC. Additionally,
`while Mimosa Asian Fusion, LLC is a named plaintiff, none of the derivative claims survive.
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`Case 5:14-cv-00030-MFU-JCH Document 252 Filed 12/09/16 Page 1 of 45 Pageid#: 6653
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`Fusion, LLC, of which Shuman was a member. Li cannot assert trademark infringement
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`against her former partner when their business dispute is still pending in state court and the
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`various corporate assets and rights flowing therefrom have yet to be disentangled. Finally, as
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`Lu cannot prove he derived independent economic value from his alleged "secret recipes,"
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`his misappropriation claim under Virginia Code§ 59.1-336 also fails as a matter oflaw.
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`Because there is no genuine issue of material fact to be resolved by a jury, defendants'
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`motion for summary judgment (ECF No. 207) will be GRANTED, plaintiffs' motion for
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`summary judgment (ECF No. 212) will be DENIED, and this case will be dismissed. 2
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`I.
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`There is no love lost ｢･ｴｷｾ･ｮ＠these former business pattners, and each side has a
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`story to tell. Plaintiffs Hui Kun Li and ]ian ''Jay" Lu, a mother and son, allege they opened
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`an Asian restaurant as a family business, allowed defendant John Shuman to invest and
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`become an equal partner in that business, and then Shuman stole the restaurant out from
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`under them. For his part, Shuman claims his investment (which far exceeded the agreed(cid:173)
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`upon amount) and organizational management prevented the restaurant from closing its
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`doors; yet one day, without warning, Lu shut it down and physically locked Shuman out of
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`the restaurant, forcing him to reopen on his own. The resulting dispute has been the subject
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`of ongoing litigation in state court since 2011, and the issues related to the dissolution of the
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`partnership between Li, Lu, and Shuman are matters of state law pending before the
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`Frederick County Circuit Court.
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`2 As such, the pending motions in limine (ECF Nos. 179 & 205) will be DENIED as moot.
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`2
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`This parallel federal action has been narrowed significantly, leaving only claims of
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`trademark infringement and misappropriation of trade secrets to be resolved by this court.
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`Nevertheless, the underlying business dispute permeates all aspects of this federal litigation.
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`Accusations about what led to the breakdown of the partnership and ensuing litigation
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`abound in the parties' filings. Accordingly, a detailed factual history is warranted.
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`A. Li forms Mimosa I
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`Mimosa Asian Fusion ("Mimosa I"), an Asian restaurant located at 202 Grocery
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`Avenue in Winchester, Virginia, opened its doors in 2008. The restaurant was a joint
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`venture between the family of plaintiff Hui Kun Li and her friend You Cheng. See Lu Dep.,
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`ECF No. 251, at 23-25. Cheng had previous experience in the restaurant industry; Li's
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`experience was limited to her work at a McDonald's restaurant, at which she has been
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`employed since 1986. Li Dep., ECF No. 208-2, at 8-11, 15. Cheng brought the restaurant(cid:173)
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`specific knowledge to the business, her husbandJun Hua Yang did the cooking, and Li's
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`son, plaintiffJian ''Jay" Lu, managed the restaurant. Lu Dep., ECF No. 251, at 25-26; Li
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`Dep., ECF No. 251, at 16, 6.
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`Li and Cheng secured a business license, ECF No. 213-22, as well as an ABC license,
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`ECF No. 213-24, 214, and signed a five-year lease with a personal guaranty, ECF No. 214-1.
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`The business took the form of a limited liability company, Mimosa Asian Fusion, LLC. ECF
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`No. 214-7. As there was no operating agreement, the contours of the Li/Lu family and
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`Cheng/Y ang family partnership are rather unclear, as are the various ownership stakes in the
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`restaurant. 3 Certain evidence in the record suggests Li and Cheng were equal owners of the
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`restaurant. See, e.g., Li Dep., ECF No. 208-2, at 13, 22; Lu Dep., ECF No. 208-3, at 24; Ex.
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`12 to Lu Dep., ECF No. 208-3; Ex. 2 to Li Dep., ECF No., 208-2. Tax returns from 2008,
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`however, show Li, Lu, Cheng, andY ang all owned 25% shares in the business. Ex. 2 to
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`Shuman Aff., ECF No. 208-11.
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`Dep., ECF No. 208-2, at 18; see also Lu Dep., ECF No. 208-3, at 36, which appeared on
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`signs, menus, gift cards, and advertisements for Mimosa I, ECF No. 214-8; see also ECF
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`No. 213-17 (signage details). Li testified she came up with the name "Mimosa" for the
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`restaurant because it is the name of a flower she likes. Li Dep., ECF No. 208-2, at 18. Lu
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`testified that as "Mimosa" is also the name of a drink, a number of drinks by the same name
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`were offered on the menu: Mimosa Classic, Mimosa Moon, Mimosa Royale, Bubble Gum
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`Mimosa, Fancy Panties Mimosa, DiSaronno Mimosa, Pina Colada Mimosa, Fiddler's Toast
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`Mimosa, Peach Mimosa and Grand Mimosa. Ex. 7 to Lu Dep., ECF No. 208-3; see also Lu
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`Dep., ECF No. 208-3, at 36-37. Lu explained: " ... I figure that if [the customers] see the
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`name Mimosa, then perhaps in their mind it's related to drinks.'' Lu Dep., ECF No. 208-3,
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`at 41.
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`In addition to Mimosa drinks, the menu at Mimosa I incorporated dishes from across
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`Asia as well as cooking styles from various regions of China. Li Dep., ECF No. 208-2, at 25;
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`Lu Dep., ECF No. 208-3, at 42. Lu testified they tried to sell "some of the more popular
