Revitalyte LLC v. PBM Nutritionals, LLC

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Revitalyte LLC,
Plaintiff/Counter Defendant,
v.
PBM Nutritionals, LLC,
Defendant/Counter Claimant.
Civil No. 25-534 (DWF/DTS)
MEMORANDUM
OPINION AND ORDER
INTRODUCTION
This matter is before the Court on Defendant/Counter Claimant PBM Nutritionals,
LLC’s (“PBM”) motion for judgment on the pleadings. (Doc. No. 65.) Plaintiff/Counter
Defendant Revitalyte LLC (“Revitalyte”) opposes the motion. (Doc. No. 71.) For the
reasons set forth below, the Court grants the motion.
BACKGROUND
Revitalyte sells oral electrolyte solution (“OES”) products. (Doc. No. 9 (“Am.
Compl.”) ¶ 1.) In September 2020, Revitalyte contracted with PBM, a large supplier of
OES products, for approximately $4 million worth of products. (Id. ¶¶ 4, 13, 22.)
Specifically, PBM agreed to supply four of its one-liter OES flavors, including shrink-
wrapped caps, one-liter plastic bottles, wraparound labels, colored liquid, and flavor
systems. (Id. ¶ 23.) Except for the brand graphics, the bottles supplied to each of PBM’s
customers are identical. (Id. ¶ 24.)
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The terms of Revitalyte’s purchase were set forth in the Supply Agreement. (Id.
¶ 22; Doc. No. 13, Ex. A (“Supply Agreement”).) The Indemnification section1 of the
Supply Agreement states that:
PBM will indemnify, defend, and hold [Revitalyte and Revitalyte’s] affiliates
and its and their respective officers, directors, employees, and agents
harmless from and against any third party claims, suits or actions and any
related loss, liability, judgment, cost, and expense (including, without
limitation, reasonable attorneys’ fees and legal expenses) arising out of,
resulting from or based on (i) a breach by PBM of the Product Warranties,
(ii) the negligence or willful misconduct of PBM in connection with this
Agreement or Products supplied by PBM under the Agreement, or (iii) any
allegation that any Product supplied by PBM to [Revitalyte] infringes any
United States patent or other third party intellectual property rights in the
United States, provided, however, the foregoing does not apply to, and PBM
will not have any responsibility for, any allegation of infringement due to any
brand name, trade dress, trademark, trade name or logo of or provided by
[Revitalyte]. 	This indemnification obligation of PBM shall not, however,
apply to the extent that any claim, suit, action, loss, liability, judgment, cost
or expense involves the breach of this Agreement, negligence or willful
misconduct of [Revitalyte] or any of its affiliates.
(Id. § 13(a).)
In May 2023, Abbott Laboratories (“Abbott”) sued Revitalyte (the “Abbott
Action”). Abbott Lab’ys v. Revitalyte LLC, Civ. No. 23-1449 (D. Minn.). Abbott sells
OES products under the Pedialyte® trademark. (Civ. No. 23-1449, Doc. No. 22 ¶ 2.)
Abbott sued Revitalyte claiming trade dress infringement, trademark infringement, unfair
competition and false advertising, trademark and trade dress dilution, and deceptive trade
practices. (Id. ¶¶ 170-203.) Each claim includes an allegation that Revitalyte acted
1 	Each section of the Supply Agreement is labeled with a heading. The headings are
for convenience only and do not hold legal significance. (Supply Agreement § 20(f).)
The Court uses this heading only for clarity.
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willfully. (Id. ¶¶ 176, 180, 186, 192, 201.) That case is ongoing. In June 2024,
Revitalyte provided a written notice to PBM of the Abbott Action. (Doc. No. 40, Ex. C.)
Within the week, PBM responded, declining Revitalyte’s request for indemnification and
defense. (Id., Ex. D.)
In February 2025, Revitalyte sued PBM, claiming breach of the contractual duty to
defend (Count 1), breach of the contractual duty to indemnify and hold harmless
(Count 2), breach of contractual warranty (Count 3), and Minnesota common law claims
of indemnification and contribution (Count 4). (Doc. No. 1; Am. Compl. ¶¶ 49-75.)
PBM now moves for judgment on the pleadings as to Counts 1 and 2, arguing that the
Supply Agreement’s willful-misconduct exception bars Revitalyte’s claims. (Doc.
No. 65.) PBM asks that Counts 1 and 2 be dismissed with prejudice. (Id.)
DISCUSSION
I. 	Legal Standard
A party may move for judgment on the pleadings at any point after the close of the
pleadings, so long as it moves early enough to avoid a delay of trial. Fed. R. Civ.
P. 12(c). “Judgment on the pleadings is appropriate only when there is no dispute as to
any material facts and the moving party is entitled to judgment as a matter of law . . . .”
Ashley County v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009) (quoting Wishnatsky v.
Rovner, 433 F.3d 608, 610 (8th Cir. 2006)). The Court evaluates a motion for judgment
on the pleadings under the same standard as a motion brought under Federal Rule of Civil
Procedure 12(b)(6). Id.
