Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 1 of 22
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
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`
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` Civil Action No.: 1:22-cv-00504
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` §
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`SHANE STEVENS and RELIANT
` §
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`IMMUNIE DIAGNOSTICS, INC.
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`Plaintiffs,
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` §
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`v.
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` §
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`ANHUI DEEPBLUE MEDICAL
`TECHNOLOGY CO., a Chinese corporation §
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` §
`Defendant.
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` §
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`COMPLAINT
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`
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`COMES NOW, Plaintiffs Shane Stevens, an Individual, and Reliant Immune Diagnostics,
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`Inc. (“Reliant”), on behalf of itself and all relevant subsidiaries, by and through undersigned
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`counsel, and files this Complaint against Defendant Anhui DeepBlue Medical Technology Co.
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`(“Anhui DeepBlue”) on the grounds set forth as follows:
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`INTRODUCTION
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`1.
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`This is a breach of contract action concerning the sale and delivery of non-
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`conforming goods. In May 2020 Plaintiffs entered into an Agreement1 with Rallo, a wholesale
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`distributor, for the purchase of 100,000 COVID-19 (SARS-CoV-2) IGM/IgG Antibody Test Kits
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`(Colloidal Gold) (hereinafter, “antibody tests” or “goods”). Pursuant to the Agreement and the
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`representations made that ultimately induced Plaintiffs to enter into the Agreement, Rallo was to
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`purchase the antibody tests from Anhui DeepBlue, a medical technology company based in Anhui
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`Province, China and deliver the antibody tests to Plaintiffs in Texas thereafter.
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`1 See, Exhibit 1.
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 2 of 22
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`2.
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`Rallo purchased the antibody tests from Anhui DeepBlue and delivered them to
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`Plaintiffs; however, upon receipt and inspection of the goods, Plaintiffs conducted a validation
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`study which revealed the antibody tests were defective. As a result, Plaintiffs file this action to
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`recover the monies payed in satisfaction of their contractual obligation and further seek to recover
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`expectation damages, reliance damages, attorney’s fees, costs, and other economic damages
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`directly and proximately caused by Defendants’ tortious conduct articulated herein.
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`PARTIES
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`3.
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`Plaintiff Shane Stevens is an adult resident of the State of Texas and a capital
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`investor that provided funding for the antibody test purchase orders.
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`4.
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`Plaintiff Reliant Immune Diagnostics, Inc. is a Delaware corporation and
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`maintains its principal place of business in Austin, Texas. At all relevant times, Reliant provided
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`a consumer-driven health platform that offers medical testing services that include, without
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`limitation, COVID-19 antibody testing.
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`5.
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`Defendant Anhui Deepblue is a Chinese corporation and maintains its principal
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`place of business in Anhui Province, China. At all relevant times, Anhui Deepblue manufactured,
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`exported, marketed, and sold the COVID-19 (SARS-CoV-2)IGM/IgG Antibody Test Kits
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`(Colloidal Gold) (hereinafter, “antibody tests”) antibody tests subject to dispute in this action.
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`JURISDICTION AND VENUE
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`6.
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`This Court has subject matter jurisdiction because the amount in controversy
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`exceeds $75,000 exclusive of interest and costs, and there is complete diversity of citizenship
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`between Plaintiffs and Defendant. The Court has diversity jurisdiction pursuant to 28 U.S.C. §
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`1332 and supplemental jurisdiction as to any state law claims.
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 3 of 22
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`7.
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`Pursuant to 28 U.S.C. § 1391, venue properly lies in this district as it is the judicial
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`district in which a substantial part of the events or omissions giving rise to the claims occurred
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`and, because the defendant is not a resident of the United, it may be sued in any judicial district.
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`Defendant conducted business in the State of Texas and had continuing minimum contacts with
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`the State of Texas.
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`RELEVANT STATUTES
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`8.
