Triple S Farms, LLC v. DeLaval Inc.
U.S. District Court, District of Minnesota
Triple S Farms, LLC v. DeLaval Inc.
Trial Court Opinion
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Triple S Farms LLC, No. 22-cv-1924 (KMM/DTS)
Plaintiff,
v.
ORDER
DeLaval Inc.; West Agro, Inc.; DeLaval
International AB; DeLaval Holding BV;
DeLaval Holding AB; and Tetra Laval
International SA;
Defendants.
Triple S Farms, LLC, is a dairy farm located in Belgrade, Minnesota. In 2018, to
upgrade its milking operation, Triple S purchased a robotic DeLaval voluntary milking
system (“VMS”) known as the DeLaval VMS™ V300 (“V300”) and made substantial
changes to its barn to incorporate the new robotic system. In this litigation, Triple S alleges
that Defendants misrepresented the capabilities of the V300, that the robot is defective and
fails to operate as promised, and that these and other issues have cause Triple S to incur
substantial damages. Triple S seeks to represent a class of United States dairy farmers who
purchased, financed, leased, or rented a V300. Defendant DeLaval Inc. (“DLI”) has moved
for partial dismissal of Triple S’s claims for failure to state a claim under Federal Rule of
Civil Procedure 12(b)(6). West Agro, Inc., argues that all the claims against it should be
dismissed pursuant to Rule 12(b)(6). And both DLI and West Agro ask the Court to strike
the class allegations from Triple S’s Complaint. For the reasons that follow, DLI’s motion
to dismiss is granted in part and denied in part, West Agro’s motion to dismiss is denied
without prejudice, and the motion to strike class allegations is denied.
I. BACKGROUND
The Parties
Triple S asserts claims relating to the V300 against six Defendants: West Agro; DLI;
DeLaval Holding BV; DeLaval International AB; DeLaval Holding BV; DeLaval Holding
BV; and Tetra Laval International SA. West Agro does business as DeLaval Manufacturing
and is a wholly owned subsidiary of DLI. DLI is a wholly owned subsidiary of DeLaval
Holding BV, which is a corporation based in the Netherlands. DeLaval International AB,
a Swedish corporation, is also a wholly owned subsidiary of DeLaval Holding BV.
DeLaval Holding AB is a Swedish corporation that is the parent company for DeLaval
Holding BV, and DeLaval Holding AB is a wholly owned subsidiary of Tetra Laval
International SA (“Tetra Leval”). Tetra Leval is a Swiss corporation that is DeLaval
Holding AB’s parent company. [Compl. ¶¶ 12–22, Doc. 1].
According to the Complaint, the Defendants are all closely related to one another
and hold themselves out as a single entity—the DeLaval Group. Together they maintain a
single website which does not distinguish between the companies in the DeLaval Group’s
search for employees. On information and belief, Triple S alleges that TLISA controls the
DeLaval Group, including DLI. TLISA provides operating funds, is required to approve
structural changes to the other entities, maintains the composition of the other Defendants’
boards of directors, must approve of any asset sales, and directs how excess cash is handled.
Defendants allegedly have common management personnel, maintain an integrated sales
organization, use consistent marketing materials regardless of allegedly separate corporate
form, and keep uniform promotional materials and sales and distribution systems. DLI
allegedly performs business functions its corporate parents would ordinarily perform and
is the exclusive marketing and sales agent for VMS robots in the United States. And
Defendants allegedly hold themselves out as a single enterprise. [Compl. ¶¶ 23–37].
The Classic and the V300
“DeLaval” introduced the first automatic milking system in Europe in 1997 and
claims to be the worldwide leader in automated milking equipment. [Compl. ¶ 44]. “The
Classic” VMS robot was completed later and was distributed to dairy farmers in the US.
[Compl. ¶ 45]. Introduction of The Classic led to a class action suit asserting that
“DeLaval” delivered a defectively designed product, with defects in materials and
workmanship, that failed to satisfy express and implied warranties. Bishop, DVM v.
DeLalval Inc., No. 5:19-cv-6129 (W.D. Mo.). In Bishop, the farmer plaintiffs alleged that
The Classic failed to perform the “essential functions” of a VMS robot: “(1) wash with a
sanitizing solution, fore-strip and dry each lactating teat before milking; (2) completely
milk each lactating quarter in a manner that prevents contamination of milk and milking
equipment; and (3) post-spray teat disinfectant on each teat after milking.” [Compl. ¶ 46].
After the Bishop case was filed, Defendants developed and began marketing the
V300, a new milking robot which was introduced to the VMS market in 2018. The
promotional materials for the V300 appear to address concerns with The Classic that had
been raised in Bishop. [Compl. ¶¶ 48–49]. Defendants represented that the V300 robot
would exceed performance of The Classic, including “washing with a germicidal solution,
fore-stripping and drying each lactating teat before milking, such that each lactating teat is
cleaner at the time of milking, producing over 100 pounds of milk per cow per day, lower
preliminary counts, and maintain somatic cell counts under 140,000 cells/mL.” [Compl.
¶ 50]. In other words, safe, clean milk and healthy, happy cows.
False Representations
According to Triple S, these representations “turned out to be false,” and the V300
was plagued by virtually identical defects to those facing The Classic. Like its predecessor,
the V300 lacked the ability to perform the essential functions for an automated milker.
[Compl. ¶ 51]. Defendants published a brochure (the “V300 Brochure”) that allegedly
contains several false representations about what the V300 could do for a dairy farm
[Compl. ¶¶ 54–60], and made similar misrepresentations on the DeLaval YouTube channel
[Compl. ¶¶ 61–66]. Defendants allegedly won FDA approval for the V300 to provide
Grade “A” pasteurized milk by misrepresenting the V300’s capabilities. [Compl. ¶¶ 67–
72].
Triple S alleges that the V300 is defective in its design, materials, and workmanship,
and as a result it is incapable of performing the essential functions of a VMS. [Compl.
¶ 73]. The V300 cannot wash, fore-strip, and dry each teat as represented by Defendants
and therefore cannot produce Grade “A” pasteurized milk, and it does not milk each cow
as completely as promised. Its flaws allegedly lead to contamination of the milk supply and
negatively affect the cows’ health. [Compl. ¶ 75]. Defendants could have corrected the
deficiencies through additional use of sensors and software programming, but they did not.
[Compl. ¶ 76]. Among the problems the V300 suffers from are: (a) a defective guidance
system; (b) a defective teat cleaning system; (c) a defective detachment process; (d) a
defective process by which milking cups are attached or re-attached after falling onto the
milking platform floor; (e) a deficient and improper sequence in which the cleaning cup
and milking cups are applied; and (f) a defective pre- and post-spray teat disinfectant
application procedure. [Compl. ¶ 83].
Defendants’ Knowledge of the Defects
According to the Complaint, Defendants knew about these issues, but rather than
delaying the launch of the V300, the Defendants each participated in a deceptive marketing
scheme intended to defraud U.S. dairy farmers. [Compl. ¶ 86]. Defendants either knew of
the problems with the V300 from their own testing, or would have known of them had they
done adequate and proper testing. [Compl. ¶ 89]. Defendants were required to provide data
to the FDA and either knew and concealed that the data showed the V300 could not meet
Grade “A” standards, or misrepresented favorable data to the FDA. [Compl. ¶ 90]. In part,
Triple S contends that Defendants knew of the problems because they had the same
problems with The Classic robot, and when Defendants started selling the V300 they
received feedback notifying them that the V300 was similarly defective. [Compl. ¶¶ 91–
93]. Because Defendants have the sole discretion with respect to repair or replacement
under the V300 limited warranty issued by DLI, Defendants also knew of the claimed
defects experienced by dairy farmers. [Compl. ¶ 96].
Inducement to Purchase V300 Machines
Triple S alleges it was fraudulently induced into purchasing four V300 robots and
other related equipment in July of 2018. [Compl. ¶ 102]. Triple S spent $3,000,000 on the
construction and retrofitting of a new barn for the four robots. These investments were
made based on Defendants’ advice, plans, specifications, and suggestions. [Compl. ¶ 103].
Prior to 2016, Nick Kunkle, a sales agent for Defendants, convinced Triple S to purchase
four of The Classic robots, but Mr. Kunkle allegedly failed to disclose that the V300 was
coming out soon. [Compl. ¶ 104]. When Triple S discovered that an updated system would
be released, Mr. Kunkel convinced Triple S to buy the V300 instead of The Classic
machines. This resulted in an increased cost of $106,000 over the original purchase price.
[Compl. ¶ 105]. Kunkel marketed the V300 to Triple S, representing that its system had
many benefits and generally parroting the overhyped representations in the V300 Brochure,
the videos on the DeLaval YouTube channel, and the statements in the material submitted
by the Defendants to the FDA for Grade “A” milk approval. [Compl. ¶ 106–08]. Triple S
relied on Mr. Kunkel’s representations about the V300s’ capabilities. Neither Defendants
nor their agents disclosed to Triple S that the V300 was not capable of performing the
essential functions of milking a cow, did not operate according to industry standards, and
did not comply with the representations in the protocol prepared for the FDA. [Compl.
¶¶ 109–10].
Because of the alleged defects with the V300, Triple S suffered impaired cow health
and reduced milk quality and quantity. [Compl. ¶ 113].
The Sales Agreement
Triple S bought its V300s pursuant to a standard form sales agreement that was not
subject to negotiation. [Compl. ¶ 119]. The four V300s were delivered to Triple S on March
18, 2019. [Compl. ¶ 112]. However, the Sales Agreement reflects that Triple S bought the
V300 robots from an “independent dealer” named Professional Dairy Systems, not from
one of the named Defendants. [ECF No. 14-1].
DLI provided an express warranty that the V300 and related equipment were “free
from defects in material and workmanship” for a period of one year from the date of
installation, and that the services from DLI during the warranty period would be provided
in a “good and workmanlike manner.” [Compl. ¶ 120]. As part of the warranty, DLI agreed
to repair or replace any flawed equipment, parts, or service in a reasonable period of time
if it received written notice within 30 days after a problem was discovered. [Compl. ¶ 121].
This limited remedy further provides
If DeLaval determines that repair or replacement of the item of
Equipment is not an effective remedy, DeLaval shall refund to
the Equipment Purchaser the purchase price (excluding the
cost of installation labor) of the defective item of Equipment
and any other Equipment which cannot be used in the absence
of the defective item of equipment.
