Greenville IL et al v. Syngenta Crop Protection, Inc. et al

Filing 255

MEMORANDUM AND ORDER denying 121 Motion to Strike and denying 26 MOTION to Dismiss for Lack of Jurisdiction. Signed by Judge J. Phil Gilbert on 11/22/2011. (dka, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
CITY OF GREENVILLE, ILLINOIS, et al.,

Plaintiffs,
v.
SYNGENTA CROP PROTECTION, INC., and
SYNGENTA AG,

Defendants.

)
)
)
)
)
)
)
)
)
)
)
)

Case No. 3:10-cv-188-JPG

MEMORANDUM AND ORDER
This matter comes before the Court on defendant Syngenta AG’s (“SAG”) motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction
(Doc. 26). The plaintiffs have responded to the motion (Doc. 112), and SAG has replied to that
response (Doc. 134). The plaintiffs have submitted supplemental authority in opposition to the
motion (Doc. 186), and SAG has responded to that supplemental authority (Doc. 187). The
plaintiffs also move to strike portions of two declarations SAG submitted in support of its
motion to dismiss (Doc. 121). SAG has responded to that motion (Doc. 128). The Court heard
argument on the motion to dismiss on July 27, 2011.
I.

Background
The plaintiffs, who are all providers of water to the public, have sued Syngenta Crop

Protection, Inc. (“SCPI”) and SAG alleging they are responsible for manufacturing atrazine, an
herbicide, and selling it to farmers knowing it had great potential to run off of crop land and into
bodies of water, including the bodies of water from which water providers like the plaintiffs
draw their raw water. The plaintiffs seek to hold SCPI and SAG liable for the costs they have

incurred to test and monitor levels of atrazine and to remove it from their raw water, the costs
that will be required for each plaintiff to construct, install, operate and maintain a special
filtration system to filter atrazine from its raw water in the future, and for punitive damages.
SAG moves to dismiss the claims against it for lack of personal jurisdiction.
Specifically, it argues that, as a Swiss corporation, it does not have sufficient contacts with the
state of Illinois to be subject to suit in a federal court sitting in Illinois and that the Illinois
contacts of SCPI, a subsidiary company, cannot be attributed to SAG for the purposes of
personal jurisdiction. It further states that SCPI is the appropriate defendant and has entered an
appearance in this case.
The plaintiffs present evidence of an elaborate web of corporate relationships between
various “Syngenta” entities and argue that the amount of control SAG has over SCPI is sufficient
to justify imputing its Illinois contacts to SAG for jurisdictional purposes.
II.

Legal Standards
A.

Standard for Dismissal

When personal jurisdiction is challenged under Federal Rule of Civil Procedure 12(b)(2),
the plaintiff bears the burden of establishing personal jurisdiction over a defendant. Purdue
Research Found. v. Sanofi-Syntholabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (citing Central
States, S.E. & S.W. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 939 (7th
Cir. 2000)). If there are material facts in dispute regarding the Court’s jurisdiction over a
defendant, the Court must hold an evidentiary hearing at which the plaintiff must establish
jurisdiction by a preponderance of the evidence. Purdue Research, 338 F.3d at 782 (citing Hyatt
Int’l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002)). Alternatively, the Court may decide the
motion to dismiss without an evidentiary hearing based on the submitted written materials so
2

long as it resolves all factual disputes in the plaintiff’s favor. Purdue Research, 338 F.3d at 782
(citing RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997)); see Tamburo v.
Dworkin, 601 F.3d 693, 700 (7th Cir.), cert. denied, 131 S. Ct. 567 (2010). If the Court consults
only the written materials, the plaintiff need only make a prima facie showing of personal
jurisdiction. Purdue Research, 338 F.3d at 782 (citing Hyatt, 302 F.3d at 713); Tamburo, 601
F.3d at 700.
Here, the Court considered only the written materials and the oral argument. Thus, the
plaintiffs’ burden is to make a prima facie showing of personal jurisdiction.
B.

Personal Jurisdiction

A federal court sitting in diversity looks to the personal jurisdiction law of the state in
which the court sits to determine if it has personal jurisdiction over a defendant. Hyatt Int’l
Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002) (citing Dehmlow v. Austin Fireworks, 963 F.2d
941, 945 (7th Cir. 1992)). Thus, this Court applies Illinois law. Under Illinois law, a court has
personal jurisdiction over a defendant if an Illinois statute grants personal jurisdiction and if the
exercise of personal jurisdiction is permissible under the Illinois and United States constitutions.
RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997); Wilson v. Humphreys
(Cayman) Ltd., 916 F.2d 1239 (7th Cir. 1990).
1.

Illinois Statutory Law

Under Illinois law, the long-arm statute permits personal jurisdiction over a party to the
extent allowed under the due process provisions of the Illinois and United States constitutions.
735 ILCS 5/2-209(c); Hyatt Int’l Corp. v. Coco, 302 F.3d 707, 714 (7th Cir. 2002); Central
States, S.E. & S.W. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 940 (7th
Cir. 2000). Therefore, whether the Court has jurisdiction over a defendant depends on whether
3

such jurisdiction is permitted by federal and state constitutional standards.
2.

