There has been quite a bit of action recently in the litigation involving the Syngenta Viptera and Duracade corn. Here is a quick update on where things stand at this point.
In 2010, Syngenta released these seed varieties, which were approved in the United States, but not in China. In 2013, US corn shipments arrived in China and were rejected due to the presence of the MIR-162 trait found in Viptera and Duracade. Shortly thereafter, US corn prices fell. Farmers who did not plant the seeds have filed suit against Syngenta claiming that Syngenta’s false assurances about imminent approval by the Chinese government constituted fraud and the rejection of corn by the Chinese caused the drop in the market, causing monetary damages to the farmers. [For more background information, read this fact sheet and view this webinar.]
Class Consolidation and Certification
Lawsuits were filed across the country and many of them were consolidated under “Multi-District Litigation” (“MDL”) in the District of Kansas before Judge Lungstrum. [Read Complaint here.] Specifically, the Complaint sought to certify a nationwide class with regard to a federal claim under the Lanham Act and 21 state classes (AL, AR, CO, IL, IN, IA, KS, KY, LA, MI, MN, MS, MO, NE, ND, OH, OK, SD, TN, TX, and WI).
Initially, Plaintiffs sought certification of 9 total classes: the nationwide claim and the state class claims for the following states: Arkansas, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio, and South Dakota to pursue negligence claims along with additional tortious interference claims for the AR and MO classes and statutory consumer protection claims in the IL and NE classes. In September 2016, Judge Lungstrum granted the class certification motion and certified these 9 classes. [For more information on the class certification or to view, read this prior blog post or read the Order.]
Class members are defined as corn producers who priced corn for sale after November 18, 2013. For class purposes, a “producer” is a person listed on the USDA FSA Form 578. (Essentially this excludes a cash rent landlord who owns the land but does not share in any risk of production.) Specifically excluded from any of these classes are producers who purchased Viptera or Duracade seeds and certain producers who have filed individual lawsuits seeking recovery for these claims (i.e. Minnesota producers who filed in state court before June 15, 2016 and producers whose attorneys have signed joint prosecution agreements with the class counsel).
A Motion for Class Certification for classes in each of the remaining states listed in the Complaint (including Texas) have not yet occurred.
Once the 9 classes were certified, the Plaintiffs’ counsel was required to send notice to everyone that would be a member of any of the 9 classes. Class members had until April 1 to opt out of the class (which would allow them to file their own individual claims). Producers who took no action remain as part of the certified class.
Syngenta’ Motion for Summary Judgment and Upcoming Trial Date
The Court set a trial date of June 5 for the first of the class action trials to be held. That trial was set to hear only the nation-wide Lanham Act claim and the Kansas class case, which involves only a state negligence claim. In April, Judge Lungstrum ruled on Motions for Summary Judgment related to this first scheduled trial. In his Order, the Judge ruled in favor of Syngenta by dismissing the Lanham Act Claim all together, and limiting the negligence claims so as not to include arguments “based on any alleged misrepresentation, a voluntary undertaking, a failure to war, or a duty to recall.” Additionally, the Court ruled in favor of the Plaintiffs with respect to a number of defenses raised by Syngenta (intervening cause, assumption of the risk, mitigation, business and economic justification, antitrust preemption, and comparative fault. [Read Order here.]
The federal Lanham Act provides liability if a defendant makes a false or misleading representation in commercial advertising or promotion. The Plaintiffs based their Lanham Act claim on an August 2011 letter from a Syngenta employee to Syngenta purchasers, which stated that Syngenta expected import approval from China for the Viptera seed in late March 2013. The court held that the Plaintiffs had not proven that their alleged damages were caused by this statement in the letter. Syngenta introduced evidence that out of 100 farmers deposed in the case, only 1 testified that he saw the letter, and none of the farmers claimed that they purchased Viptera or Duracade seed because of the letter. Additionally, the court found it important that the letter was not sent until August 2011, at which time planting had completed for that growing season, meaning that the farmers who planted the Syngenta seed in 2011 were clearly not influenced to do so by that letter. In light of this evidence, the court dismissed the Lanham Act claim.
