S & A Farms, Inc. (“S & A”) sued Farms.com Risk Management, Limited (“Farms.com”), 1 alleging that Farms.com violated the Commodity Exchange Act (CEA), breached its fiduciary duty, committed negligence, and made misrepresentations. Farms.com moved for summary judgment on all of S & A’s claims. The district court 2 granted Farms.com’s motion for summary judgment. S & A now appeals. We affirm.
I. Background
S & A is an Iowa corporation that produces soybeans, hogs, and corn аnd sells *951 soybeans and hogs. Scout Renaud (“Renaud”) and Abbie Renaud are S & A’s sole officers, directors, and shareholders. Renaud is S & A’s sole employee. Farms, com is a Canadian corporation that advises producers in the marketing and selling of crops and hogs.
In September 2007, based on a friend’s recommendation, Renaud met with Victor Aideyan, a Senior Risk Management Consultant for Farms.com. At this meeting, Renaud sought risk-management advice for his corn and hog operations. On September 17, 2007, Aideyan and Renaud executed a Price Risk Management Service Letter. This letter obligated Farms.com to provide consulting services for S & A’s corn inputs and hog outputs and obligated 5 & A to pay for these services.
After the September 2007 meeting, Renaud opened a commodities-trading account with MF Global, Inc. Although the account only authorized Renaud to make trades, he typically did so after consulting Aideyan. On some occasions, Aideyan would contact MF Global in advance or participate in conference calls with Renaud and MF Global to ensure that Renaud accurately communicated the trades as Aideyan advised. In September 2008, Aideyan left his employment at Farms.com. Maurizo Agostino replaced Aideyan as Renaud’s investment advisor.
Between September 20, 2007, and February 24, 2009, Renaud made all of the trades reflected on his MF Global account, except for one, based on Aideyаn’s or Agostino’s advice. During this time, Renaud’s MF Global account lost a net value of $1,040,958.75. On February 24, 2009, S 6 A unilaterally liquidated its positions and stopped obtaining advice from Farms, com.
On December 8, 2009, S & A sued Farms.com, alleging, among other things, that it violated the Commodity Exchange Act (CEA), 7 U.S.C. § 1 et seq., by failing to register with the Commodity Futures Trading Commission (CFTC). In its complaint S & A alleged:
21. Defendants employed devices, scheme or artifice to defraud S & A.
22. Defendants engaged in a transaction practice or cause [sic] of business which operated as a fraud or deceit uрon S & A.
23. Defendants failed to disclose to S & A that they were required to register with the Commodity Futures Trading Commission (CFTC) and had not done so. If S & A had known that Defendants were operating their business in violation of the Commodity Exchange Act it never would have done business with Defendants.
24. Defendants failed to disclose their trading experience and other material information required by CFTC regulations.
25. Defendants’ actions were a proximate cause of damages to S & A.
S & A also asserted claims for breach of fiduciary duty, negligence, and misrepresentation under Iowa law.
On March 11, 2011, Farms.com moved for summary judgment on all of S & A’s claims. The district court granted Farms, corn’s motion for summary judgment on all of S & A’s claims. On S & A’s fraud claim, the district court found that S & A could not establish proximate cause — a necessary element under the CEA. Specifically, the district court found that 7 U.S.C. § 25(a)(l)’s language, whiсh states that “[a]ny person ... who violates this chapter ... shall be liable for actual damages ... caused by such a violation,” requires that the CEA violation caused the harm. Because S & A could not show that Farms, corn’s unregistered status — the alleged CEA violation — proximately caused S & A’s harm, the district court granted summary judgment in favor of Farms.com. *952 Regarding S & A’s breaeh-of-fiduciaryduty claim, the district court found that S & A produced no evidence of a commodity investment advisor’s standard of care, nor did it produce evidence of how Farms.com breached that standard of care. 3
II. Discussion
On appeal, S & A argues that the district court erred in granting summary judgment in favor of Farms.com on its fraud claim under 7 U.S.C. § 60(1)(B) and its Iowa breach of fiduciary duty claim.
4
“We review the district court’s grant of summary judgment
de novo.” Morrison Enters., LLC v. Dravo Corp.,
A. S & A’s CEA Fraud Claim
S & A argues that the district court erred in granting summary judgment for Farms.com on its fraud claim. Specifically, S & A argues that the district court applied an incorrect standard of causation in analyzing its fraud claim. Farms.com counters, arguing that S & A did not plead fraudulent inducement; thus, S & A adduced no evidence that Farms.com’s unregistered status proximately caused S & A’s damages.
We must first determine whether S
& A
pleaded fraudulent inducemеnt or if it only pleaded that Farms.com engaged in a fraudulent scheme because these claims, although similar, allege different types of causation.
5
“The federal rule that governs pleadings requires only that a complaint be ‘a short and plain statеment of the claim showing that the pleader is entitled to relief.’ ”
Eckert v. Titan Tire Corp.,
In its complaint, S & A alleges that: “Defendants failed to disclose to S & A that they were required to register with the Commodity Futures Trading Commission (CFTC) and had not done so. If S & A had known that Defendants were operating their business in violation of the Commodity Exchange Act it never would have done business with Defendants.” S & A argues that these two sentences sufficiently apprised Farms.com that it was asserting a fraudulent-inducement claim. We disagree. Not only does the complaint not use the word “induce,” but, as the district court found, the complaint’s languаge tracks the language of 7 U.S.C. § 6o (1)(B), which a party typically uses to assert a fraud claim under the CEA, rather than 7 U.S.C. § 6b, which a party typically uses to assert a fraudulent-inducement claim. Moreover, the two sentences on which S & A relies are a part of a lаrger allegation of a fraudulent scheme. We read the complaint to allege that Farms, corn’s unregistered status was a part of the fraudulent scheme that proximately caused S & A harm, rather than a separate allegation of fraudulent inducеment. Further, as the district court found, S & A failed to affirmatively state that it was pursuing a fraudulent-inducement claim until Farms, com moved for summary judgment.
