No. 21-1113 ___________________________

Pitman Farms

lllllllllllllllllllllPlaintiff - Appellee

v.

Kuehl Poultry, LLC; Rodney Boser; Dan Schlichting; John Tschida; Chris Uhlenkamp; David Welle

lllllllllllllllllllllDefendants - Appellants ____________

Appeal from United States District Court for the District of Minnesota ____________

Submitted: December 14, 2021 Filed: September 8, 2022 ____________ Before SMITH, Chief Judge, GRUENDER and KOBES, Circuit Judges. ____________ SMITH, Chief Judge.

This case concerns the application of two Minnesota statutes and a rule promulgated by the Minnesota Department of Agriculture (MDA) that establish the liability of a parent company for the unmet contractual obligations of its subsidiary under certain kinds of agricultural contracts. Minn. Stat. § 17.93, subd. 2; Minn. Stat. § 27.133; Minn. R. 1572.0040. At issue is whether the relevant Minnesota statutory and administrative law applies to chicken production contracts between the defendants (collectively, the Growers), who are Minnesota chicken producers, and Simply Essentials, LLC (Simply Essentials), a chicken processor. If they apply, then plaintiff Pitman Farms (Pitman Farms), a California corporation and Simply Essentials’s parent company, is liable to the Growers for Simply Essentials’s breaches of contract.

Pitman Farms brought suit under the federal Declaratory Judgment Act, 28 U.S.C. § 2201, seeking a declaration that the Minnesota statutes and cases governing agricultural parent-company liability do not apply to the Growers’ contracts with Simply Essentials. Pitman Farms argued that the parent-liability authorities do not by their own terms apply to the contracts. Pitman Farms also argued that Delaware law rather than Minnesota law governs the Growers’ contracts with Simply Essentials. Lastly, it argued that applying the parent-liability authorities would run afoul of the federal dormant Commerce Clause doctrine.

The Growers filed a counterclaim also for declaratory relief. In it, they sought contrary declarations and damages. The parties filed cross-motions for summary judgment on their respective declaratory-judgment claims. The district court granted Pitman Farms’s summary-judgment motion and denied the Growers’ cross-motion based upon its conclusion that the Minnesota parent-liability authorities do not by their terms apply to the subject contracts because those authorities do not apply to parent companies of LLCs. It did not reach Pitman Farms’s other arguments. We now reverse and remand for further proceedings.

I. Background A. The Legislation at Issue This dispute concerns two provisions of the Minnesota Statutes and a related administrative rule: (1) Minn. Stat. § 17.93, subd. 2 (“Parent company responsibility for contracts of subsidiaries”), (2) Minn. Stat. § 27.133 (“Parent company liability”),

-2- and (3) Minn. R. 1572.0040 (“PARENT COMPANY LIABILITY”). These authorities establish liability of parent companies for the debts of their subsidiaries with respect to certain agricultural contracts, overriding the general rule that precludes such liability.

These authorities have a common origin. On April 28, 1988, the Minnesota Legislature directed the MDA commissioner to convene an advisory task force to advise and provide recommendations to the legislature for “economic protection for [Minnesota] farmers producing agricultural