Electronically FILED by Superior Court of California, County of Los Angeles on 06/20/2019 08:20 PM Sherri R. Carter, Executive Officer/Clerk of Court, by J. Gonzalez,Deputy Clerk 19PSCV00564 Assigned for all purposes to: Pomona Courthouse South, Judicial Officer: Peter Hernandez I WHGC, P.L.C. Jeffrey C.P. Wang (SBN I444I4) 2 JeffreyWang@WHGCLaw.com Michael G. York (SBN 89945) 3 MichaelYork@WHGCLaw.com G. Brent Sims (SBN I79397) 4 BrentSims@WHGCLaw.com Kathleen E. Alparce (SBN 230935) 5 KathleenA/parce@WHGCLaw. com 6 I30 I Dove Street, Suite I 050 Newport Beach, CA 92660 Tel. (949) 833-8483; Fax: (866) 88I-5007 7 8 9 Attorneys for Plaintiffs HUBPER GROUP, INC., THOMAS CHEN, FM XPRESS, LTD., METAX LOGISTICS, INC., and NEA DELIVERY, LLC d/b/a FIRST DELIVERY SERVICE 10 II I2 SUPERIOR COURT FOR THE STATE OF CALIFORNIA 13 IN AND FOR THE COUNTY OF LOS ANGELES I4 IS I 6 17 I8 I9 HUBPER GROUP, INC., a California Corporation; THOMAS CHEN, an individual; FM XPRESS, LTD., an Oregon Corporation; MET AX LOGISTICS, INC., a California Corporation; and NEA DELIVERY, LLC d/b/a FIRST DELIVERY SERVICE, a California Corporation, 20 Plaintiffs 2I vs. 22 AMAZON LOGISTICS, INC., a Delaware Corporation; VADIM KOZIN, an individual, RYAN HOPKINS, an individual, and DOES I- 23 24 25 IOO, Defendants. CASE NO. ______________ COMPLAINT FOR (1) BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING; (2) ESTOPPEL; (3) FRAUDULENT CONCEALMENT; (4) UNFAIR BUSINESS PRACTICES (CAL. BUS. & PROF. CODE§ 17200, et seq.); (5) INTENTIONAL INTERFERENCE WITH BUSINESS RELATIONSHIP; and (6) UNJUST ENRICHMENT DEMAND FOR JURY TRIAL 26 27 28 COMPLAINT 1 1. Plaintiffs HUBPER GROUP, INC. ("HGI"), THOMAS CHEN, FM XPRESS, LTD. 2 ("FMX"), METAX LOGISTICS, INC., ("METL") and NEA DELIVERY, LLC, d/b/a FIRST 3 DELIVERY SERVICE ("FIDS") (collectively referred to herein as "PLAINTIFFS") for their 4 Complaint 5 ("AMAZON"), VADIM KOZIN ("KOZIN"), an individual, RYAN HOPKINS, an individual, and 6 DOES 1-100, (collectively referred to as "or "DEFENDANTS"), hereby bring their claims seeking 7 relief, allege on personal knowledge as to all facts known to them, and on information and belief as to 8 all other facts, as follows: against 9 10 AMAZON Defendants LOGISTICS, INC., a Delaware Corporation JURISDICTION AND VENUE 2. This Court has jurisdiction over the subject matter of this action in that the Defendants 11 practice business in this state and county and venue is proper pursuant to California Code of Civil 12 Procedure section 395.5 because the contract alleged herein were all made and to be performed in this 13 district, and the obligations and liabilities arose in; and the breaches occurred in; the County of Los 14 Angeles, State of California, and the misrepresentations and fraudulent acts alleged herein arose or 15 occurred in the County of Los Angeles, State of California. The amount in controversy is in excess of 16 the jurisdictional minimum. 17 18 19 20 21 22 23 24 25 26 27 28 PARTIES 3. Plaintiff HGI is a Corporation organized under the laws of the State of California with a corporate headquarters in California. 4. Plaintiff Thomas Chen is an individual, who at all times relevant to this complaint resides and/or conducts business in this judicial district. 5. Plaintiff FMX is a Corporation organized under the laws of Oregon, with a corporate headquarters in the City oflndustry. 6. Plaintiff METL is a Corporation organized under the laws of California, with a corporate headquarters in the City oflndustry. 7. Plaintiff FIDS is a Limited Liability Company, organized under the laws of California, and headquartered in California. 8. Defendant AMAZON 1s a Corporation, organized under the laws of the State of 2 COMPLAINT 1 2 3 4 Delaware, with its principal place ofbusiness in the State of Washington. 9. On information and belief, Defendant KOZIN, an individual, is an agent of AMAZON, who conducts business throughout the state of California, and resides in the County of Los Angeles. 