United States District Court, D. South Dakota, Southern Division
MEMORANDUM OPINION AND ORDER
E. SCHREIER, UNITED STATES DISTRICT JUDGE
The Hillshire Brands Company moves for an order to dismiss
the complaint for failure to state a claim or, alternatively,
moves to transfer venue to the Northern District of Iowa.
Docket 4. Defendant Unlimited Freight, Inc., joins
Hillshire's motion to transfer venue. Docket 11.
Defendant AFN, LLC, moves to dismiss the complaint for
failure to state a claim. Docket 9. Plaintiff, Dakota
Provisions, LLC, resists these motions and requests leave to
amend its complaint and add Marko Dimitrijevic, an
individual, as a defendant. Docket 15.
following reasons, the court grants Dakota Provisions'
motion to amend, denies the motions to dismiss, and denies
the motion to transfer venue to the Northern District of
facts as alleged in the proposed amended
complaint are as follows:
suffered an explosion and fire at its processing facility
located near Storm Lake, Iowa. As a result of this fire,
Hillshire contacted Dakota Provisions to inquire as to
whether Dakota Provisions could process turkeys for
Hillshire. Dakota Provisions' turkey processing plant is
located in Huron, South Dakota. Although Dakota Provisions
generally only allows its member growers to utilize its
facilities, it agreed to allow Hillshire to process turkeys
at its plant.
the agreement, Hillshire was responsible for arranging
transportation to deliver live turkeys from Hillshire's
grower farms in Iowa and South Dakota to Dakota
Provisions' processing plant. Due to patented technology
and specialized equipment located at Dakota Provisions'
processing plant, Hillshire also agreed to transport the live
turkeys in a specially sized trailer with custom-built cages
that conformed to the processing plant's requirements.
Hillshire hired AFN to work as a brokerage company and to
arrange for transportation of the live turkeys. AFN hired
Unlimited Freight as a motor carrier to transport the turkeys
to the processing plant on behalf of Hillshire. Unlimited
Freight hired Marko Dimitrijevic as its driver.
Hillshire's turkeys to the Huron, South Dakota,
processing plant, Dimitrijevic used a vehicle and specially
sized trailer owned by Dakota Provision. Then, on or about
April 12, 2014, at or near Sioux City, Iowa, Dimitrijevic was
involved in an accident while speeding around a
curve. The crash resulted in the destruction of
the live haul trailer and the 60 specially designed cages,
each of which contained a live turkey at the time of the
crash. Dakota Provisions' trailer also suffered
significant damages. Dakota Provisions seeks damages totaling
$108, 468.48 plus interest.
Provisions, LLC, instituted this action in Beadle County,
South Dakota in May 2016. Docket 1. The complaint was served
on Hillshire on June 8, 2016. Hillshire removed the case with
AFN's consent to this court under 28 U.S.C. § 1441,
based on diversity of jurisdiction under 28 U.S.C. §
1332. Id. Unlimited Freight filed its answer to the
complaint (Docket 5) and consented to removal on July 11,
2016. Docket 6. Dakota Provisions sought leave to amend its
complaint to add additional counts and a new defendant on
August 12, 2016. Docket 15.
Motion to Amend the Complaint
Provisions moves to amend its complaint to make the following
changes: (1) add counts of vicarious liability/agency,
negligent hiring, conversion, and joint and several liability
against Hillshire, AFN, and Unlimited Freight; (2) add Marko
Dimitrijevic as an individual defendant; and (3) add counts
of negligence and negligence per se against Dimitrijevic.
Docket 15. Defendants AFN and Hillshire oppose the motion and
argue that the proposed amendments are futile because the
amendments fail to state a claim. See Docket 19;
Docket 21. Defendant Unlimited Freight also opposes the
motion but argues that the proposed amendment is futile
because the court lacks personal jurisdiction over
Dimitrijevic. Docket 23. As explained further below, the
court will only consider defendants' arguments as to
futility for Counts III, IV, and V of the proposed amended
purpose of pleading under the federal rules “is to
facilitate a proper decision on the merits.” Foman
v. Davis, 371 U.S. 178, 181-82 (1962) (rejecting the
approach that, under the federal rules, “pleading is a
game of skill in which one misstep by counsel may be decisive
to the outcome”) (internal quotations omitted). Federal
Rule of Civil Procedure 15(a) furthers this purpose by
declaring that “[t]he Court should freely give leave
[to amend] when justice so requires.” Fed.R.Civ.P.
