ConAgra, Inc. v. Farrington

Decision Date23 June 1994
Docket NumberNo. 84A01-9312-CV-386,84A01-9312-CV-386
Citation635 N.E.2d 1137
PartiesCONAGRA, INC. d/b/a Graham Grain Company and Mike Dimmitt, Appellants-Defendants, v. Richard FARRINGTON and Robert Farrington, Appellees-Plaintiffs.
CourtIndiana Appellate Court

William W. Drummy, Wilkinson, Goeller, Modesitt, Wilkinson & Drummy, Terre Haute, Mark F. Enenbach, McGrath, North, Mullin & Kratz, Omaha, NE, for appellants.

David H. Pope, Carr, Tabb & Pope, Atlanta, GA, Hansford C. Mann, Bruce D. Aukerman, Mann, Chaney, Johnson, Goodwin & Williams, Terre Haute, for appellees.

BAKER, Judge.

Pursuant to Ind. Appellate Rule 4(A), appellant-defendant ConAgra, Inc. d/b/a Graham Grain Co. filed this interlocutory appeal challenging the trial court's certification of a class action represented by appellee-plaintiffs Richard Farrington and Robert Farrington. Defendant Mike Dimmitt did not appeal the class certification.

FACTS

During January 1, 1988 to January 1, 1992, Robert sold wheat, soybeans, and corn to ConAgra at its Terre Haute grain elevator. Richard sold soybeans and corn to ConAgra. ConAgra, a Nebraska corporation, operated three other elevators in Indiana. Typically, farmers would deliver their grain to an elevator where ConAgra would remove a test sample in order to "grade" the load. The grading process involved two screens that separated the grain from the "foreign material" (FM). The particular grade of a load was partially based upon the FM content. If a load contained more than 1% FM, then ConAgra would deduct a percentage of the weight from the total load. Hence, the higher the FM, the lower the number of bushels ConAgra would pay the seller. 1 The price per bushel was a spot price for the particular day of delivery or a previously set contract price. ConAgra performed the grading outside the seller's view. After a load had been dumped into ConAgra's storage facility, ConAgra would give the seller a ticket indicating the grade and sale price of the load of grain.

The Farringtons claim that ConAgra miscalculated the grade of soybeans due to its use of larger screens than those mandated by the U.S. Department of Agriculture. The USDA required an 8/64 screen; whereas, ConAgra used a 10/64 screen. The Farringtons contend that the use of the larger screens resulted in a higher FM deduction for soybeans that reduced the number of bushels sold, and thus, resulted in a lower yield to the seller. The Farringtons maintain that the use of the larger screen was a policy that ConAgra management imposed at all four elevators. The Farringtons also claim that ConAgra arbitrarily added an additional .3% FM to every load of wheat and soybeans, which further reduced the yield to the seller.

The Farringtons filed suit alleging violations of Indiana Racketeer Influenced and After a hearing the trial court certified the class on October 14, 1993, and rejected ConAgra's motions to strike Shimboff's and Dr. Hurburgh's affidavits.

Corrupt Organizations statute (IND.CODE 35-45-6-2(3)), breach of contract, negligence, unjust enrichment, and fraud against ConAgra and Dimmitt, one of its employees. The Farringtons sought to convert their suit into a class action pursuant to Ind.Trial Rule 23, to include all sellers of soybeans and wheat to ConAgra during the four-year period. The Farringtons filed supporting affidavits by their expert, Dr. Charles R. Hurburgh and a former ConAgra employee, Phil Shimboff. During Shimboff's deposition, he asserted his Fifth Amendment privilege and refused to answer questions relating to his former employment. Dr. Hurburgh was deposed and stated that his opinion was based partially upon research materials generated independently from the instant litigation and on Shimboff's affidavit. Dr. Hurburgh refused to surrender the research materials, claiming that they were the property of the USDA. ConAgra sought to compel discovery from both Dr. Hurburgh and Shimboff, or in the alternative, to strike their affidavits.

DISCUSSION AND DECISION

ConAgra challenges the validity of the trial court's certification of the class. Reviewing a class certification order, we apply an abuse of discretion standard. CSX Transp., Inc. v. Rabold (1992), Ind.App., 593 N.E.2d 1277, 1278, trans. denied. If substantial evidence supports the trial court's exercise of discretion, then we will affirm its order. Id.

