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State Development and Investment Company Zhonglu Fruit Juice Co., Ltd. v. Haisheng International, Inc.

United States District Court, D. New Jersey

May 26, 2015

STATE DEVELOPMENT AND INVESTMENT COMPANY ZHONGLU FRUIT JUICE CO., LTD., Plaintiff,
v.
HAISHENG INTERNATIONAL, INC., Defendant.

CRAIG R. TRACTENBERG, NIXON PEABODY, LLP, NEW YORK, NY, On behalf of plaintiff.

MATTHEW SEAN INGLES, JAMES H. MCQUADE (pro hac vice), ORRICK HERRINGTON & SUTCLIFFE LLP, NEW YORK, NEW YORK, On behalf of defendant.

OPINION

NOEL L. HILLMAN, District Judge.

This case involves claims that defendants misappropriated trade secrets. Presently before the Court is the motion of Plaintiff State Development and Investment Company Zhonglu Fruit Juice Co., Ltd. ("SDICZL") for leave to file an amended complaint. For the reasons expressed below, plaintiff's motion will be denied, and its case dismissed without prejudice.

BACKGROUND

Plaintiff SDICZL, a Chinese corporation, specially manufactures in China a sweet potato juice concentrate, a key component of Campbell Soup's V8 V-Fusion product. How plaintiff developed and manufactures its product are trade secrets and are maintained in the strictest confidence by the company and its employees.

Plaintiff claims that China Haisheng, a Chinese corporation which is the parent to defendant Haisheng International, Inc. ("HII"), a New York entity, secretly hired Li Yinjie, a former employee of plaintiff, to obtain unauthorized access to plaintiff's trade secrets. Plaintiff claims that China Haisheng used plaintiff's trade secrets to create an illegal knock-off of plaintiff's sweet potato juice concentrate to be used in Wal-Mart's "Great Value" brand version of Campbell's V-Fusion product. Plaintiff claims that China Haisheng worked in concert with HII and defendant Clement Pappas[1] to bring the knock-off sweet potato juice into the United States for use in the American market.

Plaintiff has not lodged claims against China Haisheng in this suit. Instead, plaintiff claims that HII and Clement Pappas knew of the illegal use of plaintiff's trade secrets to make the knock-off product, and they acted in concert with China Haisheng to bring it into the United States for distribution. By way of example, plaintiff claims that China Haisheng mislabeled refrigerated drums of the knock-off sweet potato juice concentrate, shipped them to HII, which delivered them to Clement Pappas for the final manufacturing process for the production of Wal-Mart's "Great Value" V8-Fusion-like product. Plaintiff has asserted two claims against HII: Count One for misappropriation of trade secrets and confidential information, and Count Two for unjust enrichment.

HII moved to dismiss plaintiff's complaint, but during the pendency of that motion, plaintiff moved for leave to file an amended complaint. The Court denied HII's motion to dismiss, finding that the sufficiency of plaintiff's claims against HII should be considered in the context of evaluating plaintiff's proposed first amended complaint. HII has opposed plaintiff's attempt to amend its complaint, arguing that it would be futile and it is being advanced with improper delay.

DISCUSSION

A. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. ยง 1332 because there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75, 000. Plaintiff is a Chinese corporation and defendant HII is a New York corporation with its principal place of business in New York.

B. Standard for Motion for Leave to Amend

Amendments to pleadings are governed by Federal Civil Procedure Rule 15, which provides that the Court "should freely give leave when justice so requires." Fed.R.Civ.P. 15(a)(2). The Third Circuit has shown a strong liberality in allowing amendments under Rule 15 in order to ensure that claims will be decided on the merits rather than on technicalities. Dole v. Arco Chemical Co., 921 F.2d 484, 487 (3d Cir. 1990); Bechtel v. Robinson, 886 F.2d 644, 652 (3d Cir. 1989). An amendment must be permitted in the absence of undue delay, bad faith, dilatory motive, unfair prejudice, or futility of amendment. Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Amendment of the complaint is futile if the amendment will not cure the deficiency in the original complaint or if the amended complaint cannot withstand a renewed motion to dismiss. Jablonski v. Pan American World ...


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