[Compl. ¶ 122]. The Sales Agreement also contains a waiver provision indicating that the
owner/purchaser of the equipment “waives any and all other claims and causes of action
against DeLaval” and that the listed remedies are the exclusive remedies for breach of the
limited warranty. [Compl. ¶ 123].
Triple S notified Defendants on several occasions, in writing and within 30 days of
discovering a defect, that the V300 robots were having problems and repeatedly asked
DeLaval to repair or replace the defective V300s. [Compl. ¶ 124]. However, Defendants
failed to repair or replace the V300s and did not refund Triple S’s purchase price. [Compl.
¶ 125]. Triple S asserts that the limited remedy of repair or replacement is of no value to
Triple S because the V300 robot is defective. and Defendants will not or cannot provide a
non-defective product. [Compl. ¶ 129]. Triple S also alleges that the refund provision
cannot make whole the farmers who purchased the V300 machines because they had to
pay for non-compensable installation costs, and they had to retrofit or construct new barns
for the machines; the defects could not have been discovered by the farms prior to
purchasing the machines; refunds would not cover the cost of removing the machines; and
Defendants were either unable or unwilling to provide Triple S with an appropriate refund.
[Compl. ¶¶ 133–37].
Class Action Allegations
Triple S brings this action on behalf of itself and other similarly situated individuals.
It purports to represent a nationwide class, a direct purchaser subclass, and a Minnesota
subclass, which are defined in the Complaint as follows:
Nationwide Class: All Persons who purchased, financed,
leased, and/or rented a V300 (the “Nationwide Class” or
“Class”).
Direct Purchaser Subclass: All Persons who purchased,
financed, leased, and/or rented a V300 pursuant to a DeLaval
Sales Agreement (“Direct Purchaser Subclass”).
Minnesota Subclass: All Persons who are residents of
Minnesota and who purchased, financed, leased, and/or rented
a V300 (the “Minnesota Subclass”).
[Compl. ¶ 146]. Triple S also alleges that all of the requirements for maintaining a class
action are satisfied. [Compl. ¶¶ 147–54].
Causes of Action
Plaintiffs allege ten separate “causes of action” in their Complaint, with each count
asserted against all Defendants. The First Cause of Action (“Count 1”) is a claim for breach
of contract. [Compl. ¶¶ 158–67]. The essence of this claim is that Defendants promised to
provide equipment that was free from defects in materials and workmanship, but breached
that promise in providing defective equipment and in failing install the V300s in a good
and workmanlike manner. Triple S also asserts that Defendants breached the implied
covenant of good faith and fair dealing in administering the contract.
The Second Cause of Action (“Count 2”) is for breach of implied warranty of
merchantability. [Compl. ¶¶ 168–73]. This claim asserts that Defendants qualify as a
merchant that sells goods and collectively hold themselves out has having knowledge of
automated, robotic milking systems, creating an implied warranty of merchantability.
The Third Cause of Action (“Count 3”) is for breach of implied warranty of fitness
for a particular purpose. [Compl. ¶¶ 174–79]. Count 3 asserts that Triple S specified to
Defendants what it needed the V300 to be able to do and relied on Defendants’ expertise
in VMS machines when it purchased the V300s.
The Fourth Cause of Action (“Count 4”) is for breach of express warranty. [Compl.
¶¶ 180–87]. This claim alleges that Defendants gave an express warranty that the V300
was free from defects in material and workmanship.
The Fifth Cause of Action (“Count 5”) is one of strict products liability. [Compl.
¶¶ 188–98]. Triple S alleges that Defendants failed to properly design and manufacture the
V300.
The Sixth Cause of Action (“Count 6”) is for negligence. [Compl. ¶¶ 199–203].
According Count 6, the Defendants’ agents were allegedly careless in their dealings with
Triple S, and it was foreseeable that their representations would cause class members harm
to their herds and to themselves.
The Seventh Cause of Action (“Count 7”) is for fraudulent inducement. [Compl.
¶¶ 204–18]. The gist of Count 7 is that through their knowingly false statements about the
capabilities of the V300, Defendants induced Triple S to purchase and install the V300
system.
The Eighth Cause of Action (“Count 8”) is for negligent misrepresentation. [Compl.
¶¶ 219–24]. This cause of action alleges that Triple S justifiably relied negligently made
false representations in agreeing to purchase and install the V300 machines, and was
harmed as a result.
The Ninth Cause of Action (“Count 9”) is for fraudulent concealment or omission.
[Compl. ¶¶ 225–31]. Count 9 asserts that Defendants had superior knowledge regarding
the defects in their products, had a duty to disclose those details as a result, but failed to do
so, turning its concealment of that information into a fraud.
Finally, the Tenth Cause of Action (“Count 10”) is for a violation of the Minnesota
Deceptive Trade Practices Act (“DTPA”), Minn. Stat. § 325D.43. [Compl. ¶¶ 232–37].
The DTPA claim alleges that Defendants engaged in a deceptive trade practice by falsely
representing that their goods or services are of a particular quality/standard/grade. The
Defendants also allegedly made representations that create a likelihood of confusion or
misunderstanding about the quality of the goods being purchased.
The Bishop Case
As noted above, the Complaint references a previous case in which farmers sued
some of the Defendants involved in the marketing and sale of The Classic VMS. That
litigation took place in federal court in the Western District of Missouri and was captioned
Bishop v. DeLaval Inc., No. 5:19-cv-06129 (SRB) (W.D. Mo.). Ultimately, the Bishop
litigation resolved through a class action settlement. Judge Stephen R. Bough entered
Judgment on July 20, 2022. The settlement included a gross sum payment by the
defendants of $55,000,000 to obtain a full release of all claims in the Bishop lawsuit, and
class members (a nationwide class of those who purchased or leased The Classic) could
submit claims to a qualified settlement fund for administration by a claims administrator
to recover their damages.
II. DISCUSSION
A. Motion to Strike Class Allegations
DLI and West Agro ask the Court to strike Triple S’s class allegations from the
Complaint. Motions to strike are governed by Fed. R. Civ. P. 12(f), which provides that
“[t]he court may strike from a pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.” “Striking a party’s pleading is an extreme
and disfavored measure.” Donelson v. Ameriprise Fin. Servs., Inc., 999 F.3d 1080, 1092(8th Cir. 2021) (cleaned up). But granting a motion to strike can sometimes be appropriate, “such as when a portion of the complaint lacks a legal basis.”Id.
This includes granting “a motion to strike class-action allegations prior to the filing of a motion for class-action certification.”Id.
Striking class allegations at the outset of litigation is appropriate under
the following circumstances:
It is “sensible ... to permit class allegations to be stricken at the
pleading stage” if it is “apparent from the pleadings that the
class cannot be certified” because “unsupportable class
allegations bring ‘impertinent’ material into the pleading” and
“permitting such allegations to remain would prejudice the
defendant by requiring the mounting of a defense against
claims that ultimately cannot be sustained.
Id. (quoting 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1383 (3d ed.).
Relying on Donelson, DLI and West Agro point out that a number of U.S.
purchasers of V300s have agreements that include arbitration clauses waiving their rights
to participate in any class action, thereby making those purchasers ineligible class
members. Further, they assert that class allegations should be stricken to the extent they
include putative members with arbitration agreements because those clauses present
individualized issues that preclude class certification. As explained below, the Court finds
Defendants’ reliance on Donelson misplaced.
There is no question that, as a matter of law, a district court is permitted to strike
class allegations prior to a motion for class certification. Doneslon, 999 F.3d at 1092(“We agree . . . that a district court may grant a motion to strike class-action allegations prior to the filing of a motion for class-action certification.”). And although the Donelson court found the district court had abused its discretion in declining to strike the class allegations in that case, Donelson is distinguishable from this case in two important ways. First, the named Donelson plaintiff had an arbitration agreement in his contract with the defendant, and forcing the defendant to litigate the case up to the point of a class-certification motion created a significant risk of unfair prejudice to the defendant. If the defendant in the Donelson scenario were to litigate the matter without seeking to enforce its arbitration rights, it risked waiving those rights entirely.Id.
at 1087–88. In such a case, the Donelson court reasoned that if a defendant must wait until class certification to raise such a challenge, it will have to engage in litigation with “one hand tied behind its back,” or else risk waiving its right to arbitrate.Id. at 1092
.
This concern with unfair prejudice is simply not present here. It is undisputed that
the named plaintiff in this case, Triple S, does not have an agreement with an arbitration
clause. Consequently, Defendants are not faced with the same catch-22 that the Donelson
scenario presents. Failing to strike class allegations at the outset will not create any
untenable risk to the Defendants that then might be viewed as waiving their right to
arbitrate. Nor is this a situation in which the only thing preventing the defendant from
getting to arbitration is the existence of class action allegations. Id. at 1092 (finding the
district court abused its discretion because, in part, “the class allegations were all that stood
in the way of compelling arbitration”). There is nothing in the record to suggest that the
Defendant are prevented by this lawsuit from compelling arbitration where appropriate.
Second, the Donelson court found that on the face of the plaintiff’s complaint, the
class allegations should have been stricken because individual issues would clearly
predominate and make class treatment inappropriate. Id.at 1092–94. But while Donelson found that it was “apparent from the pleadings that [the plaintiff] could not certify a class,”Id. at 1092
, here, the Defendants base their argument that individual issues pertaining to
the arbitration agreements will preclude class certification on material that appears
nowhere in the Complaint or is otherwise embraced by the pleadings. To support their
request to strike the class allegations, DLI and West Agro submit extra-pleading material
showing that at some point in 2020 (likely motivated by the resolution of the Bishop
litigation), Defendants inserted arbitration provisions into form purchase agreements.
[Doc. 16-1, 16-2, 16-3]. But this is not part of Triple S’s claims, and it is undisputed that
Triple S’s agreement itself contains no arbitration clause. Therefore, Defendants have not
shown that Triple S’s claims are inappropriate for class determination in any way
comparable to Donelson.
For these reasons, the motion to strike class allegations is denied. This denial does
not mean that absent class members who have valid arbitration agreements will be among
those included in any class that may ultimately be certified in this case. Nor does it mean
that the Court has determined, at this stage, whether any aspect of Triple S’s claims is
appropriate for class treatment. Those issues are left for another day.
