Delaware judge denies Mountaire motion to dismiss in class-action suit

Karsnitz: poultry company’s contacts in Delaware were numerous and purposeful
July 1, 2020

A Delaware Superior Court judge has denied Mountaire Farms’ motion to dismiss a class-action lawsuit involving 800 members who allege their groundwater and drinking water was contaminated by wastewater from Mountaire’s Millsboro plant.

The lawsuit has been ongoing for more than two years; Millsboro couple Gary and Anna-Marie Cuppels sued Mountaire for negligence, reckless and unjust enrichment, among other charges. The Cuppels, represented by Lewes attorney Chase Brockstedt, are seeking remediation for groundwater and drinking water wells damaged by Mountaire’s wastewater and sludge disposal, implementation of improvements to Mountaire’s wastewater treatment plant, and compensatory and punitive damages. 

In its motion to dismiss, Mountaire argued that Delaware Superior Court did not have jurisdiction in the case. Mountaire is based in Arkansas but does business in Delaware under the names Mountaire Farms and Mountaire Farms of Delaware Inc. 

The Cuppels argued that while Mountaire is an Arkansas-based corporation, it has sufficient contacts in Delaware to support personal jurisdiction for Delaware courts. 

In his decision, Judge Craig Karsnitz agreed, saying Mountaire Farms of Delaware is an agent for parent company Mountaire Corporation, which directs and authorizes activities in Delaware. 

Karsnitz said Mountaire Corporation is on the mortgage recorded with the Sussex County Recorder of Deeds and shares liability for any defaults on that loan, demonstrating a significant interest in real property in Delaware. Karsnitz said in 2000, when Mountaire purchased the land for the Millsboro plant, the company considered the acquisition so important that it held a special meeting of its board of directors to award CEO Ronald Cameron a $460,000 bonus for completing the sale.  Karsnitz listed additional reasons for why he has jurisdiction over the case.  According to the Cuppels, Mountaire knew about problems with nitrate levels at the Millsboro plant as early as 2002. In 2009, Karsnitz said, Mountaire bought a house in Millsboro for the president of Mountaire Farms of Delaware. He said Mountaire employees routinely fly from Arkansas to Georgetown for meetings in Millsboro on company business. 

The overlap of directors between Mountaire Corporation and Mountaire Farms of Delaware is 100 percent, Karsnitz said, with Mountaire Corporation making capital investment decisions for the Delaware company, as well as managing processing volumes and production.

All profits from Delaware go to the parent company, he said, which then decides how to remit that money back to the Delaware companies. 

“In my view, Mountaire Corporation’s contacts with the state of Delaware exceeded minimum contacts; they were numerous and purposeful,” Karsnitz said.

He said Mountaire has not produced any evidence that Mountaire’s Delaware companies act independently of the parent company. 

In the beginning of his 25-page opinion, Karsnitz expressed frustration with the slowness of the case, which was originally filed in June 2018. Mountaire’s motion to dismiss was filed in July 2018. When the Cuppels, who now have more than 800 people as part of their lawsuit, amended their complaint, Mountaire amended its motion to dismiss. The case was then stayed, pending resolution of federal court actions on a lawsuit over improvements to Mountaire’s wastewater treatment plant and resolution of discovery issues.

As the case made its way to fall 2019, the two sides attempted mediation, which was unsuccessful. Legal wrangling continued as the case moved into 2020, and in early June, the case was finally ripe for Karsnitz to make a decision on Mountaire’s motion to dismiss.

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