In re Peanut Crop Ins. Litigation, 07-1145.
| Citation | 524 F.3d 458 |
| Decision Date | 08 May 2008 |
| Docket Number | No. 07-1145.,No. 07-1146.,07-1145.,07-1146. |
| Parties | In re PEANUT CROP INSURANCE LITIGATION, MDL-1634 Marvin Taylor Barnhill; Joey Watford; Tom Clements; Florida Peanut Farmers, and others similarly situated; Terry E. Beasley; Wallace A. Berry, South Carolina Peanut Farmer and others similarly situated; Texas Peanut Farmers, in the Southwest Growing Region; Georgia Peanut Farmers; Charles E. Smith, Jr., Plaintiffs-Appellees, v. Ann Veneman, Secretary of Agriculture for the United States of America; Ross J. Davidson, Administrator for Risk Management Agency; Risk Management Agency; United States Department of Agriculture; United States of America; Federal Crop Insurance Corporation; Mike Moore, RMA Regional Office Director Valdosta; Ron Berryhill, RMA Regional Office Director, Oklahoma City, Oklahoma, Defendants-Appellants. In re Peanut Crop Insurance Litigation, MDL-1634 Marvin Taylor Barnhill; Joey Watford; Tom Clements; Florida Peanut Farmers, and others similarly situated; Terry E. Beasley; Wallace A. Berry, South Carolina Peanut Farmer and others similarly situated; Texas Peanut Farmers, in the Southwest Growing Region; Georgia Peanut Farmers; Charles E. Smith, Jr., Plaintiffs-Appellants, v. Ann Veneman, Secretary of Agriculture for the United States of America; Ross J. Davidson, Administrator for Risk Management Agency; Risk Management Agency; United States Department of Agriculture; United States of America; Federal Crop Insurance Corporation; Mike Moore, RMA Regional Office Director Valdosta; Ron Berryhill, RMA Regional Office Director, Oklahoma City, Oklahoma, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
Jeffrey A. Clair, United States Department of Justice, Washington, D.C., for Appellants/Cross-Appellees. Robert Daniel Boyce, Boyce & Isley, P.L.L.C., Raleigh, North Carolina, for Appellees/Cross-Appellants.
ON BRIEF:
Peter D. Keisler, Assistant Attorney General, George E.B. Holding, United States Attorney, Rudolf A. Renfer, Jr., Assistant United States Attorney, Eric Goulian, Assistant United States Attorney, Scott R. McIntosh, United States Department of Justice, Washington, D.C., for Appellants/Cross-Appellees. Gordon E. Boyce, Boyce & Isley, P.L.L.C., Raleigh, North Carolina, for Appellees/Cross-Appellants.
Before WILKINSON and KING, Circuit Judges, and HENRY F. FLOYD, United States District Judge for the District of South Carolina, sitting by designation.
Vacated and remanded by published opinion. Judge KING wrote the opinion, in which Judge WILKINSON and Judge FLOYD joined.
These appeals relate to lawsuits being pursued by several classes of peanut farmers (the "Farmers") who insured their 2002 peanut crops under a Multiple Peril Crop Insurance Policy (the "MPCI Policy") that, under federal law, was issued by private insurers and reinsured by the Government.1 After suffering heavy losses to their 2002 peanut crops, due primarily to a severe drought during the growing season, the Farmers filed claims under the MPCI Policy. They were indemnified for their losses at a "non-quota" rate of 17.75 cents per pound—rather than at the claimed "quota" rate of 31 cents. The Farmers' expectations of indemnity at the 31 cent quota rate were premised largely on the Government's allocations of peanut poundage quotas in previous years. However, federal farm legislation enacted in May 2002 eliminated the peanut quota program that had been in effect in some form since 1941. See Farm Security and Rural Investment Act of 2002, Pub.L. No. 107-171, §§ 1301-1310, 116 Stat. 134, 166-83 (2002) (the "2002 Farm Bill").