See N. States Power Co.,
Next, we must determine whether the district court properly granted summary judgment on S & A’s pleaded fraud claim. A party may recover damages for CEA violations under 7 U.S.C. § 25(a)(1), which provides:
Any person (other than a registered entity or registered futures association) who violаtes this chapter or who willfully aids, abets, counsels, induces, or procures the commission of a violation of this chapter shall be liable for actual damages resulting from one or more of the transactions referred to in subparagraphs (A) through (D) of this рaragraph ....
The district court interpreted this language to require a plaintiff to show damages caused by the alleged CEA violation. We agree and read the plain language of § 25(a)(1) to require that a plaintiff show “damages ... caused by [the CEA] violation.” Id. Thus, it is nоt enough for a plaintiff to show a CEA violation and damages, rather a plaintiff must show that the CEA violation proximately caused the damages for which the plaintiff seeks relief.
Other courts addressing this section have reached similar conclusions. In
Hudson v. Wilhelm,
an investor sued a broker and brokerage firm for alleged fraud under 7 U.S.C. § 25(a)(1) for failing to register with the CFTC.
Similarly, in
Ping He (Hai Nam) Co. Ltd. v. NonFerrous Metals (U.S.A.) Inc.,
an investor plaintiff sued a broker for fraud under 7 U.S.C. § 25(a)(1) for failing to register.
Here, S & A’s complaint alleges only a fraudulent scheme. It does not allege that Farms.com’s failure to register caused its damages. As the Ping He court noted, “[a]s a logical matter, it is unlikely that any private litigant could show • ‘actual damages’ flowing from a § 4d violation because, as courts and the CFTC have recognized, [a broker-defendant’s] unregistered status, in and of itself, does not cause another financial damage.” Id. at 108. Thus, the district court did not err by granting Farms.com’s motion for summary judgment on S & A’s fraud claim.
B. S & A’s Breach-of-Fiduciary-Duty Claim.
S & A also argues that the district court erred in granting summary judgment to Farms.com on its breach-offlduciary-duty claim. In response, Farms, com argues that S
&
A presented no evidence establishing a commodity investment advisor’s standard of care or showing that Farms.com breached that standard of care. “As a federal court sitting in diversity jurisdiction, we apply the law that the forum state would apply.”
Winthrop Res. Corp. v. Stanley Works,
“To prove breach of a fiduciary duty, the plaintiff must show a fiduciary relationship existed between the plaintiff and the defendants, the defendants breached that fiduciary duty, and the breach was a proximate cause of damage to the plaintiff.”
Unterberger v. Bresnahan,
No. 09-1538,
In response to Farms.com’s motion for summary judgment, S & A asserted that Nicholas Zagotta’s expert report set forth the standard of care for commodity-trading advisors and also showed that Farms, com breached that standard. Zagotta opined:
[T]he stratеgy of [Farms.com] was not an effective, efficient or legitimate strategy. It was not effective in that S & A lost $1,040,958.75 in its implementations, it was not efficient in that it would have and should have been much simpler and much smaller____ It was not a legitimate hedge strategy because thе ratio of cash to derivatives was so much greater than 1:1 and because the S & A’s purchases of cash corn obviated the need to hedge a large portion of the cash short.
Viewing the record, we find that S & A presented no evidence describing a commodity-trading advisor’s standard of care or how Farms.com breached that standard of care. Zagotta’s opinion failed to set forth a standard of care for commodity-
*955
trading advisors. Zagotta also did not state that Farms.com, as a investment trading advisor, breached its stаndard of care. Zagotta only faulted Farms.com’s strategy as a poor hedge strategy. But nowhere in the record does S & A provide evidence that a commodity investment ad-visor must always recommend a proper hedge strategy when advising investors. A rеasonable jury would have no way of determining whether Farms.com acted with “the standard of the skill and knowledge normally possessed by [commodity investment advisors].”
Humiston Grain Co.,
III. Conclusion
Accordingly, we affirm the district court’s grant of Farms.com’s motion for summary judgment on S & A’s claims.
Notes
. S & A also sued Farms.Com, Inc., the district court granted summary judgment to both defendants although S & A did not contest summary judgment for Farms.Com, Inc. Rather, S & A only appeals the district court's grant of judgment in favor of Farms.com Risk Management, Limited.
. The Honorable Robert W. Pratt, Chief Judge of the United States District Court for the Southern District of Iowa.
. The district court also granted summary judgment in favor of Farms.com on S & A’s negligence and misrepresentation claims, but S & A does not appeal the grant of summary judgment on those claims.
. S & A also argues that the district court erred by imposing a scienter requirement on 7 U.S.C. § 6o (1)(B). But because of our resolution of S & A's fraud claim, we need not address this argument.
. "As a logical matter, it is unlikely that any private litigant could show 'actual damages’ flowing from a [7 U.S.C. § 6d] violation because, as courts and the CFTC have recognized, [a defendant’s] unregistered status, in and of itself, does not cause another financial damage.”
Ping He (Hai Nam) Co. Ltd. v. NonFerrous Metals (U.S.A.) Inc.,