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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

WALLACE SALES & CONSULTING, LLC, 

Plaintiff/Counter Defendant, 

v. 

TUOPU NORTH AMERICA, LIMITED, 

Defendant/Counter Claimant. 

 /

Case No. 15-cv-10748 

UNITED STATES DISTRICT COURT JUDGE

GERSHWIN A. DRAIN

UNITED STATES MAGISTRATE JUDGE

DAVID R. GRAND

OPINION AND ORDER GRANTING DEFENDANT’S MOTION FOR PARTIAL SUMMARY 

JUDGMENT [38] 

I. INTRODUCTION

On March 2, 2015, Wallace Sales & Consulting, LLC (“Plaintiff”) filed a 

Complaint and Demand for Trial by Jury against Tuopu North America, Limited 

(“Defendant”), alleging breach of contract and seeking a declaratory judgment. See

Dkt. No. 1. Plaintiff amended its Complaint on August 28, 2015 and added an 

additional count, alleging violation of Michigan’s Sales Representatives 

Commission Act (SRCA), MICH. COMP LAWS § 600.2961. See Dkt. No. 28, p. 5 

(Pg. ID No. 547). 

Presently before the Court is Defendant’s Motion for Partial Summary 

Judgment [38], addressing Plaintiff’s SRCA claim. The matter is fully briefed and 

a hearing was held on April 11, 2016. 

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For the reasons discussed herein, the Court will GRANT Defendant’s 

Motion for Partial Summary Judgment [38]. 

II. BACKGROUND

Plaintiff is a Michigan limited liability company with its principal place of 

business located in Brownstown, Michigan. Plaintiff is a sales representative firm 

in the automotive industry, whose sole member is James Wallace (“Wallace”). 

Defendant is an Ontario, Canada corporation with its principal place of business 

located Pickering, Ontario. Defendant is a subsidiary of Ningbo Tuopu Group Co., 

Ltd., a Chinese manufacturing conglomerate, and functions as the North American 

supplier of Ningbo Tuopu’s automotive suspension parts. 

Defendant first retained Plaintiff as its sales representative pursuant to a 

written agreement in 2007. Plaintiff primarily called on Chrysler, LLC at its 

headquarters in Auburn Hills, Michigan, soliciting orders for Defendant’s products 

to be shipped to Chrysler plants and Chrysler’s tiered suppliers located in Mexico, 

Canada, and the United States. Plaintiff alleges that its success in procuring 

business for Defendant helped Defendant’s annual sales reach $35 million by 

2011. 

In December 2011, the Plaintiff and Defendant executed a new written 

Manufacturer’s Representative Agreement (hereinafter “the Agreement”), under 

which Plaintiff served as an independent manufacturer’s representative. The 

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Agreement became effective on January 1, 2012. Wallace signed the Agreement on 

December 30, 2011 and specifically initialed each page of the Agreement. 

The Agreement included detailed provisions governing the sales 

commissions that Defendant would be required to pay to Plaintiff in the event of 

termination, which varied based upon whether Plaintiff’s termination was “without 

cause” or “for cause.” If Defendant terminated Plaintiff “without cause,” it was 

required to continue paying sales commissions to Plaintiff on all sales for which an 

order or quotation was received prior to December 31, 2014. However, if 

Defendant terminated Plaintiff “for cause,” it was only required to pay Plaintiff 

commissions on parts shipped during the one-month period following the effective 

termination date. 

Additionally, the Agreement specified that any disputes related to the 

Agreement may be brought in Ontario, Canada and shall be governed solely by 

Ontario, Canada law: 

17.2 Selection of Forum and Choice of Law. This Agreement shall 

be interpreted solely in accordance with, and it shall in all respects be 

governed by, the law of the Province of Ontario, including laws or 

rules of court regarding the service of process. The parties expressly 

consent to the jurisdiction of the courts of the Province of Ontario, in 

any action to enforce or interpret the terms of this Agreement. 

