Poletti et al v. Syngenta AG et al
Filing
194
ORDER denying 115 Motion to Dismiss for Failure to State a Claim, Lack of Personal Jurisdiction, and Request for Oral Argument. Signed by Judge David R. Herndon on 2/20/2017. (kmb2)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
--------------------------------------------------------------IN RE SYNGENTA MASS TORT ACTIONS
---------------------------------------------------------------
Judge David R. Herndon
This Document Relates to:
Poletti, et al. v. Syngenta AG, et al.
No. 3:15-cv-01121-DRH
MEMORANDUM AND ORDER
Before the Court is Syngenta’s motion to dismiss plaintiff’s First
Consolidated Amended Complaint (Doc. 59) for lack of personal jurisdiction
pursuant to Fed. R. Civ. P. 12(b)(2), and failure to state a claim pursuant to Fed.
R. Civ. P. 12(b)(6) (Doc. 115). Plaintiffs oppose the motion (Doc. 133). Syngenta
raises numerous arguments regarding why plaintiffs’ complaint should be
dismissed, only two of which are worthy of close analysis, and are analyzed fully
below. Based on the following, the Court DENIES Syngenta’s motion to dismiss
and request for oral argument.
I. BACKGROUND
A. Introduction
In March 2016, Roland Poletti, et al. 1 (“plaintiffs”) filed their First
Consolidated and Amended Complaint against Syngenta, 2 under the Class Action
1
In February 2016, the Court ordered the consolidation of all existing plaintiffs in Poletti, et al. v.
Syngenta Corp., et al., No. 3:15-cv-1221-DRH; Brase Farms, Inc., et al. v. Syngenta Corp., et al.,
No. 3:15-cv-1374-DRH; and Wiemers Farms, Inc., et al. v. Syngenta Corp., et al., No. 3:15-cv01379-DRH. The Court directed the plaintiffs to file an amended consolidated complaint in the
Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). 3
Plaintiffs alleged that Syngenta
prematurely commercialized the genetically modified corn trait “MIR162,” 4 and in
doing so, acted negligently, recklessly, and deceptively, causing harm to plaintiffs
and contaminating the entire United States corn supply. Plaintiffs further
contended that—at the time of the alleged acts—Syngenta knew of and foresaw the
risk to plaintiffs, and thereby breached the duty owed in preventing the harm
alleged (Doc. 59).
B. MIR162 & VIPTERA™ Controversy
Plaintiffs note that United States exportation of corn amounts to billions of
dollars annually, and because the U.S. corn marketing system is commoditybased, 5 the highest standards of purity are required to be maintained (Id. at 282).
Moreover, plaintiffs point to the premature release of Agrisure VIPTERA™ as the
lead case, Poletti. See Case Management Order, at 1, Brase Farms, Inc., et al., Syngenta Corp., et
al., No. 3:15-cv-1374 (S.D. Ill. Mar. 10, 2016), ECF No. 62.
2
Defendants Syngenta AG, Syngenta Crop Protection AG, Syngenta Corporation, Syngenta Crop
Protection, LLC, Syngenta Biotechnology, Inc., and Syngenta Seeds, Inc., will be collectively known
as “Syngenta” for purposes of brevity.
3
The original state-court actions were removed by Syngenta pursuant to 28 U.S.C. § 1453 from
the Third Judicial Circuit of Madison County, Illinois, case no. 15-L-1219. See Doc. 1.
4
The Environmental Protection Agency (“EPA”) Fact Sheet for Event MIR162 Maize describes
MIR162 maize as a new plant-incorporated protectant product that produces its own insecticidal
protein within the corn plant which is derived from the naturally occurring soil bacterium Bacillus
thuringiensis (Bt). The insecticidal protein Vip3Aa20 expressed in MIR162 controls certain
lepidopteran pests of corn. MIR162 target pests include: corn earworm, fall armyworm,
armyworm,
beet
armyworm,
black
cutworm,
and
western
bean
cutworm.
https://www3.epa.gov/pesticides/chem_search/reg.../fs_PC-006599_26-Dec-08.pdf
5
Corn grown by farmers throughout the U.S. is commingled, consolidated, and transported from
several thousand farms before it is hauled to distribution centers and shipped overseas.
sole cause of foreign export-market refusal to import U.S. grown corn, and further
maintain that heavy financial losses have been incurred (Id. at 282).
