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IN RE STARLINK CORN PRODUCTS LIABILITY LITIGATION
July 11, 2002
IN RE STARLINK CORN PRODUCTS LIABILITY LITIGATION THIS DOCUMENT IS APPLICABLE TO MARVIN KRAMER, ET AL, PLAINTIFFS,
AVENTIS CROPSCIENCE USA HOLDING, INC., ET AL, DEFENDANTS.
The opinion of the court was delivered by: James B. Moran, Senior United States District Judge
MEMORANDUM OPINION AND ORDER
This controversy arises from the discovery of genetically modified corn
in various food products. Plaintiffs Marvin Kramer, Mitchell and Claude
Corbin, Corbin Farms LLC, Clint Killin, Charles Dupraz, William Furlong,
Jemar, Inc., Marvin Luiken, Keith Mudd, Edward Olsen, Gerald Greiger,
Verlon Ponto, Jon Untiedt, David Christoffer, Alan Roebke, Mica
Schnoebelen, Joseph and Ardene Wirts, Southview Farms, Dennis and Donald
Olsen, Gordon Stine, Don Sutter, and Bartt McCormack d/b/a Buford Station
Farms allege that defendants Aventis CropScience USA Holdings, Inc.
(Aventis) and Garst Seed Company (Garst) disseminated a product that
contaminated the entire United States' corn supply, increasing their
costs and depressing corn prices. Before us are fifteen separately filed
cases, consolidated here for pretrial purposes by the Panel for
Multidistrict Litigation. See 28 U.S.C. § 1407. Plaintiffs have filed
a 57-count master second amended consolidated class action complaint,
alleging common law claims for negligence, strict liability, private
nuisance, public nuisance and conversion on behalf of a nationwide class
of corn farmers against Garst, and on behalf of ten statewide classes
against Aventis, as well as statutory claims against Aventis under the
Tennessee Consumer Protection Act of 1997, Tenn. Code Ann. §§
47-18-101 et seq., and the North Carolina Unfair Trade Practices Act
N.C. Gen. Stat § 75-1.1 (1999). Defendants filed a motion to
dismiss, arguing that the Federal Insecticide, Fungicide and Rodenticide
Act (FIFRA), 7 U.S.C. § 136 et seq., preempts plaintiffs' state law
claims, that the economic loss doctrine bars any recovery, and that the
complaint fails to state a claim under any of plaintiffs' purported legal
theories. For the following reasons, defendants' motion to dismiss is
granted in part and denied in part.
Aventis*fn1 genetically engineered a corn seed to produce a protein
known as Cry9C
that is toxic to certain insects. The seeds are marketed
under the brand name StarLink. Garst is a licensee who produced and
distributed StarLink seeds. Aventis applied to register StarLink with the
EPA, which is responsible for regulating insecticides under FIFRA,
7 U.S.C. § 136 et seq. The EPA noted that Cry9C had several
attributes similar to known human allergens, and issued only a limited
registration, permitting StarLink use for such purposes as animal feed,
ethanol production and seed increase, but prohibiting its use for human
consumption. Consequently, segregating it from non-StarLink corn, which
was fit for human consumption, became of utmost importance. A little
background about normal practices for cultivating, harvesting and
distributing corn demonstrates the extensive steps necessary to prevent
StarLink corn from entering the food supply.
Corn replicates by the transfer of pollen from one corn plant to
another, including cross-pollination from one breed to another. Once
airborne, corn pollen can drift over considerable distances, meaning that
different corn varieties within a farm, and from neighboring farms,
regularly cross-breed. With few exceptions, there are not procedures in
place to segregate types of corn. Different corn breeds within an individual
farm are commingled at the harvesting stage. Corn from hundreds of
thousands of farms is then further commingled as it is gathered, stored and
shipped through a system of local, regional and terminal grain elevators.
Elevators, storage and transportation facilities are generally not equipped
to test and segregate corn varieties. The commingled corn is then marketed
and traded as a fungible commodity.
In light of these general practices in the corn Industry, the EPA
required special procedures with respect to StarLink. These included
mandatory segregation methods to prevent StarLink from commingling with
other corn in cultivation, harvesting, handling, storage and transport,
and a 660-foot "buffer zone" around StarLink corn crops to prevent
cross-pollination with non-StarLink corn plants. The limited registration
also made Aventis responsible for ensuring these restrictions were
implemented, obligating it (a) to inform farmers of the EPA's
requirements for the planting, cultivation and use of StarLink; (b) to
instruct farmers growing StarLink how to store and dispose of the
StarLink seeds, seed bags, and plant detritus; and (c) to ensure that all
farmers purchasing StarLink seeds signed a contract binding them to these
terms before permitting them to grow StarLink corn.