The parties’ allegations diverge as to the quality of Plaintiff’s work for 

Defendant. Plaintiff asserts that by 2014, the orders it procured were resulting in 

sales of approximately $39 million per year, with the expectation that sales would 

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increase to over $50 million for 2016, 2017, and 2018. Conversely, Defendant 

alleges that the parties’ working relationship was problematic, due to Plaintiff’s 

failure to work well with Defendant’s staff. Defendant’s president made the 

decision to terminate Plaintiff in October 2013, but waited until finding a 

replacement to officially terminate Plaintiff. 

On July 11, 2014, Defendant sent Plaintiff notice of termination, effective 

immediately. The termination notice stated that the “termination is due to financial 

reasons and is without cause.” Additionally, the letter provided that Defendant 

would pay Plaintiff sales commissions through December 31, 2014. 

Plaintiff filed the original Complaint in the present suit on March 2, 2015, 

claiming breach of contract and seeking a declaratory judgment. See Dkt. No. 1. 

On July 14, 2015, Plaintiff filed a motion for leave to amend its complaint, adding 

a count alleging a violation of SRCA, to which Defendant objected. See Dkt. No. 

16. On August 28, 2015 this Court granted Plaintiff’s motion for leave to amend its 

complaint. Dkt. No. 27. 

III. LEGAL STANDARD

Federal Rule of Civil Procedure 56(c) “directs that summary judgment shall 

be granted if ‘there is no genuine issue as to any material fact and that the moving 

party is entitled to a judgment as a matter of law.’ ” Cehrs v. Ne. Ohio Alzheimer’s 

Research Ctr., 155 F.3d 775, 779 (6th Cir. 1998). The court must view the facts, 

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and draw reasonable inferences from those facts, in the light most favorable to the 

non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). No 

genuine dispute of material fact exists where the record “taken as a whole could 

not lead a rational trier of fact to find for the non-moving party.” Matsushita Elec. 

Indus., Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Ultimately, the court 

evaluates “whether the evidence presents a sufficient disagreement to require 

submission to a jury or whether it is so one-sided that one party must prevail as a 

matter of law.” Anderson, 477 U.S. at 251–52. 

IV. DISCUSSION

On August 28, 2015, the Court issued an Opinion and Order granting 

Plaintiff’s Motion for Leave to File a First Amended Complaint. Dkt. No. 27. The 

parties agreed that Ontario law applies to the contract as a whole, but maintained 

opposing views as to whether Plaintiff should be allowed to add a third claim for a 

violation of SRCA, which does not exist under the law of Ontario. At that time, 

given the lenient standards for granting leave of court, the Court allowed the claim 

to be added. See Foman v. Davis, 371 U.S. 178, 182 (1962) (“Rule 15(a) declares 

that leave to amend ‘shall be freely given when justice so requires’; this mandate is 

to be heeded.”). The question is now before the Court again, subject to the standard 

governing summary judgment. 

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A. Choice of Law Principles 

The determination of whether Plaintiff’s SRCA claim may proceed past 

summary judgment hinges on whether Ontario or Michigan law applies to this 

specific claim. A federal court whose jurisdiction is based on diversity of 

citizenship applies the choice-of-law rules of the forum state. Klaxon Co. v. Stentor 

Elec. Mfg. Co., 313 U.S. 487, 496 (1941). In this case, the forum state is Michigan, 

whose courts have adopted §§ 187 and 188 of the Restatement (Second) of 

Conflict of Laws. Chrysler Corp. v. Skyline Indus. Servs., Inc., 448 Mich. 113, 

120, 528 N.W.2d 698, 701 (1995). 

The “[p]rime objectives of contract law are to protect the justified 

expectations of the parties and to make it possible for them to foretell with 

accuracy what will be their rights and liabilities under the contract.” Id. at 125, 703 

(quoting RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 comment e (1971)). 

Nevertheless, “fulfillment of the parties’ expectations is not the only value in 

contract law; regard must also be had for state interests and for state regulation.” 

