Duffield et al v. MPC Pipelines, Inc. et al

Filing 23

ORDER denying as moot 8 Motion to Dismiss for Failure to State a Claim; granting in part and denying in part 11 Motion to Change Venue. Signed by Chief Judge Jeffrey L. Viken on 1/10/17. (SB)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
JOHN DUFFIELD and
KAYE DUFFIELD,

CIV. 16-5038-JLV

Plaintiffs,
vs.

ORDER

MPC PIPELINES, INC.,
DUFFIELD CONSTRUCTION, LLC,
MURPHY PIPE AND CIVIL, LLC, and
DAVID KINSELLA,
Defendants.
On April 27, 2016, plaintiffs John and Kaye Duffield (“the Duffields”) filed
a lawsuit in South Dakota state court. (Docket 1-2). Defendants Duffield
Construction, LLC (“Duffield Construction”), David Kinsella, MPC Pipelines,
Inc. (“MPC”) and Murphy Pipe and Civil, LLC (“Murphy Pipe”), removed the case
to this court on May 31, 2016. (Docket 1). Plaintiffs filed an amended
complaint on June 6, 2016. (Docket 7). On June 20, 2016, defendants filed a
motion to change venue pursuant to 28 U.S.C. § 1404(a). (Docket 11).
Defendants also filed a motion to dismiss the complaint for failure to state a
claim, or alternatively, a motion for a more definite statement. (Docket 8).
Plaintiffs filed briefs opposing defendants’ motions. (Dockets 15 & 16).
Defendants filed briefs in reply to plaintiffs’ opposition briefs. (Dockets 21 &
22).

FACTS
John and Kaye Duffield started the construction business Duffield
Construction in Rapid City, South Dakota, in 1991. (Docket 7 at p. 4). They
grew the business for over two decades and developed construction specialties.
Id. In 2014, MPC, a global pipeline business, approached the Duffields about
purchasing Duffield Construction. Id. at pp. 4-5.
In 2015, the Duffields agreed to sell Duffield Construction to MPC by
executing a stock purchase agreement. Id. at p. 5. Murphy Pipe, a business
entity related to MPC, agreed to employ John Duffield for three years by
executing an employment agreement. Id. at pp. 5-6. David Kinsella, the
General Manager and President of Murphy Pipe, executed the employment
agreement on behalf of the company. (Docket 10-1). The employment
agreement Mr. Duffield and Murphy Pipe signed in 2015 entitled Mr. Duffield
to specific payments in addition to a salary: 3 percent of the revenue from
MPC’s contracts in the United States up to $50 million in revenue, and
1 percent of the revenue beyond $50 million. (Docket 7 at p. 5). Plaintiffs refer
to these payments as equity payments. Id. at pp. 5-6.
Later in 2015, Mr. Kinsella terminated Mr. Duffield’s employment with
Murphy Pipe. Id. at p. 8. Plaintiffs allege Mr. Duffield stopped receiving equity
payments from Murphy Pipe on November 9, 2015. Id. Plaintiffs claim during
Mr. Duffield’s employment with Murphy Pipe, Mr. Kinsella made oral
statements to third parties asserting Mr. Duffield committed criminal acts, is
dishonest and is a thief. Id. at pp. 8-9.
2

After defendants removed the lawsuit to federal court, plaintiffs filed an
amended complaint stating nine causes of action. Id. at pp. 9-18. Plaintiffs
allege fraud, negligent misrepresentation, tortious interference, breach of
contract, constructive trust, unjust enrichment, money had and received,
aiding and abetting, and slander. Id.
ANALYSIS
DEFENDANTS’ MOTION TO CHANGE VENUE
I.

