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Agrolipetsk, LLC v. Seeds

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

September 25, 2018

AGROLIPETSK, LLC, Plaintiff,
v.
MYCOGEN SEEDS, et al. Defendants.

          ORDER ON PLAINTIFF'S OBJECTION TO MAGISTRATE JUDGE'S DENIAL OF PLAINTIFF'S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT (DKT. 47)

          SARAH EVANS BARKER, JUDGE

         Plaintiff Agrolipetsk (“Agrolipetsk”), a Russian limited liability company, sued Defendants Dow AgroSciences (“Dow”), a Delaware limited liability company, and Agrigenetics (doing business as “Mycogen Seeds”), a Delaware corporation, both having their principal places of business in Indiana, in connection with the sale by Defendants to Agrolipetsk of an allegedly defective variety of hybrid sunflower seed, “Variety 341.” Dkt. 12. Following dismissal without prejudice of its first amended complaint on Defendants' motion for judgment on the pleadings, see Fed. R. Civ. P. 12(c), Agrolipetsk moved for leave to file a second amended complaint. Dkt. 36. See Fed. R. Civ. P. 15(a)(2).

         We referred the motion to Magistrate Judge Matthew P. Brookman, who found that Agrolipetsk's proposed complaint (“Proposed Complaint” or “PC”) would not survive a motion to dismiss for failure to state a claim on which relief could be granted, see Fed. R. Civ. P. 12(b)(6). He therefore denied the motion as futile. Dkt. 46 (“Entry”). Agrolipetsk has now appealed from that ruling by timely objection. Dkt. 47. See Fed. R. Civ. P. 72.

         For the reasons explained below, Agrolipetsk's objections are sustained in part and overruled in part.

         Background

          The factual background of this case is fully set out in our order on Defendants' motion for judgment on the pleadings, Dkt. 35, and in Judge Brookman's ruling. We will address particulars as necessary below.

         Standard of Review

         A magistrate judge's ruling on nondispositive matters will not be set aside by the district judge unless clearly erroneous or contrary to law. Fed.R.Civ.P. 72(a). A magistrate judge's report and recommendation on a dispositive motion is reviewed by the district judge de novo. Fed.R.Civ.P. 72(b)(3).

         Dow contends that the Seventh Circuit has held that a motion for leave to file an amended complaint is a nondispositive matter for these purposes, and the magistrate judge's ruling on such motion is therefore entitled to deferential review under Rule 72(a), even if denial will end the case as a practical matter for want of live claims to prosecute. Br. Opp. 6-7 (citing Hall v. Norfolk S. Ry. Co., 469 F.3d 590, 596 (7th Cir. 2006); Elder Care Providers of Ind., Inc. v. Home Instead, Inc., No. 1:14-cv-01894-SEB-MJD, 2017 WL 4250107, at *1 (S.D. Ind. Sept. 26, 2017) (Barker, J)).

         We are unaware of such a holding. Hall affirmed a magistrate judge's denial of a motion for leave to file an amended complaint which had been reviewed by the district judge under Rule 72(a). The court of appeals pointed out that denial “did not terminate [plaintiff's] existing lawsuit against [defendant], it merely prevented him from adding [a second defendant].” 469 F.3d at 595. Similarly, in Elder Care, we applied Hall to a case where denial did not end the lawsuit; it merely prevented plaintiff from adding a new claim. 2017 WL 4250107, at *1. In Schur v. L.A. Weight Loss Centers, Inc., the Seventh Circuit left open “whether a motion to join a nondiverse defendant whose joinder would destroy the court's diversity jurisdiction is ‘dispositive[.]'” 577 F.3d 752, 760 n.6 (7th Cir. 2009). The question appears to be open still. See Clymer v. Wal-Mart Stores, Inc., No. 1:15-cv-00300-JTM-SLC, 2016 WL 3580487, at *1 n.1 (N.D. Ind. May 20, 2016). In other words, it is far from settled that a formal, rather than a functional, approach governs the choice between Rule 72(a) and Rule 72(b).

         That choice will not make a difference in this case, though, and so we need not pursue it to conclusion. Assuming Rule 72(a) supplies the correct standard, “[r]egarding legal issues, the language ‘contrary to law' appears to invite plenary review.” 12 Charles Alan Wright & Arthur R. Miller et al., Federal Practice and Procedure § 3069 (3d ed. 2014). “‘[F]or questions of law there is no practical difference between review under Rule 72(a)'s contrary to law standard and a de novo standard.'” CertusView Techs., LLC v. S & N Locating Servs., LLC, 107 F.Supp.3d 500, 504 (E.D. Va. 2015) (quoting Bruce v. Hartford, 21 F.Supp.3d 590, 594 (E.D. Va. 2014)). See also Elder Care, 2017 WL 4250107, at *2 (quoting Pain Ctr. of SE Ind., LLC v. Origin Healthcare Sols. LLC, No. 1:13-CV-00133-RLY-DKL, 2014 WL 958464, at *3 (S.D. Ind. Mar. 12, 2014)) (“An order is contrary to law when it ‘fails to apply or misapplies relevant statutes, case law, or rules of procedure.'” (emphasis added)). And Judge Brookman's ruling that the Proposed Complaint would not survive a Rule 12(b)(6) motion clearly presents a question of law. E.g., Agnew v. Nat'l Collegiate Athletic Ass'n, 683 F.3d 328, 334 (7th Cir. 2012). We will therefore review it as such.

         Analysis

         The Proposed Complaint contains two counts for breach of warranty under the Uniform Commercial Code as adopted by Indiana (“UCC”), one each against Dow and Mycogen Seeds (Counts I, II), and two counts for incurable deceptive acts under Indiana's Deceptive Consumer Sales Act (“Deceptive Sales Act”), similarly allocated (Counts III, IV). There is also one count for uncured deceptive acts under the Deceptive Sales Act against Dow only (Count V).

         Judge Brookman ruled that Counts III and IV as pleaded would not meet the applicable pleading standards, see Fed. R. Civ. P. 8(a), 9(b), except for one specific theory of liability, the “quiet recall” theory, which Defendants had not challenged and therefore survived the Rule 8 and Rule 9 analyses by default. See Entry 14. Judge Brookman ruled further that Count V would necessarily fail for lack of statutorily required notice. Finally, as to Counts I, II and the “quiet recall” theory of Counts III and IV, Judge Brookman ruled that “this case's nexus with Indiana is too thin to overcome the presumption against extraterritoriality and to satisfy the requirements of due process[, ]” barring the application of Indiana law to the conduct complained of. Entry 17.

         Agrolipetsk objects to Judge Brookman's Rule 8 and Rule 9 analyses in several particulars, and to the entirety of Judge ...


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