B. Motions to Dismiss
DLI and West Agro have also moved to dismiss failure to state a claim pursuant to
Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, a complaint must
contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570(2007). This standard does not require the inclusion of “detailed factual allegations” in a pleading, but the complaint must contain facts with enough specificity “to raise a right to relief above the speculative level.”Id. at 555
. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are not sufficient. Ashcroft v. Iqbal,556 U.S. 662, 678
(2009) (citing Twombly,550 U.S. at 5573
). In applying this standard, the Court must assume the facts in the complaint to be true and take all reasonable inferences from those facts in the light most favorable to the plaintiff. Morton v. Becker,793 F.2d 185, 187
(8th Cir. 1986); see Waters v. Madson,921 F.3d 725, 734
(8th Cir. 2019). But the Court need not accept as true any wholly conclusory allegations or legal conclusions that the plaintiff draws from the facts pled. Glick v. W. Power Sports, Inc.,944 F.3d 714, 717
(8th Cir. 2019).
1. DLI’s Motion
DLI seeks partial dismissal of the Complaint.1 DLI argues (1) that Count 1 of the
Complaint alleging a breach of contract should be dismissed; (2) that the economic-loss
doctrine bars significant portions of the damages sought in Count 5 (strict products
liability), Count 6 (negligence), and Count 8 (negligent misrepresentation); and (3) that
Triple S cannot obtain damages for a violation of the DTPA in Count 10. As discussed
below, DLI’s motion is granted in part and denied in part.
Breach of Contract
To state a claim for breach of contract under Minnesota law, a plaintiff must allege
that (1) an agreement was formed, (2) the plaintiff performed any conditions precedent to
plaintiff’s demand of performance by the defendant, and (3) the defendant breached the
1 DLI does not argue that the Court should dismiss Count 2 (breach of implied
warranty of merchantability); Count 3 (breach of implied warranty of fitness for a particular
purpose); Count 4 (breach of express warranty); Count 7 (fraudulent inducement); or Count
9 (fraudulent concealment). In addition, DLI argues only that portions of the tort claims in
Counts 5, 6, and 8 should be dismissed.
contract. Lyon Fin. Servs., Inc. v. Ill. Paper & Copier Co., 848 N.W.2d 539, 543 (Minn.
2014).
DLI asserts several bases for dismissal of Triple S’s breach-of-contract claim. First,
DLI argues that the contract claim should be dismissed because DLI is not a party to the
Sales Agreement. Second, DLI asserts that the contract claim should be dismissed as
duplicative of the breach-of-express-warranty claim. Third, to the extent the contract claim
does not overlap with the express-warranty claim, DLI contends that the obligations that
were allegedly breached are not found among the terms of the Sales Agreement and that
the responsibility for fulfilling those obligations lies only with the independent dealer,
Professional Dairy Systems. And fourth, DLI argues that the portion of the contract claim
asserting a breach of the covenant of good faith and fair dealing should be dismissed
because the covenant does not apply to sales contracts like the Sales Agreement.
The Court agrees that the Complaint fails to adequately allege formation of a
purchase agreement between Triple S and DLI. “Under Minnesota law, if a plaintiff cannot
plead the existence of a contract between himself and the defendant, the breach of contract
claim will fail.” Kruger v. Lely N. Am., Inc., 518 F. Supp. 3d 1281, 1287 (D. Minn. 2021).
Triple S alleges it entered a sales agreement with “DeLaval” to purchase the V300s. And
Count 1 of the Complaint is premised on an alleged breach of the “DeLaval Sales
Agreement.” But Defendants have supplied a copy of the Sales Agreement, the authenticity
of which Triple S does not dispute,2 which reveals that DLI is not a party to that contract.
[Doc. 13-1]. The Sales Agreement identifies Triple S Farms as the buyer, indicates that the
four V300 machines and associated materials constitute the equipment being purchased,
and names the independent dealer Professional Dairy Systems as the seller of that
equipment. [Id.]. The Sales Agreement is executed by agents of Triple S and Professional
Dairy Systems, and in a text box bearing the heading “Acceptance of Agreement,” Triple
S acknowledged its understanding that Professional Dairy Systems “is an independent
company and is not an agent of DeLaval Inc.” [Id.]. These facts demonstrate that the
contract for the purchase of the V300s was formed between Triple S and Professional Dairy
Systems, not between Triple S and DLI.
Triple S refers to the “possibility that a DeLaval employee signed the agreement”
on behalf of the Professional Dairy Systems [Doc. 37 at 14], but Triple S has pled no facts
in its Complaint to make that possibility anything more than speculation at this stage. “A
dealer is not a manufacturer’s agent simply by virtue of being a dealer of that
manufacturer’s goods.” Kruger, 518 F. Supp. 3d at 1288 (citing Jurek v. Thompson, 308
Minn. 191,241 N.W.2d 788
, 792 & n.6 (1976)). Nothing in the Complaint suggests that
Professional Dairy Systems is DLI’s agent, and Count 1 fails to state a claim because the
2 The Sales Agreement is properly before the Court for purposes of the motion to
dismiss because it is embraced by the pleadings and its authenticity is not in dispute.
Ahsanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012) (explaining that
documents need not be physically attached to the pleading to be embraced by the
complaint).
first element of a breach-of-contract claim—contract formation—has not been adequately
alleged.
Triple S attempts to distinguish this case from Kruger because the warranty and the
sales agreement at issue there were not part of the same document. [Doc. 37 at 14–15 n.3].
However, the rationale for dismissing the contract claim in Kruger did not depend on the
fact that the warranty was found in a separate document. The Kruger court’s reasoning
hinged, instead, on the fact that the defendant was not a party to the contract and the
plaintiff failed to allege that the dealer of the defendant’s goods was acting as the
defendant’s agent. 518 F. Supp. 3d at 1287–88. Similarly, Triple S’s reliance on the Sales
Agreement’s references to DLI and the indication at the bottom of each page that a “pink”
copy of the agreement was for DLI is misplaced because these details do not indicate that
DLI was a party to the purchase agreement.
Further, given the allegations in the Complaint and the clear import of the Sales
Agreement, the fact that DLI provided a limited warranty, and that warranty appears on the
reverse side of the contract, does not adequately allege that DLI was a party to a sales
contract with Triple S. To the extent Triple S suggests otherwise, its argument largely
conflates the breach-of-contract claim in Count 1 with the breach-of-express-warranty
claim in Count 4. Any obligations under a contract premised on the express warranties
provided by DLI are set forth explicitly in the limited warranty, so the contract and
warranty claims completely overlap. Such duplication supports dismissal of the contract
claim. Kruger, 518 F. Supp. 3d at 1288 (“When a breach of contract claim mirrors a breach
of warranty claim, the former should be dismissed.” (citing Spectro Alloys Corp. v. Fire
Brick Eng’rs Co., 52 F. Supp. 3d 918, 929–30 (D. Minn. 2014)); see also Cleveland v. Whirlpool Corp.,550 F. Supp. 3d 660
, 671 (D. Minn. 2021) (same).
Although Triple S argues that the Court should not dismiss the contract claim as
duplicative of the breach-of-warranty claim because the two claims may entitle Triple S to
recover different damages [Doc. 37 at 14–15 n.3], the Court finds this argument unavailing
as well. This argument does not change the fact that the obligations that would allegedly
breached under a “warranties-as-contracts theory,” Kruger, 518 F. Supp. 3d at 1288, would
be identical to those that that would form the basis of the breach-of-warranty claim. Nor
does it alter the reality that Triple S has failed to plausibly allege that it formed a contract
with DLI in the first place.
Because Triple S has failed to plausibly allege that a contract was formed with DLI,
Count 1 of the Complaint is dismissed, and the Court does not address DLI’s remaining
arguments concerning this claim.
Economic Loss Doctrine
DLI next argues that the Court should dismiss certain requests for damages sought
in connection with Triple S’s strict liability, negligence, and negligent misrepresentation
claims as barred by the economic-loss doctrine. Specifically, DLI argues that the
economic-loss doctrine prohibits Triple S from recovering in tort for the alleged diminution
in value of the V300 machines or the expenses incurred in retrofitting Triple S’s barn.
Alternatively, DLI asks the Court to strike these claims pursuant to Rule 12(f). DLI’s
motion is denied.
Under Minnesota law, “the economic loss doctrine . . . bars recovery under the tort
theories of negligence or strict liability for economic losses that arise out of commercial
transactions, except those involving personal injury or damage to other property” Transp.
Corp. of Am. v. Int’l Bus. Machines Corp., 30 F.3d 953, 956 (8th Cir. 1994); Johnson v. Bobcat Co.,175 F. Supp. 3d 1130, 1144
(D. Minn. 2016) (“The economic loss doctrine generally prohibits a plaintiff ‘from recovering purely economic losses in tort.’” (quoting Thunander v. Uponor, Inc.,887 F.Supp.2d 850, 871
(D. Minn. 2012))).
The economic loss rule has been codified by the Minnesota Legislature at Minn.
Stat. § 604.101. This provision “bars a buyer from bringing a tort claim for a product defect when the harm the buyer suffers is solely to the product.” Kruger, 518 F. Supp. 3d at 1292 (citingMinn. Stat. § 604.101
, subd. 3). The statute allows a buyer to bring a tort claim for “loss of, damage to, or diminution in value of ... other tangible personal property or real property.”Id.
(quoting § 604.101, subd. 3(1)). And the statue allows claims for “reasonable
costs of repair, replacement, rebuilding, and restoration.” Id.
Section 604.101 “‘exhaustively states the economic loss doctrine’ and thus
abrogates the common law version of the doctrine.” Johnson, 175 F. Supp. 3d at 1144–45
(quoting Ptacek v. Earthsoils, Inc., 844 N.W.2d 535, 538–39 (Minn. Ct. App. 2014)). Because the statute abrogates the common law version of the doctrine, its applicability is limited to two circumstances: “product defect tort claims and common law misrepresentation claims.” Id. at 1145. If a claim falls outside the statute’s applicability, it is error to apply the economic loss rule as a bar to a plaintiff’s claim. Ptacek,844 N.W.2d at 539
.
Insofar as DLI seeks dismissal of a portion of the damages sought by Triple S for
its tort claims pursuant to Rule 12(b)(6), its argument is undermined by the conclusion
reached on the same issue in a relatively similar piece of litigation from this District—
Kruger. There, the Court declined to dismiss the plaintiff’s “tort claims to the degree they
seek to recover for damage to the [robotic milking] system and [plaintiff’s] barn,” because
the Court found it could not dismiss “part of a claim” pursuant to Rule 12(b)(6). 518 F.
Supp. 3d at 1292. Here, the Complaint alleges that the V300s’ defects caused damage to
Triple S’s cows, milk product, and its barn, and DLI does not distinguish Kruger or
otherwise argue that its reasoning is inapplicable.
