Cargill, Inc. v. Rossi ( 2023 )

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
CARGILL, INCORPORATED, )
)
Plaintiff, )
)
)
v. ) C.A. No. N23C-03-047 SKR CCLD
)
JUAN PABLO ROSSI, )
)
Defendant. )
)
Submitted: August 15, 2023
Decided: October 16, 2023
MEMORANDUM OPINION AND ORDER
Upon Consideration of Defendant’s Motion to Dismiss:
GRANTED.
Richard P. Rollo, Esquire, Travis S. Hunter, Esquire, and Jordan L. Cramer, Esquire,
RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware, Attorneys for Plaintiff
Cargill, Incorporated.
John A. Sensing, Esquire, and Hannah L. Paxton, Esquire, POTTER ANDERSON &
CORROON LLP, Wilmington, Delaware, Attorneys for Defendant Juan Pablo Rossi.
RENNIE, J.
INTRODUCTION
This memorandum opinion considers and grants Defendant Juan Pablo Rossi
(“Rossi”)’s motion to dismiss.1 The underlying case is a breach of contract action
brought by Plaintiff Cargill, Incorporated (“Cargill”) related to Rossi’s change of
employment from Cargill to a competitor. Cargill asserts that this conduct breached
non-competition provisions in the equity compensation agreements that Rossi signed
during his time at Cargill.2
FACTUAL OVERVIEW
For approximately eighteen years, Rossi worked for Cargill,3 a Delaware
corporation that distributes “food, agricultural, financial, and industrial products”
globally.4 Cargill awarded Rossi equity compensation in the course of his
employment. Each time Rossi accepted stock, stock options, or other equity
products as compensation, he signed an associated agreement. These included the
S.A.C.I. and Subsidiaries Restated Stock Option Agreement,5 the 2019 Restricted
Stock Unit Agreement,6 the 2020 Restricted Stock Unit Agreement,7 and the 2020
Performance Share Unit Agreement8 (each separately an “Agreement” and
1
Def.’s Mot. to Dismiss.
2
Compl. ¶¶ 1-8.
3
Def.’s Opening Br. Supp. Mot. to Dismiss (“Opening Br.”) 3.
4
Compl. ¶ 9; Compl. Ex. B § 2.7(a).
5
Compl. Ex. A.
6
Compl. Ex. C.
7
Compl. Ex. E.
8
Compl. Ex. G.
2
collectively the “Agreements”). Each Agreement incorporated by reference an
accompanying ownership plan, including the Cargill, S.A.C.I. and Subsidiaries
Restated Stock Option Plan,9 the 2019 Restricted Stock Unit Plan,10 the 2020
Restricted Stock Unit Plan,11 and the 2020 Performance Share Unit Plan12 (each
separately a “Plan” and collectively the “Plans”).
Each Plan barred Rossi from engaging in “Competitive Activity” for one year
after the conclusion of his employment at Cargill.13 They defined “Competitive
Activity” to include:
Engaging in any business activity, in any geographic market in which
the Corporation or any Related Entity is then engaged in business that
is competitive with the business of the Corporation or any Related
Entity. Participants understand that the Corporation currently does
business globally and that the Corporation has operations and
participates in markets around the world . . . .14
Pursuant to the Agreements and Plans, Rossi would forfeit his equity
compensation if he engaged in Competitive Activity within that one-year post-
separation period:
If, prior to a Participant’s Separation from Service or during the one-
year period after the Participant’s Separation from Service, regardless
of the reason for such separation, the Participant directly or indirectly
engages in Competitive Activity . . . , the Participant will immediately
9
Compl. Ex. B.
10
Compl. Ex. D.
11
Compl. Ex. F.
12
Compl. Ex. H.
13
E.g., Compl. Ex. A § 18(B).
14
Compl. Ex. B. § 2.7(a); see also Compl. Ex. D § 2.9(a); Compl. Ex. F § 2.9(a); Compl. Ex. H §
2.15(a).
