Tweet et al v. Syngenta AG et al
Filing
212
ORDER granting in part and denying in part 137 Motion to Dismiss Consolidated Third Amended Complaint and Motion for Oral Argument. Signed by Judge David R. Herndon on 5/15/2017. (ceh)
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 the Motion to Dismiss Consolidated
Third Amended Complaint and Motion for Oral Argument, [doc. 137], filed by
Syngenta AG, Syngenta Biotechnology, Inc., Syngenta Corporation, Syngenta Crop
Protection AG, Syngenta Crop Protection, LLC, and Syngenta Seeds, Inc. 1
Plaintiffs filed their response opposing the motion on October 20, 2016 [doc.
172].
For the following reasons stated below, Syngenta’s motion to dismiss is
GRANTED in part and DENIED in part.
1
Defendants Syngenta AG, Syngenta Biotechnology, Inc., Syngenta Corporation, Syngenta Crop
Protection AG, Syngenta Crop Protection, LLC, and Syngenta Seeds, Inc. will be collectively known
as “Syngenta” or “defendants” for purposes of brevity.
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BACKGROUND 2
I.
This mass action arises from Syngenta’s commercialization of its genetically
modified (“GMO”) corn trait MIR162, which was sold under the trade name
Agrisure VIPTERA™.
Agrisure VIPTERA™, and its second-generation variant
containing both MIR 162 and Event 5307, DURACADE™, (“genetically-modified
products”), contained multiple genetically enhanced modified traits and were sold
for their insect-resistant capabilities.
Syngenta claimed the GMO seeds would
increase yields due to the improved resistance to insects. However, at the time of
production and distribution prior to the 2011 growing season, MIR162 was
barred for sale in several countries, including China—where it was not yet
approved for purchase or consumption.
In 2013, shipments of MIR 162-infused corn arrived in China and were not
approved for import and were subsequently rejected. 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) 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.
2
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 plaintiffs. See Thulin v. Shopko
Stores Operating Co., LLC, 771 F.3d 994, 995 (7th Cir. 2014).
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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 the GMO products 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™ to prevent the type of harm that befell plaintiffs.
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 (7th 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
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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 (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
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“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,” 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). 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
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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)
A motion to dismiss under Fed. R. Civ. P. 12(b)(6) challenges the
sufficiency of the complaint.
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(b)(6) 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
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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)). Illinois
follows the most significant relationship test found in the Restatement (Second)
Conflict of Laws. Denton v. Universal Am-Can, Ltd., 26 N.E.3d 448, 451 (Ill. App.
Ct. 2015).
Under Illinois choice of law rules, litigants can also 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).
Importantly, a choice of law analysis is only required when a difference in
the laws of the states will affect the outcome of a case. Denton, 26 N.E.3d at 451;
see also Bridgeview Health Care Ctr., Ltd. v. State Farm Fire & Cas. Co., 10
N.E.3d 902, 909 (IL Sup. Ct. 2014) (“a choice-of-law determination is required
only when the moving party has established an actual conflict between state
laws.”). The Court is cognizant that defendants state they cite “exemplar cases for
principles of law that apply across the relevant jurisdictions” and that Illinois’
most significant relationship applies “in the event of a conflict of laws.” Doc. 137-
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1 at 36. In reviewing the motion to dismiss, it is apparent that much of the case
law cited and prominently argued is out of Illinois courts or discussing Illinois
law. 3
Additionally, no actual conflicts have been highlighted by the parties
between Illinois’ and another states’ law. As such, the Court presumes defendants
believe, and that plaintiffs agree due to their silence on the issue, that Illinois
cases properly serve as “exemplars” of the possible relevant jurisdictions.
Accordingly, Illinois law is applicable and properly representative and the Court
moves forward focusing on Illinois law. As this case involves multiple plaintiffs,
to the extent a conflict does arise further on in the litigation, Illinois’ most
significant relationship test will be utilized to determine the proper states’ law. 4
B. Personal Jurisdiction is Established Because All of Plaintiffs’ Claims Arise
Out of and Relate to Syngenta’s Minimum Contacts with Illinois
Defendants do not dispute personal jurisdiction over plaintiffs besides the
non-Illinois plaintiffs’ group. Syngenta’s primary argument for the dismissal of
the 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, nor specific personal jurisdiction in Illinois for nonIllinois claims brought by non-Illinois plaintiffs. Regarding specific jurisdiction
See e.g., In re Chicago Flood Litigation, 680 N.E.2d 265 (Ill. 1997) (in support of application of
the economic loss doctrine); City of Chicago v. Beretta U.S.A. Corp., 821 N.E.2d 1099 (Ill. 2004)
(same and used in discussion on proximate cause); First Midwest Bank, N.s. v. Stewart Title
Guar. Co., 843 N.E. 2d 327 (Ill. 2006) (using Illinois elements of negligent misrepresentation in
arguing why plaintiffs cannot rely on such basis of liability).
3
The Court notes that the same defendants in the related matter, Poletti, et al. v. Syngenta, et al.,
3-15-cv-01221-DRH, also raised Illinois law as exemplar cases for the relevant jurisdictions at
issue. While the Court did not go into as much nuanced detail there, it is a distinction without a
difference, as the Court will review the present motion under Illinois law as well.
4
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over the non-Illinois plaintiffs, this Court disagrees. Plaintiffs have sufficiently
pled jurisdictional facts showing that the Syngenta defendants purposely availed
themselves of the benefits and protections of Illinois laws.
Nonresident
defendants who “purposefully direct[]” their activities toward a forum create a
legitimate basis to exercise personal jurisdiction, see Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 473-74 (1985) and Trade Well Int’l v. United Cent.
Bank, 825 F.3d 854, 859 (7th Cir. 2016) (“a district court may exercise personal
jurisdiction over any party that purposefully avails itself of the forum”), and
plaintiffs have shown that this litigation arises out of and is properly related to
defendants’ contacts with this forum.
When determining whether personal jurisdiction exists, the Seventh Circuit
uses a “quid pro quo” approach to decide whether litigation in a particular forum
is reasonably foreseeable.
430 (7th Cir. 2010).
See uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421,
What is important, is that the relationship between the
defendants’ contacts and the forum be “intimate enough” to keep the quid pro quo
inquiry proportional. Id. This can be shown by demonstrating that a defendant’s
contacts were “temporally and substantively related” to the lawsuit at hand. Id. at
431.
See also Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 779 (1984)
(personal jurisdiction is supported when cause of action arises out of the very
activity being conducted in the forum state). Here, the Syngenta defendants argue
that their contacts with Illinois are not part of the causal chain leading to the
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plaintiffs’ alleged injuries, thus personal jurisdiction does not stand. The Court is
not persuaded by this argument.
Syngenta purposefully directed and conducted substantial business
activities in Illinois, which either were a step to, or part of, the commercialization
of its GMO products.
According to plaintiffs’ Third Amended Consolidated
Complaint (“CAC”), Syngenta sells seeds in Illinois, uses “Syngenta Seed Advisors”
to promote Syngenta products in Illinois, maintains physical facilities in Illinois,
and also field tested the genetically modified trait, MIR 162, in Illinois. CAC ¶
746.
Taking the allegations as true, Syngenta’s contacts with Illinois include
promoting, making, and selling Viptera seeds which led to the alleged
contamination of the U.S. corn supply, and also activities which made that
commercialization possible in the first place, i.e. field testing the genetically
modified trait. Plaintiffs’ main cause of action is that Syngenta was negligent in
the way it commercialized and marketed Viptera seeds, thus the listed contacts
with Illinois are sufficient to demonstrate that Syngenta’s Illinois contacts are
directly related to plaintiffs’ cause of action.
The Court is cognizant of, and takes note of, defendants’ arguments relying
upon the sister litigation taking place in the United States District Court for the
District of Kansas.
There, the Honorable Judge Lungstrum presides over the
Syngenta multi-district litigation, (“MDL”), dubbed the In re Syngenta AG MIR 162
Corn Litigation.
In addressing defendants’ personal jurisdiction arguments,
Judge Lungstrum, on a motion to reconsider, held the court lacked personal
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jurisdiction over the non-Kansas plaintiffs.
In re Syngenta AG MIR 162 Corn
Litigation, 14-md-2591, Doc. 2047 at 16-18.
While the Syngenta defendants
brought comparable defenses against the non-Kansas plaintiffs, the arguments
against the non-Illinois plaintiffs are distinguishable.
Here, plaintiffs have
additionally pled that Syngenta conducted numerous field tests in Illinois, which
aided in the eventual commercialization of VIPTERA™, which is the stated
underlying basis for all plaintiffs’ claims. Defendants’ assert that the field tests
have nothing to do with plaintiffs’ current allegations and that the MDL court held
similarly. Doc. 182 at 4, n. 2. However, the passage Syngenta cites to is part of
the MDL court’s discussion on “Trespass to Chattels” and intermeddling, a claim
and issue that are not raised here.
As such, the Court finds that defendants’
statement overreaches and breathes new meaning into the MDL quotation. The
field testing is an important step leading to the commercialization of Syngenta’s
GMO products, and that, combined with the other Illinois contacts, is enough to
satisfy minimum contacts doctrine.
Plaintiffs do not have to prove that Syngenta did all their business activities
regarding commercialization and marketing of Viptera seeds in Illinois only. In
M.M. ex rel. Meyers v. GlaxoSmithKline LLC, plaintiffs sued over congenital birth
defects allegedly caused by taking the drug, Paxil. 61 N.E.3d 1026, 1041, appeal
denied sub nom. M.M. v. GlaxoSmithKline LLC, 65 N.E.3d 842 (Ill. 2016).
Specifically, plaintiffs claimed defendants failed to use reasonable care in avoiding
injuring plaintiffs. Id. Plaintiffs were identified in mother/child pairs, and only
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two of the sixteen pairs were from Illinois. Defendants moved to dismiss the out
of state plaintiffs’ claims based on lack of personal jurisdiction due to claims not
arising from Illinois contacts; the non-Illinois pairs did not receive or ingest Paxil
in Illinois, did not suffer injury there, and did not serve as Paxil study subjects in
Illinois. Id. at 1031. Defendants also argued, much like Syngenta’s discussion
regarding Illinois activities, that plaintiffs could not be correct in establishing
personal jurisdiction because they focused only on a “tiny sliver” of Paxil clinical
trials, when such trials took place in 44 states and abroad. Id. at 1033. The Paxil
plaintiffs countered that while they were not domiciled, prescribed Paxil, or
injured by Paxil in Illinois, their claims still arose directly out of or related to
defendants’ purposeful contacts with Illinois, despite similar activity occurring in
other jurisdictions. Id.
The Appellate court held that the defendants had failed to overcome
plaintiffs’ prima facie showing that they had minimum contacts in Illinois.
In
addressing defendants’ arguments that they did not have enough contacts with
Illinois to be meaningful, the court held that plaintiff’s injuries arose, in part, from
acts of omission during the clinical trials. Id. at 1041. It did not matter that a
small percentage of the clinical trial took place in Illinois, a plaintiff only has to
prove a proper place for personal jurisdiction. Id. at 1040. And a proper place
for personal jurisdiction is when there is a nexus between a defendant’s actions
and plaintiff’s cause of action that does not disrupt the quid pro quo. The Paxil
trial court properly highlighted this concern when it asked, “[Am I] trying to figure
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out where the best location for this litigation is, or whether or not there's a
significant nexus to Illinois?” Id. In relying on the GlaxoSmithKline case, this
Court takes a different approach than the MDL court where that court’s focus is
on the amount of Viptera seed sales outside of Kansas. In re Syngenta AG MIR
162 Corn Litigation, 14-md-2591, Doc. 2047 at 18. This Court, instead, focuses
its inquiry on whether those contacts are meaningful. See GlaxoSmithKline LLC,
65 N.E.3d at 1041 (“[W]hether Illinois contacts are meaningful depends entirely
on their relation to the Plaintiffs’ causes of action, and not at all on a percentagebased comparison between how much related conduct occurred outside of
Illinois.”
