Neighbors Against Large Swine Operations v. Continental Grain Co.

• Decision Date: 11 April 1995
• Docket Number: No. WD,WD
• Parties: NEIGHBORS AGAINST LARGE SWINE OPERATIONS, Appellant, v. CONTINENTAL GRAIN COMPANY, Respondent. 49537.
• Court: Missouri Court of Appeals

Page 127

901 S.W.2d 127

NEIGHBORS AGAINST LARGE SWINE OPERATIONS, Appellant, v. CONTINENTAL GRAIN COMPANY, Respondent.

No. WD 49537.

Missouri Court of Appeals Western District.

April 11, 1995.

Motion for Rehearing and/or Transfer to

Supreme Court Denied May 30, 1995.

Application to Transfer Denied

July 25, 1995.

Randall D. Crawford, Kansas City, for appellant.

Robert M. Kroenert, R. Christopher Abele, Kansas City, Terry M. Evans, Trenton, for respondent.

Before SMART, P.J., and ELLIS and LAURA DENVIR STITH, JJ.

LAURA DENVIR STITH, Judge.

Neighbors Against Large Swine Operations (NALSO) appeals the dismissal of its application for a permanent injunction to prohibit Continental Grain Company (Continental) from operating a large swine operation in Daviess County in alleged violation of the Missouri §§ 350.010-.030. ¹ NALSO also appeals denial of its Motion to Amend its Petition to include a claim for declaratory judgment that Continental is in violation of the Act and to name additional plaintiffs. We affirm.

I. FACTS AND PROCEDURAL HISTORY

NALSO filed suit seeking a permanent injunction to prohibit Continental from operating a large swine operation in alleged violation of the Missouri Farming Corporations Act (the Act). NALSO is a not-for-profit corporation consisting of Missouri residents who all live in close proximity to the swine farm to be operated by Continental. Continental, a Delaware corporation, is an international agribusiness company with approximately 90% of its receipts from sources other than farming.

On January 31, 1994, Continental acquired farm land to operate swine farming operations in Daviess County, Missouri. Every corporation engaged in farming or proposing to commence farming in Missouri must register with the director of the state department of agriculture. § 350.020. Continental registered as a family farm corporation ² pursuant to section 350.010(5).

On February 18, 1994, NALSO filed its Application for Permanent Injunction to enjoin Continental's swine farm operation. In response, Continental sought dismissal of NALSO's application for failure to state a claim upon which relief could be granted because no private right of action exists under the Act.

Perhaps anticipating that the trial court might find NALSO was not within the class protected by the Act, NALSO thereafter sought to amend its Petition to add individual family farmers as plaintiffs. NALSO further moved to amend its pleading to add a request for declaratory relief to determine whether Continental could lawfully engage in business under the Act. The trial court denied both motions to amend and ruled that no private right of action exists under the Act. This appeal followed.

II. LEGAL ANALYSIS

NALSO claims it is entitled to bring this action under Missouri's Farming Corporations Act. The Act provides that publicly-held corporations cannot engage in farming unless they meet one of the exceptions provided in the Act. § 350.015. ³ The Act has been construed only once in State ex rel. Webster v. Lehndorff Geneva, Inc., 744 S.W.2d 801 (Mo. banc 1988). While the Missouri Supreme Court did not address whether a private right of action may be implied under the Act in Lehndorff Geneva, it did explain that the statute was enacted because of a concern that the superior resources of large corporations would allow them to out-compete traditional family farms, exacerbating the latter's decline. Id. at 805. As the Court explained, the rationale for the Act is thus:

[T]o prevent the concentration of agricultural land, and the production of food therefrom, in the hands of business corporations to the detriment of traditional family units and corporate aggregations of natural persons primarily engaged in farming. Thus, large publicly held corporations are prevented from acquiring and operating large tracts of farmland.

Lehndorff Geneva, Inc., 744 S.W.2d at 805.

The Act empowers the Attorney General to bring an action against any corporation found to be in violation of the provisions of the Act. § 350.030. If a violation is found, the trial court is given discretion to make such orders as are necessary to bring the corporation into compliance with the Act. Lehndorff Geneva, Inc., 744 S.W.2d at 807. The court may, in its discretion, order the "ultimate sanction" of divestiture of the land within two years. Id. Any lands not divested within the time prescribed shall be ordered sold by the court at a public sale. § 350.030.

