Binh Thanh Import Export Production & Trade Joint Stock Co. v. Amazon.com…

Background

Binh Thanh Import Export Production & Trade Joint Stock Company, doing business as Gilimex, Inc., sued Amazon.com Services LLC, doing business as Amazon Robotics. The complaint asserted claims for negligent misrepresentation, unfair trade practices under Massachusetts General Laws chapter 93A, breach of contract, and breach of fiduciary duty. Amazon removed the case from New York state court based on diversity jurisdiction and moved to dismiss for failure to state a claim.

According to the complaint, Amazon began buying the plaintiff’s Fabric Pod Arrays in 2014. The plaintiff alleged that it expanded its workforce and facilities, investing $70 million to meet Amazon’s growing demand. It further alleged that Amazon agreed to give reasonable and substantial advance notice of significant changes in its forecasts. The parties operated without a written agreement until 2021, when they entered a Component Sale and Purchase Agreement. In 2022, Amazon reduced its projected demand and instructed the plaintiff to effectively stop production and return unused raw materials. The plaintiff alleged that it was left with inventory, raw materials, facility investments, and other losses.

Choice of Law

The court held that the CSPA’s provision selecting New York law governed the contract claim but did not extend to the tort claims. Applying New York choice-of-law principles, the court analyzed the negligent-misrepresentation claim under Massachusetts law because the claim failed under either state’s law. The court also concluded that no choice-of-law analysis was necessary for the chapter 93A claim because it failed even assuming Massachusetts law applied.

For the fiduciary-duty claim, the court found an actual conflict between New York and Massachusetts law concerning when a commercial relationship can become fiduciary. The court held that Massachusetts law applied because the alleged conduct occurred there: Amazon Robotics was headquartered in North Reading, Massachusetts; Amazon contracted with the plaintiff, ordered the pods, and generated forecasts from Massachusetts; and the parties met there during the relevant period.

Claims and Rulings

Breach of contract. The court granted dismissal of the contract claim. The claim was based on the CSPA’s requirement that the parties hold quarterly business review meetings. The plaintiff alleged that Amazon’s failure to hold those meetings prevented it from learning about the risk of reduced pod demand. The court held that the CSPA’s express exclusion of lost profits and indirect, incidental, consequential, and special damages barred the damages the plaintiff sought. The court reasoned that the plaintiff did not bargain for the meetings as a source of information or assurances about future demand, so losses associated with relying on information the meetings might have provided were consequential damages.

Negligent misrepresentation. The court granted dismissal of this claim. Under Massachusetts law, the plaintiff needed to allege that Amazon supplied false information, that the plaintiff justifiably relied on it, and that the reliance caused economic loss, among other elements. The court found that the complaint alleged only that Amazon failed to indicate before April 2022 that demand might decline. It did not allege facts supporting an inference that Amazon’s forecasts were false when made or that Amazon knew they were false.

The court also held that the claim was independently barred by the CSPA. The agreement stated that Amazon’s forecasts were for planning purposes, nonbinding, and not commitments to purchase products. Its merger clause also barred reliance on additional oral or written provisions not included in a signed agreement. The court concluded that these provisions prevented the plaintiff from claiming justifiable reliance on Amazon’s forecasts.

Massachusetts unfair trade practices. The court dismissed the chapter 93A claim. The complaint did not allege sufficient facts to show that Amazon engaged in unfair or deceptive conduct. The court found unsupported the allegations that Amazon pressured the plaintiff to expand capacity, penalized it for failing to meet volume demands, or induced it to keep buying materials while knowing it would purchase only a fraction of the inventory. The court also noted that the plaintiff alleged it continued production after receiving Amazon’s reduced forecast, which undermined the claim that Amazon deceptively induced that conduct. The alleged conduct was not sufficiently egregious or deceptive to state a chapter 93A claim.

Breach of fiduciary duty. The court denied dismissal of this claim. Under Massachusetts law, a fiduciary relationship can arise in a commercial setting when one party places confidence in another and the other party knows of that reliance. The complaint alleged that Amazon referred to the plaintiff as a strategic partner, encouraged substantial investments devoted to Amazon’s pod production, knew that the plaintiff relied on Amazon’s forecasts and advance notice, and promoted mutual trust in the relationship. The court held that these allegations plausibly supported a fiduciary relationship and that whether such a relationship existed was a factual question.

The court also rejected Amazon’s argument that the CSPA’s merger provision eliminated any fiduciary relationship. It held that, particularly because the alleged relationship began before the CSPA was signed, the merger provision did not eliminate as a matter of law a fiduciary duty that may have developed earlier.

Disposition

The court granted in part and denied in part Amazon’s motion to dismiss. The breach-of-contract, negligent-misrepresentation, and Massachusetts unfair-trade-practices claims were dismissed. The breach-of-fiduciary-duty claim survived under Massachusetts law. The Clerk of Court was directed to close the motion at Docket Number 26.