StarLink was distributed throughout the United States from
approximately May 1998 through October 2000. The limited registration
initially limited StarLink cultivation to 120,000 acres. In January
1999, Aventis petitioned the EPA to raise this limit to 2.5 million
acres. The EPA agreed, subject to an amended registration that required
(a) inform purchasers (i.e. "Growers") at the time of
StarLink seed corn sales, of the need to direct
StarLink harvest to domestic feed and industrial
non-food uses only;
(b) require all Growers to sign a "Grower Agreement"
outlining field management requirements and stating
the limits on StarLink corn use;
(c) deliver a Grower Guide, restating the provisions
stated in the Grower Agreement, with all seed;
(e) write to Growers prior to planting, reminding them
of the domestic and industrial use requirements for
(f) write to Growers prior to harvest, reminding them
of the domestic and industrial use requirements for
(g) conduct a statistically sound follow-up survey of
Growers following harvest, to monitor compliance with
the Grower Agreement.
Over this 29-month period, StarLink cultivation expanded from 10,000 acres
to 350,000 acres.
In October 2000, after numerous reports that human food products had
tested positive for Cry9C, a wave of manufacturers issued recalls for
their corn products. On October 12, 2000, Aventis, at EPA's urging,
applied to cancel the limited registration, effective February 20, 2001.
Fear of StarLink contamination nonetheless continues to affect corn
markets. Many U.S. food producers have stopped using U.S. corn, replacing
it with imported corn or corn substitutes. South Korea, Japan and other
foreign countries have terminated or substantially limited imports of
U.S. corn. Grain elevators and transport providers are now mandating
expensive testing on all corn shipments.
Plaintiffs allege that the widespread StarLink contamination of the
U.S. corn supply is a result of defendants' failure to comply with the
EPA's requirements. Aventis did not include the EPA-mandated label on
some StarLink packages, did not notify, instruct and remind StarLink
farmers of the restrictions on StarLink use, proper segregation methods
and buffer zone requirements, and did not require StarLink farmers to
sign the obligatory contracts. Prior to the 2000 growing season Aventis
allegediy instructed its seed representatives that it was unnecessary for
them to advise StarLink farmers to segregate their StarLink crop or
create buffer zones because Aventis believed the EPA would amend the
registration to permit StarLink use for human consumption. In July 2001,
however, an EPA Scientific Advisory Panel reaffirmed its previous
position on StarLink's allergenic qualities. Further, the FDA has declared
StarLink to be an adulterant under the Food, Drug and Cosmetic Act,
21 U.S.C. § 301 et seq.
Fed. R. Civ. P. 8(a)(2) only requires "a short and plain statement of
the claim showing that the pleader is entitled to relief." When deciding a
Rule 12(b)(6) motion we must assume the truth of all well-pleaded factual
allegations, making all possible inferences in the plaintiff's favor.
Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund. 25 F.3d 417, 420 (7th
Cir. 1994). We will dismiss a claim only if it appears "beyond doubt that
the plaintiff can prove no set of facts in support of his claim which would
entitle him to relief." Conley v. Gibson, 355 U.S. 41, 4546 (1957).
FIFRA, 7 U.S.C. § 136 et seq., regulates the use, sale and labeling
of pesticides such as the Cry9C protein found in StarLink corn. The EPA
approved StarLink's label and issued a limited registration for it to be
distributed. Defendants argue that FIFRA preempts plaintiffs' state law
FIFRA does not preempt all state laws respecting pesticides. Wisconsin
Public Intervenor v. Mortier, 501 U.S. 597, 614 (1991). The statute
expressly authorizes states to regulate pesticide use.
7 U.S.C. § 136v(a). But it also prohibits states from imposing any
beyond those imposed by the EPA. 7 U.S.C. § 136v(b).
The Supreme Court has made clear that "requirements" includes both
positive law, in the form of statutory and regulatory obligations, and any
common law standards which could give rise to civil damages. Cippolone
v. Liggett Group, Inc., 505 U.S. 504 (1992) (interpreting preemption
clause in Public Health Cigarette Smoking Act of 1969,
15 U.S.C. § 1331-1340). FIFRA uses nearly identical language to the
Cigarette Act, and its preemptive effect is equivalent. Shaw v. Dow
Brands, Inc., 994 F.2d 364, 370-71 (7th Cir. 1993).*fn2 FIFRA therefore
preempts any claims based on the inadequacy of StarLink's label or
defendants' failure to warn StarLink farmers.
Moreover, plaintiffs cannot avoid preemption by artful pleading. We
must scrutinize their allegations to ensure that they are not disguised
failure-to-warn claims. See, e.g., Greiner v. Vermont Log Building,
96 F.3d 559, 564 (1st Cir. 1996). If a claim amounts to a constructive
challenge to the EPA-approved label, FIFRA preempts it. Courts have,
however, recognized certain types of claims as falling outside of FIFRA.
See, e.g., Worm v. American Cyanamid Co. (WormI) 970 F.2d 1301, 1308 (4th
Cir. 1992) (state remedy for failure to comply with EPA requirements);
Lowe v. Sporicidin Int'l, 47 F.3d 124, 130 (4th Cir. 1995) (off-label
representations inconsistent with the label); New York State Pesticide
Coalition v. Jorling, 874 F.2d 115, 119 (2d Or. 1989) (failure to warn
third parties); National Bank of Commerce v. Dow Chemical Co.,
165 F.3d 602, 609 (8th Cir. 1999) (design defects). Portions of the
complaint implicate each of these, so we discuss them in turn.