Illinois Constitutional Law

The Illinois Constitution’s due process guarantee, Ill. Const. art. I, § 2, permits the
assertion of personal jurisdiction “when it is fair, just, and reasonable to require a nonresident
defendant to defend an action in Illinois, considering the quality and nature of the defendant’s
acts which occur in Illinois or which affect interests located in Illinois.” Rollins v. Ellwood, 565
N.E.2d 1302, 1316 (Ill. 1990). When interpreting these principles, a court may look to the
construction and application of the federal due process clause. Id. In fact, the Seventh Circuit
Court of Appeals has suggested that there is no operative difference between Illinois and federal
due process limits on the exercise of personal jurisdiction. Hyatt Int’l Corp. v. Coco, 302 F.3d
707, 715 (7th Cir. 2002) (citing RAR, Inc. v. Turner Diesel Ltd., 107 F.3d 1272, 1276 (7th Cir.
1997)). The Court sees nothing in this case indicating that in this particular situation the federal
and state standards should reach a different result. Therefore, if the contacts between the
defendant and Illinois are sufficient to satisfy the requirements of federal due process, then the
requirements of both the Illinois long-arm statute and the Illinois Constitution have also been
met, and no other inquiry is necessary.
3.

Federal Constitutional Law

The Due Process Clause of the Fourteenth Amendment limits when a state may assert
personal jurisdiction over nonresident individuals and corporations. See Pennoyer v. Neff, 95
U.S. 714, 733 (1877), overruled on other grounds by Shaffer v. Heitner, 433 U.S. 186 (1977).
Under federal due process standards, a court can have personal jurisdiction over a defendant only
if the defendant has “certain minimum contacts with [the forum state] such that the maintenance
of the suit does not offend ‘traditional notions of fair play and substantial justice.’”
4

International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311
U.S. 457, 463 (1940)). The defendant must have purposefully established such minimum
contacts with the forum state such that it “should reasonably anticipate being haled into court
there,” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980), because it has
“purposefully avail[ed] itself of the privilege of conducting activities within the forum State,
thus invoking the benefits and protections of its laws,” Hanson v. Denckla, 357 U.S. 235, 253
(1958). Burger King Corp. v. Rudzewicz, 474-75 (1985); see J. McIntyre Mach., Ltd. v.
Nicastro, 131 S. Ct. 2780, 2788 (2011) (Kennedy, J., plurality opinion). In deciding whether
exercising jurisdiction offends traditional notions of fair play and substantial justice, the Court
may also consider “the burden on the defendant, the interests of the forum State, and the
plaintiff’s interest in obtaining relief.” Asahi Metal Indus. Co. v. Superior Court of Cal., 480
U.S. 102, 113 (1987).
What this standard means in a particular case depends on whether the plaintiff asserts
“general” or “specific” jurisdiction. Specific jurisdiction refers to jurisdiction over a defendant
in a suit arising out of or related to the defendant’s contacts with the forum. Hyatt Int’l Corp. v.
Coco, 302 F.3d 707, 716 (7th Cir. 2002) (citing Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 414 nn. 8, 9 (1984)). General jurisdiction, on the other hand, may exist even
in suits that do not rise out of or relate to the defendant’s contacts so long as the defendant has
“continuous and systematic” contacts with the forum state. Hyatt, 302 F.3d at 713;
Helicopteros Nacionales, 466 U.S. at 416.
The parties do not really dispute that the Illinois contacts of SAG, as an independent
entity, are insufficient to confer specific or general jurisdiction. However, the plaintiffs argue
that SCPI’s contacts with Illinois can be imputed to SAG for personal jurisdiction purposes
5

because of the degree of control SAG exercises over SCPI. If SCPI’s Illinois contacts can be
imputed to SAG for personal jurisdiction purposes, there would be no question that the Court has
personal jurisdiction over SAG. Therefore, the resolution of this motion to dismiss turns on
whether SCPI’s contacts with Illinois can be imputed to SAG for jurisdictional purposes.
C.

Subsidiary Contacts

Ordinarily, the jurisdictional contacts of a subsidiary corporation are not imputed to the
parent corporation. Purdue Research Found. v. Sanofi-Syntholabo, S.A., 338 F.3d 773, 788 n. 17
(7th Cir. 2003) (citing Central States, S.E. & S.W. Areas Pension Fund v. Reimer Express World
Corp., 230 F.3d 934, 943-44 (7th Cir. 2000)). “[C]onstitutional due process requires that
personal jurisdiction cannot be premised on corporate affiliation or stock ownership alone where
corporate formalities are substantially observed and the parent does not exercise an unusually
high degree of control over the subsidiary.” Reimer Express, 230 F.3d at 943. However, where
corporate formalities are not observed such that piercing the corporate veil is warranted or where
a parent dominates the subsidiary, a court may have personal jurisdiction over a parent based on
the subsidiary’s contacts. See, e.g., id. at 945; Mart v. Berkshire Hathaway, Inc., No. 3:10 CV
118, 2011 WL 924281, * 4 (N.D. Ind. 2011). The same is true where the subsidiary is acting
solely as the parent’s agent, and the parent is simply doing business through its subsidiary to
shield itself from liability. Old Orchard Urban Ltd. P’ship v. Harry Rosen, Inc., 904 N.E.2d
1050, 1059 (Ill. App. Ct. 2009) (citing Maunder v. De Havilland Aircraft of Canada, Ltd., 466
N.E.2d 217, 222 (Ill. 1984); Alderson v. Southern Co., 747 N.E.2d 926, 944 (Ill. App. Ct.
2001)).
Where a plaintiff claims a parent company is subject to a court’s jurisdiction by virtue of
its subsidiary’s contacts because it exercised extraordinary control over the subsidiary, the court
6

