Tweet et al v. Syngenta AG et al

Filing 185

ORDER granting 138 Motion to Dismiss and granting 140 Motion to Dismiss. All claims against Archer Daniels Midland Company, Bunge North America Inc., Cargill, Incorporated and Louis Dreyfus Commodities LLC are hereby DISMISSED with prejudice and all claims against Gavilon Grain are hereby DISMISSED with prejudice. Signed by Judge David R. Herndon on 1/4/17. (klh)

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:
Tweet et al. v. Syngenta AG et al. No. 3:16-cv00255-DRH

MEMORANDUM and ORDER

HERNDON, District Judge:
This matter comes before the Court on two motions to dismiss plaintiff’s
third amended complaint filed by Archer Daniels Midland Company, Bunge North
America Inc., Cargill, Incorporated, Louis Dreyfus Commodities LLC 1 (hereinafter
referred to collectively as “ABCD defendants”) (Doc. 138) and Gavilon Grain, LLC
(hereinafter referred to as “Gavilon”)(Doc. 140). Plaintiffs filed responses

Louis Dreyfus Commodities, LLC, the domestic entity originally named in this suit,
recently changed its name to Louis Dreyfus Company, LLC. Additionally, given that
Cargill International SA and Louis Dreyfus Commodities BV have not been served,
neither participates in the motion to dismiss pending before this Court.

1

Page 1 of 16

opposing both motions (Doc. 170 &171) and Syngenta 2 also filed a response to
the ABCD defendants’ motion (Doc. 169). For the reasons stated below, the ABCD
defendants’ motion to dismiss is GRANTED (Doc. 138) and Gavilon’s motion to
dismiss is GRANTED (Doc. 140).

I. Background 3
This mass action arises from Syngenta’s commercialization of its Viptera
brand corn seed containing a genetically modified (“GM”) trait known as MIR 162
At the time of its production and distribution prior to the 2011 growing season,
MIR 162 was not approved in China. Syngenta claimed the Viptera seeds would
increase yields due to improved resistance to insects. Syngenta also developed
Duracade, a second-generation of Viptera that includes both MIR 162 and a new
GM trait known as Event 5307, which was released, distributed, and sold in
2014.
In recent years, China has been a major export market for American corn.
Thus, when the Viptera corn was shipped to China and rejected, it resulted in a
swift decrease in the demand for U.S. corn, and in turn, a drop in U.S. corn
prices. Plaintiffs also allege that Distiller’s Dried Grains with Solubles (DDGS)
2

“Syngenta” collectively refers to defendants Syngenta AG, Syngenta Crop Protection AG,
Syngenta Corporation, Syngenta Crop Protection, LLC, Syngenta Biotechnology, Inc., and
Syngenta Seeds, Inc.
3
Because this matter is before the Court on a motion to dismiss, these facts are taken
from the complaint and are presumed true for purposes of this motion. The Court
further draws all reasonable inferences in favor of the Plaintiff. See Thulin v. Shopko
Stores Operating Co., LLC, 771 F.3d 994, 995 (7th Cir. 2014).
Page 2 of 16

were marketed and shipped to China alongside U.S. corn. DDGS are produced
when corn is processed into ethanol and is used in animal feed.
The plaintiffs in this case are corn farmers from multiple states who never
purchased or knowingly planted Viptera or Duracade brand seeds. Plaintiffs seek
to hold Syngenta liable for their losses resulting from the reduced price for their
corn caused by Syngenta’s release of Viptera into the marketplace. Specifically,
plaintiffs allege that Syngenta owed a tort duty – not a contract duty – to act
reasonably in the timing, manner, and scope of its commercialization of Viptera
timing, manner, and scope of its commercialization of Viptera.
In addition to the claims brought against Syngenta, plaintiffs also allege
that the ABCD defendants and Gavilon are at fault based on a “breach of their
duties by failing to exercise reasonable care to prevent a foreseeable risk of harm
that would naturally result from their improper conduct in the marketing,
sourcing, selling, and shipping U.S. corn and DDGS.
The motions to dismiss at issue were previously brought before the United
States District Court for the District of Kansas in the related Syngenta
multidistrict litigation (“MDL”). In the MDL, which includes eight putative class
actions, the plaintiffs asserted claims against the ABCD defendants and Gavilon
similar to those brought in this action. However, those claims were recently
dismissed by Judge Lungstrum. See Syngenta AG MIR 162 Corn Lit9ig., 14-md2591, (Doc. 2426).