After minimum contacts have been established, a court must consider
whether notions of fair play and substantial justice would be interrupted by
litigating in the forum state. Courts typically consider factors like the burden on
the defendant in litigating in the chosen state, the forum state’s interest in
adjudicating the dispute, and the plaintiff’s interest in obtaining relief. See e.g.
Arnold v. Miller, No. 08-234-DRH, 2009 WL 2020838, at *6 (S.D. Ill. July 9,
2009). Here, Syngenta argues that its contacts with Illinois does not make Illinois
an all-purpose forum for all the claims surrounding VIPTERA™.
The Court does not find a substantial burden on the defendants to litigate
in Illinois. Given today’s “ease of communications and travel capabilities” it is not
outrageous to believe a large corporation like Syngenta can accommodate
defending itself in Illinois. Arnold, 2009 WL 2020838 at *6. Additionally, this
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case will go forward in this Illinois forum despite defendants’ arguments
regarding non-Illinois plaintiffs as jurisdiction is not disputed as to the Illinois
plaintiffs. The defendants have not shown how “piecemeal” litigation in different
forums advances the goals of “efficient judicial resolution of the dispute.”
GlaxoSmithKline LLC, 65 N.E.3d at 1042. Such splintered litigation raises costs
overall while also running the risk of inconsistent verdicts. Id. The Court does
not believe additional burden will befall defendants when they will already be
litigating in this court, thus serving judicial economy.
Worth noting as well
regarding the “fair play factors,” is that Illinois does have an interest in resolving
the litigation. This case addresses the alleged consequences felt by contamination
of the U.S. corn supply due to Syngenta’s claimed negligence in the
commercialization of Viptera brand seeds. The creation and commercialization of
Viptera seeds is the seminal event relating to the claims of all plaintiffs, Illinois
and non-Illinois. The activities performed in Illinois were necessary to produce
and promote trait MIR 162. Accordingly, Illinois has an interest in resolving this
litigation.
Syngenta’s contacts with Illinois gave rise to the claims of all plaintiffs.
Therefore, specific personal jurisdiction has been established and all claims are
properly before the Court.
C. The Stranger Economic Loss Does Not Prohibit Plaintiffs’ Claims
Notably, Syngenta’s arguments regarding the stranger economic loss
doctrine have now been made before this Court in the related Poletti matter,
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before Judge Lungstrum in the Syngenta MDL, and before the honorable Judge
Sipkins in the Fourth Judicial District of Minnesota. The Court sees no reason to
stray from any of these prior rulings denying application of the doctrine as no new
information has been presented by the parties. Nonetheless, the Court addresses
the argument below.
The economic loss doctrine, in the most general terms, is a rule that
prohibits a plaintiff from recovering solely economic damages under tort theories.
Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69 (Ill. 1982). “The doctrine stems
from the theory that tort law affords a remedy for losses occasioned by personal
injuries or damage to one's property, but contract law and the Uniform
Commercial Code . . . offer the appropriate remedy for economic losses
occasioned by diminished commercial expectations not coupled with injury to
person or property.” Metro. Water Reclamation Dist. of Greater Chicago v. Terra
Found. for Am. Art, 13 N.E.3d 44, 59 (Ill. App. 1st 2014) (internal citations
omitted).
The doctrine is most typically applied in the context of a defective
product or a contractual relationship between the parties.
Syngenta argues
however, that plaintiffs’ allegations are barred by a discrete, extended form of the
economic loss doctrine, the “stranger” economic loss doctrine (“SELD”).
The
SELD has often been applied in “loss of access” type cases (see infra) and can
apply when parties have no direct or contractual relationship with one another.
The economic loss doctrine has been analyzed under the pertinent states
involved here as catalogued and addressed by the MDL court in its September
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2015 order. Judge Lungstrum ruled that unless the interpretation of a particular
state’s law essentially requires application of the SELD to bar plaintiffs’ claims,
then the relevant states would not preclude the claims during the early stages of
litigation. In re Syngenta AG MIR 162 Corn Litig., 131 F. Supp. 3d 1177, 1196
(D. Kan. 2015); see id. at 1196-1207, for examples of why at the motion to
dismiss stage, the economic loss doctrine would not be applied with certainty
across a wide number of states. This Court agrees with the MDL court. Taken as
true, plaintiffs’ allegations demonstrate that the policy rationales behind the
economic loss doctrine (discussed below) would not be furthered by application
here and as such, the relevant states would not apply the SELD.
Syngenta’s
motion to dismiss is denied on this point.
a. Policy Concerns Underlying Application of the Economic Loss Doctrine
are Not Present Here
Despite Syngenta’s arguments, the economic loss doctrine is not a bright
line rule applied uniformly across the jurisdictions, nor even across economic
loss cases. As case law makes clear, the economic loss doctrine is a continually
evolving concept and the policy concerns underlying application of the doctrine do
not apply here. Succinctly, the main policies behind the doctrine are to close off
open-ended or “boundless” tort liability that can arise when solely economic
losses are sought and to ensure that liability is not far out of proportion to that of
a defendant’s culpability. Here however, and as the MDL court explained, the
“scope of liability is not completely open-ended, as plaintiffs represent discrete
classes of growers and sellers, all in an inter-connected market.” In re Syngenta
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AG MIR 162 Corn Litig., 131 F. Supp. 3d at 1196. The Court is cognizant of
Syngenta’s concern that allowing economic effects can expand quickly and “turn
Syngenta and other GM manufacturers into insurers with seemingly unlimited
tort liability.”
Doc. 137 at 51 (internal quotations omitted). This unchecked
liability defendants are concerned with however, most often accompanies “loss of
access” cases, and does not present a threat here.
A “loss of access” case is when a public infrastructure or a public resource
is damaged as a result of a tortfeasor’s misconduct. Consequently, any member
of the public could assert a claim for economic loss, leading to remote and
indeterminate liability disproportionate to the tortfeasor’s culpability. See, In re
Chicago Flood Litig., 176 Ill. 2d 179, 198 (1997). These “loss of access” cases
represent prime examples for when use of the economic loss doctrine makes
sense and furthers the policies behind it. The Court cannot conclude however,
that the rationales behind the doctrine would be furthered by application here. “If
plaintiffs' allegations are accepted as true, Syngenta is not unfairly being made an
insurer for all growers; rather, plaintiffs assert claims to hold Syngenta
responsible for particular actions having foreseeable and foreseen consequences.”