In 2009, Syngenta introduced and sold the genetically modified (“GMO”)
corn trait MIR162 to U.S. farmers under the trade name Agrisure VIPTERA™; at
the time, MIR162 was barred for sale in several countries, including China—
where it was not yet approved for purchase or consumption (Id.).
Agrisure
VIPTERA™ and its variant DURACADE™, were licensed and marketed by
Syngenta; and, both products contained multiple genetically enhanced modified
traits and were sold to seed manufactures for their insect resistance capabilities
(Id. at 283). Syngenta’s corn modification process used biotechnology to insert
genetic substances into corn seeds from the bacterium Bacillus thuringiensis
(“Bt”), in order to produce certain proteins that have insecticidal properties. One
of the produced proteins, Vip3A, binds to the pest insect’s midgut and forms
pores which kill the insect before crop damage takes place.
VIPTERA™’s bio-
engineered origin required foreign regulatory approval before it was able to be
cultivated or imported outside of the United States (Id. at 290-91).
Plaintiffs vie that Syngenta intentionally and recklessly released VIPTERA™
and DURACADE™ into the U.S. corn market before gaining MIR162 GMO
approval (Id. at 283).
Allegations begin in the spring of 2010, when plaintiffs
charge that Syngenta decided to release VIPTERA™ for the 2010-2011 corn
season; all while lacking the necessary approval for import into foreign markets,
namely China—who, in 2009-2010, imported 1,296 thousand metric tons of U.S.
corn (Id. at 291-92). 6 Plaintiffs claim that at the time of VIPTERA™’s release,
Syngenta assured consumers that import approval in Japan and European Union
countries was pending—but made no mention in regard to China (Id.). Plaintiffs
alleged that in 2012 Syngenta misinformed U.S. corn farmers, grain elevators,
grain exporters, landowners, the general public, and even Syngenta’s own
investors, by directing all to believe that MIR162 GMO approval from China was
forthcoming (Id. at 284). The misinformation was followed by Syngenta’s creation
of documentation that implicitly established the belief that MIR162 had been
accepted by Chinese importers. U.S. corn farmers—upon reliance on Syngenta’s
statements—immediately began to plant corn containing MIR162; however, China
did not approve MIR162 until 2014 (Id.).
B. U.S. Corn Crop Contamination
Factual evidence suggests that planting, harvesting, and transporting
assorted corn varieties together creates a risk of contamination, commingling, and
cross pollination from one corn plant to another, resulting in an exchange of
genetic traits (Id. at 292-94).
Plaintiffs allege that notwithstanding this risk,
Syngenta offered “a ‘side-by-side program’ which encouraged farmers to plant
VIPTERA corn side-by-side with other corn seed.” This encouragement of side-byside planting of VIPTERA™ and non-VIPTERA™ corn led to the comingling of
VIPTERA™GMO corn with the wide-ranging U.S. corn supply (Id.).
6
See World Agricultural Supply and Demand Estimates Report
http://www.usda.gov/oce/commodity/wasde/
In November 2013, the first shipments of MIR162-infused GMO corn
arriving in China were not approved for import and were subsequently rejected
(Id. at 297). Refusal continued until December of 2014; and plaintiffs claim that
Syngenta’s actions “shut down, for all intents and purposes” the 2014 U.S. corn
market to China “causing billions of dollars of damages to U.S. exporters,
including farmers, farm landowners, and farming entities” (Id. at 285). In fact,
plaintiffs point to a National Grain and Feed Association (“NGFA”) statement
indicating that Syngenta’s premature release of VIPTERA™ corn cost the U.S. corn
market between $1 Billion and $3 billion dollars due to rejection and seizures of
containers and cargo ships transporting MIR162 GMO corn to China alone (Id. at
286).
