Bolin Farms v. American Cotton Shippers Association

• Decision Date: 31 January 1974
• Docket Number: Civ. A. No. 19351,19364,19418,19389,19485 and 19652.,19365
• Citation: 370 F. Supp. 1353
• Parties: BOLIN FARMS et al. v. AMERICAN COTTON SHIPPERS ASSOCIATION et al. Lee Lois JONES, Individually and in behalf of that Class of Sharecropper Cotton Farmers Similarly Situated v. ALLENBURG COTTON COMPANY, INC., Individually and all other Cotton Shippers, Merchants and/or Mills which have Contracted to Purchase Cotton From the Class of Plaintiffs. Johnnie KOVAC, Jr. v. GEORGE H. McFADDIN & BROS., et al. BOLIN FARMS v. W. H. KENNEDY & SON, INC., et al. Donald GLOSUP et al. v. COOK INDUSTRIES, INC., et al. Homer McDANIEL et al. v. W. H. KENNEDY & SON, INC., et al. George TAYLOR v. CONE MILLS CORPORATION.
• Court: U.S. District Court — Western District of Louisiana

370 F. Supp. 1353

BOLIN FARMS et al. v. AMERICAN COTTON SHIPPERS ASSOCIATION et al.

Lee Lois JONES, Individually and in behalf of that Class of Sharecropper Cotton Farmers Similarly Situated v. ALLENBURG COTTON COMPANY, INC., Individually and all other Cotton Shippers, Merchants and/or Mills which have Contracted to Purchase Cotton From the Class of Plaintiffs.

Johnnie KOVAC, Jr. v. GEORGE H. McFADDIN & BROS., et al.

BOLIN FARMS v. W. H. KENNEDY & SON, INC., et al.

Donald GLOSUP et al. v. COOK INDUSTRIES, INC., et al.

Homer McDANIEL et al. v. W. H. KENNEDY & SON, INC., et al.

George TAYLOR v. CONE MILLS CORPORATION.

Civ. A. Nos. 19351, 19389, 19365, 19364, 19418, 19485 and 19652.

United States District Court, W. D. Louisiana, Monroe Division.

January 31, 1974.

COPYRIGHT MATERIAL OMITTED

Kidd, Katz & Halpin, Monroe, La., for plaintiffs.

Snellings, Breard, Sartor, Shafto & Inabnett, Monroe, La., Theus, Grisham, Davis & Leigh, Monroe, La., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., Massey & Robinson, West Monroe, La., for defendants.

EDWIN F. HUNTER, Jr., Chief Judge:

As of January 3, 1974, the writer assumed jurisdiction. These cases had previously been handled by the Honorable Ben C. Dawkins, Jr. A five-page order was entered on January 3, 1974, following a lengthy conference with counsel.

The pending motions have been submitted on the transcript of hearings held before Judge Dawkins, a multitude of depositions, and various affidavits.

CIVIL ACTION 19502

The motion to dismiss, pegged on lack of diversity, has been sustained and a judgment signed. My understanding is that both sides concede dismissal to be correct.

CIVIL ACTION 19485

Defendants in this $665,000,000 anti-trust suit filed a motion to stay, insisting that judgment in the contract cases favorable to plaintiffs is an essential prerequisite to a day in court in the anti-trust suit. We intimate no opinion as to the validity of this contention. We do grant a stay of all further proceedings for the time being, with the exception of the pending motion by plaintiffs for a preliminary injunction. Judge Dawkins granted a temporary restraining order, but, by order of November 1, 1973, dissolved the TRO and cancelled the hearing on the preliminary injunction that had been scheduled for November 19, 1973. Writs of mandamus and prohibition were lodged in the Fifth Circuit Court of Appeals. That Court, on November 19, 1973, denied the writ. Plaintiffs would enjoin the defendant "cotton buyers" from:

1. Requiring any farmer to sign the so-called Confirmation of Sale statement which would reveal whether or not his cotton had been previously contracted for.

2. Using any of the catalogs prepared by American Cotton Shippers Association in determining whether to purchase cotton or not.

3. Using any kind of criterion in the purchase of cotton, except technical data that was not employed prior to 1973, and

4. Refusing to purchase cotton from farmers who signed 1973 cotton contracts on any different basis or price than that made or paid to cotton farmers or producers who did not sign contracts for 1973.

The circumstances in which a preliminary injunction may be granted are not prescribed by the federal rules. The grant or denial often remains a matter for the trial court's discretion and must be exercised in conformity with historic equity practice. We cannot say, as a matter of equity, that a cotton buyer cannot require a statement from a prospective seller that he has not previously contracted for the sale of his cotton. We are not prepared to prohibit cotton buyers from utilizing trade catalogs to ascertain whether or not a prospective seller has sold to someone else. Plaintiffs' motion for a preliminary injunction is denied.

This anti-trust action is severed for separate consideration. This severance is necessary to avoid possible prejudice and to expedite resolution of the contract cases.

