Venture Commc'ns Coop., Inc. v. James Valley Coop. Tel. Co., 3:20-CV-03011-RAL

• Decision Date: 18 March 2021
• Docket Number: 3:20-CV-03011-RAL
• Parties: VENTURE COMMUNICATIONS COOPERATIVE, INC., Plaintiff, v. JAMES VALLEY COOPERATIVE TELEPHONE COMPANY, and NORTHERN VALLEY COMMUNICATIONS, LLC, Defendants.
• Court: U.S. District Court — District of South Dakota

VENTURE COMMUNICATIONS COOPERATIVE, INC., Plaintiff, v. JAMES VALLEY COOPERATIVE TELEPHONE COMPANY,and NORTHERN VALLEY COMMUNICATIONS, LLC, Defendants.

3:20-CV-03011-RAL

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA CENTRAL DIVISION

March 18, 2021

ORDER ON PENDING MOTIONS

There are four pending motions in this case: (1) Defendants' Motion to Compel, Doc. 33, seeking to compel better responses from Plaintiff to three requests for production and one request for admission; (2) Defendants' Motion to Compel Answers to Interrogatories, Doc. 34, seeking to compel better answers from Plaintiff to three interrogatories; (3) Plaintiff's Motion for an Order Compelling Production of Documents, Doc. 35; and (4) Plaintiff's Motion for Leave to File Amended Complaint, Doc. 38. Plaintiff opposes Defendants' Motions to Compel, Docs. 37, 40, and Defendants oppose Plaintiff's Motion to Compel and motion to amend its complaint, Docs. 41, 43. The motions have been thoroughly briefed with a number of additional documents submitted into the CMECF record. Docs. 33, 33-1-33-6, 34, 34-1-34-3, 35, 36, 36-1-36-4, 37, 37-1-37-2, 38, 38-1, 39, 39-1-39-2, 40, 41, 41-1-41-5, 42, 43, 44, 45, 46. This Court cannot help but wonder how much further along this case might be if the parties had put as much effort into working cooperatively in discovery as they have in staking out positions on the discovery disputes.

I. Motion for Leave to Amend Complaint

This Court first addresses Plaintiff's Motion for Leave to File Amended Complaint, Doc. 38. Plaintiff filed the motion within the time set by the Rule 16 Scheduling Order in this case, Doc. 29 at ¶ 4, and attached the proposed amended complaint highlighting changes as required by Local Rule. D.S.D. Civ. LR 15.1; Doc. 38-1. The proposed amended complaint adds no new party and, despite alleging civil conspiracy in the Fifth Cause of Action and for reasons explained below, no new cause of action. Doc. 38-1. Rather, the proposed amended complaint augments allegations under the heading "The Parties' Longstanding Disputes" to contend that part of Defendants' animus toward Plaintiff stems from Defendants' "access stimulation" or "traffic pumping" practices being opposed by Plaintiff's CEO Randy Houdek in his capacity as "an active member" of the Board of Managers of South Dakota Network, LLC (SDN), a provider network to which both Plaintiff and Defendants belong. Doc. 38-1 at 11-12. Plaintiff's other substantive change in the proposed amended complaint is to allege a Fifth Cause of Action of Civil Conspiracy. Doc. 38-1 at 19-20. The civil conspiracy allegations no doubt are connected to this Court's discussion in its prior Opinion and Order of civil conspiracy as an alternative ground why Defendant James Valley Cooperative Telephone Company (James Valley) should not be dismissed. Doc. 20 at 8-9.

Defendants' Opposition to Plaintiff's Motion for Leave to File Amended Complaint, Doc. 43, argues, with some merit, that a parent company like James Valley cannot form a civil conspiracy with a wholly-owned subsidiary like Northern Valley Communications, LLC, citing cases including Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771-77 (1984) (holding that a parent corporation and its wholly owned subsidiary are incapable of conspiring with one another under § 1 of the Sherman Act); Fogie v. THORN Am., Inc., 190 F.3d 889, 898-99 (8th Cir. 1999) (holding that a parent corporation and its subsidiaries are incapable of committing a RICO conspiracy). Defendants also argue that the added allegations supporting Defendants' alleged motive to act tortiously or otherwise wrongly to undermine Plaintiff is "implausible" and thus leave to amend should be denied.

