Dean v. Helena Chemical Company

Filing 47

OPINION AND ORDER that Helena Chemical Company's 21 Motion for Partial Summary Judgment on RM Dean Farms' claim under the Arkansas Deceptive Trade Practices Act (Count II) is GRANTED. Signed by Chief Judge J. Leon Holmes on 3/15/12. (vjt)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
EASTERN DIVISION
RM DEAN FARMS, a General Partnership
v.

PLAINTIFF

Case No. 2:11CV00105 JLH

HELENA CHEMICAL COMPANY

DEFENDANT

OPINION AND ORDER
RM Dean Farms (“Dean”) brings this action against Helena Chemical Company alleging
breach of contract, fraud, interference with contractual relationship or business expectancy, and
violation of the Arkansas Deceptive Trade Practices Act. Dean purchased 480 bushels of certified
Clearfield 111 rice seed and 216 cwt of Cruiser Rice Seed Treatment from Helena Chemical
Company. Dean alleges that the seed was planted in 240 acres but did not produce a stand of rice,
which resulted in substantial financial loss. Dean contends that the seed was worthless. Dean alleges
that either Helena Chemical Company did not treat the rice seed, the treatment was applied
improperly, or the rice was so old and in such bad condition that it should not have been treated.
Helena Chemical Company has moved for partial summary judgment, seeking dismissal of RM
Dean Farms’ Arkansas Deceptive Trade Practices Act claim. The motion will be granted.
The Arkansas Deceptive Trade Practices Act does not apply to “[a]ctions or transactions
permitted under laws administered by the Insurance Commissioner, the Securities Commissioner, the
State Highway Commission, or Bank Commissioner, or other regulatory body or officer acting under
statutory authority of this state or the United States[.]” Ark. Code Ann. § 4-88-101(3) (Repl. 2011).
The Arkansas State Plant Board is a regulatory body the powers and duties of which include the
following: “For the purpose of preventing fraud and misrepresentation, the board shall make rules and
regulations governing the transportation, distribution, or sale of . . . seeds intended for planting.”

Ark. Code Ann. § 2-16-207(c)(2) (Repl. 2008). A different chapter of the Arkansas code directs the
Plant Board to “promulgate all rules and regulations necessary to carry into effect the purpose of this
chapter, which is to provide supplies of high-grade seed, true to name and free from disease, for
planting purposes.” Ark. Code Ann. § 2-18-104(1) (Repl. 2008). The Plant Board is also
empowered to establish rules and regulations concerning the sale, distribution, or application of
pesticides in Arkansas.1 Ark. Code Ann. §§ 2-16-406, 20-20-206 (Repl. 2008). The Plant Board has
promulgated extensive regulations on the sale of agricultural seed for planting in Arkansas. Those
regulations require any person who sells agricultural seed for planting in Arkansas to be licensed by
the Plant Board. Helena Chemical Company is licensed by the Plant Board to sell planting seed.2
Thus, the transaction at issue—the sale of rice seed by a licensed seed dealer—is permitted by the
Plant Board.3

1

The Plant Board’s pesticide regulations are cursory and do little more than incorporate by
reference relevant portions of the regulations adopted by the Environmental Protection Agency
pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq.
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Dean contends that the copy of the Plant Board regulations and the copies of the Helena
Chemical Company licenses attached to the motion for partial summary judgment are not
authenticated and therefore should be disregarded. The Plant Board has published the regulations
and makes them available on its website (http://plantboard.Arkansas.gov). The Plant Board also
maintains a list of licensed seed dealers, and that list is made available on the same website under the
title “Dealer Directory.” That the Plant Board has promulgated regulations on the sale of planting
seed in Arkansas and that Helena Chemical Company is a licensed dealer with license No. R-321 are
facts that are not subject to reasonable dispute inasmuch as they are capable of accurate and ready
determination by resort to sources whose accuracy cannot reasonably be questioned. The Court
therefore takes judicial notice of those facts pursuant to Rule 201(b) of the Federal Rules of
Evidence.
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The pesticide at issue is also regulated by the Environmental Protection Agency and labeled
pursuant to EPA regulations. See 7 U.S.C. § 136 et seq.; 40 C.F.R. Parts 150-189. As will be
explained, because the transactions at issue are regulated by the Arkansas State Plant Board and in
part by the EPA, the Arkansas Deceptive Trade Practices Act does not apply to them.
2