considers factors including:
(1) whether officers or directors are the same; (2) how much control is exerted by
parent over daily affairs of its subsidiary; (3) whether parent arranges financing
for and capitalization of subsidiary; (4) whether separate books, tax returns, and
financial statements are kept; (5) whether parent holds its subsidiary out as agent;
and (6) the method of payment made to parent by subsidiary.
Bray v. Fresenius Med. Care Aktiengesellschaft Inc., No. 06 C 50197, 2007 WL 7366260, at *6
(N.D. Ill. 2007) (citing Gruca v. Alpha Therapeutic Corp., 19 F. Supp. 2d 862, 867 (N.D. Ill.
1998)). Control that is consistent with investor status – that is, monitoring the subsidiary’s
performance, supervising the subsidiary’s finance and capital budget decisions, and articulating
general policies – does not rise to the level necessary to impute the subsidiary’s jurisdictional
contacts to the parent. 16 James Wm. Moore et al., Moore’s Federal Practice § 108.42[3][b]
(3d ed. 2011); see United States v. Bestfoods, 524 U.S. 51, 72 (1998). A controlling shareholder
“is entitled to ordain [a subsidiary’s] officers and directors, influence executive compensation,
approve budgets, gather information about corporate performance, and receive distributions of
subsidiary profits.” In re Chocolate Confectionary Antitrust Litigation (“In re Chocolate”), 674
F. Supp. 2d 580, 599-600 (M.D. Pa. 2009). “These activities typify standard parent-subsidiary
interactions and do not reflect daily, operational control that is the sine qua non of an alter ego
relationship.” Id. at 600.
III.

Motion to Strike
SAG has submitted two affidavits in support of its motion to dismiss, one by Tobias

Meili, the Head of Corporate Legal Affairs of Syngenta International AG, and one by Elizabeth
Quarles, Vice President and General Counsel of SCPI. The plaintiffs ask the Court to strike
portions of those affidavits (¶¶ 11-14, 16-18, 20-22 & 26 of Meili’s affidavit; ¶¶ 4-8 & 10-12 of
Quarles’ affidavit) because they are not based on personal knowledge or because they state legal
7

conclusions rather than facts. For example, they note that Meili, who only began working for
Syngenta International AG in 2007, states in his affidavit that SAG’s Executive Committee and
board did not make decisions about how SCPI manufactures, markets or sells atrazine (¶ 18) and
that SAG does not control SCPI (¶ 17), but stated in his deposition that he is not privy to what
occurs at SAG’s Executive Committee and board meetings and does not know about how SCPI’s
business is run. As for Quarles, who has worked for SCPI since 2008 and other Syngenta
entities since 2000, she makes statements in her affidavit regarding what SCPI does, but in her
deposition states that she may be ignorant of certain matters relating to SCPI’s business.
SAG contends that by virtue of the positions held by the affiants, they have the requisite
personal knowledge to make the statements in their affidavits. SAG notes that courts routinely
accept statements by corporate officers about corporate operations and matters within their scope
of responsibility. It contends that Meili and Quarles do, indeed, have personal knowledge about
the matters in their affidavits.
The Court declines to strike the affidavits. However, since the Court is deciding this
motion solely on the papers, where there is a factual dispute between what an affiant says and
the plaintiffs’ evidence, the Court will view the facts in the plaintiffs’ favor. Where there is no
factual dispute, the Court will then consider whether, where the affiants say they have no
knowledge, they are competent to testify in those areas and will disregard statements the affiants
are not competent to make. To the extent the affidavits contain legal conclusions, the Court will
not credit those statements and will accept them only if they are justified by the evidence.
IV.

Motion to Dismiss
No party disputes that SAG has no contact with the state of Illinois other than possibly

through SCPI. SAG is a Swiss holding company that has no employees, and its sole business is
8

owning shares in other Syngenta entities. It has no independent contacts with Illinois: it is not
registered or authorized to do business here, it has no facilities, direct agents, accounts or
property here, none of its officers or directors resides here, it has never held meetings or filed
lawsuits here, and it has not manufactured or sold products here. It urges the Court to follow
Monsanto Co. v. Syngenta Seeds, Inc., 443 F. Supp. 2d 636 (D. Del. 2006), in which a district
court in Delaware held it did not have personal jurisdiction over SAG.
The plaintiffs argue that the foregoing is irrelevant because SAG exercises an unusually
high degree of control over SCPI, which is essentially SAG’s alter ego or agent for business in
the United States, such that SCPI’s contacts can be imputed to SAG to establish general personal
jurisdiction. It exercises this control, the plaintiffs allege, through functional reporting lines to
“Product Heads” in charge of seed product or crop protection product divisions or to “Functional
Heads” in charge of human resources, corporate affairs, global operations, research and
development, legal and taxes, and finance, as opposed to legal reporting lines that follow
corporate structure. In support of their position, the plaintiffs point to In re Chocolate, 674 F.
Supp. 2d 580 (M.D. Pa. 2009), and In re Phenylpropanolamine (PPA) Products Liability
Litigation, 344 F. Supp. 2d 686 (W.D. Wash. 2003) (finding subsidiary is agent of indirect
parent where management system penetrates layers of ownership and parent actively controls
decisions and activities of subsidiary through its board, committees and executives), both of
which involved management structures overseen by an international parent company. See also
Directory Dividends, Inc. v. SBC Communications, Inc., No. Civ.A. 01-CV-1974, 2003 WL
21961448 (E.D. Pa. July 2, 2003) (finding subsidiary is alter ego where parent controls business
at the subsidiary level through vertical and horizontal integration of companies); Bauman v.
DaimlerChrysler Corp., 644 F.3d 909 (9th Cir. 2011) (finding subsidiary is agent of parent for
9