It is undisputed that the Missouri Attorney General has not brought an action against Continental for violation of the Act. NALSO argues that inaction by the Attorney General should not bar enforcement of the Act. To the contrary, NALSO suggests, it is due to the danger of just such an allegedly ill-advised failure of the Attorney General to act that persons such as plaintiff should be entitled to bring the current action, for their benefit and the benefit of Missouri farmers, so as to prevent Continental's alleged continued operation in violation of the Act. Whether such a private right of action exists must be determined by reference to the Act itself.

A. A Private Right of Action Is Not Created by the Act

The Act does not expressly either establish or prohibit a private right of action. Neither Lehndorff Geneva nor any other case has considered whether such a private right of action is created under the Act. As both parties recognize, this issue is thus one of first impression for this Court to resolve.

NALSO claims that the trial court erred in holding that no implied private right of action exists under the Act. In so arguing, NALSO properly recognizes that creation of a private right of action by implication is not favored. Shqeir v. Equifax, Inc., 636 S.W.2d 944, 947 (Mo. banc 1982). NALSO argues, however, that the prerequisites to a private right of action are present here. In an interesting and well-reasoned analysis, it interprets such cases as Wear v. Walker, 800 S.W.2d 99 (Mo.App.1990); Jensen v. Feely, 691 S.W.2d 926 (Mo.App.1985); State ex rel. Ashcroft v. Kansas City Firefighters Local No. 42, 672 S.W.2d 99 (Mo.App.1984); Kellog v. Joint Council of Women's Auxiliaries Welfare Ass'n, 265 S.W.2d 374 (Mo.1954); and Cheek v. Prudential Ins. Co., 192 S.W. 387 (Mo.1916), to provide that, in determining whether a private right of action can be implied, the court must:

Look to see if the law is merely for the benefit of the public and penalty provisions are a means of enforcement or whether the statute is for the benefit of particular individuals or class of individuals and not penal in nature. If it is penal and does not benefit a particular class, then there is no private cause of action. Conversely, if it isn't penal and does benefit a particular class, then a private cause of action can and has been implied.

NALSO suggests that the many cases refusing to find a private cause of action can be distinguished because the plaintiffs therein were not within the class sought to be protected or because the statute in question was penal in nature and thus intended to benefit society in general, rather than a particular group of persons. NALSO then suggests that the Missouri Supreme Court has already found that the Farming Corporations Act is intended to benefit the particular class of individuals represented by NALSO--family farmers.

NALSO notes that, while NALSO is not itself a family farmer, it has moved to amend to add individual family farmers as plaintiffs. As such persons are within the class of persons entitled to the benefit and protection of the Act, NALSO argues a private right of action should be permitted.

NALSO suggests that the second factor it gleans from the above cases is also met here, for the Act is clearly remedial rather than penal in nature. We believe that a substantial question exists as to whether the Act could properly be characterized as being solely remedial in nature. As Continental notes, the provision allowing the judge to order the corporation to divest itself of its land holdings within two years may be viewed as penal in nature, for it may require the corporation to undergo serious financial losses, as well as loss of valued property. Even were that provision not considered penal, we note that a preceding section of the statute, § 350.020(5), provides that failure to file reports required to show compliance with the Act is a misdemeanor--a criminal act--for which punishment shall be "a fine of not less than five hundred nor more than one thousand dollars." We thus cannot say that this Act is solely remedial in nature. It clearly contains both remedial and penal aspects.

Equally importantly, while counsel for NALSO has done an impressive job of harmonizing the cases and of extrapolating a workable set of relevant factors to be considered in determining whether a private right of action exists, the resulting interpretation cannot withstand the contrary construction of relevant factors adopted by the Missouri Supreme Court in Johnson v. Kraft Gen. Foods, 885 S.W.2d 334 (Mo. banc 1994).

Decided during the pendency of this appeal, Johnson made it clear that Missouri will permit the implication of a private right of action in only the narrowest of circumstances. The Johnson plaintiffs alleged that defendant Kraft had violated section 454.505.10 by discharging Plaintiff after receiving notice of a court order to garnish Plaintiff's pay. That statute authorized the Director of the Division of Child Support Enforcement to enforce it, and contained no express provision relating to a private cause of action.

The Missouri Supreme Court found the statute's provision for enforcement of the Act by the Division of Child Support Enforcement brought the case squarely within the rule that when "the legislature has established other means of enforcement [of a statute], we will not recognize a private civil action unless such appears by clear implication to have been the...