United States District Court, D. South Dakota, Southern Division
COPPERHEAD AGRICULTURAL PRODUCTS, LLC, a South Dakota Limited Liability Company, and COPPERHEAD CONCAVE LLC, a South Dakota Limited Liability Company, Plaintiffs,
KB AG CORPORATION, LLC, KIMBER MITCHELL, and BRIAN ROBERTSON, Defendants.
MEMORDANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS' MOTION TO DISMISS
LAWRENCE L. PIERSOL UNITED STATES DISTRICT JUDGE
September 27, 2018, Plaintiffs Copperhead Agricultural
Products, LLC, and Copperhead Concave LLC (hereinafter
referred to as "Copperhead") filed a complaint
against Defendants KB Ag Corporation, LLC, Kimber Mitchell,
and Brian Robertson (collectively referred to as
"Defendants") alleging federal claims of false
designation of origin, false association, and cyberpiracy
under the Section 43(a) of Lanham Act, 15 U.S.C. §
1125(a), (d), and state law claims of defamation/trade libel;
tortious interference; unfair competition; and unjust
enrichment, and deceptive trade practices. Doc. 1. This Court
has federal question jurisdiction over Copperhead's
Lanham Act claims and diversity jurisdiction over
Copperhead's state law claims. Copperhead alleges that
the amount in controversy is greater than $75, 000 that the
parties are completely diverse. Doc. 1; see OnePoint
Solutions, LLC v. Borchert, 486 F.3d 342, 346 (8th Cir.
2007) ("Complete diversity of citizenship exists where
no defendant holds citizenship in the same state where any
plaintiff holds citizenship.").
September 25, 2019, this Court issued its Memorandum Opinion
and Order granting Defendants' Motion for Joinder (Doc.
42); denying Defendants' Motion to Dismiss for Lack of
Jurisdiction (Doc. 14); denying Copperhead's motion to
set hearing for preliminary injunctive relief (Doc. 23);
denying Copperhead's motion for preliminary and
declaratory relief (Doc. 26); and denying Defendants'
motion to stay (Doc. 66). Doc. 78. Still pending before this
Court is Defendants' Motion to Dismiss under Federal
Rules of Civil Procedure 12(b)(6) for failure to state a
claim upon which relief may be granted, Doc. 14, as well as
Copperhead's Motion to Compel Discovery, Doc. 43, which
has been referred to Magistrate Judge Veronica Duffy. For the
following reasons, Defendants' Motion to Dismiss is
granted in part and denied in part.
considering a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), the factual allegations of a complaint
are assumed true and construed in favor of the plaintiff,
"even if it strikes a savvy judge that actual proof of
those facts is improbable, and that a recovery is very remote
and unlikely." See Bell Atl. Corp. v. Twombly,
550 U.S. 544, 556 (2007) (internal quotations omitted).
"While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, a
plaintiff's obligation to provide the 'grounds'
of his 'entitle[ment] to relief requires more than labels
and conclusions, and a formulaic recitation of the elements
of a cause of action will not do." Id. at 555
(internal citations omitted). The complaint must allege
facts, which, when taken as true, raise more than a
speculative right to relief. Id.; Benton v. Merrill Lynch
& Co., Inc., 524 F.3d 866, 870 (8th Cir. 2008).
"[W]here the well-pleaded facts do not permit the court
to infer more than the mere possibility of misconduct, the
complaint has alleged-but has not 'show[n]'-'that
the pleader is entitled to relief.'" Ashcroft v.
Iqbal 556 U.S. 662. 679 (2009) (citing Fed.R.Civ.P.
8(a)(2)). "Determining whether a complaint states a
plausible claim for relief is a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense." Id. (citation
considering a motion to dismiss under Rule 12(b)(6), the
court generally must ignore materials outside the pleadings,
but it may consider '"some materials that are part
of the public record or do not contradict the complaint,'
as well as materials that are 'necessarily embraced by
the pleadings.'" Porous Media Corp. v. Pall
Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citations
omitted). In general, material embraced by the complaint
include "documents whose contents are alleged in a
complaint and whose authenticity no party questions, but
which are not physically attached to the pleadings."
Ashanti v. City of Goden Valley, 666 F.3d 1148, 1151
(8th Cir. 2012).
purposes of this motion, the factual allegations of the
complaint are assumed true and construed in favor of
Copperhead, the plaintiffs in this matter. Don Estes is the
patent holder of certain concave technologies that have
previously been affiliated with his name, and the patents
cover certain concave products that attach to farm machinery
such as combines and are used to secure a more efficient
harvesting process. Doc. 1, ¶ 10.