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`The Uniform Commercial Code applies to contracts for the sale of goods. Cont’l
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`Casing Corp. v. Siderca Corp., 38 S.W.3d 782, 788 (Tex. App.—Houston [14th Dist.] 2001, no
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`pet.) (“[T]he alleged agreement in this case was a contract for the sale of goods, and thus is subject
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`to the UCC.”). “Where the Uniform Commercial Code applies, common law rules regarding
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`breach of contract do not apply.” Plano Lincoln Mercury, Inc. v. Roberts, 167 S.W.3d 616, 624
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`(Tex. App.—Dallas 2005, no pet.) (citing Tex. Bus. & Com. Code § 2.102) (emphasis added). The
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`statutory provisions of the Texas Business and Commerce Code control this case. The relevant
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`statutes are as follows:
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`9.
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`Section 2.608 of the Texas Business and Commerce Code provides:
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`Tex. Bus. & Com. Code § 2.608
`Revocation of Acceptance in Whole or in Part
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`The buyer may revoke his acceptance of a lot or commercial
`a)
`unit whose non-conformity substantially impairs its value to him if
`he has accepted it
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`
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`(2) without discovery of such non-conformity if his acceptance was
`reasonably induced either by the difficulty of discovery before
`acceptance or by the seller’s assurances.
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`Revocation of acceptance must occur within a reasonable
`(b)
`time after the buyer discovers or should have discovered the ground
`for it and before any substantial change in condition of the goods
`
`...
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 4 of 22
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`which is not caused by their own defects. It is not effective until the
`buyer notifies the seller of it.
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`A buyer who so revokes has the same rights and duties
`(c)
`with regard to the goods involved as if he had rejected them.
`
`
`
`(emphasis added).
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`10.
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`Section 2.711 of the Texas Business and Commerce Code provides:
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`Tex. Bus. & Com. Code § 2.711
`Buyer’s Remedies in General; Buyer’s Security Interest in Rejected Goods
`
`(a) Where the seller fails to make delivery or repudiates or the
`buyer rightfully rejects or justifiably revokes acceptance then
`with respect to any goods involved, and with respect to the whole
`if the breach goes to the whole contract (Section 2.612), the buyer
`may cancel and whether or not he has done so may in addition to
`recovering so much of the price as has been paid
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`“cover” and have damages under the next section as to all
`(1)
`the goods affected whether or not they have been identified to the
`contract. . .
`
`
`(emphasis added).
`
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`11.
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`Section 2.712 of the Texas Business and Commerce Code provides:
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`Tex. Bus. & Com. Code § 2.712
`“Cover”; Buyer’s Procurement of Substitute Goods
`…
`The buyer may recover from the seller as damages the
`(b)
`difference between the cost of cover and the contract price together
`with any incidental or consequential damages as hereinafter defined
`(Section 2.715), but less expenses saved in consequence of the
`seller’s breach.
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`Section 2.715 of the Texas Business and Commerce Code provides:
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`Tex. Bus. & Com. Code § 2.715
`Buyer’s Incidental and Consequential Damages
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`Incidental damages resulting from the seller’s breach include
`(a)
`expenses reasonably incurred in inspection, receipt, transportation
`and care and custody of goods rightfully rejected, any commercially
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`12.
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`4
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 5 of 22
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`reasonable charges, expenses or commissions in connection with
`effecting cover and any other reasonable expense incident to the
`delay or other breach.
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`Consequential damages resulting from the seller’s breach
`(b)
`include:
`
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`loss resulting from general or particular
`any
`(1)
`requirements and needs of which the seller at the time of
`contracting had reason to know and which could not
`reasonably be prevented by cover or otherwise; and
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`injury to person or property proximately resulting
`(2)
`from any breach of warranty.
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`BREACH OF CONTRACT VS. BREACH OF WARRANTY
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`A.
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`13.
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`For a buyer that receives a good that does not conform to the contract with the
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`seller, the Texas Business and Commerce Code has different provisions for breach of contract
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`(Section 2.711) and for breach of warranty (Section 2.714). “[T]he critical factor in whether the
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`buyer has a breach of contract or a breach of warranty claim is whether the buyer has finally
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`accepted the goods.” Emerson Elec. Co. v. Am. Permanent Ware Co., 201 S.W.3d 301, 310 (Tex.
