Superior Edge, Inc. v. Monsanto Co.
964 F. Supp. 2d 1017
D. Minnesota2013Background
- SEI and Monsanto entered a Software Development and License Agreement for SEI to customize SEI's SalesEdge Accelerator for Monsanto's seed sales initiatives.
- Monsanto had a prior relationship with SST to develop related sales software; conflict arose over allocation of deliverables and compensation.
- Development Plan defined deliverables, milestones, and an agile approach; batch processing was used as a temporary solution for IntelliScans before a web application launched.
- SEI incurred over $1.5 million in costs for IntelliScan batch production; Monsanto funded exclusive licenses and development fees per the Agreement.
- Monsanto terminated the Agreement in 2011; disputes followed over ownership, compensation, and the scope of batch processing and software deliverables.
- SEI filed suit alleging breach of contract and several tort and statutory claims; motions to dismiss and for preliminary injunction were heard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which state's law applies to SEI's claims. | Missouri law governs breach and related claims per contract clause. | Choice-of-law clause applies to breach and related claims; Minnesota or Missouri conflict analysis may apply differently to SST. | Missouri law applies to SEI's contract and related tort claims; Minnesota law applies to tortious interference; SST bound by Minnesota. |
| Existence of a separate batch-processing contract. | Batch processing was an independent agreement for IntelliScan production. | Batch processing was a temporary solution within the Development Plan, not a separate contract. | No separate batch-processing contract; dismiss Count II but allow amendment to integrate batch claims into Count I. |
| Whether SEI's fraud claims are duplicative of contract claims. | Monsanto misrepresented performance and ownership related to the contracted software. | No independent duty; misrepresentation arises from contract performance. | Fraud claims are dismissed as duplicative of the contract and lack independent duty. |
| Validity of conversion and misappropriation claims. | Monsanto retained SEI’s work product and IP post-termination, injuring SEI. | SEI retains copies and ownership; conversion does not lie for mere copies or for ideas. | Conversion claim against Monsanto is dismissed; MUTSA preempts conversion claim against SST; MUTSA claim remains viable. |
| Whether SEI waived its right to arbitrate Count I. | SEI reserved the right to arbitrate Count I while pursuing federal litigation. | SEI engaged in litigation inconsistent with arbitration rights and prejudiced Monsanto. | SEI waived the right to arbitrate Count I; Count I will be resolved in this litigation. |
Key Cases Cited
- Inacom Corp. v. Sears, Roebuck & Co., 254 F.3d 683 (8th Cir.2001) (contract-law choice-of-law can govern related torts when closely tied to contract.)
- Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438 (Minn.Ct.App.2001) (distinguishes enforceability and reach of choice-of-law provisions across nonparties.)
- Holden Farms, Inc. v. Hog Slat, Inc.,, 347 F.3d 1055 (8th Cir.2003) (contractual choice-of-law may apply to related claims when analyzing contract disputes.)
- Northwestern Airlines, Inc. v. Astraea Aviation Servs., Inc., Ill. F.3d 1386 (8th Cir.1997) (recognizes enforcement of choice-of-law clauses in diverse contexts.)
- Micro Display Sys., Inc. v. Ax-tel, Inc., 699 F. Supp. 2d 202 (D. Minn. 1988) ( MUTSA preempts other tort theories that rely on misappropriation of trade secrets.)