Cicel (Beijing) Science & Technology Co., Ltd. v. Misonix, Inc.
2:17-cv-01642
E.D.N.YOct 7, 2017Background
- Cicel (Beijing) Science & Technology Co., Ltd., a Chinese distributor, entered a sole-distributor Agreement with Misonix, Inc. (a New York public company) effective June 1, 2013 through May 17, 2018 to distribute certain medical devices in China and Hong Kong.
- Cicel performed under the Agreement and derived roughly 70% of its business from Misonix products; it established sub-distributors in China with Misonix’s approval.
- Beginning Nov. 2014 Misonix requested detailed business and customer information from Cicel per the Agreement; in late May 2016 Misonix stopped shipments, withheld parts and service, and in Sept. 2016 announced it was "winding down" the relationship and disclosed possible FCPA concerns to the SEC.
- Cicel alleges damages from lost sales, forced breaches of its own contracts, threats/litigation from third parties, and reputational harms in China; it sued Misonix and several individual defendants asserting unfair competition; tortious interference (contract and prospective); breach of contract (seeking specific performance); conversion; and fraudulent inducement.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6). The court considered the complaint, contract, and public SEC filings and denied dismissal of the breach‑of‑contract claim (Count IV) but granted dismissal of Counts I, II, III, V and VI. All individual defendants were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — does Cicel state a plausible claim and may it seek specific performance? | Cicel says it performed, Misonix unjustifiably terminated the Agreement and Cicel is entitled to specific performance (resumption of shipments, repair/replacement). | Misonix contends termination was justified by an FCPA investigation and specific performance is inappropriate. | Claim survives 12(b)(6); factual disputes (justification for termination) unsuitable for dismissal now; specific performance remedy may be pled at this stage. |
| Unfair competition (Count I) — independent tort or duplicative? | Cicel argues misuse of confidential information is an independent wrong. | Misonix argues the conduct falls within contractual duties and the claim duplicates breach of contract. | Dismissed as duplicative of breach; no independent duty alleged outside the Agreement. |
| Tortious interference with contract (Count II) — adequately pleaded? | Cicel alleges defendants caused its sub‑distributors/contracts to be breached by halting shipments and terminating the Agreement. | Defendants say Cicel breached its sub‑distributor contracts and pleadings lack specific third‑party contract details. | Dismissed: Cicel failed to identify specific third‑party contracts and allegations improperly assert Cicel breached third‑party contracts (not third parties breaching). Claim duplicates contract dispute. |
| Tortious interference with prospective relations (Count III) — adequately pleaded? | Cicel alleges interference with prospective third‑party relationships by improper means. | Defendants assert lack of specifics and duplication with breach claim. | Dismissed for failure to plead specific prospective relationships and as duplicative of the contract claim. |
| Conversion (Count V) — distinct tort or contract remedy? | Cicel seeks recovery of $202,148.22 for products paid for but not delivered. | Defendants contend this is contract damages, not conversion; duplicative. | Dismissed: conversion grounded in contract; awarding both would permit double recovery. |
| Fraudulent inducement (Count VI) — pleaded with particularity and independent of contract? | Cicel claims it was induced to disclose proprietary information by fraudulent statements/omissions. | Defendants argue disclosures were required by the Agreement and the fraud claim is duplicative and fails Rule 9(b). | Dismissed: duplicative of contract, not collateral to the Agreement, and inadequately pleaded under Rule 9(b). |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (legal conclusions not accepted as true at pleading stage)
- Harris v. Mills, 572 F.3d 66 (2d Cir. 2009) (application of Twombly/Iqbal in the Second Circuit)
- Carvel Corp. v. Noonan, 350 F.3d 6 (2d Cir. 2003) (duty in tort must be independent of contractual duties)
- Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc., 98 F.3d 13 (2d Cir. 1996) (fraud claim collateralness and need for special damages when pleaded alongside contract)
- DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104 (2d Cir. 2010) (court assesses legal feasibility of complaint, not evidence weight)