Summary of a Recent
Judicial
Development in
Cooperatives
Feed Retailer and Customer
Sue over Poisoned Feed
Patricia FarneseNational AgLaw Center Graduate Fellow
The United States District Court for the Northern District of West Virginia has granted in part and denied in part a horse feed retailer's motion to dismiss a counterclaim filed by one of its customers who owned horses that became ill after they were given horse feed allegedly contaminated with rat poison. Southern States Cooperative, Inc. v. I.S.P. Co., Inc., 198 F.Supp.2d 807, 817 (N.D.W.Va. 2002). The retailer brought an action against the customer for defamation, product disparagement, and tortious interference with business relationships, and the customer filed a counterclaim alleging negligence, strict liability, and breach of implied warranties, among other claims. See id. at 810. The customer also alleged that the retailer had violated the West Virginia Commercial Feed Law, W. Va. Code §§ 19-14-1 - 19-14-15, and the West Virginia Pesticide Control Act, W. Va. Code §§ 19-16A-1 - 19-16A-27. See id. The district court ruled that neither the West Virginia Commercial Feed Law nor the West Virginia Pesticide Control Act gave rise to a private cause of action and that the customer's claims for negligence, strict liability, and breach of implied warranties were not preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. §§136-136y. See id. at 816. The court also ruled that the customer's claim under the West Virginia Commercial Feed Law was not preempted by the FIFRA. See id. at 814.
Steve and Diane Garvin operated a thoroughbred breeding operation in Salem, West Virginia. See id. at 809. They purchased all their horse feed from Southern States Cooperative, Inc. ("Southern States"), a retail store that specialized in horse feed. See id. The Garvins claimed that in April, 2000, their prized stallion "developed abscessed feet and contracted edema." Id. They also claimed that on May 31, 2000, their brood mare became bloated and died, and that several other horses also became ill and bloated. See id. The Garvins were later forced to euthanize their brood mare and place their remaining horses up for adoption. See id.
On June 4, 2000, Steve Garvin discovered rat poison in a bag of horse feed that he had purchased from Southern States. See id. He immediately contacted a veterinarian to examine his horses. See id. The veterinarian discovered that blood clotting in the horses was abnormally slow, a symptom consistent with the consumption of rat poison. See id. The Garvins also claimed that on June 7, 2000, employees of Southern States discovered "chunks of rat poison in the supplies of whole corn at its Clarksburg store." Id.
On February 28, 2001, Southern States brought a suit against the Garvins "alleging defamation, product disparagement, and tortious interference with business relationships." Id. at 810. On June 29, 2001, the Garvins filed a counterclaim alleging that Southern States "violated provisions of West Virginia's Uniform Commercial Code, Commercial Feed Law and Pesticide Control Act." Id. The counterclaim also included claims for negligence, strict liability, and breach of implied warranties. See id. Southern States filed a motion to dismiss the Garvins' counterclaim. See id. The district court granted in part and denied in part Southern States' motion to dismiss. See id.
The court first examined Southern States' argument that the Garvins "failed to state a cause of action under the West Virginia Commercial Feed Law because it does not create a private cause of action and does not regulate whole corn." Id. at 812. The Garvins responded that W. Va. Code § 55-7-9 "creates an implied private cause of action under the West Virginia Commercial Feed Law." Id. Section 55-7-9 provides that "[a]ny person injured by the violation of any statute may recover from the offender such damage as he may sustain by reason of the violation, although a penalty or forfeiture for such violation be thereby imposed, unless the same be expressly mentioned to be in lieu of such damages." Id.
The court explained that to determine whether § 55-7-9 creates a private cause of action, it must consider the language of § 55-7-9, in addition to the factors set forth in Hurley v. Allied Chem. Corp. , 262 S.E.2d 757 (W. Va. 1980). These factors include whether (1) the plaintiff is "a member of the class for whose benefit the statute was enacted;" (2) the legislative intent, either express or implied, indicates that a private cause of action was intended; (3) a private cause of action "is consistent with the underlying purposes of the legislative scheme;" and (4) such a private cause of action would "intrude into an area delegated exclusively to the federal government." Id. (citing Hurley, 262 S.E.2d at 757).
The district court applied the Hurley factors to evaluate the Garvin's claim under the West Virginia Commercial Feed Law and ruled that it did not give rise to a private cause of action. Id. The court stated that the Commercial Feed Law is "wholly regulatory in nature and intended to benefit the general public by providing standards for commercial feed." Id. The court added, "'[s]tatutes that focus on the person regulated rather than the individuals protected create 'no implication of an intent to confer rights on a particular class of persons.''" Id. (citations omitted). Consequently, the court determined that the Garvins were not members of the class the statute was designed to benefit. See id.
The district court also stated that when the West Virginia legislature enacted the Commercial Feed Law "it did not evince an intent to permit private enforcement of the statute." Id. The court explained that when the legislature enacted the Commercial Feed Law, it intended to create a comprehensive regulatory scheme that delegated substantial enforcement authority to the West Virginia Commissioner of Agriculture. See id. at 813. The court stated that the authority delegated to the Commissioner of Agriculture "is so encompassing as to indicate that the legislature did not intend to rely on the public to enforce the statute through private causes of actions." Id.