2018, Copperhead Concave entered into two agreements with Don
Estes, the Exclusive Distribution Agreement and Exclusive
License Agreement (collectively referred to as the
"Exclusive License and Distribution Agreement").
Doc. 1, ¶ 12. Pursuant to the Exclusive License
Agreement, Don Estes granted Copperhead Concave the exclusive
right to "make, have made, use, sell, offer for sale,
distribute, develop, and create derivative works,
improvements, and derivations" from and to the
technology any "licensed products". Docs. 20-4;
15-4. "Licensed product" is defined in the
Exclusive License Agreement as "any product covered by
or produced using information, know how, or concepts
contained within or based upon" the patents owned by Don
Estes and includes "further development of the licensed
product, any packaging, and any products previously sold by
or on behalf of the Seller utilizing the information or
concepts contained directly or indirectly within [Don
Estes's patents]." Docs. 20-4; 15-4. In the
Exclusive License Agreement, Don Estes also granted
Copperhead Concave the exclusive right and license to use the
"licensed marks" in connection with "any
making, use, sale, offer for sale, and distribution of any
licensed products." Docs. 20-4; 15-4. Licensed marks is
defined as "any of the marks of [licensor, Don Estes]
under which [Don Estes] offered or sold any [licensed
product] prior to the [e]ffective [d]ate" of the License
Agreement. Docs. 20-4; 15-4. The Exclusive Distribution
Agreement grants Copperhead "the exclusive right and
license to use the product marks," defined as "the
marks 'RPR Conclave (sic) Patents', including any
marks previously used relative to the product except those
marks over which [Don] Estes has no control." Docs.
markets and sells products pursuant to the Exclusive License
and Distribution Agreement. Doc. 1, ¶ 17. The products
are marketed as the Copperhead Concave System and include
products that are correlate with Case International Holland
combines and John Deere combines. Doc. 1, ¶ 17. On its
website, Copperhead describes the Copperhead Concave System
as follows: "Copperhead Concave Systems is proud to
manufacture the original RPR Combine Concave System that was
designed by Donnie Estes from Frankfurt Indiana. His original
design includes a notched round bar, increased space between
round bars and adjustable/removable cover plates." Doc.
1, ¶ 18. In addition to consideration paid to Don Estes
for exclusive licensing and distribution rights, Copperhead
has devoted resources to marketing and selling the Copperhead
Concave System, including advertising online, attending trade
shows, and directly engaging potential customers. Doc. 1,
September 2017, defendants Mitchell and Robertson formed
Defendant KB Ag Corp, LLC. Doc. 1, ¶ 20. Defendants
market and sell a concave product under the label XPR Concave
System and the XPR Threshing/Separating Concave System. Doc.
1, ¶ 21. Defendants market and sell products through
various commercial channels, including through a website
www.estesperformanceconcaves.com. Doc. 1, ¶ 22.
In addition, Defendants market their products with the
trade-name "Estes Performance Concaves" and their
website and other marketing materials refer to
Defendants' products as "Estes Concaves." Doc.
1, ¶ 23. Don Estes objects to the use of the
"Estes" name by Defendants to market the XPR
Concave System. Doc. 1, ¶ 28. Copperhead alleges that
the use of the "Estes" name creates the false and
misleading impression that its products are manufactured by,
authorized by, or otherwise associated with Don Estes and
contain, incorporate, or reflect the patents and product
designs that are known to be associated with his name, work,
and intellectual property. Doc. 1, ¶ 75.
attended the DakotaFest Farm Show in Mitchell, South Dakota,
which featured agricultural events and activities on August
21-13, 2018. Doc. 1, ¶ 37. During the DakotaFest Farm
Show, Defendants approached the Copperhead booth and
allegedly "began loudly making defamatory statements
about Copperhead, its product line, and the ownership
group's affiliation with Don Estes." Doc. 1, ¶
38. Kimber Mitchell made statements about Copperhead's
concave products that Copperhead alleges were both false and
disparaging, and could be heard and understood by individual
attendees of DakotaFest in and around the Plaintiffs'
booth. Doc. 1, ¶¶ 38, 40.
before the Court is Defendants' Motion to Dismiss
pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure. Therein, Defendants move to dismiss
Copperhead's federal Lanham Act claims alleging false
designation of origin/false association under 15 U.S.C.