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`Asian dishes" such as General Tso's chicken but also tried to differentiate the restaurant
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`3 The record in this case is hampered by the parties' failure to observe corporate formalities throughout the existence
`and operation of Mimosa I.
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`4
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`from the typical Chinese take-out restaurant. Lu Dep., ECF No. 208-3, at 42-43. When
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`Mimosa I opened, You Cheng and her husband J un Yang were the chefs, and Li and Lu
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`relied on their cooking experience and recipes. Li Dep., ECF No. 208-2, at 26; Lu Dep.,
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`ECF No. 208-3, at 43, 44. There was also a chef named Sonny working in the kitchen. Lu
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`Dep., ECF No. 208-3, at 43.
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`In its first year of operation, the business claimed a loss of $42,517, Ex. 2 to Shuman
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`Aff., ECF No. 208-11, and in early 2009, Li bought out Cheng's (and, presumably, Cheng's
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`family's) interest in the restaurant. In a "Partnership Buy-out Agreement" dated March 10,
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`2009, Li purchased Cheng's ownership interest in Mimosa Asian Fusion, LLC for $82,500.
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`Ex. 2 to Li Dep., ECF No. 208-2. An incomplete provision of the agreement states that
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`"You Cheng or J un Yang, agrees to remain employed at Mimosa Asian Fusion Restaurant as
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`the executive chef until the complet [sic]." Id. Lu testified this cut-off provision "was really
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`to protect us, that if we bought them out that they would-they would stay long enough to,
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`I guess, pass on their experiences, their cooking methods off to me, so that we can continue
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`operating, continuing the flavor, the flavor of the restaurant." Lu Dep., ECF No. 208-3, at
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`44.
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`B. Lu takes over the kitchen of Mimosa I
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`It is unclear how long after Li bought out Cheng's interest that Cheng and Yang
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`continued to work in the kitchen at Mimosa I, but Lu testified that after their departure he
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`assumed kitchen duties. Lu Dep., ECF No. 208-3, at 46. Lu testified that after they left, "it
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`was Jackie and me, and then we hired another chef [Bing] to work with Jackie. There was
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`also Manuel. Yeah." Id. at 43. Lu took on the role of head chef and oversaw the woks, the
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`sauces, and the sushi, despite the fact that he had no prior experience as a cook. 4 Lu Dep.,
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`ECF No. 208-3, at 14, 46. Lu asserts that in his capacity as head chef in 2009, he created
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`certain secret recipes for which he claims trade secret protection in this case. Lu Dep., ECF
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`No. 208-20, at 100. These recipes are set forth in an Excel spreadsheet. Ex. 16 to Lu's
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`Dep., ECF No. 208-23; ECF No. 214-20 (Pls.' Ex. R-4). He testified these recipes came
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`from Cheng and Yang but he incorporated "his own taste." Lu Dep., ECF No. 208-3, at 47.
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`At the same time, he stated:
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`[U]ltimately, we did not change the overall taste that the
`customers was [sic] accustomed to. We didn't want to-we
`didn't want the customers to sense that there was too much
`changes [sic], so we tried to keep their sauces or keep the
`previous ways as the basis to how we going to move forward.
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`Id. at 48. Indeed, while Lu claims to have "learned the process" from Cheng and Yang, he
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`could not articulate anything he changed specifically about their recipes:
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`Q. Is this a copy of their recipe?
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`A. They didn't sell me this recipe, but I learned the process
`from them.
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`Q. So you learned the shrimp with lobster sauce recipe from
`Mr. Yang and Ms. Cheng?
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`A. Yes.
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`Q. Did you add anything to it that's different from what they
`did?
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`A. I believe so.
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`Q. What?
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`4
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`His prior work experience included working as a teller at a bank, as a waiter at several restaurants, and starting his own
`online vitamin business. Lu Dep., ECF No. 208-3, at 14-16.
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`A. I don't recall right now. I don't recall particularly how they
`made it and how I did it.
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`Lu Dep., ECF No. 208-20, at 102.5 More than forty pages ofLu's deposition transcript
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`focus on these recipes and what makes them unique. Lu insists the secret is in the
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`process6-Lu's particular way of making each recipe-but provides little detail as to what
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`exactly about the process makes his recipes special:
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`The secret is in the process it takes to make this dish, and
`nobody else makes it this way. Even though this dish may be a
`traditional dish that you will hear the name being used in other
`restaurants, but we did not have anything similar to other
`restaurants.
`I'm trying to recreate something based on my
`experience, based on my knowledge of how this dish-how this
`dish should be tasting.
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`There is a basis as to how this dish should taste and should look
`like. Every single company, every single restaurant has(cid:173)
`perhaps they add different recipes to it, different sauces,
`perhaps .they don't. Perhaps some or perhaps they all have
`peas. Perhaps it's all clear sauce. But the taste and what goes
`into it, the processes may all be different.
`
`Q. Help me understand the process. What are you talking
`about?
`
`A. That's secret.
`
`5 At his deposition, Lu was presented with Exhibit 17, a handwritten list of ingredients for various sauces. Lu insisted
`these were Cheng and Yang's recipes that he and Li had purchased in the buy-out, which Lu believed had been lost. Lu
`Dep., ECF No. 251, at 151-52. Lu accused Shuman of stealing them. Id. at 152. Shuman's bookkeeper Alex Gibson
`stated in an affidavit filed as an exhibit to defendants' brief in opposition to plaintiffs' motion for summary judgment
`that he came across these recipes while cleaning up the restaurant's files in late 2015 or early 2016; he found them in a
`folder containing other documents stored in a rarely-used storage room. Gibson Aff., ECF No. 229-1, ｡ｴｾ＠4.
`6 Again, the court notes that Lu learned "the process" from Cheng and Yang. Lu Dep., ECF No. 208-20, at 102.
`
`7
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`