ConAgra first asserts that the class certification order is deficient because it fails to set forth findings supporting its decision. ConAgra wrongly deduces such a requirement from Kuespert v. State (1978), 177 Ind.App. 142, 378 N.E.2d 888. Kuespert does not exact findings from the trial court when it grants class certification. Kuespert held that when the evidence supports class certification but the trial court denies it, the court must enter findings explaining its denial. Id. 378 N.E.2d at 894. Because the trial court granted class certification here, Kuespert is inapposite.

ConAgra also alleges that the certification order is inadequate because it does not define the class or the issues certified for class treatment. ConAgra's argument lacks merit. Only one defined class was submitted to the trial court for certification:

persons and entities (excluding all governmental entities, ConAgra and its subsidiaries and affiliated companies, and the directors, officers and employees of ConAgra and its subsidiaries and affiliated companies) who sold soybeans and wheat to ConAgra during the period January 1, 1988 to January 1, 1992, at ConAgra's facilities in Indiana, who had a foreign material dockage greater than one (1%) percent.

Record at 272. Without a doubt, the court certified this class. Also, five questions were alleged to be common to all the class members. 2 T.R. 23(D)(4) allows the trial court to certify a class action on particular issues. Because the trial court did not expressly exclude any of the five issues, it is reasonable to presume all five were certified.

Noting that all of the Farringtons' claims are based on fraud, ConAgra posits, citing federal court decisions, that fraud claims are inappropriate for class certification. Indiana clearly allows common law fraud to be maintained as a class action provided that the requisites of T.R. 23 are met. See Skalbania v. Simmons (1982), Ind.App., 443 N.E.2d 352, 359. Hence ConAgra's contentions to the contrary on all of the causes of action fail.

I. T.R. 23(A)--Prerequisites

Next, ConAgra contends that the class did not meet the elements of Ind.T.R. 23(A)(2), (3), and (4). Failure to meet any one of the mandated prerequisites in T.R. 23(A) results in the denial of class status. Perfect Circle Corp. v. Case (1983), Ind.App., 444 N.E.2d 1211, 1213. We address each element separately.

A. Commonality

ConAgra argues that T.R. 23(A)(2), which requires questions of law or fact to be common to the class, is not satisfied. See Skalbania, at 357. ConAgra argues that commonality is lacking because no common contractual arrangements unite the class. The complaint alleged that ConAgra committed the common acts of the use of the wrong screen to grade soybeans and the false reporting of the FM content in wheat and soybeans in every transaction, thereby affecting every class member. See Record at 276-77. ConAgra stresses the following differences between the class members: 1) that the contracts between each class member and ConAgra differed since some were express and others implied, 2) many ConAgra employees and four separate elevators were involved, 3) ConAgra purchased crops of varying quality and grades, and 4) different prices were paid.

ConAgra's argument ignores the appellate standard of review because it essentially asks us to reweigh the evidence. On appeal where the evidence is conflicting and an abuse of the trial court's discretion is alleged, we shall consider only the evidence most favorable to the judgment and all reasonable inferences to be drawn therefrom. Skalbania, 443 N.E.2d at 356.

ConAgra misinterprets Skalbania as requiring the contracts and representations to be the same to all class members to meet the commonality element. The common acts in Skalbania were, in fact, the identical contracts and misrepresentations, but Skalbania did not limit commonality as ConAgra suggests. Skalbania generally recognized that a class action based on fraud is proper where a group of persons were defrauded by the same acts of the defendant. Id. at 359. Furthermore, individual questions do not prevent a class action on the common questions. Bank One Indianapolis, N.A. v. Norton (1990), Ind.App., 557 N.E.2d 1038, 1042 (common question of whether trustee acted reasonably in administration of trust); see CSX, 593 N.E.2d at 1279 (question of whether railroad abandoned right of way was common to each landowner). Thus, we conclude that the allegations in the complaint sufficiently support the trial court's determination of commonality.

ConAgra aggressively assails the certification of the fifth issue, which actually is composed of two questions: 1) whether the class members have been injured, and 2) what may they recover. 3 The former question focuses upon injury while the latter concerns damages. The injury question is based upon the allegation that the fraudulent conduct deprived every seller of the fair value of his crop sold to ConAgra. Thus, the entire class will have sustained a common injury if it proves the fraudulent conduct.

The damages question, though, is a tougher one. As ConAgra points out, each class member's damage differed because their contracts, prices, and quality of their individual loads varied. It is true that when damages are not readily ascertainable for the class, class action treatment on the question of damages is improper. Kellogg v. City of Gary (1990), Ind., 562 N.E.2d 685, 710. Such is not the case here. Notwithstanding the variances among the class members' damages, the Farringtons have presented...

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