Ray L. Olin v. Dakota Access, LLC
910 F.3d 1072
8th Cir.2018Background
- A group of Morton County, N.D. landowners signed easement agreements with Dakota Access, LLC (via agent Contract Land Staff, LLC) for pipeline construction after being offered $180 per 16.5-foot rod plus a 20% prompt-signing bonus; some later learned other landowners received much higher payments.
- Plaintiffs allege Dakota Access induced them to sign by misrepresenting that the offered price was the best available and that refusal could lead to the pipeline being moved or land taken by eminent domain.
- Plaintiffs sued for fraud and related claims, and asserted a cause of action under N.D. Cent. Code § 49-22-16.1 prohibiting acquisition of easements by harassment, threat, intimidation, misrepresentation, deception, fraud, or other unfair tactics.
- The district court treated the § 49-22-16.1 claim as sounding in fraud, applied Federal Rule of Civil Procedure 9(b)’s heightened pleading standard, and dismissed the claim for failure to plead fraud with particularity.
- The landowners appealed only the dismissal of the § 49-22-16.1 claim; the Eighth Circuit reviewed the dismissal de novo, accepting all well-pleaded facts and reasonable inferences in plaintiffs’ favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 49-22-16.1 claim is subject to Rule 9(b) | The statute covers non-fraud tactics too, so Rule 9(b) should not apply | The claim alleges misrepresentations/fraud and relies on same facts as fraud claims, so Rule 9(b) applies | Court held the § 49-22-16.1 claim sounds in fraud and is governed by Rule 9(b) |
| Whether plaintiffs pleaded fraud with particularity under Rule 9(b) | Plaintiffs did not contest 9(b) sufficiency if it applied; argued statute should avoid 9(b) | Dakota Access argued complaint lacked time, place, content, actors tied to specific misrepresentations | Complaint failed Rule 9(b); dismissal affirmed |
| Whether allegations of "misrepresentation" or "deception" avoid fraud characterization | These terms indicate fraud under North Dakota law and should not change pleading standard | Same as plaintiff | Court found North Dakota law treats such claims as fraud, requiring Rule 9(b) compliance |
| Whether non-fraud allegations (harassment, intimidation) survived ordinary notice pleading | Plaintiffs contended non-fraud claims exist under the statute | Dakota Access argued these allegations were conclusory and insufficient under Twombly/Iqbal | Court held the non-fraud allegations were conclusory and dismissed them under ordinary notice pleading as well |
Key Cases Cited
- Olson v. Fairview Health Servs. of Minn., 831 F.3d 1063 (8th Cir. 2016) (standard for de novo review of Rule 12(b)(6) dismissal and 9(b) pleading requirements)
- Retro Television Network, Inc. v. Luken Commc’ns, LLC, 696 F.3d 766 (8th Cir. 2012) (construing allegations in the nonmoving party’s favor on dismissal)
- Streambend Props. II, LLC v. Ivy Tower Minneapolis, LLC, 781 F.3d 1003 (8th Cir. 2015) (Rule 9(b) requires identifying each defendant’s role in alleged fraud)
- United States ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552 (8th Cir. 2006) (Rule 9(b) requires time, place, and content of false representations)
- Republic Bank & Tr. Co. v. Bear Stearns & Co., 683 F.3d 239 (6th Cir. 2012) (whether state-law claim "sounds in fraud" is governed by substantive state law)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir. 2009) (a statutory claim may still sound in fraud even if statute covers non-fraudulent conduct)
- Shapiro v. UJB Fin. Corp., 964 F.2d 272 (3d Cir. 1992) (same principle regarding fraud-characterized claims)
- Shaw v. Digital Equip. Corp., 82 F.3d 1194 (1st Cir. 1996) (Rule 9(b) applies to claims based on a unified course of fraudulent conduct)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (conclusory allegations and formulaic recitations of elements are insufficient to survive dismissal)