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Indian Brand Farms, Inc. v. Novartis Crop Protection

December 20, 2007

INDIAN BRAND FARMS, INC., ET AL., PLAINTIFFS,
v.
NOVARTIS CROP PROTECTION, INC., DEFENDANT.



The opinion of the court was delivered by: Joseph H. Rodriguez U.S.D.J.

Hon. Joseph H. Rodriguez

MEMORANDUM OPINION & ORDER

Presently before the Court is Defendant's renewed motion for partial summary judgment based on preemption of Plaintiffs' claims by the Federal Insecticide, Fungicide, and Rodenticide Act (hereinafter "FIFRA").*fn1 Using an inducement test, on August 21, 2003, the Court granted summary judgment in favor of Defendant holding that Plaintiffs' claims were preempted by FIFRA. Plaintiff appealed. In the interim, the United States Supreme Court issued its opinion in Bates v. Dow Agrosciences, L.L.C., 544 U.S. 431 (2005), which rejected use of the inducement test as a means of determining preemption and directed the employment of a two part test. To determine that a state statutory or common law claim is preempted by FIFRA, (1) the statute or common law rule must create a requirement for labeling or packaging and (2) the labeling or packaging requirement must be in addition to or different from those required under FIFRA. See id. at 444.

Applying the new standard announced in Bates, on the claims of negligent misrepresentation, fraud, and breach of the New Jersey Consumer Fraud Act, the Third Circuit ruled that to the extent that these claims were based on oral representations, they are not preempted. Mortellite v. Novartis, 460 F.3d 483, 491 (3d Cir. 2006). However, to the extent that these claims rely on written materials, the Third Circuit concluded that the claims were preempted if the materials qualify as "labels" or "labeling" under FIFRA. Id. ("We conclude that Plaintiffs' claims of negligent misrepresentation, fraud, and statutory consumer fraud are preempted only to the extent that those claims rely on written misrepresentations that qualify as "labels" or "labeling" as defined by FIFRA.") Given that the parties did not brief the question of whether the written materials were within the FIFRA definition of "labels" or "labeling," the Circuit remanded this issue for further consideration. Finally, as to whether any claim of failure-to-warn was preempted by FIFRA, the Third Circuit held that the first prong of the Bates test was satisfied, but remanded for further consideration the issue of whether the second prong was satisfied. Id.

Thus, in this motion for partial summary judgment based on FIFRA preemption, pursuant to the directive of the Third Circuit, the issues before the Court are: (1) whether the written materials relied upon by Plaintiffs qualify as "labels" or "labeling" under FIFRA; if so, the Third Circuit directs that Plaintiff's claims of negligent misrepresentation, fraud and breach of the New Jersey Consumer Fraud Act are preempted by FIFRA; and (2) whether Plaintiffs' failure-to-warn claim, if successful, would "create requirements in addition to or different from those under FIFRA"; if so, that claim is preempted as well. Id.

Background*fn2

The Plaintiffs in this matter are South Jersey blueberry farms and farmers. Defendant is a non-New Jersey corporation that, beginning in 1997, formulated, manufactured, and marketed an insecticide known as Diazinon AG600 WBC. During the Spring of 1997, Plaintiffs sprayed their blueberry fields with Diazinon AG600 WBC, either alone or mixed with a fungicide, Captan 80 WP or Captec, neither of which are manufactured by the Defendant. By the end of May, 1997, Plaintiffs began to notice damage to the blueberry plants that had been sprayed with the Diazinon AG600 WBC. Other bushes on Plaintiffs' farms that had been sprayed with other pesticides, either by themselves or mixed with Captan 80 WP and/or Captec, allegedly exhibited no damage. Plaintiffs reported the damage to the Defendant.

As the season progressed and the plants began to produce berries, Plaintiffs discovered damage to the fruit as well. Some Plaintiffs hired William Sciarappa, Ph.D. to perform investigation, testing, and documentation of the damage. From June 1997 to August 1997, representatives of Novartis, including Dr. Neil Lapp, visited the Plaintiffs' farms to investigate their claims and assess the problem. Dr. Lapp testified at deposition that although Novartis' investigation failed to substantiate the farmers' contentions that Diazinon AG600 WBC caused the crop injury, the company determined that it would explore goodwill settlements with the farmers.

