In re Starlink Corn Products Liability Litigation

Decision Date11 July 2002
Docket NumberMDL No. 1403.,No. 01 C 4928.,01 C 4928.
Citation212 F.Supp.2d 828
CourtU.S. District Court — Northern District of Illinois
PartiesIn re STARLINK CORN PRODUCTS LIABILITY LITIGATION Marvin Kramer, et al., Plaintiffs, v. Aventis CropScience USA Holding, Inc., et al., Defendants.

Adam J. Levitt, Wolf, Haldenstein, Adler, Freeman & Herz, LLC, Chicago, IL, David A.P. Brower, Daniel W. Krasner, Katherine B. DuBose, Wolf, Haldenstein, Adler, Freeman & Herz, LLC, New York City, Melvyn I. Weiss, Robert A. Wallner, Milberg, Wiess, Bershad, Hynes & Lerach, LLP, New York City, Herbert E. Milstein, Michael D. Hausfeld, Richard S. Lewis, Cohen, Milstein, Hausfeld & Toll, PLLC, Washington, DC, Stephen A. Weiss, Christopher A. Seeger, Seth A. Katz, Stuart P. Slotnick, Seeger Weiss, LLP, New York City, for Plaintiffs.

Edward M. Crane, Deborah F. Solmor, Skadden, Arps, Slate, Meagher & Flom (Illinois), Chicago, IL, Sheila L. Birnbaum, Katherine Armstrong, Skadden, Arps, Slate, Meagher & Flom, LLP, New york City, Jeffrey E. Stone, Cathy McNeil Stein, McDermott, Will & Emery, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

MORAN, Senior District Judge.

This controversy arises from the discovery of genetically modified corn in various food products. Plaintiffs Marvin Kramer, Mitchell and Claude Corbin, Corbin Farms LLC, Clint Killin, Charles Dupraz, William Furlong, Jemar, Inc., Marvin Luiken, Keith Mudd, Edward Olsen, Gerald Greiger, Verlon Ponto, Jon Untiedt, David Christoffer, Alan Roebke, Mica Schnoebelen, Joseph and Ardene Wirts, Southview Farms, Dennis and Donald Olsen, Gordon Stine, Don Sutter, and Bartt McCormack d/b/a Buford Station Farms allege that defendants Aventis CropScience USA Holdings, Inc. (Aventis) and Garst Seed Company (Garst) disseminated a product that contaminated the entire United States' corn supply, increasing their costs and depressing corn prices. Before us are fifteen separately filed cases, consolidated here for pretrial purposes by the Panel for Multidistrict Litigation. See 28 U.S.C. § 1407. Plaintiffs have filed a 57-count master second amended consolidated class action complaint, alleging common law claims for negligence, strict liability, private nuisance, public nuisance and conversion on behalf of a nationwide class of corn farmers against Garst, and on behalf of ten statewide classes against Aventis, as well as statutory claims against Aventis under the Tennessee Consumer Protection Act of 1997, Tenn.Code Ann. §§ 47-18-101 et seq., and the North Carolina Unfair Trade Practices Act, N.C. Gen.Stat. § 75-1.1 (1999). Defendants filed a motion to dismiss, arguing that the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. §§ 136 et seq., preempts plaintiffs' state law claims, that the economic loss doctrine bars any recovery, and that the complaint fails to state a claim under any of plaintiffs' purported legal theories. For the following reasons, defendants' motion to dismiss is granted in part and denied in part.

BACKGROUND

Aventis1 genetically engineered a corn seed to produce a protein known as Cry9C that is toxic to certain insects. The seeds are marketed under the brand name StarLink. Garst is a licensee who produced and distributed StarLink seeds. Aventis applied to register StarLink with the EPA, which is responsible for regulating insecticides under FIFRA, 7 U.S.C. §§ 136 et seq. The EPA noted that Cry9C had several attributes similar to known human allergens, and issued only a limited registration, permitting StarLink use for such purposes as animal feed, ethanol production and seed increase, but prohibiting its use for human consumption. Consequently, segregating it from non-StarLink corn, which was fit for human consumption, became of utmost importance. A little background about normal practices for cultivating, harvesting and distributing corn demonstrates the extensive steps necessary to prevent StarLink corn from entering the food supply.