10. On information and belief, Defendant HOPKINS, an individual, is an agent of 5 AMAZON, who conducts business throughout the state of California, and resides in the County ofLos 6 Angeles. 7 11. Plaintiffs are ignorant of the true names and capacities of defendants sued herein as 8 DOES 1 through 100, inclusive, and therefore sue these defendants by such fictitious names. Plaintiffs 9 will amend this complaint to allege their true names and capacities when ascertained. 10 12. Plaintiffs are informed and believe and thereon alleges that at all times herein 11 mentioned, each of the defendants sued herein was the agent and employee of each of the remaining 12 defendants and was at all times acting within the purpose and scope of such agency and employment. GENERAL ALEGATIONS 13 14 13. DEFENDANT AMAZON operated, supervised and solicited for participants in its 15 Delivery Service Partner ("DSP") program. The DSP program allowed entrepreneurs to make a 16 substantial investment in setting up and funding a delivery service utilizing trucks specified by 17 AMAZON, along with AMAZON's trademarks, trade dress, rules, requirements, specifications and 18 training. In tum, AMAZON would provide the services with logistic support and orders to allow them 19 to operate profitably. 20 21 22 14. In providing services, AMAZON insisted that each DSP work exclusively for AMAZON. 15. AMAZON required each DPS to use its trucks, uniforms, service manuals, and service 23 standards. AMAZON insisted that each hire made by each DSP was approved by AMAZON, who 24 charged $12,000 for the review and approval of the employee, and mandated that such hires be done 25 strictly adhering to its terms and conditions. 26 16. AMAZON required pre-approval of all drivers hired by a DSP. 27 17. In order to obtain AMAZON approval for a driver, a DSP was required to pay $12,000 28 in nonrefundable fees to AMAZON. Thereafter, AMAZON would determine whether to approve or 3 COMPLAINT 1 2 3 4 reject the driver. 18. AMAZON shared in the profits of each DSP, such that the increase in the size of the DSP directly benefited AMAZON. 19. CHEN and HGI purchased various routes and spent over $2 million in organizing, 5 promoting and equipping FMX. At all times relevant to this complaint, FMX operated as an 6 AMAZON DSP. It purchased trucks, hired employees, conducted training and oversaw delivery for 7 AMAZON within its set service area which was defined and agreed to by AMAZON. 8 20. AMAZON through HOPKINS approached CHEN, HGI and FMX and requested that 9 they expand by investing in an additional DSP. DEFENDANTS represented that FIDS was a DSP 10 that was performing poorly and/or not meeting AMAZON's expectations. AMAZON and HOPKINS 11 requested that CHEN and HGI purchase FIDS. CHEN, HGI and FMX contributed substantial 12 resources and purchased and began the reorganization of FIDS. 13 21. At this same time, PLAINTIFFS discovered that FIDS had unresolved legal issues due 14 and owmg to the oversight of FIDS by AMAZON. PLAINTIFFS were required to, and did, 15 undertake the resolution of such issues and invested time, capital and resources in resolving them. In or around April 20, 2018, PLAINTIFFS invested approximately $4.5 million in the 16 22. 17 purchase, of FIDS. 18 23. 19 20 In addition, PLAINTIFFS invested substantial sums in the procurement of equipment, hiring personnel and defense, repair and efforts to rehabilitate FIDS. 24. At all relevant times when requesting PLAINTIFFS acquire FIDS, DEFENDANTS, 21 and each of them, knew that FIDS was not in compliance with AMAZON specifications and 22 requirements. DEFENDANTS, however, failed to alert PLAINTIFFS to relevant facts regarding the 23 station, including its failure to adhere to relevant laws, its record of service failures, its payroll issues 24 and other issues caused and/or contributed to by AMAZON policies and oversight. 