Superior Edge, Inc. v. Monsanto Co.

• Decision Date: 06 December 2013
• Docket Number: Civil No. 12-2672 (JRT/FLN)
• Parties: SUPERIOR EDGE, INC., Plaintiff, v. MONSANTO COMPANY and SITE-SPECIFIC TECHNOLOGY DEVELOPMENT GROUP, INC., Defendants.
• Court: U.S. District Court — District of Minnesota

SUPERIOR EDGE, INC., Plaintiff, v. MONSANTO COMPANY and SITE-SPECIFIC TECHNOLOGY DEVELOPMENT GROUP, INC., Defendants.

Civil No. 12-2672 (JRT/FLN)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Dated: December 6, 2013

MEMORANDUM OPINION AND

ORDER DENYING DEFENDANT'S

MOTION TO DISMISS

Walter Joseph Gates, III, WALTER J. GATES, 510 Long Street, Suite 109, Mankato, MN 56001; and William G. Osborne, WILLIAM G. OSBORNE, P.A., 1305 East Robinson Street, Orlando, FL 32801, for plaintiff.

Jennifer S. Kingston and Robert F. Epperson, Jr., DOWD BENNETT LLP, 7733 Forsyth Boulevard, Suite 1900, St. Louis, MO 63105; and Lucas Clayton, FABYANSKE, WESTRA, HART & THOMSON, P.A., 800 LaSalle Avenue, Suite 1900, Minneapolis, MN 55402, for defendants.

This case arises out of a software development and license agreement between Plaintiff Superior Edge, Inc. ("SEI") and Defendant Monsanto Company ("Monsanto"). Pursuant to the agreement, SEI was to develop software for Monsanto to assist in Monsanto's seed sales initiatives. Prior to entering into the agreement with SEI, Monsanto had entered into a separate agreement with Defendant Site-Specific Technology Development Group, Inc. ("SST") to help Monsanto achieve other facets of its seed sales initiatives.

After SEI and Monsanto began working together, conflict ensued regarding the parties' obligations under the agreement. As the relationship between Monsanto and SEI deteriorated, Monsanto and SST allegedly appropriated SEI's initial software developments and undertook further development of that software to incorporate the capabilities initially intended to be created by SEI pursuant to the agreement.

SEI brings, among others, a claim for violation of the Minnesota Unfair and Deceptive Trade Practices Act ("MUDTPA") against SST. The Court previously dismissed this claim because, in seeking damages under the statute, it "fail[ed] to plead a permissible basis for relief." Superior Edge, Inc. v. Monsanto Co., Civ. No. 12-2672, 2013 WL 4050790, at *15 (D. Minn. Aug. 9, 2013). The Court dismissed the claim without prejudice and provided SEI with an opportunity to amend. Id. at *24. SEI filed an amended complaint, and SST again moves to dismiss the MUDTPA claim. Because SEI's claim fails to meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b), the Court will grant SST's motion to dismiss. The Court will, however, provide SEI with a final opportunity to amend its MUDTPA claim against SST to bring it into compliance with the applicable pleading requirements.

BACKGROUND¹

I. ALLEGATIONS AGAINST SST

Monsanto and SEI were parties to a Licensing Agreement, which required SEI to develop certain software for Monsanto's use. (Am. Compl. ¶¶ 21-22, Aug. 27, 2013,Docket No. 62.) In 2010, SEI approached Monsanto with ideas to enhance the quality of Monsanto's sales proposals and provided Monsanto with several prototypes. (Id. ¶ 40.) Monsanto approved of one of the sales proposal prototypes, which eventually became known as IntelliScans. (Id. ¶ 41.) IntelliScans are individualized sales proposal booklets that are given to potential Monsanto customers and contain information about the customer's farm and seed product needs.

Monsanto had a relationship with SST, a software supplier, prior to March 1, 2009, the effective date of the Licensing Agreement. (Id. ¶¶ 21, 33.) During the course of Monsanto and SEI's relationship, SST supplied SEI with data and imagery for use in the development of its software product and for creation of the IntelliScans. (Id. ¶¶ 33, 37, 43.) SST also attended meetings with SEI and Monsanto to resolve various issues involving SEI's software product. (Id. ¶ 44.)

SEI alleges that in April 2011, Monsanto "insisted that SEI disclose its proprietary technology and methods to SST." (Id. ¶ 51.) SEI alleges that "Monsanto had one purpose in giving SST access to SEI's technology: Monsanto desired to aid SST in acquiring and being able to operate SEI's software capable of generating IntelliScans so that Monsanto could avoid paying SEI [substantial fees]." (Id.) SEI did not disclose the technology and methods as requested. (Id.)