3
forfeit all of his or her Options, whether vested or unvested, any shares
not yet issued to him or her in connection with the exercise of an Option,
and any shares of Management Stock (or, if applicable, the cash
equivalent at redemption of the shares) obtained pursuant to the Plan
during the period that begins one year prior to the Competitive Activity
. . . and ends one year following the Separation from Service.15
Further, each Agreement included the following choice of law and forum
selection provisions:
The Plan and this Agreement . . . shall be governed by the laws of the
State of Delaware and construed according [sic] therewith without
giving effect to any principles of conflicts of law. The exclusive venue
for any action or proceeding hereunder or related to the Plan shall be in
the Delaware Court of Chancery, whether or not such venue is or
subsequently becomes inconvenient, and the parties to the Agreement
consent to the jurisdiction of the Delaware Court of Chancery and
expressly waive the right to object to such venue and to remove the case
from the Delaware Court of Chancery.16
In December 2021 and March 2022, Rossi redeemed shares of Cargill stock
and collected the proceeds.17 On or around March 25, 2022, Rossi concluded his
employment at Cargill, and at that time, he had been the Vice President of Cargill’s
Food Segment Lead.18 By April 2022, Rossi was hired as Vice President,
Wholesome Ingredients and Texturants, by Archer-Daniels-Midland Company
(“ADM”), a competitor of Cargill.19
15
Compl. Ex. A § 18(B); Compl. Ex. B § 5.4(d); Compl. Ex. C § 18(B); Compl. Ex. D § 4.6(d);
Compl. Ex. E § 18(B); Compl. Ex. F § 4.6(d); Compl. Ex. G § 18(B); Compl. Ex. H § 4.6(d).
16
Compl. Ex. A § 15; see also Compl. Ex. C § 15; Compl. Ex. E § 15; Compl. Ex. G § 15.
17
Compl. ¶ 35.
18
Compl. ¶ 10.
19
Opening Br. 5-6; Compl. ¶ 32.
4
On May 18, 2022, Cargill mailed a letter to Rossi stating that, by joining
ADM, he had forfeited his equity compensation and the proceeds from the
redemptions of his Cargill, pursuant to the Agreements and Plans. Cargill demanded
that Rossi repay the proceeds from the redemptions within thirty days.20
Rossi did not reply to the letter or send the payment.21 This litigation
followed.
PROCEDURAL HISTORY
Cargill filed its complaint against Rossi in the Delaware Superior Court on
March 22, 2023. Cargill asserts claims for breach of contract arising from Rossi’s
acceptance of employment with ADM within one year of his departure from Cargill.
Cargill seeks monetary damages, an order that Rossi materially breached the
Agreements, and a declaration that Rossi forfeited his Cargill stock, stock options,
and the proceeds from the stock that he redeemed.22
Rossi moved to dismiss the complaint on May 24, 2023, pursuant to Superior
Court Civil Rules 12(b)(2) and 12(b)(6) (the “Motion”). Rossi argues in the Motion
that this Court does not have personal jurisdiction over him.23 Further, he argues
that his acceptance of employment with ADM did not breach the non-competition
20
Compl. Ex. K.
21
Compl. ¶ 7.
22
Compl. 15.
23
Opening Br. 8-13.
5
provisions of the Agreements and Plans and, even if it did, the provisions are facially
unenforceable because they are unreasonably broad in scope and unduly harsh.24
On July 11, 2023, Cargill responded in opposition to the Motion, arguing that
this Court has personal jurisdiction over Rossi, that he breached the non-competition
provisions of the Agreements and Plans, and that those provisions are enforceable.25
On August 4, 2023, Rossi filed a reply brief in further support of the Motion,
expanding on his earlier arguments.26 This Court heard argument on the Motion on
August 15, 2023.
STANDARD OF REVIEW27
Upon a motion to dismiss for lack of personal jurisdiction made pursuant to
Superior Court Civil Rule 12(b)(2), the plaintiff has the burden to show a basis for
the Court’s exercise of jurisdiction over the nonresident defendant.28 If, as here,
there has been no evidentiary hearing or meaningful discovery, the Court evaluates
whether the plaintiff has made a prima facie showing of personal jurisdiction in the
complaint. In doing so, the Court accepts the well-pleaded factual allegations in the
complaint as true, unless contradicted by affidavit, construes the record in the light
24
Id. 5-8.