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`App.—Dallas 2006, no pet.). (emphasis added). “Only after the buyer finally accepts and can
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`no longer revoke his acceptance, is he limited to recovering under Section 2.714. If the seller
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`tenders non-conforming goods, the buyer may reject them, or he may later revoke his acceptance
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`under section 2.608 if the non-conformity was difficult to discover before acceptance.” Selectouch
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`Corp. v. Perfect Starch, Inc., 111 S.W.3d 830, 834 (Tex. App.—Dallas 2003, no pet.).
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`Accordingly, if the buyer can timely revoke acceptance, the buyer has a breach of contract claim
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`under Section 2.711.
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`14.
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`The remedies for breach of contract based on revocation of acceptance are set forth
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`in Section 2.711. Emerson Elec. Co., 201 S.W.3d at 310. By its express terms, Section 2.711
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 6 of 22
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`provides breach of contract remedies to buyers who can show they have “rightfully reject[ed] or
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`justifiably revoke[d] acceptance.” Tex. Bus. & Com. Code § 2.711.
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`15.
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`In this case, Plaintiffs allege a breach of contract action based on justifiable
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`revocation of acceptance of 100,000 antibody tests Anhui Deepblue manufactured, advertised,
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`marketed, shipped, and sold. Texas Business and Commerce Code Section 2.608 defines
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`“justifiable revocation.” A.O. Smith Corp. v. Elbi S.p.A., 123 Fed. App’x. 617, 619 (5th Cir. 2005)
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`(“Breach of contract remedies are available, however, to a buyer who, inter alia, properly revokes
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`acceptance. Section 2.608 of the UCC describes the conditions necessary for revocation….” )
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`(internal citations omitted). The elements of revocation of acceptance under Section 2.608 are:
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`“(1) initial acceptance without discovery of the non-conforming item if acceptance was induced
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`by [the difficulty of discovery before acceptance or] the seller’s assurance (2) of a non-conforming
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`item (3) when such non-conformity substantially impairs the value to the buyer (4) with revocation
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`occurring within a reasonable time, and in any event, before a substantial change in the condition
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`of the goods occurs unless the change is caused by a defect of the goods.” Rhoades v. Prosser,
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`2010 WL 1999150, at *4 (Tex. App.—Fort Worth May 20, 2010, no pet.); Tex. Bus. & Com. Code
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`§ 2.608.
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`16.
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`By contrast, where a buyer has accepted goods without later properly revoking
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`acceptance under 2.608—there has been “final acceptance”—the buyer is limited to a breach of
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`warranty action under Section 2.714 for a particular “non-conformity.” Neal v. SMC Corp., 99
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`S.W.3d 813, 817 (Tex. App.—Dallas 2003, no pet.) (“The remedies for breach of warranty,
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`however, are set forth in Section 2.714, and are available to a buyer who has finally accepted
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`goods.”). That provision is as follows:
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 7 of 22
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`Tex. Bus. & Com. Code § 2.714
`Buyer’s Damages for Breach in Regard to Accepted Goods
`
`Where the buyer has accepted goods and given notification
`a)
`(Subsection (c) of Section 2.607) he may recover as damages for
`any non-conformity of tender the loss resulting in the ordinary
`course of events from the seller’s breach as determined in any
`manner which is reasonable.
`
`(b) The measure of damages for breach of warranty is the difference
`at the time and place of acceptance between the value of the goods
`accepted and the value they would have had if they had been as
`warranted, unless special circumstances show proximate damages
`of a different amount.
`
`
`(emphasis added).
`
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`17.
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`The distinction between Section 2.711 breach of contract claims and Section 2.714
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`breach of warranty claims is clear: “the critical factor in whether the buyer has a breach of contract
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`or a breach of warranty claim is whether the buyer has finally accepted the goods,” rather than
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`on how one characterizes the good’s alleged shortcomings. Emerson Elec. Co., 201 S.W.3d at 310
`
`(emphasis added); see also Structural Metals, Inc. v. S & C Elec. Co., 2012 WL 5208543, at *7
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`(W.D. Tex. Oct. 22, 2012) (“[W]ith regard to delivered but non-conforming goods, the critical
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`factor in determining the remedies available to the buyer is whether the buyer has finally
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`accepted the goods, not whether the buyer is complaining about defects or non-conformities.”)
