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In re Syngenta Mass Tort Actions

United States District Court, S.D. Illinois

April 3, 2017

IN RE SYNGENTA MASS TORT ACTIONS
v.
Syngenta AG, et al. This Document Relates to Poletti, et al.

          MEMORANDUM AND ORDER

          DAVID R. HERNDON UNITED STATES DISTRICT JUDGE

         Before the Court is Syngenta's motion to dismiss plaintiffs' First Consolidated Amended Complaint [Doc. 59] for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2), and failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), [Doc. 115]. Plaintiffs oppose the motion [Doc. 133]. Based on the following, the Court GRANTS in part Syngenta's motion to dismiss and DENIES in part Syngenta's motion to dismiss and request for oral argument.

         I. BACKGROUND

         A. Introduction

         In March 2016, Roland Poletti, et al.[1] (“plaintiffs”) filed their First Consolidated and Amended Complaint against Syngenta, [2] under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d).[3] Plaintiffs alleged that Syngenta prematurely commercialized the genetically modified corn trait “MIR162, ”[4] and in doing so, acted negligently, recklessly, and deceptively, causing harm to plaintiffs and contaminating the entire United States corn supply. Plaintiffs further contend that - at the time of the alleged acts - Syngenta knew of and foresaw the risk to plaintiffs, and thereby breached the duty owed in preventing the harm alleged [Doc. 59].

         B. MIR162 & VIPTERA™ Controversy

         Plaintiffs note that United States exportation of corn amounts to billions of dollars annually, and because the U.S. corn marketing system is commodity-based, [5] the highest standards of purity are required to be maintained. Id. at 282.[6] Moreover, plaintiffs point to the premature release of Agrisure VIPTERA™ as the sole cause of foreign export-market refusal to import U.S. grown corn, and further maintain that heavy financial losses have been incurred. Id.

         In 2009, Syngenta introduced and sold the genetically modified (“GMO”) corn trait MIR162 to U.S. farmers under the trade name Agrisure VIPTERA™; at the time, MIR162 was barred for sale in several countries, including China- where it was not yet approved for purchase or consumption. Id. Agrisure VIPTERA™ and its variant DURACADE™ (“genetically-modified products”), were licensed and marketed by Syngenta; and, both products contained multiple genetically enhanced modified traits and were sold for their insect-resistant capabilities. Id. at 283. Syngenta's corn modification process used biotechnology to insert genetic substances into corn seeds from the bacterium Bacillus thuringiensis (“Bt”), in order to produce certain proteins that have insecticidal properties. One of the produced proteins, Vip3A, binds to the pest insects' midgut and forms pores, which kill the insects before crop damage takes place. VIPTERA™'s bio-engineered origin required foreign regulatory approval before it was able to be cultivated or imported outside of the United States. Id. at 290-91.

         Plaintiffs vie that Syngenta intentionally and recklessly released VIPTERA™ and DURACADE™ into the U.S. corn market before gaining MIR162 GMO approval. Id. at 283. Allegations begin in the spring of 2010, when plaintiffs charge that Syngenta decided to release VIPTERA™ for the 2010-2011 corn season; all while lacking the necessary approval for import into foreign markets, namely China-who, in 2009-2010, imported 1, 296 thousand metric tons of U.S. corn. Id. at 291-92.[7] Plaintiffs claim that at the time of VIPTERA™'s release, Syngenta assured consumers that import approval in Japan and European Union countries was pending-but made no mention in regard to China. Id. Plaintiffs alleged that in 2012 Syngenta misinformed U.S. corn farmers, grain elevators, grain exporters, landowners, the general public, and even Syngenta's own investors, by directing all to believe that MIR162 GMO approval from China was forthcoming. Id. at 284. The statements, plaintiffs' claim, were followed by Syngenta's creation of documentation that implicitly established the belief that MIR162 had been accepted by Chinese importers. U.S. corn farmers immediately began to plant corn containing MIR162; however, China did not approve MIR162 until 2014. Id.

         C. U.S. Corn Crop Contamination

         Factual evidence suggests that planting, harvesting, and transporting assorted corn varieties together creates a risk of contamination, commingling, and cross pollination from one corn plant to another, resulting in an exchange of genetic traits. Id. at 292-94. Plaintiffs allege that notwithstanding this risk, Syngenta offered “a ‘side-by-side program' which encouraged farmers to plant VIPTERA corn side-by-side with other corn seed.” This encouragement of side-by- side planting of VIPTERA™ and non-VIPTERA™ corn led to the comingling of VIPTERA™GMO corn with the wide-ranging U.S. corn supply. Id.

         In November 2013, the first shipments of MIR162-infused GMO corn arriving in China were not approved for import and were subsequently rejected. Id. at 297. Refusal continued until December of 2014; and plaintiffs claim that Syngenta's actions “shut down, for all intents and purposes” the 2014 U.S. corn market to China, “causing billions of dollars of damages to U.S. exporters, including farmers, farm landowners, and farming entities.” Id. at 285. In fact, plaintiffs point to a National Grain and Feed Association (“NGFA”) statement indicating that Syngenta's premature release of VIPTERA™ corn cost the U.S. corn market between $1 Billion and $3 billion dollars due to rejection and seizures of containers and cargo ships transporting MIR162 GMO corn to China alone. Id. at 286.