C. Request to Stop DURACADE™ Release
Plaintiffs suggest that Syngenta continued “irreparable damage to U.S.
exports of corn to China” by releasing a second version of MIR162 GMO corn—
without Chinese approval—under the trade name DURACADE™ (Id. at 286-87).
In anticipation of its release, the NGFA and North American Export Grain
Association (“NAEGA”) released a joint statement requesting that Syngenta halt its
release of DURACADE™ (Id. at 287).
The statement explained that both
organizations are gravely concerned about the serious economic harm resulting
from Syngenta’s current approach to VIPTERA™ management. 7 (Id. at 287).
7
The joint NGFA and NAEGA statement expressed, in part, “Further, the same concerns now
transcend to Syngenta’s intended product launch plans for DURACADE, which risk repeating and
extending the damage. Immediate action is required by Syngenta to halt such damage.” Doc. 59 at
287.
Plaintiffs contend that regardless of NGFA and NAEGA requests to halt
production, Syngenta nevertheless released DURACADE™, further jeopardizing
the Chinese import market (Id. at 287).
D. Claims Asserted/Causes of Action
Plaintiffs assert claims—against Syngenta—of public nuisance, private
nuisance, negligence, products liability, tortious interference with business
actions, strict liability as to certain classes of plaintiffs, and the violation of
various state deceptive trade practices and consumer protection acts (Id. at 30230). 8 Causes of action for damages include: the premature release of VIPTERA™
and DURACADE™ into the U.S. corn and corn seed supply; the materially
misleading statements made relating to approval status of MIR162 in China upon
which plaintiffs relied; the failure to disclose the material fact that MIR162 was
not approved for import into China; and the continuing and future MIR162
contamination of the U.S. corn and seed supply (Id. at 288-89). Plaintiffs seek
compensatory, consequential, and punitive damages, and injunctive relief (Id. at
331-33).
E. Syngenta’s Motion to Dismiss/Plaintiffs’ Response in Opposition
Syngenta filed a motion to dismiss plaintiffs’ complaint for lack of personal
jurisdiction and failure to state a claim for which relief may be granted (Doc. 115).
8
Plaintiffs’ Count VI, Strict Liability, against Syngenta is in reference to plaintiffs from: AL, AZ,
AR, CA, CO, FL, ID, IL, IN, IA, KS, KY, MN, MS, MO, NE, NV, NY, ND, OH, OK, OR, PA, SC, SD,
TN, TX, and WI. Counts VII-XIX relate to deceptive trade practices and/or consumer protection
acts from the following states: AR, CA, CO, FL, GA, ID, IL, KY, MN, NY, NC, OR, and SC (Doc. 59
at 309-330).
In its memorandum in support, Syngenta discusses several legal principals which
it believes warrants a grant of dismissal (Doc. 116).
Namely, non-Illinois
plaintiffs’ lack of personal jurisdiction; and, the bar of plaintiffs’ claims by the
“Stranger” and “Contractual” Economic Loss Doctrines. 9 (Id.)
Plaintiffs have filed a response to Syngenta’s motion to dismiss and argue,
inter alia, that Syngenta waived its “lack of personal-jurisdiction defense” when it
compelled discovery coordination and complied with the Court’s orders regarding
discovery (Doc. 133). In its reply, Syngenta proclaims, among other things, that
“[p]laintiffs’ waiver arguments are baseless;” because waiving personal jurisdiction
by proceeding with pretrial activities would only occur if Syngenta’s actions gave
plaintiffs belief it would proceed in defending the suit on the merits. See Mobile
Anesthesiologists Chi., LLC v. Anesthesia Assoc. of Hous. Metroplex, P.A., 623
F.3d 440, 443 (7th Cir. 2010).