jurisdictional purposes where comprehensive written agreement between parent and subsidiary
gave parent control over nearly all aspects of subsidiary’s current and future operations).
In reply, SAG disputes that it is doing business in Illinois through SCPI or that it
exercises day-to-day control over SCPI. It points to the plaintiffs’ lack of evidence showing
SAG itself, as opposed to some other Syngenta entity, controlled SCPI or used it as an agent. It
reiterates that SCPI maintains its own separate identity and that global or regional managers
simply formulate and coordinate an overall strategy for related businesses to guide SCPI. It cites
LaSalle National Bank v. Vitro, Sociedad Anonima, 85 F. Supp. 2d 857 (N.D. Ill. 2000)
(declining to impute subsidiary’s contacts to parent where parent conducted business through
divisions, offered training to subsidiary’s employees and had comprehensive business plan but
did not take active day-to-day control over subsidiary), as a similar case in further support of its
position.
In Monsanto, the court addressed jurisdiction over the same defendant at issue in this
motion: SAG. It held it did not have personal jurisdiction over SAG based on United States
subsidiaries’ contacts with the state because SAG was not involved in the United States
subsidiaries’ manufacturing or production activities and the United States subsidiaries were not
acting as SAG’s distributors or sales agents. Monsanto, 443 F. Supp. 2d at 644-45. On the
contrary, the court found that the United States subsidiaries “[made] their own decisions about
day-to-day activities, and design, manufacture, market and distribute” the Syngenta product in
issue. Id. at 645.
Perhaps In re Chocolate, is the most enlightening of all the cases cited because it
provides a contrast between numerous companies sitting atop worldwide networks of
subsidiaries. Indeed, the plaintiffs argue SAG is similar to defendant Cadbury plc and Cadbury
10

Holdings (collectively, “Cadbury”), while SAG argues it is more like defendant Nestlé, N.A.
(“Nestlé”). Like SAG, Cadbury and Nestlé are the ultimate parents of their respective group of
operating companies.
In Nestlé’s case, two immediate subsidiaries, Nestec N.A. (“Nestec”) and Société des
Produits Nestlé S.A. (“Société”) loosely coordinated operations of Nestlé’s operational
subsidiaries but each operating subsidiary was responsible for its own product sales and
distribution. In re Chocolate, 674 F. Supp. 2d at 588. Nestlé, Nestec or Société owned the
intellectual property rights to Nestlé-branded products and provided product design and
manufacturing support to the operational subsidiaries, and those subsidiaries made royalty
payments to Nestlé. Id. at 589. Centralized trademark oversight was achieved through advisors
employed by operational subsidiaries who reported both to the subsidiary, which maintained
day-to-day control over the trademarks it used, and to Nestec or Société. Id.
Nestlé managed its products through strategic business units (“SBUs”) and strategic
generating demand units (“SGDUs”) organized around product lines rather than legal corporate
structures. Id. at 590. SBUs engaged in transnational product development, facilitated sharing
of expertise of subsidiaries that made similar goods and was responsible for maintaining the
integrity of the respective trademark portfolio. Id. With one exception, SBUs answered to
Nestec, which then answered to Nestlé. Id. The SGDUs worked with SBUs and operating
subsidiaries to market and sell Nestlé products in particular markets, but operating subsidiaries
were free to reject SBU and SGDU proposals if they deemed them ill-suited. Id. All operating
companies reported financial and production data to Nestlé using a common internet-based
platform. Id.
Nestec and Société did not “directly supervise the manufacturing, sales, and marketing
11

processes, which [were] functions that remain[ed] the responsibility of operating entities such as
defendant Nestlé USA, Inc.,” which was the exclusive supplier of Nestlé products in the United
States. Id. Nestlé USA, Inc. administered its strategic business plan in the United States without
involvement from Nestlé, Nestec or Société and formulated its budget independently of Nestlé,
although it had to submit monthly financial information to Nestlé. Id. at 590-91. It created its
own independent SBUs and an SGDU distinct from those overseen by Nestec, organized around
different product clusters and focused exclusively on the American market. Id.
The In re Chocolate court found that Nestlé USA was not the alter ego of Nestlé such
that its contacts with the forum could be imputed to Nestlé. Important to this conclusion was
that Nestlé did not control Nestlé USA’s use of intellectual property, which was actually
managed by Nestec and Société, and did not control Nestlé USA’s business strategy through
SBUs or SGDUs, which only made proposals that Nestlé USA was free to reject in light of its
own SBUs’ and SGDU’s proposals. Id. at 605-07. The court further noted that Nestlé’s
monitoring of Nestlé USA’s financial and management data, collection of royalties and
recommending optional cost-saving measures were normal incidents of the parent-subsidiary
relationship and not “pervasive control over essential functions.” Id. at 607-09. Nestlé USA, the
court concluded, exercised “a significant degree of autonomy over its daily affairs” in that it
“maintain[ed] its own production facilities, purchase[d] raw materials through contracts to which
Nestlé S.A. [was] not a party, formulate[d] its own budget, and establishe[d] its own
administrative policies.” Id. at 609. Therefore it was not an alter ego of Nestlé.
In contrast, Cadbury managed the affairs of its subsidiary corporations through the
Cadbury plc’s Chief Executive Officer’s Committee (“Committee”) which was responsible “for
the day-to-day management of the operations and the implementation of strategy.” Id. at 591-92.
12

