Case Summary Archive - 2002
This Archive contains case summaries from July 1, 2002, through December 31, 2002. For more recent postings, go to Case Summaries.
Index
Agriculture and Urbanization
Decision Allowing Issuance of a Use Variance Affirmed
Brandy L. Brown
National AgLaw Center Graduate Fellow
The Michigan Court of Appeals has affirmed a trial court's decision that affirmed a township zoning board of appeals decision to grant a use variance for a 250-unit residential development in an area zoned for agricultural use. Janssen v. Holland Charter Twp. Zoning Bd. of Appeals. The court ruled that the zoning board's decision did not constitute impermissible rezoning and that the evidence presented was sufficient to justify the board's decision to issue the variance.
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Posted: Nov. 2, 2003
Designation As Agricultural Development Area Upheld
Eugenio A. Lomba
National AgLaw Center Graduate Fellow
In an action in which a township challenged a decision of New Jersey's Agriculture Development Committee to approve a 2700-acre tract of land as an Agriculture Development Area and to exclude an 80-acre parcel of land within that tract so that it could be used as a turnpike, the New Jersey Superior Court has upheld the Agriculture Development Committee's decision to exclude the 80-acre parcel of land from the Agriculture Development Area. Township of South Brunswick v. State Agriculture Development Committee. The court also ruled that the township could appeal a decision of the Middlesex County Agriculture Development Board to the Agriculture Development Committee and that the Agriculture Development Committee's decision was neither arbitrary or unreasonable.
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Posted: [Oct. 2, 2002]
Right To Farm Act Preempts Municipal Authority
E. John Edwards III
National AgLaw Center Graduate Fellow
In an action brought by a township against the operators of an ornamental plant production operation, the New Jersey Supreme Court has granted the operators' motion to transfer the proceedings to the County Agricultural Development Board (CAB) because the New Jersey Right to Farm Act (RTFA)preempts municipal land use authority over commercial farms. Township of Franklin v. Hollander.
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Posted: [Oct. 2, 2002]
Hog Farmers Sued for Violating Zoning Ordinance
Harrison M. Pittman
Staff Attorney
The Michigan Court of Appeals has reversed a decision that awarded damages to four landowners who brought an action against the owners of a neighboring hog farming operation alleging that the operation violated a local zoning ordinance that prohibited the spreading of obnoxious odors. Travis v. Preston. The court of appeals ruled that the awarding of monetary damages to the plaintiffs was an error because the only remedy authorized by the zoning enabling act was to abate a nuisance. The court also ruled that Michigan's amended Right to Farm Act did not apply retroactively and that the former version of the Michigan Right to Farm Act authorized the landowners to bring their action. The appeals court reversed the trial court's decision and remanded the case to be heard by a new trial judge.
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Posted: [Sept. 2, 2002]
Bankruptcy
Lender's Interest In Proceeds Superior to Landowner's
Brandy L. Brown
National AgLaw Center Graduate Fellow
In an action involving competing security interests between an agricultural lender and a landowner over certain proceeds of an insolvent farmer's crop, the Arkansas Court of Appeals has affirmed a trial court's decision that the lender's security interest was superior to the landowner's interest. Nef v. Ag Services of America, Inc. The appeals court ruled that the amount of attorneys' fees awarded to the lender should be reduced and that the farmer's bankruptcy filing did not toll the statute of limitations period on the landowner's action to enforce its crop lien. The court also ruled that Article 9 of the Uniform Commercial Code was not preempted by the federal laws pertaining to production flexibility contract payments.
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Posted: [Dec. 2, 2002]
Georgia Farmer Entitled to Discharge
E. John Edwards III
National AgLaw Center Graduate Fellow
The United States Bankruptcy Court for the Middle District of Georgia has ruled that a debtor who sold a farmer's seeds was entitled to a discharge even though the seeds were subject to a lien held by the Commodity Credit Corporation ("CCC") and the debtor failed to remit the proceeds from a sale of those seeds to either the farmer or the CCC. In re Wright. The court ruled that the creditor failed to demonstrate that the debtor acted in a fiduciary capacity with respect to the seeds that the creditor delivered to the debtor. The court also ruled that the debtor did not embezzle the creditor's seeds or the proceeds from the sale of those seeds and that the debtor was not guilty of larceny. Finally, the court ruled that the debtor's actions "did not cause willful and malicious injury because [the creditor] was aware of the actions and continued to do business with [the debtor] without taking any steps to prevent a recurrence of the actions."
