617 F.3d 207 (3rd Cir. 2010), 08-4484, Indian Brand Farms, Inc. v. Novartis Crop Protection Inc.

Docket Nº:08-4484.
Citation:617 F.3d 207
Opinion Judge:STAPLETON, Circuit Judge:
Party Name:INDIAN BRAND FARMS, INC.; Columbia Fruit Farms, Inc.; Joyce Cappuccio, Individually and d/b/a WM. Cappuccio & Sons; Columbia Cranberry, Inc.; Joseph Martinelli, Individually and d/b/a Blu-Jay Farms; Gregory A. Clark, Individually and d/b/a Clark Farms; Anthony Melora, Individually and d/b/a/ Melora Farms; R & S Franceschini Farms, a partnership of
Attorney:Scott K. Attaway (Argued), Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, DC, Kathleen F. Beers, Thomas J. Vesper, R.C. Westmoreland, Westmoreland, Vesper & Quattrone, West Atlantic City, NJ, Attorneys for Appellants. John P. Mandler (Argued), Bruce G. Jones, Kristen R. Eads, Krisann C....
Judge Panel:Before: FISHER, HARDIMAN and STAPLETON, Circuit Judges. HARDIMAN, Circuit Judge, dissenting in part.
Case Date:August 10, 2010
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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617 F.3d 207 (3rd Cir. 2010)

INDIAN BRAND FARMS, INC.; Columbia Fruit Farms, Inc.; Joyce Cappuccio, Individually and d/b/a WM. Cappuccio & Sons; Columbia Cranberry, Inc.; Joseph Martinelli, Individually and d/b/a Blu-Jay Farms; Gregory A. Clark, Individually and d/b/a Clark Farms; Anthony Melora, Individually and d/b/a/ Melora Farms; R & S Franceschini Farms, a partnership of Russell Franceschini and Scott Franceschini, Appellants

v.

NOVARTIS CROP PROTECTION INC., a foreign corporation.

No. 08-4484.

United States Court of Appeals, Third Circuit.

August 10, 2010

Argued Dec. 1, 2009.

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[Copyrighted Material Omitted]

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Scott K. Attaway (Argued), Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, DC, Kathleen F. Beers, Thomas J. Vesper, R.C. Westmoreland, Westmoreland, Vesper & Quattrone, West Atlantic City, NJ, Attorneys for Appellants.

John P. Mandler (Argued), Bruce G. Jones, Kristen R. Eads, Krisann C. Kleibacker Lee, Faegre & Benson, Minneapolis, MN, Robert J. Machi, Morgan Melhuis Abrutyn, Livingston, NJ, Attorneys for Appellee.

Before: FISHER, HARDIMAN and STAPLETON, Circuit Judges.

OPINION

STAPLETON, Circuit Judge:

For the second time in just over five years, a group of New Jersey blueberry farmers (collectively, " Plaintiffs" ) appeals orders of the District Court granting summary judgment to defendant Novartis Crop Protection, Inc. (" Novartis" ) on Plaintiffs' claims for damage to their crops allegedly caused by use of a pesticide manufactured and distributed by Novartis.

The principal issues on appeal are: (1) whether Plaintiffs' claims of negligent misrepresentation/fraud, violation of the New Jersey Consumer Fraud Act (" NJCFA" ), and failure-to-warn are preempted by the Federal Insecticide, Fungicide, and Rodenticide Act (" FIFRA" ), a comprehensive regulatory statute that covers the use, sale, and labeling of pesticides; (2) whether Plaintiffs have made a sufficient showing that they relied on the alleged misrepresentations by Novartis to avoid summary judgment on their negligent misrepresentation/fraud and NJCFA claims; and (3) whether Novartis was entitled to summary judgment on Plaintiffs' strict product liability, design defect claim on the ground

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that Novartis owed no duty to test its pesticide when mixed with fungicides.

We conclude that because Plaintiffs' negligent misrepresentation/fraud and NJCFA claims are based on alleged misrepresentations in Novartis's marketing brochure, and that brochure does not qualify as " labeling" under FIFRA, those claims are not preempted. We further conclude that Plaintiffs, other than Plaintiff Indian Brand Farms, have tendered prima facie evidence of their reliance on Novartis's alleged written misrepresentations. Accordingly, we will vacate the District Court's grant of summary judgment as to the negligent misrepresentation/fraud and NJCFA claims as to all Plaintiffs except Indian Brand Farms and remand for further proceedings. We will affirm the District Court's grant of summary judgment to Novartis on these claims as to Indian Brand Farms.

Because Plaintiffs' failure-to-warn claim, if successful, would not result in a labeling requirement in addition to or different from those required by FIFRA, the failure-to-warn claim is not preempted, and further proceedings on that claim are required. Finally, we conclude that there is a genuine issue of material fact with respect to Plaintiffs' design defect claim, and summary judgment in Novartis's favor was inappropriate.

I. Background

A.

For several years, Plaintiffs treated their blueberry plants with two of Novartis's pesticides, Diazinon 50 WP and Diazinon AG500 (" 50 WP" and " AG500," respectively). Before applying 50 WP and AG500, Plaintiffs would combine them with fungicides called Captan and Captec in a process known as tank mixing. Plaintiffs assert that tank mixing is a common practice that is well known in the industry, and while using 50 WP and AG500 in this manner, they experienced no crop damage.

