Kinkaid v. John Morrell & Co.
| Decision Date | 18 June 2004 |
| Docket Number | No. C 03-4131-MWB.,No. C 03-4132-MWB.,No. C 03-4130-MWB.,C 03-4130-MWB.,C 03-4131-MWB.,C 03-4132-MWB. |
| Citation | 321 F.Supp.2d 1090 |
| Parties | Scott KINKAID, Individually, and on behalf of all others similarly situated, Plaintiff, v. JOHN MORRELL & COMPANY, Defendant. Alan Hoefling, Individually, and A & G Swine Enterprises, Inc., d/b/a Hoefling Hog Farms, and on behalf of all others similarly situated, Plaintiffs, v. John Morrell & Company, Defendant. Lori Sokolowski, d/b/a Solo Pork, Individually, and on behalf of all others similarly situated, Plaintiffs, v. Tyson Fresh Meats, Inc., f/k/a IBP, INC., Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
Claudia L. Stringfield, Domina Law, PC, David A. Domina, Domina & Copple PC, Omaha, NE, Michael C. Stumo, Domina Law, PC, Winsted, CT, for Plaintiffs.
Alan K. Cotler, Andrew P. Hoppes, Brooke Hertzer, Reed Smith LLP, Philadelphia, PA, James L. Pray, Steven C. Schoenebaum, Brown Winick Graves Gross Baskerville Schoenebaum, Des Moines, IA, Lynn Collins Seaba, Robert P. Malloy, Malloy Law Firm, Goldfield, IA, David F. Graham, Lori LePar Roeser, Stephen C. Carlson, Susan A. Stone, Sidley, Austin, Brown & Wood, LLP, Chicago, IL, Michael W. Ellwanger, Rawlings Neiland Probasco Killinger Ellwanger Jacobs, et al, Sioux City, IA, for Defendant.
The defendant packing companies contend that the plaintiff hog producers should not be allowed to make "a federal case" out of their allegations that the packing companies made minimal charges against the invoice price for the plaintiffs' hogs in return for the packing companies' promise to pay for hogs that died during shipment or prior to slaughter. The producers claim that they do have "a federal case" for violation of the Packers and Stockyards Act of 1921(PSA), 7 U.S.C. §§ 181-231, where they were allegedly deceived by the packing companies into buying "insurance" for death loss risk, but the packing companies were not licensed to sell such "insurance," and no such "insurance" policy was ever approved by or filed with appropriate state insurance regulators. The packing companies contend that they were not selling "insurance," licensed or otherwise, but offering an optional contract provision regarding transfer of the "risk of loss." Even if the packing companies were selling "insurance," they contend that the producers have no cognizable claims under the PSA, because the producers have not alleged any deceptive or unfair practice, or any anticompetitive injury from any such practice, where the producers have not alleged that the packing companies failed or refused to bear the risk of loss as agreed. On the packing companies' motions to dismiss, the court must decide whether the producers have stated a claim upon which relief can be granted.
The factual background for these three separate lawsuits is drawn from the plaintiffs' Complaints, taking the facts alleged as true. See, e.g., Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ().1 Apart from identification of parties, the allegations in the three Complaints are essentially identical.2 Plaintiffs Scott Kinkaid, Alan Hoefling, and Lori Sokolowski, and their affiliated businesses or corporations, collectively "the Producers," allege that they sold swine for slaughter to defendants John Morrell & Company and Tyson Fresh Meats, Inc., formerly known as IBP, Inc., collectively "the Packing Companies." Kinkaid and Hoefling sold their hogs to John Morrell, and Sokolowski sold her hogs to Tyson. The Producers allege that the Packing Companies are packers within the meaning of the PSA. The Producers allege that they subsequently delivered swine to the Packing Companies' slaughter plants.
At or after delivery, the Producers allege that they received from the Packing Companies invoices listing a deduction for "insurance." This deduction purportedly represented a charge for the Packing Companies' assumption of the risk of death loss between the time that the swine were placed in transit to the Packing Companies and the time that the swine were slaughtered. However, the Producers allege that they believe that the Packing Companies are not authorized insurance providers and did not file for or receive permission from appropriate state regulatory authorities to sell or deliver life insurance policies on death loss risk for swine delivered to packers for slaughter in Iowa, nor has any such insurance form been filed by any of the Packing Companies with the appropriate state regulatory authorities. The Producers allege that the deduction by each Packing Company was in the nature of, and constitutes, "insurance" within the meaning of Iowa Code § 552B, and that the deduction is the equivalent of the Packing Companies selling insurance and collecting a premium. They allege, further, that the Packing Companies are not authorized to sell such insurance in Iowa or Nebraska. Finally, they allege that no insurance policy or product exists or was delivered to them or delivered to, registered with, or approved by the Commissioner for the Iowa Insurance Bureau or the Nebraska Department of Insurance, nor was any such policy otherwise authorized by Iowa or Nebraska law.
The Producers each filed a Complaint on December 31, 2003, asserting individual and purported class claims of unfair and deceptive practices by the Packing Companies in violation of § 202 of the PSA, 7 U.S.C. § 192. More specifically, the Producers allege that the Packing Companies violated § 192 because they did the following:
a. Failed to make timely full payment to Plaintiff and class members;
b. Engaged in unfair acts and deceptive devices with regard to livestock purchased from Plaintiff and Plaintiff class members for the purpose, or with the effect of defrauding or depriving Plaintiff and the class members of all sums due;
c. Violated the provisions of 7 USC § 192(a) by engaging in or using unfair, unjustly discriminatory, or deceptive practices or devices against Plaintiff and class members;
d. Violated the provisions of 7 USC § 192(e) by engaging in any course of business or doing nay [sic] act for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce; and e. Violated 7 USC § 192(a) and (e) because Defendant has deducted sums from compensation due producers of swine sold to a packer contrary to law.
Complaint in each case at ¶ 17. The Producers then prayed for the following relief:
a. A determination by the Court that class action relief is appropriate under F R Civ P 23(b)(1);
b. An Order directing that notice be given to the class by first class mail and otherwise approving the notice procedure;
c. Defendant's conduct be found unlawful, the amount of damage and loss sustained be determined, and judgment be entered for all damages due to Plaintiff and the class;
d. Establishing a claims procedure for recovery of wrongfully withheld sums due to Plaintiff and Plaintiff class members are entitled thereto [sic], and enter [sic] an appropriate Order directing that unclaimed funds be invested at the Court's direction for the general benefit of Plaintiff and class members who are swine producers in Iowa, or be paid to the State as unclaimed property;
e. An award be made of attorney fees and expenses for establishing a common fund under class action rules, and as authorized by the laws; and
f. All court costs be taxed to Defendant.
Complaint in each case at ¶ 19. The Producers demanded a jury trial on their claims.
After extensions of time to move or plead in response to the Producers' Complaints, on March 11, 2004, the Packing Companies each moved to dismiss the claim or claims against them for failure to state a claim upon which relief can be granted. Sokolowski resisted Tyson's motion on March 23, 2004, and Tyson filed a reply in further support of its motion on April 2, 2004. On April 20, 2004, Kinkaid and Hoefling each filed a resistance to John Morrell's motion to dismiss their claims that...
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