The Committee was made up of the heads of the Cadbury group’s business units, which like
Nestlé’s SBUs were organized around product lines, and other executives of the operating
subsidiaries including the president and CEO of Cadbury Adams USA LLC (“Cadbury USA”).
Id. at 592. Thus, those executives had responsibility through the Committee for global
operations as well as their own companies. Id. The Cadbury group was managed through a
matrix organizational structure in which operating subsidiaries’ executives supervised their own
employees and, under the coordination of global functional heads, shared information with other
similar subsidiaries from different geographical areas to develop global expertise and best
practices. Id. The Committee recommended intercompany transfers of personnel from one
operating subsidiary to another based on operating needs, but the operating entities could reject
the proposed transfer. Id. at 593. Cadbury was also directly involved in subsidiaries’ budgeting
procedures in that Cadbury plc’s president and CFO approved the budgets and set sales targets.
Id.
The In re Chocolate court found that Cadbury USA was the alter ego of Cadbury such
that its contacts with the forum could be imputed to Cadbury. The court first considered
Cadbury pcl’s and Cadbury Holdings’ actions together “because they coordinate[d] all of their
corporate activities and function[ed] as a unified parent entity” and “operate[d] as a single
indistinguishable entity on a daily basis.” Id. at 614 n. 51. Key to the Cadbury USA alter ego
status was that Cadbury “vertically manage[d] the Cadbury group through business units aligned
with product groups rather than corporate boundaries” where “senior executives of Cadbury
operating entities double[d] as both the leaders of business units and as the heads of production
activities.” Id. at 614. The conscription of subsidiaries’ employees “to discharge group-wide
management functions across corporate boundaries” provided “strong evidence of an alter ego
13

relationship.” Id. at 615. Similarly, the centralized management of territory through business
units and personnel was further evidence that corporate boundaries did not reflect accountability
lines. Id. at 615 n. 53. The court also noted that the Committee was required to give final
approval before Cadbury USA could implement a new project and that the Committee performed
functions like evaluating market research and supply chain management that were normally
performed by an operating company. Id. Also important to the alter ego finding was that the
Cadbury USA board lacked operational control – Cadbury USA’s CEO did not know the board’s
members, the board never met in person or by telephone and had only agreed to actions on
paper. Id. at 615-16 & n. 54. In contrast, the Committee, which met six to nine times a year for
one to three days, actively addressed issues affecting Cadbury USA’s operations. Id. at 616.
The court concluded that Cadbury USA simply did not exercise a sufficient measure of
autonomy to escape alter ego status. Id. at 617.
A.

Facts

An understanding of the legal and functional structure of SAG and its subsidiaries is
essential to untangling the issues in this case. SAG has no employees; it is a holding company
that owns stock, either directly or indirectly, in other Syngenta entities. One of its direct,
wholly-owned subsidiaries is Syngenta Crop Protection AG, which employs global operational
managers of production, distribution and marketing for the Crop Protection (“CP”) Division and
the Seeds Division, two product lines of the Syngenta entities that do not have separate legal,
corporate existences. Syngenta Crop Protection AG, in turn, directly and wholly owns Syngenta
International AG, the coordination center for the entire Syngenta group. Syngenta International
AG employs the “Heads” of the CP Division and Seeds Division, and the “Heads” and senior
staff of global corporate functions (e.g., Human Resources, Corporate Affairs, Global
14

Operations, Research and Development, Legal and Taxes, and Finance). These global Heads
and senior staff are for the most part housed in the same office space in Basel, Switzerland.
SAG is the indirect parent of SCPI through multiple layers of corporate ownership. SAG
directly and wholly owns Syngenta Participations AG, which directly and wholly owns Seeds JV
C.V., which directly and wholly owns Syngenta Corporation, which directly and wholly owns
Syngenta Seeds, Inc., which directly and wholly owns SCPI. SCPI is incorporated in Delaware,
has its principal place of business in North Carolina and has its own board of directors. It
manufactures, markets and sells atrazine and products containing atrazine in the United States.
SCPI’s sales of all products account for more than 17% of the sales for the entire Syngenta group
of companies in 2009. SAG has organized its group of subsidiary companies, including SCPI,
purposefully to limit the jurisdictions in which it is subject to court authority.
SAG represents Syngenta as a “global company.” It also shares a common website with
its subsidiaries like SCPI and controls what is communicated at that site. However, SCPI is not
undercapitalized, prepares its own financial statements, keeps its own books and records and
files its own United States tax returns. SAG does not file financial statements on behalf of SCPI,
although it includes SCPI’s financial results in its consolidated financial results to the United
States Securities and Exchange Commission and Swiss authorities in accordance with generally
accepted accounting principles.
The SAG board of directors is chaired by Mike Mack. The SAG board has established
the Executive Committee comprised of employees of Syngenta International AG, including
Mack and many global Heads. John Atkin, the CP Division Head, and Christoph Maeder, the
global Head of the Legal and Taxes function, both serve on the Executive Committee and on
SCPI’s five-member board of directors. The Executive Committee formulates and coordinates
15

