London v. Fieldale Farms Corp.

• Decision Date: 01 June 2005
• Docket Number: No. 04-10040.,04-10040.
• Citation: 410 F.3d 1295
• Parties: Harold Bruce LONDON, Christine Saunders London, Plaintiffs-Appellants, v. FIELDALE FARMS CORPORATION, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

410 F.3d 1295

Harold Bruce LONDON, Christine Saunders London, Plaintiffs-Appellants, v. FIELDALE FARMS CORPORATION, Defendants-Appellees.

No. 04-10040.

United States Court of Appeals, Eleventh Circuit.

June 1, 2005.

COPYRIGHT MATERIAL OMITTED

Cynthia Noles Johnson, Johnson Law, Cohutta, GA for Plaintiffs-Appellants.

R. Brent Hatcher, Jr., Smith, Gilliam, Williams & Miles, Gainesville, GA, for Defendants-Appellees.

Catherine Y. Hancock, Michael S. Raab, Washington, DC, Gary Jay Kushner, Hogan & Hartson, LLP, Washington, DC, for Amicus Curiae.

Appeal from the United States District Court for the Northern District of Georgia.

Before ANDERSON, DUBINA and BLACK, Circuit Judges.

DUBINA, Circuit Judge:

Appellants, Harold Bruce London and Christine London, appeal the district court's order granting summary judgment to appellee/defendant, Fieldale Farms Corporation, on the Londons' Packers and Stockyards Act, 7 U.S.C. § 181 et seq., ("PSA") retaliation and improper weighing claims. The Londons also appeal the district court's order granting Fieldale's motion for judgment as a matter of law on the Londons' PSA termination claim and state law breach of contract and fraud claims. For the reasons that follow, we affirm the district court's orders.

BACKGROUND

A. Facts

Fieldale is an integrated poultry company which enters into poultry growing contracts with growers. Fieldale owns various poultry feed mills, hatcheries, and processing plants. Fieldale's processing operations emanate from a business paradigm known as "contract farming."

Harold London worked as a broiler¹ flock supervisor and broiler manager for three different companies from 1979 until 1995. Christine London managed hen houses in the 1970's and worked as a chicken vaccinator for a poultry company in the 1980's. In 1987, the Londons purchased a nine acre farm that contained one chicken house for growing broilers ("Green Meadows No. 1"). In addition to this one broiler house on their residence, the Londons leased two other farms, the J.W. Peck Farm, which had one poultry house, and the Merritt Martin Farm (later known as "Green Meadows No. 2"), which had two chicken houses. At the time the Londons purchased their farm, Mar-Jac Poultry Company employed Harold and agreed to place broilers on the Londons' farm. In 1990, Fieldale offered Harold a job as a broiler serviceman. After Harold commenced his employment with Fieldale, the Londons switched their grower contracts from Mar-Jac to Fieldale. In 1995, Fieldale terminated Harold's employment.

The Londons and Fieldale entered into three contracts that governed their grower arrangement. The contracts are similar in content. Each contract is a separate agreement for the Londons' various farms: (1) contract for Green Meadows No. 1; (2) contract for Green Meadows No. 2; and (3) contract for the J.W. Peck Farm. The contracts are to run indefinitely or until thirty days after notice of termination by either party. The contracts also give Fieldale the option to terminate on only seven days notice when continuing the contractual relationship would have detrimental effects on Fieldale's business.

Pursuant to its contracts with the Londons, Fieldale provides them with broilers, as well as the feed and medication necessary for successful growth. In return, the Londons are responsible for providing care and oversight for the broilers during the full term of the growth cycle, which normally lasts for forty to forty-nine days. The Londons' responsibility is vital to the success of the business and encompasses a variety of duties, such as maintaining adequate water and temperature for the baby chicks and "culling" out birds that are behind in growth. At the end of the grow-out period, Fieldale crates the broilers and ships them to its processing plants. After Fieldale delivers the broilers to the processing plants, Fieldale weighs the birds, crates, and trucks on scales specifically designed to determine the birds' live weight.

Fieldale pays its broiler growers based upon a complex formula, primarily taking into account the weight of the birds upon their arrival at the plant and the feed consumed by the birds during the grow-out period. Fieldale compares its growers based upon the cost of producing the finished broilers. This comparison determines the relative performance of the grower. Fieldale determines the average cost per pound for all of the birds processed during a one week period. Fieldale then determines the cost per pound for each grower whose birds were processed during that week. Fieldale deducts money from the grower's check if his cost is above average, and adds money back to the grower's check if the cost of producing the broilers is below average. In other words, Fieldale gives those growers who are most cost efficient a higher per-pound rate than those growers who cost Fieldale more money in food and medicine.

