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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

VIPSHOP INTERNATIONAL HOLDINGS, 

LIMITED, 

 Plaintiff,

 v.

TRANSPACIFIC TRADE CENTER LLC and 

KETTY PON (also known as KITTY PON).

 Defendants.

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 No. 20 C 2557

 Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Transpacific Trade Centers LLC (“TTCL”) entered into two contracts with VIPShop 

International Holdings, Limited (“VIPShop”) to provide masks and protective gear in the early 

months of the COVID-19 pandemic. VIPShop paid TTCL the full amount, approximately $2.5 

million, but TTCL failed to supply any of the products and only reimbursed VIPShop for a fraction 

of the total price paid. VIPShop sued TTCL and Ketty Pon—also known as Kitty Pon (collectively, 

“the Defendants”)—for breach of contract. VIPShop also sued Pon to pierce the corporate veil and 

obtain redress from her personally, alleging that she and TTCL are essentially the same. VIPShop 

moved for summary judgment. For the following reasons, the Motion is granted.

BACKGROUND

VIPShop is a Hong Kong company, which acts on behalf of the government of Wenxhou 

China to negotiate deals for the procurement of protective gear. (Dkt. 1 ¶ 9). TTCL is an Illinois 

company that focuses on importing and exporting international products, including personal 

protective equipment. (Id. ¶ 10). The company was incorporated in 2016, with its primary place of 

business in Illinois. (Dkt. 64 at 2). Pon is the only member and manager of TTCL. (Dkt. 65 ¶¶ 10–

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11). TTCL has no other employees, electing instead to use independent contractors. (Id. ¶¶ 12). 

Pon exclusively controls the company’s sole bank account, and the corporate address on the 

account is also her home address. (Id. ¶¶ 13–14).

On February 12, 2020, early in the COVID-19 pandemic, VIPShop and TTCL entered into 

two contracts: the first required TTCL to supply 150,000 masks and 100,000 protective clothing 

units to VIPShop; and the second required TTCL to supply an additional 80,000 masks and an 

additional 20,000 protective clothing units. (Dkt. 57 ¶¶ 1–2). Both contracts contained an 

arbitration provision. (Dkt. 64 at 3). VIPShop paid TTCL about $2.5 million in total, but the masks 

and clothing were never delivered. (Id. ¶¶ 5-8). TTCL attributed the failure to various supply-chain 

issues. (Dkt. 66 ¶¶ 15–19). The company refunded VIPShop $531,400, about one-fifth of the 

money owed, but failed to pay the remainder. (Dkt. 57 ¶ 9). 

VIPShop sued TTCL and Pon for breach of contract. See 28 U.S.C. § 1332. The complaint 

was filed on April 24, 2020. (Dkt. 1). The Defendants filed their answer two months later. (Dkt. 

15). The attorneys entered appearances. (Dkt. 7, 8, 48). The parties participated in settlement 

conferences and engaged in discovery. (Dkt. 33, 37, 43, 44, 45, 46, 51, 53, 57). And almost two 

years later, VIPShop moved for summary judgment. (Dkt. 55).

LEGAL STANDARD

Summary judgment is proper when “the movant shows that there is no genuine dispute as 

to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 

56(a); see also Reed v. Columbia St. Mary’s Hosp., 915 F.3d 473, 485 (7th Cir. 2019). “As the 

‘put up or shut up’ moment in a lawsuit, summary judgment requires a non-moving party to 

respond to the moving party’s properly-supported motion by identifying specific, admissible 

evidence showing that there is a genuine dispute of material fact for trial.” Grant v. Trustees of 

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Ind. Univ., 870 F.3d 562, 568 (7th Cir. 2017) (citation omitted). The Court “consider[s] all of the 

evidence in the record in the light most favorable to the non-moving party.” Skiba v. Ill. Cent. R.R. 

Co., 884 F.3d 708, 717 (7th Cir. 2018) (citation omitted). “The controlling question is whether a 

reasonable trier of fact could find in favor of the non-moving party on the evidence submitted in 

support of and opposition to the motion for summary judgment.” White v. City of Chicago, 829 

F.3d 837, 841 (7th Cir. 2016).