9
Syngenta also argues that plaintiffs’ complaint should be dismissed due to preemption pursuant
to 7 U.S.C. § 71, United States Grain Standards Act; absence of duty to control third-party postsale conduct; absence of duty to refrain from trade; preemption of failure-to-warn-liability
pursuant to 7 U.S.C. ch. 6 § 136 et seq, Federal Insecticide, Fungicide, and Rodentcide Act
(“FIFRA”); failure to state a claim regarding DURACADE™; failure, as a matter of law, of all strictliability and products-liability claims; failure to state a claim for tortious interference; requisite
dismissal of private and public nuisance claims as a matter of law; and, requisite dismissal of
consumer protection claims (Doc. 116). After thorough review, the Court finds that plaintiffs’
claims survive the 12(b)(6) motion to dismiss standard. Therefore, Syngenta’s most compelling
arguments for dismissal of plaintiff’s complaint warrant discussion.
II. LEGAL STANDARDS
A. Personal Jurisdiction under 12(b)(2)
When personal jurisdiction is challenged pursuant to Fed. R. Civ. P.
12(b)(2), plaintiffs bear the burden of establishing personal jurisdiction over
defendants. N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014)
(citing Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773 (7th
Cir. 2003). If the issue of personal jurisdiction is raised by a motion to dismiss
and decided on written material rather than an evidentiary hearing, the plaintiff
need only make a prima facie showing of jurisdictional facts. Id. The Court must
take as true all well-pleaded facts alleged and resolve any factual disputes in favor
of the plaintiff. Tamburo v. Dworkin, 601 F.3d 693, 700 (7tth Cir. 2010).
Illinois’ long-arm statute enables personal jurisdiction over a party to the
extent allowed under the due process provisions of the Illinois and United States
Constitutions. See 735 Ill. Comp. Stat. 5/2-209(c) (2016) (courts may exercise
jurisdiction on any other basis now or hereafter permitted by Illinois Constitution
and Constitution of United States); see also Kipp v. Ski Enterprise Corp. of Wisc.,
Inc., 783 F.3d 695, 697 (7th Cir. 2015) (stating governing Illinois statute permits
courts to exercise personal jurisdiction up to limits of Due Process Clause of
Fourteenth Amendment).
The Illinois Constitution’s due process and equal
protection 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, 141 Ill. 2d 244, 275, 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. 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).
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.
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.’“
Int’l Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945) (quoting Milliken v.
Meyer, 311 U.S. 457, 463 (1940)); uBID, Inc. v. GoDaddy Group, Inc., 623 F.3d
421, 425 (7th Cir. 2010) (quoting Int’l Shoe, 326 U.S. at 316). The defendant
must have purposefully established such minimum contacts with the forum state
such that it “should reasonably anticipate being haled into court there,” WorldWide 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). 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., Ltd. V. Super. Ct.
of Cal., Solano Cty., 480 U.S. 102, 113 (1987).
What personal jurisdiction 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, 302 F.3d at 716 (citing Helecopteros
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.
B. Failure to State a Claim under 12(b)(6)
Rule 12(b)(6) permits a motion to dismiss a complaint for failure to state a
claim upon which relief can be granted. Hallinan v. Fraternal Order of Police
Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).
The Supreme Court
explained in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), that Rule
12(6)(b) dismissal is warranted if the complaint fails to set forth “enough facts to
state a claim to relief that is plausible on its face.” Notice pleading remains all
that is required in a complaint, even though federal pleading standards were
overhauled by Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009). “A plaintiff
still must provide only ‘enough detail to give the defendant fair notice of what the
claim is and the grounds upon which it rests and, through his allegations, show
that it is plausible, rather than merely speculative, that he is entitled to relief.’ ”
Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008) (citation omitted).