As part of its contractual duty to provide technical service, Fieldale assigns flock supervisors to visit the grower farms on a weekly basis to assist the growers with the management of the broilers. Fieldale's flock supervisors are required to maintain service reports on each grower farm. Fieldale also requires the flock supervisors to document any problems they find on the grower farms that endanger the broilers' welfare.

In 1997, Harold gave a deposition in a lawsuit against Fieldale. In that case, an African-American prospective chicken grower alleged that Fieldale denied him a contract to grow chickens because of his race. Fieldale had never contracted with an African-American grower. In his deposition, Harold testified that his supervisor, Doug Hatley, made racially derogatory comments. After Harold's testimony, the Londons allege that they began to notice that their flock supervisor was increasingly critical of their farm management. The Londons contend that in the spring of 1998, the flock supervisor checked on the Green Meadows No. 2 Farm and informed Christine that if they were not above average on the present flock then "they"² would terminate the grower contract. When the flock came in below average, Fieldale stopped delivering broilers to the farm. Later, another flock supervisor told the Londons that the remaining two farms would only get one more bunch of birds. The Londons assert that the last flocks Fieldale delivered were infected with a disease known as gumboro.³

B. Procedural History

On November 20, 2001, the Londons filed suit against Fieldale asserting claims under the PSA for wrongful termination of their poultry growing contracts, alleging that the termination was without economic justification and in retaliation for Harold London's testimony in a racial discrimination lawsuit against Fieldale. The Londons asserted a PSA misweighing claim, alleging that Fieldale failed to transport promptly the Londons' birds after loading and failed immediately to weigh the birds upon arrival at the processing plant. The Londons also asserted state law claims for breach of contract and fraud. After discovery, Fieldale filed a motion for summary judgment. The district court granted the motion for summary judgment on the Londons' contention that Fieldale provided them with substandard chicks in retaliation for Harold's testimony in the race discrimination lawsuit; on the Londons' claim that Fieldale improperly failed to make fuel weight adjustments on the flocks from the Green Meadows Farms; on two other vague weighing claims; on the Londons' retaliation claim; and on the Londons' prompt weighing and transportation claim. The case proceeded to trial with the following issues presented to the jury: (1) whether Fieldale violated the PSA in terminating the Londons' poultry growing contracts without economic justification; (2) whether Fieldale violated the PSA by failing to make a fuel weight adjustment on the flocks from the J.W. Peck Farm; (3) whether Fieldale violated the PSA by failing to make a wet bird adjustment to the weight of the flocks; and (4) whether Fieldale breached its contract with the Londons or defrauded the Londons by sending them settlement documents containing inaccurate weights.

After the Londons presented their case, Fieldale moved for a judgment as a matter of law on all claims. The district court granted the motion on the Londons' state law claims, on any PSA wet bird claim that arose prior to November 20, 1997, and on each PSA fuel adjustment claim except for those related to the J.W. Peck Farm. The district court reserved ruling on the termination claim. At the close of the evidence, Fieldale renewed its motion for judgment as a matter of law as to the post-November 20, 1997, wet bird claims, the J.W. Peck Farm fuel adjustment claim, and the PSA termination claim. The district court denied the motion, again reserving consideration of the motion as to the PSA termination claim. The jury returned a verdict in favor of the Londons on their termination claim and awarded them $164,000.00. The jury also returned a verdict for the Londons on the wet bird claim, awarding them $225.00, and on the fuel adjustment claim, awarding them $32.00. After trial, Fieldale filed a renewed motion for judgment as a matter of law and, in the alternative, a motion for a new trial. The district court entered an order granting Fieldale's motion for judgment as a matter of law on the Londons' termination claim, setting aside $164,000.00 of the judgment. The Londons timely appealed.

ISSUES

1. Whether the district court properly granted Fieldale's motion for judgment as a matter of law on the Londons' PSA termination claim because the Londons did not show that the termination had an adverse effect on competition.

2. Whether the district court properly granted Fieldale's motion for judgment as a matter of law on the Londons' state law claims for breach of contract and fraud.

3. Whether the district court properly granted Fieldale's motion for summary judgment on the Londons'...