Pioneer HI-Bred Int'l v. Alten, LLC

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PIONEER HI-BRED INTERNATIONAL, INC., CORTEVA AGRISCIENCE, LLC, AGRELIANT GENETICS, LLC, BECK'S SUPERIOR HYBRIDS, INC., and WINFIELD SOLUTIONS, LLC, Plaintiffs, v. ALTEN, LLC, MEAD CATTLE COMPANY, LLC, GREEN DISPOSAL MEAD LLC, PLATTE RIVER GREEN FUELS, LLC, and TANNER SHAW, in his individual and official capacities, Defendants.

SYNGENTA SEEDS, LLC, Plaintiff, v. ALTEN, LLC, MEAD CATTLE COMPANY, LLC, GREEN DISPOSAL MEAD LLC, TANNER SHAW, and SCOTT TINGELHOFF, Defendants.

BAYER U.S. LLC, Plaintiff, v. ALTEN, LLC, MEAD CATTLE COMPANY, LLC, GREEN DISPOSAL MEAD LLC, PLATTE RIVER GREEN FUELS, LLC, and TANNER SHAW, in his individual and official capacities, Defendants.

Nos. 8:22CV70, 8:22CV71, 8:22CV82

United States District Court, D. Nebraska

February 8, 2023

MEMORANDUM AND ORDER ON JOINT MOTION FOR PRELIMINARY INJUNCTION

Brian C. Buescher United States District Judge These consolidated cases arise from the failure of an ethanol manufacturing plant in Mead, Nebraska. Filing 1 at 1 (¶ 1).^[1] The plaintiffs supplied corn and other seed for use in the ethanol manufacturing process and the defendants operated the ethanol plant. Filing 1 at 2 (¶¶ 2-3). Hence, the Court will refer to the parties as the Seed Companies and the Operators, respectively. In these actions, the Seed Companies seek to recover from the Operators the costs that the Seed Companies have incurred in responding to the environmental conditions left behind at the failed ethanol plant and stabilizing the site when the Operators failed to take such actions. Filing 1 at 1 (¶ 1).^[2]

These cases are now before the Court on the Seed Companies' Joint Motion for Preliminary Injunction and Order of Immediate Attachment Pursuant to Fed.R.Civ.P. 65(a) 64(a)-(b), and Neb. Rev. Stat. § 25-1001 et seq. Filing 51. The Seed Companies seek a preliminary injunction enjoining the Operators from transferring or concealing any and all assets and property of the Operators and related entities (the Related Entities) and the prejudgment attachment of all such assets and property. Filing 51 at 2. The Seed Companies contend that such relief is necessary or there will be no assets left for them to recover from the Operators when judgment is ultimately entered in their favor on their claims of breach of contract, contractual indemnity voidable transfers, common law indemnity, contribution, equitable subrogation, unjust enrichment, fraud in the inducement, and promissory estoppel. Filing 55 at 3; see also Complaint, Filing 1 at 21-34 (¶¶ 106-179).

The Court filed an Order that among other things set a hearing on the Joint Motion for February 3, 2023. Filing 94. The Court has considered the parties' evidence and arguments submitted prior to and at the preliminary injunction hearing, as well as a pre-hearing Amicus Curiae Brief filed by the State of Nebraska. The Court now grants the Joint Motion for Preliminary Injunction, albeit not on precisely the terms requested by the Seed Companies.

By way of summary, the Court concludes that the Seed Companies seek available preliminary injunctive relief on equitable claims, not simply money damages on claims at law. The specific equitable claims that the Court finds make such preliminary injunctive relief available are claims for subrogation and unjust enrichment and claims under the Nebraska Uniform Voidable Transactions Act (UVTA). For this and other reasons, the Court finds it unnecessary to consider the Seed Companies' request for attachment of assets.

Having concluded that a preliminary injunction is an available remedy in this case, the Court turns to consideration of whether the Seed Companies have established that they are entitled to such a remedy. To obtain a preliminary injunction, “ʻ[a] plaintiff . . . must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.'” Tumey v. Mycroft AI, Inc., 27 F.4th 657, 665 (8th Cir. 2022) (bracketed numbers inserted) (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)).

