Virginia Lawyers Weekly VA Lawyers Weekly
Where a retailer was sued for allegedly failing to pay 76 purchase orders and the manufacturer alleged the United Nations Convention on Contracts for the International Sale of Goods, or CISG, governed the contracts, there was jurisdiction over the suit because district courts have original jurisdiction of all civil actions arising under the treaties of the United States.
Background
Plaintiff Dongguan Jianqun Shoes Company Ltd., is a foreign business entity formed under the laws of the People’s Republic of China. It alleges that it entered into a series of contracts with defendant Consolidated Shoe Company Inc., a domestic corporation incorporated and registered to conduct business in Virginia, “for the manufacture and delivery of women’s shoes.” Plaintiff alleges that “Defendants have failed to pay Plaintiff for goods and services performed on seventy-six (76) purchase orders.”
Plaintiff alleges that Consolidated Shoe Company, Inc. uses a variety of names when doing business. One of the defendants is New Century Footwear Products Co. Limited, or NCFL, which is alleged to be “a foreign business entity formed under the laws of the People’s Republic of China. Defendants have filed a motion to dismiss for lack of subject matter jurisdiction.
Diversity jurisdiction
NCFL’s alleged status as an alter ego of every other defendant does not allow NCFL to claim another defendant’s citizenship status. Courts within this circuit have recognized that “the alter ego doctrine may not be used to create diversity jurisdiction by ignoring the principal place of business of a subsidiary corporation and imputing to it the principal place of business of the parent.” Because plaintiff shares citizenship with NCFL, the case lacks complete diversity. Therefore, there is no diversity jurisdiction.
Federal question jurisdiction
Under 28 U.S.C. § 1331, “[d]istrict courts have ‘original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States.” Here, plaintiff asserts federal question jurisdiction on the basis that the CISG governs the contracts alleged to have been breached by defendants.
Courts have recognized that the CISG applies to a contract when “the parties were
located in signatory countries, and the contract did not explicitly opt out of CISG coverage.” Here, plaintiff that the CISG governs its breach of contract claim, a claim that involves an alleged contract based in 76 separate purchase orders submitted by defendants and accepted by plaintiffs. Plaintiff alleges that each purchase order “identifies Trade Winds Importing, LLC … as the original source of the purchase order.”
Trade Winds Importing LLC “is a domestic limited liability company registered to conduct business in the Commonwealth of Virginia,” and its principal place of business is in Lynchburg, Virginia. Thus, it appears that Trade Winds Importing LLC is a party to the contract located in a signatory country, the United States, and there is no allegation that the contract explicitly opted out of CISG coverage. Plaintiff’s principal place of business is the People’s Republic of China, another signatory of the CISG. As such, it appears that, based on the facts alleged in the complaint, the CISG governs, and there is thus federal question jurisdiction as to Trade Winds Importing LLC and plaintiff.
Defendants’ motion to dismiss denied.
Dongguan Jianqun Shoes Company Ltd. v. Consolidated Shoe Company Inc., Case No. 6:21-cv-00048, Sept. 29, 2022. WDVA at Lynchburg (Moon). VLW 022-3-448. 11 pp.
