United States Court of Appeals For the First Circuit
No. 24-1424
BEIJING ABACE BIOLOGY CO., LTD.,
Plaintiff, Appellant,
v.
CHUNHONG ZHANG and MTOZ BIOLABS, INC.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Indira Talwani, U.S. District Judge]
Before
Rikelman, Selya, and Kayatta, Circuit Judges.
Willard C. Shih, with whom Stephen T. Melnick, Littler Mendelson, P.C., and Wilentz, Goldman & Spitzer P.A. were on brief, for appellant. Zackary L. Stillings, with whom Yuanyou Sunny Yang and Frost Brown Todd, LLP were on brief, for appellees.
December 2, 2024 SELYA, Circuit Judge. Plaintiff-appellant Beijing Abace
Biology Co., Ltd. (Abace) challenges the district court's entry of
summary judgment in favor of defendants-appellees Dr. Chunhong
Zhang (Dr. Zhang) and MtoZ Biolabs, Inc. (MtoZ). Discerning no
error, we affirm.
I
We rehearse the relevant facts and travel of the case.
In that endeavor, we "scrutinize the record in the light most
favorable to the summary judgment loser and draw all reasonable
inferences therefrom to that party's behoof." All. of Auto. Mfrs.
v. Gwadosky, 430 F.3d 30, 34 (1st Cir. 2005).
Abace and Creative Dynamics, Inc. (Creative Dynamics)
are affiliated companies that provide research and development
resources in the life sciences and pharmaceutical spaces. Both
companies were founded in 2004. Abace is headquartered in Beijing
and Creative Dynamics is headquartered in New York. Although the
precise nature of the corporate relationship between Abace and
Creative Dynamics is murky, the record suggests that the two firms
have a "contract" relationship and that some corporate officers
work for both companies.1
In December of 2014, Abace hired Dr. Zhang. She became
a "supplier" in its creative proteomics department. As such, Dr.
1 We need not probe this too deeply as only Abace — and not Creative Dynamics — is a party to this appeal.
- 2 - Zhang was required to "find the product or service" requested by
"go[ing] online, like Google or Baidu [a Chinese search engine],
and search[ing] which company can provide this [product or service]
and then call[ing] them to ask them for the price and how long
they can deliver this [product or service] and then giv[ing] the
supplier's price back to [sic] sales person." While working for
Abace, Dr. Zhang was stationed in China.
During her tenure with Abace, Dr. Zhang signed several
employment-related agreements. These included two so-called
Cadres Agreements, dated January 9, 2016, and November 2, 2016,
respectively.2 The agreements are the same in all aspects relevant
to this decision. Separate and apart from the Cadres Agreements,
the record reflects that the parties entered into a Confidentiality
and Non-Competition Agreement (the Non-Compete Agreement) and a
Labor Contract, both dated November 2, 2016.
Each of the Cadres Agreements stated that it "appli[ed]
to all current employees of Creative Dynamics and CD Biosciences
(CD Inc), i.e., all current employees of the Company." We assume
— favorably to Abace — that Dr. Zhang fell within the reach of
those agreements.
2 Although these are called the "Creative Dynamics Cadres Agreements," the signatories are Abace and Dr. Zhang. This discrepancy is unexplained, but it is not material to the resolution of this appeal.
- 3 - Those agreements also defined certain terms. As
relevant here, those agreements defined "senior cadre[s]" as "the
first and second level leaders of each Division," meaning the
"primary and secondary head of each Division." Additionally, they
defined "senior executive[s]" as those persons who "[e]xercise the
right of operation and management" and who have certain powers
over personnel. What is more, the January Cadres Agreement stated
that, "[w]ithin 2 years from the date of termination of senior
executives, they shall not hold a position or hold a part-time job
in an organization with similar business and competitive
relationship with the Company."
On May 1, 2017, Dr. Zhang's employment with Abace was
terminated, and she signed an employment separation certificate.
This certificate referred to the obligations in the Non-Compete
Agreement.
In September of 2017, Dr. Zhang co-founded MtoZ, a
company headquartered in Massachusetts. MtoZ provides proteomics,
metabolomics, bioinformatics, and biopharmaceutical analysis
services to researchers. See About Us, MtoZ-Biolabs,
https://www.mtoz-biolabs.com/about-us.html
[https://perma.cc/5SJQ-4NCF].
