Braswell v. Conagra, Inc.

• Decision Date: 04 April 1985
• Citation: 936 F.2d 1169
• Parties: A.R. BRASWELL; Harry T. Driggers; Terry D. Howell; Julia Stricklin; Audrey A. Jones, as representative parties on behalf of all members of a class consisting of: all persons or entities joined by the defendant under the Order of
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1169

936 F.2d 1169

A.R. BRASWELL; Harry T. Driggers; Terry D. Howell; Julia Stricklin; Audrey A. Jones, as representative parties on behalf of all members of a class consisting of: all persons or entities joined by the defendant under the Order of April 4, 1985 and all other persons selling to, growing for, or making deliveries of chickens to C. Poultry Company Ltd and/or ConAgra, Inc., in Coffee County, Alabama, from January 1, 1978 until April 4, 1985, other than the original named plaintiffs, Hulon Barnes; Lamar Jackson, Frank Wilks Mark Jones, Forrest Powell, and Frances Riley, Plaintiffs-Appellees, v. CONAGRA, INC. and/or C-Poultry Company, Ltd., Defendant-Appellant.

No. 90-7643.

United States Court of Appeals Eleventh Circuit.

July 25, 1991.

Kenneth T. Fuller, Joe C. Cassady, Sr., Cassady, Fuller & Marsh, Enterprise, Ala., Leo A. Knowles, McGrath, North, Mullin & Kratz, Omaha, Neb., for defendant-appellant.

Joe S. Pittman, Stafford Pittman, Pittman, Whittaker & Pittman, Enterprise, Ala., Vreeland G. Johnson, Andalusia, Ala., for plaintiffs-appellees.

Appeals from the United States District Court for the Middle District of Alabama.

Before JOHNSON and COX, Circuit Judges, and MORGAN, Senior Circuit Judge.

JOHNSON, Circuit Judge:

Defendant ConAgra appeals a jury verdict finding it liable for fraud and breach of contract and awarding compensatory damages of $4,550,000 and punitive damages of $9,100,000.

I. STATEMENT OF THE CASE

A. Background Facts

The plaintiffs represent a class of 268 "growers" who raised broiler chickens for ConAgra. From June 1, 1977, to April 4, 1985, each plaintiff entered into at least one contract with ConAgra to "grow-out" broilers. Under a standard form contract, ConAgra provided the growers with broiler chicks, feed, and medicine. The growers raised the chicks in chicken houses meeting standards set by ConAgra. When ConAgra determined the proper time, it transported all the grown-out broilers to its plant. There, ConAgra employees used the following procedure to determine the payment due each grower: (1) they weighed the truck ¹ to obtain the "gross weight"; (2) they removed the broilers and weighed the truck again to establish the "tare weight"; and (3) they subtracted the tare weight from the gross weight to determine the "net weight" of the broilers. ConAgra then paid the growers according to the net weight, using a formula that accounted for the weight gained by the broilers and the amount of feed used by the grower.

B. Procedural History

Five growers initiated this suit in the Circuit Court of Coffee County, Alabama, in 1982. They alleged, among other things, that ConAgra had purposefully misweighed broilers over an eight-year period, thereby committing fraud and breach of contract. During discovery, ConAgra admitted that some of its employees had "randomly" misweighed broilers between October 1, 1978, and March 31, 1981, and filed a counterclaim joining all growers for this period ("the admitted-period") for the purpose of admitting liability for breach of contract and paying damages. ² ConAgra denied any other wrongdoing. In 1988, ConAgra removed the case to federal court. ³

The jury returned verdicts for the plaintiffs on their claims of fraud and breach of contract for all three periods. It awarded the plaintiffs $200,000 compensatory damages and $1,100,000 punitive damages for the pre-period; $1,450,000 compensatory damages and $5,000,000 punitive damages for the admitted-period, and $2,900,000 compensatory damages and $3,000,000 punitive damages for the after-period. ConAgra filed motions for judgment notwithstanding the verdict ("JNOV"), for a new trial, and for remittitur. The court denied the motions for JNOV and for a new trial, but granted a remittitur of $111,589.51 on the compensatory damages for the admitted period. The court later awarded the growers $1,634,026 in prejudgment interest on the compensatory damages.

II. STANDARD OF REVIEW

Denial of a motion for JNOV is a question of law subject to de novo review. Finch v. City of Vernon, 877 F.2d 1497, 1502 (11th Cir.1989). This Court considers all the evidence, not just the evidence that supports the non-movant, in the light most favorable to the party opposed to the motion. Id. at 1501-02 (citing Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969)). If the facts and inferences point so strongly in favor of one party that reasonable persons could not disagree, then granting the motion is proper. Id. at 1502. If reasonable persons could reach different conclusions, the motion will be denied. Id. The district court's denial of motions for a new trial will not be reversed absent an abuse of discretion. Hessen v. Jaguar Cars, 915 F.2d 641, 644-45 (11th Cir.1990).

