Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 1 of 11
`
`Scott E. Davis, OSB No. 022883
`Email: scott.davis@klarquist.com
`KLARQUIST SPARKMAN, LLP
`121 S.W. Salmon St., Ste. 1600
`Portland, Oregon 97204
`Telephone: (503) 595-5300
`
`Attorney for Plaintiff
`PHYLOS BIOSCIENCE, INC.
`
`
`UNITED STATES DISTRICT COURT
`
`DISTRICT OF OREGON
`
`PORTLAND DIVISION
`
`Civil Case No.:
`
`COMPLAINT
`
`DEMAND FOR JURY TRIAL
`
`PHYLOS BIOSCIENCE, INC.,
`
`Plaintiff,
`
`v.
`
`SILVER LION FARMS, LLC,
`
`Defendant.
`
`COMES NOW Plaintiff Phylos Bioscience, Inc. (“Phylos”), by its undersigned attorney,
`
`and for its Complaint against Silver Lion Farms, LLC (“SLF” or “Defendant”), states and alleges
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`as follows:
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`NATURE OF THE ACTION
`
`1.
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`This is a civil action for infringement of a United States certificate of plant variety
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`protection (“PVP certificate”) pursuant to 7 U.S.C. § 2541 et seq., a declaratory judgment
`
`pursuant to 28 U.S.C. § 2201, breach of contract, promissory estoppel, and fraud.
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`2.
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`Plaintiff Phylos is an Oregon corporation with its principal place of business in
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`PARTIES
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`Portland, Oregon.
`
`COMPLAINT
`
`
`
`1
`
`
`
`Scott E. Davis, OSB No. 022883
`Email: scott.davis@klarquist.com
`KLARQUIST SPARKMAN, LLP
`121 S.W. Salmon St., Ste. 1600
`Portland, Oregon 97204
`Telephone: (503) 595-5300
`
`Attorney for Plaintiff
`PHYLOS BIOSCIENCE, INC.
`
`
`UNITED STATES DISTRICT COURT
`
`DISTRICT OF OREGON
`
`PORTLAND DIVISION
`
`Civil Case No.:
`
`COMPLAINT
`
`DEMAND FOR JURY TRIAL
`
`PHYLOS BIOSCIENCE, INC.,
`
`Plaintiff,
`
`v.
`
`SILVER LION FARMS, LLC,
`
`Defendant.
`
`COMES NOW Plaintiff Phylos Bioscience, Inc. (“Phylos”), by its undersigned attorney,
`
`and for its Complaint against Silver Lion Farms, LLC (“SLF” or “Defendant”), states and alleges
`
`as follows:
`
`NATURE OF THE ACTION
`
`1.
`
`This is a civil action for infringement of a United States certificate of plant variety
`
`protection (“PVP certificate”) pursuant to 7 U.S.C. § 2541 et seq., a declaratory judgment
`
`pursuant to 28 U.S.C. § 2201, breach of contract, promissory estoppel, and fraud.
`
`2.
`
`Plaintiff Phylos is an Oregon corporation with its principal place of business in
`
`PARTIES
`
`Portland, Oregon.
`
`COMPLAINT
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`
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`1
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 2 of 11
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`3.
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`Upon information and belief, Defendant Silver Lion Farms, LLC is a Nevada
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`entity with its principal place of business in Ely, Nevada.
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`JURISDICTION AND VENUE
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`4.
`
`Pursuant to 28 U.S.C. § 1338(a), United States district courts such as this one
`
`have original and exclusive jurisdiction of any civil action arising under any Act of Congress
`
`relating to plant variety protection.
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`5.
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`Pursuant to 28 U.S.C. § 2201, this Court has jurisdiction to enter a judgment
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`declaring the rights of the parties with respect to the PVP certificate, hemp seeds and other issues
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`in this action.
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`6.
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`Damages to Phylos are to be established, but in any case the amount in
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`controversy exceeds the sum of $75,000, exclusive of interest and costs, for purposes of 28
`
`U.S.C. § 1332(a).