Abace responded to this initiative by filing an action
against Dr. Zhang and MtoZ in the United States District Court for
- 4 - the District of Massachusetts.3 In the operative pleading (the
second amended complaint), it claimed that Dr. Zhang had breached
both her contract with Abace and her fiduciary duty to Abace; that
MtoZ had tortiously interfered with Abace's business and business
relationships; and that Dr. Zhang and MtoZ were liable for unjust
enrichment.4 After pretrial discovery was completed, all parties
moved for summary judgment. The district court granted summary
judgment in favor of Dr. Zhang and MtoZ. See Creative Dynamics,
Inc. v. Zhang, No. 20-11711, 2024 WL 1375941 (D. Mass. Mar. 31,
2024). This timely appeal followed.
II
Summary judgment is appropriate when "the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." Fed. R. Civ.
P. 56(a). A dispute is genuine if "the evidence about the fact is
such that a reasonable jury could resolve the point in favor of
the nonmoving party." Rivera-Muriente v. Agosto-Alicea, 959 F.2d
349, 352 (1st Cir. 1992) (quoting United States v. Plat 20, Lot
17, Great Harbor Neck, 960 F.2d 200, 204 (1st Cir. 1992)). A fact
3 There were additional parties below (including Creative Dynamics, as a plaintiff). None of these parties is a party to this appeal. 4 Simultaneously, Abace sought relief against Dr. Zhang in
China in both arbitration and court proceedings. Neither of those proceedings is still pending, and we make no further mention of them.
- 5 - is material if it could affect the outcome of the case. See Baker
v. St. Paul Travelers Ins. Co., 670 F.3d 119, 125 (1st Cir. 2012).
"The summary judgment ritual is standard fare: once the movant
'adumbrate[s] an absence of evidence to support the nonmoving
party's case,' . . . the burden shifts to the nonmovant to
establish the existence of a genuine issue of material fact."
Boykin v. Genzyme Therapeutic Prods., LP, 93 F.4th 56, 60 (1st
Cir. 2024) (alteration in original) (quoting Brennan v. Hendrigan,
888 F.2d 189, 191 (1st Cir. 1989)).
We review the district court's grant of summary judgment
de novo. See Spencer v. Roche, 659 F.3d 142, 145 (1st Cir. 2011).
We peruse the record in the light most hospitable to the nonmovant
of the granted motion and draw all reasonable inferences in the
nonmovant's favor. See id.
III
This case arises under the aegis of diversity
jurisdiction. See 28 U.S.C. § 1332(a). The parties agree that
the substantive law of China controls. The district court accepted
this agreement, and so do we. See Borden v. Paul Revere Life Ins.
Co., 935 F.2d 370, 375 (1st Cir. 1991) ("Where . . . the parties
have agreed about what law governs, a federal court sitting in
diversity is free, if it chooses, to forgo independent analysis
and accept the parties' agreement.").
- 6 - In undertaking to apply Chinese law, we do not write on
a pristine page. "[T]he task of deciding foreign law [is] a chore
federal courts must often perform." Nowak v. Tak How Invs., Ltd.,
94 F.3d 708, 721 (1st Cir. 1996) (second alteration in original)
(quoting Mercier v. Sheraton Int'l, Inc., 981 F.2d 1345, 1357 (1st
Cir. 1992)). The Civil Rules instruct that "[i]n determining
foreign law, [a federal] court may consider any relevant material
or source, including testimony, whether or not submitted by a party
or admissible under the Federal Rules of Evidence." Fed. R. Civ.
P. 44.1. This approach parallels the approach appropriately taken
to the determination of state law by a federal court. See Kunelius
v. Town of Stow, 588 F.3d 1, 9 (1st Cir. 2009) ("Although we have
no single Polaris to guide our prediction of the state court's
resolution of [the relevant] questions, we rely on analogous cases
decided in the . . . state . . . and other secondary
sources . . . .").
China is a civil law jurisdiction — a fact that requires
us to decipher the law primarily from the constitution, statutes,
and regulations. See Qiang Bjornbak et al., China, 40 Int'l Law.
547, 550 (2006) ("China is a civil law jurisdiction . . . ."); see
also China, Fed. Jud. Ctr.: Judiciaries Worldwide,
https://judiciariesworldwide.fjc.gov/country-profile/china
[https://perma.cc/BD4J-YKAJ]; cf. Palencia v. Perez, 921 F.3d
1333, 1339 (11th Cir. 2019) ("The generally recognized sources of
- 7 - law in [a civil law] jurisdiction are constitutional provisions,
statutes, administrative regulations, and customs.").5 In the case
at hand, the district court appropriately relied upon "the
Constitution of the People's Republic of China, statutes and
decrees, administrative orders, and local rules" as well as the
judicial interpretations issued by the Supreme People's Court
(China's highest court). See Creative Dynamics, 2024 WL 1375941,
at *3. The parties provided much of this material, including
certified translations of reported cases and judicial
interpretations. In addition, the parties furnished the court
with expert reports that discuss these materials and the state of
the law in China.
