# Shanghai Weston Trading Co., LTD v. Tedia Company, LLC

> District Court, S.D. Ohio · December 19, 2023

URL: https://www.frixlaw.com/law-library/cases/10383779

## Case

- **Court:** District Court, S.D. Ohio
- **Decided:** December 19, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10383779

## How later opinions describe it (automated extraction)

- concluding that under Ohio law, distributorship contracts premised on the sale of goods are governed by the Uniform Commercial Code
- finding this same rule has been adopted by the vast majority of courts in the context of franchise agreements and collecting cases
- describing the differences between confirmatory writings and the contract itself
- explaining that under Ohio law quantity can be inferred from the nature of the arrangement contemplated by the exclusive distributorship contracts
- explaining that this rule of decision has been followed in Ohio and is applicable to an exclusive distributorship over the sale of calculating machines in a designated territory covering Cincinnati

## Opinion text

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

SHANGHAI WESTON TRADING
CO., LTD.,

Plaintiff, Case No. 1:23-cv-117
JUDGE DOUGLAS R. COLE
v.

TEDIA COMPANY, LLC,

Defendant.
OPINION AND ORDER
Contract law deals with enforcing an exchange of promises. However, “a
promise merely in form, but in actuality not promising anything, … cannot serve as
consideration” for the formation of a contract, and thus cannot provide a legal basis
for a breach of contract claim. 3 Williston on Contracts § 7.7 (4th ed. 2023). This case
tasks the Court with evaluating whether the parties in actuality promised anything.
Before the Court is Defendant Tedia Company, LLC’s (Tedia) partial motion to
dismiss. (Doc. 21). Tedia seeks dismissal of Plaintiff Shanghai Weston Trading Co.,
Ltd.’s (Shanghai Weston) contract-based claims because Tedia believes its agreement
denominating Shanghai Weston its exclusive distributor in China is unenforceable
for two reasons. First, it lacks necessary terms describing Tedia’s obligations. And
second, Shanghai Weston has promised nothing in return, thereby rendering the
contract illusory. Separately, Tedia seeks a dismissal of Shanghai Weston’s fraud
claim. Tedia argues that the fraud claim is actually a recast breach of contract claim
and that it owed Shanghai Weston no duty to disclose its negotiations over the sale
of its business interests to a third party when it accepted purchase orders from
Shanghai Weston.
As explained further below, at this stage of the litigation and based on the

allegations in the Complaint, the Court disagrees with Tedia that the exclusive
distributor agreement is not a valid contract. But the Court agrees with Tedia that it
owed Shanghai Weston no duty to disclose the potential sale of its business. So
Shanghai Weston’s fraud claim fails as a matter of law, but its contract-based claims
survive dismissal. As a result, the Court GRANTS IN PART AND DENIES IN
PART Defendant’s Motion for Partial Dismissal of Complaint (Doc. 21) under Federal
Rule of Civil Procedure 12(b)(6). Accordingly, the Court DISMISSES WITHOUT

PREJUDICE only Count X (Fraud) of Plaintiff’s Verified Complaint for Injunctive
Relief, Declaratory Judgment, and Compensatory and Punitive Damages (Doc. 1).
BACKGROUND1
Tedia, a chemical solvent producer, originally worked hand-in-hand with
Shanghai Weston, its designated Chinese distributor. (Doc. 1 ¶¶ 11–12, #4). This

distributor relationship began in November 1998 and continued uninterrupted
through the end of the 2022 calendar year when the business relationship collapsed.
(Id. ¶¶ 12–13, 57–58, #4, 10–11). During that time, in 2011, Tedia expanded its
manufacturing operations in Asia by becoming the controlling shareholder of Anhui
Tedia High Purity Solvents Co., Ltd. (Anhui)—the company Tedia then used to

1 As this matter comes before the Court on a motion to dismiss, the Court must accept the
well-pleaded allegations in the Complaint as true. Bassett v. Nat’l Collegiate Athletic Ass’n,
528 F.3d 426, 430 (6th Cir. 2008). But in reporting the background here based on those
allegations, the Court reminds the reader that they are just that—allegations.
produce its chemical solvents in China. (Id. ¶¶ 4, 25–29, #2, 6–7). Shanghai Weston
alleges that when this expansion of production occurred, Tedia expanded the
Tedia/Shanghai Weston distributor arrangement to cover all products its new

subsidiary, Anhui, produced. (Id. ¶¶ 4, 31–32, #2, 7).
Shanghai Weston alleges that Tedia designated Shanghai Weston as the
exclusive distributor via “an Exclusive Distributor Agreement, which is evidenced by
a series of [documents styled as] certificates of exclusive distributor agreements” that
Tedia issued nine times during the course of the business relationship between the
parties. (Id. ¶¶ 1, 12–13, 22, 33, 37, #2, 4–8; Docs. 1-1 to 1-9). Each certificate was on
Tedia letterhead, and several were addressed “To Whom It May Concern.” Through

the certificate, Tedia “certif[ied]” that Shanghai Weston would be “Tedia’s exclusive
distributor in China.” (Docs. 1-1 to 1-9). The certificate then went on to state that the
exclusive arrangement to which the certificate referred would provide Shanghai
Weston certain rights. The exact language varied, but the 2013 certificate is
illustrative. It provides that the distributor agreement would grant Shanghai Weston
“exclusive[] authoriz[ation] to purchase from Tedia, [and to] market and [to] sell