15(a)(2). “[T]his mandate is to be heeded.”
Foman, 371 U.S. at 182.
Eighth Circuit Court of Appeals takes a ‘liberal
viewpoint towards leave to amend' and leave ‘should
normally be granted absent good reason for a denial.'
”Libertarian Party of S.D. v. Krebs, 312
F.R.D. 523, 525 (D.S.D. 2016) (quoting Popp Telcomm. v.
Am. Sharecom, Inc., 210 F.3d 928, 943 (8th Cir. 2000)).
Leave to amend should be denied only if evidence exists such
as “undue delay, bad faith, or dilatory motive on the
part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment, [or]
futility of the amendment.” Roberson v. Hayti
Police Dep't, 241 F.3d 992, 995 (8th Cir. 2001)
(citing Foman, 371 U.S. at 182). “Likelihood
of success on the new claim or defenses is not a
consideration for denying leave to amend unless the claim is
clearly frivolous.” Becker v. Univ. of Neb.,
191 F.3d 904, 908 (8th Cir. 1999) (citing Gamma-10
Plastics, Inc. v. Am. President Lines, Ltd., 32 F.3d
1244, 1256 (8th Cir. 1994)).
Proposed Amended Complaint is Not Futile.
is common practice for a party to seek leave to amend in
response to a motion to dismiss.” Ireland v.
Anderson, 2014 WL 3732014, at *2 (D.N.D. July 25, 2014)
(citing Jameson v. State Farm Mut. Auto. Ins. Co.,
871 F.Supp.2d 862, 869 (W.D.Mo. May 14, 2012)). In fact, the
Eighth Circuit Court of Appeals has stated that a
“motion to amend a complaint may moot a pending motion
to dismiss.” Pure Country, Inc. v. Sigma Chi
Fraternity, 312 F.3d 952, 956 (8th Cir. 2002); see
also Janis v. Nelson, 2009 WL 4505933 (D.S.D. Nov. 24,
2009) (holding that the motion to dismiss was rendered moot
after plaintiff filed an amended complaint). “An
amendment is futile if ‘the amended complaint could not
withstand a motion to dismiss under Rule 12(b)(6) of the
Federal Rules of Civil Procedure.' ”
Libertarian Party, 312 F.R.D. at 525 (quoting
Zutz v. Nelson, 601 F.3d 842, 850 (8th Cir. 2010)).
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, ‘to state
a claim to relief that is plausible on its face.' ”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “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. “The
plausibility standard is not akin to a ‘probability
requirement, ' but it asks for more than a sheer
possibility that a defendant has acted unlawfully.”
Id. In this analysis, the court assumes that all
facts asserted in the complaint are true and construes all
reasonable inferences from those facts in a light most
favorable to the complainant. Rochling v. Dep't of
Veterans Affairs, 725 F.3d 927, 930 (8th Cir. 2013). A
well-pleaded complaint should survive a motion to dismiss
“even if it strikes a savvy judge that actual proof of
those facts is improbable, and that a recovery is very remote
and unlikely.” Twombly, 550 U.S. at 555-56
(internal quotations omitted); accord Johnson v. City of
Shelby, 135 S.Ct. 346, 346 (2014) (per curiam)
(“Federal pleading rules call for ‘a short and
plain statement of the claim showing that the pleader is
entitled to relief, ' Fed.R.Civ.P. 8(a)(2); they do not
countenance dismissal of a complaint for imperfect statement
of the legal theory supporting the claim asserted.”).
Count III: Vicarious Liability
this case is before the court on diversity jurisdiction, this
court must look to state substantive law to define the
general scope of an agency relationship and contours of
vicarious liability. Gasperini v. Ctr. for Humanities,
Inc., 518 U.S. 415, 427 (1996) (“Under the
Erie doctrine, federal courts sitting in diversity
apply state substantive law and federal procedural
law.”). The parties presently do not dispute which
state's laws should govern Dakota Provisions'
vicarious liability claim, and the result appears to be the
same under South Dakota and Iowa law. Therefore, the court
will analyze the claim using South Dakota agency law.
is a creature of state law and, in South Dakota, is governed
by both statutory and common law.” Babinski Props.
v. Union Ins. Co., 833 F.Supp.2d 1145, 1150 (D.S.D.
2011). South Dakota defines an agency relationship as
“the representation of one called the principal by
another called the agent in dealing with third
persons.” SDCL § 59-1-1. “An agency
relationship is either actual or ostensible.”
