Green Plains Obion LLC v. Obion Grain Co. Inc
| Decision Date | 15 November 2010 |
| Docket Number | CASE NO. 8:10CV251 |
| Parties | GREEN PLAINS OBION LLC, Plaintiff, v. OBION GRAIN CO., INC., Defendant. |
| Court | U.S. District Court — District of Nebraska |
This matter is before the Court on the Plaintiff's Statement of Objections to Magistrate Judge's Order (Filing No. 16), and on the Defendant's Motion to Dismiss and, in the Alternative, Motion to Transfer (Filing No. 20). For the reasons discussed, the Plaintiff's objections will be overruled, the Motion to Dismiss will be granted in part, and the action will be transferred to the Western District of Tennessee.
The following facts are based on the allegations in the Complaint (Filing No. 1 at 414), which the Court accepts as true when addressing the motion to dismiss.
Plaintiff Green Plains Obion LLC ("GPO") is a Tennessee limited liability company with its principal place of business in Omaha, Nebraska. GPO is a wholly-owned subsidiary of Green Plains Renewable Energy, Inc. ("GPRE"). GPRE also maintains its principal place of business in Omaha, Nebraska. GPRE is an ethanol producer engaged in the business of development, production, and marketing of corn-based fuel ethanol products. Through its subsidiaries, GPRE markets, sells and distributes corn-based ethanol fuel products on a national basis. GPRE owns and operates several ethanol production facilities including one in Obion, Tennessee ("Obion Facility"). GPRE acquired the Obion Facility through acquisition of all the membership interests in Ethanol Grain Processors, LLC ("EGP"). Following the acquisition, GPO assumed operation of the Obion Facility. GPO also assumed the obligations of a Corn Purchasing Agreement ("CPA") between EGP and the Defendant Obion Grain Co., Inc. ("Obion"), a Tennessee corporation with its principal offices in Obion, Tennessee.
Under the terms of the CPA, GPO agreed to buy up to a maximum of 3.5 million bushels of corn each year for use at the Obion Facility (hereinafter referred to as the "committed bushels"). Under the CPA, Obion was the exclusive supplier to GPO for all corn produced in seven counties surrounding the Obion Facility in Tennessee and Kentucky (hereinafter referred to as the "exclusion zone"). In addition to purchasing the committed bushels, GPO at times purchased additional corn from Obion. On such occasions, the price of corn delivered by Obion was negotiated and agreed upon by the parties. During the parties' course of dealing, a dispute arose as to whether the CPA prohibited GPO from purchasing corn from any other source within the exclusion zone. During the course of these disputes, Obion proposed several drafts of an "Addendum" to amend the CPA to clarify the rights and obligations of the parties, but the parties never reached an agreement. GPO claims that by seeking to enforce the CPA as prohibiting GPO's purchase of corn from any other producer in the exclusion zone, Obion has had adverse impact on GPO's ability to purchase corn and has substantially affected the price of corn within the exclusion zone. GPO seeks a declaration of the parties' rights and obligations under the CPA and seeks damages for breach of contract and unlawful restraint of trade.
GPO filed its Complaint in the District Court of Douglas County, Nebraska. After filing, GPO did not serve Obion, and instead mailed a demand letter and a date-stamped copy of the Complaint to Obion and its attorneys. Obion removed the action to this Court and filed a Demand for Jury Trial on July 7, 2010. Obion did not file an answer or otherwise respond to the Complaint until September 24, 2010, when it filed its present Motion to Dismiss or Transfer.
On September 2, 2010, GPO moved for entry of default on the grounds that Obion waived service when it filed its jury demand. The Magistrate Judge denied GPO's motion (Filing No. 13), concluding that Obion did not waive its right to service of process and thus could not be in default. The summons was returned executed on Obion on October 6, 2010, within the time required by Federal Rule of Civil Procedure 4(m).
Federal Rule of Civil Procedure 72 governs nondipositive orders issued by magistrate judges. Rule 72(a) states that a district judge "must consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law." GPO objects to the Magistrate Judge's Order arguing that the Magistrate erred by concluding that Obion did not waive its right to service by removing the case to federal court.
