Kimmel v. Dowelanco
| Decision Date | 06 June 2001 |
| Docket Number | No. 99-56746,99-56746 |
| Citation | 275 F.3d 1199 |
| Parties | (9th Cir. 2002) NATHAN KIMMEL, INC.; NATHAN KIMMEL, LLC; KNF CORP., formerly known as KENNEDY NYLON FILM CORP., Plaintiffs-Appellants, v. DOWELANCO, Defendant-Appellee |
| Court | U.S. Court of Appeals — Ninth Circuit |
Joel R. Bennett, Bennett & Fairshter, LLP, Pasadena, California, for the appellants.
Dean T. Barnhard, Barnes & Thornburg, Indianapolis, Indiana, for the appellee.
Appeal from the United States District Court for the Central District of California Dean D. Pregerson, District Judge, Presiding, D.C. No. CV-97-03941-DDP
Before: Procter Hug, Jr., Stephen S. Trott, and William A. Fletcher, Circuit Judges.
ORDER
The Opinion filed on July 10, 2001, and reported at 255 F.3d 1196 (9th Cir. 2001), is withdrawn.
The panel as constituted above has voted to grant the petition for rehearing without further oral argument and to issue a new opinion. With this decision and action, the previous opinion filed July 10, 2001, becomes inoperative, and the pending petition for rehearing en banc becomes moot. The parties, should they so choose, are at liberty to file new petitions with respect to the new opinion.
So ORDERED.
The district court dismissed Nathan Kimmel, Inc.'s (Kimmel) complaint on the ground that its state law claims are preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. §§ 136-136y. Kimmel appeals this decision. The district court had diversity jurisdiction under 28 U.S.C. § 1332. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we AFFIRM.
Defendant-Appellee DowElanco is the manufacturer of Vikane, a pesticide used to exterminate termites. Vikane is regulated by the Environmental Protection Agency ("EPA") and must carry an EPA-approved label. The Vikane label contains, among other things, instructions on the proper use of the pesticide. The use of Vikane in a manner inconsistent with its label is a violation of federal law.
Vikane is commonly used to fumigate areas containing food and medicine. The Vikane label states that when fumigating such areas, all food and medicine should either be removed from the area or placed in special protective bags. DowElanco owns the trademark for one such protective bag, known as Nylofume. DowElanco has licensed the use of the Nylofume trademark to M&Q Plastics Products ("M&Q"), which manufactures and sells the Nylofume bags. Prior to 1993, DowElanco conducted tests on several brands of protective bags to determine their effectiveness during a Vikane fumigation. Of the various bags tested, the Nylofume bag produced by M&Q allegedly was proven to offer the least protection.
From 1993 to 1996, the Vikane label read, in part:
Food, feed, drugs, and medicinals . . . must be removed from the fumigation site or sealed in highly resistant containers such as glass, metal or double bagging with nylon polymer bags
This label did not restrict the use of other nylon polymer bags not expressly listed on the label.
In early March of 1994, Kimmel informed DowElanco of its intention to begin manufacturing nylon polymer bags for use with Vikane. The bag produced by Kimmel, which is similar to the Nylofume bag, is called the NK-6 bag. DowElanco allegedly responded to Kimmel's announcement of a competitive product by stating that Kimmel would "never be selling bags and [would] not . . . be in the bag business much longer" because "you guys have really been a thorn in our side."
Immediately thereafter, on March 7, 1994, DowElanco informed M&Q, the maker of the Nylofume bag, that"[d]ue to some recent discrepancies, our product specimen label for Vikane gas fumigant will now list Nylofume bags as the only option for bagging food during a fumigation." The alleged "discrepancies" were never identified. Three days later, DowElanco wrote a letter to Kimmel stating that because of "the approval of the EPA of certain bag types tested . . . [and] DowElanco's liability associated with the Nylofume bag, they will remain the only approved bag on the label."