In re Syngenta AG MIR 162 Corn Litig., 131 F. Supp. 3d at 1196. See also, In re
Syngenta Litig., No. 27-CV-15-3785 (4th Jud. Dist. Ct., Minn. Apr. 7, 2016) (“The
scope of liability is not completely open-ended because the claims involve a
discrete class of growers and sellers in an interconnected market. Syngenta had
the ability to foresee the possible group of Plaintiffs by identifying the
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stakeholders involved in the commercialization of its GM seed . . . In addition,
because the economic losses were foreseeable, liability is not too remote or openended.”).
Although Syngenta’s potential liability for the wrongful conduct may be
large, as the U.S. corn market is a billion dollar market, large damages liability
does not equate with boundless liability, as defendants suggest. The Court agrees
with plaintiffs and Judge Lungstrum, that the SELD should only be applied if and
when the policies of the doctrine are furthered, which they are not here.
b. Application of the Economic Loss Doctrine in Illinois Case Law
The parties cover some pages discussing Illinois case law, or courts
analyzing Illinois law, in support of their economic loss arguments. The Court
takes up this discussion of Illinois law as exemplar of the principles at play, and
also incorporates Judge Lungstrum’s analyses of all applicable states’ laws,
denying application of the SELD. In re Syngenta AG MIR 162 Corn Litig., 131 F.
Supp. 3d at 1196.
In Moorman, the Illinois Supreme Court articulated three exceptions to the
doctrine’s general rule that solely economic losses may not be recovered, and
following that opinion, more exceptions have been carved out.
See e.g. 2314
Lincoln Park W. Condo. Ass'n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302,
315
(1990)
(where
the
Illinois
Supreme
Court
noted
other
situations
distinguishing Moorman and allowed tort actions seeking damages for economic
losses to proceed).
Specifically, the 2314 Lincoln Park court noted that in
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precluding application of the economic loss doctrine, “the principle common to
[Illinois] decisions is that the defendant owes a duty in tort to prevent precisely
the type of harm, economic or not, that occurred.” Id. Because of this, the Court
is unpersuaded that the doctrine applies in the same strict manner across the
gamut of case types and claims.
In support of application of the economic loss doctrine, defendants discuss
In re Chicago Flood Litig., 176 Ill. 2d 179 (1997). Chicago Flood is a “loss of
access” case and is a classic example highlighting the policy concern of
unbounded liability not present here. In Chicago Flood, numerous businesses
brought nuisance claims after flooding in an underground freight tunnel
interrupted electrical service, and thus affected profits of the surrounding
businesses. In re Chicago Flood Litig., 176 Ill. 2d at 183-5. The freight tunnel is
representative of a public infrastructure open to all the public.
In barring
plaintiffs’ claims via the economic loss doctrine, the court reasoned that the
doctrine applied to avoid the virtually limitless tort liability that could develop in
such a situation where any entity affected by the flood could bring a claim, id. at
207, thus stressing the problem with loss of access cases. Clearly, the plaintiffs in
this matter do not exemplify the same public policy concerns as those articulated
in Chicago Flood.
Here, as the MDL court expounded, plaintiffs represent
discrete classes of growers and sellers, “all in an interconnected market” and any
such injuries resulting to them would not be “disproportionate to Syngenta’s
specific wrongful conduct.” In re Syngenta AG MIR 162 Corn Litig., 131 F. Supp.
Page 19 of 37
3d at 1196. Again, large liability is not the same as limitless liability, despite
Syngenta’s many pleas to the contrary.
The Chicago Flood case is also distinguishable because there, the court did
not address whether plaintiffs were owed a duty by the defendant city to prevent
the flooding, and whether said duty was breached resulting in the exact damages
the duty was designed to prevent. Unique here, plaintiffs allege that Syngenta
owed a duty to prevent the exact losses caused to plaintiffs. See CAC ¶¶ 829-381.
The economic loss doctrine does not typically apply when a duty is owed by the
defendant to prevent the precise harm that occurred.
See generally, Nixon v.
United States, 916 F. Supp. 2d 855, 862 (N.D. Ill. 2013) (the ELD is inapplicable
where a duty arises outside of contract and the activity is not typically of the type
subject to contract); 2314 Lincoln Park W. Condo. Ass'n, 136 Ill. 2d at 315 (“The
principle common to [whether Illinois] decisions [allow exceptions to the ELD] is
that the defendant owes a duty in tort to prevent precisely the type of harm,
economic or not, that occurred.”). Here, it is alleged that Syngenta breached their
duty to plaintiff farmers when they failed to exercise reasonable care to prevent
the foreseeable contamination of the U.S. corn supply resulting from the
premature sales and distribution of its GMO products and failed to provide
adequate channeling and stewardship programs.
CAC ¶ 830. Thus, Chicago
Flood is distinguishable from the current facts.
Defendants also cite to Sample v. Monsanto Co., 283 F. Supp. 2d 1088
(E.D. Mo. 2003), as a case directly on point to the facts at hand, yet Sample is
Page 20 of 37
also distinguishable. In Sample, for purposes of this discussion, two farmers who
grew non-genetically modified soybeans and corn brought claims against
defendant Monsanto, alleging negligence and public nuisance theories as a result
of Monsanto’s introduction of the genetically modified seeds into the market. Id.
at 1091. Particularly, the complaint alleged that crops were contaminated with
the genetically modified strands, including by cross pollination and commingling,
which ultimately led to the products being boycotted by the European community.
Id.
As in Chicago Flood, the Sample plaintiffs did not allege a duty on behalf of
Monsanto to prevent the exact type of harm that befell plaintiffs. Here, plaintiffs
allege that Syngenta knew of and foresaw the risks of early commercialization of
VIPTERA™ and thereby breached the duty owed in preventing the harm alleged
from such actions. This immediately distinguishes the two matters. Discussed
earlier, there are numerous exceptions to the economic loss doctrine and each
encompasses the general understanding that the doctrine does not automatically
apply if defendant owes a duty in tort and that duty is negligently breached,
resulting in the type of harm the duty is meant to prevent.
