JMR FARMS v. C.H. ROBINSON WORLDWIDE

This order arises from a class action filed by a group of produce growers (collectively 'Growers') against C.H. Robinson Worldwide, Inc., C.H. Robinson Company, Inc., and C.H. Robinson Company (collectively 'CHR'), a large freight and logistics broker. Growers alleged two categories of claims: (1) violations of the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. § 499a et seq., a federal statute regulating the produce industry; and (2) breaches of fiduciary duty under state law, on the theory that CHR acted as Growers' agent in 'delivered-sale transactions' and failed to disclose that it was profiting from freight charges.

In a prior order (ECF No. 247), the court granted CHR's motion for summary judgment on the PACA claims and denied it on the fiduciary-duty claims. That earlier order stated that (a) CHR owed fiduciary duties to Growers as a matter of law because CHR was Growers' agent in delivered-sale transactions under the factors set out in Jurek v. Thompson, 241 N.W.2d 788 (Minn. 1976); (b) CHR 'clearly breached' those fiduciary duties under Minnesota law; and (c) the only remaining issue was what portion of CHR's sales commissions should be forfeited under the so-called 'Perl II factors.'

After the earlier order, the parties disagreed about its scope. Growers read it as resolving both the existence and breach of fiduciary duty in their favor, leaving only damages for trial. CHR argued neither issue had been finally resolved, and alternatively argued that the court's ruling in Growers' favor on these issues violated Federal Rule of Civil Procedure 56(f), which requires a court to give 'notice and a reasonable time to respond' before granting summary judgment to a non-moving party (i.e., a party that did not itself file the motion).

Chief Judge Schiltz's clarification order addresses two distinct issues:

1. Existence of Fiduciary Duty: The court reaffirmed its prior ruling that CHR owed fiduciary duties to Growers as a matter of law. The court rejected CHR's Rule 56(f) argument on this point because CHR itself had moved for summary judgment arguing it owed no fiduciary duties, both parties had briefed the Jurek factors, and Growers had explicitly argued in briefing that CHR was a fiduciary as a matter of law on undisputed facts. Under Eighth Circuit precedent — including Barkley, Inc. v. Gabriel Bros., Inc., 829 F.3d 1030 (8th Cir. 2016), and Johnson v. Bismarck Pub. Sch. Dist., 949 F.2d 1000 (8th Cir. 1991) — a court may sua sponte (on its own initiative) grant summary judgment to the non-moving party when the moving party raised and fully litigated the issue, because the moving party had adequate notice the issue could be resolved against it. The court also noted that CHR had long known Growers did not intend to offer individualized evidence on fiduciary-duty existence, as plaintiffs' counsel stated at a March 2024 class-certification hearing.

2. Breach of Fiduciary Duty: The court acknowledged a procedural error in its prior ruling on this question. Because CHR had not moved for summary judgment on the breach issue, and because CHR could not have anticipated that the court would change course on whether Growers needed to show they bore the economic burden of the breach, the court found it had not complied with Rule 56(f) when it sua sponte ruled that CHR had breached its duties. The court also noted that CHR claims to have evidence that the Growers knew CHR was profiting from freight, which — if credited — could result in a verdict for CHR on the breach issue. The court cited footnote 3 of the earlier order, which had observed that CHR could have avoided any breach by simply disclosing its freight profits. Accordingly, the court clarified that the breach-of-fiduciary-duty question must go to trial.

The court also addressed causation, noting it had already ruled that under Minnesota law, Growers do not need to prove they were harmed by the breach in order to recover the commissions they paid CHR; therefore, causation of harm is not an issue for trial.

In a footnote, the court noted that CHR's merits-based objections to the fiduciary-duty-existence ruling amounted to an improper motion for reconsideration without following the Local Rules (D. Minn. LR 7.1(j)).

Finally, the court directed the Clerk of Court to substitute Sanway Farms, Inc. for Central Florida Fruit Sales, LLC as a named plaintiff, consistent with a prior finding in ECF Nos. 245 and 247.

The motion for clarification was granted in part (as to the breach ruling) and denied in part (as to the existence-of-fiduciary-duty ruling and all other arguments). The case will proceed to trial on at least the breach-of-fiduciary-duty issue and damages.