January 27, 2005: With all due respect to David
Letterman and everyone who does year-end
Top Ten lists, here are our top ten United States agricultural
law cases for
2004. There are no set criteria for the list except
importance for family
farmers. Links to the decisions can be found at www.flaginc.org.
1.
Captive Supplies in the Cattle Industry
Pickett v. Tyson Fresh Meats, 315 F. Supp. 1172
(U.S. District for the
Middle District of Alabama April 23, 2004). A jury found
that Tyson
violated the federal Packers and Stockyards Act through
its use of captive
supply contracts in purchasing cattle and awarded cattle
farmers and ranchers
up to $1.28 billion in damages. Then federal Judge Lyle
Strom overturned
that verdict, ruling that the evidence was insufficient
to support it. The cattle
farmers and ranchers appealed to the Eleventh Circuit
Court of Appeals. Oral
argument was heard on December 17, 2004, and the appeals
court decision is
expected in 2005.
2. Mad
Cow Disease and USDA Rulemaking
R-CALF v.
USDA, No. CV-04-51-BLG-RFC (U.S. District Court for
the District of Montana April 26, 2004).
On April 22, 2004, R-CALF filed a motion for a temporary
restraining order to prohibit USDA from lifting a ban
on importation from Canada of beef and other bovine
tissue for human consumption. The ban was in place due
to the discovery of bovine spongiform encephalopathy
(BSE) or “Mad Cow Disease” in a Canadian
born cow in Alberta, Canada. USDA, without using the
notice-and-comment rulemaking process, had issued a
memorandum that would have allowed Canadian beef to
once again be imported into the United States. Federal
Judge Richard Cebull granted R-CALF’s motion stopping
USDA from reopening the U.S.-Canada border to imports
of Canadian beef. In May 2004, the parties reached an
agreement that allowed USDA to engage in rulemaking
on reopening the border to Canadian beef. Editor's
Note: The USDA announced it will reopen the border to
Canadian beef in March after ruling the nation was a
'minimal risk region for BSE.' Two additional mad cows
were later detected but the order to reopen the border
still stands.
3. First
Amendment Challenges to Commodity Checkoff Programs
Cochran v. Veneman, 359
F.3d 263 (Third Circuit Court of Appeals February 24,
2004).
2004 saw a lot of action over the constitutionality
of mandatory checkoff programs. In the
Cochran case, two Pennsylvania dairy farmers successfully
challenged the entire Dairy
Checkoff Program. The district court held that the dairy
checkoff was constitutional, finding
that the dairy industry is as heavily regulated as the
California tree fruit industry whose
marketing order was held constitutional in a 1997 Supreme
Court ruling. The Third Circuit
reversed the district court. The court concluded that
the tree fruit decision was not
applicable because the dairy checkoff is a stand-alone
program not connected with the
federal milk marketing order system or other dairy industry
regulatory schemes. The
Cochran case is being held by the U.S. Supreme Court
pending its decision in the Beef
Checkoff challenge, Veneman v. Livestock Marketing Association,
335 F.3d 711 (Eighth
Circuit Court of Appeals July 8, 2003). Also being held
pending the Supreme Court’s
decision in LMA are challenges to the Pork Checkoff
Program, Veneman v. Campaign for
Family Farms, 348 F.3d 157 (Sixth Circuit Court of Appeals
October 22, 2003) and the
Louisiana alligator checkoff, Pelts & Skins v. Landreneau,
365 F. 3d 423 (Fifth Circuit
Court of Appeals April 2, 2004).
4. Feedlot
Regulation
Gacke v. Pork Xtra, L.L.C.,
684 N.W.2d 168 (Iowa Supreme Court June 16, 2004) and
Worth County Friends of Agriculture v. Worth County,
688 N.W.2d 257 (Iowa Supreme
Court October 6, 2004).
These two Iowa Supreme Court cases dealt with the conflict
between large feedlots and government regulation. In
Gacke, the Iowa Supreme Court struck down Iowa’s
right-to-farm law that barred nuisance lawsuits against
feedlot owners. The court ruled the law violated Iowa’s
Constitution because the bar on nuisance claims could
allow feedlot owners to take other landowners’
private property without just compensation. In Worth
County, the Iowa Supreme Court struck down a county
ordinance that attempted to regulate large feedlots.
The court ruled that because the Iowa Legislature had
enacted a statute regulating feedlots at the state level,
that statute preempted the county ordinance.
The issue of feedlot regulation will likely continue
to be contested in courts and legislatures across the
country.
5. Corporate
Farming Restrictions
Smithfield Foods v. Miller,
367 F.3d 1061 (Eighth Circuit Court of Appeals May 21,
2004).
In 2003, the Eighth Circuit struck down an anti-corporate
farming amendment to the South Dakota Constitution—so-called
“Amendment E”—because it was held
to violate the dormant Commerce Clause of the U.S. Constitution.
This put other states’ corporate farming restrictions
in question. In this case, Smithfield Foods challenged
Iowa’s law banning packer ownership of livestock.
Smithfield challenged the law under the dormant Commerce
Clause of the U.S. Constitution and won at the district
court. After the district court’s ruling, however,
the Iowa Legislature amended Iowa’s law. The Eighth
Circuit decided the district court should take another
look at the law in light of the legislative changes
and sent the case back to the district court. A trial
is expected to begin in early 2005.