Is the employment agreement’s forum selection clause
enforceable?
In their motion to change venue, defendants argue under the

employment agreement’s forum selection clause and 28 U.S.C. § 1404(a) the
court should transfer this case to the United States District Court for the
District of Colorado. (Docket 12 at p. 1).
A. Applicable law
The court has diversity jurisdiction over this case. 28 U.S.C. § 1332.
Federal courts hearing cases in diversity apply the forum state’s choice of law
rules. See Retail Associates, Inc. v. Macy’s East, Inc., 245 F.3d 694, 697 (8th
Cir. 2001). South Dakota courts have “generally recognized that parties may
agree to be bound by the law of a particular state,” and are free to choose
which state’s law will apply, subject to “overriding public policy concerns.”
See Butler Mach. Co. v. Morris Const. Co., 682 N.W.2d 773, 776 (S.D. 2004)
(citations omitted).
Although the parties dispute issues surrounding the employment
agreement’s forum selection clause, they do not directly contest the
3

agreement’s choice of law provision. The employment agreement provides
Colorado law will apply to interpretation of the contract and litigation arising
from the contract. 1 (Docket 22-2 at pp. 4-5). The court considers any tension
between Colorado law and South Dakota public policy issue-by-issue.
The court proceeds applying Colorado law.2
B. Contract interpretation
The parties disagree on whether to construe the employment and stock
purchase agreements together. The court addresses this issue at the outset
because it is central to plaintiffs’ argument against defendants’ motion to
change venue.
Plaintiffs argue the court must construe the agreements as a whole.
(Docket 16 at p. 6). Plaintiffs point out each agreement refers to the other at
one point, and the parties executed them on the same day. Id. at pp. 5-6. In
plaintiffs’ view, the applicable law supports interpreting both agreements as a
whole. Id. at pp. 6-7. Plaintiffs go on to argue once the court reads the
agreements together, the forum selection clause in the employment agreement

1The

parties’ briefing on defendants’ motion to dismiss focuses on the
choice of law provision in the employment agreement. See Dockets 9 at pp. 23, 15 at p. 2, & 21 at pp. 2-3. The parties agree the forum’s choice of law rules
apply, and plaintiffs argue their analysis on construing the employment and
stock purchase agreements leads to an application of South Dakota, not
Colorado law. (Docket 15 at p. 2). The court finds the plaintiffs’ analysis does
not negate the employment agreement’s choice of law provision.
2In

this section, the court addresses the employment agreement and not
the stock purchase agreement because it is apparent from the complaint
plaintiffs’ causes of action involve the employment agreement and not the stock
purchase agreement. (Docket 7 at pp. 9-18).
4

becomes invalid because it conflicts with the stock purchase agreement’s forum
selection clause. Id. at pp. 7-8.
Defendants’ position is the agreements should not be read together as
plaintiffs request. (Docket 22 at pp. 4-7). Defendants claim the proper reading
of the cross-references between the agreements does not lead to interpreting
the documents as a whole. Id. Defendants assert the applicable case law goes
against plaintiffs’ position on contract construction. Id. at p. 6.
Under Colorado law, “[i]f a simultaneously executed agreement between
the same parties, relating to the same subject matter, is contained in more
than one instrument, the documents must be construed together to determine
intent as though the entire agreement were contained in a single document.”3
O’Reilly v. Physicians Mut. Ins. Co., 992 P.2d 644, 648 (Colo. App. 1999);
see In re Application for Water Rights of Estes Park v. Northern Colorado Water
Conservancy District, 677 P.2d 320, 327 (Colo. 1984). MPC and the Duffields
executed the stock purchase agreement. (Docket 22-1 at p. 1). Murphy Pipe,
through David Kinsella, and John Duffield executed the employment
agreement. (Docket 22-2 at p. 1). The parties executed both agreements on
April 30, 2015. (Docket 16 at p. 5). Each agreement mentions the existence of
the other agreement at a particular point. Id. at pp. 5-6. Applying Colorado
law to these facts, plaintiffs claim interpreting the agreements together

3Applying

this rule of law does not violate South Dakota public policy.
See Kramer v. William F. Murphy Self-Declaration of Trust, 816 N.W.2d 813,
815 (S.D. 2012) (stating a parallel rule of contract construction).
5

