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Growgenix Solutions LLC v. Roberts International Agricultural Development, LLC

United States District Court, D. Utah, Central Division

December 19, 2019

GROWGENIX SOLUTIONS LLC, a Utah limited liability company, dba GROVIV; GROW SOLUTIONS TECH LLC, a Utah limited liability company, and NU SKIN ENTERPRISES, INC., a Delaware corporation, Plaintiffs,
v.
ROBERTS INTERNATIONAL AGRICULTURAL DEVELOPMENT, LLC, a Utah limited liability company; ROBERTS CONSULTING & MARKETING, LLC, a Utah limited liability company; ROBERTS DAIRY, INC., a Utah corporation; DON ROBERTS, an individual; and DOES 1-10, Defendants.

          MEMORANDUM OPINION AND ORDER

          Dee Benson United States District Judge.

         Before the court is Defendants' Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(1). (Dkt. No. 11.) The motion has been fully briefed by the parties and the court has considered the facts and arguments set forth in those filings. Pursuant to civil rule 7-1(f) of the United States District Court for the District of Utah Rules of Practice, the court finds that oral argument would not be helpful or necessary and elects to determine the motion on the basis of the written memoranda. DUCivR 7-1(f).

         BACKGROUND

         The Parties

         The Plaintiffs include the following related business entities: Growgenix Solutions LLC, dba Groviv (“Groviv”); Grow Solutions Tech LLC (“Grow Solutions”); and Nu Skin Enterprises, Inc. (“Nu Skin”). Both Groviv and Grow Solutions are wholly owned subsidiaries of Nu Skin. (Dkt. 2, Compl. ¶¶ 12 - 17.) Nu Skin, through its subsidiary Groviv, seeks to commercialize and sell a system of “‘controlled environment agriculture' in order to grow sustainable, clean, and nutritious crops using a fraction of the resources of traditional agriculture.” (Id. ¶ 18.) Nu Skin created the subsidiary Grow Solutions for the purpose of owning the intellectual property rights that belong to the technology behind Groviv's system. The Grow Solutions technology “uses low-heat lighting applied to horticulture together with software and data in order to give plants the optimum amount of nutrients, water, lighting, and atmospheric conditions. (Id.) It can be used in “climate-controlled structures year-round in nearly any environment, and thereby solves many conventional agriculture problems relating to fresh water, arable land, chemical run-off, weather, and energy use.” (Id.)

         The Defendants include Don Roberts, a dairy farmer residing in Beaver County, Utah, as well as the following business entities, of which Roberts is the owner and principal: Roberts Dairy, Inc. (“Roberts Dairy”); Roberts International Agricultural Development, LLC (“Roberts International”); and Roberts Consulting & Marketing, LLC (“Roberts Consulting”). Roberts Dairy consists of approximately 5, 000 acres of land, 4, 000 dairy cows, and feedlots for 1, 000 beef cattle in Beaver County. Roberts International presents itself as an “agricultural development company” that was established to develop agricultural projects in “various international markets” and to provide “strategic agricultural business solutions.” (Dkt. 2, Compl. ¶ 22.) Roberts Consulting offers consulting and management services relating to agricultural development.” (Id. ¶ 23.)

         Brief History of the Parties' Relationship

         Over the course of approximately three years, Plaintiffs and Defendants developed a relationship based on their shared interest in agricultural development. Beginning in late 2016 and continuing through early 2017, Groviv (and eventually Groviv and Nu Skin) met with Roberts to explore the prospect of collaborating with Roberts and having Roberts serve as an “agricultural testing vendor” for Groviv. (Dkt. 2, Compl. ¶¶ 24-26.) The parties continued to communicate throughout 2017, and over time their discussions expanded to include the potential for Roberts to have more extensive involvement in Groviv's operations. (Id. ¶ 27.) The parties did not, however, precisely defined Roberts' role in the collaboration, nor did they clearly establish the contours of their business relationship. Nonetheless, the parties began working together, sharing ideas and potential plans, and on December 11, 2017, Groviv began a product research study at Roberts Dairy. (Id. ¶ 28.)