25
Pl.’s Answering Br. Opp’n Def.’s Mot. to Dismiss (“Answering Br.”).
26
Def.’s Reply Br. Further Supp. Mot. to Dismiss.
27
Because the Motion is analyzed and disposed of based on lack of personal jurisdiction, the
Court will only set forth the standard of review pursuant to Superior Court Civil Rule 12(b)(2).
28
Super Ct. Civ. R. 12(b)(2); Green Am. Recycling, LLC v. Clean Earth, Inc., 2021 WL 2211696,
at *3 (Del. Super. June 1, 2021) (quoting Focus Fin. Partners, LLC v. Holsopple, 241 A.3d 784,
800 (Del. Ch. 2020)).
6
most favorable to the nonmovant, and draws all reasonable inferences in favor of the
nonmovant.29
LEGAL ANALYSIS
Delaware law is unambiguously contractarian:
This jurisdiction respects the right of parties to freely contract and to be
able to rely on the enforceability of their agreements; where Delaware’s
law applies, with very limited exceptions, our courts will enforce the
contractual scheme that the parties have arrived at through their own
self-ordering, both in recognition of a right to self-order and to promote
certainty of obligations and benefits.30
Delaware courts are reluctant to “reliev[e] sophisticated business entities of
the burden of freely negotiated contracts.”31 Hence, in Delaware, a freely negotiated
contractual arrangement can give rise to personal jurisdiction in this state.32 Where,
for instance, “a party is considered bound to a forum selection clause, the court treats
that party as having expressly consented to personal jurisdiction” in the chosen
forum.33 In such a circumstance, the party “should clearly anticipate being required
to litigate in that forum.”34 This has limits, of course: “[T]he party is bound only by
29
Green Am. Recycling, 2021 WL 2211696, at *3.
30
New Enter. Assocs. 14, L.P. v. Rich, 295 A.3d 520, 565-66 (Del. Ch. 2023) (quoting Ascension
Ins. Holdings, LLC v. Underwood, 2015 WL 356002, at *4 (Del. Ch. Jan. 28, 2015)).
31
Id. at 566 (quoting Abry Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d 1032, 1061-62
(Del. Ch. 2006)).
32
BAM Int’l, LLC v. MSBA Grp. Inc., 2021 WL 5905878, at *6 (Del. Ch. Dec. 14, 2021).
33
Id. (citing Neurvana Med., LLC v. Balt USA, LLC, 2019 WL 4464268, at *3 (Del. Ch. Sept. 18,
2019)); Bouchard v. Braidy Indus., 2020 WL 2036601, at *8 (Del. Ch. Apr. 28, 2020) (“Where the
defendant has consented to jurisdiction, . . . both aspects of the jurisdictional analysis are deemed
satisfied.”).
34
Eagle Force Holdings, LLC v. Campbell, 187 A.3d 1209, 1228 (Del. 2018); see also Focus Fin.
Partners, LLC v. Holsopple, 241 A.3d 784, 801 (Del. Ch. 2020) (quoting Nat’l Indus. Grp.
7
the terms of the consent, and such consent applies only to those causes of action that
are identified in the consent provision.”35
Cargill contends that Rossi consented to the Delaware Superior Court’s
jurisdiction over him by signing the Agreements and Plans, even though each
contained a clause which states that “the parties to the Agreement consent to the
jurisdiction of the Delaware Court of Chancery.”36 However, a plain reading of this
carefully crafted, Chancery-specific, exclusive provision fails to confer jurisdiction
upon the Delaware Superior Court. This language does not match the cautionary
wording often utilized in forum selection clauses wherein jurisdiction is either
expressly conferred generally among various Delaware courts or on one specific
Delaware court with various designated alternative courts. For instance, in Ruggiero
v. FuturaGene, plc., the Court of Chancery found that a forum selection clause
manifesting the parties’ consent to “the exclusive jurisdiction of the State of
Delaware” was enforceable in the personal jurisdiction context.37 Relatedly, in
Eagle Force Holdings, LLC v. Campbell, the Delaware Supreme Court found that a
forum selection clause manifesting the parties’ consent to suits brought in “any court
of general jurisdiction in the City of Wilmington, Delaware[,]” was also enforceable
(Holding) v. Carlyle Inv. Mgmt. L.L.C., 67 A.3d 373, 381 (Del. 2013)) (“Where the parties to the
forum selection clause have consented freely and knowingly to the court’s exercise of jurisdiction,
the clause is sufficient to confer personal jurisdiction on a court.”)