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`7.
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`On information and belief, Phylos and Defendant are deemed citizens of different
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`States for purposes of 28 U.S.C. § 1332(a).
`
`8.
`
`This Court has jurisdiction over this action pursuant to at least 28 U.S.C. §§
`
`1332(a), 1338(a), and 1367(a).
`
`9.
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`10.
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`Venue is proper in this Court pursuant to at least 28 U.S.C. § 1391.
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`This Court has personal jurisdiction over Defendant because, upon information
`
`and belief, Defendant conducts business within this District, has engaged and continues to
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`engage in activities in this District, and Defendant’s acts have caused and continue to cause
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`injury to Phylos within this District. For example, Defendant entered into a contract with Phylos
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`and, upon information and belief, conducts business in Oregon.
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`COMPLAINT
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`
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`2
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 3 of 11
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`11.
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`Additionally, this Court has personal jurisdiction over Defendant because, upon
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`information and belief, Defendant committed intentional acts, expressly aimed at Phylos and this
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`District, causing harm Defendant knew or should have known would be likely and primarily
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`suffered in this District. For example, Defendant infringed a Phylos PVP certificate and
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`intentionally defrauded Phylos as set out in the following.
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`BACKGROUND FACTS
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`12.
`
`Phylos and SLF executed a letter of engagement (“LOE”) (attached hereto as
`
`Exhibit A) dated November 13, 2020 and signed by the parties on November 16, 2020. Third
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`party Plant Fuel Genetics (“PFG”) also signed the LOE but is not named in this action.
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`13.
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`Pursuant to the terms of the LOE, SLF agreed and promised to purchase over 23
`
`million hemp seeds to plant 975 acres (487.5 acres to be planted with 14,625,000 AutoCBD
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`seeds and 487.5 acres to be planted with 8,775,000 F1 hybrid seeds) for a contract price of
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`$2,954,250.00.
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`14.
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`The LOE specified the contract price was $1,462,500.00 for the AutoCBD seeds
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`to be planted at the rate of 30,000 per acre and $1,491,750.00 for the F1 hybrid seeds to be
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`planted at the rate of 18,000 per acre.
`
`15.
`
`As required by the LOE, SLF paid 25 percent of the contract price, i.e.,
`
`$738,562.50, in November 2020.
`
`16.
`
`SLF further agreed in the LOE that the balance of $2,215,687.50 would be due
`
`upon delivery of the hemp seeds on or before May 1, 2021.
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`17.
`
`In foreseeable reliance on SLF’s agreement to purchase hemp seed as required by
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`the LOE, Phylos promptly entered into an agreement with, and issued a purchase order to, an
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`Oregon entity on November 18, 2020 for production of the seeds, thereby incurring a liability.
`
`COMPLAINT
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`
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`3
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 4 of 11
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`18.
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`19.
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`20.
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`Seeds produced for SLF were tested in Oregon before delivery.
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`Seeds produced for SLF were packaged in Oregon.
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`On April 29, 2021 Phylos employee Sage Haegen traveled to SLF’s farm from
`
`Oregon to deliver the hemp seeds pursuant to the terms of the LOE.
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`21.
`
`Attempting delivery from Oregon was induced by SLF’s dealings with Phylos,
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`including SLF’s execution of the LOE.
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`22.
`
`SLF co-founder and president Gian Khalsa met Haegen and PFG employee Erik
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`Jackson. Khalsa falsely represented to Haegen that SLF Chief Executive Officer (“CEO”) Bob
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`Kurilko and Phylos CEO Ralph Risch had spoken and had agreed that SLF would take
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`possession of approximately 4.3 million F1 hybrid seeds, but not any of the AutoCBD seeds.
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`23.
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`No agreement was made between Kurilko and Risch whereby SLF would only
`
`accept and Phylos would only deliver approximately 4.3 million F1 hybrid seeds.
`
`24.