In the spring of 1997,1 Plaintiffs purchased and began using Diazinon AG600 (" AG600" ), a new pesticide produced and marketed by Novartis, and Plaintiffs tank mixed AG600 with Captan and Captec in the same manner they had tank mixed 50 WP and AG500. AG600 was indicated for use on sixty-two different plants, one of which was blueberries. Novartis did not recommend, however, on the product label or orally, that growers mix AG600 with Captan or Captec, and the product label warned purchasers that unintended consequences such as crop injury could result from the " presence of other materials, or the manner of use or application." App. at A545.

The AG600 product label is a twenty-one-page document that is divided into " Directions for Use" and " Conditions of Sale and Warranty." The " Conditions of Sale and Warranty" are contained in the first two paragraphs of the label, and the " Directions for Use" take up the remainder, containing multiple subparagraphs and charts covering various crop and pest

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types. The label does not specify that AG600 contains an inert ingredient called an ionic surfactant 2 because the United States Environmental Protection Agency (" EPA" ) does not require manufacturers to identify the inert ingredients of a product on the label unless the agency has determined that a particular inert ingredient is of toxicological concern. See 7 U.S.C. § 136h(d)(1)(C); 40 C.F.R. § 156.10(g)(1) & (7); Labeling Requirements for Pesticides and Devices, 49 Fed.Reg. 37,960, 37,965 (1984) (" Because the identity of an inert ingredient is protected from disclosure by FIFRA sec. 10(d)(1)(C), a prerequisite for labeling identification of such ingredients is that the Agency make a finding that ‘ disclosure is necessary to protect against an unreasonable risk of injury to health or the environment.’ " ).

Novartis distributed advertising literature stating that AG600 was safer and more effective than its previous products. This literature was in the form of a seventeen-page, full-color, marketing brochure stating that AG600 had " [t]he same powerful product performance," " [i]ncreased safety to users and the environment," and promoted " [b]etter crop safety" with " equal performance." App. at A533-34. The marketing brochure contained no instructions for use of AG600. The brochure was distributed to, among others, product retailers and scientists at the Rutgers University Cooperative Extension, a part of the Rutgers New Jersey Agricultural Experiment Station. As a result of these marketing efforts, these scientists recommended AG600 to New Jersey blueberry farmers, both at a " twilight meeting" of farmers in May 1997 3 and via the May 29, 1997, edition of the Blueberry Bulletin, a newsletter published by Rutgers.

Contrary to these claims of crop safety, Plaintiffs contend that AG600, when mixed with the fungicides Captan and Captec, caused systemic injury to their blueberry plants, including blotches, depressions, spots on the plants, and even plant death. Plaintiffs allege that this injury was due to the presence of an ionic surfactant, which was not an ingredient of 50 WP or AG500. Plaintiffs allege that this ingredient, about whose inclusion in AG600 Plaintiffs were unaware, when mixed with the fungicides, caused the damage to their plants.

B.

Plaintiffs filed suit in the United States District Court for the District of New Jersey on May 7, 1999, seeking damages based on claims of strict liability under the New Jersey Products Liability Act (" NJPLA" ) (in that AG600 had a latent design defect and Novartis failed to warn that AG600 could be harmful to crops if mixed with a fungicide); negligence (in that Novartis was negligent in failing to test AG600 before putting it in the stream of commerce); negligent misrepresentation/fraud (in that Novartis marketed AG600 as controlling insects without having adverse effects on plants, when Novartis knew or should have known that this was false); breach of the NJCFA (in that Novartis deceptively represented that AG600 was safe to use on blueberry plants); and breach of express warranty

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(in that Novartis warranted that AG600 would conform to the chemical description on its label and would not injure plants).

Following discovery, Novartis moved for summary judgment, arguing, inter alia, that Plaintiffs' claims were preempted by FIFRA. The District Court agreed and granted the motion. Plaintiffs then appealed to this Court.

On appeal, this Court concluded, in light of the intervening case of Bates v. Dow Agrosciences LLC, 544 U.S. 431, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005), in which the Supreme Court clarified the scope of FIFRA preemption, that Plaintiffs' claims of strict product liability, negligent testing of AG600, and breach of express warranty were not preempted by FIFRA, and it reversed the District Court's grant of summary judgment on those claims for that reason. Mortellite v. Novartis Crop Protection, Inc., 460 F.3d 483, 489-90 (3d Cir.2006). With respect to Plaintiffs' claims of negligent misrepresentation/fraud and violation of the NJCFA, to the extent that they were based on oral misrepresentations by Novartis, we ruled that they were not preempted by FIFRA. However, to the extent that these claims were based on written misrepresentations, we remanded them to the District Court, because the preemption issue with respect to these claims had not been fully briefed and argued on appeal. We remanded Plaintiffs' failure-to-warn claim as well, also because the issue of whether they were preempted by FIFRA was not fully briefed and argued on appeal.

Following remand, Novartis filed several summary judgment motions, and in a series of rulings, the District Court once again granted summary judgment to Novartis on all of Plaintiffs' claims. The District Court concluded that, to the extent Plaintiffs' claims of negligent...

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