Leonhardt v. Western Sugar Co.
| Decision Date | 13 November 1998 |
| Docket Number | No. 97-8078,97-8078 |
| Citation | 160 F.3d 631 |
| Parties | 98 CJ C.A.R. 6149 Larry LEONHARDT, Dan Laursen, and Rick Rodriquez, Rodriquez Farms, Inc., Plaintiffs--Appellants, v. WESTERN SUGAR COMPANY, a corporation, Defendant--Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Michael J. Heaphy (John M. Cogswell on the briefs), John M. Cogswell Law Office, Buena Vista, Colorado, for Appellants.
Marc D. Flink, Baker & Hostetler, Denver, Colorado (Todd L. Lundy and L. Andrew Cooper, Baker & Hostetler, Denver, Colorado; W. Perry Dray and Gregory C. Dyekman, Cheyenne, Wyoming, with him on the briefs), for Appellees.
Before PORFILIO, McWILLIAMS, and ANDERSON, Circuit Judges.
Plaintiffs, Wyoming sugar beet farmers, appeal the dismissal of their class action against defendant, Western Sugar Company. Plaintiffs' federal cause of action, alleging a violation of the Agricultural Fair Practices Act ("AFPA"), was dismissed for failure to state a claim. Because not all members of the class satisfied the $75,000 jurisdictional amount required under 28 U.S.C. § 1332 for a diversity action, the court declined to exercise supplemental jurisdiction over plaintiffs' state law claims and dismissed them without prejudice. This appeal followed. We affirm, holding as follows on the central issues presented: 1) the district court correctly held that plaintiffs' complaint failed to state a claim under AFPA; and 2) because only one plaintiff's claim satisfied the $75,000 jurisdictional
amount, and because 28 U.S.C. § 1367 has not overturned the historical rule under 28 U.S.C. § 1332 that plaintiffs in a diversity class action must each satisfy that jurisdictional amount, the district court correctly dismissed plaintiffs' state law claims without prejudice.
The plaintiffs are Wyoming farmers who grow sugar beets under contract for Western Sugar Company, a Colorado corporation. Each farmer had four separate contracts with Western Sugar covering crop years 1985-87, 1988-90, 1991-92, and 1993-95. In accordance with those contracts, the Wyoming farmers delivered beets to Western Sugar's Lovell facility, where they were put in a pile and weighed. Because sugar beets can lose their sugar over time, a phenomenon referred to as "pile loss," Western Sugar took samples from and measured the sugar content of each grower's beets both at the time they were delivered and at the time they were processed. The latter samples, taken from sliced sugar beets at the beginning of the manufacturing process, are referred to as "factory cossette samples." The difference in sugar content between the samples taken at the time of delivery and the factory cossette samples is referred to as the "polarity difference," or "PD." The PD was used to calculate payments under the contracts, which were based on the market price of sugar, the weight of beets delivered, and the sugar content of each grower's beets.
Plaintiffs contend that the manufacturing process used at the Lovell facility permitted too many adulterants, such as water and soil, to adhere to the sliced beets that were used for the factory cossette samples. The presence of these adulterants lowered the sugar content measurement, thereby increasing the PD. This, in turn, lowered the payments the growers received under their contracts.
Based on this contention, the plaintiffs brought suit on behalf of themselves and all persons who grew sugar beets under contract for Western Sugar between 1985 and 1995. The complaint asserted federal claims under the Sherman Act and AFPA, as well as five state law claims, alleging breach of contract, breach of an implied duty of good faith and fair dealing, breach of fiduciary duty, promissory estoppel, and a violation of the Wyoming Weights and Measurers Act, Wyo. Stat. Ann. §§ 40-10-117 to -136 and its predecessor, Wyo. Stat. Ann. §§ 40-10-101 to -116 (repealed 1993). At the time of the district court ruling at issue on appeal, the only claims remaining in the suit were a single federal claim under AFPA and the state law claims. 1 The plaintiffs made no allegations that their freedom to join or not join any association or cooperative was in any way hindered by Western Sugar.
The district court dismissed the AFPA claim for failure to state a claim. The court determined that no plaintiff's remaining state claims met the $75,000 amount in controversy necessary for the exercise of diversity jurisdiction under 28 U.S.C. § 1332. Before the court, however, was a pending motion to amend the complaint to add a prayer for punitive damages to one of the state claims. If granted, this amendment would increase the potential recoverable damages of plaintiff Rodriquez Farms, Inc. to $75,000 or more. The court denied the motion to amend as futile, reasoning that, even if Rodriquez Farms could meet the jurisdictional limit, the court could not exercise supplemental jurisdiction over the claims of the remaining plaintiffs. Therefore, the court dismissed plaintiffs' state law claims without prejudice, and this appeal followed.
