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Direct Enterprises, Inc. v. Sensient Colors LLC

United States District Court, S.D. Indiana, Indianapolis Division

July 13, 2017




         I. Introduction

         Plaintiffs Direct Enterprises, Inc. and Olympus Seed Treatment Formulator, Inc. commenced this action against Defendant Sensient Colors LLC, asserting claims for breach of contract, breach of warranties, and fraud. Plaintiffs purchased colorants from Sensient to add to agricultural seed treatments Plaintiffs sold to their customers. They allege that some of the colorants were defective and caused damage to the seed treatments. Third-Party Defendant Spectra Colorants, Inc. manufactured the colorants and sold them to Sensient. This cause is before the Court on three motions: (1) Plaintiffs' Motion to Modify the Amendment Deadline to File a Fourth Amended Complaint, (2) Defendant Sensient's Motion for Remedy for Plaintiffs' Loss of Evidence, and (3) Plaintiffs' Motion for Remedies for Spoliation of Evidence. For the reasons that follow, the motions are denied.

         II. Background

         Plaintiffs filed their complaint against Sensient in August 2015. Because they had not sufficiently alleged a jurisdictional basis, the Court ordered them to file an amended complaint. They did so in September 2015. Plaintiffs filed a second amended complaint in December 2015 to address issues identified by Sensient that may have been raised in a motion to dismiss. In June 2016, Sensient filed its amended answer and third-party complaint, alleging that Spectra was obligated to defend and indemnify Sensient against Plaintiffs' claims.

         The Court held a pretrial conference in November 2016 in an effort to assist the parties with a discovery dispute regrading Plaintiff's discovery responses that asked Olympus to identify by lot number, delivery date, and product description, each colorant that it purchased from Sensient that it contends “failed to perform as expected or warranted.” The Court directed Olympus to “conduct further investigations to determine the most specific identifications that it can provide of the defective colorants that it purchased” and supplement its responses by November 18, 2016. [Filing No. 72 at 3.]

         Olympus' supplemental answer to the interrogatory stated:

Around October 2, 2012 Olympus had used its previous orders of red colorant from Sensient and requested future shipments of red pearl colorant. On information and belief, the faulty colorants consist of those that were shipped and delivered after October 2, 2012, consisting of colorants with a pearlescent additive and particularly including a red pearlescent colorant that was manufactured with excessive amounts of ammonia.

[Filing No. 145-1 at 2.]

         In January 2017, Plaintiffs moved for leave to file a third amended complaint, asserting that the proposed amendments would refine the factual basis for their claims and refine their theories of liability. In particular, they sought to plead their contractual relationship with Sensient “with additional specificity, ” add facts pertaining to the fraud claims, add fraud claims, and add claims under the Indiana Products Liability Act. Plaintiffs filed the motion before the January 19, 2017, deadline for motions to amend the pleadings. The Court granted the motion, and in February 2017 Plaintiffs filed their third amended complaint, which is their fourth complaint in this case. Four counts of the third amended complaint allege that “the pearlescent colorants” destroyed Plaintiffs' seed treatments. [Filing No. 95 ¶¶ 91, 96, 107.] The other three counts-claims for breaches of implied warranties and product liability claim-likewise are clear that the alleged culprits were the “pearlescent colorants”. [Id. ¶¶ 113, 120, 127-31.]

         Defendants then filed motions to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Sensient asserts several grounds for dismissing the fraud and constructive fraud claims, including noncompliance with Rule 9. Sensient also seeks dismissal of the claims for breach of contract, breach of express warranty, and product liability. Sensient argues that all claims by Direct Enterprises, Inc. should be dismissed because the complaint does not allege a factual basis for third-party beneficiary status. Spectra seeks dismissal of the products liability claim against it, arguing that the claims are time barred.

         In February and March of this year, Sensient supplemented its discovery responses. In early April, Spectra provided its first supplemental discovery responses.

         On May 5, 2017, Plaintiffs filed their Motion to Modify Amendment Deadline to File a Fourth Amended Complaint, contending that they recently received new evidence about the formulas, ingredients, and manufacturing of the colorant blends involved in this case. They maintain that the evidence directly supports their pending claims.

         The May 19, 2017, discovery deadline has passed. The dispositive motion deadline is August 21, 2017. The case ...

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