Id. (quoting RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 comment g 

(1971)). 

Section 187(2) of the Restatement (Second) of Conflict of Laws provides: 

The law of the state chosen by the parties to govern their contractual 

rights and duties will be applied, even if the particular issue is one 

which the parties could not have resolved by an explicit provision in 

their agreement directed to that issue, unless either 

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a. the chosen state has no substantial relationship to the parties or 

the transaction and there is no other reasonable basis for the 

parties’ choice, or 

b. application of the law of the chosen state would be contrary to a 

fundamental policy of a state which has a materially greater 

interest than the chosen state in the determination of the 

particular issue and which, under the rule of § 188, would be 

the state of the applicable law in the absence of an effective 

choice of law by the parties. 

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187(2) (1971). Courts are to 

“move cautiously when asked to hold contract clauses unenforceable on public 

policy grounds.” Banek Inc. v. Yogurt Ventures U.S.A., Inc., 6 F.3d 357, 362 (6th 

Cir. 1993) (quoting Moses v. Business Card Express, Inc., 929 F.2d 1131, 1139 

(6th Cir.), cert. denied, 502 U.S. 821 (1991)). 

Where there has not been an effective choice of law, Michigan’s choice of 

law rules “require a court to balance the expectations of the parties to a contract 

with the interests of the states involved to determine which state’s law to apply.” 

Mill’s Pride, Inc. v. Cont’l Ins. Co., 300 F.3d 701, 705 (6th Cir. 2002). 

B. Count 3: Violation of Michigan Sales Representatives Act 

The purpose of the SRCA is “to ensure that sales representatives in 

Michigan are paid the full commissions to which they are entitled.” HowtingRobinson Assocs., Inc. v. Bryan Custom Plastics, 65 F.Supp.2d 610, 613 (E.D. 

Mich. 1999) (citing Walters v. Bloomfield Hills Furniture, 228 Mich. App. 160, 

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577 N.W.2d 206 (1998)). Defendant argues that this claim fails because Ontario 

law applies to the parties’ contract, due to the agreement’s choice-of-law provision. 

Plaintiff responds that Michigan law should apply to its SRCA claim, because 

applying Ontario law would abrogate a fundamental policy of the State of 

Michigan. 

1. Divergent Precedent 

Each party has cited cases in support of their arguments for which law 

should apply to Plaintiff’s SRCA claim. Defendant relies on Johnson v. Ventra 

Grp., Inc., 191 F.3d 732 (6th Cir. 1999), and Milne v. Accurcast, Inc., No. 08-

13643, 2010 WL 374176 (E.D. Mich. Jan. 25, 2010), in support of its argument 

that the Court should not allow a claim for SRCA to proceed when all other 

elements of the Agreement are governed by Ontario law. In Johnson, the Sixth 

Circuit determined that a plaintiff could not bring a SRCA claim against his 

employer’s successors because Ontario law governed the case and because SRCA 

was not enacted until four years after the plaintiff was terminated. 191 F.3d at 749. 

In Milne, Judge Battani found that Ontario had a substantial relationship to the 

parties and transaction and that Michigan did not have a materially greater interest 

than Ontario in the outcome of the suit, compared to Ontario. Id. at *6. See also

David Eng’g Co. v. Morbern Inc., No. 11-12615, 2012 WL 3109919, at *3 (E.D. 

Mich. July 31, 2012) (noting that in a prior order, the court enforced the Ontario 

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choice of law provision and dismissed the plaintiff’s SRCA claim under Ontario 

law). 