necessarily invalidates the forum selection clauses because they call for
different jurisdictions in the event of litigation. Id. at pp. 7-8.
However, even if the court reads the employment and stock purchase
agreements together, plaintiffs’ argument does not prevail. The purpose of the
contract construction plaintiffs seek is to determine the intent of the
contracting parties. See In re Application for Water Rights of Estes Park, 677
P.2d at 327; Sterling Colo. Agency, Inc. v. Sterling Ins. Co., 266 F.2d 472, 476
(10th Cir. 1959). Applying this general interpretation does not entail fusing
each provision of the separate instruments. See Sterling, 266 F.2d at 476;
LPG Holdings, Inc. v. Casino America, Inc., No. 99-1037, 2000 WL 1637536, at
*8-9 (10th Cir. Nov. 1, 2000) (unpublished).
Section 13 of the employment agreement states Colorado law shall
govern the agreement and any litigation arising under the agreement shall take
place “in the federal or state courts located in Denver County, Colorado.”
(Docket 22-2 at p. 4). Section 17 reiterates some of Section 13 but is slightly
broader, providing any legal theory “arising out of or relating to [the
employment agreement] or [Mr. Duffield’s] employment with [MPC] shall” be
litigated as Section 13 directs. Id. at pp. 4-5. In the stock purchase
agreement, Section 10.9 states the laws of Delaware govern the agreement, and
any litigation arising from the agreement shall occur in Delaware federal or
state courts. (Docket 22-1 at p. 5).
If the court reads the two agreements together, the most natural
understanding of the forum selection clauses is the parties intended to resolve
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issues connected with employment as provided in the employment agreement’s
clauses on law and forum choice. As for disagreements related to the stock
transaction, it is most natural to conclude the parties intended to follow the
law and forum choices in the stock purchase agreement. The interpretation
applied by plaintiffs does not achieve their goal of invalidating the forum
selection clauses. See Sterling, 266 F.2d at 476; LPG Holdings, Inc., 2000 WL
1637536, at *8-9.
Even if the court interprets the employment and stock purchase
agreements as a whole, the court finds the result is not the invalidation of each
agreement’s forum selection clause.
C. Enforceability of the forum selection clause
Because defendants seek enforcement of the employment agreement’s
forum selection clause, the court must determine whether the clause is
enforceable.
The United States Supreme Court established the federal standard for
determining a forum selection clause’s enforceability in M/S Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 15 (1972). In resolving a motion to dismiss, the
United States Court of Appeals for the Eighth Circuit held “a district court
sitting in diversity jurisdiction and applying federal law must apply the
standard articulated in Bremen to the question of whether to enforce a forum
selection clause . . . .” Union Elec. Co. v. Energy Ins. Mut. Ltd., 689 F.3d 968,
973 (8th Cir. 2012). The Eighth Circuit explained “[w]hile Bremen provides the
proper analysis for determining the enforceability of a forum selection clause,
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in this circuit, consideration of the public policy of the forum state must be
part of that analysis.” Id. at 974 (citation omitted); see also JTV Mfg., Inc. v.
Braketown USA, Inc., 110 F. Supp. 3d 900, 905-06 (N.D. Iowa 2015) (citing
Union Electric in concluding federal law applies to a forum selection clause’s
enforceability). Although Union Electric involved a motion to dismiss and this
case involves a motion to change venue under 28 U.S.C. § 1404(a), the court
finds Union Electric’s ruling applies to this case. See Heartland Family
Services v. Netsmart Technologies, Inc., 961 F. Supp. 2d 964, 969-71 (D. Neb.
2013) (applying Union Electric in the context of transfer pursuant to 28 U.S.C.
§ 1404(a)).
Whether the court applies federal law or the law of either state connected
with the change of venue motion, the legal test is the same. The South Dakota
Supreme Court applied Bremen in O’Neill Farms, Inc. v. Reinert, 780 N.W.2d
55, 58 (S.D. 2010), and Colorado courts apply Bremen in the “vast majority of
cases . . . .” Cagle v. Mathers Family Trust, 295 P.3d 460, 464 (Colo. 2013).
Under Bremen, a clause is prima facie valid and enforceable unless it is
(1) unreasonable and unjust, (2) the result of fraud or overreaching, or
(3) enforcing it goes against a strong public policy in the forum state. Bremen,
407 U.S. at 15.
Plaintiffs argue the forum selection clause is invalid for the reasons
discussed above, but they do not dispute its enforceability under Bremen or

8

relevant state law. The employment agreement’s forum selection clause is
enforceable.4 See id.
II.