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Posted: [Nov. 2, 2002]
Farmer's Debt Excepted for Making False Statements
Jay Kiiha
National AgLaw Center Graduate Fellow
The United States Bankruptcy Court for the District of Kansas has held that $8,409.65 of a farmer's debt was excepted from discharge in bankruptcy under Bankruptcy Code § 523(a)(2) because the farmer made false financial statements regarding a debt owed to the farmer's bank. In re Diel. The court also determined that the farmer's sale of hay for $4,797.12 would have constituted "willful and malicious injury" to the bank, in violation of Bankruptcy Code § 523(a)(6), if the land on which the hay was grown had been sufficiently described in the bank's security agreement pursuant to Kan. Stat. Ann. § 84-9-203(1)(a). The court also ruled that it would not except from discharge the proceeds of the farmer's sale of other crops under § 523(a)(2) or (a)(6) because the bank failed to demonstrate that the farmer had damaged the bank's property interests. Finally, the court ruled that the sale of an anhydrous applicator was not in violation of § 523(a)(2) or (a)(6) because the bank did not prove that the farmer profited from the sale or was personally involved in the sale.
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Posted: [Oct. 2, 2002]
Creditor Bound by Confirmed Chapter 12 Plan
Harrison M. Pittman
Staff Attorney
The United States Bankruptcy Court for the Northern District of Iowas has ruled that a creditor who failed to object to the amount of the allowed secured claims provided in two confirmed Chapter 12 bankruptcy plans was bound by the plans' provisions, even if the plans' treatment of the creditor's claims was not otherwise proper. In re Schellhorn.
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Posted: [Aug. 2, 2002]
Motion to Compromise PACA Claims Denied
Harrison M. Pittman
Staff Attorney
The United States Bankruptcy Court for the Eastern District of California has denied a bankruptcy trustee's motion to compromise the claims made by two claimants to the proceeds resulting from the settling of three adversary proceedings. In re Churchfield. The district court denied the motion to compromise because the bankruptcy trustee failed to make the necessary prima facia showing of a real and substantial factual or legal controversy. The bankruptcy court ruled that the proceeds collected by the bankruptcy trustee were not part of the debtors' Perishable Agricultural Commodity Act trust, but instead were property of the estate under section 541(a)(3) of the bankruptcy code.
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Posted: [Aug. 2, 2002]
Wife Entitled to "Tools of the Trade" Exemption
Harrison M. Pittman
Staff Attorney
The United States Bankruptcy Court for the District of Kansas has ruled that a debtor-wife who worked nine out of ten work days off the farm as a nurse was entitled to claim the $7,500.00 Kansas "tools-of-the-trade" exemption in farm machinery. In re Kieffer. The court also ruled that the debtor-wife was allowed to avoid a creditor's lien on the subject farm machinery.
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Posted: [Aug. 2, 2002]
Couple Allowed "Tools of the Trade" Exemption
Harrison M. Pittman
Staff Attorney
The Bankruptcy Appellate Panel for the Tenth Circuit has affirmed the portion of a bankruptcy court's decision that held that a husband and wife were principally engaged in farming, and reversed the portion of the decision that held that the wife was not entitled to claim a "tools of the trade" exemption under Kansas state law. In re Lampe. Both the debtors, Donald and Sheila Lampe, and the creditor, Iola Bank & Trust, appealed the bankruptcy court decision.
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Posted: [Aug. 2, 2002]
Farmer-Debtor Retains Disaster Payments
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Eighth Circuit has ruled in In re Vote that disaster payments received post-petition by a farmer who filed a Chapter 7 bankruptcy petition were not property of the estate and were not an after-acquired interest of the state.
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Posted: [July 28, 2002]
Biotechnology
Monsanto Forum Selection Clause Upheld
Beth Crocker
National AgLaw Center Graduate Fellow
In an appeal involving several damages actions brought by Alabama farmers who had purchased and planted transgenic Monsanto cottonseed, the Alabama Supreme Court held that the forum selection clause in the Monsanto technology agreement signed by the farmers was enforceable. The farmers commenced their damage actions against Monsanto and other defendants in Alabama. The forum selection clause, however, recited that the parties to the technology agreement had consented to the exclusive jurisdiction of the federal and state courts in St. Louis, Missouri, Monsanto's principal place of business. Ex parte Monsanto Co.