The Seventh Circuit offers further instruction on what a civil action must
allege to endure 12(b)(6) dismissal. In Pugh v. Tribune Co., 521 F.3d 686, 699
(7th Cir. 2008), the Court reiterated the standard: “surviving a Rule 12(b)(6)
motion requires more than labels and conclusions”; the complaint’s allegations
must “raise a right to relief above the speculative level.” A plaintiff’s claim “must
be plausible on its face,” that is, “the complaint must establish a non-negligible
probability that the claim is valid.” Smith v. Med. Benefit Adm’rs Grp., Inc., 639
F.3d 277, 281 (7th Cir. 2011).
III. ANALYSIS
A. Choice of Law
In a diversity case, the Court applies the choice of law rules of the state in
which the district court sits. Jackson v. Payday Fin., LLC, 764 F.3d 765, 774
(7th Cir. 2014) (citing Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). Under
Illinois choice of law rules, litigants can stipulate to which substantive law applies
to their case so long as the stipulation is reasonable.
City of Clinton, Ill. v.
Moffitt, 812 F.2d 341, 342 (7th Cir. 187); see also Rexford Rand Corp. v. Ancel,
58 F.3d 1215, 1219 n.6 (7th Cir. 1995). The parties have cited to Illinois law,
thus, Illinois law applies. To the extent that the Illinois Supreme Court has not
yet spoken to any of the issues before the Court, the Court shall apply the law as it
would predict the Illinois Supreme Court would if deciding the case. Taco Bell
Corp. v. Cont’l Cas. Co., 388 F.3d 1069, 1077 (7th Cir. 2004) (stating that duty of
federal court in diversity suit is to predict what state Supreme Court would do if
presented with identical issue).
B. Personal Jurisdiction Waived By Syngenta
Syngenta’s primary argument for the dismissal of non-Illinois plaintiffs’
claims is that—under the Due Process Clause—the Court lacks personal
jurisdiction to adjudicate, i.e., Syngenta is not subject to general personal
jurisdiction in Illinois, nor specific personal jurisdiction in Illinois for non-Illinois
claims brought by non-Illinois plaintiffs.
Further, Syngenta argues that under
Mobile Anesthesiologists 623 F.3d at 440, it has not waived a lack of personal
jurisdiction defense argument by complying with court-ordered discovery
processes. 10
10
In Mobile Anesthesiologists, defendant filed a motion to continue a preliminary injunction
hearing and requested expedited discovery scheduling, because a witness was unable to testify on
the previously set date of the proceeding. See Mobile Anesthesiologists, 623 F.3d at 442-43. Two
weeks later, defendant filed a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction,
which prompted plaintiffs to contend that defendant waived the right to argue lack of personal
Mobile Anesthesiologists is undoubtedly distinguishable from the instant
matter.
Here, Syngenta has induced and complied with pretrial discovery
coordination, and has submitted itself to the Court for discovery purposes by:
moving for the adoption of a particular form of discovery coordination 11; filing a
reply regarding its motion for adopting the coordination order 12; participating in a
status
conference
regarding
involvement
and
agreement
of
discovery
coordination 13; complying with the Court’s order to provide a list of potential
candidates to serve as special master in case of settlement 14; filing a response in
jurisdiction. Id at 443. The Seventh Circuit was not persuaded, the court reasoned that “[the
defendant’s] preliminary actions [of engaging in pretrial litigation activity] d[id] not come close to
what is required for waiver or forfeiture” of personal jurisdiction. Id. Rather, in order to waive
personal jurisdiction defense, “a defendant must give a plaintiff a reasonable expectation that it
will defend the suit on the merits or must cause the court to go to some effort that would be
wasted if personal jurisdiction is later found lacking.” Id. (citing American Patriot Ins. Agency,
Inc. v. Mutual Risk Management, Ltd., 364 F.3d 884, 887-88 (7th Cir. 2004) (explaining if
defendant, by words or actions, misleads plaintiff into thinking the he is content with court
plaintiff’s suit is filed or if court is involved to the point that wasted judicial effort would occur if
case is sent to another locale, “conventional principles of waiver or equitable estoppel come into
play and if invoked by the plaintiff [to] block the challenge”)). In other words, defendant had the
right to request more time to ascertain: who he was being sued by, and why he was being sued
when faced with an imminent preliminary injunction hearing and being unable to deliver its key
witness. Id.