         D. Request to Stop DURACADE™ Release

         Plaintiffs suggest that Syngenta continued “irreparable damage to U.S. exports of corn to China” by releasing a second version of MIR162 GMO corn- without Chinese approval-under the trade name DURACADE™. Id. at 286-87. In anticipation of its release, the NGFA and North American Export Grain Association (“NAEGA”) released a joint statement requesting that Syngenta halt its release of DURACADE™. Id. at 287. The statement explained that both organizations were gravely concerned about the serious economic harm resulting from Syngenta's current approach to VIPTERA™ management.[8] Id. at 287. Plaintiffs contend that regardless of NGFA and NAEGA requests to halt production, Syngenta nevertheless released DURACADE™, further jeopardizing the Chinese import market. Id.

         E. Claims Asserted/Causes of Action

         Plaintiffs assert claims-against Syngenta-of public nuisance, private nuisance, negligence, products liability, tortious interference with business actions, strict liability as to certain classes of plaintiffs, and the violation of various state deceptive trade practices and consumer protection acts. Id. at 302-30.[9] Causes of action for damages include: the premature release of VIPTERA™ and DURACADE™ into the U.S. corn and corn seed supply; the failure to disclose the material fact that MIR162 was not approved for import into China; and the continuing and future MIR162 contamination of the U.S. corn and seed supply. Id. at 288-89. Plaintiffs seek compensatory, consequential, and punitive damages, and injunctive relief. Id. at 331-33.

         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 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 “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)); uBID, Inc. v. GoDaddy Group, Inc., 623 F.3d 421, 425 (7th Cir. 2010) (quoting Int'l Shoe, 326 U.S. at 316). The defendant must have purposefully established such minimum contacts with the forum state such that it “should reasonably anticipate being haled into court there, ” WorldWide Volkswagen Corp. v. Woodson, 444 U.S 286, 297 (1980), because it has “purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws, ” Hanson v. Denckla, 357 U.S. 235, 253 (1958). In deciding whether exercising jurisdiction offends traditional notions of fair play and substantial justice, the Court may also consider “the burden on the defendant, the interests of the forum State, and the plaintiff's interest in obtaining relief.” Asahi Metal Indus. Co., Ltd. V. Super. Ct. of Cal., Solano Cty., 480 U.S. 102, 113 (1987).

         What personal jurisdiction means in a particular case depends on whether the plaintiff asserts “general” or “specific” jurisdiction. Specific jurisdiction refers to jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum. Hyatt, 302 F.3d at 716 (citing Helecopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8, 9 (1984)). General jurisdiction, on the other hand, may exist even in suits that do not rise out of or relate to the defendant's contacts so long as the defendant has “continuous and systematic” contacts with the forum state. Hyatt, 302 F.3d at 713; Helicopteros Nacionales, 466 U.S. at 416.

         B. Failure to State a Claim under 12(b)(6)

         Rule 12(b)(6) permits a motion to dismiss a complaint for failure to state a claim upon which relief can be granted. Hallinan v. Fraternal Order of Police Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). The Supreme Court explained in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), that Rule 12(6)(b) dismissal is warranted if the complaint fails to set forth “enough facts to state a claim to relief that is plausible on its face.” Notice pleading remains all that is required in a complaint, even though federal pleading standards were overhauled by Twombly and Ashcroft v. Iqbal, 556 U.S. 662 (2009). “A plaintiff still must provide only ‘enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests and, through his allegations, show that it is plausible, rather than merely speculative, that he is entitled to relief.' ” Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008) (citation omitted).

         The Seventh Circuit offers further instruction on what a civil action must allege to endure 12(b)(6) dismissal. In Pugh v. Tribune Co., 521 F.3d 686, 699 (7th Cir. 2008), the Court reiterated the standard: “surviving a Rule 12(b)(6) motion requires more than labels and conclusions”; the complaint's allegations must “raise a right to relief above the speculative level.” A plaintiff's claim “must be plausible on its face, ” that is, “the complaint must establish a non-negligible probability that the claim is valid.” Smith v. Med. Benefit Adm'rs Grp., Inc., 639 F.3d 277, 281 (7th Cir. 2011).

         III. ANALYSIS

         A. Choice of Law

         In a diversity case, the Court applies the choice of law rules of the state in which the district court sits. Jackson v. Payday Fin., LLC, 764 F.3d 765, 774 (7th Cir. 2014) (citing Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). Under Illinois choice of law rules, litigants can stipulate to which substantive law applies to their case so long as the stipulation is reasonable. City of Clinton, Ill. v. Moffitt, 812 F.2d 341, 342 (7th Cir. 187); see also Rexford Rand Corp. v. Ancel, 58 F.3d 1215, 1219 n.6 (7th Cir. 1995). The parties have cited to Illinois law, thus, Illinois law applies. To the extent that the Illinois Supreme Court has not yet spoken to any of the issues before the Court, the Court shall apply the law as it would predict the Illinois Supreme Court would if deciding the case. Taco Bell Corp. v. Cont'l Cas. Co., 388 F.3d 1069, 1077 (7th Cir. 2004) (stating that duty of federal court in diversity suit is to predict what state Supreme Court would do if presented with identical issue).

         B. Personal Jurisdiction is Established Because All of Plaintiffs' Claims Arise Out of and Relate to Syngenta's Minimum Contacts with Illinois

         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 non-Illinois claims brought by non-Illinois plaintiffs. Regarding specific jurisdiction 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); Trade Well Int'l v. United Cent. Bank, 825 F.3d 854, 859 (7th Cir. 2016) (“Moreover, a district court may exercise personal jurisdiction over any party that purposefully avails itself of the forum.”).

         As stated above and briefly reiterated here, personal jurisdiction exists only if a defendant has “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Int'l Shoe Co., 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., 444 U.S at 297, 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, 357 U.S. at 253. Here, Syngenta has done just that.

         In order to commercialize VIPTERA™, the Syngenta defendants availed themselves of ...


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