§ 1125(a), Copperhead's cyberpiracy claim arising
under § 1125(d), as well as Copperhead's state law
claims alleging defamation/trade libel, tortious
interference, unfair competition, unjust enrichment, and
deceptive trade practices. The court will address, in turn,
each of Copperhead's claims that are the subject of
Defendants' motion to dismiss.
is either libel or slander. SDCL § 20-11-2. In South
Dakota, libel is defined as "a false and unprivileged
publication by writing, printing, picture, effigy, or other
fixed representation to the eye which exposes any person to
hatred, contempt, ridicule, or obloquy, or which causes him
to be shunned or avoided, or which has a tendency to injure
him in his occupation." SDCL § 20-11-3. Slander is
defined under South Dakota law as "a false and
unprivileged publication," which:
(1) Charges any person with crime, or with having been
indicted, convicted, or punished for crime;
(2) Imputes to him the present existence of an infectious,
contagious, or loathsome disease;
(3) Tends directly to injury him in respect to his office,
profession, trade, or business, either by imputing to him
general disqualification in those respects which the office
or other occupation peculiarly requires, or by imputing
something with reference to his office, profession, trade, or
business that has a natural tendency to lessen its profit;
(4) Imputes to him impotence or want to chastity; or
(5) By natural consequence, causes actual damage.
SDCL § 20-11-4. A statement is actionable if it implies
a false assertion of an objective fact. Paint Brush Corp.
v. Parts Brush Div. v. Neu, 599 N.W.2d 384, 397 (S.D.
1999) (citing Milkovich v. Lorain Journal Co., 497
U.S. 1, 18-19 (1990)).
their complaint, Copperhead alleges that Defendants have made
"false oral and written representations about Plaintiffs
and their products" to third parties. Doc. 1, ¶ 44.
Copperhead alleges that Defendants "impugned,
disparaged, and defamed Plaintiffs' products in and
through their marketing materials, website testimonials, and
other business activities" and that Defendants'
"defamatory statements and misrepresentations have
occurred in other media as well." Doc. 1, ¶¶
35, 36. In addition to these more general allegations,
Copperhead describes an incident that took place at
DakotaFest Farm Show in Mitchell, South Dakota, during which
Kimber Mithcell allegedly "made statements about
Plaintiffs' concave products that were both false and
disparaging" and that such statements could be heard by
individuals attendees of DakotaFest in and around the
Plaintiffs' trade booth. Defendants allege further that
"[t]he subject matter of the false representations would
tend to injure Plaintiffs in their occupation."
Copperhead fails to set forth the alleged defamatory
statements made to third parties at DakotaFest, in marketing
materials, website testimonials, and other business
activities, the Court concludes that Copperhead fails to
state a claim for defamation upon which relief may be
granted. See Freeman v. Bechtel Contr. Co., 87 F.3d
1029, 1031 (8th Cir. 1996) (quoting Asay v. Hallmark
Cards, Inc., 594 F.2d 692, 699 (8th Cir. 1979)
("[U]nless the complaints set forth the alleged
defamatory statements and identify the persons to whom they
were published, [the defendant] is unable 'to form
responsive pleadings.'")); Holliday v. Great
Ail. & Pacific Tea Co., 256 F.2d 297, 302 (8th Cir.
1958) ("In an action for slander or libel the words
alleged to be defamatory must be pleaded and proved.");
Hernandez v. Aver a Queen of Peace Hosp., 886 N.W.2d
338, 346 (S.D. 2016) (dismissing defamation claim based on
allegations that hospital administrator wrote inaccurate,
false, and malicious statements to people associated with the
hospital because plaintiff failed to "identify an
objectively false fact published by [the
extent that Copperhead alleges that the use by Defendants of
the "Estes" name in their advertising is the basis
of their defamation claim,  the Court finds that this too
fails to state a claim upon which relief may be granted. The
South Dakota Supreme Court has stated that in order to bring
a defamation claim under South Dakota law, "it must
appear that the alleged defamatory language refers to some
ascertained or ascertainable person and that person must be
the plaintiff." See Brodsky v. Journal Pub.
Co.,42 N.W.2d 855, 857 (S.D. 1950) ("We recognize
that an action may be maintained where the defamed person is
not named, but is sufficiently identified by reference in the
article to facts and circumstances from which others may
understand that such person is referred to."); see
also Restatement of the Law - Torts § 564,
Applicability of Defamatory Communication to
Plaintiff (updated Oct. 2019) ("It is necessary
that the recipient of the defamatory communication understand
it as intended to refer to the plaintiff."). The use of
the name "Estes" by Defendants in KB Ag's
website address and marketing materials to market its own
products is not "a false assertion ...