Does the forum selection clause encompass plaintiffs’ causes of
action?
Separate from their position on the validity of the forum selection clause,

plaintiffs argue the clause does not encompass most of their causes of action.
(Docket 16 at pp.12-13). Plaintiffs assert the majority of their causes of action
are beyond the forum selection clause’s scope because they connect to conduct
occurring before the parties executed either agreement. Id. (naming plaintiffs’
first, second, fifth, sixth and seventh causes of action). Plaintiffs allege their
ninth cause of action, a slander claim, is not subject to the clause because it
does not implicate the employment agreement’s terms or relate to any provision
in an agreement between the parties. Id. at p. 13.
Defendants argue the causes of action plaintiffs mention fall within the
employment agreement’s forum selection clause because each cause of action
concerns whether the employment agreement entitles plaintiffs to equity
payments. (Docket 22 at pp. 7-9). As to plaintiffs’ slander claim, defendants
assert it is within the clause’s scope because the content of the statements
underlying the slander claim relate to John Duffield’s employment with MPC.
Id. at p. 10.

4The

parties do not dispute the exclusivity of the employment
agreement’s forum selection clause. See Dunne v. Libbra, 330 F.3d 1062,
1064 (8th Cir. 2003) (discussing exclusivity). Consequently, the court can find
the clause enforceable without analyzing exclusivity.
9

The issue is whether plaintiffs’ non-contract claims are subject to the
forum selection clause.
A. Applicable law
The Eighth Circuit established the standard for whether “a forum
selection clause will apply to tort claims” in Terra Int’l, Inc. v. Miss. Chem.
Corp., 119 F.3d 688, 693-94 (8th Cir. 1997). Under Terra, a forum clause
encompasses tort claims if the situation meets any of “three generally
applicable tests.” Id. at 694. The first test asks whether the “tort claims
ultimately depend on the existence of a contractual relationship between the
parties [because] such claims are covered by a contractually-based forum
selection clause.” Id. (citing Coastal Steel Corp. v. Tilghman Wheelabrator Ltd.,
709 F.2d 190, 203 (3d Cir. 1983)) (internal quotation marks omitted). The
second test asks “ ‘whether resolution of the claims relates to interpretation of
the contract.’ ” Id. (quoting Manetti-Farrow, Inc. v. Gucci America, Inc., 858
F.2d 509, 514 (9th Cir. 1988)). The third test states a forum selection clause
covers a tort claim if the claim involves “the same operative facts as a parallel
claim for breach of contract . . . .” Id. (citing Lambert v. Kysar, 983 F.2d 1110,
1121-22 (1st Cir. 1993)) (internal quotation marks omitted).
Applying this law, the court determines whether each cause of action is
subject to the employment agreement’s forum selection clause.
B. Plaintiffs’ contract and equitable causes of action
Plaintiffs’ fourth cause of action is breach of contract. (Docket 7 at
pp. 14-15). Neither party asserts the breach of contract claim is beyond the
10

forum selection clause’s reach. The court finds the employment agreement’s
forum selection clause covers plaintiffs’ breach of contract claim.
The fifth, sixth and seventh causes of action in plaintiffs’ amended
complaint are claims in equity and allege constructive trust, unjust
enrichment, and money had and received, respectively. (Docket 7 at pp. 1516). Plaintiffs specifically mention these causes of action as falling outside the
forum selection clause’s scope. (Docket 16 at pp. 11-13). The basis of each
equitable claim is that the named defendants have not paid plaintiffs as
defendants committed to in the employment agreement. Id. Although they are
equitable and not tort claims, these causes of action revolve around facts
operative in a breach of contract claim. See Terra, 119 F.3d at 694; cf. Third
Ave. Trust v. Suntrust Bank, 163 F. Supp. 2d 215, 217-22 (S.D.N.Y. 2001)
(finding an equitable claim subject to a forum selection clause); Bluesky
Greenland Envtl. Solutions, LLC v. Rentar Envtl. Solutions, Inc., Case No. 1281234, 2013

WL 12095168, at *5-6 (S.D. Fla. Apr. 19, 2013) (same); C.