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Posted: [July 28, 2002]
Clean Water Act
Suit Against Army Corps of Engineers Continues
Harrison M. Pittman
Staff Attorney
The United States Court of Federal Claims has denied a motion for summary judgment filed by the Army Corps of Engineers ("Corps") in an action in which a farmer alleged that the government effectively took his property without just compensation when the Corps ordered him to cease maintenance and operation of a drainage system on his property and to restore the property to a prior wetland condition. Brace v. United States("Brace II"). The Corps alleged that the farmer operated the drainage system in violation of § 404 of the Clean Water Act ("CWA"). The court ruled that in light of the intervening decision in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, there was a genuine issue of material fact with respect to whether there was a nexus between the farmer's property and an interstate water pursuant to the CWA. The court also ruled that there was not sufficient information to allow summary judgment in favor of the government with respect to whether a taking had occurred.
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Posted: [Dec. 2, 2002]
Pumped Rainwater is "Stormwater Discharge"
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Eleventh Circuit has ruled that a Florida sugar cane farming operation was not required to obtain a National Pollutant Discharge Elimination System ("NPDES") permit to discharge water from its water management system into an adjacent lake. Fisherman Against Destruction of the Environment, Inc. v. Closter Farms, Inc.. The court determined that an NPDES permit was unnecessary because the pollutants discharged into the lake fell within the scope of the agricultural exemptions contained in the Clean Water Act.
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Posted: [July 28, 2002]
Cooperatives
Ag Coop Member Ordered to Arbitrate
Harrison M.Pittman
Staff Attorney
The Georgia Court of Appeals has ruled that in a dispute between an agricultural cooperative and one of its members, the member was precluded from denying the validity of the parties' arbitration agreement when he had not timely moved to stay arbitration proceedings. Rushing v. Gold Kist Inc. The Court also ruled that the Federal Arbitration Act applied to the parties' agreement to arbitrate, that the arbitration clause incorporated into the cooperative's by-laws after the membership agreement was signed subjected the member to arbitration, and that the arbitration clause was supported by proper consideration required under Georgia law.
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Posted: [July 2, 2002]
Crop Insurance
Insurance Policy Application Ruled Not Part of Policy
Brandy L. Brown
National AgLaw Center Graduate Fellow
The United States District Court for the Western District of Arkansas has granted an insurer's motion for summary judgment and denied the insureds' motion for summary judgment in an action brought by the insureds seeking recovery for losses they suffered when one of their poultry houses was destroyed by fire. Forrest v. Northland Cas Co. The court ruled that the plaintiffs' insurance policy application, including all of the property valuations contained in that application, did not become a part of the insurance policy, and therefore the Arkansas valued policy law did not apply.
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Posted: [Oct. 2, 2002]
Agency's Motion for Summary Judgment Denied
Harrison M. Pittman
Staff Attorney
The United States District Court for the Western District of Tennessee has denied a motion for summary judgment filed by a crop insurance agency because a genuine issue of material fact existed as to whether an employee for the insurance agency failed to procure a crop insurance policy for the plaintiff-farmers. Campbell v. White & Associates Ins. Agency, Inc.
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Posted: [Sept. 2, 2002]
Sugar Beet Growers Sue Crop Insurers
Harrison M. Pittman
Staff Attorney
In an action brought by several sugar beet growers against various crop insurers for failure to pay the growers' claims for frost damage, the United States District Court for the District of Minnesota ruled that the growers' contract claims should be aggregated with their fraud claims for purposes of calculating the amount in controversy. Agre v. Rain & Hail LLC. The court also ruled that the Federal Crop Insurance Act ("FCIA") did not preempt all of the growers' state law claims and that the crop insurers' naming of the Federal Crop Insurance Corporation ("FCIC") as a third party defendant did not justify removal of the case in federal court.
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Posted: [Aug. 2, 2002]
Motion to Compel Granted in Crop Insurance Dispute
Harrison M. Pittman
Staff Attorney
The United States District Court for the Southern District of Florida has ruled that the arbitration clause contained in a multiple peril crop insurance policy required the dispute between an insured and the insurer be submitted to arbitration. Ledford Farms, Inc. v. Fireman's Fund Ins. Co. The court also ruled that the arbitration clause did not completely bar the insured from bringing a subsequent court action against the insurer. Instead, the court determined that the arbitration clause was a condition precedent that had to be satisfied before the insured could bring such an action against the insurer.
