The Scotts Company LLC v. Seeds, Inc.

Federal courts have broad authority to “look beyond the pleadings, and arrange” — or realign — “the parties according to their sides in the dispute.” City of Indianapolis v. Chase Nat’l Bank of N.Y., 314 U.S. 63, 69 , 62 S.Ct. 15 , 86 L.Ed. 47 (1941) (internal quotation marks omitted). We hold that when a federal court evaluates realigning the parties in a case, it may not consider claims made in a different case.

I.

In September 2007, The Scotts Company (“Scotts”) and Seeds, Inc. (“Seeds”) entered into a Supply Agreement that obligated Scotts to buy cleaned and processed Kentucky Bluegrass seed from Seeds. The Supply Agreement allowed Scotts to audit Seeds to ensure Seeds’ compliance with the terms of the Agreement. Scotts, an Ohio LLC, brought a diversity action against Seeds, a Washington corporation, in federal district court for breach of this audit provision. Shortly after Scotts filed its federal action, Millhorn Farms, Inc., Maple Leaf Farms, Inc., Mica Creek, Inc., and Tim Freeburg (“Growers”) sued Seeds and Scotts in Washington state court. Maple Leaf Farms and Mica Creek are both Washington corporations. Millhorn Farms is an Idaho corporation and Tim…