`
`Haegen did not have phone service at the place of delivery and so could not
`
`contact Risch or anyone else at Phylos to try to confirm Khalsa’s representation that Kurilko and
`
`Risch had reached an agreement for delivery of approximately half the number of F1 hybrid
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`seeds and none of the AutoCBD seeds required by the LOE.
`
`25.
`
`Haegen did not know or have reason to believe that Khalsa made a false
`
`representation before delivering approximately 4.3 million F1 hybrid seeds and then leaving the
`
`SLF farm without delivering the balance of the seeds. Haegen acted in reliance on Khalsa’s false
`
`representation.
`
`26.
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`Upon regaining phone service, Haegen learned from Risch that Phylos and SLF
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`had not reached any agreement such as that which Khalsa described.
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`27.
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`Risch instructed Haegen to return to SLF’s farm and collect the approximately 4.3
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`COMPLAINT
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`
`
`4
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 5 of 11
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`million F1 hybrid seeds Khalsa took under false pretenses.
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`28.
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`A SLF security officer refused to return any of the delivered F1 hybrid seeds to
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`Haegen.
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`29.
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`On information and belief, Khalsa and/or Kurilko knew, at the time Khalsa
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`misrepresented otherwise to Haegen, that SLF and Phylos had not reached an agreement for
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`delivery of only about 4.3 million of the F1 hybrid seeds and none of the AutoCBD seeds SLF
`
`was obligated to purchase under the LOE.
`
`30.
`
`On information and belief, Khalsa and/or Kurilko intentionally deceived Phylos’s
`
`employee Haegen to induce him to deliver only a portion of the F1 hybrid seeds required by the
`
`LOE.
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`31.
`
`SLF has neither accepted delivery nor paid for the remaining seeds it is obligated
`
`to purchase under the LOE.
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`32.
`
`Phylos has never agreed to partial performance under the LOE to satisfy SLF’s
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`obligation to purchase seed for the contract price of $2,954,250.00.
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`COUNT I
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`INFRINGEMENT OF PVP CERTIFICATE NO. 201900403
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`PURSUANT TO 7 U.S.C. § 2541
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`33.
`
`Phylos hereby re-alleges and incorporates by reference each of the allegations in
`
`each of the foregoing sections and paragraphs as though fully set forth here.
`
`34.
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`The United States duly and legally issued Certificate of Plant Variety Protection
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`No. 201900403 (attached hereto as Exhibit B, and hereinafter “the ’403 PVP certificate”) to
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`Phylos on June 22, 2020, for hemp variety NBS CBD-1 (also known as AutoCBD).
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`35.
`
`Phylos owns the ’403 PVP certificate and has owned it since it issued.
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`COMPLAINT
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`5
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 6 of 11
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`36.
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`Phylos’s AutoCBD and F1 hybrid seeds at issue in this action are valuable
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`varieties protected by the ’403 PVP certificate.
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`37.
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`SLF did not have authority to take seeds in a manner inconsistent with the terms
`
`of the LOE, including by taking a partial delivery or otherwise.
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`38.
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`SLF infringed the ’403 PVP certificate at least by transferring possession of
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`approximately 4.3 million protected seeds without authority, using a scheme of deceit and fraud.
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`39.
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`Based at least on the LOE, SLF has expressed an intent to engage in propagation
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`and production using seeds protected by the ’403 PVP certificate.
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`40.
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`Phylos suffered injury in an amount to be determined for infringement of its rights
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`in the ’403 PVP certificate.
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`41.
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`Unless SLF is enjoined, Phylos will suffer and continue to suffer irreparable
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`injury from SLF’s infringement, and the threat of continued infringement, of its rights in the ’403
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`PVP certificate.
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`COUNT II
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`DECLARATION OF RIGHTS
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`42.
`
`Phylos hereby re-alleges and incorporates by reference each of the allegations in
`
`each of the foregoing sections and paragraphs as though fully set forth here.
`
`43.
`
`Phylos did not authorize possession or use of the approximately 4.3 million F1
`
`hybrid seeds SLF took.
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`44.