DLI, perhaps recognizing the impact of this portion of Kruger, which it otherwise
heavily relies upon to support other aspects of its motion, suggests that the Court should,
pursuant to Fed. R. Civ. P. 12(f), simply strike certain paragraphs from the Complaint
related to precluded damages. [Doc. 63 at 17–18]. However, striking matter from a
pleading under Rule 12(f) is a discretionary decision. BJC Health Sys. v. Columbia Cas.
Co., 478 F.3d 908, 917(8th Cir. 2007) (“Judges enjoy liberal discretion to strike pleadings under Rule 12(f).”). And courts generally do not grant motions to strike without some showing of prejudice. Braun v. Walz, No. 20-CV-331 (NEB/DTS),2021 WL 871217
, at
*1 (D. Minn. Mar. 9, 2021) (“There is general agreement that motions to strike ‘should be
denied unless the challenged allegations have no possible relation or logical connection to
the subject matter of the controversy and may cause some form of significant prejudice to
one or more of the parties to the action.’” (quoting 5C Charles Alan Wright & Arthur R.
Miller, Fed. Prac. & Proc. § 1382 (3d ed.)). DLI does not identify any significant prejudice
that will result if the paragraphs referencing purportedly unavailable damages are not
stricken from the Complaint. DLI may implicitly argue that it would be unfair for it to have
to defend against damages claims concerning Triple S’s barn when those damages are
unrecoverable, but defendants often have to defend against claims for damages that
ultimately are shown to be beyond a plaintiff’s reach. That run-of-the-mill aspect of a
defense does not constitute significant prejudice that justifies striking all barn-related
damages allegations from the Complaint.
Finally, at least at this stage of the proceedings, the Court cannot conclude that all
barn-related damages are foreclosed by the economic loss doctrine. DLI suggests that any
alleged costs to rebuild and repair Triple S’s barn would be barred under the integrated-
system rule because the V300 is integrated into the completed system of Triple S’s dairy
barn, so that the entire system ceases to be other property for purposes of the economic loss
doctrine. [Doc. 63 at 16 (citing Milwaukee Mut. Ins. Co. v. Deere & Co. Inc., No. Civ. 04-
4905 (MJD/JGL), 2005 WL 2105513, at *3–4 (D. Minn. Aug. 26, 2005))]. DLI argues that
Triple S’s allegation that its barn can only be used with the V300s makes it clear that the
integrated-system rule applies, but the Court disagrees. At this stage of the litigation,
whether the integrated-system rule bars recovery for damages to Triple S’s barn is a fact
issue that is not appropriate for resolution under Rule 12(b)(6). Cf. Milwaukee Mut. Ins.
Co., 2005 2105513, at *4–5 (finding the rule applicable in a case where the tree processor
attached to the excavator “work[ed] as a single unit and were sold as a single unit, in one
transaction, for one undivided price” such that they “were component parts of an integrated
system”).
For these reasons, DLI’s motion to dismiss, or alternatively to strike, the portions of
Counts 5, 6 and 8 seeking damages related to Triple S’s barn, the value of the V300s, or
the costs incurred in removing or replacing the V300s is denied. Whether such damages
are ultimately recoverable for Plaintiff’s tort claims or are barred by the economic loss
doctrine is a question better left for another day.
Deceptive Trade Practices Act
The parties’ dispute regarding the propriety of Triple S’s pleading of Count 10 is
indicative of some of the unnecessarily over-litigated aspects of this proceeding to date. In
the portion of its Complaint reciting its cause of action for violations of the DTPA, Triple
S alleged that DLI’s deceptive trade practices caused it to incur monetary and non-
monetary damages, and that the Plaintiff and Minnesota Subclass seek all monetary and
non-monetary relief allowed by law. [Compl. ¶¶ 236–37]. Because the only remedy for
violations of the DTPA is injunctive relief, Dennis Simmons, D.D.S., P.A. v. Modern Aero,
Inc., 603 N.W.2d 336, 339 (Minn. Ct. App. 1999), DLI asks the Court to dismiss this
portion of Plaintiff’s DTPA claim or strike Paragraphs 236 and 237 from the Complaint.
Triple S responds that in those paragraphs it is not seeking to recover monetary damages,
but seeks only those damages “allowed by law.” Triple S otherwise suggests that these
paragraphs merely show that it has suffered past harm, will suffer ongoing harm in the
future, and that it is entitled to other equitable relief including recission of a contract. [Doc.
37 at 25–28]. And in reply, DLI insists that the paragraphs at issue do, in fact, ask for
monetary damages; repeats its request for dismissal or to have Paragraphs 236 and 237
stricken; and contends that Triple S should not be permitted to use its response to amend
its Complaint to seek rescission of a contract when that relief was not requested in the
pleading. [Doc. 63 at 18–20].
What this frustrating exchange reveals is that the parties do not actually dispute
whether money damages are available for a violation of the DTPA. Because Triple S has
conceded that such relief is not available, it is unnecessary for the Court to redline
Triple S’s Complaint via Rule 12(b)(6) or Rule 12(f) to make that clear. In light of the
parties’ agreement, DLI’s motion is denied as moot on this issue.
2. West Agro’s Motion
West Agro’s motion to dismiss has three distinct parts: (1) a “lumping” challenge;
(2) a joinder in DLI’s arguments; and (3) an argument that Plaintiff’s fraud-based claims
are not alleged with the particularity required by Rule 9(b). The Court first resolves the
lumping and particularity challenges together, and then turns to the joinder argument.
Lumping and Particularity
First, West Agro argues that Triple S fails to state any claim against it because the
Complaint does not identify any specific conduct attributable to West Agro. Instead, West
Agro contends that Triple S lumped all the Defendants together into a single entity that it
defined as “DeLaval” for purposes of all the facts alleged and the causes of action. [Doc. 14
at 3–5]. This characterization of the Complaint is accurate. Triple S is pursuing an “alter-
ego” theory of liability by which all six Defendants operate as a single unit. Triple S
suggests that the integration of the Defendants means that the presumption that they are
separate corporate entities should be disregarded and they should all be parties to the
litigation regardless of which company was nominally taking a specific action. [See Compl.
¶¶ 23–41 (discussing relationship between the Defendants and alleged “alter-ego” theory)].
Relatedly, West Agro argues that the absence of specific allegations related to its
conduct necessarily means that Triple S’s fraudulent inducement and fraudulent
concealment claims fail because they are not pled with the particularity required by Rule
9(b). [Doc. 14 at 5]. As such, West Agro persuasively argues that the Complaint, as pled,
does not inform West Agro of its alleged participation in the fraud. Olin v. Dakota Access,
LLC, 910 F.3d 1072, 1075 (8th Cir. 2018) (stating that “in cases with multiple defendants,
the complaint should inform each defendant of the nature of his alleged participation in the
fraud”) (internal quotations omitted).
At the time the Complaint was filed, Triple S was somewhat hamstrung in asserting
its “alter-ego” theory by the fact that it could not use information about the relationships
between the Defendants learned during the course of discovery in the Bishop litigation.
The barrier to doing so was the presence of a protective order that precluded use of
confidential materials from Bishop in other litigation. Subsequently, Triple S obtained
relief from that protective order and supplemented the record in this case with material that
it believes supports its “alter-ego” theory. [Doc. 150–52].
On February 1, 2023, the Court heard oral argument on additional motions to
dismiss filed by other Defendants, including DeLaval Holding BV (“DLH BV”) and Tetra
Laval. DLH BV and Tetra Laval raised similar lumping arguments in their motions to those
advanced by West Agro in the instant motion, as did other motions filed by DeLaval
Holding AB (“DLH AB”) and DeLaval International AB (“DLI AB”). Meanwhile, when
Triple S supplemented the record, it suggested that if the Court did not believe that the
Complaint as drafted adequately supported the “alter-ego” theories of liability and personal
jurisdiction Triple S was advancing, then Triple S should be given leave to amend.
In a February 1, 2023 bench ruling, the Court determined that Triple S should file
an Amended Complaint to take its best shot at alleging the basis for its “alter-ego” theories
of personal jurisdiction and liability. In addition, the Court denied the motions filed by
DLH BV, Tetra Laval, DLH AB, and DLI AB without prejudice to potentially being refiled
after Triple S files the Amended Complaint. The Court notes that West Agro has identified
that it is situated somewhat differently from those other defendants because it is a
subsidiary of DLI, and not a parent company that could control DLI’s operations. [Doc. 14
at 4]. Regardless of whether West Agro’s status as a subsidiary creates a barrier to the
“alter-ego” theory laid out in the Complaint, the Court concludes that denying West Agro’s
motion without prejudice is likewise appropriate at this stage. As noted, Triple S will be
filing an Amended Complaint, which will become the operative pleading in this litigation.
The Court asked Plaintiff’s counsel to think carefully about which Defendants were truly
the appropriate parties to have in this litigation given what it knows about the Defendants’
operations and relationships, and if Triple S persists in asserting claims against West Agro,
West Agro is free to renew a motion to dismiss aimed at the allegations in the amended
pleading if it believes they are deficient. That is true of both West Agro’s theory that the
Plaintiff improperly lumped the Defendants together and its argument that the fraud-based
claims directed at West Agro were not alleged with sufficient particularity.
Adoption of DLI’s Arguments
In briefing its motion to dismiss, West Agro asserted that DLI’s arguments raised
in its motion to dismiss applied equally to West Agro. Like DLI, West Agro is not a party
to the contract at issue, and for the same reasons the Court found that the Complaint fails
to state a claim against DLI for breach of contract, it finds that the breach-of-contract claim
against West Agro fails as well. Accordingly, the Court will grant West Agro’s motion to
dismiss to the extent it is aimed at the breach-of-contract claim. West Agro presents no
compelling reason why the Court should resolve the other arguments that DLI raised any
differently with respect to West Agro. Therefore, West Agro’s motion adopting DLI’s
other arguments is denied for the same reasons discussed above.
III. ORDER
Consistent with the discussion above, IT IS HEREBY ORDERED THAT:
1. The Motion to Strike Class Allegations [Doc. 12] is DENIED.
2. DeLaval Inc.’s Motion to Dismiss or Alternatively to Strike [Doc. 15] is DENIED
IN PART and GRANTED IN PART.
3. West Agro’s Motion to Dismiss for Failure to State a Claim [Doc. 13] is DENIED
IN PART WITHOUT PREJUDICE and GRANTED IN PART.
