Green Leaf Nursery v. E.I. Dupont De Nemours

• Citation: 341 F.3d 1292
• Decision Date: 15 August 2003
• Docket Number: No. 01-13345.,No. 01-15693.,01-13345.,01-15693.
• Parties: GREEN LEAF NURSERY, Gus Pena, Plaintiffs-Counter-Defendants-Appellants, v. E.I. DUPONT DE NEMOURS AND COMPANY, a Delaware Corporation, Defendant-Counter-Claimant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

341 F.3d 1292

GREEN LEAF NURSERY, Gus Pena, Plaintiffs-Counter-Defendants-Appellants, v. E.I. DUPONT DE NEMOURS AND COMPANY, a Delaware Corporation, Defendant-Counter-Claimant-Appellee.

No. 01-13345.

No. 01-15693.

United States Court of Appeals, Eleventh Circuit.

DECIDED: August 15, 2003.

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A. Camden Lewis, Thomas A. Pendarvis, Mary G. Lewis, Lewis, Babcock & Hawkins, L.L.P., Columbia, SC, David W. Moyer, Stephen T. Cox, Scott J. Allen, Molligan, Cox & Moyer, San Francisco, CA, for Green Leaf Nursery and Pena.

Thomas E. Scott, Edward A. Moss, Eileen L. Tilghman, Shook, Hardy & Bacon, Miami, FL, A. Stephens Clay, James F. Bogan, III, C. Allen Garrett, Jr., Kilpatrick & Cody, Atlanta, GA, for Defendant-Counter-Claimant-Appellee.

Appeals from the United States District Court for the Southern District of Florida.

Before BIRCH, DUBINA and KRAVITCH, Circuit Judges.

DUBINA, Circuit Judge:

In the early 1990's, plant growers throughout the country filed hundreds of lawsuits against E.I. DuPont De Nemours and Company ("DuPont") alleging fraud and products liability relating to the DuPont fungicide Benlate. In 1992, Green Leaf Nursery, Inc., a Florida plant nursery, and its owner ("Plaintiffs") brought such a suit against DuPont in Florida state court (the "Underlying Litigation"). In May 1994, notwithstanding ongoing accusations of discovery fraud and litigation misconduct in Plaintiffs' own case and in other Benlate cases throughout the country, which Plaintiffs' counsel monitored, Plaintiffs settled their claims with DuPont, executed a general release, and dismissed their Florida state court action with prejudice in August, 1995.¹

Plaintiffs contend that after settling their case, they discovered that DuPont had engaged in a massive scheme of perjury, falsification of evidence, and fraudulent concealment of evidence to induce themselves and other Benlate plaintiffs to settle their claims for less than the claims' fair value. Although Plaintiffs accepted and kept the settlement monies, affirming the settlement agreement, they filed the present action against DuPont alleging fraud and violations of the Racketeer Influenced and Corrupt Organization Act ("RICO"), codified at 18 U.S.C. § 1961 et seq.² The district court dismissed Plaintiffs' claims in two orders and entered judgment in favor of DuPont that Plaintiffs appealed separately. We consolidate these appeals and affirm the district court's judgment.

BACKGROUND

A. The Bush Ranch Case

By the mid-1990's, many growers had filed lawsuits against DuPont contending that Benlate was defective and caused damage to their crops and nurseries. Plaintiffs monitored many of these cases, including one of the first cases to proceed to trial, In re E.I. du Pont de Nemours & Co. — Benlate Litigation, 918 F.Supp. 1524 (M.D.Ga.1995), rev'd, 99 F.3d 363 (11th Cir.1996), which is known as the Bush Ranch case. In the Bush Ranch case, the district court sanctioned DuPont in excess of $100 million, finding that DuPont had committed fraud on the court. On appeal, we held that the sanctions imposed were punitive, and thus criminal in nature, so that the district court's imposition of sanctions in a civil proceeding without the constitutional protections accorded criminal defendants was improper. 99 F.3d at 369. Accordingly, we reversed the district court's sanction order and remanded the case for further proceedings. Id. at 373.

B. Other Settlement-Fraud Cases

The Plaintiffs were not alone in filing settlement-fraud cases. The first Benlate settlement-fraud cases to be litigated through judgment and appeal were damages actions brought in the Northern District of Georgia by several of the plaintiffs in the Bush Ranch case. See Kobatake v. E.I. DuPont De Nemours & Co., 162 F.3d 619 (11th Cir.1998) (per curiam). This court affirmed the district court's dismissal of the settlement-fraud claims based on the general release and the plaintiffs' inability to prove reasonable reliance due to the merger clauses in the plaintiffs' affirmed settlement agreements. Id. at 622.

