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Frontier AG, Inc. v. Nuseed Americas Inc.

United States District Court, D. Kansas

July 17, 2019

FRONTIER AG, INC., Plaintiff,
v.
NUSEED AMERICAS INC., Defendant.

          MEMORANDUM AND ORDER

          DANIEL D. CRABTREE UNITED STATES DISTRICT JUDGE.

         Before the court is defendant Nuseed Americas Inc.'s (“Nuseed”) “Partial Motion to Dismiss” (Doc. 27). This case involves several tort and warranty claims following the alleged failure of sunflower seeds to germinate at the expected rate. Nuseed contends Counts I, II, III, and V of plaintiff Frontier AG, Inc.'s (“Frontier”) Amended Complaint are precluded by the Kansas Product Liability Act (“KPLA”) and by Kansas's economic loss doctrine. Nuseed further contends that the implied warranty component of Frontier's warranty claim in Count IV is barred because there was no privity between Frontier and Nuseed. In response, Frontier asserts that the Federal Seed Act preempts the KPLA. And, Frontier argues Kansas's economic loss doctrine does not apply here because the sunflower seeds' failure to germinate resulted in damage to the fields where farmers had sowed the seeds. Frontier also disputes the proposition that it must demonstrate privity with Nuseed to make an implied warranty claim against Nuseed. The court concludes that: (1) the Federal Seed Act does not preempt the KPLA; and (2) Frontier, as a corporate entity who did not plant the sunflower seeds, must allege privity with Nuseed to advance an implied warranty claim. The court thus grants Nuseed's Partial Motion to Dismiss (Doc. 27).

         I. Factual Allegations

         The court derives the following factual allegations from Frontier's Amended Complaint (Doc. 24).

         Nuseed “is in the business of global agricultural hybrid enhanced yield rate seed manufacturing.” Doc. 24 at 1 (Am. Compl. ¶ 2). Frontier is in the “seed retail business” and purchased “pre-packaged, pre-labeled confection sunflower seeds manufactured by Nuseed.” Id. at 2 (Am. Compl. ¶ 9). Frontier purchased the sunflower seeds from a wholesaler-Legend Seeds, Inc.-and then sold the seeds to two farmers. Id. (Am. Compl. ¶¶ 9-10). The packaging containing the seeds “warranted a germination rate of 85%.” Id. at 4 (Am. Compl. ¶ 27).

         The two farmers who bought the sunflower seeds from Frontier complained that the seeds exhibited “erratic and poor emergence and poor yield.” Id. at 2 (Am. Compl. ¶ 10). Because the seeds did not germinate at the expected rate, the farmers purchased additional fertilizer, used additional water, could not rotate their crops as scheduled, and “suffered and will continue to suffer weed intrusion on their cropland.” Id. at 2-3 (Am. Compl. ¶ 10). To resolve the farmers' complaints, Frontier paid them a sum “in excess of $75, 000.00.” Id. at 3 (Am. Compl. ¶ 11).

         Frontier then commenced this action against Nuseed, filing a five-count Amended Complaint. Count I presents a claim for negligence based on Nuseed's breach of its duty of care when “design[ing], manufacturing, testing, packaging, distributing[, ] and inspecti[ng]” the sunflower seeds. Id. at 3 (Am. Compl. ¶¶ 12-15). Count II makes a failure to warn claim, contending Nuseed had a duty to advise Frontier about potential defects in the sunflower seeds. Id. at 3-4 (Am. Compl. ¶¶ 16-19). Count III raises a claim for strict liability. Id. at 4 (Am. Compl. ¶¶ 20-23). Count IV asserts claims for breach of two distinct warranties-the express warranty of an 85% germination-rate on the packaging and the implied warranty of fitness and merchantability. Id. at 4-5 (Am. Compl. ¶¶ 24-29). Count V claims Nuseed is liable for negligent misrepresentation, contending that, independent from the 85% germination-rate printed on the packaging, Nuseed represented that the sunflower seeds “would germinate at a rate greater than the test result of a 56% germination rate.” Id. at 5 (Am. Compl. ¶¶ 30-34).

         Nuseed moves to dismiss Counts I, II, III, and V, claiming that both the KPLA and Kansas's economic loss doctrine bar these four claims. Doc. 27; Doc. 28 at 4-7. Nuseed also moves to dismiss the implied warranty of fitness and merchantability prong of Count IV's warranty claims, arguing there was no privity of contract between Nuseed and Frontier because Frontier bought the sunflower seeds from Legend Seeds, not Nuseed. Doc. 28 at 7-8.

         Frontier responds, arguing that the Federal Seed Act preempts the KPLA. Doc. 30 at 3- 6. And, Frontier argues Kansas's economic loss doctrine does not apply to any of the claims at issue currently because the Amended Complaint seeks to recover more than economic damages, i.e., it also makes claims for damage to property from weed intrusion. Id. at 6-7. On Count V, Frontier separately argues that Kansas courts do not apply the economic loss doctrine to claims for negligent misrepresentation. Id. at 7-8. Finally, on the implied warranty portion of Count IV's claim, Frontier argues that it need not establish privity because implied warranties extend to natural persons who may be expected to use a product-in this case, the two farmers who planted the sunflower seeds. Id. at 9-10.

         In its Reply, Nuseed disputes that the Federal Seed Act preempts the KPLA. But it also argues that even if the Federal Seed Act did preempt the KPLA, it also would preempt state common law tort actions. Doc. 31 at 1-4. Nuseed disputes Frontier's argument for overcoming Kansas's economic loss doctrine, asserting that Frontier-who is suing on its own behalf and not for the two farmers-only suffered monetary damages, not property damage. Id. at 4-8. And finally, Nuseed argues Frontier's implied warranty argument is misplaced because Frontier was not an intended user of the sunflower seeds and is not a “natural person” for purposes of the exception to the privity requirement. Id. at 8-9.

         II. Standards of Review

         A. Rule 12(b)(6) Standard

         When considering a motion to dismiss under Rule 12(b)(6), the court must assume that the factual allegations in the complaint are true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). But this requirement does not extend to every assertion made in a complaint. The court is “‘not bound to accept as true a legal conclusion couched as a factual allegation.'” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to state a claim for relief. Bixler v. Foster, 596 F.3d 751, 756 (10th Cir. 2010) (quoting Iqbal, 556 U.S. at 678). Also, the complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555 (citations omitted).

         To survive a motion to dismiss under Rule 12(b)(6), a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.'” Iqbal, 556 U.S. at 679 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678 (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ...


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