As an initial matter, we must consider whether we have jurisdiction over the claims of Rodriquez Farms, Inc. Federal Rule of Appellate Procedure 3(c) provides that "[a] notice of appeal must specify the party or parties taking the appeal by naming each appellant in either the caption or the body of the notice of appeal." The caption of the notice of appeal here contains the names of only the three individual named plaintiffs and not the name of Rodriquez Farms, another named plaintiff below. Both the docketing statement and the caption of appellants' opening brief also omit Rodriquez Farms as a named appellant. The body of the notice of appeal, however, states that "[n]otice is hereby given that all of the plaintiffs in the above named case hereby appeal," and the notice of appeal is signed by John M. Cogswell, Esq., who represented all four plaintiffs in the district court.
Plaintiffs contend that Rodriquez Farms is properly an appellant under Rule 3(c), and they move to amend the caption to reflect the inclusion of Rodriquez Farms. Rule 3(c) provides that "[a]n attorney representing more than one party may fulfill th[e] requirement [to specify the parties taking the appeal] by describing those parties with such terms as 'all plaintiffs.' " Such a description will be sufficient if "it is objectively clear that a party intended to appeal." Fed. R.App. P. 3(c) advisory committee's note (1993). We agree with plaintiffs that it is objectively clear that Rodriquez Farms intended to appeal the district court's order, especially in light of the fact that it is the only plaintiff capable of meeting the $75,000 amount in controversy necessary for diversity jurisdiction. We turn, then, to the merits of plaintiffs' appeal.
In 1968, Congress enacted AFPA, 7 U.S.C. §§ 2301-2306, to "protect[ ] the right of farmers and other producers of agricultural commodities to join cooperative associations through which to market their products." Michigan Canners & Freezers Ass'n v. Agricultural Mktg. & Bargaining Bd., 467 U.S. 461, 464, 104 S.Ct. 2518, 81 L.Ed.2d 399 (1984) (footnote omitted).
Although the Act's principal purpose is to protect individual producers from interference by processors when deciding whether to belong to a producers' association, the Act also protects the producer from coercion by associations of producers. The AFPA thus provides that it is unlawful for either a processor or a producers' association to engage in practices that interfere with a producer's freedom to choose whether to bring his products to market himself or to sell them through a producers' cooperative association.
Among the Act's prohibitions is the following: "It shall be unlawful for any handler knowingly to [make] or permit any employee or agent ... [t]o make false reports about the finances, management, or activities of associations of producers or handlers." 7 U.S.C. § 2303(e). The complaint here alleged that Western Sugar violated the prohibition contained in § 2303(e) by "conduct[ing] cossette tests on the 1985-1995 crops contrary to the standards established by the U.S.D.A. and report[ing] to the growers false results and PD determinations." Appellant's App. at 48 (Complaint, p 73(a)).
The district court ruled that plaintiffs' allegations failed to state a claim under AFPA on three grounds. First, the court stated that a false cossette sample report did not fall within the scope of reports about the "finances, management, or activities of associations of producers or handlers" under § 2303(e). Second, the court said that, "[a]bsent the conclusory statement under Paragraph 73(a)," the complaint did not contend that the cossette sample test results were false. Appellant's App. at 153 (Telephonic Oral Ruling Transcript). Rather, the court noted, the complaint alleged that adulterants in the cossette samples resulted in higher PDs. Finally, the court concluded that, even if Western Sugar issued false reports about its finances, management or activities, it did not do so "in an attempt to coerce or influence a producer to join or not to join an association." Id.
"We review de novo the district court's dismissal for failure to state a claim upon which relief may be granted." Dill v. City of Edmond, 155 F.3d 1193, 1201 (10th Cir.1998). Such dismissal "is inappropriate unless [p]laintiff can prove no set of facts in support of his claims that would entitle him to relief." Id. Furthermore, we must "accept all factual allegations in the complaint as true." Id.
Plaintiffs and defendants present dueling canons of statutory construction to support their respective interpretations of AFPA. Because some of the arguments relate to § 2303(e) in context, we set out the entire section:
It shall be unlawful for any handler knowingly to engage or permit any employee...
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