`... In my secret recipes there are maybe 50-plus secret sauces in
`here and processes, and every one is unique in its own special
`way. And there's nothing in here that is similar to anybody
`else's. And if you can find me one same sauce, show me.
`
`Q. Well, that's your burden in this case, and I'm asking you,
`what is it about-· help me understand. Is it-fried rice on the
`first page. Is fried rice your trade secret?
`
`A. Yes.
`
`Q. Fried rice is your trade secret?
`
`A. The fried rice in here is my special way of making it.
`Nobody else makes this fried rice the way I make it.
`
`Q. All rigpt. Explain to me how your fried rice is different
`from everyone else's fried rice.
`
`A. Fried rice will have cup eggs, carrots, peas and died [sic]
`onions. It's a very simple process. Just eggs, carrots, peas and
`onions. What is special about it is the sauce that goes into it.
`The sauce, nobody does it the way I do.
`
`Q. All right. What about-
`
`A. That's why I was willing to name it Mimosa's fried rice.
`
`Q. What about the fried rice sauce is different from everyone
`else's?
`
`A. The brown sauce, two quarts chicken stock, half cup sugar,
`five tablespoons salt, three tablespoons black pepper. That
`seems very simple. Sugar, salt, pepper, chicken stock, but
`what's special is my sauce. My sauce, if you go into the sauces
`and how the brown sauce is made -
`
`Q. Let's do that. That's on page 4.007.
`
`A. The brown sauce. Kikkoman soy sauce, 7 ladles. Golden
`Label Soy, sugar, chicken stock, Fujian wine, oyster sauce,
`Hoisin sauce, thick sauce, soy sauce, star anise seed, red
`
`8
`
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`