The court held that although the Kansas Class’ negligence claim may go forward, it may not be based on an argument that the negligence of Syngenta was based on alleged misrepresentations. This is because Plaintiffs did not make a “negligent misrepresentation” claim (which is separate from an ordinary negligence claim like the one made by the Plaintiffs.) Additionally, the court ruled that the Kansas Class may not argue that Syngenta owed a duty based upon the Restatement (Second) of Torts Section 324A because that section applies only to physical damages and, in this case, plaintiffs do not seek physical damages, but only economic damages.
The court ruled against Syngenta on its attempt to seek summary judgment for any claims related to the Duracade (rather than the Viptera) seed claiming they were merely speculative. The court rejected this argument, citing to evidence from witnesses that a jury could rely upon to determine negligence related to Duracade. Thus, this claims related to Duracade remain active. Similarly, the court ruled against Syngenta seeking to dismiss a claim that they had a duty to conduct a limited launch. The court found that, viewing the evidence most favorable to the plaintiff, a question of fact remained for a jury to determine.
Finally, the court ruled against Syngenta’s attempt to dismiss punitive damage claims, holding that it could not apply an equitable doctrine before hearing evidence in a case and, therefore, it could not issue a ruling on punitive damages as a matter of law. Thus, the Kansas Class may seek these damages at trial.
The court then walked through a host of affirmative defenses raised by Syngenta and granted summary judgment in favor of the Plaintiffs on Syngenta’s defenses of assumption of risk (not recognized under KS law anymore), mitigation (no issue of fact), business and economic justification and antitrust (failure to preserve in pretrial order), comparative fault (no question of fact). With regard to Syngenta’s claim that there were independent and intervening causes that occurred and cut off liability on the part of Syngenta, the Court held that this defense was inapplicable to any potential intervening causes, with one exception. The court held that Syngenta may argue that China’s decision to reject corn was based upon political reasons or other reasons unrelated to the presence of the Syngenta seed and if a jury were to find that true, this could be an intervening cause.
Minnesota Individual Cases
As noted in the class definition above, there are certain individual cases pending in Minnesota that were not consolidated into the MDL and are not part of the class action. The first of those cases went to trial two weeks ago. However, a mistrial was declared on Wednesday, April 26, only the second day of trial. The trial has now been reset for July.
So Where Does That Leave Us?
First, of course, all of these trial court rulings could eventually be appealed, and a reversal of any decisions could significantly change the following analysis. But, for now, here is where we stand.
Because the Lanham Act claim was dismissed, there is no longer a nationwide class certified in the Syngenta cases. Additionally, any producer who was a member of the nationwide class (this means anyone who meets the class definition listed above and who did not affirmatively opt out of the class certification by April 1) may not now file an individual suit making a Lanham Act claim. However, producers who opted out of the nationwide class would still be able to bring an individual Lanham Act claim, subject to the applicable statute of limitations and statutory standards.
For producers in the 8 states with classes currently certified (Arkansas, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio, and South Dakota), if a producer did not actively opt out of the class by April 1, they are a member of the pending class actions and trial dates are being set, with Kansas leading the way with a trial date of June 5. If a producer from one of these states did actively opt out of the class, then he or she still has the right to file an individual action against Syngenta, subject to applicable statutes of limitations that apply to the specific claims. Oftentimes with class actions, once the first couple of cases (often known as “bell weather” cases) are tried, the parties will likely attempt to reach settlements in the remaining cases based on the verdicts reached in those initial cases. It will remain to be seen what those verdicts are and whether settlements may be reached.
For producers in other states (including Texas) that have class action claims pending but not yet certified, nothing has really happened yet. Once a Motion for Class Certification is ruled on, the court will either grant class certification or deny class certification. If granted, then the same procedure as was followed in the other state classes will commence and producers will receive notice and have the option to affirmatively opt out of the class by a certain date. If the class is not certified, then producers would be left with any individual claims they might wish to bring, subject to the applicable statutes of limitations. Any producer who may be interested in filing an individual action against Syngenta in this context should visit with their attorney to discuss and analyze when the statute of limitations could run and disallow any of their potential claims.