Tedia products in China.”2 (Docs. 1-8, 1-9). Only Tedia signed these certificates. (Docs.
1-1 to 1-9). Early certificates set a timeframe for how long the exclusivity agreement
would remain in force by noting the specific expiration date for the agreement. (Docs.
1-1 to 1-7). And consistent with those expiration dates, Tedia meticulously reaffirmed

2 Earlier versions used “entitled to sell, [to] accept and [to] process orders” in place of the
“purchase … market and sell” language. (E.g., Doc. 1-4).
the exclusivity of Shanghai Weston’s distributorship so that it appears to have
continued unrevoked for the duration of their business relationship.
The last two certificates, issued in 2013 and 2018, respectively, contained

slight wording changes but continued the trend. In these certificates, Tedia again
certified that Shanghai Weston was Tedia’s exclusive distributor in China. But it also
noted that such exclusivity was also authorized “on behalf of” Anhui. (Doc. 1-8, #44;
Doc. 1-9, #46). And while the previous certificates had expressly stated when the
“agreement” expired, the last two certificates defined when the “certificate” expired.3
(Doc. 1-8, #44; Doc. 1-9, #46). The last-signed certificate said it would “expire[] on
December 31, 2023. (Doc. 1-9, #46).

Yet Tedia allegedly changed its mind about Shanghai Weston’s exclusive
distributorship and is claimed to have abandoned the arrangement in December
2021. (Doc. 1 ¶ 76, #13). This alteration stems from Tedia’s sale of its ownership
interests in Anhui, along with its Chinese trademark “Tedia,” to a Chinese company
named Shanghai Titan Technology Company, Ltd. (Titan). (Id. ¶¶ 69, 71, #12). Titan
allegedly purchased all Tedia products through Shanghai Weston before Titan bought

Anhui. (Id. ¶ 70, #12). But after the sale was consummated, Tedia allegedly began

3 In the Complaint, Shanghai Weston sometimes appears to conflate the certificates
themselves with the exclusivity agreement—for example, alleging that “[t]he 2018 certificate
stated that the ‘certificate [i.e., the Agreement] is in effect January 1, 2019, to December 31,
2023.” (Doc. 1 ¶ 39, #8). But the clear import of the Complaint read as a whole and in the
light most favorable to Shanghai Weston, as the Court must do at this stage of the litigation,
Pegram v. Herdrich, 530 U.S. 211, 230 & n.10 (2000), is that the certificates memorialize the
existence of an exclusivity agreement—not that they constitute the written instrument
containing the entire agreement and its terms. (Doc. 1 ¶¶ 1, 74–75, #2, 13 (alleging the
certificates “evidenced” the exclusivity agreement)).
“marketing and selling Tedia Products in China” through Titan, thereby rendering
Titan a competitor (rather than a customer) of Shanghai Weston and purportedly
breaching the exclusivity arrangement Shanghai Weston had enjoyed with Tedia. (Id.

¶¶ 77–83, #13–14).
Shanghai Weston’s claimed problems with Tedia were not limited solely to the
alleged nullification of the exclusive distributorship under which it had operated.
According to Shanghai Weston, Tedia accepted three purchase orders submitted by
Shanghai Weston in late 2021—on September 17, 2021, October 5, 2021, and
November 13, 2021, respectively—none of which were ultimately fulfilled. (Id. ¶¶ 42–
47, 50, #8–9; Docs. 1-10 to 1-15). Beyond decrying Tedia’s alleged breach of these

purchase orders, Shanghai Weston alleges that Tedia never intended to fulfill those
orders even when it accepted them. (Id. ¶ 142, #22). As Shanghai Weston tells it,
Tedia’s acceptance of the purchase orders was concurrent with its talks to sell Anhui
to Titan—the sale executed in December 2021—which talks were not disclosed to
Shanghai Weston until September 2022. (Id. ¶¶ 143–44, #23). By withholding the
existence of these negotiations from Shanghai Weston, Tedia allegedly “concealed

important information from [Shanghai] Weston with the intent to mislead [Shanghai]
Weston into relying” on the validity of the purchase orders. (Id. ¶ 145, #23). And
Shanghai Weston claims that because the purchase orders were not fulfilled, it has
been defrauded resulting in some amount of damages—purportedly measured by the
costs associated with the unfulfilled orders and the “unfair advantage against
[Shanghai] Weston” that Titan allegedly obtained by purportedly “creat[ing] market
confusion as to who [wa]s the authorized distributor” of Tedia’s products in China.
(Id. ¶¶ 146, 148, #23–24).
Based on these allegations, Shanghai Weston sued Tedia on February 27, 2023.