`
`45.
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`The ’403 PVP certificate protects the F1 hybrid seeds.
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`The Court should declare that the ’403 PVP certificate is valid and enforceable
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`and that SLF is not authorized under the ’403 PVP certificate to perform any of the acts
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`identified in 7 U.S.C. § 2541(a) with respect to AutoCBD or the F1 hybrid of AutoCBD.
`
`COMPLAINT
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`
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`6
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 7 of 11
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`COUNT III
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`BREACH OF CONTACT
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`46.
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`Phylos hereby re-alleges and incorporates by reference each of the allegations in
`
`each of the foregoing sections and paragraphs as though fully set forth here.
`
`47.
`
` SLF and Phylos, for valuable consideration, executed the LOE, which being a
`
`valid and enforceable contract, obligated SLF to purchase seeds for a total price of $2,954,250.00
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`($1,462,500.00 for AutoCBD and $1,491,750.00 for the F1 hybrid) by May 1, 2021.
`
`48.
`
`Phylos performed, at least by tendering all of the AutoCBD and F1 hybrid seeds
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`required under the LOE and attempting to deliver the seeds at SLF’s farm on April 29, 2021.
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`49.
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`Pursuant to the LOE, SLF was contractually obligated to accept and pay for the
`
`full delivery of seeds for a total price of $2,954,250.00.
`
`50.
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`SLF has refused to accept or pay for the remaining $2,215,687.50 worth of seeds
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`that it is obligated to purchase.
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`51.
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`SLF breached when it refused to accept or pay for all the seeds purchased under
`
`the LOE for the total agreed price.
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`52.
`
`As a direct and proximate result of SLF’s breach of the LOE, Phylos suffered
`
`damages in an amount to be determined.
`
`COUNT IV
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`PROMISSORY ESTOPPEL
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`53.
`
`Phylos hereby re-alleges and incorporates by reference each of the allegations in
`
`each of the foregoing sections and paragraphs as though fully set forth here.
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`54.
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`If the LOE is not an enforceable contract, it is at least an enforceable promise to
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`purchase AutoCBD and F1 hybrid hemp seeds.
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`COMPLAINT
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`
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`7
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 8 of 11
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`55.
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`SLF did, or at least could, foresee that its promises in the LOE would induce
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`Phylos to enter agreements to produce seeds, take on substantial obligations and otherwise
`
`prepare to perform.
`
`56.
`
`Phylos did in fact enter agreements to produce seeds, take on substantial
`
`obligations and otherwise prepare to perform.
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`57.
`
`Phylos substantially changed its position in reliance on SLF’s promises, and
`
`Phylos was harmed.
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`COUNT V
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`FRAUD INDUCING PARTIAL DELIVERY
`
`58.
`
`Phylos hereby re-alleges and incorporates by reference each of the allegations in
`
`each of the foregoing sections and paragraphs as though fully set forth here.
`
`59.
`
`On or about April 29, 2021, SLF, via Khalsa, misrepresented to Phylos’s Haegen,
`
`that an agreement was made whereby SLF would accept about 4.3 million of the F1 hybrid seeds
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`rather than the full amount of more than 23 million seeds (consisting of both AutoCBD seeds and
`
`F1 hybrid seeds) that Phylos attempted to deliver.
`
`60.
`
`SLF, through Khalsa and/or Kurilko, knew the representations to Phylos’s Haegen
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`to be false because no such agreement was made.
`
`61.
`
`SLF’s misrepresentation, made through Khalsa, was of a matter relating to the
`
`LOE with Phylos.
`
`62.
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`On information and belief, Khalsa and SLF intended that Phylos’s Haegen act on
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`false representations; and he did so act, allowing SLF to take only a small fraction of the seed it
`
`had agreed to buy.
`
`63.
`
`Khalsa and SLF knew or should have known that Phylos, through Haegen, would
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`COMPLAINT
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`
`
`8
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 9 of 11
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`rely upon Khalsa’s misrepresentation to deliver about 4.3 million of the F1 hybrid seeds.