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Posted: [Aug. 2, 2002]
Motion to Compel Granted in Crop Insurance Dispute
Harrison M. Pittman
Staff Attorney
The United States District Court for the Southern District of Florida has ruled that the arbitration clause contained in a multiple peril crop insurance policy required the dispute between an insured and the insurer be submitted to arbitration. Ledford Farms, Inc. v. Fireman's Fund Ins. Co. The court also ruled that the arbitration clause did not completely bar the insured from bringing a subsequent court action against the insurer. Instead, the court determined that the arbitration clause was a condition precedent that had to be satisfied before the insured could bring such an action against the insurer.
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Posted: [Aug. 2, 2002]
FCIA Preempts Arkansas Statute
Harrison M. Pittman
Staff Attorney
The Arkansas Supreme Court has ruled that the Federal Crop Insurance Act ("FCIA") preempts Ark. Code. Ann. Sec. 16-108-201, a statute which would have rendered the arbitration clause in the parties' multiple peril crop insurance policy ("MPCI") unenforceable. IGF Ins. Co. v. Hat Creek Partnership. The court also ruled that the McCarran-Ferguson Act was inapplicable. Id. A concurring opinion agreed that the FCIA preempted Sec. 16-108-201, but reasoned that "neither the contract nor the applicable federal regulations require the parties to arbitrate anything other than disputes over 'any factual determination.'" Id. at *4-5. According to the concurring opinion, Hat Creek, the insured party, could pursue its state law tort claims against IGF, the insurance company, and its agent once arbitration of any factual determinations was completed.
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Posted: [July 28, 2002]
Ag Partners Guilty Under False Claims Act
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Eighth Circuit has affirmed, per curiam, a jury verdict entered by the United States District Court for the Eastern District of Arkansas determining that an agricultural partnership, Larry Reed and Sons Enterprises, and its individual partners, violated the False Claims Act ("FCA") when they submitted a false cotton crop insurance claims for loss of 194.1 acres of cotton. United States v. Larry Reed & Sons Partnership. The jury based its determination largely upon its finding that the 194.1 acres had never been planted in the 1993 crop season.
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Posted: [July 28, 2002]
Federal Arbitration Act Preempts State Statute
Harrison M. Pittman
Staff Attorney
The Iowa Supreme Court has held that the Iowa Code which would have required adhesion contracts to be exempted from arbitration, was preempted by the Federal Arbitration Act ("FAA"). Heaberlin Farms, Inc. v IGF Ins. Co. The court held that the FAA prempted the Iowa statute because the sale of federal crop insurance had a sufficient economic nexus with interstate commerce to make the FAA applicable. The court also ruled that the FAA was a permissible exercise of Congress' authority to regulate interstate commerce.
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Posted: [July 28, 2002]
Environmental Law
Permit Allowing Expanded Egg Production Invalidated
E. John Edwards III
National AgLaw Center Graduate Fellow
The Ohio Court of Appeals has ruled that permits granted by the director of the Ohio Environmental Protection Agency ("OEPA") to an egg producer to expand operations and install an egg processing wastewater system were invalid because the director failed to conduct an on-site evaluation prior to issuing the permits. Concerned Citizens Of Cent. Ohio v. Schregardus. The court also ruled that the permits could not be validated by a de novo review of the director's decision by the state Environmental Review Appeals Commission.
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Posted: [Dec. 2, 2002]
Farm Programs
Group Lacks Standing to Challenge USDA Classification
Patricia Farnese
National AgLaw Center Graduate Fellow
The United States District Court for the Southern District of New York has dismissed an action in which the plaintiffs sought a declaratory judgment that would require the USDA to classify all downed animals as "adulterated" pursuant to federal law and an injunction that would prevent the use of these animals for human consumption. Farm Sanctuary, Inc. v. Baur. The court dismissed this action because the plaintiffs lacked standing.
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Posted: [Oct. 2, 2002]
Livestock Farmers Denied Disaster Relief
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Fourth Circuit has affirmed a decision that denied livestock disaster relief funds to three farmers because each of the farmers' gross revenue exceeded the amount allowed pursuant to the regulations implementing two disaster relief programs, the 1998 Crop Loss Disaster Assistance and the Emergency Livestock Feed Assistance Program. McDaniels v. United States
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Posted: [Sept. 2, 2002]
Challenge to Milk Pricing Classifications Rejected
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the District of Columbia Circuit has ruled that a chocolate manufacturer failed to exhaust its administrative remedies when it challenged the USDA's implementation of pricing classifications for milk used in the manufacture of milk chocolate. Hershey Foods Corporation v. Department of Agriculture. The D.C. Circuit affirmed the district court's decision to dismiss the action, but disagreed with the district court's ruling that the USDA's final rule was converted into statutory law when the 2000 Appropriations Act was enacted.