Page 3 of 16

II. Motion to Dismiss
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
challenges the sufficiency of the complaint for failure to state a claim upon which
relief may be granted. Gen. Hallinan v. Fraternal Order of Police Chicago Lodge
No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “To survive a motion to dismiss under
Rule 12(b)(6), a complaint must allege sufficient factual matter to state a claim to
relief that is plausible on its face.” Firestone Fin. Corp. v. Meyer, 796 F.3d 822,
826 (7th Cir. 2015) (quotation omitted). The Supreme Court explained in Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), that a complaint “does not
need detailed factual allegations” but must contain “enough facts to state a claim
for relief that is plausible on its face.” in order to withstand Rule 12(b)(6)
dismissal. Twombly, 550 U.S. at 570.
Despite Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009) retooling
federal pleading standards, notice pleading remains all that is required in a
complaint. “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). In making this assessment, the district court accepts as true all
well-pleaded factual allegations and draws all reasonable inferences in the
plaintiff’s favor. See Rujawitz v. Martin, 561 F.3d 685, 688 (7th Cir. 2009); St.
John’s United Church of Christ v. City of Chi., 502 F.3d 616, 625 (7th Cir.
Page 4 of 16

2007). With this in mind, the Court turns to plaintiff’s claims against the ABCD
defendants and Gavilon.
III. Analysis
The ABCD defendants and Gavilon, referred to as the “ABCDG defendants”,
seek dismissal of the claims alleged against them under Rule 12(b)(6). The
ABCDG defendants argue that plaintiff' claims against them mirror those asserted
by the Phipps’ plaintiffs in the MDL and therefore, this Court should apply the
same rationale finding that plaintiffs’ claims are preempted under the United
States Grain Standards Act (GSA). The ABCD defendants also assume for the
sake of argument that even if the “fringe theories”, put forth by the plaintiffs in
their third amended complaint, are not preempted, those claims still fail under
Rule 12(b)(6) for failure to allege a duty. 4 The Court will address the arguments in
turn.
a. Preemption
The ABCDG defendants argue that plaintiffs’ negligence claims against them
are preempted by the United States Grain Standards Act (GSA), 7 U.S.C. §§ 7187k. Plaintiffs, however, argue that their common law negligence claims against
the ABCDG defendants fall outside the scope of the GSA’s express preemption
provision.

4

The ABCD Defendants, not including Gavilon, assume arguendo that certain claims are
not preempted by the GSA. The Court will address the viability of those three remaining
claims in a later section, thus adopting a similar approach to that of the MDL Court.
Page 5 of 16

Congress can preempt state law either expressly, “by enacting a statute
containing an express preemption provision,” or impliedly. Arizona v. United
States, 132 S. Ct. 2492, 2500-01 (2012). Here, the ABCDG defendants assert that
§ 87g(a) of the GSA expressly preempts plaintiffs’ negligence claims seeking to
impose a duty to inspect, test, describe, and establish separate facilities for corn
in order to segregate Viptera corn from non-Viptera. Section 87g(a) of the GSA
contains the Act’s express preemption provision which states:
No State or subdivision thereof may require the inspection or
description in accordance with any standards of kind, class, quality,
condition, or other characteristics of grain as a condition of
shipment, or sale, of such grain in interstate or foreign commerce, or
require any license for, or impose any other restrictions upon the
performance of any official inspection or weighing function under this
chapter by official inspection personnel. Otherwise nothing in this
chapter shall invalidate any law or other provision of any State or
subdivision thereof in the absence of a conflict with this chapter.
See 7 U.S.C. § 87g(a). When determining the scope of a preemption provision,
“[t]he question, at bottom, is one of statutory intent,” and a court must “begin with
the language employed by Congress and the assumption that the ordinary
meaning of that language accurately expresses the legislative purpose.” See
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383 (1992) (internal
quotation omitted).
Looking to the GSA's preemption provision, it states that “[n]o State ... may
require the inspection or description in accordance with any standards of ...
quality, condition, or other characteristics of grain as a condition of shipment, or
sale, of such grain in interstate or foreign commerce.” See 7 U.S.C. § 87g(a).
Page 6 of 16