First, plaintiffs allege that defendants sold StarLink seeds without
the EPA-required label, and otherwise failed to comply with the limited
registration's terms. There is no federal private right of action to
redress FIFRA violations. Only the EPA has standing to enforce it. No
Spray Coalition, Inc. v. City of New York, 252 F.3d 148, 150 (2d Cir.
2001). FIFRA does not, however, prevent states from creating civil
remedies for violating the federal standard. See, e.g., Lowe, 47 F.3d at
128; MacDonald v. Monsanto, 27 F.3d 1021, 1024 (5th Cir. 1994). The
statute only prohibits additional requirements, not identical ones.
7 U.S.C. § 136v(b). Although potential civil liability obviously
increases the manufacturer's incentive to comply, if the state is merely
adopting as its standard of care that which is already required under
federal law, no additional obligation is imposed.*fn3 FIFRA, therefore,
does not preempt plaintiffs' negligence per se claims.
Next, plaintiffs assert that defendants made voluntary statements
regarding StarLink beyond those on the EPA-approved label that
contributed to the contamination. Claims based on off-label
representations are preempted if they merely reiterate information
contained in the label. Lowe, 47 F.3d at 130. They are not preempted,
however, to the extent the
representations substantially differ from the
label. Id.*fn4 The complaint alleges that Aventis instructed seed
representatives to tell farmers that StarLink was safe for human
consumption and that the EPA was going to issue a tolerance for Cry9C in
food products. Such statements directly contradict the approved label and
therefore fall within Lowe.
Plaintiffs also advance the theory that defendants failed to adequately
inform those who handled corn further down the distribution chain, e.g.,
grain elevator operators and transport providers, of the required
warnings. Courts have noted the distinction between failure to warn the
initial purchaser and failure to warn third parties.
FIFRA "labeling" is designed to be read and followed
by the end user. Generally it is conceived as being
attached to the immediate container of the product in
such a way that it can be expected to remain affixed
during the period of use. . . . By contrast, the
target audience of the [state] notification program is
those innocent members of the general public who may
unwittingly happen upon an area where strong poisons
are present as well as those who contract to have
New York State Pesticide Coalition, 874 F.2d at 119; see also Mortier,
501 U.S. at 603 (upholding regulation requiring placards be posted to
notify third parties of pesticide use). Parties who handle StarLink corn
down the supply chain will not see the label on the original seed bag
and, consequently, will not know that a particular batch of corn is unfit
for human consumption and must be segregated and handled differently.
States can reasonably require that pesticide manufacturers share the same
EPA-approved warnings with parties beyond the immediate purchaser.
Similar to permitting state causes of action for directly violating
FIFRA, because the state standard here would mirror the federal one in
substance, it does not interfere with the EPA's prerogative with respect
to labeling and does not constitute an additional requirement.
Finally, plaintiffs allege that StarLink corn is a defective product.
They assert that, as currently designed, StarLink cannot be safely used
for its intended non-food purposes because it will inevitably commingle
and cross-pollinate with the food supply. The EPA's approval of a
product's FIFRA label does not constitute a finding or an endorsement that
its design is safe. See generally Jeffers v. Wal-Mart Stores, Inc.,
171 F. Supp.2d 617, 623-24 (S.D.W. Va. 2001). Here we must be careful to
determine whether their allegations are really challenging the product
design, which is permissible, or effectively challenging the accompanying
warnings, which would be preempted. The test most frequently articulated
is, when confronted with a type of harm, would the manufacturer change
the design or the label to prevent its recurrence? Worm v. American
Cyanamid Co. (Worm II), 5 F.3d 744, 747-48 (4th Cir. 1993).
The allegations regarding StarLink's tendency to cross-pollinate with
non-StarLink corn can be read two ways. One is that defendants should
have known that the 660-foot buffer zone was insufficient to prevent
cross-pollination. The 660-foot requirement was incorporated in the
limited registration and would have been communicated to farmers by the
EPA-approved label. A state standard of care demanding more than a
660-foot buffer would be an additional requirement in the form of a
different warning. FIFRA preempts such a claim.
It is also possible to view plaintiffs' cross-pollination charge as
asserting that no buffer zone could prevent it. The theory posits that
given the way corn reproduces, cross-pollination between corn targeted for
non-food uses and corn intended for the human food supply is inevitable.
Defendants, therefore, had a duty to design insect-resistant corn such that
it is fit for human consumption — use a protein that is safer than
Cry9C. This still attacks the label because it is premised on the idea that
the buffer zone warning was not sufficient to prevent cross-pollination.
The EPA approved the label with the knowledge that StarLink was unfit for
human consumption. It deemed the 660-foot buffer zone an adequate warning
to preserve the integrity of the food supply. Plaintiffs' defect claims
implicitly challenge this warning and are therefore preempted.
In summary, plaintiffs may proceed on the theory that defendants (1)
violated duties imposed by the limited registration; (2) made
representations to StarLink growers that contradicted the EPA-approved
label; and (3) failed to inform parties ...