After the Farmers were indemnified at the 17.75 cent non-quota rate for their 2002 crop losses, they initiated a series of civil actions against the Government in several federal jurisdictions, alleging, inter alia, that the MPCI Policy had been breached and that their due process rights had been violated.2 The district court eventually had before it a district-wide class action on behalf of the Farmers situated in the Eastern District of North Carolina, as well as several other district-wide class actions first initiated in other jurisdictions and then transferred to the Eastern District of North Carolina by the Multi-District Litigation Panel (the "MDL Panel"). In disposing of the Farmers' contentions, the court, on July 22, 2004, certified a district-wide class action on behalf of the Farmers in the Eastern District of North Carolina (the "North Carolina case"). The court then awarded summary judgment to those Farmers on their breach of contract claims. See Barnhill v. Davidson, No. 4:02-cv-00159-H (E.D.N.C. July 22, 2004) (the "SJ Opinion").3 On March 31, 2005, the court entered an order establishing a formula to be used in computing damage awards. See In re Peanut Crop Insurance Litigation, No. 4:05-cv-00008-H (E.D.N.C. Mar. 31, 2005) (the "Damages Order").4 On March 31, 2005, and again on December 20, 2006, the court extended its SJ Opinion (including the class certification ruling), as well as its Damages Order, to the lawsuits brought by the Farmers in other jurisdictions (the "MDL cases"). See In re Peanut Crop Insurance Litigation, No. 4:05-cv-00008-H (E.D.N.C. Mar. 31, 2005) ("MDL Order I"); In re Peanut Crop Insurance Litigation, No. 4:05-cv-00008-H2 (E.D.N.C. Dec. 20, 2006) ("MDL Order II").5.
On December 20, 2006, the district court entered Final Judgment on the Farmers' breach of contract claims, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.6 The Government has appealed, contending, inter alia, that the court erred by (1) concluding that the MPCI Policy obligated the insurers to indemnify the Farmers at the 31 cent quota rate in the absence of 2002 peanut poundage quota allocations having been made to individual farms; and (2) determining that the Government's failure to allocate such quotas breached the MPCI Policy, based on the court's conclusion that the enactment of the 2002 Farm Bill hindered the performance of the Government's statutory duty to allocate such quotas. The Government also contends that the court erroneously premised its SJ Opinion, in part, on the Farmers' alternative theory of detrimental reliance. The Farmers have cross-appealed, asserting that the district court erred in failing to certify a nationwide class of farmer-plaintiffs, and also in denying the requests of certain plaintiffs for transfers of venue. As explained below, we disagree with the district court's breach of contract ruling, and thus vacate its SJ Opinion and remand.
In order to properly assess these appeals, we first review the background of the federal crop insurance and peanut quota programs.7 We then examine the relevant provisions of the MPCI Policy and the 2002 Farm Bill. Finally, we relate the procedural history of this litigation, as well as the appellate contentions of the parties.
Although crop insurance under the MPCI Policy is provided by private insurers, it is reinsured by a governmental entity called the Federal Crop Insurance Corporation (the "FCIC"), pursuant to the Federal Crop Insurance Act, 7 U.S.C. §§ 1501 et seq.8 The FCIC is a wholly owned government corporation that operates under the umbrella of the Department of Agriculture (the "USDA"), and it is statutorily responsible for regulating the crop insurance industry. See Tex. Peanut Farmers v. United States, 409 F.3d 1370, 1372 (Fed.Cir.2005). The FCIC is itself regulated by the USDA's Risk Management Agency (the "RMA"). Id. As specified by Congress, the FCIC's purpose is "to promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance." 7 U.S.C. § 1502(a). The crop insurance program implements the public policy of protecting farmers from the risks associated with drought, flood, and other natural disasters. 7 U.S.C. § 1508(b). The basic coverage provisions of crop insurance protect insured farmers against catastrophic risk, and serve to indemnify those farmers on losses in excess of 50% of the crop's normal yield, indemnified at 55% of the crop's expected market price. 7 U.S.C. § 1508(b); 7 C.F.R. § 402.1. Pursuant to the governing provisions of the crop insurance program, insured farmers are also entitled to purchase additional insurance coverage at a greater percentage of their expected yields. 7 U.S.C. § 1508(c).
Prior to 2002, the extent to which the MPCI Policy indemnified lost or damaged peanut crops varied, depending on whether the insured crops were designated as "quota" or "non-quota" peanuts, as defined by the peanut quota program. This peanut quota program was recently addressed and described by the Federal Circuit in Members of the Peanut Quota Holders Ass'n v. United States, 421 F.3d 1323 (Fed.Cir. 2005) (). That court's description of the background of the program is helpful, and was spelled out, in part, as follows:
In the 1930s the United States' economic depression particularly affected the agricultural community. Congress, in an attempt to mitigate the effects of the depression on agricultural products, enacted the Agricultural Adjustment Act of 1938 ("AAA"), ch. 30 tit. III, § 301 et seq., 52 Stat. 31, 38, which regulated the production and sale of tobacco and wheat within the United States. The statute instituted acreage allotments to prevent oversupply of the targeted agricultural commodities. In 1941, the AAA was amended to include farm acreage allotments for peanuts. The Agricultural Adjustment Act of 1938, as amended, ch. 39, tit. III, §§ 357-359, 55 Stat. 88, 88-91 (the "1941 Act"). The 1941 Act sought to regulate the production of peanuts to avoid severe fluctuations in price caused by rapid changes in market demand and the year-long lag in response to that demand caused by crop growing cycles....
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