Under the ordinary meaning of the statute text, the presence of a genetic trait, like
MIR 162, qualifies as a characteristic of corn. The GSA preempts plaintiff’s
negligence claims as they relate to inspection and description requirements,
sourcing and segregating requirements, and shipping requirements of the Viptera
and dried grains with solubles (“DDGS”). The Court therefore concludes that
allowing liability for the alleged breach of these duties by the ABCDG’s defendants
would, in fact, impose a duty on the part of the defendants that falls squarely
within the scope of Section 87g(a).
The GSA includes multiple provisions that support the Court’s conclusion.
First, Section 74(a) begins with Congress's assertion that “[g]rain is an essential
source of the world's total supply of human food and animal feed and is
merchandised in interstate and foreign commerce,” and that the GSA’s regulation
of grain and grain transactions “is necessary to prevent or eliminate burdens on
such [interstate or foreign] commerce and to regulate effectively such commerce.”
See 7 U.S.C. § 74(a). Additionally, various other GSA provisions implement the
stated purpose of facilitating foreign commerce in trade. 5 As the MDL Court noted

5

See 7 U.S.C.§ 76(d) (“If the Government of any country requests that moisture content
remain a criterion in the official grade designations of grain, such criterion shall be
included in determining the official grade designation of grain shipped to such country.”);
§ 77(a)(1) (requires the weighing, inspection, and official certificate for shipment of any
grain to any place outside the United States); § 77(c) (requires that “all corn exported
from the United States be tested to ascertain whether it exceeds acceptable levels of
aflatoxin contamination, unless the contract for export between the buyer and seller
stipulates that aflatoxin testing shall not be conducted”); § 78(a) (in any sale involving
shipment in interstate or foreign commerce, prohibiting use in advertising of description
of grade with respect to standards regulated under the Act); § 78(b) (“No person shall, in
any sale, offer for sale, or consignment for sale, of any grain which involves the shipment
of such grain from the United States to any place outside thereof, knowingly describe
Page 7 of 16

when addressing plaintiff’s nearly identical claims, these provisions demonstrate
“Congress’s intent to regulate foreign commerce in grain” and facilitate and
promote grain trade. In re: Syngenta Ag Mir 162 Corn Litig., No. 14-MD-2591JWL, 2016 WL 1312519, at *3 (D. Kan. April. 4, 2016). Therefore, under the
plain language of Section 87g(a), plaintiffs’ claims against the ABCDG defendants
are preempted as they fall within the scope of the GSA’s express preemption
provision. 6 The Court adopts the MDL Court’s rationale argued by the ABCDG
defendants, and rejects plaintiff’s interpretation of Section 87g(a).
b. Plaintiffs’ Non-Preempted Claims
The ABCD defendants further argue that any non-preempted negligence
claims asserted against the ABCDG defendants fail to establish a state-law duty
owed to the plaintiffs. In the third amended complaint, plaintiffs allege that the
ABCD companies were negligent in three ways: (1) in encouraging farmers to plant
Viptera (or failing to discourage farmers from doing so); (2) in providing poor
such grain by any official grade designation, or other description, which is false or
misleading”; § 87b(d) (“to ensure the quality of grain marketed in or exported from the
United States,” prohibiting (A) recombining certain materials once removed from grain
with any grain, and prohibiting (B) addition foreign material of any origin to the grain, or
recombining of certain material with grain); § 87e(c) (authorizes the Secretary of
Agriculture “to monitor in foreign nations which are substantial importers of grain from
the United States, grain imported from the United States upon its entry into the foreign
nation, to determine whether such grain is of a comparable kind, class, quality, and
condition after considering the handling methods and conveyance utilized…”); § 87e(k)
(authorizes the Secretary of Agriculture to “extend appropriate courtesies to official
representatives of foreign countries in order to establish and maintain relationships to
carry out the policy stated in section 74”); §87f-1 (requiring registration with the
Secretary of persons in the business of buying, handling, weighing, or transporting grain
for sale in foreign commerce).
6
Based on the Court’s conclusions under the express preemption provision of the GSA,
the Court need not address the ABCDG defendants’ arguments in favor of dismissal
based on implied preemption or the Warehouse Act.
Page 8 of 16