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`(emphasis added). Breach of contract under Section 2.711 expressly states it is available to buyers
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`who “rightfully reject or justifiably revoke acceptance,” whereas Official Comment 1 to Section
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`2.714 makes clear that the breach of warranty claim under Section 2.714 applies to “the buyer after
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`the goods have been accepted and the time for revocation of acceptance has gone by.” Tex. Bus.
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`& Com. Code §§ 2.711 and 2.714, Official Comment 1. “Only after the buyer finally accepts
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`and can no longer revoke his acceptance, is he limited to recovering under section 2.714. If the
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`seller tenders non-conforming goods, the buyer may reject them, or he may later revoke his
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 8 of 22
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`acceptance under section 2.608 if the non-conformity was difficult to discover before acceptance.”
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`Selectouch Corp. v. Perfect Starch, Inc., 111 S.W.3d 830, 834 (Tex. App.—Dallas 2003, no pet.)
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`(emphasis added); see also id. at 7 n.6 (noting that “under the UCC, non-conformity may relate to
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`both goods and conduct/performance under the contract”) (citing Tex. Bus. & Com. Code §
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`2.106(b)).
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`18.
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`Any distinction between breach of contract and breach of warranty actions other
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`than “final acceptance”—such as the delivery of incorrect products versus defective future
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`performance—runs counter to the rule stated in the UCC and defined in Fifth Circuit and Texas
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`case law. See, e.g., Structural Metals, Inc., 2012 WL 5208543, at *6 (“Although the case law is
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`murky, the UCC is clear: With regard to delivered but nonconforming goods, the buyer’s
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`remedies under the UCC are determined by whether the buyer has accepted the goods.”)
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`(emphasis added); Luig v. N. Bay Enterprises, Inc., 55 F. Supp. 3d 942, 948 (N.D. Tex. 2014)
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`(“this Court is bound to follow Texas law. . . . Thus, whether [Plaintiff] may state a cause of action
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`for breach of contract depends on whether [Plaintiff] has finally accepted the aircraft.”) rev’d on
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`other grounds, 817 F.3d 901 (5th Cir. 2016) (“Under Texas law, ‘damages are [] permitted under
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`a breach of contract cause of action when . . . the buyer has revoked his acceptance’”) (citing A.O.
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`Smith Corp., 123 Fed. App’x. at 619); Paul Mueller Co. v. Alcon Labs., Inc., 993 S.W.2d 851,
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`855-56 (Tex. App.—Fort Worth 1999, no pet.) (“[H]old[ing] that [Plaintiff] was entitled to assert
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`a breach of contract claim just as if it had initially rejected the goods” after revoking acceptance
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`of corroding storage tanks); Vill. Mobile Homes, Inc. v. Porter, 716 S.W.2d 543, 551 (Tex. App.—
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`Austin 1986, writ ref’d n.r.e.) (affirming damages award for revocation of acceptance based on
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`numerous defects in mobile home, including cracking exterior paint, malfunctioning oven and
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`stove, and malfunctioning air compressor).
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 9 of 22
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`19.
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`In addition to the case law, the statutory text of the Texas Business and Commerce
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`Code supports “final acceptance” as the distinction between breach of contract and breach of
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`warranty for a non-conforming good. Both Section 2.608 revocation of acceptance and Section
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`2.714 breach of warranty are expressly based on the same standard: a “non-conformity,” which is
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`defined in the Texas Business and Commerce Code as not “conforming to the obligations of the
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`contract.” Tex. Bus. & Com. Code § 2.106. Therefore, a “non-conformity” for purposes of Section
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`2.608 is not a particular characterization of a subset of defective goods that is unique to Section
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`2.608 and cannot serve to distinguish between a contract and warranty claim, because a non-
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`conformity is the basis of a breach of warranty under Section 2.714 as well. Looking at the entire
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`statutory scheme, a non-conformity in a good where acceptance has been revoked under Section
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`2.608 leads to breach of contract under Section 2.711. That same non- conformity in a good that
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`has been finally accepted leads to breach of warranty.