Plaintiff relies on Howting–Robinson Assocs., Inc. v. Bryan Custom Plastics, 

65 F.Supp.2d 610 (E.D. Mich. 1999),1

 in support of its argument that the Court 

should allow Plaintiff to bring its SRCA claim, because to hold otherwise would be 

against the fundamental policies of the State of Michigan. In Howting–Robinson, 

the court allowed the SRCA claim to proceed, finding that “Ohio ha[d] a far less 

substantial relationship to the contract” and that applying Ohio law would violate 

“a specific legislatively expressed public policy of the State of Michigan and 

therefore should not be enforced.” 65 F. Supp. 2d at 613 (noting that the place of 

performance and location of the subject matter was Michigan, and that negotiation 

and execution of the contract took place in Michigan). 

Other recent cases have also analyzed Michigan’s interest and relationship to 

the parties in SRCA choice-of-law disputes. See, e.g., Trilogy Mktg., Inc. v. 

Memsic, Inc., No. 12-13967, 2014 WL 4265788 (E.D. Mich. Aug. 29, 2014) 

(finding Michigan did not have a more substantial relationship to the parties than 

their contractual choice of Massachusetts, due to reliance on Michigan’s “strong 

 1

 Some have commented that Howting–Robinson may have misapplied the 

language of Restatement § 187(2)(a). See Morrison v. Unum Life Ins. Co. of Am., 

730 F. Supp. 2d 699, 705 (E.D. Mich. 2010) (criticizing Howting–Robinson for 

lowering the § 187(1) standard from “no substantial relationship” to a comparative 

standard of “far less substantial relationship”). 

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public policy preference for the enforcement of contractual choice-of-law 

provisions,” and the plaintiff’s delay in raising the argument); Volunteer Energy 

Servs., Inc. v. Option Energy, LLC, No. 1:11-CV-554, 2012 WL 3545283, at *9 

(W.D. Mich. Aug. 16, 2012),2 aff’d sub nom. Volunteer Energy Servs., Inc. v. 

Option Energy, LLC, 579 F. App’x 319 (6th Cir. 2014) (“The Court is satisfied that 

the Michigan SRCA does embody Michigan public policy, and that in light of the 

fact that the Agent Agreement was negotiated and made in Michigan and covered 

services that a Michigan sales representative was to perform exclusively in 

Michigan, failing to offer the protections of the SRCA would violate Michigan 

public policy.”). 

2. Application of Restatement Sections 187 and 188 

Accordingly, the Court will evaluate whether Ontario or Michigan law 

should be applied to Plaintiff’s SRCA claim based on the principles of §§ 187 and 

188 of the Restatement (Second) of Conflict of Laws. In Michigan, “[t]he law of 

the state chosen by the parties to govern their contractual rights and duties will be 

applied,” unless either (a) “the chosen state has no substantial relationship to the 

parties or the transaction and there is no other reasonable basis for the parties’ 

 2

 Despite determining that failing to offer the protections of the SRCA would 

violate Michigan’s public policy, Volunteer Energy determined that applying Ohio 

law would not be contrary to Michigan policy because Ohio had enacted a statute 

similar to Michigan’s SRCA. 2012 WL 3545283, at *9. 

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choice,” or (b) the application of the chosen state’s law would be contrary to a 

fundamental policy of a state (i) with a materially greater interest than the chosen 

state in the determination of the issue and (ii) whose law would be applicable in the 

absence of an effective choice of law by the parties. RESTATEMENT (SECOND) OF 

CONFLICT OF LAWS § 187 (1971); Hudson v. Mathers, 283 Mich. App. 91, 96–97, 

770 N.W.2d 883 (2009). 

In the present case, it is clear that the law contracted to under the 

Agreement—Ontario law—would apply under the “substantial relationship” prong 

of § 187(2)(a). The Agreement explicitly states that the parties have agreed that 

Ontario law applied to any disputes that arose under the agreement. Plaintiff 

already agreed that “Ontario clearly has a substantial connection to the parties and 

the transaction, as Defendant is an Ontario corporation with its principal place of 

business located in Ontario.” Dkt. No. 9, p. 18 (Pg. ID No. 120). Since Ontario is 

where Defendant is located and where all orders are placed and accepted, there is 

more than a reasonable basis for the parties to have chosen Ontario law. See Dkt. 