See, e.g., Ward
Chrysler Ctr., Inc. v. ADP Dealer Servs., Inc., No. 12-CV-32-DRH-DGW, 2012 WL
3526757, at *2 (S.D. Ill. Aug. 14, 2012). Explained in more detail below, the
Court finds that Syngenta owed plaintiffs duties in tort when commercializing the
genetically-modified products. Additionally, Sample dealt with public nuisance
claims where it was alleged that defendants owed a duty of care to the entire
Page 21 of 37
public, opening up the unchecked liability policy concern. Here, plaintiffs are a
finite group, allegedly foreseen by Syngenta.
Thus, the Court agrees with plaintiffs that the economic loss doctrine is not
a bar to their claims. Many exceptions exist to the doctrine and the Court concurs
with Judge Lungstrum and Judge Sipkins that the doctrine should only be
applied when the policies and rationales underlying it would be furthered.
Consequently, Syngenta’s motion to dismiss is denied to the extent it relies on the
economic loss doctrine.
D. Preemption under the United States Grain Standards Act
Like the economic loss doctrine arguments, the preemption arguments
presented to the Court have largely been addressed by Judge Lungstrum
presiding over the Syngenta MDL action. The Court itself has also addressed this
matter already in its Order dismissing the “ABCDG” defendants. See Doc. 185.
This Court held that the United States Grain Standards Act (“GSA”) preempts any
of plaintiffs’ claims as they relate to:
1. Inspection and shipping requirements; and
2. Sourcing and segregating requirements.
Doc. 185 at 7.
The Court acknowledges plaintiffs’ extended briefing on the history and legislative
intent of the GSA compared to that drafted in the related Poletti matter regarding
the GSA’s application in relation to Syngenta’s actions. Nonetheless, under the
ordinary meaning of the GSA, MIR 162 counts as a characteristic of corn. Based
Page 22 of 37
on the same reasoning and logic applied in Poletti, certain claims concerning
Viptera corn are preempted.
The language of the GSA clearly states that:
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.
7 U.S.C.A. § 87(g).
When determining the scope of a preemption provision, a court “begin[s] with the
language employed by Congress and the assumption that the ordinary meaning of
that language accurately expresses the legislative purpose.”
Morales v. Trans
World Airlines, Inc., 504 U.S. 374, 383 (1992) (internal quotations omitted).
Accordingly, if an activity falls within the express language of the GSA, then it is
preempted.
Syngenta argues that under the plain language of the Act, any theory under
which it had a duty to ensure the “inspection, testing, description, and or
segregation or channeling” of Viptera corn, or that it had a duty to force others to
do so, is preempted.
Doc. 137-1 at 71. Plaintiffs counter that the GSA is not
applicable because they have alleged against Syngenta a general duty of
reasonable care in the timing, manner, and scope of commercialization of its
GMO products, not a specific duty regarding inspection or description of corn.
Page 23 of 37
Plaintiffs contend that Syngenta inappropriately categorizes this general duty into
multiple “discrete” duties in attempt to paint plaintiffs’ allegations in a different
light. Plaintiffs maintain that when their claimed general duty is looked at as a
whole, Syngenta could have satisfied the duty in a multitude of ways, not just
ways that involved inspection or description of corn.
Consequently, under
plaintiffs’ theory, the GSA would not apply to plaintiffs’ claims because
preemption is not valid when liability would simply “induce inspection” by
Syngenta – it must be the only way to avoid liability.
In their Third Consolidated Amended Complaint, plaintiffs claim that
Syngenta owed farmers a “duty to provide assistance through either channeling or
stewardship programs” and that Syngenta breached that duty by failing to provide
“adequate channeling and stewardship programs which could have avoided
contamination and commingling.” CAC ¶¶ 829-30. To the extent these allegations
rest on a duty to ensure that MIR 162 corn is kept segregated from other corn, the
GSA preempts such claims. The allegations in the complaint that Syngenta failed
to provide adequate channeling programs cannot be perceived to avoid liability in
any other way than to inspect and segregate the GMO corn, thus imposing
improper State requirements under the GSA. This holding is true whether claims
are interpreted to impose a requirement to segregate corn via inspection or
description by any entity for trait MIR 162, not just Syngenta.
Similarly, any
claim that Syngenta had a duty to control others to segregate GMO corn from the
U.S. corn supply, or to aid others in facilitating a stewardship program, is
Page 24 of 37
preempted to the extent the duty relates to corn.
The GSA preempts any
requirement of measures to channel or contain genetically-modified corn and the
imposition of a duty to limit sales to those who would take such actions,
necessarily imposes that inspection or description of corn take place. It makes no
difference under the provisions of the GSA if this duty is placed on purchasers or
other third-parties, or the manufacturer – all such claims are preempted as they
relate to harvested corn.
As the MDL court recently explained, the “GSA preemption provision does
not refer to state-law requirements imposed on any particular actor; thus, the
statute preempts any claims based on a requirement of inspection or description
by anyone, not just the seeming target of the state law.” In re Syngenta AG MIR
162 Corn Litigation, 14-md-2591, p. 22 (Doc. 2426).
See also, American
Trucking Ass’ns, Inc. v. City of Los Angeles, Calif., 133 S. Ct. 2096, 2104 (2013),
and Engine Mfrs. Ass’n v. South Coast Air Quality Mgmt. Dist., 541 U.S. 246, 255
(2004). Accordingly, the GSA preempts all claims relating to segregation of corn
containing the MIR 162 trait. This includes preemption of any and all allegations
that Syngenta had a duty to contract with buyers of their product to ensure the
inspection or channeling of corn, or any other measures to keep GMO corn
isolated.
A state law cannot require a seed seller, like Syngenta, to create a
regime or stewardship-type program to inspect, describe, or channel geneticallymodified corn via contract provisions or agreements with buyers, like grain
elevators.
To do so would violate the plain meaning of the GSA.
Page 25 of 37
Plaintiffs’
arguments that state tort law has long been available to recover financial losses
from contaminated grain are misguided here as the cases cited by plaintiffs are
distinguishable from the issue presented to the Court. See Doc. 172 at 58-60.