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`64.
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`Reliance was reasonable under the circumstances where Haegen did not have cell
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`phone service to immediately verify Khalsa’s false representation or otherwise have reason to
`
`believe that Khalsa’s representation was false when made.
`
`65.
`
`Phylos, via Haegen, had the right to rely on Khalsa’s representation as being true
`
`when in fact it was false.
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`66.
`
`As a direct and proximate cause of SLF’s misrepresentation made through Khalsa,
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`Phylos suffered injury in an amount to be determined.
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`COUNT VI
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`FRAUD INDUCING EXECUTION OF THE LOE
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`67.
`
`Phylos hereby re-alleges and incorporates by reference each of the allegations in
`
`each of the foregoing sections and paragraphs as though fully set forth here.
`
`68.
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`Additionally or alternatively, SLF, through at least Kurilko, misrepresented to
`
`Phylos during negotiations and execution of the LOE in November 2020 that SLF would
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`purchase over 23 million seeds for the contract price.
`
`69.
`
`Additionally or alternatively, SLF’s misrepresentations were made in the
`
`formation of the LOE and were of matter relating to the LOE.
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`70.
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`Additionally or alternatively, SLF did not intend to purchase the full amount of
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`more than 23 million seeds that the parties had agreed upon and knew its representations to
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`Phylos to be false, inducing execution of the LOE.
`
`71.
`
`SLF knew or should have known that Phylos would rely upon its representation
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`by executing subsequent agreements with seed producers to uphold its contractual obligation to
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`deliver over 23 million seeds to SLF.
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`COMPLAINT
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`9
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 10 of 11
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`72.
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`Phylos’s reliance was reasonable under the circumstances where SLF signed the
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`LOE promising to purchase and accept over 23 million seeds
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`73.
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`As a direct and proximate cause of SLF’s misrepresentation, Phylos suffered
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`injury in an amount to be determined.
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`PRAYER FOR RELIEF
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`WHEREFORE, Phylos prays for judgment as follows:
`
`A.
`
`A declaration that SLF infringed Phylos’s valid rights protected by the ’403 PVP
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`certificate.
`
`B.
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`A declaration that this is an exceptional case, entitling Phylos to reasonable
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`attorney fees pursuant to 7 U.S.C. § 2565.
`
`C.
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`A declaration that Phylos is entitled to increased damages, up to three times the
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`amount determined, pursuant to 7 U.S.C. § 2564(b).
`
`D.
`
`E.
`
`F.
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`A declaration that SLF breached its contract with Phylos.
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`A declaration that SLF defrauded Phylos.
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`An award of damages adequate to compensate for the infringement of the ’403
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`PVP certificate, but in no event less than a reasonable royalty, together with interest and costs as
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`fixed by the Court, pursuant to 7 U.S.C.§ 2564(a).
`
`G.
`
`H.
`
`I.
`
`J.
`
`An award of compensatory damages, costs and interest.
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`An award of reasonable attorney fees to Phylos.
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`An award of punitive damages.
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`An injunction against further infringement of the rights protected by the ’403 PVP
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`certificate, pursuant to 7 U.S.C.§ 2563.
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`COMPLAINT
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`
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`10
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`Case 3:22-cv-00127-JR Document 1 Filed 01/24/22 Page 11 of 11
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`K.
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`Such other, further, and different relief as the Court deems proper under the
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`circumstances.
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`DEMAND FOR JURY TRIAL
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`Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Phylos hereby demands a
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`trial by jury of all issues triable of right by a jury in the above-captioned case.
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`
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`
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`DATED: January 24, 2022.
`
`Respectfully submitted,
`
`
`
`
`By: s/Scott E. Davis
`Scott E. Davis, OSB No. 022883
`scott.davis@klarquist.com
`KLARQUIST SPARKMAN, LLP
`
`Attorney for Plaintiff
`PHYLOS BIOSCIENCE, INC.
`
`COMPLAINT
`
`
`
`11
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`
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