In the Complaint, Shanghai raised eleven claims: claims for (1) preliminary and
permanent injunctions (Count I); (2) breach of the exclusivity agreement (Count II);
(3) breach of the purchase orders (Count III); (4) promissory estoppel arising out of
the exclusivity agreement (Count IV); (5) promissory estoppel arising out of the
purchase orders (Count V); (6) unjust enrichment (Count VI); (7) Tedia’s tortious
interference with the exclusivity agreement as it pertained to Anhui (Count VII);
(8) Tedia’s tortious interference with Shanghai Weston’s business relationship with

Anhui (Count VIII); (9) conversion (Count IX); (10) fraud (Count X); and
(11) declaratory relief (Count XI). (Id. ¶¶ 87–155, #14–25). As a result of these claims,
Shanghai Weston requests compensatory and punitive damages, injunctive and
declaratory relief, as well as costs and fees. (Id. at #25–28). Shortly after Tedia
entered its appearance, Shanghai Weston moved for a temporary restraining order,
expedited discovery, and a preliminary injunction against Tedia’s continued use of

Titan to distribute its Anhui products. (Docs. 11-13). After holding an informal
preliminary telephone conference regarding these motions, the Court granted
Shanghai Weston’s temporary restraining order on March 16, 2023. (Doc. 14). The
Court then granted the parties’ agreed-to preliminary injunction order on April 7,
2023, which relief was limited to barring Tedia’s shipping Tedia products in China
through any distributor other than Shanghai Weston. (Docs. 18, #286–87).
Following the Court’s entry of the agreed-to preliminary injunction order,
Tedia moved to dismiss Count II (breach of contract arising out of the exclusivity
agreement), Count VII (tortious interference with the exclusivity agreement as it

pertained to Anhui), and Count X (fraud), for failure to state a claim upon which relief
may be granted under Federal Rule of Civil Procedure 12(b)(6). (Doc. 21). Specifically,
it argues that breach of contract claim fails because the exclusivity agreement lacks
material terms and because Shanghai Weston provided no consideration for the
alleged contract. (Id. at #298–303). Tedia then argues that the tortious interference
claim necessarily fails as a result because, absent a contract between Anhui and
Shanghai Weston, Tedia could not tortiously interfere. (Id. at #303). And it argues

that the fraud claim fails because the claim is merely a recast breach of contract claim
and because Tedia owed Shanghai Weston no duty to disclose the allegedly withheld
information. (Id. at #304–06). Shanghai Weston opposed (Doc. 24), and Tedia filed its
reply (Doc. 25).4
The matter is now ripe for the Court’s review.

4 Tedia’s reply brief makes a passing reference to requesting the Court “sua sponte [to] strike
the Declaration attached to Shanghai Weston’s Opposition as improper.” (Doc. 25, #425). The
Court does not consider this request as Tedia did not formally move to strike the declaration
and included the request in its reply without providing Shanghai Weston an opportunity to
respond. See Bard v. Brown Cnty., 970 F.3d 738, 750–51 (6th Cir. 2020). And the Court finds
that striking the declaration is unnecessary. The Court expressly confined its review, as it
must at this stage in the litigation, to only the well-pleaded factual allegations. Elec. Merch.
Sys. LLC v. Gaal, 58 F.4th 877, 883 (6th Cir. 2023). And because the declaration played no
role in the Court’s disposing of Tedia’s motion, the appropriate action “is not to strike that
filing, but to disregard it.” Bloodworth v. Pouperd, No. 3:20-cv-2424, 2022 WL 716099, at *2
(N.D. Ohio Mar. 10, 2022). That said, the Court reminds Shanghai Weston that evidence
beyond the pleadings, judicially noticeable facts, written instruments, and documents
incorporated by reference in the Complaint are properly considered by the Court only when
presented with a motion for summary judgment. See Fed. R. Civ. P. 12(d).
LEGAL STANDARD
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
a “complaint must present sufficient facts to ‘state a claim to relief that is plausible
on its face.’” Robbins v. New Cingular Wireless PCS, LLC, 854 F.3d 315, 319 (6th Cir.

2017) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In assessing plausibility, the
Court “construe[s] the complaint in the light most favorable to the plaintiff.” Bassett
v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (cleaned up). But

while well-pleaded allegations are accepted as true, they are just that—allegations.
LAW AND ANALYSIS5
As noted, Tedia’s motion to dismiss addresses only three claims raised in the
Complaint: the claims for breach of the exclusivity agreement, tortious interference
with the exclusivity agreement, and fraud. The Court evaluates each in turn.

5 Both parties assume Ohio law applies without engaging in a choice-of-law analysis. While
choice of law is not a jurisdictional issue, the Sixth Circuit has tacitly suggested that courts
should nonetheless evaluate the issue—but “not [to] delve too deeply” when “all parties have
acquiesced[]without comment.” GBJ Corp. v. E. Ohio Paving Co., 139 F.3d 1080, 1085 (6th
Cir. 1998). The need to evaluate choice of law makes intuitive sense because, after all, what
law the Court must apply as a rule of decision is “an issue antecedent to … [resolving the
merits of] the dispute before it.” U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508
U.S. 439, 447 (1993) (cleaned up). So the Court may analyze choice-of-law even if “the parties
fail to identify and [to] brief” it given the Court “retains the independent power to identify
and [to] apply the proper construction of governing law, even where the proper construction
is that a law does not govern” the dispute. Id. at 446–447 (cleaned up).
Under Ohio law, which governs the choice-of-law rules that the Court must apply here,
Klaxon Co. v. Stentor Elec. Mfg., 313 U.S. 487, 496 (1941), the Court looks to Section 188 of
A. Count II – Breach of the Exclusivity Agreement
As stated above, Shanghai Weston claims that Tedia violated the exclusivity
agreement—evidenced by the certificate Tedia issued in 2018—by shifting its
distribution of Tedia products in China from Shanghai Weston to Titan. (Doc. 1, #16).