The Court is not persuaded that the Magistrate Judge erred by failing to analyze GPO's motion for entry of default under Nebraska law. In support of its argument, GPO cites 28 U.S.C. § 1448 which states that where a defendant has not been served prior to removal, "such process or service may be completed or new process issued in the same manner as in cases originally filed in such district court." GPO also cites Federal Rule of Civil Procedure 4(h)(1)(A)1, which, referring to Rule 4(e)(1), provides that unless federal law states otherwise, a corporation, partnership or association may be served by following state law for serving a summons in an action brought in the state where the district court sits or where service is made. GPO argues that because Nebraska law equates a voluntary appearance to service, Obion was deemed served when it filed its jury demand. The Court disagrees. Both the statute and Rule 4(h) describe the manner in which service may be effected. Regarding the process allowed by § 1448, "the perfection of process after removal is governed by federal law rather than state law." Velten v. Daughtrey, 226 F. Supp. 91, 92 (W.D. Mo. 1964) (citing § 1448). Further, Rule 4 merely authorizes service in conformity with state law. This authorization affects the manner in which plaintiffs may effect service, not the manner in which defendants waive it.
Even if Nebraska law applies, the Court is not persuaded that a jury demand amounts to a voluntary appearance. The Court notes that default judgments are disfavored, and should be a rare judicial act. In re Jones Truck Lines, Inc., 63 F.3d 685, 688 (8th Cir. 1995). GPO cites no direct authority suggesting that filing a jury demand rises to the level of a voluntary appearance, obviating the need for service, under either Nebraska or federal law. Accordingly, the Magistrate Judge's decision is not clearly erroneous or contrary to law.2
GPO states that even if its objection to the Magistrate Judge's Order is denied, it properly served process upon Obion on October 1, 2010, and the summons was returned executed on October 6, 2010. Service took place after Obion filed its Motion to Dismiss or Transfer, but within the time required by Rule 4(m). In its Reply, Obion does not dispute that it was properly served. Therefore, Obion's motions under Rule 12(b)(4) and (5) are denied as moot.
Obion argues that GPO has not met its burden for subjecting Obion to personal jurisdiction in this Court. "To allege personal jurisdiction, 'a plaintiff must state sufficient facts in the complaint to support a reasonable inference that the defendant can be subjected to jurisdiction within the state." Wells Dairy, Inc. v. Food Movers Intern., Inc., 607 F.3d 515, 518 (8th Cir. 2010) (quoting Deverv. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004). Further, "[a] federal court may exercise jurisdiction 'over a foreign defendant only to the extent permitted by the forum state's long-arm statute and by the Due Process Clause of the Constitution.'" Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090 (8th Cir. 2008) (quoting Dakota Indus., Inc. v. Ever Best Ltd., 28 F.3d 910, 915 (8th Cir. 1994)). The question of whether this Court has personal jurisdiction over Obion presents two issues: (1) whether the requirements of the Nebraska long-arm statute are satisfied, and (2) whether the exercise of jurisdiction over Obion will violate the Due Process Clause. Because Nebraska's long-arm statute3 confers personal jurisdiction to the "to the fullest extent permitted by the United States Constitution," the Court's analysis need only address whether the exercise of personal jurisdiction over a defendant would violate the Due Process Clause. Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693 (8th Cir. 2003) (citing Barone v. Rich Bros. Interstate Display Fireworks Co., 25 F.3d 610, 612 (8th Cir. 1994)); see also Wagner v. Unicord Corp., 526 N.W.2d 74, 77-78 (Neb. 1995).
Due process requires that a non-resident defendant have sufficient "minimum contacts" with the forum state "such that the maintenance of the suit [in that state] does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). See also Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090 (8th Cir. 2008) (). "The Supreme Court has set forth two theories for evaluating minimum contacts, general jurisdiction and specific jurisdiction." Dever, 380 F.3d at 1073. "Under the theory of general jurisdiction, a court may hear a lawsuit against a defendant who has 'continuous and systematic' contacts with the forum state, even if the injuries at issue in the lawsuit did not arise out of the defendant's activities directed at the forum." Id. (citing Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984)). "In contrast, specific jurisdiction is viable only if the injury giving rise to the lawsuit occurred within or had some connection to the forum state." Id. (citing Hall, 466 U.S. at 414)....
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