Date: March 2, 2023
s/Katherine Menendez
Katherine Menendez
United States District Judge Trial Court Opinion
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Triple S Farms LLC, No. 22-cv-1924 (KMM/DTS)
Plaintiff,
v.
ORDER
DeLaval Inc.; West Agro, Inc.; DeLaval
International AB; DeLaval Holding BV;
DeLaval Holding AB; and Tetra Laval
International SA;
Defendants.
Triple S Farms, LLC, is a dairy farm located in Belgrade, Minnesota. In 2018, to
upgrade its milking operation, Triple S purchased a robotic DeLaval voluntary milking
system (“VMS”) known as the DeLaval VMS™ V300 (“V300”) and made substantial
changes to its barn to incorporate the new robotic system. In this litigation, Triple S alleges
that Defendants misrepresented the capabilities of the V300, that the robot is defective and
fails to operate as promised, and that these and other issues have cause Triple S to incur
substantial damages. Triple S seeks to represent a class of United States dairy farmers who
purchased, financed, leased, or rented a V300. Defendant DeLaval Inc. (“DLI”) has moved
for partial dismissal of Triple S’s claims for failure to state a claim under Federal Rule of
Civil Procedure 12(b)(6). West Agro, Inc., argues that all the claims against it should be
dismissed pursuant to Rule 12(b)(6). And both DLI and West Agro ask the Court to strike
the class allegations from Triple S’s Complaint. For the reasons that follow, DLI’s motion
to dismiss is granted in part and denied in part, West Agro’s motion to dismiss is denied
without prejudice, and the motion to strike class allegations is denied.
I. BACKGROUND
The Parties
Triple S asserts claims relating to the V300 against six Defendants: West Agro; DLI;
DeLaval Holding BV; DeLaval International AB; DeLaval Holding BV; DeLaval Holding
BV; and Tetra Laval International SA. West Agro does business as DeLaval Manufacturing
and is a wholly owned subsidiary of DLI. DLI is a wholly owned subsidiary of DeLaval
Holding BV, which is a corporation based in the Netherlands. DeLaval International AB,
a Swedish corporation, is also a wholly owned subsidiary of DeLaval Holding BV.
DeLaval Holding AB is a Swedish corporation that is the parent company for DeLaval
Holding BV, and DeLaval Holding AB is a wholly owned subsidiary of Tetra Laval
International SA (“Tetra Leval”). Tetra Leval is a Swiss corporation that is DeLaval
Holding AB’s parent company. [Compl. ¶¶ 12–22, Doc. 1].
According to the Complaint, the Defendants are all closely related to one another
and hold themselves out as a single entity—the DeLaval Group. Together they maintain a
single website which does not distinguish between the companies in the DeLaval Group’s
search for employees. On information and belief, Triple S alleges that TLISA controls the
DeLaval Group, including DLI. TLISA provides operating funds, is required to approve
structural changes to the other entities, maintains the composition of the other Defendants’
boards of directors, must approve of any asset sales, and directs how excess cash is handled.
Defendants allegedly have common management personnel, maintain an integrated sales
organization, use consistent marketing materials regardless of allegedly separate corporate
form, and keep uniform promotional materials and sales and distribution systems. DLI
allegedly performs business functions its corporate parents would ordinarily perform and
is the exclusive marketing and sales agent for VMS robots in the United States. And
Defendants allegedly hold themselves out as a single enterprise. [Compl. ¶¶ 23–37].
The Classic and the V300
“DeLaval” introduced the first automatic milking system in Europe in 1997 and
claims to be the worldwide leader in automated milking equipment. [Compl. ¶ 44]. “The
Classic” VMS robot was completed later and was distributed to dairy farmers in the US.
[Compl. ¶ 45]. Introduction of The Classic led to a class action suit asserting that
“DeLaval” delivered a defectively designed product, with defects in materials and
workmanship, that failed to satisfy express and implied warranties. Bishop, DVM v.
DeLalval Inc., No. 5:19-cv-6129 (W.D. Mo.). In Bishop, the farmer plaintiffs alleged that
The Classic failed to perform the “essential functions” of a VMS robot: “(1) wash with a
sanitizing solution, fore-strip and dry each lactating teat before milking; (2) completely
milk each lactating quarter in a manner that prevents contamination of milk and milking
equipment; and (3) post-spray teat disinfectant on each teat after milking.” [Compl. ¶ 46].
After the Bishop case was filed, Defendants developed and began marketing the
V300, a new milking robot which was introduced to the VMS market in 2018. The
promotional materials for the V300 appear to address concerns with The Classic that had
been raised in Bishop. [Compl. ¶¶ 48–49]. Defendants represented that the V300 robot
would exceed performance of The Classic, including “washing with a germicidal solution,
fore-stripping and drying each lactating teat before milking, such that each lactating teat is
cleaner at the time of milking, producing over 100 pounds of milk per cow per day, lower
preliminary counts, and maintain somatic cell counts under 140,000 cells/mL.” [Compl.
¶ 50]. In other words, safe, clean milk and healthy, happy cows.
False Representations
According to Triple S, these representations “turned out to be false,” and the V300
was plagued by virtually identical defects to those facing The Classic. Like its predecessor,
the V300 lacked the ability to perform the essential functions for an automated milker.
[Compl. ¶ 51]. Defendants published a brochure (the “V300 Brochure”) that allegedly
contains several false representations about what the V300 could do for a dairy farm
[Compl. ¶¶ 54–60], and made similar misrepresentations on the DeLaval YouTube channel
[Compl. ¶¶ 61–66]. Defendants allegedly won FDA approval for the V300 to provide
Grade “A” pasteurized milk by misrepresenting the V300’s capabilities. [Compl. ¶¶ 67–
72].
Triple S alleges that the V300 is defective in its design, materials, and workmanship,
and as a result it is incapable of performing the essential functions of a VMS. [Compl.
¶ 73]. The V300 cannot wash, fore-strip, and dry each teat as represented by Defendants
and therefore cannot produce Grade “A” pasteurized milk, and it does not milk each cow
as completely as promised. Its flaws allegedly lead to contamination of the milk supply and
negatively affect the cows’ health. [Compl. ¶ 75]. Defendants could have corrected the
deficiencies through additional use of sensors and software programming, but they did not.
[Compl. ¶ 76]. Among the problems the V300 suffers from are: (a) a defective guidance
system; (b) a defective teat cleaning system; (c) a defective detachment process; (d) a
defective process by which milking cups are attached or re-attached after falling onto the
milking platform floor; (e) a deficient and improper sequence in which the cleaning cup
and milking cups are applied; and (f) a defective pre- and post-spray teat disinfectant
application procedure. [Compl. ¶ 83].
Defendants’ Knowledge of the Defects
According to the Complaint, Defendants knew about these issues, but rather than
delaying the launch of the V300, the Defendants each participated in a deceptive marketing
scheme intended to defraud U.S. dairy farmers. [Compl. ¶ 86]. Defendants either knew of
the problems with the V300 from their own testing, or would have known of them had they
done adequate and proper testing. [Compl. ¶ 89]. Defendants were required to provide data
to the FDA and either knew and concealed that the data showed the V300 could not meet
Grade “A” standards, or misrepresented favorable data to the FDA. [Compl. ¶ 90]. In part,
Triple S contends that Defendants knew of the problems because they had the same
problems with The Classic robot, and when Defendants started selling the V300 they
received feedback notifying them that the V300 was similarly defective. [Compl. ¶¶ 91–
93]. Because Defendants have the sole discretion with respect to repair or replacement
under the V300 limited warranty issued by DLI, Defendants also knew of the claimed
defects experienced by dairy farmers. [Compl. ¶ 96].
Inducement to Purchase V300 Machines
Triple S alleges it was fraudulently induced into purchasing four V300 robots and
other related equipment in July of 2018. [Compl. ¶ 102]. Triple S spent $3,000,000 on the
construction and retrofitting of a new barn for the four robots. These investments were
made based on Defendants’ advice, plans, specifications, and suggestions. [Compl. ¶ 103].
Prior to 2016, Nick Kunkle, a sales agent for Defendants, convinced Triple S to purchase
four of The Classic robots, but Mr. Kunkle allegedly failed to disclose that the V300 was
coming out soon. [Compl. ¶ 104]. When Triple S discovered that an updated system would
be released, Mr. Kunkel convinced Triple S to buy the V300 instead of The Classic
machines. This resulted in an increased cost of $106,000 over the original purchase price.
[Compl. ¶ 105]. Kunkel marketed the V300 to Triple S, representing that its system had
many benefits and generally parroting the overhyped representations in the V300 Brochure,
the videos on the DeLaval YouTube channel, and the statements in the material submitted
by the Defendants to the FDA for Grade “A” milk approval. [Compl. ¶ 106–08]. Triple S
relied on Mr. Kunkel’s representations about the V300s’ capabilities. Neither Defendants
nor their agents disclosed to Triple S that the V300 was not capable of performing the
essential functions of milking a cow, did not operate according to industry standards, and
did not comply with the representations in the protocol prepared for the FDA. [Compl.
¶¶ 109–10].
Because of the alleged defects with the V300, Triple S suffered impaired cow health
and reduced milk quality and quantity. [Compl. ¶ 113].
The Sales Agreement
Triple S bought its V300s pursuant to a standard form sales agreement that was not
subject to negotiation. [Compl. ¶ 119]. The four V300s were delivered to Triple S on March
18, 2019. [Compl. ¶ 112]. However, the Sales Agreement reflects that Triple S bought the
V300 robots from an “independent dealer” named Professional Dairy Systems, not from
one of the named Defendants. [ECF No. 14-1].
DLI provided an express warranty that the V300 and related equipment were “free
from defects in material and workmanship” for a period of one year from the date of
installation, and that the services from DLI during the warranty period would be provided
in a “good and workmanlike manner.” [Compl. ¶ 120]. As part of the warranty, DLI agreed
to repair or replace any flawed equipment, parts, or service in a reasonable period of time
if it received written notice within 30 days after a problem was discovered. [Compl. ¶ 121].
This limited remedy further provides
If DeLaval determines that repair or replacement of the item of
Equipment is not an effective remedy, DeLaval shall refund to
the Equipment Purchaser the purchase price (excluding the
cost of installation labor) of the defective item of Equipment
and any other Equipment which cannot be used in the absence
of the defective item of equipment.
[Compl. ¶ 122]. The Sales Agreement also contains a waiver provision indicating that the
owner/purchaser of the equipment “waives any and all other claims and causes of action
against DeLaval” and that the listed remedies are the exclusive remedies for breach of the
limited warranty. [Compl. ¶ 123].