Tedia mounts two attacks to the legal validity of this contract claim. It first argues
that the exclusivity agreement is invalid because material terms are missing from
the certificates—documents that Tedia contends do not merely evidence a contract,
but in fact are the alleged contract. (Doc. 21, #298–302). Second it argues that no

the Restatement (Second) of Conflict of Laws to evaluate what law applies—a question that
turns on which forum has the “most significant relationship to the transaction and the
parties,” Ohayon v. Safeco Ins. Co. of Ill., 747 N.E.2d 206, 209 (Ohio 2001). To evaluate this
issue, the Court “should consider the place of contracting, the place of negotiation, the place
of performance, the location of the subject matter, and the domicile, residence, nationality,
place of incorporation, and place of business of the parties.” Id. On the limited record before
the Court—the well-pleaded factual allegations in the Complaint—the Court finds that the
parties’ wordless acquiescence to Ohio law is reasonable and warranted. Although Shanghai
Weston is a Chinese company with a specific focus on distributing chemical solvents in China,
Tedia retains its principal place of business here in Ohio. (Doc. 1 ¶¶ 8–9, #4). The evidence
of the contracts at issue in this dispute strongly suggest that acceptance and consummation
of those agreements occurred here in Ohio—Tedia issued the certificates confirming the
exclusivity agreement from Ohio, and it accepted the proposed purchase orders, which were
sent to Tedia’s headquarters in Ohio, from an Ohio address. (E.g., Doc. 1-1; Doc. 1-11, #52).
And although these agreements will eventually be performed in China—the agreements are
about Shanghai Weston’s sale and distribution of Tedia’s goods in China—the initial
inception and nexus of the contracting occurred in Ohio, and it is Tedia’s actions under (or in
contravention of) these agreements from its headquarters in Ohio that form the heart of this
dispute. For the Court’s analysis of the conflict-of-law issue without “delv[ing] too deeply”
into it at this stage of the litigation, that record is sufficient to establish that “no injustice
[would be] wrought by applying [Ohio] law to these acquiescent litigants.” GBJ Corp., 139
F.3d at 1085 (concluding that New York law applied given the company “at the center of this
case” was a New York business and “the negotiations at issue took place in New York”). The
Court notes, however, that its disposition of this issue is subject to reconsideration and
revision. Should evidence be adduced during discovery that changes the choice-of-law
calculus—for instance, evidence that the contracts had choice-of-law provisions or that
negotiations actually took place in another forum—the Court will reevaluate its legal
determination on that record after briefing and argumentation from the parties. The Court’s
conclusion here rests solely on the record presently before it.
contract exists because the alleged arrangement lacks mutual consideration. In
particular, the promise set forth in the certificate—an exclusive distributorship—
operates only to Tedia’s detriment; it imposes no corresponding obligation on

Shanghai Weston, which means there is no bargained-for exchange. (Id. at #302–03).
Neither argument carries the day.
Start with the claim that the contract is missing material terms. Tedia argues
that because the 2018 certificate does not specify a quantity term, Ohio law will
recognize such a contract only if it is either a requirements contract or an output
contract.6 (Id. at #298–99). As Tedia correctly notes, exclusivity is the touchstone of
either. Output contracts require a seller to sell all of its output exclusively to a single

buyer. H&C Ag Servs., LLC v. Ohio Fresh Eggs, LLC, 41 N.E.3d 915, 924–25 (Ohio
Ct. App. 2015). A requirements contract is similar, but it is an agreement that the
buyer will buy all of its required goods exclusively from a given seller. Id. at 923–24.
Relying on the exclusivity requirement for a valid requirements contract, Tedia
makes two interrelated arguments. First, Tedia argues that according to the 2018
certificate, Shanghai Weston need not purchase chemical solvents exclusively from

6 As explained below, Ohio law, via its adoption of the Uniform Commercial Code, also
recognizes and enforces exclusive dealing contracts, which include exclusive distributorship
agreements for the sale of goods. Ohio Rev. Code § 1302.19(B); Irwin Indus. Tool Co. v.
Worthington Cylinders Wisc., LLC, 2009 WL 606218, at *18–*19 (W.D.N.C. Mar. 9, 2009)
(applying Ohio law); see generally Watkins & Son Pet Supplies v. Iams Co., 254 F.3d 607,
611–12 (6th Cir. 2001) (concluding that under Ohio law, distributorship contracts premised
on the sale of goods are governed by the Uniform Commercial Code). And this is so, even if
the exact quantity term is not strictly provided for in the contract, since “[u]ncertainty as to
the number of [goods] to be ordered … [can be] capable of ascertainment after performance.”
Bach v. Friden Calculating Mach. Co., 155 F.2d 361, 364–65 (6th Cir. 1946) (explaining that
this rule of decision has been followed in Ohio and is applicable to an exclusive distributorship
over the sale of calculating machines in a designated territory covering Cincinnati).
Tedia, which places the contract outside the realm of a valid requirements contract.
(Doc. 21, #301; Doc. 25, #425–26). Then, it contends that because the contract was
non-exclusive, a specified mechanism to establish the quantity of goods to be

