Gorton v. American Cyanamid Co.

• Decision Date: 26 June 1995
• Docket Number: Nos. 93-0778,93-2267,s. 93-0778
• Citation: 533 N.W.2d 746,194 Wis.2d 203
• Parties: , Prod.Liab.Rep. (CCH) P 14,270 John L. GORTON, Thomas Hauch, Timothy Hauch and Michael Vander Leest, partners under the name Gorton Farms, a Wisconsin general partnership, Plaintiffs-Respondents, v. AMERICAN CYANAMID COMPANY, a Maine corporation, Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 746

533 N.W.2d 746

194 Wis.2d 203, Prod.Liab.Rep. (CCH) P 14,270

John L. GORTON, Thomas Hauch, Timothy Hauch and Michael Vander Leest, partners under the name Gorton Farms, a Wisconsin general partnership Plaintiffs-Respondents, v. AMERICAN CYANAMID COMPANY, a Maine corporation, Defendant-Appellant.

Nos. 93-0778, 93-2267.

Supreme Court of Wisconsin.

Argued April 4, 1995.

Decided June 26, 1995.

For the defendant-appellant there were briefs by Kenneth B. Ness, John M. Filachek and Ness & Foley, Milwaukee and Lawrence S. Ebner and McKenna & Cuneo, Washington, DC, and oral argument by Kenneth B. Nass and Lawrence S. Ebner.

For the plaintiffs-respondents there was a brief by Robert H. Bichler, JoAnne M. Breese-Jaeck and Hostak, Henzl & Bichler, S.C., Racine and oral argument by Robert H. Bichler.

WILCOX, Justice.

This case is on certification from the court of appeals following a jury trial held in the circuit court for Racine County, Honorable Dennis J. Barry, Judge. The jury concluded that Gorton Farms Inc. was entitled to damages for harm to its corn crops caused through the negligence of American Cyanamid Company (American Cyanamid). The issue certified for our consideration is as follows:

Whether, in light of Cipollone v. Liggett Group, Inc., 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992), the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. sec. 136v(b), preempts Wisconsin common law damage claims of breach of warranty, failure to warn and misrepresentation brought against a chemical manufacturer of a herbicide registered with the Environmental Protection Agency (EPA)?

In resolving this issue, we also consider a separate issue of whether attorney fees granted to Gorton Farms by the circuit court pursuant to sec. 100.18, STATS., were appropriate. We conclude that the circuit court properly determined that Gorton Farms' claim as to negligent misrepresentation is not preempted by FIFRA and that Gorton Farms is entitled to attorney fees pursuant to sec. 100.18. Therefore, we affirm the decision of the circuit court.

During the 1980's, American Cyanamid developed an herbicide known as SCEPTER. ¹ The herbicide is designed to control weeds in soybean crops. SCEPTER was first sold for use in Wisconsin in 1987. SCEPTER has been marketed through American Cyanamid sales personnel and technical representatives, and is sold by agricultural dealers chosen by American Cyanamid.

In May of 1987 and 1988, Gorton Farms bought SCEPTER for their soybean fields. Gorton Farms purchased SCEPTER from the Delong Company, an authorized American Cyanamid agricultural dealer. SCEPTER was preplant incorporated on several fields by Gorton Farms in both 1987 and 1988. There is no dispute that the herbicide provided excellent weed control for the soybean plants.

In the spring of 1988, Gorton Farms planted field corn as a follow crop to the soybeans. Thus, the corn was planted into fields that had eleven months earlier been sprayed with SCEPTER. In June, 1988, there was evidence that the field corn was not growing properly. Gorton Farms asked Ronald Doersch of the University of Wisconsin Agronomy Department to examine the fields. Doersch indicated that the corn could have been adversely affected by the previous application of SCEPTER.

On February 9, 1990, Gorton Farms filed a complaint against American Cyanamid alleging theories of breach of warranty, defective product based on failure to provide adequate instructions for use, and negligent misrepresentation concerning SCEPTER's use in follow corn crops. In September, Gorton Farms amended its complaint to allege outrageous conduct in that American Cyanamid misrepresented SCEPTER as safe for "follow corn" despite having evidence of adverse carryover to corn from its field tests.

In November, 1991, American Cyanamid filed a "Motion For An Order Limiting Damages." American Cyanamid argued that: (1) SCEPTER's label contained enforceable disclaimers and limitations on liability; and (2) FIFRA expressly prohibits states from imposing additional or different labeling requirements and, therefore, preempts state common law tort claims based on a failure to adequately warn. The circuit court ruled that the disclaimers did not limit American Cyanamid's liability and that FIFRA did not preempt Gorton Farms' state common law tort claims. The court stated: "It is this Court's opinion that the defendant has failed to demonstrate the clear purpose of Congress to have FIFRA supersede the police powers of the state of Wisconsin in this matter. Therefore, that portion of the defendant's motion to limit damages which is based on the doctrine of federal preemption is denied."

