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Cuppels v. Mountaire Corp.

Superior Court of Delaware

May 29, 2019

GARY CUPPELS and ANNA-MARIE CUPPELS, individually and on behalf of all others similarly situated, Plaintiffs,
v.
MOUNTAIRE CORPORATION, an Arkansas corporation, MOUNTAIRE FARMS, INC., a Delaware corporation, and MOUNTAIRE FARMS OF DELAWARE, INC., a Delaware corporation, Defendants.

          ORDER CLARIFYING THE SCOPE OF JURISDICTIONAL DISCOVERY

         1) This is an action plaintiffs have filed against Mountaire Corporation ("MC"), Mountaire Farms, Inc. ("MFI"), and Mountaire Farms of Delaware, Inc. ("MFODI") alleging defendants' operations of poultry processing facilities in Delaware caused pollution to the air, soil and water, which, in turn, resulted in injuries to the plaintiffs and caused diminution in the value of their properties.

         2) Plaintiffs assert the following regarding MC, an Arkansas company, based upon information and belief. MC is the corporate parent of MFI and MFODI; it earns substantial revenue from the activities of MFI and MFODI in Delaware; it selects, oversees and shares common owners, board members, directors, officers and personnel of MFI and MFODI, including developing, implementing, and carrying out their environmental projects, policies and compliance; it has guaranteed or otherwise acted as surety and mortgagor for certain financial obligations of MFI and MFODI; and it has purchased, used or sold real property in Sussex County, Delaware.[1] The Amended Complaint asserts that MC, MFI and MFODI:

individually and collectively: a) participated in a material way in owning and operating the chicken processing facility and associated real property used for disposal of wastewater and sludge over the relevant time period; b) through their individual and joint direction, control, and coordination developed, implemented, and carried out the projects, policies and procedures that proximately caused the pollution and damages detailed herein; c) hired, fired, managed, supervised, and instructed employees, agents and contractors involved in the conduct described herein; d) promoted and marketed the "Mountaire" brand and products in Delaware; e) collectively and individually transacted business, solicited business, sold services and products, and entered into contracts causing them to earn revenue directly or indirectly from such business activities conducted in and directed at Delaware; and f) otherwise engaged in conduct that contributed to the pollution and damages described herein as will be uncovered in discovery.[2]

         The Amended Complaint also alleges jurisdiction over MC based upon the theory of agency. Specifically, plaintiffs assert:

92. At all relevant times hereto, MFI and/or MFODI were agents, servants and/or otherwise under the direction, supervision, management, control and oversight of MC. Plaintiffs demand that any denial of agency be answered by affidavit in accordance with 10 Del.C. § 3916.
93. At all relevant times hereto, MC directed, supervised, managed, controlled or provided oversight to MFI and/or MFODI in their a) operating of the chicken processing facility and associated real property for disposal of wastewater and sludge; b) individual and joint direction, control, and coordination in developing, implementing and carrying out environmental projects, policies and procedures that proximately caused the pollution and damages as set forth herein; c) hired, fired, managed, supervised and instructed employees, agents and contractors involved in the conduct described herein; d) promoted and marketed the "Mountaire" brand and products in Delaware; and e) otherwise engaged in conduct that contributed to the pollution and damages described herein and that will be further learned through discovery.
94. As principal, MC has guaranteed or otherwise acted as surety and mortgagor for certain financial obligations of its agents, MFI and MFODI.
95. Through this agency relationship, MC engaged in and transacted business in Delaware and earned revenue directly or indirectly from business activities conducted by its agents, MFI and/or MFODI.
96. Pursuant to principles of agency and the doctrine of respondent superior, the negligence, carelessness, recklessness and willful and wanton conduct of MFA and/or MFODI as set forth herein is imputed to MC making it vicariously liable for the conduct of MFI and/or MFODI.

         3) MC filed a motion to dismiss the action, alleging the Court lacks personal jurisdiction over it. In affidavits submitted with the motion, MC explains it is an Arkansas corporation with its principal place of business in Arkansas. It states that MFODI owns the Millsboro poultry processing facility, including the physical facility, all spray irrigation fields and all land application fields. MC denies that the decision-making regarding the direction, control, and coordination of MC's corporate activities occur in Delaware; it states it never has owned, operated or managed the Millsboro poultry plant; and it asserts it:

[I]s not registered to do business in Delaware, has no registered agent for service of process in Delaware, conducts no business or operations in Delaware, does not rent or own any real or personal property in Delaware, derives no revenue from Delaware, has no bank accounts in Delaware, does not advertise in Delaware, employs no salespeople soliciting business in Delaware, and warehouses no goods in Delaware.[3]

         4) In a February 22, 2019 Order, the Court allowed plaintiffs the opportunity to undertake limited discovery for determining whether MC has had sufficient contact with Delaware to permit this Court to exercise personal jurisdiction over MC. This February 22, 2019 Order also allowed plaintiffs until August 20, 2019, to plead with particularity how this Court may exercise jurisdiction over MC.

         5) The parties have submitted a joint motion seeking clarification of the scope of jurisdictional discovery.

         6) Plaintiffs maintain that their discovery is "tailored to unearth 'MC's contacts with

         Delaware' as the order states, with an eye towards the theories... [of agency and conspiracy]."[4] They further argue:

Plaintiffs discovery seeks various possible contacts MC has with Delaware (footnote omitted). The clear language of the Court's Order - "MC's contacts with Delaware" - permits inquiry into those contacts (citation omitted). And disclosure of those contacts will also lead to the discovery of more evidence relevant to whether this Court has jurisdiction over MC because of its control over, or conspiracy with, MFI and MFODI.[5]

         Plaintiffs admit they are seeking information on all of MC's contacts with Delaware and explain that "[e]ven if certain contacts are not ultimately relevant to the Court's jurisdiction decision, the scope of discovery allows inquiry about those contacts."[6]

         7) Defendants argue the scope of jurisdictional discovery should be limited to MC's contacts with Delaware from which the core allegations in the Amended Complaint arise; i.e., the Millsboro groundwater contamination and air pollution.

         8) The rulings set forth below will guide the Court, the parties and the Special Master[7] on the scope of discovery regarding in personam jurisdiction over MC.

         9) Because the burden is on plaintiffs to establish personal jurisdiction over MC, [8]they are allowed discovery to show that jurisdiction is proper.[9] However, plaintiffs are not allowed to undertake a fishing expedition in order to establish jurisdiction.[10] Instead, the discovery "must relate to the factual allegations in the Complaint and to the question of personal jurisdiction."[11] The Court may employ its discretion to delineate the appropriate scope of discovery.[12] It can limit even relevant discovery to prevent a fishing expedition.[13]

         10) The starting point is 10 Del. C. ยง 3104(c), which specifies when a nonresident establishes legal presence ...


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