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In deciding a motion to dismiss under Rule 12(b)(6), a court assumes all facts in
the complaint to be true and construes all reasonable inferences from those facts in the
light most favorable to the complainant. Morton v. Becker, 793 F.2d 185, 187 (8th Cir.
1986). In doing so, however, a court need not accept as true wholly conclusory
allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir. 1999),
or legal conclusions drawn by the pleader from the facts alleged, Westcott v. City of
Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990). A court may also consider certain matters
outside of the pleadings, including matters of public record or materials embraced by the
complaint. See Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999).
To survive a motion to dismiss, a complaint must contain “enough facts to state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). Although a complaint need not contain “detailed factual allegations,” it must
contain facts with enough specificity “to raise a right to relief above the speculative
level.” Id. at 555. “Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements,” will not pass muster under Twombly. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). In sum, this standard “calls for
enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of
[the claim].” Twombly, 550 U.S. at 556.
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II. 	Analysis
Counts 1 and 2 both rely on the Indemnification section of the Supply Agreement.
The validity of the Supply Agreement is not disputed. The merits of Counts 1 and 2 are
therefore questions of contract interpretation.2
The Supply Agreement is governed by Michigan law. (Supply Agreement
§ 20(a).) Under Michigan law, a contract for indemnification is construed to effectuate
the parties’ intent at the time they entered the contract. Miller-Davis Co. v. Ahrens
Constr., Inc., 848 N.W.2d 95, 102 (Mich. 2014). When, as here, parties have expressly
contracted for indemnification, the language of the contract guides the intent inquiry. Id.
If the language is clear and unambiguous, it is construed according to the plain meaning.
Zahn v. Kroger Co. of Mich., 764 N.W.2d 207, 211 (Mich. 2009) (“All contracts,
including indemnity contracts[,] should be construed to ascertain and give effect to the
intentions of the parties and should be interpreted to give a reasonable meaning to all of
its provisions.”). Additionally, a contract should be read to “give effect to every word,
phrase, and clause in a contract and avoid an interpretation that would render any part of
the contract surplusage or nugatory.” Klapp v. United Ins. Grp. Agency, Inc., 663
N.W.2d 447, 453 (Mich. 2003). If the language is unclear or ambiguous, the intent of the
parties is a question of fact. Sherman v. DeMaria Bldg. Co., 513 N.W.2d 187, 190
(Mich. 1994).
2 	The Court may consider the Supply Agreement because it is embraced by the
pleadings. See Porous Media Corp., 186 F.3d at 1079.
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The Indemnification section of the Supply Agreement requires PBM to
“indemnify, defend, and hold [Revitalyte] . . . harmless from and against any third party
claims, suits or actions . . . arising out of, resulting from, or based on” PBM’s products
and conduct. (Supply Agreement § 13(a).) However, the “indemnification obligation of
PBM” does not “apply to the extent that any claim, suit, action, loss, liability, judgment,
cost or expense involves . . . negligence or willful misconduct” by Revitalyte. (Id.) PBM
argues that judgment on the pleadings is warranted because the willful-misconduct
exception precludes any claim by Revitalyte. Revitalyte counters that judgment on the
pleadings is premature because no finding of willfulness has been made at this point in
the litigation. Revitalyte further argues that even upon a finding of willfulness, the
exception would apply only to the duty to indemnify, not the duty to defend, because the
exception specifies “indemnification obligation.” Therefore, there are two questions of
interpretation for the Court to answer: (1) whether a mere allegation of willfulness is
enough to invoke the willful-misconduct exception, and (2) whether the willful-
misconduct exception applies to the duty to defend.
A. 	Application of the Willful-Misconduct Exception to the Abbott Action
To the first issue, the Court answers in the affirmative: An allegation is sufficient
to invoke the willful-misconduct exception. The Supply Agreement used broad language:
“any claim, suit, action, loss, liability, judgment, cost or expense involv[ing]” willful
misconduct is exempted from the indemnity obligation. (Supply Agreement § 13(a).) An
allegation is synonymous with a claim. Compare Allegation, Black’s Law Dictionary
(12th ed. 2024) (defining allegation as “a statement, not yet proved, that someone has
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done something wrong or illegal”), with Claim, Black’s Law Dictionary (12th ed. 2024)
(defining claim as a “statement that something yet to be proved is true”). Additionally,
the word “any” and the list of multiple potential applications communicates an intention
that the exception apply to a broad range of situations. Miller-Davis, 848 N.W.2d
at 102-03 (emphasizing that “all” and “any” are inclusive terms, especially when paired
with a list of situations). An allegation of willfulness fits within that group of potential
applications.
Further, a claim or suit “involves” willfulness if willfulness is alleged.
Involvement is a broad term—a lawsuit can involve willfulness if willfulness is an
element of a claim even if the claim ultimately fails. See People v. LaFountain, 844
N.W.2d 5, 6 (Mich. 2014) (“The term ‘involve’ means to include within itself or its
scope.” (citation modified)). At the hearing, counsel for PBM offered the following
example: if someone on trial for murder is ultimately acquitted, it can still be said that
the trial involved murder. The Court agrees. The word “involves” does not require an
affirmative finding. Cf. Miller-Davis, 848 N.W.2d at 102-04 (holding that an indemnity
clause which applied to “all claims, damages, losses, demands, liens, payments, suits,
actions, recoveries, judgments and expenses” did not require the indemnitee to prove
liability). The language clearly and unambiguously creates an exception to the
indemnification obligation for any legal process, including allegations, that touch
willfulness.