The case subsequently proceeded to a jury trial beginning in August, 1992. Following several weeks of trial, the jury was given a number of instructions as to negligence and strict liability. The jury found that American Cyanamid was "negligent regarding SCEPTER," that SCEPTER was not unreasonably dangerous to Gorton Farms' follow corn crops, that Gorton Farms was not negligent, and that American Cyanamid's conduct was outrageous. The jury awarded Gorton Farms compensatory damages in the sum of $129,300.00 and punitive damages in the sum of $50,000.00. Judgment on the verdict was entered on February 4, 1993. American Cyanamid filed a Notice of Appeal on March 22, 1993.

On March 4, 1993, Gorton Farms filed a motion in the circuit court requesting an award of attorney fees pursuant to sec. 100.18(11)(b)2, STATS. Following briefing and several oral hearings on the matter, the circuit court concluded that an award of attorney fees was appropriate and granted fees in the sum of $307,421.25. An amended judgment was entered on July 30, 1993. A Notice of Appeal from the amended judgment was filed on August 18, 1993. The court of appeals granted a motion by American Cyanamid to consolidate the two appeals. Following briefing to the court of appeals, that court certified the above question to this court. We accepted jurisdiction of the entire matter on September 20, 1994. Further facts necessary for a resolution of the case are set forth below.

I. Preemption under FIFRA

The threshold issue on review is whether the circuit court properly concluded that FIFRA does not preempt Gorton Farms' state common law tort claims. American Cyanamid asserts that all of Gorton Farms' claims are predicated on a theory of failure to warn and, as such, are preempted by sec. 136v(b) of FIFRA. Gorton Farms responds that "FIFRA does not preempt common law damage liability based on negligent and outrageous conduct and testing and in misrepresenting SCEPTER's safety to follow corn, which conduct was part of [American Cyanamid's] marketing and sales activity and not based on SCEPTER's labeling or packaging." ²

Federal preemption of state law implicates issues of governmental authority that go to the very heart of our federal system. The potential for conflict between federal enactments and state law is a persistent reminder of the tensions inherent in our governmental structure. Although the federal Constitution envisions a substantial role for state governments, it also commands that federal law "shall be the supreme law of the land." U.S CONST. art. VI, cl. 2. ³ Further, while states are treasured for their roles as "laborator[ies] ... [to] try novel social and economic experiments," see New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S.Ct. 371, 387, 76 L.Ed. 747 (1932), there is also the recognition of the importance of national control and uniformity.

Recently, preemption principles have been the center of many hard-fought legal battles involving important societal issues. Examples of these disputes range from challenges as to the validity of state statutes designed to limit corporate takeovers, CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69, 107 S.Ct. 1637, 95 L.Ed.2d 67 (1987), to challenges as to whether a state statute requiring payment of surcharges based on the status of the underlying insurance provider is preempted by ERISA, New York Conference of Blue Cross Plans v. Travelers Ins. Co., 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). An interesting example of the controversy surrounding the use of federal preemption is an executive order promulgated by former President Ronald Reagan in 1987 designed to dissuade executive departments and agencies from interpreting federal statutes in ways that would displace state law. ⁴

When considering the federal preemption doctrine an important benchmark is a definition of both federal and state law. Obviously, federal law includes the United States Constitution and all of the federal statutes and treaties promulgated by Congress. Federal law also includes federal regulations promulgated by the various federal agencies. In Fidelity Federal Savings and Loan Assoc. v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982), the Supreme Court stated that "federal regulations have no less pre-emptive [sic] effect than federal statutes." Thus, federal law is broadly defined and includes regulations made by federal agencies under their congressionally granted authority.

On the state side, it is apparent that state constitutions, state statutes, and state regulations will all be encompassed within the definition of "state law." Also falling within the heading of state law, and of great importance to the issue at hand, is the concept of state common law tort actions. As noted by one commentator, "[t]he regulatory effect of tort law has long been recognized." Penning Parker Landen, Federal Preemption and the Drug Industry: Can Courts Co-Regulate?, 43 FOOD DRUG COSM. L.J. 85, 86 (1988). Further, In San Diego Building Trades Council v. Garmon, 359 U.S. 236, 247, 79 S.Ct. 773, 780-81, 3 L.Ed.2d 775 (1959), the Supreme Court stated that "[t]he obligation to pay compensation can be, indeed is designed to be, a potent method of governing...