35
Ruggiero v. FuturaGene, plc., 948 A.2d 1124, 1132 (Del. Ch. 2008).
36
Answering Br. 7-8.
37
948 A.2d at 1132 (but not forgoing minimum contacts analysis for corporation’s directors).
8
for personal jurisdiction purposes.38 In contrast, the forum selection clauses of the
Agreements and Plans that Rossi signed specify narrowly that he consents to the
personal jurisdiction of the Court of Chancery, not Delaware courts in general or this
Court.39 Interpreting this provision contrary to what it says would contravene the
parties’ intentions and their bargained-for arrangement.40 Hence, the forum selection
provisions in the Agreements and Plans do not confer personal jurisdiction over
Rossi in this Court.
Cargill argues in the alternative that “principles of implied consent” require
that this Court exercise personal jurisdiction over Rossi, citing In re Pilgrim’s Pride
Corp. Derivative Litigation.41 In that case, the company’s bylaws provided that “the
sole and exclusive forum” for various causes of action would be “the Court of
Chancery of the State of Delaware and any state appellate court therefrom within the
38
187 A.3d 1209, 1222, 1228-29 (Del. 2018). Further, in City of Providence v. First Citizens
BancShares, Inc., the Court of Chancery enforced a forum selection bylaw manifesting the parties’
consent to the jurisdiction of “the United States District Court for the Eastern District of North
Carolina, or if that court lacks jurisdiction, any North Carolina state court with jurisdiction.” 99
A.3d 229, 230-31, 242 (Del. Ch. 2014).
39
See, e.g., Compl. Ex. A § 15.
40
See Ruggiero, 948 A.2d at 1138 (“[T]o determine whether a party to a contract submitted to the
court’s jurisdiction, ‘the express terms of the relevant provisions’ govern.”). It is readily apparent
that the parties bargained for an arrangement whereby any challenge to the non-competition
provision would be remedied in the Court of Chancery through injunctive or other equitable relief.
Cargill, for strategic reasons, realized that it would fare better challenging Rossi’s new
employment through a forfeiture theory as opposed to seeking injunctive or other relief related to
a breach of a covenant not to compete.
41
Answering Br. 24-25
9
State of Delaware.”42 This forum selection bylaw provided that if the Court of
Chancery declined to accept jurisdiction, “any state or federal court within the State
of Delaware” had jurisdiction.43 Hence, the Court of Chancery held that the
company’s shareholders had “consented implicitly to the existence of personal
jurisdiction” in Delaware by participating in the vote to adopt this broad forum
selection bylaw.44
Cargill’s reliance on Pilgrim’s Pride does not advance its argument. Unlike
the broad provision in Pilgrim’s Pride, the forum selection clauses in the Agreements
and Plans signed by Cargill and Rossi are narrow and exclusive. They only establish
consent to the personal jurisdiction of the Court of Chancery, not this Court, and they
do not designate alternative courts. The Pilgrim’s Pride court held that the
shareholders had implicitly consented to the forum selection bylaw as it was written,
not to a broader bylaw than was written.45 Rossi cannot consent to a hypothetical
forum selection clause for which Cargill and Rossi did not bargain. Further, Rossi
has taken no action that would otherwise manifest his implied consent to this Court’s
personal jurisdiction over him. Hence, Rossi has not implicitly consented to the
personal jurisdiction of the Delaware Superior Court.
42
In re Pilgrim’s Pride Corp. Derivative Litig., 2019 WL 1224556, at *12-13 (Del. Ch. Mar. 15,
2019).
43
Id. at *13.
44
Id. at *15.
45
Id. at *12-13.