distributed needed to be fairly included in the terms of the 2018 certificate but there
is no such mechanism present. (Doc. 21, #300–01; Doc. 25, #423).
There are two conspicuous problems with these arguments. Begin with the
most evident. As the Court noted above, reading the Complaint in the light most
favorable to Shanghai Weston, the 2018 certificate “evidenced”—did not constitute,
but merely evidenced—the actual exclusivity agreement between the parties. See
supra note 3. Tedia’s argument, though, necessarily assumes that the certificate is

the contract, or in other words that the certificate itself must contain all of the
material terms necessary to form a valid exclusivity agreement. If, to the contrary,
the certificate merely confirmed the existence of some other underlying agreement,
an agreement extending beyond the terms solemnized in the certificate itself, then
the argument fails out of the box. Cf. Tubelite Co. v. Original Sign Studio, Inc., 891
N.E.2d 820, 824–25 (Ohio Ct. App. 2008) (describing the differences between

confirmatory writings and the contract itself).
Here, the Complaint’s well-pleaded allegations create a plausible inference
that those independent terms existed—that there was an agreement (whether
written or oral) beyond the terms contained in the certificate itself. For example, the
parties are claimed to have labored under an exclusivity arrangement without
interruption—and without objection to this course of dealing—for over two decades,
(Doc. 1 ¶¶ 19, 22, 33, 37, 76, #5–6, 7–8, 13). See Metal Seal Precision, Ltd. v. Good
Time Outdoors, Inc., 128 N.E.3d 678, 687 (Ohio Ct. App. 2018) (explaining that under
Ohio Revised Code § 1302.05, which Ohio adopted as part of its enactment of the

Uniform Commercial Code (UCC), the parties may “explain or supplement” the terms
included in confirmatory memoranda and contracts with their course of dealing, such
as when “the writing is not ‘a complete and exclusive statement of the agreement’”
(citation omitted)).7 Because the Complaint plausibly alleges that there is an
underlying exclusivity agreement that included terms beyond those memorialized in
the 2018 certificate, and because the Complaint contains sufficient factual allegations
to render plausible the inference that the full agreement included all relevant

material terms, Tedia’s contention that the contract lacks the necessary material
terms fails at this stage.8

7 And that the parties can use their past course of dealing to elucidate the terms of the claimed
contract explains why Tedia’s arguments about the perceived lack of a quantity term fall
short of requiring a dismissal of Shanghai Weston’s claim for breach of the exclusivity
agreement at this early stage of the litigation. (Doc. 21, #300–01). Evidence of Tedia’s historic
sales of chemical solvents to Shanghai Weston under this exclusivity arrangement over the
two decades it was in place could reasonably explicate what “good faith” quantity was
anticipated to be produced and sold by Tedia and then distributed by Shanghai Weston in
China. See Ohio Rev. Code § 1302.19(A) (defining the quantity term of an output contract as
“such actual output [of the seller] … as may occur in good faith”).
8 That said, the Court should not be understood to be finding that a separate agreement in
fact exists, that if it does that it contains all necessary terms, or that if the separate
agreements is an oral contract, that there are no other defenses, such as the difficulties of
enforcing oral contracts under the statute of frauds, that may apply. None of these potential
arguments are currently before the Court. Because Tedia’s briefing focused solely on
attacking the validity of the exclusivity agreement by homing in on only the terms as
memorialized in the 2018 certificate, the Court has had no occasion to evaluate other possible
legal issues. Simply put, the Court is relying on only Shanghai Weston’s allegations to
adjudicate the pending motion to dismiss. Further factual development may prove those
allegations wrong.
Separately, Tedia’s fixation on the allegedly missing elements of a
requirements contract seems to miss the point. The certificate evidencing the parties’
exclusivity arrangement states that the seller, Tedia, promises to employ a single

Chinese distributor for its chemical solvents, Shanghai Weston. That is not a
requirements contract, but rather an exclusive distributorship for the sale of goods.
Thompson Everett, Inc. v. Nat’l Cable Advert., L.P., 850 F. Supp. 470, 476 n.4 (E.D.
Va. 1994) (explaining that the “exclusive distributorship typically provides a
distributor with the right to be the exclusive outlet for a manufacturer’s products or
services in a given geographic area” and “do[es] not … [normally] limit the
distributor[] … [but is] frequently coupled with territorial restraints to keep the

dealers out of each other’s exclusive territories” (citations omitted)). As to such
agreements, the exclusivity of the seller’s choice in distributor for a given market is
clearly a necessary element to enforceability under Ohio law. CashCan Corp. v.
Reinfeld Dev. Ctr., Inc., No. 88AP-466, 1989 WL 98441, at *4–*5 (Ohio Ct. App. Aug.
24, 1989) (concluding that a modified contractual agreement for the sale of vending
machines in which the seller was “not committed” to any particular future sales to

plaintiff and was “free to proceed with o[ther] prospects” did not constitute an
exclusive dealing agreement). And that is allegedly present here as the seller, Tedia,
allegedly appointed Shanghai Weston as the exclusive distributor in China. But
beyond that, it is not clear what, if any, other elements are needed to make an
exclusive distributorship valid. Certainly, quantity is not one of them. See Bach v.
Friden Calculating Mach. Co., 155 F.2d 361, 364–65 (6th Cir. 1946) (explaining that
under Ohio law quantity can be inferred from the nature of the arrangement
contemplated by the exclusive distributorship contracts). See also Alessi Equip., Inc.
v. Am. Piledriving Equip., Inc., 578 F. Supp. 3d 467, 495–96 (S.D.N.Y. 2022) (applying