Revitalyte argues that such a result renders PBM’s indemnification obligation
nugatory because all cases of trademark and trade dress infringement touch willfulness,
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and therefore PBM would never have to indemnify against infringement claims. This
may well be true for any trade dress and trademark claims because the inquiry into
likelihood of confusion includes an inquiry into intent. See, e.g., Gateway, Inc. v.
Companion Prods., Inc., 384 F.3d 503, 509-10 (8th Cir. 2004) (discussing factors for
likelihood of confusion for infringement claims, including intent to confuse). However,
PBM points to the example of patent infringement, which does not involve intent. See
Glob.-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 761 n.2 (2011) (discussing the
irrelevance of intent to the patent infringement inquiry). Because the language is not
rendered completely superfluous, the Court cannot rewrite a clear and unambiguous
contract. Cf. Klapp, 663 N.W.2d at 453 (finding the language ambiguous because there
was “no way to read the provisions of [the] contract in reasonable harmony” without
rendering at least part meaningless).
Applying the interpretation to this case, Abbott’s allegations of willfulness in the
Abbott Action are sufficient to invoke the willful-misconduct exception. The claims
require the Court to assess the willfulness of Revitalyte’s actions. By the plain meaning,
the claims therefore involve willfulness. PBM has no responsibility to indemnify
Revitalyte in the Abbott Action. Count 2 is dismissed.
B. 	Relationship Between Duty to Defend and Duty to Indemnify
Having found that the willful-misconduct exception applies to the situation and
PBM has no duty to indemnify, the question becomes whether that exception also
absolves PBM of the duty to defend.
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The first sentence of the Indemnification section explains the circumstances under
which “PBM will indemnify, defend, and hold [Revitalyte] . . . harmless.” (Supply
Agreement § 13(a).) The next sentence then makes an exception that “[t]his
indemnification obligation of PBM shall not” apply when any suit involves willful
misconduct. (Id.) A plain reading suggests that the exception applies to the entirety of
the preceding sentence. Instead of saying “the indemnification obligation,” the contract
says “this indemnification obligation.” Use of the word “this” indicates that the
exception applies to the thing just mentioned. See, e.g., W.C. Ducomb Co. v. Ann Arbor
Mach. Co., No. 301988, 2012 WL 516089, at *6 (Mich. Ct. App. Feb. 16, 2012) (per
curiam) (finding that when a condition immediately follows an obligation, it is presumed
that the condition applies to the obligation immediately prior). If one were to parse out
the duties as Revitalyte suggests, the first specific obligation mentioned was the duty to
indemnify. It would not make sense to use the word “this” if in reference to indemnity if
the duties were separate because indemnity would not be the most recent thing
mentioned. The use of “this” therefore indicates that the duties to indemnify, defend, and
hold harmless are intertwined as one.
Further, it is commonplace to refer to the combination of the duties to indemnify,
defend, and hold harmless under the umbrella term of “indemnification.” See Zahn, 764
N.W.2d at 209-10 (calling a provision which required the subcontractor to “defend,
indemnify, and hold [the contractor] harmless” an “indemnification clause”);
DaimlerChrysler Corp. v. Wesco Distrib., Inc., 760 N.W.2d 828, 833 (Mich. Ct. App.
2008) (calling a provision for the seller to “protect, defend, hold harmless, and
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indemnify” an “indemnification provision”). Revitalyte somewhat acknowledges that by
combining the duties to indemnify and hold harmless in Count 2. But leaving the duty to
defend out of that group belies the contractual language. The duty to defend is placed
between its counterparts in the Supply Agreement. It does not make sense to group the
duty to indemnify and the duty to hold harmless, while separating out the duty to defend.
The duty to indemnify, defend, and hold harmless was clearly intended to be one
obligation here. The willful-misconduct exception applies to the entirety of PBM’s
indemnification obligation, including the duty to defend. Count 1 is also dismissed.
CONCLUSION
The willful-misconduct exception in the Indemnification section of the Supply
Agreement absolves PBM of responsibility to indemnify when third-party litigation
involves willful misconduct by Revitalyte. The Abbott Action involves willful
misconduct and, thus, the exception applies. Further, the exception applies to the entirety
of PBM’s responsibility. PBM is not required to indemnify, defend, or hold Revitalyte
harmless in the Abbott Action.
ORDER
Based upon the foregoing and the record in this case, IT IS HEREBY
ORDERED that:
1. 	Defendant/Counter Claimant PBM Nutritionals, LLC’s motion for
judgment on the pleadings (Doc. No. [65]) is GRANTED.
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2. 	Counts 1 and 2 of Plaintiff/Counter Defendant Revitalyte LLC’s amended
complaint (Doc. No. [9]) are DISMISSED WITH PREJUDICE.
Dated: May 4, 2026 	s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
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