         The parties continued to work together for the next year or so and, as they had discussed, Roberts' involvement with and contributions to Groviv extended beyond simply hosting the research study. Although the parties now dispute the extent of Roberts' contributions as well as his role at Groviv, both sides agree that the precise terms of the business relationship were never reduced to a formal written agreement. Even so, the parties continued to discuss a variety of compensation options for Roberts' involvement and contributions, including potential salary, expense reimbursement, consulting compensation, and stock options. (Dkt. 2, Compl. ¶¶ 36-49.)

         By early 2019, however, it had become clear that Nu Skin and Roberts had vastly different perspectives regarding the nature and scope of their relationship. Roberts sensed he was being demoted and felt as though Nu Skin was “looking to cut him out.” (Dkt. 11-1 (Sealed) at 9.) By April 2019, the relationship had soured.

         On April 30, 2019, Roberts, through counsel, sent a 14-page demand letter to Nu Skin (“Demand Letter” or “Letter”) detailing Roberts' perspective of the business relationship between Roberts and Nu Skin, as well as Roberts' perceived contributions to Groviv's technology and operations. (Dkt. 11-1 (Sealed), Demand Letter.) In the concluding section of the Letter, under the heading “DEMAND, ” it reads: “As is clear from the facts and the law, Nu Skin formed a general partnership with Roberts as co-owners of [the] innovative technology [claimed in the ‘564 Patent Application] and Groviv. Thus Roberts is an equal partner in the operations and future of Groviv . . . .” (Id. at 13.)

         On May 22, 2019, Plaintiffs filed the Complaint in this case pursuant to the Utah Declaratory Judgment Act and the Federal Declaratory Judgment Act. (Dkt. 2, Compl. at 13-16.) The Complaint contains four causes of action, seeking a declaratory judgment on each claim as follows: (1) that none of the Defendants has a general partnership interest relating to Groviv under the Utah Uniform Partnership Act (Utah Code § 48-1d-100, et seq.); (2) that Roberts made no contribution to the technology identified in Grow Solutions' Patent No. ‘434 and thus Roberts is not entitled to a “correction of inventorship” under the Patent Act (35 U.S.C. § 256); (3) that Groviv and Grow Solutions have not misappropriated any trade secret of Roberts or Roberts International in violation of the Defend Trade Secrets Act (18 U.S.C. § 1831, et seq.); and (4) that Groviv and Grow Solutions have not misappropriated any trade secret of Roberts or Roberts International in violation of the Utah Uniform Trade Secrets Act (Utah Code § 13-24-2, et seq.).

         Plaintiffs assert that their Complaint for Declaratory Relief is proper because the Demand Letter “details extensive claims and allegations that confer federal jurisdiction” over Plaintiffs' claims. (Dkt. 21 at 1.) Specifically, Plaintiffs assert: (1) that the “facts alleged, under the totality of the circumstances, ” show a “substantial controversy between the parties, ” and (2) that federal question jurisdiction is present because the Patent Act claim and Defend Trade Secrets Act claim “arise under the laws of the United States.” (Dkt. 21 at 4, citing 28 U.S.C. § 1331.) As for the state-law claims, Plaintiffs assert that this court has supplemental jurisdiction over them because they are “so related to the claims in this action within this Court's original jurisdiction that they form part of the same case or controversy.” (Compl. ¶ 10, citing 28 U.S.C. § 1367.)

         On July 2, 2019, Defendants filed the present motion to dismiss, pursuant to Federal Rule of Civil Procedure 21(b)(1), arguing that Plaintiffs' Complaint For Declaratory Relief should be dismissed in its entirety for lack of jurisdiction. (Dkt. 9 at 1.) Directing the court's attention to the Demand Letter, Defendants claim that the actual dispute between the parties is focused on the following two issues: (1) the formation of a partnership, alleging that “Roberts and Nu Skin had formed a Roberts-Nu Skin Partnership and as a result [Roberts] was entitled to all the legal rights of a general partner, ” and (2) the inventorship of the ‘564 Application, alleging that Roberts should be identified as an inventor of the subject matter disclosed in the ‘564 patent application. (Dkt. 11 at 13.)

         In other words, Defendants argue that there is no “actual controversy” between the parties as to Plaintiffs' claims under federal law (the Patent Act and Defend Trade Secrets Act[1]), and therefore those claims should be dismissed. Additionally, Defendants assert that even though there is an actual dispute under the Utah Uniform Partnership Act [Plaintiffs' First Cause of Action], this claim turns entirely on the application ...


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