the New York UCC provision that is identical to Ohio Rev. Code § 1302.19(B) to an
exclusive distributorship and holding that “the absence of a quantity term in an
alleged exclusive distributorship contract … does not make an otherwise valid
contract invalid”). Beyond that, the Court’s research has not revealed any Ohio case
identifying the minimum terms necessary for a valid exclusive distributorship. That
said, the Idaho Supreme Court’s determination in General Auto Parts Co. v. Genuine
Parts Co., 979 P.2d 1207, 1215 (Idaho 1999), provides some helpful thoughts. There,

the court said that “duration, geographic scope[,] and performance standards” define
the high watermark of material terms.9 Id.; accord Irwin Indus. Tool Co. v.
Worthington Cylinders Wisc., LLC, 2009 WL 606218, at *18–*19 (W.D.N.C. Mar. 9,
2009) (concluding under Ohio law the hallmark of an exclusive distributorship is
whether “one commercial party has the other at its mercy in a particular market”
(cleaned up)); but see Miller v. Wikel Mfg. Co., 545 N.E.2d 76, 79 (Ohio 1989) (holding

that an oral agreement to create an exclusive distributorship in the state of Michigan
was valid and enforceable even though the duration was indefinite because by

9 The Court finds General Auto Parts generally persuasive because Idaho, another UCC
jurisdiction, has enacted the same exclusive dealing provisions that Ohio has. Compare Ohio
Rev. Code § 1302.19 with Idaho Code § 28-2-306. And the Idaho Supreme Court’s
determination of the material terms of an exclusive distributorship followed its canvassing
the relevant caselaw from other jurisdictions. Gen. Auto Parts Co. v. Genuine Parts Co., 979
P.2d 1207, 1215 (Idaho 1999).
operation of law, such contracts are “terminable at will by either party after a
reasonable duration and on reasonable notice”).
Assuming those are the required terms, the certificate at issue here clearly

establishes the duration (the most recent exclusivity agreement was set to expire on
December 31, 2023), the geographic region (China), and Shanghai Weston’s exclusive
control over that market. (Doc. 1-9, #46). And while the performance standards
Shanghai Weston had to follow were not expressly dictated in the terms of the
certificate, Ohio law, as explored below, imposes an obligation on the distributor “to
employ reasonable efforts to generate sales of the product.”10 Ill. Controls, Inc. v.
Langham, 639 N.E.2d 771, 779 (Ohio 1994). Thus, these terms suffice for the Court

to conclude that the Complaint plausibly alleges the existence of a contract that
contains all of the material terms necessary to establish an exclusive distributorship.
Simply, contrary to Tedia’s contention, the lack of a provision restricting from
whom Shanghai Weston could buy chemical solvents, even assuming the full
agreement between the parties lacks such a term, does not render the contract
unenforceable. Cf. Cyril Bath Co. v. Winters Indus., 892 F.2d 465, 467 (6th Cir. 1989)

(holding that under Ohio law, “[a] promise to purchase exclusively from one supplier
may be either implicit or explicit” and can be inferred from relevant competent
evidence, such as the seller’s “awareness of [the buyer’s] needs” and the agreement’s
terms). Rather, the certificate’s express provision of the exclusivity (i.e., the limitation

10 As noted above, what reasonable efforts means in the context of the distributorship
arrangement between Tedia and Shanghai Weston may be explained and supplemented by
parol evidence. Ohio Rev. Code § 1302.05. Put differently, the expected performance
standards Shanghai Weston was to follow may be evidenced by the parties’ course of dealing.
on which Chinese distributor Tedia could use to sell its chemical solvents), duration,
and geographic terms directly map onto the provisos needed for the agreement to
constitute a valid exclusive distributorship.

So Tedia’s first theory that Shanghai Weston’s breach of contract claim
premised on the exclusivity agreement must be dismissed because it lacks the
necessary material terms—quantity and exclusivity (on Shanghai Weston’s part)—
fails to persuade.
What about Tedia’s alternate theory that exclusivity promise is illusory (i.e.,
consideration is lacking) because the agreement does not obligate Shanghai Weston
to do anything? (Doc. 21, #302–03). For starters, Tedia’s argument rests on the same

flawed premise rejected above—that the certificate sets out all of the relevant terms
of the contract. The plausible existence of other terms beyond those memorialized in
the 2018 certificate strongly undercuts Tedia’s theory.
But even setting that to the side, the Court would still reject Tedia’s argument
that the exclusivity agreement lacked consideration. Under Ohio law, “[a] lawful
agreement by [] the seller … for exclusive dealing … imposes … an obligation … [on]

the buyer to use best efforts to promote the[] sale [of the seller’s goods].” Ohio Rev. Code
§ 1302.19(B). This statutory enactment implements the rule set forth in Wood v. Lucy,
Lady Duff-Gordon—a case studied by every law student in first-year contracts. 118
N.E. 214 (N.Y. 1917). Namely, promising a counterparty the exclusive right to
represent one’s interests is “instinct with an obligation, [even if] imperfectly
expressed,” of the counterparty to “use reasonable efforts” to promote those interests.
Id. at 214; Ill. Controls, 639 N.E.2d at 779 (“[W]e hold that a contractual provision
which gives a party the exclusive right to market a product on behalf of another
imposes upon that party a duty to employ reasonable efforts to generate sales of the