No South Dakota court has directly addressed whether a parent and subsidiary can form an agreement actionable as a civil conspiracy under South Dakota law. See Berg v. Johnson & Johnson, CIV. 09-4179-KES, 2013 WL 12411821, at *2 (D.S.D. Sept. 12, 2013). Indeed, there is quite a split of authority over whether a parent and subsidiary can form an agreement actionable as a civil conspiracy. Some courts find that a civil conspiracy can arise from the actions of a parent and subsidiary. See Fortis Advisors LLC v. Fishawack Med. Commc'n Ltd., No.: 20cv607-LAB-AGS, 2021 WL 308279, at *4-5 (S.D. Cal. Jan. 29, 2021) (rejecting defendants' argument that Copperweld Corp. forecloses an actionable civil conspiracy between a parent corporation and its subsidiary under California law); Stryker Corp. v. Ridgeway, Nos. 1:13-CV-1066, 1:14-CV-889, 2015 WL 5308038, at *16-17 (W.D. Mich. Sept. 10, 2015) (holding that a parent corporation and its subsidiary can commit a civil conspiracy under Michigan law because such entities are separate and distinct from one another); All Energy Corp. v. Energetix, LLC, 985 F. Supp. 2d 974, 995 (S.D. Iowa 2012) (finding no Iowa cases adopting the intracorporate immunity doctrine and declining to apply the doctrine on a motion to dismiss for failure to state a claim); ASARCO LLC v. Am. Min. Corp., 382 B.R. 49, 76-80 (S.D. Tex. 2007) (predicting that a civil conspiracy between a parent corporation and its wholly owned subsidiary is actionable in at least some circumstances under Arizona law based on 50-state survey conducted by the court); TRC Self Storage Dev., LLC v. Public Storage, Inc., No. 07-cv-00351-WDM-MEH, 2007 WL 2936322, at *3 (D. Colo. Oct. 9, 2007) (holding that plaintiff alleged enough facts to state a claim for civilconspiracy between parent corporation and its subsidiary under Colorado law); Nilavar v. Mercy Health Sys. Western Ohio, 142 F. Supp. 2d 859, 888-89 (S.D. Ohio 2000) (rejecting the defendants' argument that a parent corporation and its subsidiary cannot commit a civil conspiracy under Ohio law); SEECO, Inc. v. Hales, 22 S.W.3d 157, 173 (Ark. 2000) (declining to apply intracorporate immunity doctrine beyond the antitrust realm); Metro. Life Ins. Co. v. La Mansion Hotels & Resorts, Ltd., 762 S.W.2d 646, 651-52 (Tex. App. 1988) (holding that a parent corporation and its wholly owned subsidiary are separate legal entities, and therefore, can commit a civil conspiracy under Texas law).

Some courts hold that a parent and subsidiary cannot form a civil conspiracy. See St. Jude Med., S.C., Inc. v. Biosense, Webster, Inc., 994 F. Supp. 2d 1033, 1052 (D. Minn. 2014) (finding that a parent corporation and its subsidiary are incapable of committing a civil conspiracy under Minnesota law (citing Palm Beach Polo, Inc. v. Dickinson Fin. Corp., 221 F.3d 1343 (8th Cir. 2000) (unpublished))); Clay v. Consol Pa. Coal Co., LLC, 955 F. Supp. 2d 588, 599-601 (N.D. W. Va. 2013) (holding that parent corporation and its subsidiary are not separate entities but rather acted as "one consciousness," and therefore, plaintiff cannot state a claim for civil conspiracy under West Virginia law); Alonso v. McAllister Towing of Charleston, Inc., 595 F. Supp. 2d 645, 652-53 (D.S.C. 2009) (holding that South Carolina does not recognize a claim for civil conspiracy between a parent corporation and its wholly owned subsidiary because such entities are not separate actors); Norkol/Fibercore, Inc. v. Gubb, 279 F. Supp. 2d 993, 1000 (E.D. Wis. 2003) (noting that a parent corporation and its wholly owned subsidiary cannot conspire with one another under Wisconsin law); Siegel Transfer, Inc. v. Carrier Exp., Inc., 856 F. Supp. 990, 1009 (E. D. Pa. 1994) (holding that it is well established under Pennsylvania law that a parent corporation and its subsidiaries cannot commit a civil conspiracy); Okusami v. Psych. Inst. of Washington, Inc.,959 F.2d 1062, 1066-67 (D.C. Cir. 1992) (affirming dismissal of civil conspiracy claim between a subsidiary, its officer, and two parent corporations because such parties operate as a single entity); Pizza Mgmt., Inc. v. Pizza Hut, Inc., 737 F. Supp. 1154, 1165-66 (D. Kan. 1990) (holding that a civil conspiracy between a parent corporation and its subsidiary is not actionable under Kansas law); Chrysler Credit Corp. v. Rebhan, 311 S.E.2d 606, 609 (N.C. Ct. App. 1984) (holding that a parent corporation and its wholly owned subsidiary cannot commit a civil conspiracy under Michigan law).

Nothing in this Court's Opinion and Order Granting in Part and Denying in Part Defendants' Motion to Dismiss, Doc. 20, should be read as predicting how the Supreme Court of South Dakota would rule on whether a parent and subsidiary can form a civil conspiracy. The parties had not briefed that issue, and this Court simply mentioned civil conspiracy as an alternative ground to deny dismissal of James Valley as a party defendant. South Dakota law, however, makes clear that civil conspiracy "is not an independent cause of action, but is sustainable only after the underlying tort claim has been established." Sancom, Inc. v. Qwest Commc'ns Corp., 643 F. Supp. 2d 1117, 1132 (D.S.D. 2009); see also Kirlin v. Halverson, 758 N.W.2d 436, 455 (S.D. 2008) (civil conspiracy not an "independent cause of action" but an "agreement to commit a tort").

Rule 15(a) of the Federal Rules of Civil Procedure requires at this stage of the case the opposing party's written consent or leave of court for Plaintiff to amend the complaint. Under Rule 15(a), this Court "should freely give leave when justice so requires." Fed. R. Civ. P. 15(a)(2). Factors to consider in deciding whether to grant leave to amend a complaint include whether the motion was filed in bad faith or with dilatory motive, whether there was undue delay in filing the motion, whether leave to amend would be unduly prejudicial to any opposing party, and whether the proposed amendment would be futile. Bell v. Allstate Life Ins. Co., 160 F.3d 452, 454 (8thCir. 1998). The proposed amended complaint was not filed in bad faith, or with dilatory motive or undue delay, nor is there any undue prejudice to Defendants by allowing the proposed amendment of the complaint. Defendants instead argue that the...