customer service to Chinese customers; and (3) in making errors or
misrepresentations in paperwork provided to Chinese officials.
The defendants cite to the MDL Court’s ruling that disposes of the
aforementioned allegations as a matter of generally applicable state tort law. The
Court adopts a similar analysis. First, to the extent that plaintiffs are alleging a
duty to act with respect to harvested corn, such a claim is preempted by Section
87g(a) of the GSA as discussed in the previous section.
Plaintiffs also assert that the ABCD defendants were negligent in “[d]irecting
their crop consultants and corporate representatives or agents to recommend
and/or not discourage farmer cultivation of Viptera and/or Duracade,” and by
“indicating that they would accept Viptera at times when farmers were making
planting decisions,” (Doc. 65). Plaintiffs argue that the ABCDG defendants
breached a general duty of reasonable care and caused harm that was foreseeable
given their knowledge about Viptera and Duracade. The ABCDG defendants argue
that they owe no such duty to plaintiffs, who did not plant either Viptera or
Duracade seeds.
Plaintiffs failed to cite any authority to support an argument that these
defendants owe a duty to prevent the harmful conduct by others in the absence of
a special relationship with the injured party. Furthermore, plaintiffs have not
alleged that the ABCDG defendants had a special relationship with all corn
growers sufficient to impose a duty to discourage or to refrain from encouraging
Page 9 of 16

farmers regarding their seed choices. Additionally, plaintiffs do not allege that
farmers who themselves planted Viptera and Duracade acted tortuously. Looking
to the Restatement (Second) of Torts, Section 876(b) states that a defendant is
subject to liability if he:
(b) knows that the other's conduct constitutes a breach of duty and
gives substantial assistance or encouragement to the other so to
conduct himself
This provision in no way addresses conduct by a third party that is not wrongful,
nor does plaintiff provide binding authority to support such a finding.
Accordingly, the Court dismisses these claims of negligence against the ABCDG
defendants.
Plaintiffs next allege that the ABCDG defendants were negligent in “[f]ailing to
timely and adequately respond to customer complaints and/or mitigate losses
incurred by Chinese purchasers following the rejection of their corn and DDGS
shipments in China (for instance by not re-directing contaminated shipments or
providing replacement goods promptly), thereby causing Chinese purchasers to
source corn and DDGS from locations other than the U.S.”. The MDL Court
dismissed identical claims on this theory. The MDL Court held that an “alleged
duty to keep the Chinese buyers happy, even if not preempted, would not support
a cognizable claim” because “plaintiffs have not provided any authority to support
a claim based on such a duty to all American corn growers with respect to acts so
far down the supply chain.” In re: Syngenta Ag Mir 162 Corn Litig., No. 14-MD2591-JWL, 2016 WL 4382772, at *6 (D. Kan. Aug. 17, 2016). The same is true in
Page 10 of 16