6. Discrimination in USDA Programs
Garcia v. Veneman, 224
F.R.D. 8 (U.S. District Court for the District of Columbia
September 10, 2004) and Love v. Veneman, 224 F.R.D.
240 (U.S. District Court for the District of Columbia
September 29, 2004).
These two cases were brought against USDA for discrimination
in USDA programs. Garcia was brought on behalf of a
class of Hispanic farmers. The district court denied
the Hispanic farmers’ class certification motion
because the court believed each individual farmer had
different disputes with USDA, and therefore the farmers
could not satisfy the commonality requirement for certification.
In Love, a case brought on behalf of women farmers claiming
discrimination on the basis of gender, the same district
court denied the women farmers’ motion for class
certification on the same grounds. The D.C. Circuit
Court of Appeals has granted a motion to review the
class certification issue in the Love case.
7. Seed Saving Penalties
Monsanto Co. v. McFarling,
363 F.3d 1336 (Federal Circuit Court of Appeals April
9,
2004).
The Federal Court of Appeals upheld a finding that
a farmer violated his 1998 Technology Agreement with
Monsanto by saving seed, but held that because the remedies
provisions in the Agreement were “invalid and
unenforceable under Missouri law,” the $780,000
judgment against the farmer must be vacated. The court
reasoned that Monsanto’s liquidated damages clause
requiring farmers to pay 120 times the applicable technology
fee for each bag of seed purchased was not a reasonable
estimate of the financial harm Monsanto suffered when
the farmer saved seed. Monsanto removed this portion
of the remedies clause from its 2005 Technology Agreement.
8. Deceptive
Herbicide Pricing and Marketing
Peterson v. BASF Corp.,
675 N.W.2d 57 (Minnesota Supreme Court February 19,
2004).
The Minnesota Supreme Court unanimously affirmed a
jury verdict and entry of a $52 million judgment for
a nationwide class of farmers of minor crops who claimed
that BASF’s herbicide marketing and pricing schemes
were deceptive. BASF filed a petition for the U.S. Supreme
Court to review the case, which is apparently being
held pending that Court’s decision in Bates v.
Dow Agrosciences, 332 F.3d 323 (Fifth Circuit Court
of Appeals June 11, 2003). The Bates case concerns whether
state law product liability claims
against a herbicide manufacturer are preempted by the
Federal Insecticide, Fungicide and Rodenticide Act and
will be heard by the U.S. Supreme Court in January 2005.
It is expected that the Peterson case will finally be
decided by the end of 2005, nearly eight years after
it was filed.
9. Binding Arbitration in Production Contracts
Tyson v. Archer, 147 S.W.3d
681 (Arkansas Supreme Court February 19, 2004).
The Arkansas Supreme Court ruled that the binding arbitration
clause in a Tyson hog production contract was not enforceable
because the contract did not impose mutual obligations
on Tyson and the farmer. The issue arose when Tyson
suddenly terminated contracts of more than 100 hog farmers.
The hog farmers sued for compensatory and punitive damages
alleging that they incurred substantial debt to build
commercial hog farms that were rendered useless without
a contract. Tyson had contended that the contract the
hog farmers had signed required disputes to be resolved
through binding arbitration instead of litigation. The
court found that the contract was unenforceable because
the farmers’ only remedy was to use arbitration,
but Tyson could pursue litigation if it chose to. State
and federal legislation has been introduced to address
problems with binding arbitration provisions in agricultural
contracts.
10. Termination of Peanut Production Quotas
Members of the Peanut
Quota Holders Association v. United States, 60 Fed.
Cl. 524
(United States Court of Claims April 30, 2004).
A group of peanut farmers who held peanut production
quotas that were terminated by the 2002 Farm Bill sued
for compensation under the Takings Clause of the Fifth
Amendment of the U.S. Constitution. The court held that
the peanut quota system was created by Congress and
Congress has the right to modify or terminate a federal
program. Accordingly, the court found that no benefit
from such a program would constitute a property interest
protected by the Fifth Amendment, and it dismissed the
peanut farmers’ claims. For the first time since
1938, peanut farmers are without a production quota
safety net.
Cases to Watch
in 2005
There are a number of cases farmers should keep in
an eye on in 2005. The U.S. Supreme Court will issue
at least four decisions that will be important to farmers.
In Veneman v. Livestock Marketing Association, the Court
will decide whether the federal beef checkoff violates
the First Amendment of the U.S. Constitution. In Bates
v. Dow Agrosciences, the Court will decide whether state
law claims based on defective pesticides are preempted
by the Federal Insecticide, Fungicide and Rodenticide
Act. In Kelo v. City of New London, the Court will decide
whether government has the power to condemn or take
private property for private redevelopment uses. And
in Orff v. United States, the Court will decide whether
farmers have the right to sue the federal government
over breach of water rights contracts. In addition,
the First Circuit Court of Appeals in Harvey v. Veneman
will decide an organic farmer’s challenge to rules
implementing the Organic Foods Production Act of 1990.
There may also be a decision in Been v. OK Industries,
a case involving the cancellation of more than 400 Oklahoma
poultry growers’ contracts. The trial in that
case is scheduled to begin in Oklahoma state court in
March 2005.
FLAG will continue to follow these cases and other
legal developments that concern family
farmers.
David R. Moeller is a FLAG Staff Attorney and
Susan E. Stokes is FLAG’s Legal Director. FLAG
is
dedicated to providing legal services to family farmers
and their rural communities in order to help keep family
farmers on the land. See www.flaginc.org
for more information. |