Thorrez Industries, Inc. v. LuK Transmissions Systems, LLC, No. 5:09-cv01986, 2010 WL 1434326, at * 5-6 (S.D. Ohio Apr. 8, 2010) (same). The court
finds the forum selection clause in the employment agreement encompasses
plaintiffs’ equitable causes of action because they meet Terra’s third test. See
Terra, 119 F.3d at 694.
C. Plaintiffs’ first three tort causes of action
The first three tort causes of action in plaintiffs’ amended complaint are
fraud, negligent misrepresentation and tortious interference. (Docket 7 at
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pp. 9-14). As with the equitable claims, each of these tort claims rests on
plaintiffs’ allegation certain defendants executed the employment agreement
providing specific payments for plaintiffs, and those payments were not carried
out. See id.; cf. Micropower Group v. Ametek, Inc., 953 F. Supp. 2d 801, 80809 (S.D. Ohio 2013) (finding negligent misrepresentation, fraud and tortious
interference claims subject to a forum selection clause); Ormand v. Sanford
Clinic, No. CIV. 09-4161, 2010 WL 2207745, at *2 (D.S.D. May 26, 2010)
(finding a fraud claim subject to a forum selection clause). For instance,
whether plaintiffs can advance the claim defendants tortiously interfered with
payment to which the employment agreement entitled plaintiffs turns on the
same operative facts as the question of whether defendants breached the
employment agreement. The court finds the employment agreement’s forum
selection clause applies to plaintiffs’ first three tort causes of action because
Terra’s third test is met. See Terra, 119 F.3d at 694.
D. Plaintiffs’ aiding and abetting cause of action
The eighth cause of action in plaintiffs’ amended complaint is for aiding
and abetting. (Docket 7 at pp. 16-18). The parties disagree about whether this
is a cognizable claim, and whether it is properly understood as a claim for civil
conspiracy. See Dockets 9 at pp. 20-21, 15 at pp. 13-14, & 21 at p. 10. Those
arguments aside, the acts plaintiffs claim defendants aided and abetted each
other in committing concern the same operative facts as a breach of contract
claim. Plaintiffs allege the defendants assisted each other in not paying
plaintiffs as the employment agreement provided. (Docket 7 at pp. 16-17).
12

Under Terra’s third test, this claim is subject to the forum selection clause in
the employment agreement. See Terra, 119 F.3d at 694.
E. Plaintiffs’ slander cause of action
Plaintiffs’ final cause of action alleges the tort of slander. (Docket 7 at
pp. 17-18). The parties fundamentally disagree about whether the relation
between the alleged slander and Mr. Duffield’s employment is sufficient to
subject the claim to the forum selection clause. See Dockets 16 at p. 13 & 22
at p. 10.
Plaintiffs’ slander claim is beyond the forum selection clause’s scope. It
is clear the slander cause of action does not share operative facts with a claim
for breach of contract. See Terra, 119 F.3d at 694. Although the employment
agreement’s forum selection clause is broad, the slander allegation does not
relate to the employment agreement or Mr. Duffield’s employment. See id.
Defendants argue because the content of the alleged slander bears some
conceivable connection with Mr. Duffield’s status as an employee, there is a
sufficient relationship to the employment agreement. (Docket 22 at p. 10).
Defendants also contend the alleged slander would not have occurred but for
Mr. Duffield’s employment with defendants. Id.
But these points do not address the applicable legal standard. The
pivotal issue is that plaintiffs’ slander claim does not bear a sufficient
connection to the employment agreement’s substance or Mr. Duffield’s
employment. Plaintiffs’ slander claim alleges during Mr. Duffield’s employment
with Murphy Pipe, Mr. Kinsella made oral statements to third parties asserting
13

Mr. Duffield committed criminal acts, is dishonest and is a thief. (Docket 7 at
pp. 8-9). Even if Mr. Duffield was not employed with defendants or the
employment agreement had different terms, there would be no notable impact
on a claim particular defendants are liable for slander. Cf. Zichichi v. Jefferson
Ambulatory Surgery Ctr., LLC, Civil Action No. 07-2774, 2007 WL 3353304, at
*7 (E.D. La. Nov. 7, 2007) (finding a defamation claim not subject to a forum
selection clause). Plaintiffs’ slander claim does not depend upon the
employment agreement’s existence, relate to interpretation of the agreement, or
share operative facts with a breach of contract claim. The court finds plaintiffs’
slander cause of action is not subject to the forum selection clause in the
employment agreement.
III.