global strategy for Syngenta businesses, and there are central corporate policies requiring
Syngenta subsidiaries to operate independently under the general guidance of Syngenta group
control.
There is no overlap between the SAG and SCPI boards of directors, which do not meet at
the same time. The SAG board meets five to six times a year, but the SCPI board rarely meets,
either in person or by telephone. In fact, it has only met a handful of times over the last decade.
Instead, the SCPI board’s actions, including selection and removal of SCPI’s officers, have been
by unanimous written consent of actions recommended by global or regional managers and
delivered via e-mail to board members. Similarly, the Syngenta Seeds, Inc.’s board appoints and
removes SCPI board members upon recommendation by Mack.
The CP Division has its own structure, which is not defined by legal, corporate
relationships but by reporting relationships. This ensures that employees doing similar jobs
around the world are able to share knowledge and ideas with each other so that they can learn
how to do their jobs better. Within the CP Division is the CP Leadership Team, which includes
CP Division Head Atkin, CP region Heads (including SCPI President Vern Hawkins) and some
global corporate function Heads. The CP Leadership Team meets bi-monthly to develop
strategy for new products, markets and operational efficiencies and to monitor performance of
Syngenta’s worldwide CP business. Under the CP Leadership Team are regional leadership
teams, including the NAFTA Regional Leadership Team, which oversees SCPI and its Canadian
and Mexican Syngenta counterparts. The NAFTA Regional Leadership Team is chaired by
SCPI President Hawkins and includes employees of SCPI and its Canadian and Mexican
Syngenta counterparts. Generally, those North American Syngenta entities report to the NAFTA
Regional Leadership Team, which reports to the CP Leadership Team, which reports to the
16

Executive Committee, which answers to the SAG Board, although some specific members of the
NAFTA Regional Leadership Team, including some SCPI employees, also report directly to
some global Heads. Where global managers supervise SCPI employees, those managers
participate in those employees’ performance reviews and request salary increases, if appropriate.
On occasion, the functional reporting lines result in employees of parent companies reporting to
officers of subsidiary companies.
SCPI performs its functions according to its role in the CP Division structure. CP
Division development projects are proposed at the global level, ranked and funded at the global
level after input from functional entities such as the CP Leadership Team and the NAFTA
Regional Leadership Team, and given final approval by the Executive Committee. With respect
to new product development projects, new CP products are developed by Syngenta entities that
conduct research and development functions for the entire CP Division. The products they
develop are then tested by other Syngenta entities such as SCPI under the direction and
supervision of global managers and/or the CP Leadership Team. Syngenta entities, including
SCPI, do not have contracts with each other or compensate each other for these services they
provide for each other; the costs are simply included in the operating budgets of the individual
entities. If a product shows promise based on the testing and potential markets, either global or
regional leaders (depending on whether the target market is global or regional) decide whether to
sell a product, and that decision must be approved by the Executive Committee. The products
sold all bear the same Syngenta trademark and logo.
As for atrazine in particular, the supply chain is controlled and coordinated globally from
raw materials through delivery to the customer. For example, atrazine for global demand is
manufactured in an SCPI plant in St. Gabriel, Louisiana. A member of the Executive Committee
17

and a team that reports to him are responsible for communicating global demand to the St.
Gabriel plant, and SCPI then manages day-to-day production to make sure that demand is met.
The Executive Committee member and his team is also responsible for deciding how atrazine is
allocated to markets after it is manufactured, although local distribution strategies may
independently be tailored to local needs. Global managers also provide sales and marketing
strategies to SCPI and have negotiated a number of sales deals on behalf of SCPI. Because
atrazine is a global product, SCPI could not decide to stop manufacturing it without approval
from CP Division Head Atkin.
SCPI is subject to additional oversight by global managers through a system of “reserved
powers” that require subsidiary companies to seek approval for certain decisions from higher
levels within the functional reporting structure. For example, although subsidiaries can handle
small legal matters on their own, under the “reserved powers” system, they must get approval
from various higher levels of the functional reporting relationships when the matters exceed
certain thresholds of value or importance. For instance, settlement of this lawsuit would need to
be approved by the SAG board because its value likely exceeds $60 million. Similarly, in the
personnel arena, appointments of senior managers at SCPI must be approved by higher levels
than the SCPI board, although the SCPI board is the body that formally appoints the managers.
SAG maintains that the subsidiary companies have the legal authority to take action on their own
without higher approval, but the actual practice is that only after the higher level pre-approves an
action does SCPI take it. Similar restrictions exist in other arenas including human resources,
communications and public affairs, corporate structure or ownership, asset sales or acquisitions,
key appointments to boards, committees and management positions, compensation packages and
training for those appointments, finance and tax.
18