Triple S notified Defendants on several occasions, in writing and within 30 days of
discovering a defect, that the V300 robots were having problems and repeatedly asked
DeLaval to repair or replace the defective V300s. [Compl. ¶ 124]. However, Defendants
failed to repair or replace the V300s and did not refund Triple S’s purchase price. [Compl.
¶ 125]. Triple S asserts that the limited remedy of repair or replacement is of no value to
Triple S because the V300 robot is defective. and Defendants will not or cannot provide a
non-defective product. [Compl. ¶ 129]. Triple S also alleges that the refund provision
cannot make whole the farmers who purchased the V300 machines because they had to
pay for non-compensable installation costs, and they had to retrofit or construct new barns
for the machines; the defects could not have been discovered by the farms prior to
purchasing the machines; refunds would not cover the cost of removing the machines; and
Defendants were either unable or unwilling to provide Triple S with an appropriate refund.
[Compl. ¶¶ 133–37].
Class Action Allegations
Triple S brings this action on behalf of itself and other similarly situated individuals.
It purports to represent a nationwide class, a direct purchaser subclass, and a Minnesota
subclass, which are defined in the Complaint as follows:
Nationwide Class: All Persons who purchased, financed,
leased, and/or rented a V300 (the “Nationwide Class” or
“Class”).
Direct Purchaser Subclass: All Persons who purchased,
financed, leased, and/or rented a V300 pursuant to a DeLaval
Sales Agreement (“Direct Purchaser Subclass”).
Minnesota Subclass: All Persons who are residents of
Minnesota and who purchased, financed, leased, and/or rented
a V300 (the “Minnesota Subclass”).
[Compl. ¶ 146]. Triple S also alleges that all of the requirements for maintaining a class
action are satisfied. [Compl. ¶¶ 147–54].
Causes of Action
Plaintiffs allege ten separate “causes of action” in their Complaint, with each count
asserted against all Defendants. The First Cause of Action (“Count 1”) is a claim for breach
of contract. [Compl. ¶¶ 158–67]. The essence of this claim is that Defendants promised to
provide equipment that was free from defects in materials and workmanship, but breached
that promise in providing defective equipment and in failing install the V300s in a good
and workmanlike manner. Triple S also asserts that Defendants breached the implied
covenant of good faith and fair dealing in administering the contract.
The Second Cause of Action (“Count 2”) is for breach of implied warranty of
merchantability. [Compl. ¶¶ 168–73]. This claim asserts that Defendants qualify as a
merchant that sells goods and collectively hold themselves out has having knowledge of
automated, robotic milking systems, creating an implied warranty of merchantability.
The Third Cause of Action (“Count 3”) is for breach of implied warranty of fitness
for a particular purpose. [Compl. ¶¶ 174–79]. Count 3 asserts that Triple S specified to
Defendants what it needed the V300 to be able to do and relied on Defendants’ expertise
in VMS machines when it purchased the V300s.
The Fourth Cause of Action (“Count 4”) is for breach of express warranty. [Compl.
¶¶ 180–87]. This claim alleges that Defendants gave an express warranty that the V300
was free from defects in material and workmanship.
The Fifth Cause of Action (“Count 5”) is one of strict products liability. [Compl.
¶¶ 188–98]. Triple S alleges that Defendants failed to properly design and manufacture the
V300.
The Sixth Cause of Action (“Count 6”) is for negligence. [Compl. ¶¶ 199–203].
According Count 6, the Defendants’ agents were allegedly careless in their dealings with
Triple S, and it was foreseeable that their representations would cause class members harm
to their herds and to themselves.
The Seventh Cause of Action (“Count 7”) is for fraudulent inducement. [Compl.
¶¶ 204–18]. The gist of Count 7 is that through their knowingly false statements about the
capabilities of the V300, Defendants induced Triple S to purchase and install the V300
system.
The Eighth Cause of Action (“Count 8”) is for negligent misrepresentation. [Compl.
¶¶ 219–24]. This cause of action alleges that Triple S justifiably relied negligently made
false representations in agreeing to purchase and install the V300 machines, and was
harmed as a result.
The Ninth Cause of Action (“Count 9”) is for fraudulent concealment or omission.
[Compl. ¶¶ 225–31]. Count 9 asserts that Defendants had superior knowledge regarding
the defects in their products, had a duty to disclose those details as a result, but failed to do
so, turning its concealment of that information into a fraud.
Finally, the Tenth Cause of Action (“Count 10”) is for a violation of the Minnesota
Deceptive Trade Practices Act (“DTPA”), Minn. Stat. § 325D.43. [Compl. ¶¶ 232–37].
The DTPA claim alleges that Defendants engaged in a deceptive trade practice by falsely
representing that their goods or services are of a particular quality/standard/grade. The
Defendants also allegedly made representations that create a likelihood of confusion or
misunderstanding about the quality of the goods being purchased.
The Bishop Case
As noted above, the Complaint references a previous case in which farmers sued
some of the Defendants involved in the marketing and sale of The Classic VMS. That
litigation took place in federal court in the Western District of Missouri and was captioned
Bishop v. DeLaval Inc., No. 5:19-cv-06129 (SRB) (W.D. Mo.). Ultimately, the Bishop
litigation resolved through a class action settlement. Judge Stephen R. Bough entered
Judgment on July 20, 2022. The settlement included a gross sum payment by the
defendants of $55,000,000 to obtain a full release of all claims in the Bishop lawsuit, and
class members (a nationwide class of those who purchased or leased The Classic) could
submit claims to a qualified settlement fund for administration by a claims administrator
to recover their damages.
II. DISCUSSION
A. Motion to Strike Class Allegations
DLI and West Agro ask the Court to strike Triple S’s class allegations from the
Complaint. Motions to strike are governed by Fed. R. Civ. P. 12(f), which provides that
“[t]he court may strike from a pleading an insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.” “Striking a party’s pleading is an extreme
and disfavored measure.” Donelson v. Ameriprise Fin. Servs., Inc., 999 F.3d 1080, 1092(8th Cir. 2021) (cleaned up). But granting a motion to strike can sometimes be appropriate, “such as when a portion of the complaint lacks a legal basis.”Id.
This includes granting “a motion to strike class-action allegations prior to the filing of a motion for class-action certification.”Id.
Striking class allegations at the outset of litigation is appropriate under
the following circumstances:
It is “sensible ... to permit class allegations to be stricken at the
pleading stage” if it is “apparent from the pleadings that the
class cannot be certified” because “unsupportable class
allegations bring ‘impertinent’ material into the pleading” and
“permitting such allegations to remain would prejudice the
defendant by requiring the mounting of a defense against
claims that ultimately cannot be sustained.
Id. (quoting 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1383 (3d ed.).
Relying on Donelson, DLI and West Agro point out that a number of U.S.
purchasers of V300s have agreements that include arbitration clauses waiving their rights
to participate in any class action, thereby making those purchasers ineligible class
members. Further, they assert that class allegations should be stricken to the extent they
include putative members with arbitration agreements because those clauses present
individualized issues that preclude class certification. As explained below, the Court finds
Defendants’ reliance on Donelson misplaced.
There is no question that, as a matter of law, a district court is permitted to strike
class allegations prior to a motion for class certification. Doneslon, 999 F.3d at 1092(“We agree . . . that a district court may grant a motion to strike class-action allegations prior to the filing of a motion for class-action certification.”). And although the Donelson court found the district court had abused its discretion in declining to strike the class allegations in that case, Donelson is distinguishable from this case in two important ways. First, the named Donelson plaintiff had an arbitration agreement in his contract with the defendant, and forcing the defendant to litigate the case up to the point of a class-certification motion created a significant risk of unfair prejudice to the defendant. If the defendant in the Donelson scenario were to litigate the matter without seeking to enforce its arbitration rights, it risked waiving those rights entirely.Id.
at 1087–88. In such a case, the Donelson court reasoned that if a defendant must wait until class certification to raise such a challenge, it will have to engage in litigation with “one hand tied behind its back,” or else risk waiving its right to arbitrate.Id. at 1092
.
This concern with unfair prejudice is simply not present here. It is undisputed that
the named plaintiff in this case, Triple S, does not have an agreement with an arbitration
clause. Consequently, Defendants are not faced with the same catch-22 that the Donelson
scenario presents. Failing to strike class allegations at the outset will not create any
untenable risk to the Defendants that then might be viewed as waiving their right to
arbitrate. Nor is this a situation in which the only thing preventing the defendant from
getting to arbitration is the existence of class action allegations. Id. at 1092 (finding the
district court abused its discretion because, in part, “the class allegations were all that stood
in the way of compelling arbitration”). There is nothing in the record to suggest that the
Defendant are prevented by this lawsuit from compelling arbitration where appropriate.
Second, the Donelson court found that on the face of the plaintiff’s complaint, the
class allegations should have been stricken because individual issues would clearly
predominate and make class treatment inappropriate. Id.at 1092–94. But while Donelson found that it was “apparent from the pleadings that [the plaintiff] could not certify a class,”Id. at 1092
, here, the Defendants base their argument that individual issues pertaining to
the arbitration agreements will preclude class certification on material that appears
nowhere in the Complaint or is otherwise embraced by the pleadings. To support their
request to strike the class allegations, DLI and West Agro submit extra-pleading material
showing that at some point in 2020 (likely motivated by the resolution of the Bishop
litigation), Defendants inserted arbitration provisions into form purchase agreements.
[Doc. 16-1, 16-2, 16-3]. But this is not part of Triple S’s claims, and it is undisputed that
Triple S’s agreement itself contains no arbitration clause. Therefore, Defendants have not
shown that Triple S’s claims are inappropriate for class determination in any way
comparable to Donelson.
For these reasons, the motion to strike class allegations is denied. This denial does
not mean that absent class members who have valid arbitration agreements will be among
those included in any class that may ultimately be certified in this case. Nor does it mean
that the Court has determined, at this stage, whether any aspect of Triple S’s claims is
appropriate for class treatment. Those issues are left for another day.