11
On January 8, 2016, Syngenta filed a motion for entry of a Multi-District Litigation (“MDL”)
Coordination Order (Doc. 32) requesting the adoption of the form of discovery coordination
entered in the pending District of Kansas MDL case In re Syngenta AG MIR 162 Corn Litig., No.
14-md-2591-JWL-JPO (D. Kan. Consolidated Dec. 11, 2014); which was granted by this Court
(Doc. 44) prior to plaintiffs’ First Consolidated and Amended Complaint (Doc. 59).
12
On January 29, 2016, Syngenta filed a reply to Response to Motion re Doc. 32, Motion for Order
to Syngenta’s Motion for Entry of MDL Coordination Order (Doc. 43).
13
On February 18, 2016, counsel for Syngenta participated in status conference (see Doc. 50, 53)
and discussed with plaintiffs, inter alia, ESI protocol and issues with electronic records in
possession of farmers; the MDL coordination order and participation agreement; concerns raised
regarding certain exporter entities; and consent to the filing of plaintiffs amended consolidated
complaint.
14
On March 11, 2016, Syngenta filed a Response to the Court’s February 25, 2016 Coordination
Order Relating to Settlement (Doc. 66) and provided the names, qualifications, and rates of three
potential special masters for court-ordered settlement discussions.
opposition regarding deposition time for witnesses 15; requesting to file certain
exhibits under seal 16; filing a response in opposition to a request for additional
time to depose a witness 17; and participating and filing a joint status report
regarding trial discovery. 18
All preliminary pretrial discovery actions described took place in advance
of Syngenta’s filing of its motion to dismiss for lack of personal jurisdiction. See
Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 705
(1982) (explaining failure to enter timely objection to personal jurisdiction
constitutes waiver of objection under Fed. R. Civ. P. 12(h)(1)). 19 Moreover, all of
the actions described above present non-Illinois “plaintiff[s] [with] a reasonable
expectation that [Syngenta] will defend the suit on the merits” and has “caus[ed]
the [C]ourt to go [through] some effort that would be wasted if personal
jurisdiction is later found lacking.” Mobile Anesthesiologists, 623 F.3d at 443.
15
On March 23, 2016, Syngenta filed a Response in Opposition to Plaintiffs’ Motion Concerning
Allocation of Deposition Time for Syngenta Witnesses and argued that under the terms of Court’s
Coordination Order, there is no basis to dictate time allowed for questions in coordinated
Syngenta/Plaintiff actions (Doc. 83).
16
On March 23, 2016 Syngenta filed a motion for leave to File Under Seal Exhibits 1-4 (Doc. 88),
which was granted by the Court (see Doc. 90).
17
On March 28, 2016, Syngenta filed a response in Opposition to Plaintiffs’ Motion To Compel
Additional Deposition Questioning Time for Witness Chuck Lee, Head of Corn, North America
(Doc. 97).
18
On April 15, 2016, Syngenta filed a Joint Status Report as to Trial Discovery Pool Selection
Process (Doc. 108) pursuant to the Court’s February 26, 2016 discovery order.
19
Although Syngenta previously filed a motion to dismiss for lack of personal jurisdiction on
February 5, 2016 (Doc. 45), the Court terminated the motion as moot in a case management order
regarding consolidation matters on March 10, 2016 (Doc. 63).
“A variety of legal arrangements have been taken to represent express or
implied consent to the personal jurisdiction of the court.” Compagnie, 456 U.S.
at 703.
The method a court uses to determine whether it has personal
jurisdiction can include legal rules and presumptions, as well as direct factfinding.