DISCUSSION

I. Contract Dispute

The facts are essentially not disputed. Both parties agree that they had a contract to supply 

the protective equipment and that TTCL failed to deliver as the contract required. Both parties 

agree on the amount of the contract and the amount that TTCL paid to reimburse VIPShop for its 

breach. Yet, after litigating this breach of contract case in this Court for two years, the defendants

now assert that this dispute should go to arbitration because federal law requires a lawsuit be stayed 

when the parties agreed to arbitration as part of the contract. (Dkt. 64). VIPShop maintains that 

the defendants waited too long to invoke their right to arbitration, and moreover, they breached

the terms of the contract, so summary judgment should be awarded in its favor. (Dkt. 56). The 

Court takes each argument in turn.

A. Arbitration 

Section 3 of the Federal Arbitration Act (“FAA”) instructs that if a suit is brought “upon 

any issue referable to arbitration under an agreement in writing for such arbitration, the court ... 

shall on application of one of the parties stay the trial of the action until such arbitration has been 

had in accordance with the terms of the agreement.” 9 U.S.C. § 3. This provision ensures

arbitration agreements are enforceable like “other contracts, but not more so.” Prima Paint Corp. 

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v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967); see also Morgan v. Sundance, Inc., 

142 S. Ct. 1708, 1713 (2022) (explaining that the FAA “place[s] such agreements upon the same 

footing as other contracts” (quoting Granite Rock Co. v. Int’l Bros. of Teamsters, 561 U.S. 287, 

302 (2010))); Volkswagen of Am., Inc. v. Sud’s of Peoria, Inc., 474 F.3d 966, 970 (7th Cir. 2007) 

(“[T]he FAA’s purpose is not to provide special status for [arbitration] agreements.”). Therefore, 

like any other contractual right, “the right to arbitrate is waivable.” Brickstructures, Inc. v. Coaster 

Dynamix, Inc., 952 F.3d 887, 891 (7th Cir. 2020). 

It is true, as the defendants posit, that “[f]ederal law favors arbitration,” Brickstructures, 

Inc., 952 F.3d at 891, but only so far as placing arbitration agreements “upon the same footing as 

other contracts,” Granite Rock Co., 561 U.S. at 302. Favoring arbitration does not mean that courts 

must jettison the traditional rules of litigation—even if the contract refers to an international 

arbitration tribunal. See Brickstructures, Inc., 952 F.3d at 891. (VIPShop appears to incorrectly 

construe this argument as invoking international law and a choice-of-law issue, but the defendants’ 

point speaks only to the relationship between arbitration and international forums.) Here, VIPShop

replies that the defendants have waived their agreement to arbitrate based on their actions before 

this Court.

A waiver can be either express or implied. Kawasaki Heavy Indus., Ltd. v. Bombardier 

Recreational Prods., Inc., 660 F.3d 988, 994 (7th Cir. 2011). Both sides agree that the defendants

did not explicitly waive their right to arbitrate. See Brickstructures, Inc., 952 F.3d at 891 (noting 

that the issue of express abandonment is often easy, some phrase akin to “‘I waive arbitration’

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answers the question”). The inquiry, then, turns to whether they impliedly waived their right to 

arbitrate. 

The policy underlying implied waiver “prevents parties from waiting to see how they fare 

in a judicial forum before choosing arbitration, prevents the duplicative adjudication of disputes, 

and prevents the undue prejudice that results from a party spending time and money on litigation 

that will not ultimately resolve a case.” Kawasaki Heavy Indus., Ltd., 660 F.3d at 994–95. A party 

impliedly waives arbitration when “based on all the circumstances, the party against whom the 

waiver is to be enforced has acted inconsistently with the right to arbitrate.” Welborn Clinic v. 

