Court Has Jurisdiction Over Chinese Company
In Williams v. Zhou, the plaintiff owned a professional consulting business located in New Jersey. The plaintiff marketed a “Citizenship by Investment” Program for the Antiguan government, which allows individuals to become citizens of Antigua by investing in the country’s economy. Defendant Zhou was a resident of New York while defendant Tian was a citizen of Shenzhen, China. The third defendant, Jiahao International Group, was a Hong Kong corporation with offices in Shenzhen, China. The plaintiff asserted that the individual defendants were business partners and co-owned the Chinese company Jiahao, but the individual defendants claimed that defendant Zhou was only Tian’s interpreter.
The parties met in 2014 after the defendants contacted the plaintiff through the official website for Antigua’s investment program. The parties met at a restaurant in New Jersey and the defendants expressed interest in facilitating economic citizenship applications for Chinese citizens throughout the world. Thereafter, the parties allegedly entered into a “verbal services agreement” whereby the plaintiff agreed to help the defendants negotiate the price of “economic citizenship” in Antigua for Chinese citizens. In essence, the plaintiff and his consulting company agreed to act as intermediaries and promised to conduct official discussions with the Prime Minister of Antigua and with other governmental officials in order obtain discounted access to Antiguan citizenship.
Plaintiff Commences Negotiations in Antigua on Behalf of Chinese Defendants
After securing the consulting agreement with the defendants, the plaintiff and his consulting company began working on obtaining discounted citizenship for the defendants’ Chinese clients. The plaintiff traveled to Antigua twice, met with the Prime Minister of Antigua, and worked for 1,120 hours on the defendants’ behalf. In doing so, the plaintiff incurred $14,500 in expenses and invoiced defendants for $322,500 for his consulting work. However, the defendants failed to pay the invoice, and the plaintiff filed suit.
Plaintiffs File Suit Against Chinese Defendants for Breach of Contract
After the defendants refused to pay the plaintiffs’ invoice, the plaintiffs filed a lawsuit for breach of contract seeking payment of the outstanding invoice. The defendants filed a motion to dismiss the lawsuit for lack of personal jurisdiction. The defendants further argued that the parties did not have a “verbal services agreement” and argued that a single page contract governed instead. According to the defendant, the contract, which was translated into Chinese by the plaintiffs’ translator, provided that the consulting fee was contingent upon the plaintiffs obtaining a reduced contribution to Antigua’s development fund and was only payable upon approval by the Antiguan government of the reduced fee.
Court Rules it Has Personal Jurisdiction Over Chinese Defendants
In moving to dismiss the plaintiffs’ complaint, the defendants argued that the court could not exercise personal jurisdiction over them because they had no connections to New Jersey, did not have offices there, never solicited business there, and only had one meeting in New Jersey. However, the court disagreed with the defendants’ claim that they did not have substantial connections to New Jersey. The court reasoned that the defendants were the ones to initiate contact with the plaintiff and his company, that the parties met in New Jersey, and that the defendants sent the operative contract to the plaintiff in New Jersey. Specifically, the court held that “defendants sent communications to New Jersey to contact a New Jersey resident about a business opportunity, went to New Jersey to meet the New Jersey resident, and then continued to send communications to New Jersey to facilitate an alleged business relationship.” In addition, the court found that defendant Tian admitted that he signed a contract and mailed it to New Jersey.
The court next considered whether the defendants’ established contacts with the state of New Jersey satisfied the overall “fairness requirement” of exercising personal jurisdiction. The court held that it did not see a compelling reason why litigating the matter in New Jersey would be unreasonable, even though it could be burdensome for the Chinese defendants. Instead, the court held that New Jersey had a “manifest interest” in providing a means for the plaintiffs to litigate their claims against the foreign defendants.
The court considered a decision by the Third Circuit Court of Appeals, O’Connor v. Sandy Lane Hotel Co., Ltd. 496 F.3d 312, 317 (3rd Cir. 2007), in which the court held that a Barbados entity had “purposely availed” itself of jurisdiction in the United States by sending brochures and placing phone calls to Pennsylvania citizens for the purpose of selling spa services. The court held that even though the Barbados company’s representatives had to travel 2,000 miles to defend themselves in Pennsylvania and most of the foreign witnesses were located in Barbados, it was not unfair to subject the company to legal proceedings in the state of Pennsylvania.
Based on the foregoing, the district court denied the defendants’ motion to dismiss on the grounds that the court possessed personal jurisdiction over the defendants.
The case is Williams v. Zhou, Court No. 2:14-cv-5544-KM-MAH, decided on January 30, 2018 in the United States District Court for the District of New Jersey.
***This legal translations blog should not be construed as legal advice. You should always consult a lawyer regarding your specific legal needs.***
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