B. Motions to Dismiss
DLI and West Agro have also moved to dismiss failure to state a claim pursuant to
Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, a complaint must
contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570(2007). This standard does not require the inclusion of “detailed factual allegations” in a pleading, but the complaint must contain facts with enough specificity “to raise a right to relief above the speculative level.”Id. at 555
. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” are not sufficient. Ashcroft v. Iqbal,556 U.S. 662, 678
(2009) (citing Twombly,550 U.S. at 5573
). In applying this standard, the Court must assume the facts in the complaint to be true and take all reasonable inferences from those facts in the light most favorable to the plaintiff. Morton v. Becker,793 F.2d 185, 187
(8th Cir. 1986); see Waters v. Madson,921 F.3d 725, 734
(8th Cir. 2019). But the Court need not accept as true any wholly conclusory allegations or legal conclusions that the plaintiff draws from the facts pled. Glick v. W. Power Sports, Inc.,944 F.3d 714, 717
(8th Cir. 2019).
1. DLI’s Motion
DLI seeks partial dismissal of the Complaint.1 DLI argues (1) that Count 1 of the
Complaint alleging a breach of contract should be dismissed; (2) that the economic-loss
doctrine bars significant portions of the damages sought in Count 5 (strict products
liability), Count 6 (negligence), and Count 8 (negligent misrepresentation); and (3) that
Triple S cannot obtain damages for a violation of the DTPA in Count 10. As discussed
below, DLI’s motion is granted in part and denied in part.
Breach of Contract
To state a claim for breach of contract under Minnesota law, a plaintiff must allege
that (1) an agreement was formed, (2) the plaintiff performed any conditions precedent to
plaintiff’s demand of performance by the defendant, and (3) the defendant breached the
1 DLI does not argue that the Court should dismiss Count 2 (breach of implied
warranty of merchantability); Count 3 (breach of implied warranty of fitness for a particular
purpose); Count 4 (breach of express warranty); Count 7 (fraudulent inducement); or Count
9 (fraudulent concealment). In addition, DLI argues only that portions of the tort claims in
Counts 5, 6, and 8 should be dismissed.
contract. Lyon Fin. Servs., Inc. v. Ill. Paper & Copier Co., 848 N.W.2d 539, 543 (Minn.
2014).
DLI asserts several bases for dismissal of Triple S’s breach-of-contract claim. First,
DLI argues that the contract claim should be dismissed because DLI is not a party to the
Sales Agreement. Second, DLI asserts that the contract claim should be dismissed as
duplicative of the breach-of-express-warranty claim. Third, to the extent the contract claim
does not overlap with the express-warranty claim, DLI contends that the obligations that
were allegedly breached are not found among the terms of the Sales Agreement and that
the responsibility for fulfilling those obligations lies only with the independent dealer,
Professional Dairy Systems. And fourth, DLI argues that the portion of the contract claim
asserting a breach of the covenant of good faith and fair dealing should be dismissed
because the covenant does not apply to sales contracts like the Sales Agreement.
The Court agrees that the Complaint fails to adequately allege formation of a
purchase agreement between Triple S and DLI. “Under Minnesota law, if a plaintiff cannot
plead the existence of a contract between himself and the defendant, the breach of contract
claim will fail.” Kruger v. Lely N. Am., Inc., 518 F. Supp. 3d 1281, 1287 (D. Minn. 2021).
Triple S alleges it entered a sales agreement with “DeLaval” to purchase the V300s. And
Count 1 of the Complaint is premised on an alleged breach of the “DeLaval Sales
Agreement.” But Defendants have supplied a copy of the Sales Agreement, the authenticity
of which Triple S does not dispute,2 which reveals that DLI is not a party to that contract.
[Doc. 13-1]. The Sales Agreement identifies Triple S Farms as the buyer, indicates that the
four V300 machines and associated materials constitute the equipment being purchased,
and names the independent dealer Professional Dairy Systems as the seller of that
equipment. [Id.]. The Sales Agreement is executed by agents of Triple S and Professional
Dairy Systems, and in a text box bearing the heading “Acceptance of Agreement,” Triple
S acknowledged its understanding that Professional Dairy Systems “is an independent
company and is not an agent of DeLaval Inc.” [Id.]. These facts demonstrate that the
contract for the purchase of the V300s was formed between Triple S and Professional Dairy
Systems, not between Triple S and DLI.
Triple S refers to the “possibility that a DeLaval employee signed the agreement”
on behalf of the Professional Dairy Systems [Doc. 37 at 14], but Triple S has pled no facts
in its Complaint to make that possibility anything more than speculation at this stage. “A
dealer is not a manufacturer’s agent simply by virtue of being a dealer of that
manufacturer’s goods.” Kruger, 518 F. Supp. 3d at 1288 (citing Jurek v. Thompson, 308
Minn. 191,241 N.W.2d 788
, 792 & n.6 (1976)). Nothing in the Complaint suggests that
Professional Dairy Systems is DLI’s agent, and Count 1 fails to state a claim because the
2 The Sales Agreement is properly before the Court for purposes of the motion to
dismiss because it is embraced by the pleadings and its authenticity is not in dispute.
Ahsanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012) (explaining that
documents need not be physically attached to the pleading to be embraced by the
complaint).
first element of a breach-of-contract claim—contract formation—has not been adequately
alleged.
Triple S attempts to distinguish this case from Kruger because the warranty and the
sales agreement at issue there were not part of the same document. [Doc. 37 at 14–15 n.3].
However, the rationale for dismissing the contract claim in Kruger did not depend on the
fact that the warranty was found in a separate document. The Kruger court’s reasoning
hinged, instead, on the fact that the defendant was not a party to the contract and the
plaintiff failed to allege that the dealer of the defendant’s goods was acting as the
defendant’s agent. 518 F. Supp. 3d at 1287–88. Similarly, Triple S’s reliance on the Sales
Agreement’s references to DLI and the indication at the bottom of each page that a “pink”
copy of the agreement was for DLI is misplaced because these details do not indicate that
DLI was a party to the purchase agreement.
Further, given the allegations in the Complaint and the clear import of the Sales
Agreement, the fact that DLI provided a limited warranty, and that warranty appears on the
reverse side of the contract, does not adequately allege that DLI was a party to a sales
contract with Triple S. To the extent Triple S suggests otherwise, its argument largely
conflates the breach-of-contract claim in Count 1 with the breach-of-express-warranty
claim in Count 4. Any obligations under a contract premised on the express warranties
provided by DLI are set forth explicitly in the limited warranty, so the contract and
warranty claims completely overlap. Such duplication supports dismissal of the contract
claim. Kruger, 518 F. Supp. 3d at 1288 (“When a breach of contract claim mirrors a breach
of warranty claim, the former should be dismissed.” (citing Spectro Alloys Corp. v. Fire
Brick Eng’rs Co., 52 F. Supp. 3d 918, 929–30 (D. Minn. 2014)); see also Cleveland v. Whirlpool Corp.,550 F. Supp. 3d 660
, 671 (D. Minn. 2021) (same).
Although Triple S argues that the Court should not dismiss the contract claim as
duplicative of the breach-of-warranty claim because the two claims may entitle Triple S to
recover different damages [Doc. 37 at 14–15 n.3], the Court finds this argument unavailing
as well. This argument does not change the fact that the obligations that would allegedly
breached under a “warranties-as-contracts theory,” Kruger, 518 F. Supp. 3d at 1288, would
be identical to those that that would form the basis of the breach-of-warranty claim. Nor
does it alter the reality that Triple S has failed to plausibly allege that it formed a contract
with DLI in the first place.
Because Triple S has failed to plausibly allege that a contract was formed with DLI,
Count 1 of the Complaint is dismissed, and the Court does not address DLI’s remaining
arguments concerning this claim.
Economic Loss Doctrine
DLI next argues that the Court should dismiss certain requests for damages sought
in connection with Triple S’s strict liability, negligence, and negligent misrepresentation
claims as barred by the economic-loss doctrine. Specifically, DLI argues that the
economic-loss doctrine prohibits Triple S from recovering in tort for the alleged diminution
in value of the V300 machines or the expenses incurred in retrofitting Triple S’s barn.
Alternatively, DLI asks the Court to strike these claims pursuant to Rule 12(f). DLI’s
motion is denied.
Under Minnesota law, “the economic loss doctrine . . . bars recovery under the tort
theories of negligence or strict liability for economic losses that arise out of commercial
transactions, except those involving personal injury or damage to other property” Transp.
Corp. of Am. v. Int’l Bus. Machines Corp., 30 F.3d 953, 956 (8th Cir. 1994); Johnson v. Bobcat Co.,175 F. Supp. 3d 1130, 1144
(D. Minn. 2016) (“The economic loss doctrine generally prohibits a plaintiff ‘from recovering purely economic losses in tort.’” (quoting Thunander v. Uponor, Inc.,887 F.Supp.2d 850, 871
(D. Minn. 2012))).
The economic loss rule has been codified by the Minnesota Legislature at Minn.
Stat. § 604.101. This provision “bars a buyer from bringing a tort claim for a product defect when the harm the buyer suffers is solely to the product.” Kruger, 518 F. Supp. 3d at 1292 (citingMinn. Stat. § 604.101
, subd. 3). The statute allows a buyer to bring a tort claim for “loss of, damage to, or diminution in value of ... other tangible personal property or real property.”Id.
(quoting § 604.101, subd. 3(1)). And the statue allows claims for “reasonable
costs of repair, replacement, rebuilding, and restoration.” Id.
Section 604.101 “‘exhaustively states the economic loss doctrine’ and thus
abrogates the common law version of the doctrine.” Johnson, 175 F. Supp. 3d at 1144–45
(quoting Ptacek v. Earthsoils, Inc., 844 N.W.2d 535, 538–39 (Minn. Ct. App. 2014)). Because the statute abrogates the common law version of the doctrine, its applicability is limited to two circumstances: “product defect tort claims and common law misrepresentation claims.” Id. at 1145. If a claim falls outside the statute’s applicability, it is error to apply the economic loss rule as a bar to a plaintiff’s claim. Ptacek,844 N.W.2d at 539
.
Insofar as DLI seeks dismissal of a portion of the damages sought by Triple S for
its tort claims pursuant to Rule 12(b)(6), its argument is undermined by the conclusion
reached on the same issue in a relatively similar piece of litigation from this District—
Kruger. There, the Court declined to dismiss the plaintiff’s “tort claims to the degree they
seek to recover for damage to the [robotic milking] system and [plaintiff’s] barn,” because
the Court found it could not dismiss “part of a claim” pursuant to Rule 12(b)(6). 518 F.
Supp. 3d at 1292. Here, the Complaint alleges that the V300s’ defects caused damage to
Triple S’s cows, milk product, and its barn, and DLI does not distinguish Kruger or
otherwise argue that its reasoning is inapplicable.