Succinctly, the cases plaintiffs try to analogize all deal with characteristics of corn
that made the product unsuitable for consumption.
For example, Adkins v.
Burris Mill & Feed, Inc., 644 So.2d 839 (La. App. 1994) dealt with moldy corn
that resulted in the death of several horses, Dougherty v. Lee, 168 P.2d 54 (Cal.
App. 1946) examined poisoned hay that killed multiple dairy cows, and Tillman &
Deal Farm Supply, Inc., 246 SE.2d 138 (Ga. App. 1978) discussed corn affected
by aflatoxin which killed the plaintiff’s hogs. The alleged contamination in this
matter is of a different kind than the above authority given that corn containing
trait MIR 162 is not harmful to health.
Thus, plaintiffs’ arguments that
defendants’ and the Court’s view on the GSA would result in a deprivation of a
long available form of compensation is unpersuasive given the facts.
Finally, the Court acknowledges, and verifies in its reasoning and holdings
above, plaintiffs’ contention that the GSA only applies to transactions involving
grain, not seeds.
Again, the GSA applies to Syngenta to the extent plaintiffs’
claims apply to corn. The MDL court also distinguished this issue and indicated
that “preemption of claims based on such duties turns on whether those
[segregation] measures relate to harvested corn or to the seeds sold by Syngenta
prior to harvesting.” In re Syngenta AG MIR 162 Corn Litigation, 14-md-2591,
Doc. 2426 at 25. Tellingly, the MDL court provided examples of which types of
Page 26 of 37
claims would be preempted. For instance, “any claim based on a duty to assist in
the channeling or segregation of corn (through contract requirements, education,
inspection, or tracing the product through the supply chain) is preempted.” Id.
Consequently, the Court grants in part and denies in part Syngenta’s
motion to dismiss as it relates to preemption under the GSA. Any claims that
would be preempted under the preceding analysis are dismissed.
E. FIFRA Preemption
As the Court ruled in Poletti, the Federal Insecticide, Fungicide, and
Rodenticide Act (“FIFRA”) preempts any claims based on a failure to warn
farmers about the risk of loss of the Chinese export market. Plaintiffs contend
that they have not directly asserted a failure to warn claim, doc. 172 at 86, but in
the same breath, state that “if Syngenta’s FIFRA preemption argument applies to
anything at all, it is an exceedingly narrow portion of plaintiffs’ claim that . . .
could at most impact allegations concerning ‘failures to warn farmers concerning
the risk of loss of the Chinese market.’”
Thus, in addition to any claims
preempted under the GSA, certain claims of plaintiffs’, to the extent they implicate
failure to provide warnings on product labels, are also preempted under FIFRA. 5
Under FIFRA, labeling requirements extend to any written, printed or
graphic matter on, or attached to, the product.
5
7 U.S.C. § 136(p).
FIFRA
The Court acknowledges that unlike the complaint filed in the MDL, plaintiffs here have not
directly used the magic words, “failing to adequately warn . . .” in their negligence allegations.
Nonetheless, the Court believes plaintiffs have essentially asserted that argument in the Negligence
subsection by stating that Syngenta knew of the risks of commercializing VIPTERA™ and
DURACADE™, including the likely contamination of the U.S. corn supply, which is the claimed
reason for the loss of the Chinese export market. Accordingly, the rationale adopted by the MDL
court in applying FIFRA is applicable and incorporated here.
Page 27 of 37
preempts any state rule that imposes any requirement for labeling or packaging
that is in addition to, or different, than those required under the Act. See Bates v.
Dow Agrosciences LLC, 544 U.S. 431, 444, n.17 (2005).
Under 7 U.S.C. §
136(q)(1)(G), the only labeling requirements imposed on a manufacturer are
those to adequately “protect health and the environment.”
Thus, any implied
claim by plaintiffs that Syngenta should have warned about risks associated with
growing its products, like the risk of loss of the Chinese market, by placing
warning materials on the products’ labels, are preempted. Such requirements
about potential economic loss are clearly in addition to FIFRA’s health and
environmental protection concerns.
As the MDL court held, “because such
warnings [about risks of growing Viptera corn] might ordinarily be included in
materials accompanying the products, plaintiffs’ complaints do appear to include
a claim that seeks to impose a labeling requirement not found among FIFRA’s
statutory requirements.”
In re Syngenta AG MIR 162 Corn Litigation, 14-md-
2591, Doc. 2426 at 36, quoting In re Syngenta AG MIR 162 Corn Litigation, 131
F. Supp. 3d at 1208.
Even though plaintiffs disclaim they’ve made any such
allegations, the Court “dismisses any claim based on an alleged failure to warn to
the extent that such claim is based on a lack of warnings in materials
accompanying the products.”
In re Syngenta AG MIR 162 Corn Litig., 131 F.
Supp. 3d at 1208.
F. Syngenta’s Arguments That No Duties Existed in Tort are Rejected
Page 28 of 37
Regarding the enduring claims not preempted under the GSA or FIFRA, the
Court agrees with plaintiffs that the remaining allegations have already been
extensively reviewed by the MDL court holding that under the ordinary principles
of tort law, Syngenta owed a “duty of reasonable care with respect to the timing,
manner, and scope of Syngenta’s commercialization of its Viptera and Duracade
products.” 131 F. Supp. 3d at 1188. As such, Syngenta’s “no duty” arguments
are rejected.
Briefly, plaintiffs charge that Syngenta owed a duty to not create
unreasonable risks to others, by refraining from “selling and distributing Viptera
and Duracade in a manner that would foreseeably cause harm to the Plaintiffs,
[and] to use reasonable care in its commercialization of Viptera and Duracade.”
CAC ¶ 829. Defendants counter that they cannot be held liable in tort for selling
an approved genetically-modified seed within the United States, doc. 137-1 at 9495, and that a manufacturer has no duty to control post-sale use of its products.
Id. at 83. When considering whether a duty exists, foreseeability is considered.
Here, plaintiffs allege that Syngenta actually foresaw the risks to plaintiffs, CAC ¶¶
778, 832, in part because the parties had a relationship with each other with
defendants even calling plaintiffs “stakeholders.” Id. at ¶ 758; see also In re
Syngenta AG MIR 162 Corn Litig., 131 F. Supp. 3d at 1189.
