Daredevil, Inc. v. ZTE Corporation

CourtDistrict Court, E.D. Missouri
DecidedNovember 26, 2019
Docket4:12-cv-01166
StatusUnknown

This text of Daredevil, Inc. v. ZTE Corporation (Daredevil, Inc. v. ZTE Corporation) is published on Counsel Stack Legal Research, covering District Court, E.D. Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Daredevil, Inc. v. ZTE Corporation, (E.D. Mo. 2019).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

DAREDEVIL, INC., ) ) Plaintiff, ) ) v. ) Case No. 4:12 CV 01166 RWS ) ZTE CORP., ) ) Defendant. )

MEMORANDUM AND ORDER Plaintiff Daredevil, Inc. (Daredevil) sued ZTE USA, a wholly-owned subsidiary of Defendant ZTE Corp., for breach of contract, fraud, and unjust enrichment. The case went to arbitration. Because Daredevil had not sued ZTE Corp. at the time of the arbitration, the arbitrator found that Daredevil’s claims against ZTE Corp. were outside the scope of the arbitration. After the arbitrator made this determination, Daredevil brought this suit against ZTE Corp., asserting the same grounds for relief it had sought from ZTE USA. This case was stayed pending arbitration between Daredevil and ZTE USA. Ultimately, the arbitrator rejected Daredevil’s claims against ZTE USA. The District Court for the Middle District of Florida confirmed the arbitration award, see PTA-FLA, Inc. v. ZTE USA, Inc., No. 3:11-cv-510-J-32JRK, 2015 WL 12843833 (M.D. Fla. Oct. 6, 2015), and the Eleventh Circuit Court of Appeals affirmed, see PTA-FLA, Inc. v. ZTE USA, Inc., 844 F.3d 1299 (11th Cir. 2016). The stay in the present case was lifted and ZTE Corp. moved for summary judgment, arguing that Daredevil’s

claims are precluded based on the arbitrator’s decision. I find that Daredevil’s claims are precluded. As a result, I will grant ZTE Corp.’s motion for summary judgment.

Background This lawsuit arises out of Daredevil’s attempt to develop a cell-phone network in St. Louis, Missouri. 1 On September 25, 2008, two ZTE USA representatives—Neil Kushner and Joey Jia—visited Eric Steinmann, Daredevil’s

owner, at his house in California. After some negotiations, Daredevil entered into a contract (the Missouri MSA) that same day with ZTE USA and ZTE Corp. (ZTE USA’s parent corporation).2 This contract consisted of a five-page “Agreement” as

1 Unless otherwise noted, I am drawing from the parties’ statements of undisputed facts. Local Rule 4.01(E) requires a party moving for summary judgment to attach “a statement of uncontroverted material facts,” and a party opposing summary judgment to “include a statement of material facts as to which the party contends a genuine issue exists.” Both Daredevil and ZTE Corp. make this process difficult. Daredevil repeatedly “objects to the extent that [ZTE Corp.’s] proffered fact[s] are immaterial, vague[,] and misleading,” but then often goes on to admit the substance of those facts. For its part, ZTE Corp. responds to the first 54 of Daredevil’s 59 additional material facts with the same lengthy statement which starts by denying “that this allegation involves facts that are material to the determination of its motion for summary judgment based upon the preclusive effect of the [Arbitrator’s] Final Award.” 2 There is some dispute about whether ZTE Corp. was a party to this contract. The Agreement repeatedly refers to “ZTE”, and the signature block for Jia says “ZTE, Inc.” The Master Supply Agreement only refers to “ZTE USA, Inc.” and the signature block for Jia says “ZTE USA, Inc.” However, the Agreement also says that its purpose was to establish a close relationship “that transcends the borders dividing the countries of these two companies.” Because ZTE USA is incorporated in the United States, this language would seem out of place if ZTE Corp. was not also a party to the contract. [See Doc. #78, Ex. 2.] Moreover, for the well as a standardized “Master Supply Agreement” (MSA). The Agreement begins by noting that “the terms of the attached agreement [i.e., the MSA] will

apply” and ends with “[a]dditional terms as included.” [Doc. #78, Ex. 2.] As Daredevil acknowledged in arbitration, the Agreement and the MSA “was all to be interpreted as one integrated document.” [Doc. # 78, Ex. 5. at 60–61. See also