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Posted: [Aug. 2, 2002]
Exhaustion Requirement Not Jurisdictional
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Ninth Circuit has held that the exhaustion requirement contained in the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 did not deprive the district court of subject matter jurisdiction. McBride Cotton and Cattle Corp. v. Veneman. The Ninth Circuit also ruled that the nondebtor-plaintiffs' failure to exhaust their administrative remedies was excused because the plaintiffs' alleged collateral and colorable constitutional claims in their complaint, and because any attempt made by the plaintiffs to exhaust their administrative remedies would have been meaningless.
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Posted: [July 28, 2002]
Sugar Program Violated Food Security Act
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the District of Columbia Circuit has ruled that the USDA Secretary violated the Administrative Procedures Act ("APA") when it announced by press release, without notice and comment, a new payment-in-kind ("PIK") program for the 2001 sugar crop. Sugar Cane Growers Co-op of Florida v. Veneman. The D.C. Circuit also ruled that the USDA's failure to comply with the APA was not harmless error, and that the Secretary violated the Food Security Act of 1985 in its implementation of the PIK program. In addition, the DC Circuit reversed the district court's holding that the plaintiffs lacked standing to bring the action. The D.C. Circuit did not vacate the Department's action, but rather remanded the matter to the USDA for further consideration.
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Posted: [July 28, 2002]
Finance and Credit
Collateral Description Adequate Under Revised Article 9
E. John Edwards III
National AgLaw Center Graduate Fellow
In an action brought by two debtors to determine the validity, priority, and extent of the liens held in certain farm equipment, the United States Bankruptcy Court for the Southern District of Illinois has ruled that a creditor's financing statement containing only a general description of the farm equipment was sufficient to protect that creditor's security interest. In re Grabowski. The court further ruled that the financing statement's listing of the debtors' address as their business address, as opposed to their home address where the collateral was located, did not render the financing statement misleading or otherwise invalid.
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Posted: [Dec. 2, 2002]
Farmer Required to Pay Shared Appreciation
Harrison M. Pittman
Staff Attorney
The United States District Court for South Dakota has upheld a USDA National Appeals Division determination that the recapture provision in a farmer's shared appreciation agreement was effective upon expiration of such agreement, and that the farmer was required to pay a shared appreciation amount of $91,150.00. Bukaske v. United States Dep't. of Agric.
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Posted: [Aug. 2, 2002]
Payment Required On Shared Appreciation Agreement
Susan A. Schneider, Director
Graduate Program in Agricultual Law
Monica M. Clark
National AgLaw Center Graduate
Fellow
The Seventh Circuit ruled that the USDA was entitled to the recapture appreciation value upon expiration of the ten-year term of a Farm Service Agency's Shared Appreciation Agreement, regardless of whether any of the triggering events contained in the agreement had occurred. Israel v. USDA .
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Posted: [July 28, 2002]
Challenge to Shared Appreciation Agreement Dismissed
Harrison M. Pittman
Staff Attorney
The United States District Court for North Dakota has dismissed an action in which the plaintiff-farmers claimed that the USDA erroneously interpreted the terms and conditions of their shared appreciation agreements as requiring payment to the USDA up to the amount of the loan written down at the expiration of the agreement. Stahl v. Veneman. The Court ruled that the shared appreciation agreements entitled the USDA to the recapture appreciation value upon expiration of the agreements, regardless of whether any of the "triggering events" had occurred.
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Posted: [Aug.2, 2002]
Farm Service Agency Retains Perfected Interest
Harrison M. Pittman
Staff Attorney
The United States Bankruptcy Court for the Eastern District of Arkansas has ruled that a filing officer's erroneous termination of a properly filed financing statement filed by the Farm Service Agency ("FSA") did not cause the FSA's secured claim to become an unsecured claim and therefore avoidable by the bankruptcy trustee. In re Masters.
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Posted: [July 28, 2002]
Conviction for FSA Loan Falsification Reversed
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Fifth Circuit has reversed a jury verdict entered by the United States District Court for the Southern District of Mississippi which found that a Mississippi farmer was guilty of bribery and knowingly making false statements on farm loan applications. United States v. Hart. The Fifth Circuit ruled that the district court abused its discretion when it allowed a government witness to testify about the debts the farmer allegedly should have reported on his loan applications. The Fifth Circuit also ruled that without the government witness's testimony, the remaining evidence was insufficient to prove the farmer's guilt beyond a reasonable doubt. The district court's conviction was vacated, and the matter was remanded for a new trial.
