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The Scoular Co. v. Ceres Global Ag Corp.

United States District Court, D. Minnesota

March 19, 2015

THE SCOULAR COMPANY, Plaintiff,
v.
CERES GLOBAL AG CORP., and RIVERLAND AG CORP., Defendants.

Peter M. Lancaster and Anne M. Trimberger, DORSEY & WHITNEY LLP, for plaintiff.

Lewis A. Remele, Jr. and Jeffrey R. Mulder, BASSFORD REMELE, PA, for defendants.

MEMORANDUM OPINION AND ORDER DENYING MOTION TO DISMISS

JOHN R. TUNHEIM, District Judge.

This case involves a contract dispute between a commodity logistics company, defendant Ceres Global Ag Corp. ("Ceres"), and an agricultural marketing company, plaintiff The Scoular Company ("Scoular"). Ceres is a Canadian company and Scoular is a Nebraska company with an office in Minnesota. Ceres's subsidiary, Riverland Ag Corp. ("Riverland"), also a defendant in this case, is based in Minnesota and runs several grain elevators in the state. Ceres approached Scoular about developing and running a grain elevator at Ceres's Northgate property in southwestern Canada. Ceres and Riverland officials met Scoular officials in Minnesota at least three times and exchanged many phone calls that involved some officials based in Minnesota. Most of the meetings occurred in Chicago, however, and the parties eventually signed several agreements, including a non-binding Term Sheet. The agreements set up Scoular to operate a grain elevator at Northgate, and did not call for any activity to take place in Minnesota. The agreements were non-binding, however, and Ceres soon decided to take its grain operations at Northgate in-house.

Scoular brings this action against Ceres and Riverland for breaching its agreements with Scoular. Ceres filed a motion to dismiss, arguing the Court lacks personal jurisdiction over Ceres or, in the alternative, that the case should be dismissed under the doctrine of forum non conveniens. Because Scoular has demonstrated sufficient contact between Ceres and Minnesota, the Court will find that it has personal jurisdiction over Ceres. In addition, the Court will conclude that the case should not be dismissed under the forum non conveniens doctrine. The Court will deny Ceres's motion to dismiss.

BACKGROUND

I. THE PARTIES AND THE NORTHGATE PROJECT

Scoular is an employee-owned Nebraska corporation with one of its offices located in Minneapolis, Minnesota. (First Am. Compl. ("Compl.") ¶ 2, July 24, 2014, Docket No. 9.) Scoular is an agricultural marketing company that manages commodity supply-chain risk for customers in the food, feed, and renewable fuel industries. ( Id. ) One aspect of its business, relevant to this case, is "planning, building, developing, and operating grain elevators and related rail transportation infrastructure." ( Id. )

Ceres is a publicly-traded Canadian company, based in Toronto. ( Id. ¶ 3.) Ceres is an agriculture and commodity logistics holding company with two key areas of investment: (1) a "Grain Storage, Handling and Merchandising unit, anchored by its 100% ownership of [Riverland];" and (2) "its Commodity Logistics unit, containing its 25% interest in Stewart Southern Railway Inc. and its development of the Northgate, SK Commodity Logistics Hub (Northgate Project')." (Aff. of Michael Detlefsen in Supp. of Defs.' Mot. to Dismiss ("Detlefsen Aff.") ¶ 3, Aug. 7, 2014, Docket No. 14.) During the relevant period covered by the complaint in this case, Ceres employed only one or two people and therefore had no operational capabilities; the company was managed by Front Street Capital, an investment management firm.[1] (Compl. ¶ 3.)

Riverland is a Delaware corporation, with an office in St. Louis Park, Minnesota. ( Id. ¶ 4.) Riverland is a wholly-owned subsidiary of Ceres, first acquired by the company in June 2010. ( Id. ) The company "is a collection of grain storage and handling assets in Minnesota, New York, Wisconsin and Ontario." (Detlefsen Aff. ¶ 4.)

Ceres owns 1, 300 acres of land at Northgate, Saskatchewan, along the United States-Canadian border, and ten adjoining acres of land across the border in North Dakota. (Compl. ¶¶ 12-13; Detlefsen Aff. ¶ 5.) Ceres is developing the Northgate Project at its Northgate site. (Compl. ¶ 12.) The Northgate Project is a "$90 million grain, oil and oilfield supplies transloading" and logistics hub, focused on increasing transportation of Canadian grain, oil, and other energy products into the United States. (Detlefsen Aff. ¶ 5; Compl. ¶¶ 12-14.) The North Dakota land, and cross-border nature of the site, connects Canadian producers to the Burlington Northern Santa Fe ("BNSF") railroad in the United States and gives them unique access to United States customers. (Compl. ¶¶ 13-14.)

II. NEGOTIATIONS BETWEEN THE PARTIES

This case arises out of negotiations between the parties regarding the Northgate Project. ( Id. ¶ 1.) In 2012, Ceres, through Riverland, approached Scoular about serving as the operator of its grain facility at the Northgate Project. ( Id. ¶¶ 10, 15.) Scoular alleges that Ceres conceded neither it nor its subsidiary, Riverland, had the expertise needed to operate the high-volume grain facility it had planned for Northgate. ( Id. ¶ 15.) As a result, Ceres sought out Scoular to be the sole developer, operator, and owner of the grain facility at Northgate. ( Id. ¶¶ 16-19.)

The initial meeting between Ceres, Riverland, and Scoular occurred on June 26, 2012, in Minneapolis at Scoular's office. ( Id. ¶ 10.) Two additional meetings took place in Minnesota, on August 28, 2012 and September 18, 2012. ( Id. ¶ 11.) Former Ceres CEO Michael Detlefsen attended the initial meeting and the August 2012 meeting in Minnesota. (Detlefsen Aff. ¶¶ 7-8.) Another negotiating meeting took place in Kansas City, Missouri, near Scoular's Nebraska headquarters, on July 16, 2012. ( Id. ¶ 8.) Most of the remaining meetings, in late 2012 and throughout 2013, took place in Chicago, Illinois. ( Id. ¶ 10.) However, the parties held two additional meetings in Overland Park, Kansas, and another in Toronto. ( Id. ¶ 11.) According to Detlefsen, the Ceres Board of Directors initially involved Riverland because they wanted a joint-venture grain elevator run by both Riverland and Scoular. ( Id. ¶ 9.) Once the Board scrapped that concept, Detlefsen claims Riverland was generally no longer involved in the ...


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