As to “likelihood of success on the merits,” the Court rejects the Operators' argument that the Seed Companies cannot recover for “voluntary” payments. The Court concludes that the Seed Companies' remediation efforts satisfy the requirements of the “emergency assistance” doctrine as defined in the Restatement (Third) of Restitution and Unjust Enrichment § 22. The Court also rejects the Operators' argument that the Seed Companies cannot recover because the Seed Companies lack privity of contract with Mead Cattle, Green Disposal, Platte River, and Related Entities. The Court finds that privity is not a requirement of the equitable claims on which the Seed Companies rely for available preliminary injunctive relief. The Court also rejects the Operators' argument that the Seed Companies must “pierce the corporate veil” or demonstrate that various entities are “alter egos” of the Operators to obtain preliminary injunctive relief against them. Even without reaching the question of whether the corporate identities of any Operators or Related Entities must be disregarded, the Court concludes that it has the authority to grant a preliminary injunction against all the entities at issue because they fall within the scope of entities that can be enjoined pursuant to Rule 65(d)(2) of the Federal Rules of Civil Procedure.

Just as importantly, the Court concludes that the Seed Companies have a fair chance of proving their equitable claims on which their Joint Motion for Preliminary Injunction is based. The Court finds in essence that the record so far shows that the Seed Companies have a fair chance of showing that they fulfilled the Operators' obligation to effect remediation at the site of the failed ethanol plant when the Operators did not do so, thus entitling the Seed Companies as a matter of equity to recover assets from the Operators. As to the UVTA claim, the Court finds further that the Operators intended to conceal some of those assets. Thus, the “likelihood of success” factor weighs heavily in favor of preliminary injunctive relief.

As to “irreparable harm,” the Court rejects the Operators' argument that the Seed Companies seek only economic losses that can be remedied at law with money damages. Instead, the Court notes that, under applicable law, the threat of unrecoverable economic loss does qualify as irreparable harm. The Court finds such irreparable harm is likely in the face of the Seed Companies' expenditure of nearly $28 million so far to fulfill the Operators' remediation obligations, which the Seed Companies seek to recover; the total of something less than $1.8 million dollars in cash assets left to the Operators; the Operators' monthly “cash burn” of over $100,000 per month; and the strong likelihood that the cash will be dissipated before any judgment is entered.

As to the “balance of harms,” the Court is persuaded that a complete asset “freeze” would effectively put the Operators out of business and damage their position in this and other litigation. Further, and as amicus curiae the State of Nebraska explains, such relief would make AltEn unable to fund the few activities it has been performing for necessary permit compliance and other activity under a consent order with the State. Thus, this factor warrants some limitation on the extent of the “freeze” of assets to accommodate certain demonstrably necessary expenses. Likewise, the State of Nebraska's concern about a total asset “freeze” is a persuasive statement of the “public interest.” Thus, this factor also counsels a limitation on the extent of any preliminary injunction to allow the Operators to perform certain tasks, including monitoring and permitting.

Although the Court will allow the Operators access to assets for certain demonstrably necessary categories of expenses, the Court will otherwise enjoin the Operators, their officers, agents, servants, employees, attorneys, and other persons or entities who are in active concert or participation with the Operators, specifically including certain Related Entities, from dissipating assets pending the conclusion of this litigation.

I. INTRODUCTION

A. Factual Background^[[3]]

1.The Ethanol Plant Operations

The Seed Companies were among companies that would supply corn wheat, sorghum, milo seed, and other grains (collectively, Seed) to defendant AltEn, LLC, for use in its ethanol manufacturing process. Filing 1 at 8 (Filing 31). The Operators ran an ethanol plant in Mead, Nebraska, as a “closed-loop” system comprising an ethanol manufacturing plant (defendant AltEn), cattle feedlot (defendant Mead Cattle Company, LLC), and a biochar production unit (defendant Green Disposal Mead, LLC). Filing 1 at 2 (¶¶ 2, 13, 15, and 17). Defendant Tanner Shaw was the president of all three entities and directed and controlled them. Filing 1 at 2 (¶ 2).^[4]

Somewhat more specifically, the AltEn Facility in Mead, Nebraska began ethanol manufacturing operations on or about January 9, 2015, and used grain (primarily corn) to produce approximately 24,000,000 gallons of ethanol annually. Filing 1 at 7 (¶ 23). Mead Cattle owned and operated a cattle feedlot located on the immediately adjacent property to the AltEn Facility. Filing 1 at 7-8 (¶ 24). Mead Cattle transferred manure to the AltEn Facility, where AltEn's two digesters would then turn the manure into methane used to power its ethanol production, and AltEn would convey byproduct from the ethanol production, known as wet distiller's grains, to Mead Cattle's feedlot as feed for the cattle. Filing 1 at 8 (¶ 24). Green Disposal owned a biochar unit at the AltEn...