25 26 27 28 25. At all relevant times, DEFENDANTS and each of them knew, or should have known of the costs, actions and status ofFIDS prior to PLAINTIFFS' expenditures. 26. AMAZON and HOPKINS also approached CHEN, HGI and FMX and requested that they purchase METL. 4 COMPLAINT 1 27. CHEN, in conjunction with HGI and FMX purchased METL. 2 28. HGI placed substantial resources into METL in purchasing equipment, training 3 drivers, overhauling the operating systems, settling outstanding issues and otherwise reorganizing and 4 overhauling METL to ensure that it operated as efficiently and as beneficially as possible to the 5 DEFENDANTS. 6 29. 7 acquisition costs, payments, training, qualifying drivers, and equipment upgrades. 8 9 10 In or around January 31, 2018, CHEN, HGI and/or FMX invested over $2 million in 30. In or around April of 2019, less than a year after PLAINTIFFS were coaxed into acquiring and renovating METL and FIDS, PLAINTIFFS collectively employed over 600 persons in the delivery of AMAZON materials; and operated multiple stations covering over 300 routes. 11 31. At all times relevant to the complaint, PLAINTIFFS adhered to AMAZON dictated 12 practices, used AMAZON trucks, complied with all applicable laws and regulations, and had 13 increased service levels and performance of both FIDS and METL. 14 15 32. PLAINTIFFS and each of them, invested time, money, and resources in bringing the companies into compliance with AMAZON's specifications. 16 33. From the acquisition of the stations in 2018, continuing through April of 2019, 17 Plaintiffs continued to purchase trucks, upgrade equipment, hire drivers, and alleviate previous issues 18 at the stations. For instance, PLAINTIFFS at one station purchased 300 new vans, and at another 19 station purchased a new bobtail truck. This was done on reliance of the representations and actions of 20 AMAZON, who assisted in the revitalization of these DSPs and knew of PLAINTIFFS' efforts and 21 expenditures in working with the DSPs. 34. 22 From the time of the purchase of FIDS and METL through April of 2019, the 23 PLAINTIFFS and AMAZON worked together in reviewing payroll reports, and employment issues 24 and bringing FIDS and METL into compliance with all applicable statutes, guidelines and 25 requirements. 35. 26 During this time, AMAZON, through KOZIN and without explanation began rejecting 27 drivers submitted by THE PLAINTIFFS, while still accepting the $12,000 per driver fee. 28 /II 5 COMPLAINT 36. 1 2 Unbeknownst to PLAINTIFFS, at the same time, AMAZON would approach the potential driver hires from the PLAINTIFFS and offer them employment directly. 37. 3 On or about April 10, 2019, AMAZON, through KOZIN, conducted a telephonic 4 conference wherein it informed CHEN, FMX, METL, FIDS, and HGI that AMAZON would be 5 terminating its relationship with them within 30 days. 38. 6 A series of telephonic conferences began between PLAINTIFFS and KOZIN. During 7 this time, KOZIN represented that PLAINTIFFS' relationship was being terminated because of 8 failures to adhere to AMAZON standards and requirements, however, DEFENDANTS were unable to 9 identify any failures attributed to the PLAINTIFFS. 10 39. Instead, DEFENDANTS, and each of them, operated so as to preclude PLAINTIFFS 11 from realizing any profit on their investment; DEFENDANTS' actions exposed PLAINTIFFS to 12 liability for actions and timelines dictated by the DEFENDANTS and was designed to unfairly drive 13 the PLAINTIFFS from the business, while allowing DEFENDANTS to unjustly profit from their 14 efforts. 15 16 17 40. PLAINTIFFS were informed that AMAZON 2.0 was being implemented, and Plaintiffs would no longer receive business from AMAZON. 41. DEFENDANTS and each of them had known that PLAINTIFFS would be excluded 18 from AMAZON 2.0, but did not reveal this fact to the PLAINTIFFS while PLAINTIFFS were 19 expending funds that would inure to the benefit ofthe PLAINTIFFS. 