the underlying action. Accordingly, the Court dismisses these claims of negligence
against the ABCDG defendants.
Finally, plaintiffs allege that the ABCDG defendants made misrepresentations
in paperwork provided to Chinese officials regarding the presence of MIR-162. As
previously determined, any requirement to describe the shipments as Viptera-free
would be preempted based on the express preemption provision of the GSA. The
Restatement (Second) of Torts § 552 states that in order to allege negligent
misrepresentation, plaintiffs must show, that each of the ABCDG companies was
in the business of supplying information, that the ABCDG companies negligently
“supplie[d] false information for the guidance of others in their business
transactions”, and that plaintiffs suffered by acting in reliance on that false
information. Restatement (Second) of Torts § 552. Plaintiffs fail to satisfy this
criterion, as they allege that the ABCD defendants made misrepresentations to
their Chinese customers, not the plaintiffs to this action. Also, plaintiffs do not
allege that they took certain actions in reliance on the ABCD defendants’ alleged
statements to Chinese customers regarding shipment contents. Finally, plaintiffs
allege that Chinese rejected shipments of corn and DDGS because their tests
indicated the presence of MIR 162, not because of a paperwork-related
misrepresentation.
As the MDL Court recognized in dismissing claims based on the same
allegations set forth in this litigation, “plaintiffs have not stated a plausible claim
of causation, as they do not allege plausibly that the buyers would have accepted
Page 11 of 16

the shipments (thus avoiding the alleged impact on the market) if the exporters
would have correctly stated that the corn was contaminated with Viptera.” In re:
Syngenta Ag Mir 162 Corn Litig., No. 14-MD-2591-JWL, 2016 WL 4382772, at
*6 (D. Kan. Aug. 17, 2016). The same is true of plaintiffs’ claims in this case.
Accordingly, any potentially non-preempted negligence claim asserted by the
plaintiffs against the ABCDG defendants is legally insufficient. Thus, the Court
dismisses all plaintiffs’ remaining claims against the ABCDG defendants. 7
c. Plaintiffs’ Partnership Claim against Gavilon
In addition to plaintiff’s claims discussed above, plaintiffs allege that
Gavilon

is

liable

for

the

economic

harm

resulting

from

Syngenta’s

commercialization of the Viptera and Duracade corn based on an alleged legal
partnership with Syngenta. Gavilon seeks dismissal of plaintiffs’ claims
alleging a partnership between itself and Syngenta for failure to state a claim.
Specifically, Gavilon argues that plaintiffs fail to allege any facts that plausibly
suggest a legal partnership between itself and Syngenta. The Court agrees.
In the third amended complaint plaintiffs allege:
“At all times relevant hereto, Gavilon partnered with the Syngenta
entities in the commercialization of Viptera and Duracade corn.
Syngenta has publicly referred to Gavilon as its business “partner” in
several news releases and marketing materials. Also, in a joint letter
to the North American Export Grain Association (“NAEGA”) and the
National Grain and Feed Association (“NGFA”), Syngenta represented
that the commercialization of Duracade and the “Right to Grow”
7

Based on the Court’s ruling above, the Court will not address defendant’s arguments
regarding personal jurisdiction or the economic loss doctrine.
Page 12 of 16

program was launched “in collaboration with” Gavilon. The letter is
personally signed and endorsed by Greg Konsor, Vice President and
General Manager of Gavilon Grain, LLC. Under this partnership,
Gavilon became responsible with the Syngenta entities for the launch,
handling, stewardship, and channeling of Viptera and Duracade corn.
Pursuant to the partnership, in addition to other responsibilities,
Gavilon accepted Viptera and Duracade grains and provided
“stewardship and distribution services” related thereto. Although the
Syngenta entities and Gavilon first announced their partnership
formally on February 20, 2014 in relation to the “Right to Grow
Program,” it is the information and belief of Plaintiffs that this
partnership business between the Syngenta entities and Gavilon
concerning the launch, handling, stewardship, and channeling of
Viptera and Duracade corn existed for years prior to the formal
announcement, including as early as 2011 when Viptera was first
commercialized in the U.S. Further, at all times relevant hereto,
Gavilon and the Syngenta entities have shared profits from this
partnership business which they own, including revenues generated
by the commercialization, marketing, and sale of Viptera and
Duracade corn. In September of 2014, Syngenta announced that it
“renewed and enhanced its program with Gavilon” and began to offer
farmers a “per unit stewardship premium for each bag of Agrisure
Duracade corn planted in 2015” and “consultative services through
Gavilon to help them appropriately steward and market their corn[.]”
Gavilon continues to directly encourage farmers to plant Duracade
seed and promote the commercialization of Duracade despite lack of
import approval from China, stating that it “plan[s] to grow [its]
network of accepting locations.”
(Doc. 65, ¶730)(Footnotes omitted). This complaint