Next, the court stated that "a private cause of action is not consistent with the underlying purpose of this legislative scheme, which provides for criminal penalties and authorizes the Commissioner to assess civil penalties payable to the State." Id. (citing W. Va. Code § 19-14-15). The Commercial Feed Law provides, in part, that
(a) No application shall be refused until the applicant has the opportunity to amend his/her application to comply with the requirements of this article. (b) No registration or permit shall be refused, suspended or revoked until the registrant or permittee shall have the opportunity to have a hearing before the commissioner. (c) Any person adversely affected by an act, order or ruling made pursuant to the provisions of this article, may within forty-five days thereafter, bring an action for judicial review in the circuit court of the county in which the violation occurred. Any party aggrieved by a final judgment entered by a circuit court, may appeal to the West Virginia Supreme Court of Appeals.
Id. (quoting W. Va. Code § 19-14-17).
The court stated that this statutory language establishes that only persons who are regulated under the Commercial Feed Law "have recourse to the statute's administrative and judicial remedies." Id. at 813-14. The court added, "[b]ecause the Garvins seek no redress from the act, order or ruling made pursuant to the Commercial Feed Law, it would be inconsistent with the underlying purposes of the statute to permit them to bring a private cause of action against Southern States." Id. at 814.
With respect to the fourth factor of the Hurley test, the court determined that allowing the Garvins to bring a private cause of action against Southern States under the Commercial Feed Law "would not intrude into an area delegated exclusively to the federal government." Id. Southern States argued that the FIFRA preempted the Garvins' claim under the Commercial Feed Law and therefore allowing a private cause of action under the Commercial Feed Law would intrude into an area delegated exclusively to the federal government. Id. at 814.
The court explained that the FIFRA "'is the primary federal regulatory scheme for pesticides.'" Id. (citation omitted). It also explained that the FIFRA "'grants the Environmental Protection Agency (EPA) authority over registration, labeling, and enforcement,' and mandated the EPA to register pesticides distributed and sold in the United States." Id. (citations omitted). The court concluded, however, that the Garvins' claim under the Commercial Feed Law "does not implicate pesticide regulation requirements, including labeling or packaging, under state law or FIFRA. Therefore, Southern States' preemption argument is not well founded." Id.
The district court next examined whether the Garvins could maintain a private cause of action against Southern States under the West Virginia Pesticide Control Act. See id. The court ruled that under W. Va. Code § 55-7-9 and the Hurley factors a private cause of action did not exist. See id. The court noted that § 19-16A-2 of the Pesticide Control Act provides that "'[t]he purpose of this article is to regulate and control pesticides in the public interest, by their registration, use and application.'" Id. (quoting W. Va. Code § 19-16A-2). Thus, the court determined that the Garvins were not members of the class that the Pesticide Control Act was intended to benefit because it was intended to benefit the public as a whole. See id. at 814-815.
The district court also determined that the language of the Pesticide Control Act did not indicate that the West Virginia legislature intended to create a private cause of action under the Act. See id. The court explained that the legislature expressly characterized the Pesticide Control Act "as a regulatory statute enacted for the purpose of controlling pesticides in the public interest." Id. at 815. It noted that similar to the Commercial Feed Law, the Pesticide Control Act delegates substantial authority to the Commissioner of Agriculture. See id. The court stated that "[t]his delegation of authority indicates that the legislature intended that the Commissioner, not private plaintiffs, would enforce the statute." Id. (citation omitted).
Next, the court determined that "the Garvins' private cause of action was not consistent with the underlying purposes" of the Pesticide Control Act. Id. It explained that the Pesticide Control Act provides for the assessment of criminal penalties and civil penalties for violations of the statute, and allows individuals aggrieved by an action of the Commissioner to seek judicial review. Id. The court ruled that "[i]n as much as the Garvins are not persons aggrieved by an action of the Commissioner, their cause of action is inconsistent with the underlying purpose of the Act." Id.
The court also determined that a private cause of action under the Pesticide Control Act "might intrude into an area delegated exclusively to the federal government." Id. The court explained that, while the FIFRA does not preempt the entire field of pesticide regulation, "it does preempt a state from permitting the sale or use of pesticides in conflict with its provisions, and from imposing any labeling and packaging requirements 'in addition to or different from those' required by its provisions." Id. (citations omitted). The court stated, however, that the Garvins did not allege that Southern States violated any specific provisions of the Pesticide Control Act, rather they generally claimed that "Southern States manufactured, distributed, and sold the adulterated feed in violation of the Act." Id. The court concluded that although the Garvins claim would be preempted by the FIFRA if they alleged a violation of the Pesticide Control Act that was "in addition to or different from [the] FIFRA's regulations or standards for packaging and labeling," it did not need to decide this issue "because no private cause of action arises by implication under the statute." Id. The court added that the Pesticide Control Act "is a regulatory statute intended to benefit the public as a whole, and to be enforced by the state Commissioner of Agriculture, not by private citizens." Id.
Finally, the court ruled that it would allow the Garvins' negligence, strict liability, and breach of implied warranties claims. See id. at 816. It stated that "[t]he argument of Southern States that FIFRA preempts these claims fails as the Garvins are not alleging violations of pesticide labeling and packaging requirements in their claims." Id.
The case was decided on March 19, 2002; this summary was posted March, 2003