Policy
considerations also play an important role in determining whether a duty exists,
for example, the expectation of the parties, the magnitude of the burden of
Page 29 of 37
guarding against injury, and whether allowing recovery would have no sensible or
just stopping point. Id.
The Court is cognizant of Syngenta’s concern that foreseeability is not the
only requirement regarding duties and that plaintiffs’ theory of placing a duty on a
seed manufacturer as such, could impose great unchecked liability in the
marketplace.
As discussed supra however, and by Judge Lungstrum in
distinguishing away Hoffman v. Monsanto Canada, Inc. (Hoffman I), 2005 SKQB
225, 2005 SK.C. LEXIS 330 (Can. Sask. Q.B. May 11,2005) aff’d, Hoffman v.
Monsanto Canada, Inc. (Hoffman II), 2007 SKCA 47, 2007 SK.C. LEXIS 194 (Can.
Sask. C.A. May 2, 2007), there is a relationship between the parties here, who all
share an interconnected market. See generally, In re Syngenta AG MIR 162 Corn
Litig., 131 F. Supp. 3d at 1188-93; id. at 1189 (“the Court is not persuaded that
recognition of a duty in this case would allow for a recovery that is too remote, or
would open the door too much to fraudulent or speculative claims. Nor is the
Court persuaded . . . that other policy considerations preclude the recognition of a
duty here.”). Thus, liability stemming from imposing a duty on Syngenta to take
reasonable steps in commercializing its genetically-modified seeds does not create
unrestrained liability.
Regarding Syngenta’s arguments that manufacturers are routinely not held
liable for injuries resulting from third parties’ post sale use of non-defective
products, the Court disagrees with Syngenta’s logic in likening this matter to
cases where third parties misused products. See e.g., Ashley Ctyl, Ark. V. Pfizer,
Page 30 of 37
Inc., 552 F.3d 659 (8th Cir. 2009), discussing whether liability exists for makers of
cold medicine used to create methamphetamine; Williams v. Cingular Wireless,
809 N.E.2d 473 (Ind. Ct. App. 2004), rejecting liability on cell phone retailers to
prevent car accidents caused by use of cell phones while driving; City of Chicago
v. Beretta U.S.A. Corp., 821 N.E.2d 1099, holding no liability on gun
manufacturers
for
misuse
of
their
products.
In
those
cases,
the
manufacturers/retailers were not held liable for sale of the products due to the
purchasers’ misuse or illegal conduct performed with the product. That is not the
issue here. Here, there are no allegations against plaintiffs or farmers in general
that they somehow misused or improperly planted Viptera or Duracade seeds.
Instead, farmers simply planted the seeds in a normal, industry-derived fashion
with no intervening event that could be considered “misuse.” The focus is not on
controlling third parties’ activities, but rather on Syngenta’s own affirmative
conduct in failing to act reasonably in its commercialization of the GMO products.
The Court is unpersuaded by defendants’ appeal to Judge Lungstrum‘s order
dismissing certain tort claims based on a finding that Syngenta lacked control
because that reasoning did not apply to negligence claims, it applied to reject
claims like nuisance, strict liability, and trespass. Thus, it is inapplicable here.
It is important to note once again, that any duties Syngenta has in relation
to plaintiffs’ claims, only apply as the claims relate to seeds. The allegations are
preempted under the GSA as they relate to corn. Thus, the Court concludes that
policy considerations do not warrant that Syngenta did not have a duty to exercise
Page 31 of 37
reasonable care and judgement in its commercialization of VIPTERA™ to avoid
risk of harm to plaintiffs. For reasons more fully stated by our sister court in In
re Syngenta AG MIR 162 Corn Litig., 131 F. Supp. 3d at 1188-93, (discussing
factors influencing when a duty is imposed) and incorporated here, the Court
denies Syngenta’s motion to dismiss based on plaintiffs’ negligence claims for lack
of a legal duty.
G. Proximate Causation is Proven
Defendants argue that proximate cause is too remote to prove and that
foreseeability does not play a role in determining proximate causation.
The
injuries alleged by plaintiffs however do prove a connection to Syngenta’s conduct
and thus, the Court disagrees with Syngenta that plaintiffs’ chain of causation is
too remote to demonstrate proximate cause.
To start, the Court agrees that Illinois law has established a difference
between a “condition” of an event and a “cause” of an event as defendants assert.
See Beretta, 821 N.E. 2d at 1133.
However, despite these assertions and
attempts to make distinctions, foreseeability stills plays a big role in determining
proximate causation even if a condition v. cause distinction exists.
See id. at
1133-34, explaining that legal cause is “essentially a question of foreseeability”
and that when a party’s injuries are claimed to be the result of a subsequent third
party, as Syngenta does here, the question is whether “the intervening efficient
cause was of a type that a reasonable person would see as a likely result of his or
her conduct.”
(Internal citation omitted).
As stated numerous times above,
plaintiffs have alleged that their injuries were not only foreseeable, but actually
Page 32 of 37
foreseen by Syngenta. See CAC ¶¶ 778, 756-757; 765; 776. Thus, the chain of
causation is not broken because the acts of the purchasers of the GMO products,
i.e. to plant the seeds. were no different than what a reasonable manufacturer
would assume as a likely result of their conduct.
Defendants continue that even if foreseeability is shown, conduct can still
be too remote to prove legal causation. Defendants argue that no proximate cause
exists because plaintiffs have not shown a “direct relation” between harm and
Syngenta’s conduct and goes on to create their own causal chain of events they
believe plaintiffs have alleged to arrive at their injuries. Doc. 137-1 at 110. The
Court believes however, that plaintiffs have alleged enough facts to show that
Syngenta directly contributed to their injuries, including creation of VIPTERA™,
marketing of VIPTERA™, and directions to plant different corn varieties side-byside, knowing the increased cross-pollination chances. CAC ¶ 777. On top of
that, numerous of the steps defendants list to demonstrate remoteness have been
rendered moot by the Court’s Order dismissing the ABCDG defendants.
185.
Doc.