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Posted: [July 28, 2002]
Reliance on Address Leaves Creditor Unperfected
Harrison M. Pittman
Staff Attorney
The United States Bankruptcy Court for the Western District of Arkansas held that a creditor's filing of a financing statement in the county where the debtor conducted business, instead of the county in which the debtor actually resided, caused the creditor's security interest in certain farm equipment to become unperfected despite the creditor's good faith reliance on the address provided to the creditor. In re Davis.
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Posted: [July 28, 2002]
Food Safety
USDA Salmonella Performance Standards Rejected
Jeffrey A. Feirick
National AgLaw Center Graduate Fellow
The Fifth Circuit Court of Appeals has affirmed a district court's decision to set aside a USDA Food Safety and Inspection Service (FSIS) regulatory regime that permitted the FSIS to withdraw its inspection services from meat and poultry establishments that failed salmonella performance standards. The Fifth Circuit agreed with the district court that the regulations exceeded the Secretary's authority under the Federal Meat Inspection Act. Supreme Beef Processors v. USDA.
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Posted: [July 28, 2002]
Revised Meat Inspection Proposals Upheld
Harrison M. Pittman
Staff Attorney
In an action brought under the Poultry Products Inspection Act ("PPIA") and the Federal Meat Inspection Act ("FMIA"), the United States Court of Appeals for the District of Columbia Circuit upheld a district court decision ruling that the USDA's implementation of a modified carcass inspection model did not violate either the PPIA or the FMIA. American Fed'n of Gov't Employees v. Veneman. The action was brought by federal meat and poultry inspectors to enjoin the Secretary of Agriculture from "authorizing anything other than carcass-by-carcass postmortem inspection by federal inspectors. The inspectors were joined by their union and a public interest organization.
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Posted: [July 28, 2002]
Labor
New York Farmer Subject to Jurisdiction in Texas
Harrison M. Pittman
Staff Attorney
In an action brought under the Migrant and Seasonal Agricultural Worker Protection Act ("AWPA"), and under certain provisions of Texas law, the United States District Court for the Western District of Texas has ruled that a New York farmer who recruited workers through a Texas farm labor contractor was subject to personal jurisdiction in Texas. Gonsalez Moreno v. Milk Train, Inc. The court also ruled that the Western District was the proper venue for the lawsuit and that the forum selection clause in the parties' contract was voided by the AWPA.
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Posted: [July 28, 2002]
New York Farmer Subject to Jurisdiction in Arizona
Harrison M. Pittman
Staff Attorney
In an action brought under the Migrant and Seasonal Agricultural Worker Protection Act ("AWPA"), and under certain provisions of Arizona state law, the United States Court of Appeals for the Ninth Circuit has held that J.B. Martin and Sons Farms, Inc. ("Martin Farms"), a farming operation located in New York, was subject to personal jurisdiction in an Arizona federal district court as a result of its relationship with a Texas-based farm labor contractor that recruited migrant workers residing in Arizona for work on its cabbage and squash farms. Ochoa v. J.B. Martin and Sons Farms, Inc.
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Posted: [July 28, 2002]
Livestock Marketing
Claim Against Pork Packer Dismissed
Harrison M. Pittman
Staff Attorney
The United States District Court for the Eastern District of Virginia has granted a pork packer's motion for summary judgment in an action brought by several hog producers under 7 U.S.C. Sec. 192 of the Packers and Stockyards Act of 1921 ("PSA"). Griffin v. Smithfield Foods, Inc.. The court determined that the packer's direct ownership and contractual purchases of hogs did not violate the PSA. The Court also determined that the packer implemented a vertically integrated system of hog purchasing for the purpose of promoting efficiency, rather than for the purpose of manipulating the market.
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Posted: [Aug. 2, 2002]
Perishable Commodities
PACA Claimant Allowed to Collect Attorney's Fees
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Ninth Circuit has ruled that a Perishable Agricultural Commodities Act ("PACA") statutory trust claimant was allowed to recover attorneys' fees from assets of a statutory trust as part of its PACA trust claim, despite the fact that there were not sufficient funds in the trust to fully satisfy each of the PACA claimants' claims. Middle Mountain Land and Produce Inc. v. Sound. The Ninth Circuit held that the claimant could recover attorneys' fees based on the plain language of the PACA. The court remanded the matter to the district court, however, to determine whether the PACA claimant had a valid contractual claim that allowed it to recover attorneys' fees from the trust assets. The Ninth Circuit also affirmed the district court's decision not to award the PACA claimant prejudgment interest. These issues presented matters of first impression for the Ninth Circuit.