Similarly, a district court in the Southern District of Florida dismissed several settlement-fraud cases based on the release clauses contained in the settlement agreements, including settlement agreements containing Delaware choice-of-law clauses identical to those found in Plaintiffs' settlement agreements. The Florida cases involved two groups of settlement-fraud plaintiffs: (1) those who had settled in 1994 and executed settlement agreements containing Delaware choice-of-law clauses; and (2) those who had settled in late 1991 and early 1992 without having filed any litigation against DuPont and who had signed settlement agreements that did not contain choice-of-law clauses.

Appeals of these Florida district court decisions resulted in the certification of questions of Florida law to the Supreme Court of Florida. See Foliage Forest, Inc. v. E.I. DuPont De Nemours & Co., 172 F.3d 1284 (11th Cir.1999); Mazzoni Farms, Inc. v. E.I. DuPont De Nemours & Co., 166 F.3d 1162 (11th Cir.1999). We certified the following two questions to the Supreme Court of Florida: (1) what is the effect of the choice-of-law clause, and (2) what is the construction of the release clauses in any settlement agreements governed by Florida, rather than Delaware, law. The Florida Supreme Court ruled that where a settlement-fraud plaintiff affirms a release, the choice-of-law clause is valid and governs the construction of the release, but in those cases where no choice-of-law clause exists, the release language is not sufficiently broad to bar fraudulent inducement claims. Mazzoni Farms, Inc. v. E.I. DuPont De Nemours & Co., 761 So.2d 306, 313, 316 (Fla.2000). Accordingly, we reversed the district court's orders dismissing the actions as barred by the release and remanded the cases.³

C. The Instant Action

Plaintiffs settled their Underlying Litigation in May 1994, executing a general release. In August 1995, the Florida trial court dismissed with prejudice the Plaintiffs' Florida state court action. The settlement agreement provided that

[i]n consideration of [DuPont's] payment of the amount set forth in the authorization previously signed by Plaintiff[s], Plaintiff[s] hereby release[ ] [DuPont] from any and all causes of action, claims, demands, actions, obligations, damages or liability, whether known or unknown, that Plaintiff[s] ever had, now [have], or may hereafter have against [DuPont], by reason of any fact or matter whatsoever, existing or occurring at any time up to and including the date this Release is signed (including, but not limited to, the claims asserted and sought to be asserted in the Action).

[R. Vol. 3 Tab 208 Ex. C]. The settlement agreement also contains a choice-of-law clause that states: "This Release shall be governed and construed in accordance with the laws of the State of Delaware without giving effect to the choice of law provisions thereof." [R. Vol. 3 Tab 208 Ex. C].

Plaintiffs allege that the discovery abuses and litigation misconduct in the Bush Ranch case and other cases that they monitored along with the discovery abuses in their own case represent a scheme to induce them to settle their case for less than the fair value of their claims. Specifically, the Plaintiffs allege that DuPont fraudulently concealed information allegedly showing defects in Benlate in the Underlying Litigation.⁴ Plaintiffs also allege that DuPont issued fraudulent discovery responses, put forth perjured testimony, and engaged in other allegedly dishonest litigation conduct. Plaintiffs claim that in reliance on DuPont's actions in the Underlying Litigation and in the other Benlate cases, which they monitored, they suffered damages. Therefore, Plaintiffs filed this settlement-fraud action more than three years after settling the Underlying Litigation and the Bush Ranch case.

During the pendency of the Florida certification proceedings from the other settlement-fraud cases, DuPont moved for judgment on the pleadings in the instant action. DuPont also moved, in a related case involving similarly situated plaintiffs, for certification to the Supreme Court of Delaware of the issue of whether the release barred such settlement-fraud actions. The district court granted DuPont's motion for certification in the related case and stayed all proceedings in this and all other related cases pending the resolution of the certified question. The district court certified the following question to the Supreme Court of Delaware: "Under Delaware law, does the release in these settlement agreements bar Plaintiffs' fraudulent inducement claims?" E.I. DuPont De Nemours & Co. v. Florida Evergreen Foliage, 744 A.2d 457, 459 (Del.1999). The Delaware Supreme Court answered that, under Delaware law, the release clause did not unambiguously bar the plaintiffs' fraudulent inducement claims. Id. at 461. The court held that

a tort claimant fraudulently induced to execute a release may opt either for rescission or a separate suit for fraud with damages calculated on the difference between that received under the release and the value of the settlement or recovery achieved had there been no fraud by the released party.

Id. at 458.

The district court then ruled on DuPont's motion for judgment on the pleadings. DuPont had moved for judgment on the pleadings on all of Plaintiffs' claims except for their spoliation claim. In an order dated March 8, 2001, the district court found that Florida law governed Plaintiffs' tort claims and dismissed all of Plaintiffs' state law claims as barred by Florida's litigation privilege. Florida Evergreen Foliage v. E.I. DuPont De Nemours & Co., 135 F.Supp.2d 1271, 1278, 1283 (S.D.Fla.2001). As an alternative basis for dismissing Plaintiffs' state law fraud claims,⁵ the district court found that Plaintiffs had not reasonably relied on any...