SEI alleges that its relationship with Monsanto began to deteriorate, and as it did, Monsanto and SST began to further develop the Intelliscan software product and represented to the public that the software had been created through the joint efforts of solely SST and Monsanto. (Id. ¶ 63.) SEI claims that "[b]y not later than May of 2011,Monsanto had succeeded in transferring to SST sufficient information and technology . . . such that SST could produce complete IntelliScans independent of SEI." (Id. ¶ 65.) SEI alleges that SST "began a public marketing campaign representing that the IntelliScan intellectual property of SEI was in fact the creation and property of SST and Monsanto," (id.), explaining that

[i]n fact, not later than May of 2011, SST had promulgated written materials and had published statements to the general public and the agriculture industry that both the IntelliScan and IntelliSeed software had been created solely as a joint effort of SST and Monsanto. These publications and statements by SST were materially false and constituted a misrepresentation and fake claim that the work product and intellectual property of SEI were the property of SST and Monsanto.

(Id. ¶ 63).

II. AUGUST 9, 2013 DISMISSAL

SEI's original complaint brought five claims against SST, including a claim for violation of MUDTPA. (Compl. ¶¶ 115-119, Oct. 19, 2012, Docket No. 1.) On August 9, 2013, the Court filed an order that, among other things, granted SST's motion to dismiss the MUDTPA claim. See Superior Edge, Inc., 2013 WL 4050790 at *24. The Court concluded that SEI's MUDTPA claim, which sought relief in the form of economic damages suffered by SEI "fail[e]d to plead a permissible basis for relief" because "[u]nder Minnesota law, 'the sole statutory remedy for deceptive trade practices is injunctive relief.'" Id. at *15 (quoting Dennis Simmons, D.D.S., P.A. v. Modern Aero, Inc., 603 N.W.2d 336, 339 (Minn. Ct. App. 1999)). Although the Court dismissed SEI's claim it did so without prejudice and "allow[ed] SEI to file an amended complaint . . . seeking appropriate remedies under MUDTPA." Id. The Court also expressly noted thatany such amendment was required to comply with the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Id.

III. AMENDED COMPLAINT

In compliance with the Court's dismissal order SEI filed an amended MUDTPA claim against SST, seeking injunctive relief. (Am. Compl. ¶ 96.) Incorporating the above factual allegations by reference, Count II of the Amended Complaint goes on to allege the following:

The actions and representations of SST, to wit: that the intellectual property of SEI is in fact its own property and that it, individually and together with Monsanto, created such intellectual property is a violation of said statute. These representations by SST were and are knowingly false and are continuing in nature.

Specifically, the acts by SST that constitute a deceptive trade practice in the course of business include but are not limited to:

A. Passing off the goods or services of another as their own;

B. Causing a likelihood of confusion or of misunderstanding as to the source of goods or services;

C. Disparaging the goods or services of another by false or misleading representations of fact;

D. Engaging in conduct which creates a likelihood of confusion or of misunderstanding by holding out the intellectual property of SEI as its own.

(Id. ¶¶ 94-95.)

ANALYSIS

I. STANDARD OF REVIEW

In reviewing a motion to dismiss brought under Rule 12(b)(6), the Court considers all facts alleged in the complaint as true to determine if the complaint states a "'claim to relief that is plausible on its face.'" See, e.g., Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8^th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility" and therefore must be dismissed. Id. (internal quotation marks omitted). Although the Court accepts the complaint's factual allegations as true, it is "not bound to accept as true a legal conclusion couched as a factual allegation." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). Therefore, to survive a motion to dismiss, a complaint must provide more than "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).

II. MUDTPA CLAIM

SST moves for dismissal on the grounds that SEI's MUDTPA claim fails to satisfy the pleading standards of Federal Rule of Civil Procedure 9(b). Rule 9(b) provides that "[i]n alleging fraud or mistake, a party must state with particularity the circumstancesconstituting fraud or mistake." MUDTPA claims are subject to this heightened pleading standard, and therefore must contain "factual allegations explaining the who, what, when, where and how," of the allegedly deceptive conduct. E-Shops Corp. v. U.S. Bank Nat'l Ass'n, 678 F.3d 659, 665-66 (8^th Cir. 2012); see also Stinson v. U.S. Bank, NA, Civ. No. 12-68, 2012 WL 2529354, at *4 (D. Minn. June 13, 2012).

SEI's pleading fails to meet this standard.² Count II merely recites, verbatim, the text of the statute with regard to acts constituting deceptive trade practices, and does not indicate what actions SEI took to engage in these practices, when or where they were taken, or how the actions constitute violations of the statute. (Compare Am. Compl. ¶¶ 94-95, with Minn. Stat. § 325D.44, subd. 1(1)-(2), (8), (13).); see ...