No. 38, p. 17 (Pg. ID No. 612). 

Consequently, if Michigan law is to apply to Plaintiff’s SRCA claim, then 

the exception under § 187(2)(b) must apply. This requires both (1) that Michigan 

has a materially greater interest than Ontario in the determination of the issue; and 

(2) that the application of Ontario’s law is contrary to a fundamental policy of 

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Michigan, whose law would otherwise apply under the rule of § 188. See

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187(2)(b) (1971). Section 188 

directs the Court to look at the following factors: (a) the place of contracting, 

(b) the place of negotiation of the contract, (c) the place of performance, (d) the 

location of the subject matter of the contract, and (e) the domicile, residence, 

nationality, place of incorporation and place of business of the parties. Id. at § 188. 

Here, Plaintiff’s counsel noted at the hearing that the place of contracting is 

a neutral factor, because the contracting occurred over email in both Michigan and 

Ontario. See also Dkt. No. 38-5, pp. 2–4 (Pg. ID No. 637–39). The place of 

negotiation would also be neutral, as the parties were reported to have negotiated 

over email in Ontario and in Michigan. 

Next, the Court looks to the place of performance3

 and the location of the 

subject matter of the contract. Although Plaintiff asserts it primarily called on 

automotive customers in Southeast Michigan, Dkt. No. 44, p. 19 (Pg. ID No. 687), 

the place of performance for Plaintiff’s duties under the contract is the entirety of 

 3

 The Court will not place an undue focus on the place of performance, because 

such a dominate focus on this factor has been viewed skeptically under Michigan 

law when the parties previously agreed to a choice-of-law provision. See Chrysler, 

448 Mich. at 127–28, 528 N.W.2d at 704 (“It is questionable whether Illinois has a 

greater interest in reaching into the contractual arrangements of out-of-state 

companies when those companies have negotiated an agreement in their own state 

concerning the relative liability obligations between them.”); Performance 

Contracting Inc. v. DynaSteel Corp., 750 F.3d 608, 619 (6th Cir. 2014) (White, J., 

concurring in part) (noting that Chrysler presented “a strong indication that 

Michigan courts would honor the parties’ choice of . . . law.”). 

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North America, which would include Mexico, the United States, and Canada. Dkt. 

No. 38-2, p. 9 (Pg. ID No. 626). Defendant’s alleged breach of its duties under the 

contract occurred in Ontario. Dkt. No. 38, pp. 17–18 (Pg. ID No. 612–13). Plaintiff 

served as a sales agent for all of North America, with a primary focus on Michigan, 

and all of the orders that gave rise to Plaintiff’s commissions were required to be 

placed with and accepted by Defendant in Ontario. Id. Invoices and payments for 

the orders were received by Defendant in Ontario, and orders for customers were 

filled in Ontario. Id. Additionally, Defendant issued commission checks to Plaintiff 

from Ontario. Id. 

Finally, the Court looks to the location of the parties. Plaintiff is a Michigan 

limited liability company with its principal place of business located in 

Brownstown, Michigan. Defendant is an Ontario, Canada corporation with its 

principal place of business located Pickering, Ontario. Thus, under the factors 

listed in § 188, it does not appear that Michigan would be the “state of the 

applicable law in the absence of an effective choice of law by the parties.” See 

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187(2)(b) (1971); Ventra Grp., 

191 F.3d at 741 (finding Ontario law governed under a § 188 analysis where the 

employer and its successors were Ontario corporations, the contract was negotiated 

and signed in Ontario, and the alleged breach occurred in Ontario, despite the 

plaintiff’s residence and performance in Michigan). 