simply does not allege

sufficient facts to state a plausible claim that Syngenta and Gavilon Grain entered
into a legal partnership. Although plaintiffs cite that Syngenta and Gavilon Grain
referred to each other as “partners” on some occasions, plaintiffs fail to set forth
facts supporting such a relationship. Gavilon argues that referencing the word
“partner” in business merely indicates that two entities may work together, but
this in no way signifies the existence of a legal partnership. The Court agrees that

Page 13 of 16

under the facts alleged, the word “partner” is not sufficient to state a plausible
claim that Gavilon Grain and Syngenta were entered into a legal partnership.
A plaintiff must set forth factual allegations or assertions to support the
existence of a legal partnership. Although the complaint “does not need detailed
factual allegations” it still must contain “enough facts to state a claim for relief
that is plausible on its face” in order to withstand Rule 12(b)(6) dismissal.
Twombly, 550 U.S. at 570. 8 Here, plaintiffs failed to plead adequately the
existence of a legal partnership between Syngenta and Gavilon. Plaintiffs cite to
Syngenta’s 2014 public statements that introduced the “Right to Grow Program”,
but nothing concrete prior to 2014. Gavilon argues that parties in business often
use the word “partner” to indicate “teaming up” or working together, without the
relationship signifying the existence of a legal partnership.
The Court rejects the plaintiffs' argument that the pleading requirements
require only minimal factual allegations to claim a legal partnership between
Gavilon and Syngenta in order to withstand a Rule 12(b)(6) motion to dismiss.
Plaintiffs argue that they should be allowed to proceed to discovery to find facts to
support their claim of a partnership. However this Court disagrees based on
applicable standards set forth in Twombly. Plaintiff’s third amended complaint
includes references to the “Right to Grow Program” to support its partnership
allegations. Said program involved commercializing Duracade, which is a seed
that came to the market after Viptera (in 2014). Therefore, even if the Court

Page 14 of 16

found that the plaintiffs’ complaint was sufficient to support a claim that a
partnership existed, the facts still do not support a claim relating to Viptera.
Plaintiffs attempt to infer such a partnership existed when Viptera was
first commercialized, but offer nothing more than bare assertions as support.
Absent facts to support plaintiff’s conclusory allegation that a partnership “existed
for years prior to the formal announcement, including as early as 2011 when
Viptera was first commercialized in the U.S.” plaintiffs’ allegations are insufficient
to support a plausible claim for relief. Plaintiffs argue that Syngenta’s
announcement of a “renewed and enhanced” program with Gavilon involving the
Duracade seed, allows one to reasonably infer that the “Right to Grow Program”
existed prior to 2014. However, there are no factual allegations to support a claim
that the program went so far back as to include the time when Viptera was
commercialized. Furthermore, no factual allegations support the argument that
the program’s existence translated to legal partnership existed between Gavilon
and Syngenta. Thus, plaintiffs' conclusory allegation based on “information and
belief” that the partnership also involved the commercialization of Viptera is
simply insufficient without facts to support it. Therefore, plaintiff’s claim alleging
a partnership between Gavilon and Syngenta are dismissed.
IV. Conclusion
Accordingly, the Court GRANTS the ABCD defendants’ motion to dismiss
(Doc. 138). All claims against Archer Daniels Midland Company, Bunge North

Page 15 of 16

America Inc., Cargill, Incorporated and Louis Dreyfus Commodities LLC are
hereby DISMISSED with prejudice.
Furthermore, the Court GRANTS Gavilon Grain’s motion to dismiss (Doc.
140). Therefore, all claims against Gavilon Grain are hereby DISMISSED with
prejudice.
IT IS SO ORDERED.
Signed this 4th day of January, 2017.

Judge Herndon
2017.01.04
09:12:48 -06'00'
United States District Judge

Page 16 of 16