China United Lines, LTD v. Amazon.com Services LLC

Background

China United Lines, Ltd. (CUL) brought two breach-of-contract claims under New York law against Amazon.com Services LLC (Amazon). CUL operates a container-shipping business based in China. The parties entered into a Main Transportation Agreement and a Work Order in April 2022, and a Nondisclosure Terms agreement in March 2022. The Main Agreement incorporated the nondisclosure agreement.

The Main Agreement allowed either party to terminate for convenience with 90 days’ written notice. CUL alleged that, after Amazon gave notice of termination for convenience, the parties agreed that Amazon would pay CUL $31,560,000. CUL relied on a spreadsheet sent by an Amazon manager and subsequent emails discussing the amount and a 45-day payment period. CUL alleged that it accepted the proposed payment arrangement and gave up other payments it could have claimed.

Amazon later sent a notice terminating the Work Order for cause, effective immediately. The notice cited CUL’s alleged unauthorized use and disclosure of confidential information, including WeChat posts referring to Amazon’s support and the parties’ business relationship. CUL alleged that the termination for cause was wrongful and that Amazon failed to pay the $31,560,000 invoice.

Amazon’s motion

Amazon moved to dismiss the Second Amended Complaint under Rule 12(b)(6), which permits dismissal when a complaint does not allege enough facts to make a legal claim plausible. Amazon relied principally on the parties’ written agreements.

The Main Agreement and nondisclosure agreement submitted with the motion contained substantial redactions. The redactions covered the definition of “Confidential Information” and a provision Amazon said required signed written amendments. Amazon also did not submit the Work Order, which was central to CUL’s second claim, or the correspondence underlying CUL’s alleged agreement to receive $31,560,000.

Count One: alleged agreement to pay $31,560,000

Count One alleged that Amazon and CUL formed a new written agreement under which Amazon would pay $31,560,000 in exchange for terminating the parties’ relationship for convenience and CUL’s waiver of other payments. Amazon argued that the communications were only a notice of termination, not a binding agreement, and that the complaint did not identify a signed amendment as allegedly required by the Main Agreement.

The court denied the motion to dismiss Count One. At the pleading stage, and drawing reasonable factual inferences for CUL, the complaint plausibly alleged an offer, acceptance, agreement about termination for convenience, and agreement about the amount and timing of payment. The court also could not determine what effect the alleged signed-amendment provision had because that provision was not included in the version of the Main Agreement submitted to the court. The court therefore did not decide whether the alleged payment agreement was ultimately enforceable.

Count Two: alleged wrongful termination for cause

Count Two alleged that CUL had performed its obligations and that Amazon breached the Main Agreement and Work Order by terminating them for cause based on the WeChat posts. Amazon argued that the unambiguous contract language authorized termination for CUL’s disclosures and use of Amazon’s name or other proprietary rights.

The court denied the motion to dismiss Count Two. Under New York law, contracts must be read as a whole rather than by focusing on isolated provisions. The court could not interpret the Main Agreement and nondisclosure agreement as a whole because important terms, including the definition of “Confidential Information,” were redacted. It also could not determine whether Amazon properly exercised its termination rights without reviewing the missing Work Order, which the termination notice cited as a basis for cancellation.

Disposition

The court denied Amazon’s motion to dismiss. It denied the motion as to Count One and denied it as to Count Two. The ruling allowed both claims to continue at that stage; it did not determine whether Amazon breached the agreements, whether CUL performed its obligations, or whether CUL was entitled to $31,560,000.