Even if a precise number of steps were needed to avoid a finding of
proximate causation, three of Syngenta’s six steps are obsolete in face of the
dismissal of the various grain elevators and exporters. Consequently, the Court is
not persuaded that proximate causation is lacking. Defendants’ motion is denied
on this point.
H.
Plaintiffs Cannot Rely on a Misrepresentation Theory of Liability to
Support Negligence Claims
Page 33 of 37
The arguments regarding reliance on a negligent misrepresentation theory
to support general negligence claims have been brought before the MDL Court and
Judge Sipkins of the Fourth Judicial District of Minnesota.
Both courts have
agreed with Syngenta that there is “no basis for Syngenta’s liability based on false
representations or omissions of fact[.]”
In re Syngenta AG MIR 162 Corn
Litigation, 14-md-2591, Doc. 2426 at 20. The Court here does the same and
defendants’ motion to dismiss is granted with respect to the argument that
plaintiffs cannot rely on a misrepresentation theory of liability to support their
negligence claims.
The elements of a negligence claim differ from what is required to prove a
negligent misrepresentation claim - satisfying the former does not satisfy the
latter. To properly allege a negligent misrepresentation claim, a plaintiff must
show: (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; (5) damage to the other party resulting from such reliance; and
(6) a duty on the party making the statement to communicate accurate
information. First Midwest Bank, N.A. v. Stewart Title Guar. Co., 843 N.E.2d
327,
332
(2006).
In
their
complaint,
plaintiffs
claim
that
Syngenta
“misrepresented and deceived industry stakeholders concerning the standing of
its petition for deregulation of Viptera/MIR 162 with the Chinese government” and
“Syngenta misrepresented to industry stakeholders China’s significance as a
Page 34 of 37
purchaser of U.S. corn and corn products.” CAC ¶ 777. But, plaintiffs do not
allege negligent misrepresentation as a separate cause of action, as plaintiffs agree
in their Opposition. Doc. 172 at 107.
Here, the misrepresentations alleged by plaintiffs are in regards to the sale
of seeds.
Thus, the Court agrees with Judge Sipkins when he held that the
purported misinformation was not made to or relied on by the plaintiffs because
“the vast majority of Plaintiffs in this litigation did not grow Viptera or Duracade.”
In re: Syngenta Litigation, 27-CV-15-3785-TMS (Order dated 3/31/2017 at 14).
Accordingly, Syngenta is correct when it argues that plaintiffs cannot rely on
evidence of misrepresentations as a basis of support for their negligence claims
because they have not pled facts supporting each element of the higher standard
associated with the distinct tort of negligent misrepresentation.
I. The principle of Res Ipsa Loquitur is not properly applicable in this case
In their complaint, plaintiffs allege claims against Syngenta for negligence,
as discussed thoroughly above, and also for res ipsa loquitur. Syngenta seeks to
dismiss the res ipsa loquitur claim, stating it fails as a matter of law because it is
merely a theory for proving negligence, allowing the fact finder to infer negligence
by circumstantial evidence. Plaintiffs agree implicitly that res ipsa loquitur does
not provide a basis for an independent cause of action, arguing that the claim is
“part and parcel of Plaintiffs’ negligence claim – it is one way Plaintiffs’ might
prove Syngenta’s negligence.” Doc. 172 at 108-9. Accordingly, the separate claim
based on res ipsa loquitur is dismissed.
Page 35 of 37
Syngenta also argues that because plaintiffs have alleged multiple specific
negligent acts, res ipsa loquitur is not appropriately applied here.
Because
concrete, precise negligent acts have been alleged, “the principle of res ipsa
loquitur is not appropriately applied here, as that principle is intended to apply
when a specific act of negligence cannot be shown.” In re Syngenta AG MIR 162
Corn Litigation, 14-md-2591, Doc. 2426 at 27. The Court agrees with defendants
that this is not the type of case in which there is a need to resort to the inference
provided by res ipsa loquitur, and thus dismisses any theory of negligence based
on the doctrine.
A negligent act may be inferred to the defendant under the principle of res
ipsa loquitur, when:
(a) the event is of a kind which ordinarily does not occur in the absence of
negligence;
(b) other responsible causes, including the conduct of the plaintiff and third
persons, are sufficiently eliminated; and
(c) the indicated negligence is within the scope of the defendant’s duty to the
plaintiff.
See Restatement (Second) of Torts § 328D(1).
In addition to the above, the Court also concludes that the cause/event of
plaintiffs’ harm “is not of a kind which ordinarily does not occur in the absence of
negligence.”
As the MDL court explained, the textbook example cited for the
principle of res ipsa loquitur is that of a pedestrian walking on a sidewalk hit by a
barrel of flour which fell from an above window. In that case, “it was not known
how the barrel escaped from the window, but the event was of a kind that would
Page 36 of 37
not have occurred absent some negligence by someone.” In re Syngenta AG MIR
162 Corn Litigation, 14-md-2591, Doc. 2426 at 28.
Here, plaintiffs’ alleged harm is a decrease in market price for corn due to
cross-pollination of non-GMO corn with defendants’ GMO products. As Syngenta
correctly states, cross-pollination can and does occur without any negligent
behavior. Consequently, the injuries plaintiffs complain of are “not of a type that
ordinarily does not occur in the absence of negligence, as changes in prices in a
commodity market are routinely caused by any number of factors not involving
negligence.” Id.
Accordingly, Syngenta’s motion is granted with respect to the
application of res ipsa loquitor in this matter.
IV. CONCLUSION
IT IS THEREFORE ORDERED BY THE COURT THAT Syngenta’s motion to
dismiss, Doc. 137, is hereby granted in part and denied in part, as set forth
herein. The motion is granted with respect to any and all claims preempted by
the GSA and by FIFRA. The motion is also granted with respect to the res ipsa
loquitur claim and any claims based on negligent misrepresentation. The motion
is otherwise denied. The request for oral argument is denied as moot.
IT IS SO ORDERED.
Digitally signed by
Judge David R. Herndon
Date: 2017.05.15
12:11:14 -05'00'
DATED: May 15, 2017
UNITED STATES DISTRICT JUDGE
Page 37 of 37
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