Plaintiffs allege that in or about mid-July of 1997, Dr. Lapp, who had just become Defendant's Technical Services Manager on July 2, 1997, told Plaintiffs not to hire an attorney, because Novartis would treat them fairly and compensate them for all of their damage, present and future. Allegedly at the direction of Dr. Lapp, during the Fall of 1997, all Plaintiffs except Indian Brand Farms, Inc. and Columbia Fruit Farms, Inc. submitted documentation to Novartis outlining only the damages they had suffered during the crop year. These Plaintiffs allege that Dr. Lapp represented that Novartis would talk to them about further damages to their crops, plants, and land sustained during the crop years 1998 and following, after those particular years were over.

From November of 1997 through January of 1998, Defendant entered into settlement agreements with Plaintiffs Joyce Cappuccio, individually and d/b/a Wm. Cappuccio & Sons, Gregory A. Clark, individually and d/b/a Clark Farms, R & S Franceschini Farms, Anthony Melora, individually and d/b/a Melora Farms, Columbia Cranberry, Inc. and Joseph E. Martinelli, individually and d/b/a Blu-Jay Farms (the "Settling Plaintiffs"). Each of these "settling plaintiffs" signed a Release indicating that he or she received settlement proceeds in full satisfaction and extinguishment of all claims and causes of action against [defendant] . . . arising out of any damage or loss, present or future, to crops, plants, animals, fish or land, direct or indirect, known or unknown allegedly sustained by the [settling plaintiff] as a result of the use of [Diazinon AG6OO].

The Release further provided, "It is agreed that this is a business decision in compromise of a disputed claim and that the making of this payment is not an admission of liability on the part of [Defendant]."

The settling Plaintiffs also signed a Confidentiality Agreement, which stated:

The goodwill settlement which has been negotiated between [defendant] and the owner/manager of the crop in question is a business transaction.

Each party is required to keep the details of the agreement confidential. If either party violates this Confidentiality Agreement, both agree that this goodwill settlement may be null and void.

In the Spring of 1998, it became apparent that there was continuing damage to all of the plants that had been sprayed with the Diazinon AG600 WBC the previous year. At about the same time, Indian Brand Farms, Inc. and Columbia Fruit Farms, Inc. Submitted their crop loss and damage report for 1997 & 1998, but Novartis denied these Plaintiffs any compensation for 1997 or 1998 damage. Some of the settling plaintiffs again contacted Novartis about the damages, but Dr. Lapp told them that the company had closed its files on the matter and had no intention of considering further damage caused by Diazinon AG600 WBC.

Thus, the essence of the dispute in this case centers around damage allegedly caused to Plaintiffs' blueberry plants and crops by a chemical manufactured by Defendant. Defendant asserted that the majority of Plaintiffs signed a Release concurrent with taking certain sums in settlement of this claim after evaluating initial damage to the 1997 crops, with the Releases giving up all rights to future damages. However, the "Settling Plaintiffs" sought to avoid the Releases by asserting that Defendant fraudulently induced them into signing.

The Fourth Amended Complaint, filed in April of 2007, contains seven counts. Count I has alleged Strict Products Liability in that Diazinon AG600 WBC had a latent defect which made it unreasonably dangerous to Plaintiffs' plants and land, and which resulted in injury to Plaintiffs' plants and land.

Count II states a claim for Negligence in that the defendant negligently placed Diazinon AG600 WBC into the stream of commerce, and was negligent in formulating, testing, manufacturing, instructing, and distributing Diazinon AG600 WBC.

Count III alleges Fraud in that the Defendant told the Settling Plaintiffs that any settlement reached for damages was for the crop year 1997 only, but Defendant knew that this was a misrepresentation and that it was fraudulently inducing those Plaintiffs to sign the Releases. Plaintiffs allege that they relied on Defendant's representations and signed releases, and that such reliance was detrimental as there was future damage.

Count IV alleges Negligent Misrepresentation/Fraud by stating that the Defendant marketed its product as effectively controlling certain insects without inflicting adverse effects on plants or soil and the defendant knew or should have known that this was a false statement regarding a material fact. Plaintiffs allege they relied to ...


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