We hasten to add that the district court was not
obligated to give the views of any expert any particular weight.
See Animal Sci. Prods., Inc. v. Hebei Welcome Pharm. Co., 585 U.S.
33, 36 (2018) (holding that even foreign government's statements
are not binding because court may consider any relevant material).
In the last analysis, the dimensions of foreign law must be
determined by the inquiring court, not simply by rubber-stamping
5Abace disputes the use and reliability of the Judiciaries Worldwide website. But as Dr. Zhang notes, this is a resource provided by the Federal Judicial Center — a resource that is commonly used by federal courts in a wide variety of contexts. See, e.g., Victor v. Nebraska, 511 U.S. 1, 16-17 (1994) (citing Federal Judicial Center for "definitions of reasonable doubt most widely used in the federal courts").
- 8 - the views of some expert witness. See Balkan Energy Ltd. v.
Republic of Ghana, 302 F. Supp. 3d 144, 153 n.5 (D.D.C. 2018).
Instead, an inquiring court must "regard the matter of
foreign country law as purely a 'question of law.'" Kalmich v.
Bruno, 553 F.2d 549, 552 (7th Cir. 1977) (quoting Fed. R. Civ. P.
44.1). The court must answer that question of law through its own
research and analysis. See id. Appellate review is de novo, see
Robidoux v. Muholland, 642 F.3d 20, 22 (1st Cir. 2011), and the
lower court's answer to the question must be fairly supportable.
Cf. R.W. Int'l Corp. v. Welch Foods, Inc., 88 F.3d 49, 52 (1st
Cir. 1996) (stating that federal courts may make "predict[ions]"
as to state law if "reasonably clear" (quoting VanHaaren v. State
Farm Mut. Auto. Ins. Co., 989 F.2d 1, 3 (1st Cir. 1993))).
IV
Given that China is a civil law jurisdiction, we start
our analysis with the relevant statutory text. Article 24 of the
Labor Contract Law states that "[p]ersonnel subject to non-
competitive restrictive covenant [sic] shall be limited to the
employer's senior management personnel, senior technical personnel
and other personnel who are obliged to keep confidentiality." See
Hunan Mingjing New Bldg. Materials Co. v. Zhang Yongxing, No. 4486,
at 10 (Changsha Hunan Interm. People's Ct. June 13, 2022)
- 9 - (interpreting labor contract law of People's Republic of China).6
The parties dispute whether Dr. Zhang was properly classified as
senior management or technical personnel or had other
confidentiality obligations.7 We conclude that Dr. Zhang does not
fit into either of these categories and, therefore, any non-compete
contractual provisions are unenforceable under Chinese law.
In analyzing this issue, the parties quarrel about
whether we should look primarily to the courts of Beijing, rather
than the courts of China generally. Abace argues that only law
from Beijing courts is binding, and that the district court erred
in its categorization of Chinese courts as less geographically
rigid than U.S. courts. On this point, however, the parties'
contrasting views are purely academic: Beijing courts agree with
the dispositive principle in this case, which is that non-compete
agreements are only enforceable against senior management or
technical personnel and employees with confidentiality
obligations. See, e.g., Beijing Golden Cap. Gen. Aviation Co. v.
Gao Hui, No. 3362, at 8 (Beijing 3d Interm. People's Ct. Mar. 29,
6 The certified translations of these decisions are available in the appendices provided by the parties, and the page numbers cited reflect the pagination provided there. 7 Although MtoZ is also named as a defendant and appellee,
the parties agree that its liability, if any, is coterminous with that of Dr. Zhang. Consequently, we refer to Dr. Zhang for the most part as if she was the sole defendant-appellee. Our ruling, of course, extends to the claims brought against MtoZ.
- 10 - 2021). And because both parties have cited non-Beijing cases, we
do not hesitate to rely on those cases as persuasive authority.
A
Courts have made pellucid that — under Chinese law —
"[e]mployers can only sign [binding] non-competition agreements
with employees for specific job positions." Shengli Oilfield
Furuite Petroleum Equip. Co. v. Wang Zhifeng, No. 2250, at 19
(Dongying Shandong Interm. People's Ct. Feb. 16, 2022). They also
have made pellucid that employers "cannot require employees to
assume non-competition obligations for general job positions."