III. ANALYSIS

A. The Submission of the Breach of Contract and Fraud Theories to the Jury

ConAgra argues that the plaintiffs based all their claims on a single act: the misweighing of broilers. It contends that its duty to weigh the broilers accurately arose solely from its contracts with the growers. ConAgra therefore argues that the plaintiffs have a claim only for breach of contract. ConAgra asserts that the district court erred under Alabama law by allowing the plaintiffs to submit a claim for fraud to the jury.

Federal courts apply state substantive law to pendent state claims litigated in federal courts. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966) (dicta). The Supreme Court of Alabama "has long recognized that, while a defendant's failure ... to perform the act promised in a contract may give rise to an action ex delicto, such failure also gives rise to an action ex contractu when there is a breach of promise." Roberts v. Public Cemetery of Cullman, Inc., 569 So.2d 369, 372 (Ala.1990) ⁴; see also Eidson v. Johns-Ridout's Chapels, Inc., 508 So.2d 697 (Ala.1987). "Alabama law is clear that where the plaintiff does not seek to rescind a contract based upon fraud, but rather sues for breach of contract and fraud by the defendant in performing the contract, then both the contract and tort claims are proper for submission to the jury." Marshall Durbin Food Corp. v. Equitable Life Assurance Soc'y, 834 F.2d 949, 954 (11th Cir.1987), cert. denied, 487 U.S. 1206, 108 S.Ct. 2849, 101 L.Ed.2d 886 (1988) (citing Herring v. Priestwood, 414 So.2d 52, 57-58 (Ala.1982)); see also Deupree v. Butner, 522 So.2d 242, 244 (Ala.1988).

ConAgra notes correctly that under Alabama law a "mere breach of a contractual provision is not sufficient to support a charge of fraud." Brown-Marx Assocs., Ltd. v. Emigrant Sav. Bank, 703 F.2d 1361, 1370-71 (11th Cir.1983). We disagree, however, with ConAgra's assertion that its failure to weigh the broilers accurately was merely a breach of one of the contract provisions and therefore could not give rise to a fraud claim. ConAgra contracted to pay the growers based on the weight of the broilers. It failed to perform that act by committing a fraud, misrepresenting the weight of the broilers. Because of this fraud, the growers accepted lower payments than called for under their contracts. Because the growers did not sue to rescind the contract, the district court correctly presented both the breach of contract and the fraud claims to the jury. See Marshall Durbin, 834 F.2d at 954; Deupree, 522 So.2d at 244-45; Roberts, 569 So.2d at 372; Herring, 414 So.2d at 57-58.

Finally, despite ConAgra's claims to the contrary, the growers did not receive a double recovery by the district court's presenting both claims to the jury. The court specifically instructed the jury that, although it could find against ConAgra on both the breach of contract and the fraud claims, it "should independently decide whether the plaintiff[s] should recover on each of the two claims or on both of the two claims." Moreover, the court properly charged the jury that Alabama law bars double recovery of compensatory damages for a fraud claim and a contract claim based on a single transaction. Deupree, 522 So.2d at 244-45. The district court specifically instructed the jury that if it found the defendant guilty of both breach of contract and fraud, "you [the jury] cannot double the amount of damages. Instead, you would award compensatory damages as if [the plaintiffs] had recovered on only one claim."

B. The Fraud Claim

ConAgra argues that the district court erred in denying its motion for JNOV on the fraud claim. It asserts plaintiffs failed to present sufficient evidence to support a prima facie case of fraud. Specifically, ConAgra claims that the plaintiffs failed to show that the ConAgra employees who wrote the payment checks actually knew that the broilers had been misweighed. Moreover, ConAgra contends that any evidence that did exist was limited to the admitted period and was not relevant to the pre- or after-periods. It argues that the jury was impermissibly allowed to presume fraudulent intent in violation of Alabama law.

To establish a claim for fraudulent misrepresentation under Alabama law, a plaintiff must show (1) that the defendant made a false representation to the plaintiff, (2) that the false representation related to a material fact, (3) that the plaintiff justifiably relied on the false statement; and (4) that the plaintiff sustained damages as a proximate result. Sharp Electronics Corp. v. Shaw, 524 So.2d 586, 592 (Ala.1987) (per curiam); see also Ala.Code Sec. 6-5-101 (1975).

The plaintiffs presented evidence that (1) ConAgra employees misweighed broilers ⁵ and represented to the plaintiffs that these false weights were accurate, (2) ConAgra paid the plaintiffs on the basis of these false weights, (3) the plaintiffs justifiably relied on the false weights because ConAgra exclusively controlled the weighing process, and (4) the plaintiffs accepted the inadequate payment in reliance on the false weights. Alabama law makes an employer liable for any fraudulent...