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`20.
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`The “final acceptance” rule also comports with the policy goal of Section 2.608,
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`because Section 2.608 is intended to protect buyers from latent defects. Structural Metals, Inc. v.
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`S & C Elec. Co., 2012 WL 5208543, at *8 (W.D. Tex. Oct. 22, 2012) (“[T]his section recognizes
`
`a buyer’s right to revoke when use of the goods reveals a latent defect.”). Section 2.608 is designed
`
`to provide a breach of contract remedy to a buyer who would otherwise have difficulty identifying
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`the non-conformity on delivery. Indeed, the statute expressly states the goal is to give the revoking
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`buyer the same rights “as if he had rejected” the non-conforming goods at delivery. Tex. Bus. &
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`Com. Code § 2.608(c). By allowing a party to bring a breach of contract claim after delivery and
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`until the point of “final acceptance,” the law protects unsuspecting buyers from latent defects while
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`barring those who simply wait too long to revoke acceptance after discovering the non-conformity.
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`9
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 10 of 22
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`21.
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`In order to plead a breach of contract claim under Texas Business and Commerce
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`Code § 2.608, Plaintiffs need show only that the antibody tests did not conform to a contract term,
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`that Plaintiffs revoked its acceptance of the antibody tests within a reasonable time of discovering
`
`the non-conformity, and that the non-conformity substantially impaired the antibody tests value to
`
`Plaintiffs. Tex. Bus. & Com. Code § 2.711; Luig v. N. Bay Enterprises, Inc., 817 F.3d 901, 906
`
`(5th Cir. 2016) (“Under Texas law, damages are only permitted under a breach of contract cause
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`of action when the seller has failed to deliver the goods, the buyer has rejected the goods, or the
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`buyer has revoked his acceptance. . . . a buyer may revoke acceptance of a good if the good was
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`accepted without knowledge of a nonconformity and acceptance was reasonably induced either by
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`the difficulty of discovery before acceptance or by the seller’s assurance.”) (internal citations
`
`omitted).
`
`A.
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`THE AGREEMENT
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`FACTUAL ALLEGATIONS
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`22.
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` Plaintiffs entered into two (2) Agreements with Rallo Holdings, Ltd. ("Rallo") for
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`the purchase of antibody tests imported from Anhui DeepBlue. However, after Rallo failed to
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`procure and deliver the goods in a timely manner, the Parties terminated the first agreement and
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`entered into a second Agreement, which is the basis of this action.
`
`23.
`
`Effective May 30, 2020, Plaintiffs and Rallo entered into a second Commercial
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`Agreement (the “Contract”) setting forth the items, purchase quantity, purchase price, payment
`
`specifications, and delivery obligations.
`
`24.
`
`Under the Contract, Rallo was to obtain 100,000 antibody tests from Anhui Deep
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`Blue Medical Technology Co. to Plaintiffs in exchange for $600,000.00 representative of the
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`cumulative individual item price of $6.00.
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`10
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 11 of 22
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`25.
`
`Under the terms of the Contract, Plaintiffs were obligated to pay for the antibody
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`tests as follows:
`
`a. 75% down payment ($481,125.00)
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`b. 25% balance due payable on June 30, 2020 ($118,875.00)2
`
`26.
`
`Plaintiffs satisfied its financial payment obligation as to the 75% down payment;
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`however, after discovering the non-conforming nature of the antibody tests Plaintiffs promptly
`
`revoked its acceptance of the goods. As a result, Plaintiffs did not tender the remaining 25%
`
`balance and requested a refund of $481,125.00.
`
`B.
`
`THE NON-CONFORMING GOODS
`
`27.
`
`After delivery and upon inspection, Plaintiffs discovered the antibody tests were
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`not in proper working condition.