MedQuist, Inc., 301 F.3d 634, 637 (7th Cir. 2002). Several factors inform the waiver analysis: 

most heavily, “diligence or the lack thereof,” as well as participation in litigation, a substantial 

delay in requesting arbitration, the commencement and engagement in discovery, and prejudice to 

the other party. Kawasaki Heavy Indus., Ltd., 660 F.3d at 994; see also Cabinetree of Wisc., Inc. 

v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 391 (7th Cir. 1995); St. Mary’s Medical Ctr. of 

Evansville, Inc. v. Disco Aluminum Products Co., Inc., 969 F.3d 585, 589–91 (7th Cir. 1992). 

Although the Supreme Court recently held federal courts could not fashion an arbitration-specific 

rule requiring prejudice as a condition of waiver, it did not cast doubt on the proposition that 

prejudice can be a factor in deciding whether a party impliedly waived arbitration. Morgan, 142 

S. Ct. at 1712–13; see also St. Mary’s, 969 F.2d at 590. 

For two years, the Court has monitored this litigation during which the Defendants never 

moved for arbitration. Usual practice requires the party seeking to invoke arbitration to do so at 

the earliest stage of the proceeding. This makes sense, of course, because the party seeking to 

invoke the clause is essentially seeking to dismiss the action from federal court to remove it to the 

arbitrator where the case will be decided. Any discovery will take place before the arbitrator. Here, 

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however, at no point prior to its response to summary judgment did the defendants invoke their 

right to arbitrate. Instead, the defendants filed an answer to the complaint, (Dkt. 15), filed a joint 

status report and confidentiality order, (Dkt. 19, 30), participated in settlement conferences and 

status hearings, (Dkt. 33, 37, 43, 44, 45, 46, 51, 53), requested deadline extensions, (Dkt. 9, 23, 

59, 62), and perhaps most importantly, engaged in discovery, including by providing formal 

responses to VIPShop’s requests for admissions, (Dkt. 57).1 See, e.g., Smith, 907 F.3d at 500 

(weighing the fact that two dispositive motions were already pending in favor of waiver); St. 

Mary’s, 969 F.2d at 591 (noting that discovery represents a crucial step in waiving arbitration 

because the process can be onerous and certain discovery options would not necessarily be 

available in arbitration). These actions signal a decision to litigate, not arbitrate, a case. 

The over two-year delay in requesting arbitration also favors finding waiver—and is 

significantly longer than the inexcusable delay recognized in other cases. See Smith, 907 F.3d at 

500 (eight months); Cabinetree, 50 F.3d at 391 (eight months); St. Mary’s 969 F.2d at 589 (ten

months); see also Royce v. Michael R. Needle P.C., 950 F.3d 939, 950 (7th Cir. 2020) (“A delay 

of over three-and-a-half years is alone sufficient to find waiver, particularly where [one party]

actively participated in the litigation.”). Significantly, VIPShop would be harmed by submitting 

the case to arbitration. It has already incurred significant legal expenses seeking to recover its loss, 

and any further delay would postpone the ability to recoup nearly $2 million. See St. Mary’s, 969 

F.2d at 591 (“Disco’s delay caused St. Mary’s the expense of litigating in court, as well as ... 

making St. Mary’s endure two years of what would have been (had Disco succeeded) wasted 

litigation.”). In short, the defendants acted “inconsistently with the right to arbitration” and 

impliedly waived the option altogether. Welborn Clinic, 301 F.3d at 637. Neither TTCL nor Pon 

1 The fact that VIPShops identified the arbitration provision and governing law in its complaint is immaterial; the 

Court focuses only on the actions of the defendants.

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acted diligently in requesting arbitration and ordering arbitration at this juncture would prejudice 

VIPShop.