Id. at 707. It is important to remember—as plaintiffs have argued—
Syngenta consented to litigate against non-Illinois plaintiffs in the Southern
District of Illinois as a CAFA mass action pursuant to section 1332(d), and
removed the case from state court as such. A demonstration of historical facts
makes it clear to the Court that it has personal jurisdiction over Syngenta. Id. at
704 (stating “certain factual showings will have legal consequences”).
No
deprivation of fairness or justice will take place if Syngenta continues proceedings
in the same lawsuit it voluntarily removed and consented to litigating in this
Court.
Syngenta should have known that its actions “may amount to a legal
submission to the jurisdiction of the court, whether voluntary or not.” Id. at 70405.
C. Economic Loss/Moorman Doctrine Does Not Prohibit Plaintiffs’ Claims
Substantively, Syngenta claims that plaintiffs’ allegations are barred by the
economic loss doctrine (“ELD”). 20 In Illinois, solely economic losses are generally
20
The ELD adopted in Moorman prohibits plaintiffs from recovering negligence damages for
economic losses that do not involve personal injury or property damage. Moorman, 91 Ill. 2d at
69 (stating in actions for negligence manufacturer liability is limited to damages for physical
injury; there is no recovery for economic loss alone). The rationale behind the decision is that tort
law is not intended to compensate litigants for monetary losses suffered as a result of duties which
are owed to them as a result of a contract entered into. Therefore, losses related to a consumer’s
disappointed expectations due to “deterioration, internal breakdown, or nonaccidental cause[s]
lie[] in contract.”20 Id. at 86.
not recoverable in tort actions. 21 See Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill.
2d 69, 435 N.E.2d 443 (Ill. 1982).
However, three exceptions to the ELD exist:
(1) where plaintiff sustains personal injury or property damage resulting from a
sudden or dangerous occurrence; (2) where plaintiffs’ damages are proximately
caused by defendant’s intentional, false representation, i.e., fraud; and (3) where
plaintiff’s damages are proximately caused by negligent misrepresentation of
defendant in the business of supplying information for the guidance of others in
their business transactions. See American United Logistics, Inc. v. Catellus Dev.
Corp., 319 F.3d 921, 927, n. 4 (7th Cir. 2003); Trans State Airlines v. Pratt &
Whitney Can., Inc., 177 Ill. 2d 21, 26-27 (Ill. 1997) (citing Chi. Flood, 176 Ill. 2d
at 186-87).
i. Negligent Misrepresentation Exception to ELD
In Illinois, the elements of negligent misrepresentation are:
(1) a false statement of material fact; (2) carelessness or negligence in
ascertaining the truth of the statement by the party making it; (3) an
intention to induce the other party to act; (4) action by the other
party in reliance on the truth of the statement; and (5) damage to the
other party resulting from such reliance, (6) when the party making
the statement is under a duty to communicate accurate information.
See F:A J Kikson v. Underwriters Lab., Inc., 492 F.3d 794, 801 (7th Cir. 2007)
(citing First Midwest Bank, N.A. v. Stewart Title Guar. Co., 218 Ill. 2d 326, 335,
843 N.E.2d 327, 332 (Ill. 2006)); Board of Educ. of City of Chi. v. A, C and S,
21
An economic loss is defined as “ ‘damages for inadequate value, costs or repair and replacement
of the defective product, or consequent loss of profits—without any claim of personal injury or
damage to other property.’” In re Chicago Flood Litigation, 176 Ill. 2d 179, 198-99 (Ill. 1997)
(emphasis in original) (quoting Moorman, 91 Ill. 2d at 82).
