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International Fruit Genetics, LLC v. Per Asset Management Trust

United States District Court, C.D. California

November 24, 2014

INTERNATIONAL FRUIT GENETICS, LLC, Plaintiff,
v.
P.E.R. ASSET MANAGEMENT TRUST; PIETER EDUARD RETIEF REDELINGHUYS N.O., IN HIS CAPACITY AS TRUSTEE; DEBORAH MARY REDELINGHUYS N.O., IN HER CAPACITY AS TRUSTEE, Defendants.

ORDER DENYING DEFENDANTS' MOTION TO DISMISS [26] AND PLAINTIFF'S REQUEST FOR ATTORNEY'S FEES

OTIS D. WRIGHT, II, District Judge.

I. INTRODUCTION

Until recently, Defendants were an approved licensee of Plaintiff for certain table grape varieties in South Africa. This case arises from Defendants' alleged theft, illegal importation into South Africa, and propagation of Plaintiff's proprietary plant materials in violation of the parties' license agreement. Defendants filed two Motions to Dismiss, the first on behalf of P.E.R. Asset Management Trust and the second on behalf of the two trustees. (ECF Nos. 18, 26.) Plaintiff opposed both Motions. (ECF Nos. 20, 28.) However, at the November 24, 2014 hearing, Plaintiff stipulated to dismiss Defendant P.E.R. Asset Management Trust. Therefore, the Court need not decide the Motion. For the reasons discussed below, the Court ORDERS that Plaintiff shall file a Voluntary Notice of Dismissal as to Defendant P.E.R. Asset Management Trust within seven days, and DENIES Defendants' Motion to Dismiss as to the trustees. (ECF No. 26.) The Court also DENIES Plaintiff's request for attorney's fees. (ECF Nos. 28.)

II. FACTUAL BACKGROUND

1. Plaintiff's Business Model

Plaintiff International Fruit Genetics, LLC ("IFG") is a California-based company that invents, develops, and licenses proprietary hybrid table grape varieties in the United States and other countries. (FAC ¶ 9.) IFG operates a grape-breeding program that invents and develops new table grape varieties, which are of particular interest to commercial grape growers. ( Id. ¶ 10.) In the last thirteen years, IFG has spent millions of dollars on its breeding program. ( Id. ) IFG's income is derived principally from the intellectual property rights held in the proprietary plant varieties that it develops. ( Id. ¶ 11.) Consequently, it is critical that these rights are closely monitored and controlled. ( Id. )

After IFG develops a table grape variety, the company applies for "plant variety rights" in foreign countries. ( Id. ) IFG then enters license agreements with parties in those countries that allow them to grow, evaluate, market, farm, and/or sell table grapes from IFG's proprietary table grape varieties, subject to the terms and conditions of the license agreements. ( Id. ¶ 12.)

IFG does not provide its plant materials directly to licensees in foreign countries. ( Id. ¶ 13.) Rather, IFG enters license agreements with one or more table grape nurseries in foreign countries and grants the nurseries the exclusive right to propagate and distribute proprietary plants to IFG-approved licensees in those countries. ( Id. ) This provides IFG with an effective method to monitor and control the distribution of proprietary plant material to growers around the world. ( Id. )

Once license agreements are in place, IFG places its proprietary plant varieties into the plant quarantine system of foreign countries. ( Id. ¶ 14.) Most countries with large agricultural sectors require that new plant materials undergo a quarantine process where plants are tested for diseases and pests. ( Id. ) When plants pass the quarantine process, they are delivered to IFG-licensed nurseries, which then propagate the plants for distribution to other licensees. ( Id. )

2. Plaintiff and Defendants Enter Testing Agreement, Marketing Agreement, and Planting Agreement

In July 2004, IFG entered an International Fruit Genetics Proprietary Variety Testing and Marketing Rights Option Agreement (the "Testing Agreement") with Defendants, P.E.R Asset Management Trust (the "Trust") and two trustees, Pieter Eduard Retief Redelinghuys ("Pieter") and Deborah Mary Redelinghuys ("Deborah").[1] ( Id. ¶ 20.) Pieter is a grape grower and marketer based in South Africa. ( Id . ¶ 19.) The Testing Agreement allowed Defendants to evaluate IFG's proprietary table grape varieties and gave Defendants an option to enter a marketing rights agreement. ( Id. ¶ 20.)

In April 2010, IFG entered an International Fruit Genetics Proprietary Variety Marketing Rights and Trademark License Agreement (the "Marketing Agreement"). ( Id. ¶ 32.) The Marketing Agreement allowed Defendants to market IFG's proprietary plant varieties to plant growers, market and sell fruit from licensees entitled to grow IFG's proprietary plant varieties, and request that Defendants and IFG or IFG and other plant growers enter planting rights agreements. ( Id. )

In April 2010, IFG also entered an International Fruit Genetics Proprietary Variety Planting Rights and Trademark License Agreement (the "Planting Agreement"). ( Id. ¶ 36.) The Planting Agreement allowed Defendants to grow plants of certain varieties, in certain quantities, and in certain locations with IFG's written consent. ( Id. )

3. Jurisdiction and Venue Listed in Agreements

The Testing Agreement contained a "Jurisdiction and Venue" section, which provided that the exclusive forums in which the parties could adjudicate any case or controversy would be the "United States District Court, Central District of California or a court of similar standing in the Territory." ( Id. Ex. F "General Terms and Conditions.") The "Territory" was defined as the Republic of South Africa and the Republic of Namibia. ( Id. ¶ 30.) The Marketing Agreement and Planting Agreement provided that the exclusive forum in which the parties could adjudicate any case or controversy would be the United States District Court, Central District of California. ( Id. Ex. F "General Terms and Conditions.")

The Marketing Agreement and Planting Agreement each contained a provision that in the event of litigation arising out of or in connection with either agreement in the United States District Court, Central District of California, the parties would not contest or challenge the Court's jurisdiction or venue. ( Id. )

4. Defendants' Propagation of Plaintiff Plant Material

In May 2013, 1, 680 plants of IFG's proprietary IFG Ten table grape variety were discovered on Defendants' property. ( Id. ¶ 40.) Other IFG proprietary table grape varieties were found growing on Defendants' property: 540 plants of IFG Nineteen, 1, 960 plants of IFG Seventeen, 1, 840 plants of IFG Sixteen, 864 plants of IFG Six, and 277 vines of IFG Eleven. ( Id. ¶¶ 41-45.) None of these plants or vines had been supplied to Defendants nor were Defendants authorized to propagate these IFG varieties. ( Id. )

On April 4, 2014, IFG alleges, Pieter admitted to IFG's Business Manager that in July 2013 he took a cutting of an IFG Eleven grapevine from the Director of IFG's ranch in California, smuggled it into South Africa, and propagated the cutting to produce four vines on Defendants' property in South Africa. ( Id. ¶ 46.) Pieter explained, allegedly, it was from these four vines that he propagated the additional IFG Eleven plants that were found on Defendants' property. ( Id. )

IFG obtained a DNA test of the IFG Eleven plants found on Defendants' property and those held in quarantine at the nursery. ( Id. ¶ 47.) The test showed that the IFG Eleven plants on Defendants' property were ...


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