`
`28.
`
`Specifically, the antibody tests were defective in that the tests produced ghost lines
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`and false positives which precluded physicians from accurately diagnosing patients with or without
`
`COVID-19 antibodies.
`
`29.
`
`On or about April 17, 2020, Jim Lu, the CEO and Medical Director for GoPath
`
`Laboratories LLC and the individual who connected Rallo and Anhui DeepBlue, sent Plaintiffs a
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`validation study conducted by Complutense University of Madrid using Anhui DeepBlue’s
`
`antibody tests. Dr. Lu advised Plaintiffs the study “looks pretty good.”3
`
`30.
`
`On or about July 1, 2020 and following delivery of the antibody tests, Plaintiffs
`
`raised concerns regarding the Federal Drug Administration’s (“FDA”) removal of the Anhui
`
`DeepBlue antibody tests from the list of approved devices for distribution.4
`
`
`2 See Exhibit 2, Invoice dated May 30, 2020.
`3 See Exhibit 3, Email dated April 17, 2020.
`4 See Exhibit 4, Email dated July 2, 2020.
`
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 12 of 22
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`31.
`
`On or about July 2, 2020, Dr. Lu attempted to mitigate Plaintiffs concerns, advising
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`Plaintiffs should “treat th[e] ‘validation’ as internal/pilot study . . .”5 and warned against avoiding
`
`any publication the “premature data.”6
`
`32.
`
`In his July 2, 2020 email, Dr. Lu not only admitted for the first time that Anhui
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`DeepBlue failed to submit the requisite information needed for FDA approval of the antibody tests,
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`but further conceded the “DP [DeepBlue] kit is not the best . . .”.7 Defendants also tendered a
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`document titled “FDA certificate 03112020.pdf”8 upon which Plaintiffs relied to their detriment
`
`in believing that the antibody test registration with the FDA would then culminate in ultimately
`
`receiving FDA approval.
`
`33.
`
`On or about July 10, 2020, just ten (10) days after learning of the defects,
`
`Defendants’ failure to obtain FDA approval of the antibody tests, and Dr. Lu’s concession that the
`
`antibody tests “[were] not the best”, Plaintiffs sent Rallo a formal rejection of the non-conforming
`
`goods and requested a refund.9
`
`34.
`
`To date, and despite numerous conversations with Dr. Lu, Rallo, and Anhui
`
`DeepBlue,10 Defendants have refused to refund Plaintiffs the compensation paid in exchange for
`
`antibody tests in proper working condition and in conformity with the Agreements and industry
`
`customs.
`
`
`
`
`
`
`5 See Exhibit 5, Email dated July 2, 2020.
`6 Id.
`7 Id.
`8 See Exhibit 6, FDA Certificate of Registration.
`9 See, Exhibit 7, Email dated July 10, 2020.
`10 See, Exhibit 8, Text Messages.
`
`
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 13 of 22
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`FIRST CLAIM FOR RELIEF
`BREACH OF CONTRACT PURSUANT TO TEX. BUS. & COM. CODE § 2.608
`
`35.
`
`Plaintiffs incorporate by reference all preceding paragraphs as if fully set forth
`
`
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`herein.
`
`36.
`
`At all times relevant, Defendant had a valid and binding contract to provide
`
`Plaintiffs with antibody tests suitable for diagnostic testing in accord with the applicable standards
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`set forth by United States governmental and professional organizations, including without
`
`limitation, the FDA, as described above.
`
`37.
`
`Plaintiffs are proper parties to assert a claim, whether as a party to the contract, an
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`assignee, or an intended third-party beneficiary.
`
`38.
`
`39.
`
`Plaintiffs performed their obligations under the contract.
`
`Defendant breached the aforementioned contract by failing to provide goods to
`
`Plaintiffs of the qualities and characteristics agreed upon and acceptable in the medical field,
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`including those as specifically described above.
`
`40.
`
`41.
`
`Plaintiff has satisfied all conditions precedent to recovery under the contract.
