Untiedt's Vegetable Farm, Inc. v. S. Impact, LLC, Case No. 20-CV-0597 (PJS/DTS)

• Decision Date: 08 October 2020
• Docket Number: Case No. 20-CV-0597 (PJS/DTS)
• Citation: 493 F.Supp.3d 764
• Parties: UNTIEDT'S VEGETABLE FARM, INC., Plaintiff, v. SOUTHERN IMPACT, LLC, Defendant.
• Court: U.S. District Court — District of Minnesota

493 F.Supp.3d 764

UNTIEDT'S VEGETABLE FARM, INC., Plaintiff,

v.SOUTHERN IMPACT, LLC, Defendant.

Case No. 20-CV-0597 (PJS/DTS)

United States District Court, D. Minnesota.

Signed October 8, 2020

Jessica L. Roe, Shannon N.L. Cooper, and Nicholas M. Beckman, ROE LAW GROUP, PLLC, for plaintiff.

Sarah B. Riskin, Joel O'Malley, and Robert Koneck, NILAN JOHNSON LEWIS PA, for defendant.

ORDER

Patrick J. Schiltz, United States District Judge

Defendant Southern Impact, LLC is in the business of helping employers to obtain governmental authorization to employ seasonal workers from outside of the United States. Untiedt's Vegetable Farm, LLC ("Untiedt's") retained Southern Impact to prepare and file its applications for foreign labor certifications for the 2014, 2015, and 2016 growing seasons.¹ After the United States Department of Labor ("DOL") found that Untiedt's had violated federal regulations in connection with its foreign-labor program, Untiedt's filed this action against Southern Impact, asserting claims of negligent misrepresentation and breach of contract. Untiedt's also seeks a declaration that the exculpatory clauses in its contracts with Southern Impact are unenforceable.

This matter is before the Court on Southern Impact's motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). At the conclusion of the hearing on the motion, the Court dismissed Untiedt's negligent-misrepresentation claim from the bench. Negligent misrepresentation must be pleaded with particularity under Fed. R. Civ. P. 9(b). See Trooien v. Mansour , 608 F.3d 1020, 1028 (8th Cir. 2010). Rule 9(b) "requires that a pleading include such matters as the time, place and contents of false representations." Id. (citation and quotation marks omitted). Untiedt's negligent-misrepresentation claim was dismissed because it did not come close to meeting the Rule 9(b) standard.

The Court did not, however, dismiss Untiedt's breach-of-contract claims. Southern Impact had argued that those claims were barred by the contracts’ exculpatory clauses. But whether an exculpatory clause is enforceable is a fact-based question that usually cannot be resolved on a Rule 12 motion. See Schlobohm v. Spa Petite, Inc. , 326 N.W.2d 920, 923–26 (Minn. 1982) (explaining that whether an exculpatory clause is enforceable requires consideration of such fact-based questions as whether there was a disparity in bargaining power and whether the services were necessary and unavailable elsewhere). This case is no exception.

Finally, Southern Impact argued that one of Untiedt's breach-of-contract claims—the claim for breach of the contract that related to the 2014 growing season (the "2014 contract")—is barred by the statute of limitations. The Court took that matter under advisement and now issues its decision.

I. BACKGROUND

Untiedt's and Southern Impact entered into separate contracts related to the foreign labor certification process for the 2014, 2015, and 2016 growing seasons. Compl. ¶¶ 28–31. Pursuant to each contract, Southern Impact prepared and filed the paperwork necessary for Untiedt's to obtain authorization to employ foreign workers through the H-2A program. See Compl. ¶¶ 31–33, 46. The H-2A program is authorized by the Immigration Reform and Control Act of 1986, and allows agricultural employers to bring foreign workers to the United States to perform temporary or seasonal work. Compl. ¶¶ 10–11. According to the complaint, the first step in the H-2A process is to prepare and submit an agricultural job order, also known as an ETA Form 790. Compl. ¶ 16. The ETA Form 790 is submitted to the relevant state workforce agency and to DOL. Compl. ¶¶ 16–17.

As relevant to this litigation, Southern Impact submitted three ETA Form 790s on Untiedt's behalf—one in 2013 to obtain foreign labor certification for the 2014 H-2A worker period; one in 2014 to cover the 2015 period; and one in 2015 to cover the 2016 period. See Compl. ¶ 46. In each instance, Southern Impact failed to disclose on the ETA Form 790 that Untiedt's intended to deduct $2.75 per day from each H-2A laborer's paycheck to cover housekeeping and maintenance expenses. Compl. ¶¶ 47–50. Untiedt's alleges that Southern Impact was aware that Untiedt's took this deduction. Compl. ¶ 49.

DOL opened an investigation into Untiedt's labor practices in August 2016. Compl. ¶ 51. During the course of that investigation, DOL "informed Untiedt's that the failure to include the deductions in Untiedt's H-2A documentation resulted in a violation of 20 C.F.R. § 655.122(p)." Compl. ¶ 52. Untiedt's argues that Southern Impact breached its contractual obligations by failing to disclose the deductions on the ETA Form 790s that it filed on Untiedt's behalf. Compl. ¶ 70.

