Summary of a Recent
Judicial Development in
Environmental Law

FIFRA Preempts State Law Claims when FIFRA's Existence
Is Critical to Maintaining the Suit

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In Peterson v. BASF Corp., 657 N.W.2d 853 (Minn. Ct. App. 2003), the Minnesota Court of Appeals affirmed the district court's opinion, which had entered judgment on the jury verdict against a herbicide manufacturer, trebled damages, and added prejudgment interest and attorney fees. Farmers brought a class action lawsuit against BASF Corporation (BASF) under the New Jersey Consumer Fraud Act (NJCFA) claiming that BASF engaged in fraudulent and unconscionable commercial conduct by marketing the same herbicide as two different products and convincing farmers to buy a more expensive product.

Background

A nationwide class of farmers alleged that BASF, a corporation that develops, produces, and markets herbicides, violated the NJCFA by deceptively advertising and marketing two BASF herbicides, Poast and Poast Plus. Id. at 860. Evidence at trial indicated that the two herbicides contained the same concentration of active ingredient per acre and were registered with the United States Environmental Protection Agency (EPA), according to the requirements of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), for use on the same crops. Id. at 861. BASF argued that the EPA required it to register the products separately and give them different names because of their chemical differences. Id. However, the farmers presented evidence indicating that BASF failed to register Poast Plus with state regulators for minor crop usage or indicate on its label that it was suitable for such usage in order to maximize profits. Id. BASF's internal documents indicated that this strategy was designed to mislead farmers and prevent them from learning details about the lower-priced Poast Plus. Id. at 862. The jury returned a verdict in favor of the farmers and awarded damages of $15,000,000. Id. The district court trebled the damages and added prejudgment interest and attorney fees. Id. BASF appealed. Id.

Arguments

BASF argued that: (1) it was entitled to judgment notwithstanding the verdict (JNOV) on the jury's determination that it engaged in consumer fraud; (2) it was entitled to JNOV on the verdict for damages as to the years 1992 and 1995-96; (3) it was entitled to a new trial based on errors in jury instructions and the improper admission of evidence; (4) the district court improperly certified the class; and (5) FIFRA, under which EPA registration is required, preempted private causes of action based on alleged abuse of pesticide regulations. Id. at 860, 864.

The respondent farmers challenged the district court's determinations concerning prejudgment interest and moved to strike portions of BASF's brief. Id.

Analysis and Holdings

BASF claimed that FIFRA preempted the instant private cause of action. Id. at 865. The United States Supreme Court previously held that federal law preempts state law claims when the existence of the federal enactments is a critical element. Id. (citing Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 353 (2001)). In applying this standard, the court disagreed with BASF, stating that "the farmers' claims were based on BASF's misleading statements and omissions as to the EPA-authorized uses of the products, not on claims that BASF committed fraud in the labeling or packaging." Id. The existence of FIFRA was not a critical element to the farmers' ability to bring the instant action. Id.

The next issue the court addressed concerned causation. Id. at 866. To establish a violation of the NJCFA, an ascertainable loss must be caused by an unlawful practice. Id. BASF argued that the farmers' theory of causation could not stand as a matter of law. Id. The court held otherwise, because it had previously recognized the basis for the farmers' claims for damages. Id.

Finally, BASF argued that the district court abused its discretion in instructing the jury, in its verdict form, and by its admission of evidence. Jury instructions only need to convey to the jury a clear and correct statement of the law. See id. at 870. The admissibility of evidence is within the broad discretion of the trial court and its ruling will only be disturbed if it is based on an erroneous view of the law or constitutes an abuse of discretion. See id. at 871. The district court has broad discretion in drafting special verdict forms. See id. at 870-71. The instant court held that the trial court did not fun afoul of any of the three above-mentioned standards. Id. For these reasons, the court affirmed the trial court's judgment.

The case was decided on March 11, 2003.