Should the court transfer the case?

When a defendant moves to change venue under 28 U.S.C. § 1404(a),
and the case presents an enforceable forum selection clause applying to certain
causes of action, the applicable legal standard is found in the United States
Supreme Court decision Atl. Marine Const. Co. v. U.S. Dist. Court for the W.
Dist. of Tex., 134 S. Ct. 568, 581-83 (2013). Under Atlantic Marine, the
presence of a valid forum selection clause changes the ordinary § 1404(a)
analysis in the following ways. Id. at 581. “First, the plaintiff’s choice of forum
merits no weight.” Id. “Second, a court evaluating a defendant’s § 1404(a)
motion to transfer based on a forum-selection clause should not consider
arguments about the parties’ private interests.” Id. at 582. “As a consequence,
a district court may consider arguments about public-interest factors only.” Id.
14

The Court notes “the practical result [of this analysis] is that forum-selection
clauses should control except in unusual cases.” Id.
The question is whether this is the “unusual” case where public interest
considerations outweigh a forum selection clause within a legitimate bargain
the parties struck. Id. Plaintiffs argue their South Dakota residency and
nearly 20 years of running a business in South Dakota support not
transferring the case. (Docket 16 at p. 10). They also assert because some of
their claims arose from defendants’ travel to South Dakota, there are strong
public policy reasons against transfer. Id. This case involves enforcement of a
forum selection clause and claims relating to contract law, equity and tort law.
The court does not find South Dakota public policy strongly against
transferring the claims subject to the forum selection clause. See supra
Section I.C. (citing South Dakota policy on enforcement of forum selection
clauses); see also (Docket 9 at p. 3) (noting South Dakota and Colorado law do
not “substantively differ” on plaintiffs’ causes of action). This is not the
“unusual” case where firm public interest factors weigh against transfer. See
Atl. Marine, 134 S. Ct. at 582; In re Union Elec. Co., 787 F.3d 903, 909-10 (8th
Cir. 2015).
Because the plaintiffs’ slander claim is not subject to the forum selection
clause, the court separates it from the other eight causes of action and does
not transfer it. The court’s “twin commitments to upholding forum selection
clauses where [they] apply and deferring to a plaintiff’s proper choice of forum”
require the court to treat plaintiffs’ slander claim separately. See Phillips v.
15

Audio Active Ltd., 494 F.3d 378, 393 (2d Cir. 2007); Traton News, LLC v.
Traton Corp., 914 F. Supp. 2d 901, 908-09 (S.D. Ohio 2012) (collecting cases);
cf. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985) (holding that
district courts are required to compel arbitration of claims subject to
arbitration clause “even if the result is ‘piecemeal’ litigation”). The court finds
transfer appropriate as to plaintiffs’ first eight causes of action and not the
ninth.
DEFENDANTS’ MOTION TO DISMISS
IV.

Do plaintiffs fail to state a slander claim upon which the court
can grant relief?
A. Applicable law and legal standard
As stated above, the court has diversity jurisdiction in this case. See

supra Section I.A. Federal courts sitting in diversity apply the substantive law
of the forum state. See Kozlov v. Associated Wholesale Grocers, Inc., 818 F.3d
380, 388 (8th Cir. 2016). Because plaintiffs’ slander claim is separate from the
parties’ agreed upon law and forum choices, and it requires application of
substantive law, the court looks to South Dakota law for the elements of a
slander claim. See id.
Defendants base their motion to dismiss plaintiffs’ slander cause of
action on Federal Rule of Civil Procedure 12(b)(6). Rule 12(b)(6) permits
dismissal of a claim if the plaintiff fails to state a claim upon which relief can
be granted. Id. Plaintiffs must plead “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007).
16