Doc. #78, Ex. 3 at 24 (“These dates and terms were incorporated into a six-page contract that Mr. Steinmann typed up himself while the ZTE people were there. … This contract, including about ten pages of boilerplate language … is what has been dubbed the Missouri MSA.”).] 3 The Missouri MSA specified terms

regarding the establishment of Daredevil’s St. Louis network. Among other things, ZTE agreed to supply Daredevil with network infrastructure (e.g., cable bundles, battery cabinets, other “core network components,” and base stations) by

particular dates, to provide handsets at low prices, and to help with software development for phone applications.

purpose of summary judgment analysis, I will assume that ZTE Corp. is a party to the contract. This assumption favors Daredevil, the non-moving party. Yet even if ZTE Corp. is a party to the contract, that fact is not material to my analysis. 3 These statements are Daredevil’s own words during arbitration (in their Statement of Claim and closing argument). Despite these admissions, in its opposition to summary judgment, Daredevil claims that the MSA and the Agreement are stand-alone documents. Daredevil argues that “the Agreement was not subject to arbitration” and that the arbitrator “simply did not recognize the Agreement for the purposes of his Award.” [Doc. # 98.] The record flatly contradicts these arguments. Throughout the arbitration, the parties (including Daredevil) referred to the contract—the entire contract—as the Missouri MSA. The arbitrator followed this convention in the Final Award. [See Doc. # 78, Ex. 7.] Things did not go as planned. On May 4, 2011, Daredevil sued ZTE USA for breach of contract, rescission, and unjust enrichment in this Court. See

Daredevil, Inc. v. ZTE USA, Inc., 4:11 CV 1054 TIA (E.D. Mo.). Daredevil alleged that ZTE USA had breached the Missouri MSA by failing to deliver the equipment in a timely fashion and that this caused Daredevil to lose the

opportunity to develop the St. Louis network. ZTE USA moved to compel arbitration because the MSA included an arbitration provision. The Court granted the motion to compel arbitration on June 22, 2011. See Daredevil, Inc. v. ZTE USA, Inc., 4:11 CV 1054 TIA, 2011 WL 2473083 (E.D. Mo. June 22, 2011).

Daredevil’s lawsuit against ZTE USA is only one of a series of lawsuits against ZTE brought by related entities. Around the same time, Daredevil affiliates—collectively known as “ClearTalk” and each “owned and controlled by

Eric Steinmann”—filed related cases against ZTE USA. [Doc. #78, Ex. 7.] In South Carolina, PTA-FLA, Inc. sued ZTE USA; in Tennessee, NTCH-West Tenn., Inc. sued ZTE USA; in Washington, NTCH-WA sued ZTE USA; and in California, Steinmann sued ZTE USA and ZTE Corp. In December 2011, after

several of these cases were sent to arbitration, the parties stipulated to a consolidated arbitration in Jacksonville, Florida. After the stipulation, the cases operated as a unified proceeding that bound ZTE USA, Daredevil, PTA-FLA, NTCH-West Tenn., and NTCH-WA (hereafter collectively referred to as “ClearTalk entities”).

Also in December 2011, the ClearTalk entities filed an Amended Statement of Claim in arbitration, where each entity (including Daredevil) asserted claims against ZTE USA and against ZTE Corp. ZTE Corp. objected to including these

claims because, except for Steinmann’s claims, this was the first time that they had been brought. Daredevil argued that ZTE Corp. should be included as an “alter ego” of ZTE USA—or, alternatively, that ZTE USA and ZTE Corp. were agent and principal or that their actions made them coconspirators. On June 4, 2012, the

arbitrator agreed with ZTE Corp., “determin[ing] that the scope of the arbitration will be all the claims, counterclaims, and defenses that exist or may arise between and among the parties subject to the jurisdiction of the courts in the lawsuits

pending at the time of the agreement to arbitrate.” [Doc. # 78, Ex.

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