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Posted: [Nov. 2, 2002]
Summary Judgment Denied In Part, Granted In Part
Harrison M. Pittman
Staff Attorney
In an action brought pursuant to the Perishable Agricultural Commodities Act ("PACA"), a plaintiff sought to disgorge the funds from several beneficiaries of a PACA trust that were received from an insolvent produce dealer. Fresh Kist Produce, L.L.C. v. Choi Corp., Inc.. The United States District Court for the District of Columbia granted in part, and denied in part, a motion for summary judgment filed by the plaintiff and denied a cross-motion for summary judgment filed by one of the defendants. The court ruled that one of the beneficiaries of the PACA trust was required to disgorge $59,189.40 received from the insolvent produce dealer so that the funds could be distributed pro rata among all of the PACA trust beneficiaries. The court based its determination on the fact that the particular beneficiary had knowledge of the produce dealer's insolvency or near insolvency at the time he received the payments.
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Posted: [Sept. 2, 2002]
Corporation Violated PACA
Harrison M. Pittman
Staff Attorney
The United States District Court for the Middle District of Florida has ruled that meals prepared by a corporation from produce received by the corporation were "products derived from perishable agricultural commodities" as defined under the Perishable Agricultural Commodities Act ("PACA"), and that the conduct of the officers and directors of the corporation should be judged on fiduciary duty standard, and that the officers and directors of the corporation violated fiduciary duty standards owed to an agricultural commodities wholesaler. Red's Market v. Cape Canaveral Cruise Line, Inc.
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Posted: [July 28, 2002]
"BMA" Found to Violate PACA Trust
Eduardo Gabriel Arana
National AgLaw Center Graduate Fellow
The United States District Court for the Middle District of Tennessee has ruled that a commercial bank, acting pursuant to a “Business Manager Agreement” between it and a produce buyer, violated a trust created under the Perishable Agricultural Commodities Act (PACA), for the benefit of unpaid sellers of produce. Overton Distributors Inc. v. Heritage Bank. In essence, the court concluded that the agreement did not provide for the sale of the produce buyer’s accounts receivable as it purported to do. Instead, it gave the bank a security interest in the accounts. The court also concluded that the bank did not acquire the accounts receivable as a bona fide purchaser because it did not give value for them, and the bank had notice that such a transfer to the bank was a breach of the PACA trust.
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Posted: [July 28, 2002]
Factoring Agreements May Not Breach PACA Trust
Jeffrey A. Feirick
National AgLaw Center Graduate Fellow
The Ninth Circuit Court of Appeals has ruled that factoring agreements do not per se breach the trust created by the Perishable Agricultural Commodities Act (PACA). Boulder Fruit Express & Heger Organic Farm Sales v. Transportation Factoring, Inc. In rejecting the trust beneficiaries’ claim that factoring agreements per se breach the PACA trust because they contemplate a discounted sale of trust receivables, the court opined that “a commercially reasonable sale of account for fair value is entirely consistent with the trustee’s primary duty under PACA . . . to maintain trust assets so that they are ‘freely available to satisfy outstanding obligations to sellers of perishable commodities.’” Thus, while declining to rule that factoring agreements are per se breaches of the PACA trust, the court did not foreclose the possibility that a particular factoring agreement might breach the trust because it was not commercially reasonable.
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Posted: [July 28, 2002]
Pesticides
Farmer's Product Liability Claim Preempted by the FIFRA
Brian J. Oakey
National AgLaw Center Graduate Fellow
The Washington State Court of Appeals has affirmed a decision that held that a landowner's product liability claim was preempted by the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"). Eriksen v. Mobay Corp. The claim was premised on the "consumer expectations" test, a standard that requires the plaintiff to show that the product was less safe than the ordinary consumer would expect. Under this test, the existence of government-mandated product labels are relevant because their contents bear on the question of what a reasonable, ordinary consumer is justified in expecting. Here, the product was labeled as required by the FIFRA. The court observed that "[t]he FIFRA is a comprehensive scheme that details the requirements a pesticide manufacturer must meet, including warnings and precautionary statements," and it "specifically preempts conflicting state law causes of action that would impose a duty to provide a warning that is different or in addition to its requirements under the federal scheme." Reasoning that it would be "anomalous" for the plaintiff to claim that a consumer was justified in expecting the product to perform more safely than revealed by its label, the court held that the claim was preempted by the FIFRA.