Under this oversight, global managers initiate and the global Head of human resources
oversees international assignments and compensation of managers employed by one Syngenta
subsidiary to do temporary work for another in another country. The international assignment
program aims, in part, to improve succession planning by developing corporate talent to make
employees fit for higher positions within the Syngenta group of companies.
Also under this oversight, there is a central global finance function – known as Syngenta
Group Treasury – for the Syngenta group of companies, including SCPI, that is governed by a
global treasury policy. That policy subordinates the financial interests of SAG’s subsidiaries to
the interests of the Syngenta group as a whole. Under the policy, Syngenta Group Treasury
controls daily cash sweeps from subsidiaries, holds the cash on account, and lends it to other
subsidiaries that need liquidity. This reduces the need of subsidiaries to seek financing from
non-Syngenta entities, which is only allowed with the approval of Syngenta Group Treasury.
Syngenta Group Treasury also decides whether SCPI will issue a dividend to its parent Syngenta
Seeds, Inc. and how much that dividend will be, and the SCPI board approves the dividend
accordingly without discussion.
Despite oversight from above, SCPI handles its own human relations matters below
senior management level, runs its facilities, and manages its relationships with United States
retailers of its products independently of other Syngenta entities. It also manages its own
advertizing and promotion budget and enters into contracts with third parties on its own.
B.

Analysis
1.

Contacts With Illinois

The plaintiffs have made a prima facie showing that the Court has personal jurisdiction
over SAG. While SCPI’s jurisdictional contacts are not attributable to SAG simply because of
19

their corporate affiliation, the evidence shows SAG exercises an “unusually high degree of
control over” and, in fact, dominates SCPI despite the multiple layers of corporate ownership
between them. See Central States, S.E. & S.W. Areas Pension Fund v. Reimer Express World
Corp., 230 F.3d 934, 943 (7th Cir. 2000). SAG’s control of SCPI exceeds that which is
consistent with investor status, and SAG is therefore subject to the personal jurisdiction of this
Court.
The evidence in this case shows that the Executive Committee functions as the means by
which the SAG board exercises control over SCPI. The Executive Committee has some degree
of influence over the SCPI board because CP Division Head Hawkins and Legal and Tax Head
Maeder serve on the SCPI board and the Executive Committee. More importantly, however, is
the fact that the SCPI board rarely meets in person and decides almost everything by unanimous
consent of a recommendation provided by a higher functional reporting level outside SCPI’s or
parent Syngenta Seeds Inc.’s legal boundaries. SAG argues that it is a common practice for
boards to pass measures by unanimous consent where they have been discussed and agreed upon
ahead of time. It notes that three of SCPI’s five-member board work in the same office in
Greensboro, North Carolina, the other two work in Basel, Switzerland, and they are in constant
communication. Nevertheless, the Court will not assume deliberations that are not reflected in
corporate records. The Court is hard-pressed to see how such a board can diligently and
seriously consider the issues before it if it rarely even holds a discussion in person or otherwise.
No matter how many Executive Committee members serve on the SCPI board, the reality is that
the board does not appear to function independently and instead simply ratifies decisions already
made by higher functional reporting levels and communicated to it by Maeder or through the CP
Division structure.
20

While not controlling of the Court’s decision, see LaSalle Nat’l Bank v. Vitro, Sociedad
Anonima, 85 F. Supp. 2d 857, 865 (N.D. Ill. 2000) (“Personal jurisdiction is based on actual
evidence of control . . . rather than on a corporation’s general descriptions.”), it is worth noting
that SAG centralizes uniform marketing in which it represents that “Syngenta” is a singleintegrated globally managed entity. SCPI uses the same corporate insignia, marks and logos as
SAG and does not have an independent website for its business.
Additionally, management of human resources indicates the Syngenta group of
companies functions more like a monolithic corporation controlled by SAG through the
Executive Committee as opposed to a group of independent though related companies. Through
the NAFTA Leadership Team, managers from SCPI are tasked with managing the Canadian and
Mexican Syngenta entities within the CP Division although SCPI has no ownership interest in
those entities. SCPI employees are also occasionally tasked with global management roles that
far exceed their SCPI domain. For example, Peter Hertl, an SCPI employee was in charge of
global product safety for the entire Syngenta group of companies. Indeed, 35 SCPI employees
have NAFTA job titles and 15 SCPI employees have global job titles. Conversely, some SCPI
employees take orders from global managers who work for Syngenta entities that have no
ownership interest in SCPI. Those managers participate in reviews of those SCPI employees and
can request raises or other personnel action, functions beyond those of managers of a normal
parent. That the formal decisions regarding those SCPI employees are technically made by
SCPI’s managers does not change the reality that higher levels actually make the real decisions.
In addition, the global Human Resources function centrally orchestrates movement of managers
between Syngenta entities, including SCPI, as if it were managing a single human resources
department. These practices demonstrate that personnel technically employed by one entity
21

