In re Syngenta AG Mir 162 Corn Litig.

• Decision Date: 04 April 2016
• Docket Number: Case No. 14-md-2591-JWL,MDL No. 2591
• Citation: In re Syngenta AG Mir 162 Corn Litig., Case No. 14-md-2591-JWL, MDL No. 2591 (D. Kan. Apr 04, 2016)
• Parties: IN RE: SYNGENTA AG MIR 162 CORN LITIGATION This Document Relates To All Cases
• Court: U.S. District Court — District of Kansas

IN RE: SYNGENTA AG MIR 162 CORN LITIGATION

This Document Relates To All Cases

MDL No. 2591

Case No. 14-md-2591-JWL

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS

April 4, 2016

MEMORANDUM AND ORDER

This matter comes before the Court on the joint motion to dismissdefendants' counterclaims and third-party complaints filed by Archer Daniels Midland Company("ADM"), Cargill, Incorporated("Cargill"), and Rail Transfer, Inc.("Rail Transfer")(collectively, "movants")(Doc. # 1434)¹; and Rail Transfer's additional motion to dismiss(Doc. # 1436).The Court heard oral argument on these motions on March 30, 2016.For the reasons set forth below, the Courtgrants the joint motion, and the third-party claims and counterclaims asserted against movants in this MDL are hereby dismissed.In light of that ruling, Rail Transfer's additional motion to dismiss is denied as moot.

I.Background

In hundreds of cases in this MDL, producer and non-producer plaintiffs havebrought negligence and other claims against defendants(collectively, "Syngenta") relating to Syngenta's commercialization of a genetically-modified corn seed known as Viptera.One such case was brought by non-producer Rail Transfer.Exporters ADM and Cargill also brought cases against Syngenta, although those cases have been remanded to state court and thus are no longer part of the MDL.Syngenta has asserted counterclaims against Rail Transfer, and in all of the cases in the MDL in which the plaintiff has conformed its complaint to master complaints filed in this Court, Syngenta has asserted third-party claims against movants ADM, Cargill, and Rail Transfer.The counterclaims and third-party claims seek contribution or indemnity under state law, based on allegations of movants' negligence to plaintiffs.Specifically, Syngenta alleges that movants were negligent in handling and commingling corn containing the Viptera trait and in selling or shipping such corn to China.

In seeking dismissal of these counterclaims and third-party claims, movants argue that the claims are preempted under two federal statutes, that movants do not owe a legal duty to plaintiffs as alleged by Syngenta, and that the claims do not satisfy various states' requirements for contribution and indemnity.Movants further argue that personal jurisdiction over Rail Transfer is lacking in all cases originally filed outside of Minnesota.Finally, Rail Transfer asserts by separate motion that Syngenta has failed to state a plausible claim against it under the requisite pleading standards.

II.Lack of Personal Jurisdiction over Rail Transfer

As an initial matter, the Court addresses Rail Transfer's jurisdictional argument.Rail Transfer, a Minnesota company, has submitted an affidavit in support of its argument that it is subject to personal jurisdiction only in Minnesota with respect to these claims by Syngenta.²Syngenta concedes, based on the affidavit, that there is no personal jurisdiction over Rail Transfer in cases originating in other states.Accordingly, the Court dismisses for lack of personal jurisdiction Syngenta's third-party claims against Rail Transfer in all cases in the MDL other than those cases transferred to the MDL from the District of Minnesota.

III.Preemption

Movants argue that Syngenta's claims against them are preempted by the United States Grain Standards Act (GSA), 7 U.S.C. §§ 71-87k.They further argue that any claims against ADM and Cargill (licensed warehouses) relating to the handling of grain are preempted by the United States Warehouse Act, 7 U.S.C. §§ 241-56.The parties agree that the possible scope of preemption here under the Warehouse Act does not extend beyond claims that Syngenta concedes are preempted by the GSA; thus, the Court need not address whether the Warehouse Act preempts claims in this case, and it will confine its discussion to preemption under the GSA.

The GSA contains the following express preemption provision:

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.

See7 U.S.C. § 87g(a).The parties agree that one "characteristic" of corn under this provision is whether it contains the trait found in Viptera.Syngenta therefore concedes that movants"cannot be subject to a state tort law duty to inspect for and segregate Viptera corn," and that the GSA"precludes the imposition of any state tort law duty that would require [movants] to inspect, test, or describe corn according to the 'characteristic' of whether or not it contains Viptera," which "necessarily precludes any duty on anyone to segregate or channel Viptera."³Thus, Syngenta concedes that its claims based on movants' handling of corn are preempted.⁴

Syngenta argues, however, that its claims against movants survive in part because it has also alleged that movants breached a duty of reasonable care by selling andshipping to China corn known to contain Viptera.Thus, the issue for the Court is whether the GSA's preemption provision also reaches Syngenta's shipping claims.

In determining the scope of a preemption provision, "[t]he question, at bottom, is one of statutory intent," and a court must "begin with the language employed by Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose."SeeMorales v. Trans World Airlines, Inc., 504 U.S. 374, 383(1992)(internal quotation omitted).In relevant part, the GSA's preemption provision states that "[n]o State . . . may require the inspection or description in accordance with any standards of . . . quality, condition, or other characteristics of grain as a condition of shipment, or sale, of such grain in interstate or foreign commerce."See7 U.S.C. § 87g(a).⁵The Court concludes that allowing liability for a breach of the duty asserted by Syngenta—a duty not to ship or sell to China corn that is known to include the Viptera trait—would impose, as a condition of shipment or sale, a requirement of inspection or description in accordance with a standard concerning a characteristic of the corn.As movants note, imposing such a duty would require either that the shipped or sold corn be tested for the presence of the Viptera trait or that the corn be effectively described as Viptera-free.The only alternative would be a complete ban on the sale of any corn to China because of the possibility of the presence of the Viptera trait, and such a ban imposed by state law would run afoul of Congress's unmistakable intent to reserveto the federal government any such regulation on interstate or foreign commerce in grain based on characteristics of the grain.Thus, under the plain language of Section 87g(a), Syngenta's claims are preempted.

This conclusion is further supported by a reading of the entire GSA, which contains numerous provisions demonstrating Congress's intent to regulate foreign commerce in grain.The Act begins with Congress's declaration that "[g]rain is an essential source of the world's total supply of human food and animal feed and is merchandised in interstate and foreign commerce," and that the Act's regulation of grain and transactions in grain "is necessary to prevent or eliminate burdens on such [interstate or foreign] commerce and to regulate effectively such commerce."Seeid.§ 74(a).Various substantive provisions in the GSA implement...