Kasselder v. Kapperman, 316 N.W.2d 628, 630
(S.D.1982). The party claiming that an agency relationship
exists has the burden to prove the existence of the
relationship. Id. To determine whether an agency
relationship exists, the court examines “the relations
of the parties as they exist under their agreement or
agency exists when a principal and agent expressly agree to
enter into an agency relationship.” A.P. & Sons
Constr. v. Johnson, 657 N.W.2d 292, 297 (S.D. 2003);
see also SDCL § 59-1-4 (“Agency is actual
when the principal appoints the agent.”). To
demonstrate the existence of an actual agency relationship, a
party must show the following elements: “(1)
manifestation by the principal that the agent shall act for
him, (2) the agent's acceptance of the undertaking, and
(3) the understanding of the parties that the principal is to
be in control of the undertaking.” A.P. &
Sons, 657 N.W.2d at 297. Where an actual agency
relationship exists, the principal may be held liable for the
agent's negligent or wrongful acts. See
Kasselder, 316 N.W.2d at 630 (concluding that the
principal was liable for the acts of its agent).
agency occurs “when by conduct or want of ordinary care
the principal causes a third person to believe another, who
is not actually appointed, to be his agent.” SDCL
§ 59-1-5; A.P. & Sons, 657 N.W.2d at 297.
To establish the existence of an ostensible agency
relationship, the evidence should indicate that the
principal, by its representations or actions, caused a third
party to believe that a person was its agent.
Kasselder, 316 N.W.2d at 630 (citations omitted)
(“Ostensible agency for which a principal may be held
liable must be traceable to the principal and cannot be
established solely by the acts, declarations or conduct of an
agent.”). Where an ostensible agency relationship
exists, “the principal is bound by the acts of his
agent to only those persons who have ‘in good faith,
and without negligence, incurred a liability or parted with
value upon the faith thereof.' ” Dahl v.
Sittner, 429 N.W.2d 458, 462 (S.D. 1988) (quoting SDCL
South Dakota law, “[a] principal is responsible to
third persons for the negligence of his agent in the
transaction of the business of the agency, including wrongful
acts committed by such agent in and as part of the
transaction of such business; and for his willful omission to
fulfill the obligation of the principal.” SDCL §
59-6-9. Further, “[t]he ancient doctrine of
respondeat superior is well established as
‘holding an employer or principal liable for the
employee's or agent's wrongful acts committed within
the scope of the employment or agency.' ”
Kirlin v. Halverson, 758 N.W.2d 436, 444 (S.D. 2008)
(quoting Respondeat Superior, Black's Law
Dictionary (8th ed. 2004)). For situations involving
subagents, the South Dakota State Legislature has determined
that because “[a] subagent, lawfully appointed,
represents the principal in like manner with the original
agent; and the original agent is not responsible to third
persons for acts of the subagent.” SDCL § 59-3-16.
But see Fanset v. Garden City State Bank, 123 N.W.
686, 688 (S.D. 1909) (stating that “where an agent has
authority to employ subagents, [the agent] will not be liable
for the acts or omissions of the subagent, unless in the
appointment of such subagent [the agent] is guilty of fraud
or negligence, or co-operates with the subagent in such acts
the proposed amended complaint plausibly alleges that an
agency relationship existed between Hillshire, AFN, and
Unlimited Freight. See, e.g., Amended Complaint at
17, ¶¶ 38-39. This agency relationship could be
either actual or ostensible. The agency relationship could be
actual in that the proposed amended complaint alleges that
Hillshire was required to use Dakota Provisions' vehicle,
trailer, and cages to haul the turkeys to the processing
plant and that the vehicle, trailer, and cages were picked up
and actually used. See Amended Complaint at 15,
¶¶ 11-17. One inference from these allegations, is
that a long-standing relationship existed between Hillshire,
AFN, and Unlimited Freight, and that the parties had a
contract that allowed Unlimited Freight and AFN to use the
equipment on Hillshire's behalf. Another inference is
that Hillshire entered into an emergency agreement with AFN
and Unlimited Freight that gave them the actual authority to
use Dakota Provisions' equipment on Hillshire's
agency relationship between Hillshire, AFN, and Unlimited
Freight could also be ostensible. The proposed amended
complaint alleges that AFN and Unlimited Freight used Dakota
Provisions' equipment to transport turkeys on
Hillshire's behalf. See Amended Complaint at 15,
¶ 17. Thus, it would be reasonable for Dakota Provisions
to believe that Hillshire was holding out AFN ...