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Posted: [Nov. 2, 2002]
Lake Owner's Pesticide Contamination Action Dismissed
Harrison M. Pittman
Staff Attorney
The Illinois Court of Appeals has affirmed a decision to dismiss a lake owner's claims against a pesticide manufacturer for damages the lake owner suffered when his lake was allegedly contaminated by pesticide runoff. Traube v. Freund. The lake owner claimed that the manufacturer created a nuisance when it helped a farmer prepare his pesticide-spreading equipment and that the manufacturer engaged in an ultrahazardous activity because the particular pesticide in question should not have been applied near an aquatic site. The court of appeals also affirmed the trial court's ruling that the lake owner's claims were preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA").
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Posted: [Nov. 2, 2002]
Claims Not Based on Labels Not Preempted by FIFRA
Harrison M. Pittman
Staff Attorney
The Illinois Appellate Court has reversed and remanded a trial court ruling that held that a farmer's state law claims against a cooperative and its general manager were preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"). Diehl v. Polo Co-op Ass'n. The appellate court ruled that the state law claims were not preempted by the FIFRA because the claims were not a challenge to the pesticides' labels.
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Posted: [Sept. 2, 2002]
Horse Rider's State Law Claims Preempted by FIFRA
Harrison M. Pittman
Staff Attorney
The United States Court of Appeals for the Eighth Circuit, in Netland v. Hess & Clark, Inc., rehearing and rehearing en banc denied (May 13, 2002), has affirmed a ruling that a plaintiff's claims against a pesticide manufacturer for strict liability, failure to warn, and negligence were preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), because the claims were challenges to the pesticide's label.
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Posted: [July 28, 2002
Experts' Opinions on Pesticide Dangers Upheld
Jeffrey A. Feirick
National AgLaw Center Graduate Fellow
A federal district court has upheld an EPA rule requiring pesticide registrants to report facts known and opinions held by non-testifying experts as to the dangers of registered pesticides. American Crop Protection Ass’n. v. United States Envtl. Protection Agency. The EPA rule was promulgated pursuant to the EPA’s regulatory authority over pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).
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Posted: [July 28, 2002]
Production Contracts
Tyson Foods Liable for $891,660 In Damages
Harrison M. Pittman
Staff Attorney
The Arkansas Supreme Court has affirmed a decision that awarded an Arkansas hog farmer $891,600.00 in damages in an action brought by the hog farmer against Tyson Foods, Inc., for fraud, promissory estoppel, and negligence. Tyson Foods, Inc. v. Davis. The court ruled that the plaintiff's fraud and promissory estoppel claims were not precluded by the three-year statute of limitations and that the claims submitted to the jury were supported by substantial evidence. A dissenting opinion stated that the hog farmer's fraud claim was precluded by the three-year statute of limitations.
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Posted: [Sept. 2, 2002]
Wildlife
Turkey Farmer Not Allowed to Release Game Birds
Harrison M. Pittman
Staff Attorney
The Virginia Supreme Court has affirmed a decision by the Rockingham County Board of Supervisors to deny a landowner's application for a special use permit that would have allowed the landowner to raise and release various types of game birds for a shooting preserve on the landowner's turkey farm. Board of Sup'rs of Rockingham County v. Stickley. The court ruled that an expert witness's testimony regarding the significant risk posed to surrounding poultry operations by the pen-raised game birds was sufficient to make that particular issue of disease "fairly debatable." The court also ruled that the county board did not act arbitrarily, notwithstanding testimony produced by some of the landowner's expert witnesses.
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Posted: [Aug. 2, 2002]
Georgia Farmer Not Allowed to Sell Wild Alligators
Harrison M. Pittman
Staff Attorney
The Georgia Court of Appeals in Wright v. Department of Natural Resources, has affirmed a trial court decision that a Georgia alligator farmer cannot sell alligators living in a fenced-in pond on the farmer's land. The court of appeals ruled that the farmer did not have a property interest in the alligators to substantiate a viable takings claim; that even if the takings claim was viable, it was nevertheless barred by a four-year statute of limitations, and that the farmer was precluded by statute from asserting a nuisance claims against the Department of Natural Resources for the state of Georgia.
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Posted: [July 28, 2002]