product.”). And if Shanghai Weston’s acceptance of Tedia’s promise to use Shanghai
Weston as its exclusive Chinese distributor imposes on Shanghai Weston a return
obligation to exercise reasonable efforts to promote Tedia’s products in China, then
there is nothing illusory about the promises contained in the exclusivity agreement.11
Each party is burdened by a promise to the other that creates a viable cause of action
for breach of contract in the event of one party’s failure to perform. So Tedia’s
alternate argument that the breach of the exclusivity agreement claim fails as a

matter of law for a want of consideration also lacks merit.
Accordingly, the Court concludes that Count II of the Complaint survives
Tedia’s motion to dismiss.

11 And this inherent obligation to use best efforts to hawk Tedia’s products in China further
undermines Tedia’s contention that Shanghai Weston need not buy anything that Tedia
produces. (Id. at #301, 303). If one is obligated to employ best efforts to promote and to sell a
product, that obligation likely cannot be satisfied by failing to purchase the seller’s goods in
the first instance. Put differently, Shanghai Weston would risk being unable to claim it was
using best efforts to distribute Tedia’s products in China sans buying a non-zero quantity of
the chemical solvent. Ill. Controls, 639 N.E.2d at 779 (“[A] contractual provision which gives
a party the exclusive right to market a product on behalf of another imposes upon that party
a duty to employ reasonable efforts to generate sales of the product.” (emphasis added)). So
although the obligation to buy some solvent is not explicitly stated in the certificate, it
reasonably inheres in the obligation to exercise best efforts to create a market for Tedia’s
product, thereby being integral to the exclusivity agreement. Cyril Bath Co., 892 F.2d at 467.
This conclusion is bolstered and can be plausibly inferred from the fact that over the last two
decades, Shanghai Weston’s alleged outlays to maintain its Chinese distribution network for
the sale of Tedia’s products were significant. (Doc. 1 ¶¶ 18, 21, #5). In other words, Shanghai
Weston operated under the impression that it had to build up Tedia’s brand recognition in
China by purchasing, marketing, and distributing a non-trivial amount of Tedia’s output.
B. Count VII – Tortious Interference with the Exclusivity Agreement
The Court need not tarry long on Tedia’s argument why Shanghai Weston’s
tortious interference claim must be dismissed for failure to state a claim for relief.
Tedia’s sole argument for dismissal hinges on its mistaken contention that the

exclusivity agreement as pleaded does not constitute a valid contract. (Doc. 21, #303;
Doc. 25, #426). Tedia is correct that under Ohio law, a tortious interference claim
requires proof of “the existence of a contract.” Kenty v. Transamerica Premium Ins.
Co., 650 N.E.2d 863, 866 (Ohio 1995). But given the Court found that Shanghai
Weston adequately pleaded the existence of a valid contract, see supra Part A, Tedia’s
sole argument for the dismissal of the tortious interference claim, by necessity, lacks

merit. So Count VII of the Complaint likewise survives Tedia’s motion to dismiss.
C. Count X – Fraud
Finally, turn to Shanghai Weston’s fraud claim. An Ohio fraud claim requires
proof of the following elements:
(1) a representation or, where there is a duty to disclose, a concealment
of a fact, (2) which is material to the transaction at hand, (3) made
falsely, with knowledge of its falsity, or with such utter disregard and
recklessness as to whether it is true or false that such knowledge can be
inferred, (4) with the intent of misleading another into relying upon it,
(5) justifiable reliance upon the representation or concealment, and (6) a
resulting injury proximately caused by the reliance.
Captiva, Inc. v. Viz Commc’ns, Inc., 85 F. App’x 501, 505 (6th Cir. 2004) (citing
Williams v. Aetna Fin. Co., 700 N.E.2d 859, 868 (Ohio 1998)). Shanghai Weston
appears to be relying on a theory of promissory fraud. (Doc. 1 ¶¶ 139, 142, #22; Doc.
24, #412–13). Namely, Shanghai Weston essentially alleges Tedia “ma[de] a promise
concerning a future action [(i.e., the fulfillment of the three purchase orders)] … and,
at the time [Tedia] ma[de] [the promise], [it] ha[d] no intention of keeping the
promise.” Williams v. Edwards, 717 N.E.2d 368, 374 (Ohio Ct. App. 1998).
Shanghai Weston’s claim fails right out of the gate. To establish fraud, a party

must show a misrepresentation where a duty to disclose existed. Levy v. Seiber, 57
N.E.3d 331, 338 (Ohio Ct. App. 2016). Considering the purchase orders were
consummated via arm’s-length transactions, (Doc. 1 ¶¶ 42–47, #8–9), the only basis
for Tedia’s owing Shanghai Weston a duty to disclose would be if “full disclosure
[were] necessary to dispel misleading impressions that are or might have been
created by [Tedia’s] partial revelation of the facts.”12 Levy, 57 N.E.3d at 338 (emphasis
removed). The Complaint lacks any non-conclusory allegations that Tedia’s actions