20 42. At the same time, with informing the PLAINTIFFS, AMAZON began contacting 21 drivers, managers, and other personnel employed, trained and hired by the PLAINTIFFS, and offering 22 employment as independent contractor drivers utilizing the same routes organized and operated by 23 PLAINTIFFS. 24 43. As more fully alleged above, PLAINTIFFS and DEFENDANTS entered into a series 25 of contracts, both written in the purchase of DSP' s and implied in fact wherein PLAINTIFFS would 26 purchase equipment, adhere to AMAZON terms and conditions, and in tum be able to make a return 27 on their investment, and that their business with AMAZON would not be unreasonably interfered 28 with, hampered, curtailed or terminated. 6 COMPLAINT 1 FIRST CAUSE OF ACTION 2 (Breach of the Covenant of Good Faith and Fair Dealing) 3 All Plaintiffs as to Defendant AMAZON 44. 4 5 PLAINTIFFS re-allege and incorporate herein by reference, all of the previous paragraphs of this Complaint, as though fully set forth herein. 45. 6 In every contract or agreement there is an implied promise of good faith and fair 7 dealing. This means that each party will not do anything to unfairly interfere with the right of any other 8 party to receive the benefits of the contract. 46. 9 In this case, the contracts alleged were entered into with the understanding, belief and 10 intent that PLAINTIFFS would be able to recoup a return on their investment of time, resources and 11 capital. 12 47. AMAZON had implicitly covenanted that by requiring and encouraging PLAINTIFFS worker~, 13 and each of them to invest funds, hire expand productivity, and resolve problems caused and 14 exacerbated by previous owners and operators that it would continue doing business with 15 PLAINTIFFS until at least such time as PLAINTIFFS would recoup the investment along with a 16 reasonable return. 17 48. In inducing such behavior, DEFENDANTS, and each of them, knew that 18 PLAINTIFFS would be forced to expend resources, time, and funds in an attempt to meet 19 AMAZON's service goals, and in rectifying conditions caused or contributed to by AMAZON and the 20 former operators of these stations. 49. 21 By the acts herein alleged, DEFENDANTS breached this covenant by encouraging 22 PLAINTIFFS and each of them to invest in DSP's, incur costs, and hire employees and then by 23 terminating the relationship with each DSP without adequate notice, without sufficient cause, and in 24 such a manner as to cause damage to the PLAINTIFFS. 25 50. By doing the actions herein alleged, PLAINTIFFS and each of them have been 26 damaged in an amount to be proven at trial. 27 Ill 28 Ill 7 COMPLAINT 1 SECOND CAUSE OF ACTION 2 (Estoppel) 3 All Plaintiffs as to Defendant AMAZON 4 5 51. PLAINTIFFS re-allege and incorporate herein by reference, all of the previOus paragraphs of this Complaint, as though fully set forth herein. 6 52. At all times relevant to this Complaint, DEFENDANTS and each of them understood, 7 encouraged and requested that PLAINTIFFS and each of them incur costs, expenses and efforts in an 8 effort to assist AMAZON in its business. 9 53. At all relevant times, DEFENDANTS knew that PLAINTIFFS would need a 10 sufficient amount of time following these expenditures to break even and realize a return on their 11 investment. 12 54. DEFENDANTS, through their position in the industry, their relationship with 13 PLAINTIFFS, and their knowledge of these transactions, knew that PLAINTIFFS would not make 14 the requested investment without sufficient time to realize a profit and to recoup their expenditures. 15 55. DEFENDANTS, through their encouragement, advice, and assistance, intended that 16 their conduct should be acted upon, or acted in such a manner that PLAINTIFFS and each of them 17 justifiably believed that their actions were so intended. 18 56. Had the PLAINTIFFS understood that DEFENDANTS would terminate their 19 relationship without reasonable notice or a chance to realize a profit, PLAINTIFFS would not have 20 incurred the costs and expense herein alleged. 