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With regard to Michigan’s policy interest in this issue, the state has an 

interest in “ensur[ing] that sales representatives in Michigan are paid the full 

commissions to which they are entitled, especially when those commissions fall 

due after the termination of the employment relationship.” Howting-Robinson, 65 

F. Supp. 2d at 613. However, Michigan also has “a strong public policy preference 

for the enforcement of contractual choice-of-law provisions.” Trilogy Mktg., 2014 

WL 4265788, at *8 (citing Turcheck v. Amerifund Fin., Inc., 272 Mich. App. 341, 

345, 725 N.W.2d 684, 688 (2006) (“It is undisputed that Michigan’s public policy 

favors the enforcement of contractual forum-selection clauses and choice-of-law 

provisions.”)). 

As previously noted, the choice-of-law provision was individually 

negotiated between the parties. Plaintiff wrote, in an email about the provision: 

“The term of law is only an issues [sic] if a law suit [sic] is required and the person 

bring [sic] the suit. Based on previous track record this does not matter anyway.” 

Dkt. No. 38-5, p. 4 (Pg. ID No. 639). After receiving modifications to the contract, 

including an increase in commission from 1% to 3%, Plaintiff stated “I can agree 

to this contract.” Id. at 2. The Agreement was the result of bargaining between the 

parties, and it is noted that Plaintiff successfully negotiated multiple changes in the 

contract in its favor. The Court is hesitant to hold the choice-of-law provision 

inapplicable to Plaintiff’s SRCA claim on public policy grounds, when it would 

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mean providing Plaintiff with more than he bargained for. See Banek, 6 F.3d at 361 

n.2 (“We are hesitant to void the choice of law provision because that would mean 

Banek would be getting more than it bargained for.”); Trilogy Mktg, 2014 WL 

4265788, at *8 (“Plaintiff agreed to the selection of Massachusetts law at its own 

risk, and buyer’s remorse does not give it the ability to argue otherwise.”). 

Based on the facts presented to the Court, it does not appear that Michigan 

has a materially greater interest than Ontario in the determination of this issue. 

Michigan’s strong preference for enforcing contractual choice-of-law provisions, 

such as the one that was specifically negotiated here, must be balanced against 

Michigan’s interest in ensuring its sales representatives are paid the full 

commission to which they are entitled. In balancing those two interests with regard 

to the present case, the Court finds that applying Ontario’s law, which would 

otherwise apply under § 188, is the best way to “protect the justified expectations 

of the parties and to make it possible for them to foretell with accuracy what will 

be their rights and liabilities under the contract.” See RESTATEMENT (SECOND) OF 

CONFLICT OF LAWS § 187 comment e (1971). 

A finding that Michigan does not have a materially greater interest than 

Ontario is in line with similar cases in the Eastern District of Michigan. For 

instance, in Milne, the court did not find that Michigan had a materially greater 

interest than Ontario, even though the plaintiff was a Michigan resident who 

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performed the majority of his work from his office in Michigan. 2010 WL 374176, 

at *6. The Milne court found that Ontario had the greater interest because the 

defendant was located in Ontario, made the decision to terminate the plaintiff in 

Ontario, all orders secured by the plaintiff were received and fulfilled in Ontario, 

and payment for orders were directed to the defendant in Ontario. Id. Additionally, 

the court considered that the plaintiff was not hired to solely do work within 

Michigan. Id. 

Restatement commentary counsels that a forum should “not refrain from 

applying the chosen law merely because this would lead to a different result than 

would be obtained under the local law of the state of the otherwise applicable law.” 

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 comment g (1971). Thus, 

although application of Ontario law abrogates a fundamental policy of Michigan 

law, that alone is not enough to override the parties’ choice of law where 

Michigan’s law would not otherwise apply under § 188 and Michigan does not 

have a materially greater interest than that of Ontario. See id. at § 187(b)(2). 

V. CONCLUSION

For the reasons stated herein, the Court will GRANT Defendant’s Motion 

for Partial Summary Judgment [38]. Count III of Plaintiff’s Amended Complaint is 

dismissed. 

IT IS SO ORDERED. 

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Dated: April 12, 2016 

 /s/Gershwin A Drain 

 HON. GERSHWIN A. DRAIN 

 United States District Court Judge 

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