THE CONTRACT CASES — 19,351, 19,389, 19,365, 19,364, 19,418

This litigation arises out of the attempts by eleven (11) cotton farmers to test the contracts by which they concededly obligated themselves to sell and deliver their cotton. In essence, defendants agreed to purchase whatever was planted by these farmers on specific acreage at a price agreed upon between January and March of 1973, irrespective of what the price might be at harvest time. Meanwhile, the price of cotton unexpectedly skyrocketed to at least double the price agreed upon. The complaints seek a declaration that the contracts are null and void, so that plaintiffs may achieve a better price than they bargained for. The fundamental question in each action involves the enforceability vel non of contracts for the advance or forward sale of cotton grown for the 1973 crop.

CLASS ACTION REQUEST

Plaintiffs seek to maintain these contracts as consolidated class litigation on behalf of "all cotton farmers in the State of Louisiana that have signed `forward' or `future' crop contracts with cotton brokers and/or buyers." (Plaintiffs' motion, page 1.) This description would, of course, encompass a highly diverse aggregation of purported class members, many of whom may be persons who never had dealings with defendants. The individual petitions make no reference to any purported class, and all allegations are asserted on behalf of individual plaintiffs. As the Court of Appeals for the Fifth Circuit made clear in Danner v. Phillips Petroleum Co., 447 F.2d 159, 164 (5th Cir. 1971), complaints such as these cannot possibly provide an adequate predicate for class action certification.

Even more significant, plaintiffs have not made the slightest factual showing that the weakening of the forward contracting system which this purported class litigation seeks would be welcomed by, or would in any way benefit, all members of the purported class. On the contrary, it is apparent that plaintiffs' interests are antagonistic to, rather than typical of, many members of the purported class. Surely, a person who has attempted to test his contract and has incurred counterclaims thereby can in no sense be regarded as "typical" or adequately representative of a class of persons who have not attempted to repudiate their contracts. This inescapable divergence between plaintiffs' position and class members' positions is even more pronounced in the case of those class members who have already delivered and been paid.

In Arnesen v. Raymond Lee Organization, Inc., 59 F.R.D. 145, 148 (C.D.Cal. 1973), as in the case at bar, a plaintiff who was "seeking a rescission of his agreement" with defendants sought to represent a class composed of other persons who had entered into agreements with defendants but had not purported to rescind their agreements. The Court held that because of plaintiff's attempted rescission, plaintiff was in a "different posture" from that of other class members, and thus:

"Plaintiff's claim against defendants is not typical of claims of other members of the class, Rule 23(a)(3) * * *." 59 F.R.D. at 148.

We conclude that the maintenance of plaintiffs' class pursuant to Rule 23 would be improper, and the motion for a determination of the same is denied.

THE MOTIONS

The record is a morass of pleadings which can best be unraveled by proceeding to the very core of the case — that is, the validity and enforceability of a contract for the purchase and sale of cotton, entered into between a willing buyer and a willing seller, both adult (experienced cotton farmers on the one hand and experienced cotton buyers on the other hand) on an open and competitive market. The case on summary judgment presents two facets:¹

(1) The prayer of plaintiffs for a declaratory judgment annulling the cotton sales contracts, and

(2) The prayer of defendants that the contracts be adjudged lawful and valid.

On these motions, we have before us:

1. The depositions of 25 individuals;

2. Affidavits filed by defendants prior to January 3, 1974, and the affidavit filed by Mr. Kidd as per this Court's instructions, and

3. The transcript of the proceedings before the Honorable Ben C. Dawkins, Jr. on November 26 and 27, 1973, and December 5, 1973. This transcript includes the testimony, under cross examination, of some 20 individuals.

An opening article of the Law of Obligations (Louisiana Civil Code Article 1901) reads:

"Agreements legally entered into have the effect of laws on those who have formed them.

"They cannot be revoked, unless by mutual consent of the parties, or for causes acknowledged by law.

"They must be performed with good faith."

This statutory mandate has stood unaltered from Article 1134 of the Code Napoleon through the Louisiana Codes of 1808, 1825 and 1870.

It is a matter of public record and public knowledge that as a result of the sudden and spectacular rise in the price of cotton in the latter part of 1973, literally scores of suits have been filed, either to enforce or rescind these advance or forward contracts. Defendants have cited thirteen (13) cases that arose between September 18 and November 9, 1973. In each, the validity of the contracts has been upheld by either summary judgment, declaratory judgment, preliminary injunction, and/or permanent injunction. These affirmations of the contracts have emanated from the United States District Courts for the Middle District of Georgia, the Northern District of Mississippi, the Western District of Tennessee, the Northern District of Alabama, The District of South Carolina, the Northern District of Georgia, and from the state courts of Arkansas, Georgia, Alabama and Mississippi.²

Jurisdiction is pegged on diversity. We are governed by Louisiana law.³

The contracts are in evidence. They speak for themselves. No useful purpose would be served by detailing each provision. They were entered into between January 9, 1973 and March 29, 1973. In each, plaintiffs obligated themselves to sell and deliver to the defendant cotton buyers all of the...