Norman County prepares for farmers' class action
Consumer-protection suit centers on herbicide prices
BY BARBARA L. JONES
Norman County is not the type of place where you would expect large-scale litigation to take place. Ada, the county seat, has a population of 1,708. But a District Court judge's decision to certify a class last month means that the bucolic county has become the showdown site of a national class action suit involving thousands of litigants.
The plaintiffs - farmers from several states, including Minnesota - allege that BASF deceptively marketed and priced one herbicide as two separate products - Poast and Poast Plus. BASF sold Poast at almost twice the price of Poast Plus, the suit alleges.
"According to farmers, BASF dropped the price for the re-named Poast Plus to compete in the soybean market, while retaining a premium price for Poast for use on other crops," said Minneapolis attorney Douglas J. Nill, who, along with attorneys Hugh V. Plunkett and Robert K. Shelquist, represent the plaintiffs.
While damages now are difficult to determine, the potential award is sizeable - particularly because BASF could be assessed treble damages under the applicable law.
Nill and Shelquist said that they hope to do well while doing good.
"It's nice to be wearing a white hat in a case like this," Nill said.
A defense motion for summary judgment is pending, according to Winthrop A. Rockwell of Faegre & Benson, L.L.P., who represents BASF.
"Plaintiffs' claim should have been dismissed outright without the intermediate step of class-certification," Rockwell said.
BASF Corp. is a subsidiary of a global chemical manufacturer located in Germany. BASF originally marketed Poast as a herbicide to kill weed grasses and faced little competition. By the early 1990s, competition in the soybean market had increased. BASF then marketed a new, less expensive product - Poast Plus - as a herbicide for a limited number of crops including soybeans. Poast remained on the market for use on a variety of other crops.
The plaintiffs allege that Poast and Poast Plus were in fact the same product with different labels. They assert that BASF used the Poast Plus label so that it could compete in the soybean market while retaining a premium price for its herbicide when it was being used on other crops.
Since it is illegal for farmers to use herbicides in a manner inconsistent with the labeling, farmers could not legally use the cheaper Poast Plus for anything other than a limited number of products, the plaintiffs argue.
New Jersey law
Because BASF's corporate headquarters are in New Jersey, the class certification was decided under the New Jersey consumer-protection statute.
It's unusual but not unprecedented for a state court to hear a national class action under a different state's law, according to Nill. The U.S. Supreme Court approved the procedure in a 1985 case, Phillips Petroleum v. Schutts, 472 U.S. 797.
Nill successfully argued that the New Jersey consumer-protection statute applies to the case under conflicts-of-law principles because: the statute by its terms can be applied by any court of competent jurisdiction and a New Jersey court has held that its law extends to nonresidents who are harmed by the deceit of a resident.
Rockwell summarized the plaintiffs' claims as follows: "Plaintiffs are proceeding under the New Jersey consumer-protection act, seeking a finding that BASF should have offered them a product that BASF did not wish to sell them, at a price to be regulated by the court." Rockwell said that, in the absence of an antitrust violation, courts do not have the authority to control pricing.
A class of their own
In certifying the class, Judge Michael J. Kraker found that the plaintiffs had satisfied the requirements of class certification contained in Rule 23.01 of the Minnesota Rules of Civil Procedure. The requirements of numerosity, commonality, typicality, and adequacy of representation were met because although the individual claims were small, there is a public interest in the vindication of consumer rights. Kraker also determined that the plaintiffs showed that common issues of law and fact predominate the lawsuit.
"New Jersey's articulated interest in preventing corporations from engaging in deception and fraud outweighs any possible interest of each of the 50 states and avoids clogging court dockets with hundreds of individual cases by farmers against BASF," Kraker wrote in his order certifying the class. Furthermore, a class action is the superior method of handling claims under Rule 23.02, Kraker determined.
"BASF is the subsidiary of a multinational German parent corporation," the judge wrote. "It would be improvident to require thousands of individual farmers to each hire attorneys to individually litigate and tie up numerous trial court judges in this country, with each farmer litigating a few hundred or a few thousand dollars of individual damages against a large corporation."
North Dakota case
Certain North Dakota farmers are excluded from the class because a separate class action was litigated - and settled - there, Nill said, adding that the North Dakota lawsuit indirectly led to the Minnesota one.
According to Nill, the North Dakota case began after BASF attempted to influence the Department of Agriculture to prosecute farmers who used the less expensive Poast Plus for crops for which it was not designated.
The North Dakota Commissioner of Agriculture asked the EPA to approve the use of the less expensive product on other crops, identified in the complaint as minor crops. The EPA responded that it had already approved the use of the lower price herbicide on minor crops.
The Minnesota case began when a North Dakota farmer couldn't make a claim in the North Dakota class action because he had bought his Poast in Climax, Minn.
Nill and Shelquist seek injunctive relief but also money damages for their clients. In court documents, BASF disclosed that the price differential between the two products was about $4 per acre. Because many of the documents in the case are under an order of confidentiality, a damage estimate is not available for the public, Nill said. However, he noted, the New Jersey consumer-protection statute has mandatory treble damages.
Nill and Shelquist compared their lawsuit to a recent national consumer fraud class action against Bausch & Lomb, manufacturers of contact lenses. Bausch & Lomb allegedly marketed the same contact lens under three different prices. The company defended itself by arguing that the three different labels were approved by the Food and Drug Administration. In settlement of the case Bausch & Lomb agreed to disgorge profits on the higher priced lenses. The value of the Bausch & Lomb settlement - which included a cash payment and a large amount of product discounts - was $68 million.