21 22 57. PLAINTIFFS relied upon DEFENDANTS' actions and in so doing were damaged in an amount to be proven at trial. 23 THIRD CAUSE OF ACTION 24 (Concealment) 25 All Plaintiffs as to Defendants AMAZON, HOPKINS, and KOZIN 26 58. PLAINTIFFS re-allege and incorporate herein by reference, all of the previOus 27 paragraphs ofthis Complaint, as though fully set forth herein. 28 /// 8 COMPLAINT 1 59. At DEFENDANTS' request, PLAINTIFFS purchased, refurbished, overhauled, and 2 re-staffed various DSPs, and continue to invest funds into these facilities, including the purchase of 3 new trucks, uniforms, and the training of new personnel. 4 60. AMAZON oversaw the operational aspects of the DSPs, and the DSPs and AMAZON 5 worked together with the aim of making a profit. AMAZON had a duty to provide accurate and timely 6 information to allow the business to carry on as efficiently as possible. 7 61. At all times, DEFENDANTS knew that these DSPs would be terminated, and that 8 PLAINTIFFS would be unable to recoup their investments, and would stand be damaged by their 9 actions, and that such damages would increase the longer that PLAINTIFFS continued to invest in 10 their businesses. 11 62. PLAINTIFFS and each of them continued to invest funds into each of the DSPS up to 12 and including the time when they were informed that they received notice from AMAZON through 13 KOZIN that the relationship with the PLAINTIFFS would be terminated. 14 63. DEFENDANTS failed to disclose, and actively concealed and/or suppressed the true 15 facts discussed above, including, but not limited to, the fact that the DEFENDANTS would terminate 16 their relationships with the DSP' s at issue without allowing the PLAINTIFFS to break even or realize 17 a return on its investment. 18 19 64. PLAINTIFFS did not know of the concealed facts, and believed that AMAZON was working with it to ensure the compliance and success of the new DSPs. 20 65. 21 these facts. 22 66. DEFENDANTS and each of them intended to deceive PLAINTIFFS by concealing Had the omitted information been disclosed, PLAINTIFFS would not have, at 23 DEFNDANTS' suggestion and/or with DEFENDANTS' knowledge, invested the funds into the 24 DSPs. 67. 25 DEFENDANTS' failure to disclose these relevant facts caused the PLAINTIFFS to 26 incur damages in an amount to be proven at trial. 27 Ill 28 /// 9 COMPLAINT 1 FOURTH CAUSE OF ACTION 2 (Unfair Competition, Business & Professions Code Section 17200) 3 All Plaintiffs as to Defendants AMAZON, HOPKINS and KOZIN 4 5 68. PLAINTIFFS re-allege and incorporate herein by reference, all of the previous paragraphs of this Complaint, as though fully set forth herein. Business & Professions Code section 17200 prohibits any unfair, unlawful or fraudulent 6 69. 7 business practice. 8 70. DEFENDANTS and each of them breached this statute by engaging in the acts outlined 9 above, namely convincing PLAINTIFFS to invest in a business that they knew they would soon 10 render worthless. Such a practice is immoral, unethical, oppressive, unscrupulous and substantially 11 injurious to consumers. 12 71. In addition, the acts of the DEFENDANTS were fraudulent, as outlined above. 13 72. Such actions have caused the PLAINTIFFS to be damaged, and also to pay substantial 14 15 16 sums to the DEFENDANTS. 73. As such, PLAINTIFFS request that DEFENDANTS be ordered to return PLAINTIFFS' funds invested as a result of the actions described herein. 17 FIFTH CAUSE OF ACTION 18 (Interference With Business Relations) 19 All Plaintiffs as to Defendant AMAZON and KOZIN 20 21 22 74. PLAINTIFFS re-allege and incorporate herein by reference, all of the prevwus paragraphs of this Complaint, as though fully set forth herein. 