Pitman Farms v. Kuehl Poultry, LLC, No. 21-1113 (8th Cir. 2022)
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This case concerns the application of two Minnesota statutes and a rule promulgated by the Minnesota Department of Agriculture (MDA) that establishes the liability of a parent company for the unmet contractual obligations of its subsidiary under certain kinds of agricultural contracts. At issue is whether the relevant laws apply to chicken production contracts between Defendants (collectively, the Growers), who are Minnesota chicken producers, and Simply Essentials, LLC (Simply Essentials), a chicken processor. If they apply, then Plaintiff Pitman Farms (Pitman Farms), a California corporation and Simply Essentials’ parent company is liable to the Growers for Simply Essentials’ breaches of contract.
The district court granted Pitman Farms’s summary-judgment motion and denied the Growers’ cross-motion based upon its conclusion that the Minnesota parent-liability authorities do not by their terms apply to the subject contracts because those authorities do not apply to parent companies of LLCs.
The Eighth Circuit reversed. The court explained that the Minnesota legislature’s lack of amendment subsequent to the advent of LLCs played a significant role in the district court’s conclusion. The court concluded that it does think that this fact suffices to exclude LLCs from the operation of the laws at issue in this case. Further, here, the legislative intent is clear: with respect to agricultural contracts, the Minnesota legislature intended parent companies to be liable for the breaches of their subsidiaries. Accordingly, the court held that the use of the phrase “corporation, partnership, or association” in the relevant statutes and Rule is intended to include LLCs for the purpose of parent company liability.
Court Description: [Smith, Author, with Gruender and Kobes, Circuit Judges] Civil case - Contracts. In this action plaintiff sought a declaratory judgment that the Minnesota statutes on Parent Company Liability - Minn. Stat. Sec. 17.93 and Minn. Stat. Sec. 27.133 - and the implementing rule - Minn. R. 1572.0040 - do not govern the contracts between chicken farmers and Simply Essentials, Pitman's subsidiary; the district court granted Pitman summary judgment on the ground that the Sec. 17.93 only provides protection to sellers, not producers like the growers, and that neither the statutory sections nor the rule apply when the subsidiary is a limited liability company; the district court erred in failing to consider Sec. 27.133 in construing the meaning of the word "seller" in Sec. 17.93 and Rule 1572.00400; considering the provisions together, the court holds the term "seller" can include a "producer" when applying the Producer Protection Act and its implementing Rule; the court holds the use of the phrase "corporation, partnership, or association" in the statutes and rule was intended to include limited liability corporations for the purpose of determining parent-company liability; reversed and remanded for further proceedings.
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