Haren v. Conrad Cooperative

• Decision Date: 10 May 1999
• Docket Number: No. 98-3803,98-3803
• Citation: 198 F.3d 683
• Parties: (8th Cir. 1999) DOUG HAREN, APPELLANT, v. CONRAD COOPERATIVE, 42-0193879, APPELLEE. KENNETH P. SIEVERS, APPELLANT, v. LINCOLN COOPERATIVE COMPANY, LINCOLN, IOWA, AN IOWA COOPERATIVE, PIN #42-0242590, APPELLEE. ED GRIFFIN, APPELLANT, v. FARMERS COOPERATIVE ELEVATOR, OF BUFFALO CENTER, IA, APPELLEE. LAURIE CURRIE, JOHN CURRIE, APPELLANTS, v. FARMERS COOP. CO., FARMERS COOPERATIVE CO., FARNHAMVILLE, IOWA, APPELLEE. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 683

198 F.3d 683 (8th Cir. 1999)

DOUG HAREN, APPELLANT, v. CONRAD COOPERATIVE, 42-0193879, APPELLEE.

KENNETH P. SIEVERS, APPELLANT, v. LINCOLN COOPERATIVE COMPANY, LINCOLN, IOWA, AN IOWA COOPERATIVE, PIN #42-0242590, APPELLEE.

ED GRIFFIN, APPELLANT, v. FARMERS COOPERATIVE ELEVATOR, OF BUFFALO CENTER, IA, APPELLEE.

LAURIE CURRIE, JOHN CURRIE, APPELLANTS, v. FARMERS COOP. CO., FARMERS COOPERATIVE CO., FARNHAMVILLE, IOWA, APPELLEE.

No. 98-3803

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: May 10, 1999

Filed: December 15, 1999

Appeals from the United States District Court for the Northern District of Iowa.

Before Mcmillian, Heaney, and John R. Gibson, Circuit Judges.

Heaney, Circuit Judge.

Like Grain Land Coop v. Obermeyer, Nos. 98-3217 & 98-3304, this case requires us to consider the application of the Commodity Exchange Act (CEA), 7 U.S.C. §§ 1-25 (1999), to certain Hedge-to-Arrive contracts, or HTAs. Doug Haren, Kenneth P. Sievers, Ed Griffin, and Laurie Currie and John Currie (the Curries) are Iowa farmers who entered into HTAs with four Iowa grain elevators. The contracts signed by the farmers differed slightly from those signed by Obermeyer, in that the HTA documents themselves did not explicitly contemplate a right to roll the delivery obligation. Although it is a matter of some dispute, the farmers claim to have negotiated for and obtained the right to unlimited rolling from the elevators. In substance, then, the contracts signed by Haren, Sievers, Griffin, and the Curries were identical to the Grain Land contracts.

As in Grain Land, due to the unprecedented steady rise in corn prices, the farmers elected to sell their grain for the better price offered by the cash markets and rolled their delivery obligations. As a result of the rising market, the elevators paid hefty margin calls and the farmers' HTA prices dropped accordingly. During the 1996 crop year, each farmer received a letter from the elevator with which they had entered into the HTAs either terminating or severely restricting their ability to roll their delivery obligations, or demanding assurances that the farmers would deliver grain as provided in their HTA contracts and cover all margin and commission costs. Soon after, Haren, Griffin, and Sievers were sued by their respective elevators in state court.

In late 1996 and early 1997, the farmers filed individual actions against the elevators in the district court, seeking, inter alia, a declaration that the contracts were illegal off-market futures contracts and therefore void. The farmers also alleged fraud under the CEA, and brought a number of state law claims against the elevators. The elevators moved for summary judgment, contending the HTAs were exempted from Commodity Futures Trading Commission regulation by the CEA's cash-forward exception. In October 1998, the court issued...