Two “working principles” underlie Rule 12(b)(6)’s analysis. See Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009). First, courts are not required to accept as
true legal conclusions “couched as . . . factual allegation[s]” in the complaint.
See id. “Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.” Id. (quoting Twombly, 550 U.S. at
555) (internal quotation marks omitted). The court does, however, “take the
plaintiff’s factual allegations as true.” Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594 (8th Cir. 2009). Second, the plausibility standard is a “contextspecific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 678 (citation omitted). The complaint
is analyzed “as a whole, not parsed piece by piece to determine whether each
allegation, in isolation, is plausible.” Braden, 588 F.3d at 594.
B. Discussion
Defendants argue plaintiffs fail to meet the Rule 12(b)(6) standard
because plaintiffs do not provide more detail on the alleged slander’s content
and who heard the oral statements. (Docket 9 at p. 15-16). In response,
plaintiffs assert the specific facts they provided regarding who made the
statement, when the statement was uttered, and the statement’s topic are
sufficient under Rule 12(b)(6). (Docket 15 at pp. 16-17). In the alternative,
plaintiffs request leave to amend their complaint and include more factual
detail on the slander claim, including the name of the person to whom Mr.
Kinsella allegedly made the statement. Id.

17

Rule 15 of the Federal Rules of Civil Procedure governs plaintiffs’ ability
to amend their complaint. Fed. R. Civ. P. 15. When the motion to amend
comes more than 21 days after serving the complaint, plaintiffs need either the
written consent of opposing parties or the court’s leave in order to amend. Fed.
R. Civ. P. 15(a)(2). Courts “freely give leave when justice so requires.” Id.
Because plaintiffs lack the written consent of defendants, the court must
decide whether to give them leave to amend the complaint or deny the motion
as futile.
The United States Court of Appeals for the Eighth Circuit holds it can be
error for a district court to dismiss a complaint because of deficient allegations
if the district court does not give the plaintiff an opportunity to amend. See
Freeman v. Bechtel Const. Co., 87 F.3d 1029, 1032 (8th Cir. 1996). It is not an
error to dismiss, however, when plaintiffs do not request a chance to amend or
when they request permission for “a classic fishing expedition.” See id.
(“[Plaintiffs] requested an opportunity to take numerous depositions,
confirming that their defamation allegations were made without supporting
facts in the hope they would be permitted to embark upon a classic fishing
expedition.”). The possibility of error decreases further if plaintiffs do not
“explain the substance of [their] proposed amendment.” Misischia v. St. John’s
Mercy Health Sys., 457 F.3d 800, 805-06 (8th Cir. 2006).
The South Dakota legislature defines slander as:
a false and unprivileged publication . . . which . . . [t]ends directly
to injure [a person] in respect to his office, profession, trade, or
business, either by imputing to him general disqualification in
those respects which the office or other occupation peculiarly
18

requires, or by imputing something with reference to his office,
profession, trade, or business that has a natural tendency to
lessen its profit[.]
SDCL § 20-11-4; see Guilford v. Northwestern Pub. Serv., 581 N.W.2d 178, 180
(S.D. 1998). Plaintiffs’ slander claim in the amended complaint provides
general details, including who they believe made the statements and the topic
of the statements. (Docket 7 at pp. 17-18). In response to defendants’ motion
to dismiss, plaintiffs make a request to amend their complaint further so they
can provide the identity of the person who heard the alleged slander and
“elaborate on . . . [the] slanderous statements . . . .” (Docket 15 at pp. 16-18).
Although plaintiffs did not file a formal motion to amend, their request is not
for “a classic fishing expedition,” and they are specific about what they will add
in the second amended complaint. Freeman, 87 F.3d at 1032. The court
grants plaintiffs leave to file a second amended complaint providing more
details on their slander claim.
ORDER
Based on the above analysis, it is
ORDERED that defendants’ motion to change venue (Docket 11) is
granted as to the first eight causes of action in plaintiffs’ amended complaint.
Plaintiffs’ first eight causes of action are transferred to the United States
District Court for the District of Colorado, Denver Division.
IT IS FURTHER ORDERED that defendants’ motion to change venue
(Docket 11) is denied as to plaintiffs’ slander cause of action.

19

IT IS FURTHER ORDERED that plaintiffs may file a second amended
complaint as to the slander cause of action. Plaintiffs must file the second
amended complaint by January 25, 2017.
IT IS FURTHER ORDERED that defendants’ motion to dismiss for failure
to state a claim or alternatively for a more definite statement (Docket 8) is
denied as moot because the court grants plaintiffs leave to file a second
amended complaint.
Dated January 10, 2017.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
CHIEF JUDGE

20