Approximately one month after issuing this statement to Kimmel, DowElanco applied to the EPA to change the Vikane label to require the use of only Nylofume bags during a Vikane fumigation. DowElanco informed the EPA that this proposed change was predicated on DowElanco's conclusion that the Nylofume bag had "proven to be the most reliable" and had "proven to be best suited for this use, " a conclusion that allegedly was not only unsupported, but actually contradicted by DowElanco's testing. The EPA approved DowElanco's proposed amendment to the Vikane label in October of 1996, thereby prohibiting the use of Kimmel's NK-6 bags during Vikane applications. On January 1, 1998, the State of California began citing and fining any fumigator using non-Nylofume bags during Vikane fumigations.
Kimmel subsequently sued DowElanco, alleging that DowElanco knowingly and intentionally submitted false and misleading statements to the EPA regarding the reliability of the Nylofume bag for the purpose of procuring a Vikane label that would exclude Kimmel from the nylon polymer bag market. DowElanco moved for summary judgment, which was denied by the district court. The district court did, however, order Kimmel to amend certain portions of its complaint. Kimmel then filed an amended complaint seeking (1) injunctive relief pursuant to California Business and Professional Code § 17200 for unfair business practices, and (2) damages for intentional interference with a prospective economic advantage. The only relief sought by Kimmel under§ 17200 was injunctive relief. Specifically, Kimmel asked that DowElanco be ordered to change its label to permit the use of the NK-6 bag during Vikane fumigations. As now conceded by Kimmel in its opening brief, however, "an injunction imposed against a manufacturer to change its label would represent a state-mandated labeling requirement and would therefore be preempted." Therefore, the district court's dismissal of this claim is affirmed.
DowElanco moved to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)"), asserting preemption by FIFRA. The district court granted DowElanco's motion to dismiss.
The gravamen of Kimmel's state damages claim for intentional interference with a prospective economic advantage is that DowElanco knowingly submitted false information to the EPA to obtain an amended Vikane label prohibiting the use of NK-6 bags during Vikane fumigations.2 On appeal, Kimmel challenges the district court's conclusion that this claim is preempted by FIFRA.
We review de novo both a dismissal for failure to state a claim under Rule 12(b)(6) and the district court's decision regarding preemption. See Williamson v. Gen. Dynamics Corp., 208 F.3d 1144, 1149 (9th Cir. 2000).
The Supremacy Clause of the Constitution provides that any state law conflicting with federal law is preempted by the federal law and is without effect. U.S. Const. art. VI, cl. 2. FMC Corp. v. Holliday, 498 U.S. 52, 56-57 (1990) (internal quotations omitted). The Supreme Court has held that principles of implied conflict preemption serve to nullify state law that"under the circumstances of th[e] particular case . . . stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress--whether that `obstacle' goes by the name of conflicting; contrary to; . . . repugnance; difference; irreconcilability; inconsistency; violation; curtailment; . . . interference, or the like." Geier v. Am. Honda Motor Co., Inc., 529 U.S. 861, 873 (2000) (internal quotations omitted). Implied conflict preemption can exist even when Congress has chosen to include an express preemption clause in a statute. See Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995).
The federal law claimed by DowElanco to preempt Kimmel's state damages claim is FIFRA. FIFRA is a comprehensive regulatory scheme aimed at controlling the use, sale, and labeling of pesticides. See Wisconsin Pub. Intervenor v. Mortier, 501 U.S. 597, 601 (1991). FIFRA requires, among other things, that manufacturers register a pesticide with the EPA before introducing it into the market. As part of this registration process, manufacturers must submit to the EPA a proposed label for approval. See 7 U.S.C. § 136a(c)(1)(C) (West 2000). FIFRA specifically prohibits the knowing falsification of any application for the registration of a pesticide, including the falsification of "any information relating to the testing of any pesticide . . . including the nature of any . . . observation made, or conclusion or opinion formed." Id. at §§ 136j(a)(2)(M), 136j(a)(2)(Q).
In § 136v of FIFRA, Congress expressly delineated the extent to which the States can regulate pesticides:
(a) In General
A State may regulate the sale or use of any federally registered pesticide or device in the State, but only if and to the extent the regulation does not permit any sale or use prohibited by this subchapter.
(b) Uniformity
Such State shall not impose or continue in effect any requirements for labeling or packaging in addition to or different from those required under this subchapter.
7 U.S.C. § 136v. Both DowElanco and Kimmel focus primarily on this express preemption language, debating whether Kimmel's state law claim threatens to...
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