10
Where a party has not consented to personal jurisdiction in the relevant forum
by contract, as is the case here, this Court follows a two-step analysis to determine
whether personal jurisdiction over a nonresident defendant may otherwise be
established. First, it determines whether any subsection of the Delaware long-arm
statute, 10 Del. C. § 3104, applies. Second, if the long-arm statute applies, it
determines whether exercising personal jurisdiction over the nonresident defendant
violates due process.46
A. The Long-Arm Statute
Cargill contends that subsection (c)(1) of the Delaware long-arm statute is
applicable to confer personal jurisdiction over Rossi in Delaware. Pursuant to that
subsection, this Court “may exercise personal jurisdiction over any nonresident . . .
who . . . [t]ransacts any business or performs any character of work or service in the
46
Matthew v. Fläkt Woods Grp. SA, 56 A.3d 1023, 1027 (Del. 2012).
11
State.”47 To satisfy this requirement, “some act must actually occur in Delaware.”48
The subsection confers specific, not general, jurisdiction, so there must be some
nexus between this Delaware act and the conduct that forms the basis of the suit.49
During Rossi’s eighteen-year period of employment at Cargill, he worked in
Argentina and Minneapolis, Minnesota.50 Rossi states that he did not attend
meetings or conduct business in Delaware during this period and indeed “has never
even been to Delaware.”51 Since leaving Cargill and joining ADM, Rossi resides in
Glencoe, Illinois.52 Cargill does not contend that Rossi was ever physically present
in Delaware or transacted any business here. Accordingly, no act actually occurred
in Delaware, and the long-arm statute does not apply.53
47
10 Del. C. § 3104(c)(1). The other subsections, inapplicable in this case, provide for the exercise
of personal jurisdiction over a person who:
(2) Contracts to supply services or things in this State;
(3) Causes tortious injury in the State by an act or omission in this State;
(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State
if the person regularly does or solicits business, engages in any other persistent course of conduct
in the State or derives substantial revenue from services, or things used or consumed in the State;
(5) Has an interest in, uses, or possesses real property in the State; or
(6) Contracts to insure or act as surety for, or on, any person, property, risk, contract, obligation or
agreement located, executed or to be performed within the State at the time the contract is made,
unless the parties otherwise provide in writing.
Id. § 3104(c)(2)-(6).
48
Murphy v. Pentwater Capital Mgmt. LP, 2017 WL 5068572, at *3 (Del. Super. Oct. 31, 2017)
(quoting Mobile Diagnostic Grp. Holdings, LLC v. Suer, 972 A.2d 799, 804 (Del. Ch. 2009)).
49
In re P3 Health Grp. Holdings, LLC, 2022 WL 8011513, at *5 (Del. Ch. Oct. 14, 2022).
50
Compl. Ex. J.
51
Opening Br. 10-12; Def.’s Aff. Supp. Def.’s Mot. to Dismiss.
52
Compl. ¶ 10.
53
See Kelly v. McKesson HBOC, Inc., 2002 WL 88939, at *17 (Del. Jan. 17, 2002) (“Absent any
actual conduct in Delaware, [the defendant chief financial officer’s] positions . . . are insufficient
12
B. Due Process
Because no provision of 10 Del. C. § 3104 applies here, there is no need to
engage in a due process analysis.54 Nonetheless, Cargill appears to argue that this
Court can and should still engage in a due process analysis based upon its reading of
the seminal case, Burger King Corp. v. Rudzewicz.55 Cargill misapprehends the law
on this point. Cargill looks to Burger King to support its proposition that the parties’
selection of Delaware choice of law, combined with Rossi’s pattern of contractual
conduct with Cargill, confers personal jurisdiction over Rossi in this Court.56
In Burger King, the United States Supreme Court held that due process was
not offended by a district court’s application of Florida’s long-arm statute to exercise
to establish jurisdiction. . . . [T]his Court will not establish personal jurisdiction on the mere fact
that he was employed by a Delaware corporation.”), quoted in LVI Grp. Invs., LLC v. NCM Grp.