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`Plaintiffs notified Defendant of the non-conforming goods and formally rejected
`
`the defective antibody tests within a reasonable time.
`
`42.
`
`Plaintiffs did not limit their rights of revocation under Section 2.608. Those rights
`
`exist at law and are nowhere modified by any agreement.
`
`43.
`
`Breach of contract remedies are available to a buyer who properly revokes
`
`acceptance. A.O. Smith Corp. v. Elbi S.p.A., 123 F. App’x 617, 619–20 (5th Cir. 2005). Section
`
`2.608 of the Texas Business and Commerce Code describes the conditions necessary for
`
`revocation. Id.
`
`44.
`
`Section 2.608 of the Texas Business and Commerce Code provides:
`
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`13
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 14 of 22
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`Tex. Bus. & Com. Code § 2.608
`Revocation of Acceptance in Whole or in Part
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`The buyer may revoke his acceptance of a lot or commercial
`a)
`unit whose non-conformity substantially impairs its value to him if
`he has accepted it
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`...
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`(2) without discovery of such non-conformity if his
`acceptance was reasonably induced either by the difficulty
`of discovery before acceptance or by the seller’s assurances.
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`Revocation of acceptance must occur within a reasonable
`(b)
`time after the buyer discovers or should have discovered the ground
`for it and before any substantial change in condition of the goods
`which is not caused by their own defects. It is not effective until the
`buyer notifies the seller of it.
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`A buyer who so revokes has the same rights and duties with
`(c)
`regard to the goods involved as if he had rejected them.
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`Tex. Bus. & Com. Code § 2.608.
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`45.
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`The antibody tests were non-conforming goods because they did not conform to
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`Defendant's obligations under the contract.
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`46.
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`Plaintiffs did not know the antibody tests were non-conforming at the time
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`Plaintiffs received the antibody tests.
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`47.
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`Plaintiffs could not have been aware of the non-conformities with respect to
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`antibody tests at the time Plaintiffs accepted them. Defendant, either directly or indirectly, or
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`through its agents acting with express or apparent authority, assured Plaintiffs that the antibody
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`tests "were certified or registered by CE quality standards and compliant with relevant quality
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`standards and safety requirements of Chicago."11 Further, Defendant stated, "Our company is
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`responsible for the truthful declaration of [this information]."12
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`11 See Exhibit 9, Export Declaration of Medical Supplies.
`12 Id.
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 15 of 22
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`48.
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`49.
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`Plaintiffs revoked acceptance of the antibody tests within a reasonable time.
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`The non-conformity of the antibody tests substantially impaired the value of the
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`antibody tests to Plaintiffs.
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`50.
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`As a direct and proximate result of Defendant's breach, Plaintiffs suffered actual
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`damages, expectation damages, reliance damages, lost profits, and loss of business opportunity,
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`and incurred reasonable attorney's fees and court costs associated with this litigation.
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`SECOND CLAIM FOR RELIEF
`UNFAIR AND DECEPTIVE BUSINESS PRACTICES
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`Plaintiffs incorporate by reference all preceding paragraphs as if fully set forth
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`51.
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`herein.
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`52.
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`Defendant engaged in unconscionable business practices in breaching implied
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`warranties concerning the condition of the antibody tests.
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`53.
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`54.
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`Such acts by Defendant were detrimentally relied upon by Plaintiffs.
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`Defendant, by taking $481,125.00 from Plaintiffs in exchange for defective
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`antibody tests to which Defendant knew of the defect, or should have known of the defect, was an
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`act or practice detrimental to Plaintiffs.
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`55.