Corn replicates by the transfer of pollen from one corn plant to another, including cross-pollination from one breed to another. Once airborne, corn pollen can drift over considerable distances, meaning that different corn varieties within a farm, and from neighboring farms, regularly cross-breed. With few exceptions, there are not procedures in place to segregate types of corn. Different corn breeds within an individual farm are commingled at the harvesting stage. Corn from hundreds of thousands of farms is then further commingled as it is gathered, stored and shipped through a system of local, regional and terminal grain elevators. Elevators, storage and transportation facilities are generally not equipped to test and segregate corn varieties. The commingled corn is then marketed and traded as a fungible commodity.

In light of these general practices in the corn industry, the EPA required special procedures with respect to StarLink. These included mandatory segregation methods to prevent StarLink from commingling with other corn in cultivation, harvesting, handling, storage and transport, and a 660-foot "buffer zone" around StarLink corn crops to prevent cross-pollination with non-StarLink corn plants. The limited registration also made Aventis responsible for ensuring these restrictions were implemented, obligating it (a) to inform farmers of the EPA's requirements for the planting, cultivation and use of StarLink; (b) to instruct farmers growing StarLink how to store and dispose of the StarLink seeds, seed bags, and plant detritus; and (c) to ensure that all farmers purchasing StarLink seeds signed a contract binding them to these terms before permitting them to grow StarLink corn.

StarLink was distributed throughout the United States from approximately May 1998 through October 2000. The limited registration initially limited StarLink cultivation to 120,000 acres. In January 1999, Aventis petitioned the EPA to raise this limit to 2.5 million acres. The EPA agreed, subject to an amended registration that required Aventis to

(a) inform purchasers (i.e. "Growers") at the time of StarLink seed corn sales, of the need to direct StarLink harvest to domestic feed and industrial non-food uses only;

(b) require all Growers to sign a "Grower Agreement" outlining field management requirements and stating the limits on StarLink corn use;

(c) deliver a Grower Guide, restating the provisions stated in the Grower Agreement, with all seed;

(d) provide all Growers with access to a confidential list of feed outlets and elevators that direct grain to domestic feed and industrial uses;

(e) write to Growers prior to planting, reminding them of the domestic and industrial use requirements for StarLink corn;

(f) write to Growers prior to harvest, reminding them of the domestic and industrial use requirements for StarLink corn;

(g) conduct a statistically sound follow-up survey of Growers following harvest, to monitor compliance with the Grower Agreement.

Over this 29-month period, StarLink cultivation expanded from 10,000 acres to 350,000 acres.

In October 2000, after numerous reports that human food products had tested positive for Cry9C, a wave of manufacturers issued recalls for their corn products. On October 12, 2000, Aventis, at EPA's urging, applied to cancel the limited registration, effective February 20, 2001. Fear of StarLink contamination nonetheless continues to affect corn markets. Many U.S. food producers have stopped using U.S. corn, replacing it with imported corn or corn substitutes. South Korea, Japan and other foreign countries have terminated or substantially limited imports of U.S. corn. Grain elevators and transport providers are now mandating expensive testing on all corn shipments.

Plaintiffs allege that the widespread StarLink contamination of the U.S. corn supply is a result of defendants' failure to comply with the EPA's requirements. Aventis did not include the EPA-mandated label on some StarLink packages, did not notify, instruct and remind StarLink farmers of the restrictions on StarLink use, proper segregation methods and buffer zone requirements, and did not require StarLink farmers to sign the obligatory contracts. Prior to the 2000 growing season Aventis allegedly instructed its seed representatives that it was unnecessary for them to advise StarLink farmers to segregate their StarLink crop or create buffer zones because Aventis believed the EPA would amend the registration to permit StarLink use for human consumption. In July 2001, however, an EPA Scientific Advisory Panel reaffirmed its previous position on StarLink's allergenic qualities. Further, the FDA has declared StarLink to be an adulterant under the Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301 et seq.

DISCUSSION

Fed.R.Civ.P. 8(a)(2) only requires "a short and plain statement of the claim showing that the pleader is entitled to relief." When deciding a Rule 12(b)(6) motion we must assume the truth of all well-pleaded factual allegations, making all possible inferences in the plaintiff's favor. Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417, 420 (7th Cir. 1994). We will dismiss a claim only if it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).

I. Preemption

FIFRA, 7 U.S.C. §§ 136 et seq., regulates the use, sale and labeling of pesticides such as the Cry9C protein found in StarLink corn. The EPA approved StarLink's label and issued a limited registration for it to be distributed. Defendants argue that FIFRA preempts plaintiffs' state law claims.

FIFRA does not preempt all state laws respecting pesticides. Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 614, 111 S.Ct. 2476, 115 L.Ed.2d 532 (1991). The statute expressly authorizes states to...

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