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Law360 (April 22, 2020, 4:35 PM EDT) -- An Oregon hemp processor told a Kentucky federal court that it lacks jurisdiction to determine whether the coronavirus pandemic triggers a force majeure clause and cancels a farm's $9 million contract, saying the two companies have had no contact in the Bluegrass State.
Pure Valley Solutions said Tuesday that it can't be dragged to a court in Kentucky simply because Third Wave Farms LLC is registered as a business there. The dispute over a contract for 100 acres of hemp should instead be litigated in Oregon, where Pure Valley said the deal was negotiated and executed.
"The nexus between Kentucky and the claims in this action is limited to Third Wave's decision to organize as a Kentucky limited liability company and to allegedly base its headquarters here," Pure Valley said. "This is not enough to support personal jurisdiction over Pure Valley."
Third Wave's registration in Kentucky shows the company is also a resident of Oregon and Connecticut, Pure Valley said. Third Wave's CEO lives in Oregon, where the farmland that produced the hemp in question is located, Pure Valley added.
"An out-of-state defendant, like Pure Valley, cannot be hauled into a Kentucky forum merely because it entered into a contract with an entity which is allegedly headquartered in Kentucky," Pure Valley said.
Third Wave sued Pure Valley last month, saying it shouldn't have to pay a $9 million invoice from the hemp processor because neither company can hold up their end of a contract in the midst of the coronavirus pandemic.
The lawsuit stems from a deal the two companies made in May 2019, under which Third Wave said it would act as a broker to facilitate the sale of Pure Valley's winterized CBD oil. Third Wave promised to purchase the oil at $1,800 per liter and resell it at a 50-50 revenue split with Pure Valley, according to court documents.
Third Wave claimed Pure Valley never had the capacity to make the 5,000 liters of CBD oil spelled out in the contract, and the oil that the company did produce allegedly failed to meet the deal's specifications.
In the contract, Third Wave said it was still raising the $2 million in capital it would need to uphold its end of the bargain. The farm said its inability to do so voided the deal.
At any rate, Third Wave said, the contract should be canceled because the coronavirus pandemic and state of emergency declarations in Kentucky and Oregon trigger a force majeure clause that terminates the agreement in the face of a mutual catastrophe.
Counsel for the parties did not immediately respond to requests for comment Wednesday.
Third Wave is represented by Matthew B. Bunch of Bunch & Brock PSC.
Pure Valley is represented by Christopher W. Brooker and Sean G. Williamson of Wyatt Tarrant & Combs LLP.
The case is Third Wave Farms LLC v. Pure Valley Solutions LLC, case number 6:20-cv-00069, in the U.S. District Court for the Eastern District of Kentucky.
--Additional reporting by Diana Novak Jones. Editing by Daniel King.
For a reprint of this article, please contact reprints@law360.com.