Holdings, LLC, 2017 WL 3912632, at *4 n.42 (Del. Ch. Sept. 7, 2017); Herman v. BRP, Inc., 2015
WL 1733805, at *4 (Del. Super. Apr. 13, 2015) (“It is also well established that a choice of
Delaware law provision in a contract is not, of itself, a sufficient transaction of business in the
State to confer jurisdiction under § 3104(c)(1).”); EBP Lifestyle Brands Holdings, Inc. v. Boulbain,
2017 WL 3328363, at *4 (Del. Ch. Aug. 4, 2017) (citing NRG Barriers, Inc. v. Jelin, 1996 WL
377014 (Del. Ch. July 1, 1996)) (defendant entering form stockholders’ agreement with Delaware
choice of law provision did not confer personal jurisdiction under long-arm statute); see also
Intellimark, Inc. v. Rowe, 2005 WL 2739500, at *2 (Del. Super. Oct. 24, 2005) (“[T]here is no
basis under the long-arm statute to confer personal jurisdiction simply on the basis of a choice of
law provision in a promissory note.”).
54
Mobile Diagnostic Grp. Holdings, LLC v. Suer, 972 A.2d 799, 809 n.46 (Del. Ch. 2009)
(“Because I have found that there is no statutory basis for jurisdiction over [the defendant] in
Delaware, I need not reach . . . whether this Court’s exercise of jurisdiction over [him] would
comport with the requirements of the Due Process Clause . . . .”); Abajian v. Kennedy, 1992 WL
8794, at *9 (Del. Ch. Jan. 17, 1992) (“I conclude that [the defendant] is not subject to personal
jurisdiction under Delaware’s long-arm statute, 10 Del. C. § 3104. As a result, I need not reach the
issue whether sustaining jurisdiction . . . would violate due process requirements of the 14th
Amendment.”).
55
471 U.S. 462 (1985).
56
Answering Br. 27-28.
13
personal jurisdiction over a nonresident defendant whose claim arose out-of-state.
In so holding, the Court noted that the state selected in the parties’ choice of law
provision was just one factor in the accompanying due process analysis, insufficient
on its own to confer personal jurisdiction. The defendant’s interdependent, twenty-
year relationship with the plaintiff corporation’s Florida headquarters “reinforced his
deliberate affiliation” with Florida.57
Here, however, Burger King does not support the need for a due process
analysis. Unlike in Burger King, in which the defendant’s conduct fell within the
purview of Florida’s long-arm statute and necessitated that the Court consider due
process factors,58 Rossi’s conduct does not fall within any subsection of Delaware’s
long-arm statute, 10 Del. C. § 3104. Hence, Burger King does not apply, and this
Court need not evaluate whether an exercise of personal jurisdiction over Rossi
comports with the due process analysis of that case.
Ultimately, Rossi’s only relationship with Delaware is contractual, and the
contracts with Cargill which established that relationship could not lead Rossi to
reasonably anticipate being required to defend himself in this Court. To receive his
equity compensation, he signed the Agreements and Plans, which included forum
57
471 U.S. 462, 463-64, 482-83 (1985).
58
The district court found that Florida’s long-arm statute reached the defendant’s conduct. The
circuit court did not analyze the statutory issue because the parties stipulated that the long-arm
statute applied. The Supreme Court questioned this stipulation but did not analyze with depth or
dispute the first step of the personal jurisdiction analysis. Id. at 470 n.12.
14
selection clauses evincing an intent to consent only to the personal jurisdiction of
the Court of Chancery. Rossi worked at Cargill from Argentina, then from
Minnesota, then left the company. These contacts are insufficient to reach the legal
thresholds required for this Court to exercise personal jurisdiction over him.59
CONCLUSION
Rossi’s motion to dismiss is GRANTED. Because the action is properly
dismissed pursuant to Superior Court Civil Rule 12(b)(2), this Court need not
address Rossi’s alternative arguments for dismissal pursuant to Rule 12(b)(6).
IT IS SO ORDERED.
______________________________
Sheldon K. Rennie, Judge
59
At oral argument, the Court inquired of counsel whether the jurisdictional challenge would be
mooted if Cargill had initiated this action in the Court of Chancery, and it was dismissed for lack
of subject matter jurisdiction then transferred to this Court, pursuant to 10 Del. C. § 1902. Counsel
for Rossi alerted the Court that it would have properly reserved the right to challenge personal
jurisdiction in this Court in such a scenario. Hence, Rossi would still have had grounds to move
to dismiss for lack of personal jurisdiction in this Court. Cargill’s choice of initial forum is not
determinative in this case.
15