Southern Impact now moves to dismiss Untiedt's claim for breach of the 2014 contract, arguing that the claim is time barred.

II. ANALYSIS

A. Standard of Review

A court may dismiss a claim as untimely if it is clear from the face of the complaint that the claim is barred by the statute of limitations. See Joyce v. Armstrong Teasdale, LLP , 635 F.3d 364, 367 (8th Cir. 2011). "[T]he face of the complaint ... include[s] public records and materials embraced by the complaint." Noble Sys. Corp. v. Alorica Cent., LLC , 543 F.3d 978, 983 (8th Cir. 2008). To determine whether a "complaint is self-defeating based on a statute of limitations," a court must identify the relevant limitations period, the date the action was commenced, and the date the plaintiff's claims accrued. Int'l Decision Sys., Inc. v. JDR Sols., Inc. , No. 18-CV-2951(ECT/DTS), 2019 WL 2009249, at *3 (D. Minn. May 7, 2019). "As with any motion under Rule 12(b)(6), all factual allegations in the complaint must be accepted as true, and all reasonable inferences drawn in [the plaintiff's] favor." Id. (citing Gorog v. Best Buy Co. , 760 F.3d 787, 792 (8th Cir. 2014) ).

Ordinarily if the parties present, and the Court considers, matters outside of the pleadings, a motion to dismiss must be treated as a motion for summary judgment. Fed. R. Civ. P. 12(d). But the Court may consider materials that are embraced by the complaint and matters of public record without converting the motion into one for summary judgment. Zean v. Fairview Health Servs. , 858 F.3d 520, 526 (8th Cir. 2017). "[M]aterials embraced by the complaint include documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleadings." Id. (citation and quotation marks omitted).²

B. Statute of Limitations

Under Minnesota law, a breach-of-contract claim is subject to a six-year statute of limitations. See Minn. Stat. § 541.05, subd. 1(1). The limitations period begins to run when the cause of action accrues. Id. § 541.01. This action was commenced on March 14, 2020, when Southern Impact was served with the summons and complaint.³ ECF No. 5. A breach-of-contract claim that accrued prior to March 14, 2014 is therefore time barred. See Int'l Decision Sys. , 2019 WL 2009249, at *4. The parties dispute whether Untiedt's claim for breach of the 2014 contract accrued before March 14, 2014.

Southern Impact argues that a breach-of-contract claim accrues at the time of the alleged breach and that the alleged breach of the 2014 contract occurred when Southern Impact filed the ETA Form 790 without disclosing the housekeeping deduction. Compl. ¶ 70. Documents embraced by the complaint make clear that the ETA Form 790 for the 2014 H-2A worker period was submitted no later than December 2, 2013.⁴ ECF Nos. 22-1; 22-2. If Southern Impact's theory is correct, then, Untiedt's claim for breach of the 2014 contract is untimely, as it accrued before March 14, 2014.

Untiedt's disputes Southern Impact's characterization of Minnesota law. According to Untiedt's, a breach-of-contract claim does not accrue until the claim could survive a motion to dismiss, and damages are a necessary element of a breach-of-contract claim. In Untiedt's view, then, its breach-of-contract claim could not have survived a motion to dismiss—and thus did not accrue—until Untiedt's was damaged by Southern Impact's failure to disclose the housekeeping deduction on the ETA Form 790. Untiedt's contends that the failure to disclose the housekeeping deduction was not itself unlawful; rather, the failure to disclose the housekeeping deduction simply meant that Untiedt's could not later take the deduction.⁵ Therefore, says Untiedt's, it was not harmed by Southern Impact's breach of the 2014 contract until March 14, 2014, when Untiedt's issued its first payroll checks to the newly-arrived H-2A workers and took the housekeeping deduction.⁶

The vast majority of courts that have addressed the issue—including the Eighth Circuit, whose decisions are binding on this Court—agree with Southern Impact that, under Minnesota law, a breach-of-contract action accrues upon breach. See TCF Nat'l Bank v. Mkt. Intel., Inc., 812 F.3d 701, 710 (8th Cir. 2016) ("Under Minnesota law, the cause of action for a contract-based claim ‘accrue[s] at the time of the breach, even though actual damages occur later.’ " (quoting Parkhill v. Minn. Mut. Life Ins. Co. , 174 F. Supp. 2d 951, 956 (D. Minn. 2000) )).⁷

Untiedt's relies on TCF National Bank v. Market Intelligence, Inc. , No. 11-CV-2717 (JRT/AJB), 2012 WL 3031220, at *2 (D. Minn. July 25, 2012), in arguing that a breach-of-contract claim accrues not at the time of the alleged breach, but only when the claim can survive a motion to dismiss. But the language on which Untiedt's relies⁸ pertained to fraud and tort claims, not contract claims, as there were no contract claims pending before the court at the time that it issued its order. Indeed, after the plaintiff amended its complaint to include a claim for breach of contract, the same court explained in a later order that a breach-of-contract claim accrues upon breach, regardless of when damages are incurred. TCF Nat'l. Bank v. Mkt. Intel., Inc. , No. 11-CV-2717 (JRT/LIB), 2014...