B. Breach of Contract

There is little dispute regarding the breach of contract claim. To prevail on a breach-ofcontract claim, a plaintiff must “prove that (1) a contract existed; (2) the plaintiff performed his 

obligations under the contract; (3) the defendant breached the contract; and (4) the plaintiff 

sustained damages as a result of the defendant’s breach.” Anderson v. Kohler, 922 N.E.2d 8, 18 

(Ill. App. Ct. 2009); see also Nat’l Prod. Workers Union Ins. Tr. v. Cigna Corp., 665 F.3d 897, 

905 (7th Cir. 2011). TTCL undoubtedly breached the contracts—a conclusion the company does 

not dispute. VIP Shop and TTCL entered into two contracts. (Dkt. 57 ¶¶ 1–2). VIPShop performed 

its obligations by paying TTCL over $2.5 million. (Id. ¶¶5–9). TTCL did not supply the masks and 

clothing units, nor has TTCL refunded the amount owed to VIPShop. (Id. ¶9). As such, TTCL is 

liable for breaching both contracts. The only remaining question is whether Pon can be held 

personally liable for TTCL’s debt to VIPShop. 

II. Piercing the Corporate Veil

Having lost nearly $2 million from the breach, VIPShop seeks to hold Pon personally liable 

along with the corporation by alleging essentially that she is one and the same. Normally, a

corporation is presumed to be “separate and distinct from its officers, shareholders, and directors, 

and those parties will not be held personally liable for the corporation’s debts and 

obligations.” Tower Investors, LLC v. 111 E. Chestnut Consultants, Inc., 864 N.E.2d 927, 941 (Ill.

App. Ct. 2007). But in some circumstances, “courts will find them personally liable for a 

corporation’s obligations through the equitable remedy known as piercing the corporate veil.” 

Steiner Elec. Co. v. Maniscalco, 51 N.E.3d 45, 56 (Ill. App. Ct. 2016). The concept is that a party 

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should not be able to harm another party and then hide its assets from that party by claiming that 

the corporate entity cannot pay for that harm. See Wachovia Sec., LLC v. Banco Panamericano, 

Inc., 674 F.3d 743 (7th Cir. 2012) (noting that shareholders or officers cannot use a “web of 

corporations to avoid their responsibilities ... by ensuring that [the corporation] would not have 

sufficient funds to pay their debts” and “adhering to [this] corporate form would sanction an 

attempt ... to set up ‘a flimsy organization to escape personal liability’” (quoting Laborers’ 

Pension Fund v. Lay-Com, Inc., 580 F.3d 602, 611 (7th Cir. 2009))). Here, VIPShop has already 

been told that the entity cannot repay them for the loss and so they seek to hold the individual 

responsible. In piercing the corporate veil, the aggrieved party seeks to break down the façade that 

protects an individual from payment by hiding behind the corporate structure. 

A plaintiff can pierce a corporation’s veil of limited liability when there is (1) “such unity 

of interest and ownership that the separate personalities of the corporation and the individual no 

longer exist” and (2) “adherence to the fiction of separate corporate existence would sanction []

fraud, promote injustice, or promote inequitable consequences.” Roiser v. Cascade Mountain, Inc., 

855 N.E.2d 243, 250–51 (Ill. App. Ct. 2006); see also Wachovia Sec., LLC v. Banco 

Panamericano, Inc., 674 F.3d 743, 751–52 (7th Cir. 2012). As to whether there is sufficient “unity 

of interest,” Illinois courts look to several considerations:

(1) inadequate capitalization; (2) failure to issue stock; (3) failure to 

observe corporate formalities; (4) nonpayment of dividends; (5) 

insolvency of the debtor corporation; (6) nonfunctioning of the other 

officers or directors; (7) absence of corporate records; (8) 

commingling of funds; (9) diversion of assets from the corporation 

by or to a stockholder or other person or entity to the detriment of 

creditors; (10) failure to maintain arm’s-length relationships among 

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related entities; and (11) whether, in fact, the corporation is a mere 

facade for the operation of the dominant stockholders.

Fontana v. TLD Builders, Inc., 840 N.E.2d 767, 778 (Ill. App. Ct. 2005). “A party seeking to rely

on the corporate veil theory need not prevail on all [] factors, and no single factor is dispositive,

but a court should take all of the variables into consideration.” Roiser, 855 N.E.2d at 567.