actually function as if they were employed by SAG for the use of the Syngenta group of
companies. Indeed, a number of employees of Syngenta entities cannot identify for which
Syngenta entity they or their coworkers work.
With respect to SCPI’s production of atrazine in particular, global managers exercise a
high degree of control. In practice, they dictate how much atrazine SCPI will produce at its St.
Gabriel plant and the countries where and the companies to which atrazine will be sold, even
going so far as to negotiate sales contracts on behalf of SCPI and to direct its marketing
messages. They also decide what testing SCPI will do – without compensation – and the
protocols for that testing for the benefit of the Syngenta group of companies. While many of
these decisions are cloaked as general direction, advice or recommendations to local managers,
in reality they are viewed and treated as authoritative commands that must be followed.
Additionally, SCPI does not control the decision whether to discontinue atrazine, its own
product; it would need to get approval from Executive Committee member and CP Division
Head Atkin before it could stop production. These activities and oversight go beyond what a
normal parent company does for its subsidiary.
More compelling evidence is the “reserved powers” that require approval from higher
levels of the functional reporting system for certain decisions. While it is true that corporate
parents may supervise certain budget decisions and set general policies, the “reserved powers”
go beyond that general oversight to cover such things as compensation packages and settlement
of legal proceedings. SAG maintains that the SCPI board retains the ultimate authority to make
decisions and that the “reserved powers” only require consultation with higher functional
reporting levels. This argument is specious in that, as noted above, the SCPI board appears not
to function independently as a board.
22

The case at bar is distinguishable from Monsanto Co. v. Syngenta Seeds, Inc., 443 F.
Supp. 2d 636 (D. Del. 2006), in that there is more evidence presented here that SAG, through the
Executive Committee and the CP Leadership Team, made decisions about day-to-day operations
of SCPI – such as how much atrazine the St. Gabriel plant would produce and at what price it
would be sold – than was presented with respect to SAG’s control over its United States
subsidiaries at issue in that case. There is also more evidence here that SAG controls the
designing of the product and determines marketing strategies and distribution plans. For this
reason, Monsanto is not persuasive to this Court.
It appears to the Court that SAG is more akin to Cadbury than to Nestlé in the In re
Chocolate case. SAG’s control over SCPI through the Executive Committee is more than just
loose control over operating activities as was the case with Nestlé. On the contrary, the
Executive Committee or the CP Leadership Team makes decisions for SCPI in areas including
strategic business planning, budgeting, product testing, production levels, marketing, sales and
personnel, all of which SCPI was required to – and did – formally adopt. In the case of Nestlé,
Nestlé USA was permitted to reject proposals made by the product line SBUs and SGDUs or
recommendations for cost-saving measures. The Syngenta reserved powers also require SCPI to
get approval from higher levels in the functional reporting structure before it takes a broad range
of corporate actions for its own business. In sum, SCPI simply does not have the level of
autonomy from SAG that Nestlé USA had from Nestlé, Nestec or Société.
On the contrary, the level of autonomy exercised by SCPI more closely resembles the
level exercised by Cadbury USA. As with Cadbury, operating subsidiary employees have
responsibilities beyond their legal corporate domains and are overseen by an executive
committee directly answerable to the ultimate parent. The Executive Committee and CP
23

Leadership Team require SCPI employees to manage the businesses of SCPI’s Mexican and
Canadian counterparts as well as some global aspects of the Syngenta group of companies. They
also require SCPI to test products for the benefit of other SAG subsidiaries without
compensation for those efforts. Also as with Cadbury, the Executive Committee and CP
Leadership Team are involved in SCPI’s budgeting process and other operational decisions,
while the SCPI board has never deliberated, has rarely met, and has only adopted measures by
unanimous written consent. Like Cadbury, SAG exercised a sufficiently high degree of control
over SCPI that it is proper to impute SCPI’s contacts to SAG for jurisdictional purposes.
2.

Reasonableness of Exercising Jurisdiction

The Court now turns to the question of whether exercising personal jurisdiction over
SAG would offend “traditional notions of fair play and substantial justice.” International Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945). In making this determination, the Court considers
“the burden on the defendant, the interests of the forum State, and the plaintiff’s interest in
obtaining relief.” Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 113 (1987).
The Court is especially mindful of the burden on foreign corporations which might not be
familiar with the United States legal system. Id. at 115. The defendant bears the burden of
showing jurisdiction is unreasonable despite its contacts with the jurisdiction. See Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).
SAG has not made such a showing. As a preliminary matter, by its actions to control
SCPI within this forum, SAG has purposefully availed itself of this forum’s law such that it
should not be a surprise that it is being haled into court here. Furthermore, in light of SAG’s
vast global presence, global legal department and regular travel to many regions, it would not be
unduly burdensome for it to appear in this forum to litigate this case. Moreover, modern
24

advances in electronic communication tend to reduce many formerly onerous burdens of
litigating in a distant forum. It is clear that Illinois has a substantial interest in this litigation in
that the allegations are that SAG is responsible for contaminating the water supply of numerous
municipalities within the state. Finally, while it is true that the plaintiffs may be able to obtain
complete relief from SCPI, which is not undercapitalized, could pay a judgment in this case, and
has willingly appeared to litigate it, SAG’s control over SCPI’s budget makes it an important
player in this dispute.
For these reasons, the Court finds that exercising personal jurisdiction over SAG does not
offend due process.
V.

Conclusion
For the foregoing reasons, the Court:

•

DENIES the plaintiffs’ motion to strike SAG’s affidavits in support of its motion to
dismiss (Doc. 121); and

•

DENIES SAG’s motion to dismiss for lack of personal jurisdiction (Doc. 26).

SO ORDERED.
DATED: November 23, 2011
s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE

25