75. PLAINTIFFS at all time had an economic relationship between themselves and their 23 drivers, managers, and other personnel. These drivers represented a substantial amount of money 24 invested by the PLAINTIFFS in training, qualifying, hiring and maintaining relations with each. 25 26 76. PLAINTIFFS future business hinged on these personnel remaining in place and available to allow PLAINTIFFS to continue in the delivery and service industries. 27 77. DEFENDANTS knew of this relationship. 28 78. DEFENDANTS terminated its relationship with PLAINTIFFS and thereafter sought 10 COMPLAINT 1 to take advantage of the substantial investment made by PLAINTIFFS in its workforce by enticing its 2 drivers to leave work, and work directly for AMAZON. 3 4 79. disrupted by the actions of the DEFENDANT. 5 6 80. SIXTH CAUSE OF ACTION 8 (Unjust Enrichment) All Plaintiffs as to Defendants AMAZON, HOPKINS and KOZIN 9 11 12 13 14 PLAINTIFFS were damaged by this disruption and DEFENDANTS were a substantial factor in causing PLAINTIFFS' harm. 7 10 PLAINTIFFS' relationship with its drivers, managers and other personnel was 81. PLAINTIFFS re-allege and incorporate herein by reference, all of the previOus paragraphs of this Complaint, as though fully set forth herein. 82. PLAINTIFFS expended considerable resources in developing the DSPs, as herein alleged. 83. DEFENDANTS' actions deprived the PLAINTIFFS of the benefits of these actions, 15 and, instead, sought to unfairly and maliciously take advantage of the actions of the PLAINTIFFS and 16 thereby receive the fruits of the investment, labor and development, rehabilitation and expenditures 17 made by the PLAINTIFFS, all the while taken actions specifically designed to inflict the maximum 18 damage possible on the PLAINTIFFS and each of them. DEFENDANTS profited by engaging in the 19 wrongful conduct set forth in this Complaint above. 20 21 22 84. DEFENDANTS' enrichment is directly and causally related to the detriment of PLAINTIFFS as investors and operators of the businesses herein alleged. 85. These benefits were accepted by DEFENDANTS under such circumstances that it 23 would inequitable for them to retained without payment. 24 concealed facts from the PLAINTIFFS, placed them in unfavorable business situations and, then 25 sought to step in and reap the benefit of PLAINTIFFS investment and work. DEFENDANTS are not 26 justified to retain the benefits conferred upon them, which are estimated to be, at a minimum, 27 $25,00,000.00, plus interest at the legal rate from the date of the original investment. 28 As alleged above, DEFENDANTS WHEREFORE, PLAINTIFFS pray for relief as set forth below. II COMPLAINT 1 2 3 4 5 PRAYER FOR RELIEF WHEREFORE, PLAINTIFFS pray judgment against DEFENDANTS, and each of them as follows: 1. For compensatory damages, disgorgement, and/or money, estimated to be, at a minimum, $25,000,000.00; 6 2. For prejudgment and post-judgment interest at the rate of interest under the law; 7 3. For exemplary and punitive damages; 8 4. For attorney's fees, expenses and costs incurred in pursuing the claims asserted herein, 9 against DEFENDANTS, jointly and severally, as may be provided by contract and/or law; 10 5. For pre-judgment and post-judgment interest at the maximum allowable rate of interest 11 12 under the law; and 6. For such other and further relief as the Court may deem just and proper. 13 14 DATED: June 20,2019 WHGC, P.L.C. 15 16 17 18 19 20 21 By: ~c£:;=== Michael G. York G. Brent Sims Kathleen E. Alparce Attorneys for Plaintiffs HUBPER GROUP, INC., FM XPRESS, LTD., METAX LOGISTICS, INC., and NEA DELIVERY, LLC d/b/a FIRST DELIVERY SERVICE 22 23 24 25 26 27 28 12 COMPLAINT 1 2 DEMAND FOR JURY TRIAL PLAINTIFFS hereby requests trial by jury. 3 4 DATED: June 20,2019 WHGC, P.L.C. 5 6 7 8 9 10 11 12 By: 7 . ._ Jeffrey C.P. Wang Michael G. York G. Brent Sims Kathleen E. Alparce Attorneys for Plaintiffs HUBPER GROUP, INC., THOMAS CHEN, FM XPRESS, LTD., METAX LOGISTICS, INC., and NEA DELIVERY, LLC d/b/a FIRST DELIVERY SERVICE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 COMPLAINT