12 A duty to disclose may also exist if there is a “fiduciary relationship [or] both parties to the
transaction understand that a special trust or confidence has been reposed.” Levy, 57 N.E.3d
at 338. No party has argued that either applies here. (Doc. 24, #415; Doc. 25, #427). That
tactical choice is wise given the parties are sophisticated businesses that consummated the
purchase orders at arm’s length. Umbaugh Pole Bldg. Co. v. Scott, 390 N.E.2d 320, 323 (Ohio
1979) (holding that an institutional lender’s provision of advice to a debtor did not create a
fiduciary or special relationship triggering a duty to disclose because the parties’ interactions
occurred “in a commercial context in which the parties dealt at arm’s length, each protecting
his own interest”). And courts applying Ohio law have held, in accordance with the rule
adopted by most jurisdictions, that the existence of a distributorship agreement is alone
insufficient to give rise to a fiduciary relationship. E.g., Executone of Columbus, Inc. v. Inter-
Tel, Inc., No. 2:06-cv-00126, 2007 WL 1144866, at *5 (S.D. Ohio Apr. 16, 2007) (applying Ohio
law); accord OKI Distrib., Inc. v. Amana Refrigeration, Inc., 850 F. Supp. 637, 647 (S.D. Ohio
1994) (“[I]t is well established that a manufacturer-distributor relationship, absent more,
does not give rise to a fiduciary relationship.” (collecting cases from jurisdictions across the
country)); cf. O’Neal v. Burger Chef Sys., Inc., 860 F.2d 1341, 1349 & n.4 (6th Cir. 1988)
(finding this same rule has been adopted by the vast majority of courts in the context of
franchise agreements and collecting cases). So there needs to be additional factual allegations
to create a plausible inference that the parties intended their arrangement to have the
trappings of a fiduciary relationship or that the parties understood that Shanghai Weston
held special trust or confident in Tedia. But, the Complaint is lacking in any such non-
conclusory, well-pleaded factual allegations. Without these details, the Court cannot conclude
that the exclusive distributorship was anything other than an arm’s-length sophisticated
economic transaction.
created a mistaken impression about some material fact—let alone, allegations that
Tedia even partially revealed facts material to the purchase orders. All Tedia is
alleged to have done is accepted the three purchase orders and failed to perform on

those agreements. (Doc. 1 ¶¶ 43, 45, 47, 50, #8–9; Docs. 1-11, 1-13, 1-15). That is a
classic breach of contract claim as alleged. But without more, Shanghai Weston fails
to state a claim for relief for fraud because “fraud cannot be predicated upon the mere
fact that a promise has been broken.” Wall v. Firelands Radiology, Inc., 666 N.E.2d
235, 243 (Ohio Ct. App. 1995) (cleaned up).
Shanghai Weston counters that Tedia’s “confirmations [and subsequent silence
about the negotiations involving Tedia and Titan] misled Weston, [thereby] leading

Weston to believe that its orders would be fulfilled.”13 (Doc. 24, #413–15). But that
argument fails to answer the predicate question whether Tedia had a duty to disclose
such information. As Tedia rightly observes, “Shanghai Weston does not point to any
partial revelation of facts provided by Tedia [] that were misleading and needed to be
dispelled.” (Doc. 25, #427). Offering no argument (or specific allegations) to the
contrary, Shanghai Weston has failed to plead sufficient factual allegations to make

out a claim for fraud. So Count X of the Complaint, Shanghai Weston’s fraud claim,
must be dismissed without prejudice for failure to state a claim for relief.

13 Shanghai Weston’s statement of the fraud claim reinforces that, in actuality, it has simply
dressed up its breach of contract claim in fraud garb. As fraud claims turn on duties that
exist independent of the terms and promises of the contract, Navistar, Inc. v. Dutchmaid
Logistics, Inc., 171 N.E.3d 851, 859–60 (Ohio Ct. App. 2021), Shanghai Weston’s reliance
solely on the promise to deliver the goods contracted for dooms its claim, even beyond the
failure adequately to allege that Tedia owed Shanghai Weston a duty to disclose.
CONCLUSION
Altogether, the Court finds that based on the allegations in the Complaint,
Shanghai Weston’s contract-based claims arising under the exclusivity agreement
survives Tedia’s motion to dismiss. While further factual developments may vindicate
Tedia’s position that the exclusivity agreement is not a valid contract, the Court
cannot reach that conclusion at this stage of the litigation in light of the well-pleaded
factual allegations read in the light most favorable to Shanghai Weston. That said,
the Court agrees with Tedia that it owed Shanghai Weston no duty to disclose the
potential sale of its business interests to Titan. Therefore, Shanghai Weston’s fraud
claim fails as a matter of law. So the Court GRANTS IN PART AND DENIES IN
PART Defendant’s Motion for Partial Dismissal of Complaint (Doc. 21) under Federal
Rule of Civil Procedure 12(b)(6).
Accordingly, the Court DISMISSES WITHOUT PREJUDICE only Count X
(Fraud) of Plaintiffs Verified Complaint for Injunctive Relief, Declaratory Judgment,
and Compensatory and Punitive Damages (Doc. 1). The rest of the Complaint
survives dismissal, and the case may continue apace on those remaining claims.
SO ORDERED.

December 19, 2023
DATE DOUGLAS R. COLE
UNITED STATES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10383779. Public record. Not legal advice.