United States District Court, D. Minnesota
A. Horstmann, Esq., Maslon LLP, Minneapolis, MN, on behalf of
Matthew A. Lee, Esq., Quinn Emanuel Urquhart & Sullivan,
New York, NY, and Randi J. Winter, Esq., Felhaber Larson,
Minneapolis, MN, on behalf of Defendant Hedinn Ltd.
MEMORANDUM OPINION AND ORDER
MONTGOMERY U.S. DISTRICT JUDGE
matter is before the undersigned United States District Judge
for a ruling on the damages claim of Plaintiff LEI Packaging,
LLC (“LEI”) after being granted Default Judgment
against Defendant Samey ehf (“Samey”) [Docket No.
135]. Defendant Hedinn Ltd. (“Hedinn”), who is
still actively defending in this case, filed a Response
[Docket No. 147]. For the reasons stated below, LEI's
request for damages as to Samey is denied as premature.
Parties, the Machine, and the Machine Agreement
dispute concerns contracts for the purchase of a Rotary
Quattro TO Pulp Moulding Machine (the “Machine”),
which was designed to be capable of producing 7, 200 egg
cartons per hour. On January 22, 2014, LEI, a Minnesota
manufacturer and seller of molded pulp packaging products,
including egg cartons and trays, agreed to pay Emery
Silfurtun Inc. (“Emery”) $4, 509, 858 to design,
construct, and install the Machine. Second Am. Compl. [Docket
No. 66] ¶¶ 1, 7, Ex. A (“Machine
Agreement”). Emery, a Canadian company, and LEI are the
only signatories to the Machine Agreement.
in turn contracted with Samey and Hedinn (collectively, the
“Icelandic Defendants”) to assist in fulfilling
its obligations under the Machine Agreement. Id.
¶¶ 19, 27; Lee Decl. [Docket No. 82] Ex. 1 §
1.0, Ex. 2 § 1.0 (collectively, the “Icelandic
Contracts”). The Second Amended Complaint alleges that
Samey agreed to provide project management and testing
services, assume responsibility over the Machine's
electrical and automation parts, and source and order several
major Machine components. Second Am. Compl. ¶ 21.
Hedinn's role was to build steel constructions and to
provide steel materials for the Machine's construction.
Id. ¶ 29.
design and manufacture started in January 2014, and
installation began in September 2014. Id.
¶¶ 35, 40. The Icelandic Defendants spent
considerable time in Minnesota working on the Machine.
Id. ¶¶ 41, 43.
thereafter, LEI identified a number of problems with the
Machine. These problems included the inability of the Machine
to produce the promised 7, 200 egg cartons per hour, the poor
quality of the finished product, and individualized issues
with specific Machine components, such as the Machine's
rotor, robotic transfer system, dryer, and hot press.
Id. ¶¶ 47, 48. On March 16, 2015, LEI and
Emery entered into an “agreement in order to remedy
faults and design flaws that have emerged post installation
of the Emery Silfurtun Quattro egg carton production line at
LEI Packaging.” Compl. [Docket No. 1-1] Ex. B
(“Modification Agreement”). The Icelandic
Defendants are not parties to the Modification Agreement.
11, 2015, citing diversity jurisdiction, Emery removed the
original Complaint from Minnesota state court to federal
court. 28 U.S.C. § 1332. On July 17, 2015, the Icelandic
Defendants filed a Motion to Dismiss [Docket No. 18], which
was later withdrawn after LEI filed an Amended Complaint
[Docket No. 30]. On August 21, 2015, LEI and Emery stipulated
[Docket No. 32] to arbitrate their claims and to stay the
litigation between themselves. That same day, the Icelandic
Defendants renewed their Motion to Dismiss [Docket No. 34].
On September 3, 2015, LEI filed a Motion to Compel the
Icelandic Defendants to Arbitrate [Docket No. 41]. The
Icelandic Defendants' Motion to Dismiss and LEI's
Motion to Compel were both denied by Order [Docket No. 56]
dated December 22, 2015. On February, 23, 2016, LEI filed its
Second Amended Complaint, the operative complaint in this
March 15, 2016, the Icelandic Defendants again moved to
dismiss [Docket No. 79], arguing that the Second Amended
Complaint suffered from jurisdictional and venue defects,
while also not stating plausible third-party beneficiary and
implied warranty ...