There is no doubt that TTCL and Pon operated with sufficient “unity of purpose” that the 

notion of the company’s separate existence ceased to exist. The first factor, the capitalization of a 

corporation, is perhaps the most significant factor in determining whether a legitimate separate 

corporate entity existed, and one that suggests a unity of purpose here. Fiumetto v. Garrett Enters., 

Inc., 749 N.E.2d 992, 1005 (Ill. App. Ct. 2001); see also Jacobson v. Buffalo Rock Shooters Supply 

Inc., 664 N.E.2d 328, 332 (Ill. App. Ct. 1996) (“An obvious inadequacy of capital, measured by 

the nature and magnitude of the corporate undertaking, has frequently been an important factor in 

cases denying stockholders their defense of limited liability.” (quoting Gallagher v. Reconco 

Builders, Inc., 415 N.E.2d 560, 564 (Ill. App. Ct. 1980))). TTCL has inadequate capitalization—

also termed undercapitalization, that is, a company with insufficient capital to operate normally 

and repay creditors—as it admits that it can neither refund VIPShop nor pay its debts. (Dkt. 66 ¶

21, 66-1 ¶ 9). Of course, TTCL had no difficulty in accepting payments from Plaintiffs of over 

$2.5 million but when it fails to deliver on the product, the entity claims it cannot repay. 

Additionally, TTCL never claimed to issue stock or pay dividends, (see generally Dkt. 64); Pon is 

the “only member” and “only manager” of TTCL, (Dkt. 65 ¶¶ 10–12); there are no other employees 

except her and close family members, (id. ¶ 12); and Pon maintains “exclusive control” over 

TTCL’s bank account, which she registered to her home address, (id. ¶14). These facts indicate 

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that Pon never maintained an “arm’s length relationship,” and the corporate operated as a “mere 

façade.” Fontana, 840 N.E.2d at 778. 

The defendants submit that TTCL was not a “sham” corporation because TTCL was a 

properly formed company, had a separate bank account and contractors, and filed the appropriate 

articles of incorporation and annual reports with the Illinois Secretary of State. (Dkt. 64 at 6). 

Fontana v. TLD Builders, Inc., 840 N.E.2d 767, makes clear, however, that filing all the necessary 

paperwork does not, by itself, undermine a unity of purpose. See id. at 781. A court is permitted to 

consider and assign greater weight to other factors, as “no single factor is dispositive.” Roiser, 855

N.E.2d at 567. The lone case cited by the defendantsfor this proposition, Bank of Am. v. WS Mgmt.,

Inc., 33 N.E.3d 696 (Ill. App. Ct. 2015), engaged in a similar multifactor analysis without assigning

undue reliance on the articles of incorporation, see id. at 927–32.

For the second prong, adherence to the separate-corporate-identity fiction would promote 

injustice. One recognized example of injustice occurs when denying veil piercing would allow a 

corporate officer “to be unjustly enriched at plaintiff’s expense.” B. Kreisman & Co. v. First 

Arlington Nat. Bank of Arlington Heights, 415 N.E.2d 1070, 1073 (Ill. App. Ct. 1980); see also 

Wachovia Sec., LLC, 674 F.3d at 756 (“Illinois law endorses veil piercing to avoid unfair 

enrichment, permitting the creator of a liability and cause of the inability to meet that liability to 

escape responsibility ....”). VIPShop paid $2.5 million and is still owed almost $2 million. TTCL

has conceded that it cannot reimburse any additional amount. Thus, there would be no effective 

remedy to address the unfairness. Given the “unity of purpose” between TTCL and Pon, as well 

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as the clear injustice, Pon cannot shield herself behind the corporate façade. She is personally liable 

for TTCL’s obligations to VIPShop. 

CONCLUSION

For these reasons, Plaintiff’s Motion for Summary Judgment is granted. (Dkt. 55). Plaintiff 

shall submit a proposed order with the exact amount of funds due on or before 9/19/22. Defendants

may file objections to the amount, if any, on or before 9/26/22.

____________________________________

Virginia M. Kendall

United States District Judge

Date: September 9, 2022

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