90 F.4th 919
7th Cir.2024Background
- Green Plains Trade Group, LLC (Green Plains) and ADM are large ethanol producers; Green Plains alleged ADM manipulated ethanol prices downward at the Argo Terminal, affecting benchmark pricing nationwide.
- Green Plains' contracts for ethanol sales with third parties were tied to the Chicago Benchmark Price, which they claimed ADM depressed through strategic market actions and outsized futures positions.
- Green Plains alleged ADM's conduct caused it to receive lower proceeds on its contracts, and brought a claim for tortious interference with contract in federal court under diversity jurisdiction.
- The district court, applying Nebraska law, dismissed Green Plains’ complaint, holding it failed to allege specific contracts and that Nebraska did not clearly recognize the viability of interference claims that did not require an actual breach (Restatement § 766A claims).
- The district court reasoned that, even though the Nebraska Supreme Court might recognize such a claim, federal courts sitting in diversity should avoid expanding state law without clear state court support.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Must plaintiff plead specific contracts? | Specific identity/details not required at pleading stage | Specific contracts and terms must be alleged | Some specificity required, but not to Rule 9(b) standard |
| Does Nebraska law recognize § 766A? | Nebraska courts have acknowledged/accepted § 766A | Nebraska requires breach or inducement to breach | District court erred: Must determine what state supreme court would do, not just avoid novelty |
| Federal court obligation in diversity | Should apply state substantive law per Erie | Should avoid expanding state law beyond clear precedent | Federal courts must ascertain, as best as possible, what state's highest court would rule |
| Should the complaint be dismissed with prejudice? | Leave to amend should be granted if law may recognize claim | No plausible legal claim stated | If amended, district court should revisit merits under clarified approach |
Key Cases Cited
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (federal courts must apply state substantive law in diversity)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (choice of law in diversity determined by forum state rules)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards: plausibility requirement)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleadings must state a plausible claim)
- Bernhardt v. Polygraphic Co. of America, 350 U.S. 198 (federal courts tasked with predicting how state court would rule on unresolved issues)