Inc., 131 Ill. 2d 428, 452, 546 N.E.2d 428, 591 (Ill. 1989) (stating negligent
misrepresentation has essentially same elements of fraudulent misrepresentation
except defendant mental state is different).
ii. Plaintiffs sufficiently allege Negligent Misrepresentation
In their First Consolidated and Amended Complaint, plaintiffs alleged that
Syngenta misinformed farmers—such as plaintiffs—and other individuals within
the farming and corn export community that MIR162 GMO approval from China
was imminent years before it was actually authorized
22 23
; Syngenta knew of and
foresaw the risk to plaintiffs by purporting misinformation relating to Chinese
MIR162 approval and was negligent when it breached the duty owed in preventing
harm; Syngenta was intent on financial gain when it induced plaintiffs to act by
purchasing and planting Agrisure VIPTERA™ and DURACADE™ before Chinese
import approval; that plaintiffs relied on Syngenta’s statements and documents
declaring Chinese import approval of MIR162 was “days away”; that plaintiffs
were damaged by the rejection of U.S. corn by China after relying on Syngenta’s
materially false statements regarding MIR162 approval; and that Syngenta, as a
22
“Although Syngenta, during times relevant to this complaint, lacked approval to import corn or
other products containing MIR162 into China, it nevertheless misinformed farmers such as the
Plaintiffs about that fact, as it similarly misinformed grain elevators, grain exporters, landowners,
Syngenta’s own investors, the farming community, and the general public—leading all to believe,
including these Plaintiffs, that approval from China was imminent. For example, during
Syngenta’s first quarter 2010 earnings conference call, Syngenta CEO Michael Mack stated ‘[t]here
isn’t outstanding approval for China, which we expect to have quite frankly within the
matter of a couple of days . . . we know of no issue with that whatsoever . . . .’” Doc. 59 at 284
(emphasis in original).
23
“Despite knowing MIR162 had not yet been approved for import into China, Syngenta created
and distributed forms and documents that imply MIR162 is accepted in China.” Doc. 59 at 284.
product manufacturer in the commercial grain industry, had a duty to
disseminate accurate information about the import/export status of its products.
Taking as true all well-pleaded facts in plaintiffs’ complaint, see 735 Ill.
Comp. Stat. 5/2-615 (2016), plaintiffs do not seek damages for disappointed
commercial expectations of a product purchased from Syngenta.
Rather,
plaintiffs seek damages proximately caused by negligent misrepresentations of
Syngenta who—in commercializing, marketing, and advertising MIR162 as
approved for export in China—placed itself in the business of supplying
information for guidance in U.S. farming and corn exporting business
transactions. 24
See Restatement (Second) of Torts § 552 (1977) (one who in
course of business or in which he has pecuniary interest, supplies false
information for guidance of others in their business transactions, is subject to
liability for pecuniary loss caused to them by justifiable reliance upon the
information, if he fails to exercise reasonable care or competence in obtaining or
communicating the information). Plaintiffs have met the standard of pleading,
with
sufficient
particularity,
facts
that
establish
elements
of
negligent
misrepresentation, including what misrepresentations were made, when they were
made, who made them, and who they were made to. See Board of Educ. Chi.,
24
“The standard of honesty is unequivocal and ascertainable without regard to the character of the
transaction in which the information will ultimately be relied upon or the situation of the party
relying upon it. Any user of commercial information may reasonably expect the observance of this
standard by a supplier of information to whom his use is reasonably foreseeable.” See
Restatement (Second) of Torts § 552, Explanatory Notes, comment a.
131 Ill. 2d at 457. Therefore, the negligent misrepresentation exception to the
Moorman ELD doctrine applies to this case, and plaintiffs’ claims are permitted.
IV. CONCLUSION
Based on the foregoing, the Court DENIES Syngenta’s motion to dismiss
and request for oral argument (Doc. 115). Plaintiffs complaint has sufficiently
alleged claims against Syngenta that survive both Rule 12(b)(2) and Rule 12(b)(6)
Fed. R. Civ. P. pleading standards.
IT IS SO ORDERED.
Signed this 20th day of February, 2017.
Judge Herndon
2017.02.20
14:40:32 -06'00'
UNITED STATES DISTRICT JUDGE
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