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`Defendant breached one or more implied warranties. Specifically, Defendant
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`engaged in false, misleading or deceptive acts or practices in one or more of the following ways:
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`a. Causing confusion or misunderstanding as to the source, sponsorship,
`approval, or certification of goods or services. Tex. Bus. & Comm. Code §
`17.46(b)(2);
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`b. Representing that its goods or services had characteristics, uses, benefits
`which they did not have. Tex. Bus. & Comm. Code § 17.46(b)(5);
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`c. Representing that its goods or services are of a particular standard, quality,
`or grade when they are not. Tex. Bus. & Comm. Code § 17.46(b)(7);
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 16 of 22
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`d. Knowingly making false or misleading statements of fact concerning the
`need for replacement or repair service. Tex. Bus. & Comm. Code §
`17.46(b)(13);
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`e. Failing to disclose information concerning goods or services which was
`known at the time of the transaction if such failure to disclose such
`information was intended to induce the consumer into a transaction into
`which the consumer would not have entered had the information been
`disclosed. Tex. Bus. & Comm. Code § 17.46(b)(24); and
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`f. Falsely representing that work or service had been performed. Tex. Bus. &
`Comm. Code § 17.46(b)(22).
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`56.
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`Defendant’s violations of the Texas Deceptive Trade Practices Act (“DTPA”) were
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`
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`made intentionally, knowingly or negligently and were the proximate and/or producing cause of
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`Plaintiffs damages.
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`57.
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`As a direct and proximate result of Defendant’s violations of the Texas DTPA,
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`Plaintiffs sustained damages and are entitled to recover actual damages, expectation damages,
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`reliance damages, treble damages, lost profits, loss of business opportunity, and reasonable
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`attorney's fees and court costs associated with this litigation.
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`THIRD CLAIM FOR RELIEF
`MANUFACTURING DEFECT
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`Plaintiffs incorporate by reference all preceding paragraphs as if fully set forth
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`58.
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`herein.
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`59.
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`Anhui DeepBlue manufactured and distributed defective antibody tests that failed
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`to satisfy the minimum required quality control and inspection standards and obligations under the
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`applicable contract, laws, regulations, and industry standards.
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`60.
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`As a result of the aforesaid defects, the antibody tests were not designed and
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`manufactured to the standards of a reasonable and prudent manufacture under same or similar
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`circumstances.
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 17 of 22
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`61.
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`At this time, Plaintiffs cannot more specifically allege the act of manufacturing
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`defect on the part of Anhui DeepBlue aside from its failure to manufacture antibody tests that
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`produce accurate diagnostic testing results under the normal and reasonable intended use for such
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`tests.
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`62.
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`Upon information and belief, information as to the specific manufacturing defects
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`are within the knowledge, control, and custody of Anhui DeepBlue.
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`63.
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`Alternatively, should Plaintiffs be unable to prove specific facts of manufacturing
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`defect, Plaintiffs assert their manufacturing defect claim under the doctrine of res ipsa loquitur.
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`64.
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`At trial, Plaintiffs will demonstrate that:
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`a. the manufacturing of the casing was in the exclusive control of Anhui
`DeepBlue; and
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`b. Plaintiffs did not know, or did not have the reason or means to know, the
`method or manner in which Anhui DeepBlue manufactured the antibody
`tests.
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`65.
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`The antibody tests remain in the same condition as the condition in which the
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`antibody tests arrived upon delivery by Defendant.
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`66.
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`The defective condition in which the antibody tests were delivered would not have
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`occurred in the ordinary course of business but-for a manufacturing defect.
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`67.
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`As a direct and proximate result of the aforesaid manufacturing defect, Plaintiffs
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`suffered actual damages, expectation damages, reliance damages, lost profits, and loss of business
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`opportunity, and incurred reasonable attorney's fees and court costs associated with this litigation.
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`FOURTH CLAIM FOR RELIEF
`BREACH OF IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
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`Plaintiffs incorporate by reference all preceding paragraphs as if fully set forth
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`68.
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`herein.
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`Case 1:22-cv-00504-LY Document 1 Filed 05/24/22 Page 18 of 22
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`69.
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`Plaintiffs allege the antibody tests in question were sold in a defective condition
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`and were not fit for the particular purposes known and mutually assented to by the parties forming
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`the basis of the contract at the time it left the control of Anhui DeepBlue. Further, the antibody
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`tests did not conform with the minimum required quality control and inspection standards and
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`obligations under the applicable contract, laws, regulations, and industry standards and at all times
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`relevant, were unable to be used in the manner(s