Id. Thus, the fact that Dr. Zhang signed one or more agreements
containing non-compete provisions does not end our inquiry.
On this record, we are constrained to find that Dr.
Zhang's role fell within the category that Chinese courts have
excluded from the purview of non-compete agreements. Abace
conceded at the summary judgment hearing that Dr. Zhang was not
"senior technical personnel." What is more, neither Chinese
statutes nor Chinese courts have defined with particularity which
employees are to be considered senior management personnel. Even
so, common understanding can guide our approach. To rise to the
level of senior management, it seems inexorable that the role must
involve some exercise of discretion in a company's affairs. See
Management, Black's Law Dictionary (12th ed. 2024). Here, there
is not a scrap of evidence that Dr. Zhang was senior management
- 11 - personnel. Indeed, the record does not show that she had any
management responsibilities.
Dr. Zhang's job responsibilities, by contrast, appear to
fall within the realm of general sales. Ordinarily, general sales
personnel have been held to fall short of the requisite level.
See Hunan Mingjing, No. 4486, at 10; Zhongshan Laser Ent. Co. v.
Xu Jun, No. 3271, at 4 (Zhongshan Guangdong Interm. People's Ct.
May 6, 2021). So it is here. The general sales roles described
in Hunan Mingjing and Zhongshan Laser seem to be fairly comparable
to Dr. Zhang's role in level of responsibility: her work primarily
involved using Google and Baidu to connect salespeople with
vendors.
To cinch the matter, Abace introduced no evidence that
Dr. Zhang was either in a supervisory or management role. On the
contrary, the record indicates that Dr. Zhang started in an entry
level position: an Abace representative testified that when Dr.
Zhang joined the company, she was a "graduate without any
experience." And even after Dr. Zhang was promoted, there is no
evidence that her duties ever extended beyond "communicat[ing]
with the supplier," "communicat[ing] with the marketing
department," and "customer service."
A review of the agreements at issue here confirms our
commonsense understanding of the relevant terms in Chinese law.
Even under the definitions in the Cadres Agreements, Dr. Zhang is
- 12 - neither a "senior cadre" nor a "senior executive" to whom a non-
compete agreement might apply. "Senior cadres" are defined as
"the first and second level leaders of each Division, i.e., those
position [sic] higher than the head of the battle group." The
record contains no evidence that Dr. Zhang came within this
definition. "Senior executive[s]" are defined as employees who,
among other things, "[e]xercise the right of operation and
management," who can "employ or dismiss subordinates," and who can
"transfer personnel." Once again, the record is devoid of any
evidence that Dr. Zhang either performed any of these functions or
— as a practical matter — had the right to do so notwithstanding
the language in the contracts. And in any event, Abace has not
argued that she did.
Abace has a fallback position. It contends that Dr.
Zhang's non-compete obligation is enforceable because she "signed
the agreement indicating that she was a Cadre — explicitly defined
by the Agreement as a senior executive." This contention lacks
force. First, "senior cadre" and "senior executive" have different
definitions in the Cadres Agreements, and only senior executives
are defined as having management responsibilities. Second,
Chinese courts have rejected nearly identical arguments. See
Qingdao Xingyue Iron Tower Co. v. Yin Yichang, No. 13686, at 4-5
(Jiaozhou Shandong People's Ct. Mar. 16, 2002) (holding that
signing agreement containing non-compete provisions was "not
- 13 - sufficient to identify the defendant . . . as a non-competition or
duty of confidentiality person," because agreement was "generally
applicable to different positions and employees").8 It is clear,
then, that the Cadres Agreements — as well as any other agreement
signed by Dr. Zhang — are not dispositive as to the analysis of
whether Dr. Zhang's role satisfied the relevant legal standard.
In a last-ditch effort to gain some traction, Abace
insists that the record is tenebrous as to whether every employee
is offered the Cadres Agreement. This lack of clarity, Abace
continues, extends to whether Dr. Zhang was offered the agreement
only after being promoted. At oral argument, Abace suggested that
any sufficiently senior employee could be subject to a non-compete
regardless of whether he can plausibly lay claim to being
management or technical personnel. Building on this porous
foundation, Abace summarily concludes that these are genuine
disputes of material fact sufficient to defeat summary judgment.
The fly in the ointment is that these are not material
facts: they do not have any bearing on the outcome of the case.
Even if the Agreements did establish that Dr. Zhang was a senior
executive, that would be insufficient to bridge the gap that
separates the general run of executives from senior management or
8 In light of the facts of the cited case, the date provided in the case translation may be incorrect. The defendants' expert report lists the year of decision as 2021. This discrepancy, though, is not material to our decision, and we do not pursue it.