`

`peppercorns, carrots, ginger, scallions, onions, chicken bones,
`whole, scallions. Fill a large pot with half water. As you can
`see, it's a very complex sauce.
`
`Q. And explain to me what about the brown sauce is different
`from the way other people make brown sauce.
`
`A. Actually, that's a- that's a process I'm not willing to share.
`
`Q. Sir, you have to share it.
`
`A. The secret is the way you process it and the combination of
`the different ingredients that go into it.
`
`Lu Dep., ECF No. 208-20, at 102-07.
`
`Lu acknowledges that every Asian restaurant has its own brown sauce. As to what
`
`.
`-
`-
`makes his different from all the others, Lu testified: "There's a way of prepping it flrst, and
`
`then the combinations goes in afterwards. And based on the initials steps and when you add
`
`those sauces into it makes a big difference." Id. at 108. He went on to explain that the
`
`brown sauce forms the base for a number of other sauces and "sets the taste. It sets the
`
`uniqueness to my sauce, to my secret recipes." Id. at 111. According to Lu, it is therefore
`
`the most important. Id.
`
`Lu testified these recipes and the menu at Mimosa I were set when Jackie began
`
`working as chef. Lu Dep., ECF No. 208-3, at 48; see Ex. 7 to Lu Dep., ECF No. 208-3.
`
`Throughout 2010 and 2011, Jackie, Bing, Manuel and Lu worked in the kitchen. Lu Dep.,
`
`ECF No. 208-3, at 43.
`
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`9
`
`

`

`C. Shuman invests in Mimosa I
`
`Never intending to operate the restaurant alone, Li and Lu began searching for new
`
`investors to help share the financial and day-to-day responsibilities of running the business
`
`after Cheng and Yang left. See Lu Dep., ECF No. 208-3, at 90-92; Li Dep., ECF No. 251, at
`
`43-45. Enter defendant John Shuman.
`
`Shuman was a regular customer at Mimosa I. Shuman Aff., ECF No. 208-1, ｡ｴｾ＠6;
`
`Lu Dep., ECF No. 208-3, at 87-88. After he learned from Lu of the restaurant's financial
`
`problems, Shuman expressed interest in investing in the business. Shuman Aff., ECF No.
`
`208-1, ｡ｴｾｾ＠7-8; Lu Dep., ECF No. 208-3, at 88-89. In approximately April of 2010, Lu, on
`
`behalf of Li,7 invited Shuman to purchase a 50% interest in the family business. Shuman
`
`Aff,, ECF No. 208-1, ｡ｴｾ＠8-9; Shuman Dep., ECF No. 208-4, at 243-44; Li Dep., ECF No,
`
`208-2, at 36-37; Lu Dep., ECF No. 208-3, at 92. Li explained: "So we were thinking John
`
`Shuman is the local people in the community and has a lot of friend, and also he has his
`
`business experience .... " Li Dep., ECF No. 208-2, at 36. Likewise, Lu testified that
`
`Shuman "sold himself as somebody who is good with numbers, good with the books. And
`
`since he had years of experience as a businessman, I took his word that he was-he knows
`
`how to handle the QuickBooks or the financials." Lu Dep., ECF No. 208-3, at 91.
`
`This was to be a side venture for Shuman. Shuman Aff., ECF No. 208-1, ｡ｴｾ＠8. His
`
`primary business is running Shuman's Flag Car Service, which provides guidance for
`
`deliveries of oversized truck loads on interstates and local roads throughout the eastern
`
`United States. Id. ｡ｴｾ＠1. Shuman's previous employment consists of work in a factory, as a
`
`7 The record contains a document that purports to grant power of ｡ｴｾｯｭ･ｹ＠over Li to Lu. The document is signed by Li
`and dated May 1, 2009 but is not notarized. Ex. 4 to Li Dep., ECF No. 208-2; see also Li Dep., ECF No. 208-2, at 35.
`
`10
`
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`