DLI, perhaps recognizing the impact of this portion of Kruger, which it otherwise
heavily relies upon to support other aspects of its motion, suggests that the Court should,
pursuant to Fed. R. Civ. P. 12(f), simply strike certain paragraphs from the Complaint
related to precluded damages. [Doc. 63 at 17–18]. However, striking matter from a
pleading under Rule 12(f) is a discretionary decision. BJC Health Sys. v. Columbia Cas.
Co., 478 F.3d 908, 917(8th Cir. 2007) (“Judges enjoy liberal discretion to strike pleadings under Rule 12(f).”). And courts generally do not grant motions to strike without some showing of prejudice. Braun v. Walz, No. 20-CV-331 (NEB/DTS),2021 WL 871217
, at
*1 (D. Minn. Mar. 9, 2021) (“There is general agreement that motions to strike ‘should be
denied unless the challenged allegations have no possible relation or logical connection to
the subject matter of the controversy and may cause some form of significant prejudice to
one or more of the parties to the action.’” (quoting 5C Charles Alan Wright & Arthur R.
Miller, Fed. Prac. & Proc. § 1382 (3d ed.)). DLI does not identify any significant prejudice
that will result if the paragraphs referencing purportedly unavailable damages are not
stricken from the Complaint. DLI may implicitly argue that it would be unfair for it to have
to defend against damages claims concerning Triple S’s barn when those damages are
unrecoverable, but defendants often have to defend against claims for damages that
ultimately are shown to be beyond a plaintiff’s reach. That run-of-the-mill aspect of a
defense does not constitute significant prejudice that justifies striking all barn-related
damages allegations from the Complaint.
Finally, at least at this stage of the proceedings, the Court cannot conclude that all
barn-related damages are foreclosed by the economic loss doctrine. DLI suggests that any
alleged costs to rebuild and repair Triple S’s barn would be barred under the integrated-
system rule because the V300 is integrated into the completed system of Triple S’s dairy
barn, so that the entire system ceases to be other property for purposes of the economic loss
doctrine. [Doc. 63 at 16 (citing Milwaukee Mut. Ins. Co. v. Deere & Co. Inc., No. Civ. 04-
4905 (MJD/JGL), 2005 WL 2105513, at *3–4 (D. Minn. Aug. 26, 2005))]. DLI argues that
Triple S’s allegation that its barn can only be used with the V300s makes it clear that the
integrated-system rule applies, but the Court disagrees. At this stage of the litigation,
whether the integrated-system rule bars recovery for damages to Triple S’s barn is a fact
issue that is not appropriate for resolution under Rule 12(b)(6). Cf. Milwaukee Mut. Ins.
Co., 2005 2105513, at *4–5 (finding the rule applicable in a case where the tree processor
attached to the excavator “work[ed] as a single unit and were sold as a single unit, in one
transaction, for one undivided price” such that they “were component parts of an integrated
system”).
For these reasons, DLI’s motion to dismiss, or alternatively to strike, the portions of
Counts 5, 6 and 8 seeking damages related to Triple S’s barn, the value of the V300s, or
the costs incurred in removing or replacing the V300s is denied. Whether such damages
are ultimately recoverable for Plaintiff’s tort claims or are barred by the economic loss
doctrine is a question better left for another day.
Deceptive Trade Practices Act
The parties’ dispute regarding the propriety of Triple S’s pleading of Count 10 is
indicative of some of the unnecessarily over-litigated aspects of this proceeding to date. In
the portion of its Complaint reciting its cause of action for violations of the DTPA, Triple
S alleged that DLI’s deceptive trade practices caused it to incur monetary and non-
monetary damages, and that the Plaintiff and Minnesota Subclass seek all monetary and
non-monetary relief allowed by law. [Compl. ¶¶ 236–37]. Because the only remedy for
violations of the DTPA is injunctive relief, Dennis Simmons, D.D.S., P.A. v. Modern Aero,
Inc., 603 N.W.2d 336, 339 (Minn. Ct. App. 1999), DLI asks the Court to dismiss this
portion of Plaintiff’s DTPA claim or strike Paragraphs 236 and 237 from the Complaint.
Triple S responds that in those paragraphs it is not seeking to recover monetary damages,
but seeks only those damages “allowed by law.” Triple S otherwise suggests that these
paragraphs merely show that it has suffered past harm, will suffer ongoing harm in the
future, and that it is entitled to other equitable relief including recission of a contract. [Doc.
37 at 25–28]. And in reply, DLI insists that the paragraphs at issue do, in fact, ask for
monetary damages; repeats its request for dismissal or to have Paragraphs 236 and 237
stricken; and contends that Triple S should not be permitted to use its response to amend
its Complaint to seek rescission of a contract when that relief was not requested in the
pleading. [Doc. 63 at 18–20].
What this frustrating exchange reveals is that the parties do not actually dispute
whether money damages are available for a violation of the DTPA. Because Triple S has
conceded that such relief is not available, it is unnecessary for the Court to redline
Triple S’s Complaint via Rule 12(b)(6) or Rule 12(f) to make that clear. In light of the
parties’ agreement, DLI’s motion is denied as moot on this issue.
2. West Agro’s Motion
West Agro’s motion to dismiss has three distinct parts: (1) a “lumping” challenge;
(2) a joinder in DLI’s arguments; and (3) an argument that Plaintiff’s fraud-based claims
are not alleged with the particularity required by Rule 9(b). The Court first resolves the
lumping and particularity challenges together, and then turns to the joinder argument.
Lumping and Particularity
First, West Agro argues that Triple S fails to state any claim against it because the
Complaint does not identify any specific conduct attributable to West Agro. Instead, West
Agro contends that Triple S lumped all the Defendants together into a single entity that it
defined as “DeLaval” for purposes of all the facts alleged and the causes of action. [Doc. 14
at 3–5]. This characterization of the Complaint is accurate. Triple S is pursuing an “alter-
ego” theory of liability by which all six Defendants operate as a single unit. Triple S
suggests that the integration of the Defendants means that the presumption that they are
separate corporate entities should be disregarded and they should all be parties to the
litigation regardless of which company was nominally taking a specific action. [See Compl.
¶¶ 23–41 (discussing relationship between the Defendants and alleged “alter-ego” theory)].
Relatedly, West Agro argues that the absence of specific allegations related to its
conduct necessarily means that Triple S’s fraudulent inducement and fraudulent
concealment claims fail because they are not pled with the particularity required by Rule
9(b). [Doc. 14 at 5]. As such, West Agro persuasively argues that the Complaint, as pled,
does not inform West Agro of its alleged participation in the fraud. Olin v. Dakota Access,
LLC, 910 F.3d 1072, 1075 (8th Cir. 2018) (stating that “in cases with multiple defendants,
the complaint should inform each defendant of the nature of his alleged participation in the
fraud”) (internal quotations omitted).
At the time the Complaint was filed, Triple S was somewhat hamstrung in asserting
its “alter-ego” theory by the fact that it could not use information about the relationships
between the Defendants learned during the course of discovery in the Bishop litigation.
The barrier to doing so was the presence of a protective order that precluded use of
confidential materials from Bishop in other litigation. Subsequently, Triple S obtained
relief from that protective order and supplemented the record in this case with material that
it believes supports its “alter-ego” theory. [Doc. 150–52].
On February 1, 2023, the Court heard oral argument on additional motions to
dismiss filed by other Defendants, including DeLaval Holding BV (“DLH BV”) and Tetra
Laval. DLH BV and Tetra Laval raised similar lumping arguments in their motions to those
advanced by West Agro in the instant motion, as did other motions filed by DeLaval
Holding AB (“DLH AB”) and DeLaval International AB (“DLI AB”). Meanwhile, when
Triple S supplemented the record, it suggested that if the Court did not believe that the
Complaint as drafted adequately supported the “alter-ego” theories of liability and personal
jurisdiction Triple S was advancing, then Triple S should be given leave to amend.
In a February 1, 2023 bench ruling, the Court determined that Triple S should file
an Amended Complaint to take its best shot at alleging the basis for its “alter-ego” theories
of personal jurisdiction and liability. In addition, the Court denied the motions filed by
DLH BV, Tetra Laval, DLH AB, and DLI AB without prejudice to potentially being refiled
after Triple S files the Amended Complaint. The Court notes that West Agro has identified
that it is situated somewhat differently from those other defendants because it is a
subsidiary of DLI, and not a parent company that could control DLI’s operations. [Doc. 14
at 4]. Regardless of whether West Agro’s status as a subsidiary creates a barrier to the
“alter-ego” theory laid out in the Complaint, the Court concludes that denying West Agro’s
motion without prejudice is likewise appropriate at this stage. As noted, Triple S will be
filing an Amended Complaint, which will become the operative pleading in this litigation.
The Court asked Plaintiff’s counsel to think carefully about which Defendants were truly
the appropriate parties to have in this litigation given what it knows about the Defendants’
operations and relationships, and if Triple S persists in asserting claims against West Agro,
West Agro is free to renew a motion to dismiss aimed at the allegations in the amended
pleading if it believes they are deficient. That is true of both West Agro’s theory that the
Plaintiff improperly lumped the Defendants together and its argument that the fraud-based
claims directed at West Agro were not alleged with sufficient particularity.
Adoption of DLI’s Arguments
In briefing its motion to dismiss, West Agro asserted that DLI’s arguments raised
in its motion to dismiss applied equally to West Agro. Like DLI, West Agro is not a party
to the contract at issue, and for the same reasons the Court found that the Complaint fails
to state a claim against DLI for breach of contract, it finds that the breach-of-contract claim
against West Agro fails as well. Accordingly, the Court will grant West Agro’s motion to
dismiss to the extent it is aimed at the breach-of-contract claim. West Agro presents no
compelling reason why the Court should resolve the other arguments that DLI raised any
differently with respect to West Agro. Therefore, West Agro’s motion adopting DLI’s
other arguments is denied for the same reasons discussed above.
III. ORDER
Consistent with the discussion above, IT IS HEREBY ORDERED THAT:
1. The Motion to Strike Class Allegations [Doc. 12] is DENIED.
2. DeLaval Inc.’s Motion to Dismiss or Alternatively to Strike [Doc. 15] is DENIED
IN PART and GRANTED IN PART.
3. West Agro’s Motion to Dismiss for Failure to State a Claim [Doc. 13] is DENIED
IN PART WITHOUT PREJUDICE and GRANTED IN PART.
Date: March 2, 2023
s/Katherine Menendez
Katherine Menendez
United States District Judge Reference
- Status
- Unknown