- 14 - technical personnel. Because Abace's proposed interpretation —
that any sufficiently senior employee could be subject to a non-
compete regardless of whether he could plausibly lay claim to being
management or technical personnel — contradicts the explicit text
of Article 24, we reject it.
In all events, we are not convinced by Abace's contention
that Dr. Zhang's signing of the agreements is conclusive evidence
that she was a senior executive. Those agreements clearly
contemplate that employees who do not meet the definitions of
"senior executive" and "senior cadre" may nonetheless be required
to sign Cadres Agreements. And even if it is true that an employee
must achieve an arbitrary internal seniority level to be offered
such a contract, that would not render the employee either a senior
executive or a senior cadre under the Agreements' own definitions.
To sum up, as we have explained, Chinese law makes plain
that it is the nature of the job description, not the employer's
label, that is the relevant inquiry as to whether a non-compete
provision can apply to a role. See Qingdao Xingyue, No. 13686, at
4-5. Viewing the record as a whole, then, we discern no genuine
issue of material fact. And taking the established facts in the
light most hospitable to Abace, we nonetheless conclude that the
district court did not err in determining that Dr. Zhang — when
employed by Abace — was neither senior management nor senior
- 15 - technical personnel such as would bind her to a non-compete
provision under Chinese law.
B
The final category of individuals that may be subject to
a non-compete agreement under Chinese law includes "other
personnel with confidentiality obligations." Hunan Mingjing, No.
4486, at 10. This category has been limited by courts to those
employees who have access to confidential information that is not
accessible to the average employee or to the public. See Foshan
FIND Culture & Art Co. v. Xiang Mingqi, No. 15463, at 10 (Foshan
Guangdong Interm. People's Ct. Nov. 21, 2022). In other words,
the information must be beyond "the normal scope of information
that a [general employee] can understand." Hunan Mingjing, No.
4486, at 10-11. Thus, for non-compete restrictions to apply,
courts have required that employers demonstrate that an employee
had access to "trade secrets." Zhongshan Laser, No. 3271, at 4.
Abace does not identify any such trade secrets in its
brief. Nor is there any proof of them in the record. To fill
this void, Abace points only to Dr. Zhang's use of "information
about our business, our customer [sic] and a lot of documents."
But under Chinese law, this is insufficient to demonstrate that
she had information that was not accessible to average employees.
See Hunan Mingjing, No. 4486, at 10-11 (holding that former
employee's knowledge of customers was not enough for non-compete
- 16 - agreement to be enforceable); Foshan FIND, No. 15463, at 10
(holding that "general knowledge, experience, and skills" acquired
by employee are distinguishable from "trade secrets" and are
insufficient to establish confidentiality obligation); Hefei Yuehe
Educ. & Training Sch. Co. v. Chen Mei, No. 3423, at 7 (Hefei Anhui
Interm. People's Ct. June 11, 2021) ("[The employer] has no
evidence to prove that the above information constitutes a trade
secret that needs to be kept confidential. . . . If non-
competition restrictions are imposed on workers on this ground, it
would be too harsh for workers and would also be contrary to the
provisions of the Labor Contract Law."). Dr. Zhang's knowledge of
general business information appears to be no different in kind
than what any employee would have from a former employer, and Abace
has not argued to the contrary.
We are aware that this holding is in tension with the
language of the agreements. For example, the Non-Compete Agreement
defines "trade secrets" as "customer, product, procedure, business
and service information" of Abace "or any affiliated business
entity." But — as the district court concluded, see Creative
Dynamics, 2024 WL 1375941, at *6-7 — we cannot give effect to this
language because it contravenes Chinese law. See Hefei Yuehe, No.
3423, at 7 (distinguishing trade secrets from general business
information); cf. Paul Arpin Van Lines, Inc. v. Universal Transp.
Servs., Inc., 988 F.2d 288, 290 (1st Cir. 1993) (holding that "an
- 17 - otherwise valid contract that results in the violation of a public-
protection statute or regulation is unenforceable"). Put bluntly,
to the extent that this language encompasses ordinary business
information that would be available to general employees, it cannot
serve as a basis to trigger the non-competition obligation against
Dr. Zhang.
V
We need go no further. We discern no genuine issue of
material fact and hold that a necessary condition for the
enforcement of a non-compete agreement under Chinese law has not
been satisfied. Accordingly, the district court did not err either
in granting Dr. Zhang's motion for summary judgment or in denying
Abace's cross-motion.
Affirmed.
- 18 -