`

`butcher in a country store, in the construction and automotive industries, and for a coffee
`
`service business. Shuman Dep., ECF No. 251, at 234, 238-41. He has started several small
`
`businesses, including a farm that is still operational. Id. at 238-41. At the time he became
`
`involved in Mimosa I, Shuman did not have previous experience in the restaurant industry
`
`but testified that he loved Asian food and "cook[ed] a lot of it in [his] 20s, 30s" with a friend
`
`who was a chef. Id. at 236-37.
`
`There is no partnership agreement between Li and Lu and Shuman, s nor is there
`
`formal documentation showing the amount of Shuman's investment. Shuman attests:
`
`We agreed that I would invest $70,000 and become an equal
`50/50 owner of Mimosa I, with my ownership percentage
`increasing if I made additional investments. We also agreed that
`I would make direct payments of $35,000 to Jay [Lu]'s family
`members upon his request and that the remainder of the buy-in
`would be invested as direct payment of the operational costs for
`Mimosa I and in funding a new checking account. Jay told me
`that, at the time, Mimosa I did not have a bank account, line of
`credit, or any other access to outside finances, so my ability to
`pay for operational costs along the way was necessary and an
`agreeable form of investment.
`
`Shuman Aff., ECF No. 208-1, at ,-r 9. Evidence of Shuman's financial investment in Mimosa
`
`I comes in the form of four checks-three made payable to Cai F. Park in the amounts of
`
`$5,000 (dated April13, 2010), $10,000 (dated April27, 2010), and $10,000 (dated May 5,
`
`2010), and one $10,000 check made payable to Zhuo Xiong Lu (dated June 9, 2010).9 Ex. 1
`
`to Shuman Aff., ECF No. 208-1. Shuman explains:
`
`I made payments totaling $35,000 by check to Jay's sister and
`father. (Exhibit 1 ). I then funded a new checking account for
`I then made direct
`Mimosa I in the amount of $5,000.
`
`8 What appears to be an unsigned, proposed partnership agreement can be found in the record at ECF No. 214-10.
`9 The amended complaint alleges Cai F. Park is Li's daughter (Lu's sister) and Zhuo Xiong Luis Li's husband (Lu's
`father). ECF No. 53, ｡ｴｾ＠32.
`
`11
`
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`

`

`purchases, using my cash and my personal credit cards, towards
`operational costs for Mimosa I in the amount of $81,746.68
`between May 2010 and May 20, 2011. Under the terms of our
`agreement, I made more than the necessary $70,000 investment
`that Jay and I had discussed and according to the terms that we
`had agreed upon.
`
`Shuman Aff., ECF No. 208-1, at ,-r 10.
`
`Lu, however, sees things differently. He testified Shuman
`
`had agreed on a buy-in amount of seventy plus-70,000 plus
`inventory, but I did not receive the full amount. And I pursued
`him on a regular basis to complete those transactions so we
`could have a legitimate business partnership going on. And he
`was supposed to be amended to that lease so that he could take
`on the liabilities of the restaurant as a business partner.
`
`And then he started-but because he took all the cash
`and all the money from the company every single day, he started
`to use that money. And he called it reinvesting into the
`business, and which I never agreed on doing so, but he was
`buying things in and out and stocking up the restaurant. fully
`with the company's money. But then he's considered as his
`own investment. I just don't understand how he is so clever on
`how to increase his financial numbers.
`
`Lu Dep., ECF No. 251, at 92-93.
`
`A 2010 tax return for Mimosa Asian Fusion, LLC shows Shuman owning 98% of the
`
`partnership capital and Lu (rather than Li) 2%. Ex. 10 to Lu Dep., ECF No. 208-22. Profits
`
`and losses were said to be shared 60/40 between Shuman and Lu. I d. Li, however,
`
`adamantly disputes that she ever sold her shares of the business to either