Dean contends, however, that subsection 4-88-101(3) does not exclude the transactions at
issue from the Arkansas Deceptive Trade Practices Act because Helena Chemical Company’s
misrepresentation of the quality of the seed and its subsequent sale of untreated or improperly treated
seed were not approved or permitted by the Plant Board. This Court has previously rejected a similar
argument and has held that subsection 4-88-101(3) excludes any transaction that is governed by the
laws administered by a regulatory authority, regardless of whether the transaction violates the relevant
regulations. Williams v. State Farm Mut. Auto. Ins. Co., No. 5:10CV00032, 2010 WL 2573196, at
*4 (E.D. Ark. June 22, 2010) (“If the Court were to follow the plaintiffs’ argument to its logical
conclusion, the ADTPA would apply to any action or transaction alleged to be unlawful, which would
render the exceptions listed in section 4-88-101 meaningless and would doubtless run afoul of the
statutory scheme created by the Arkansas General Assembly.”); see also Kirby v. United Am. Ins.
Co., No. 4:08CV00338, 2010 WL 961723, at *1 (E.D. Ark. Mar. 15, 2010); Jones v. Unum Life Ins.
Co. of Am., No. 4:06CV00547, 2006 WL 3462130, at *3 (E.D. Ark. Nov. 29, 2006); Robertson v.
White, 633 F. Supp. 954, 978 (W.D. Ark. 1986).
Dean argues that these cases are distinguishable because they involved the sale of insurance.
As part of the reasoning in Williams, the Court noted that the Arkansas Insurance Code contains its
own trade practices act that expressly states that it does not create a private cause of action, see Ark.
Code Ann. § 23-66-202(b) (Repl. 2001). Consequently, in the context of an insurance sale,
interpreting the Arkansas Deceptive Trade Practices Act to allow a private right of action would
contradict the Arkansas General Assembly’s express intent in passing the Insurance Trade Practices
Act. Dean argues that no similar concern exists in this case because the Arkansas statutes pertaining
to the Plant Board’s authority do not include a trade practices act that disallows private suits. Dean’s
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argument fails because there is nothing in the language of subsection 4-88-101(3) that would make
it reasonable to interpret that subsection as excluding insurance transactions from the purview of the
Act, regardless of whether they are permissible under the insurance regulations, while interpreting the
same language to exclude from the Act transactions governed by other regulatory authorities only
where the conduct does not violate that authority’s regulations. The exception is a general one; it
cannot reasonably be construed to treat insurance transactions differently from other regulated
transactions.
As in the insurance context, Dean’s argument would render the exceptions in section 4-88101(3) meaningless. No regulatory body permits deceptive and unconscionable trade practices such
as those prohibited by the Arkansas Deceptive Trade Practices Act. See Ark. Code Ann. § 4-88-107.
Because no regulatory body permits deceptive and unconscionable trade practices, on Dean’s
argument, no conduct that violated the Arkansas Deceptive Trade Practices Act would ever fall
within the exception provided in section 4-88-101(3), which would mean that that provision is
meaningless. In the context of this case, the only reasonable construction of section 4-88-101(3) is
that, because the Plant Board permits Helena Chemical Company to sell rice seed, those sales are
excluded from the Arkansas Deceptive Trade Practices Act. To say that the sale of agricultural seed
and pesticides by a dealer licensed by the Plant Board is excluded from the Arkansas Deceptive Trade
Practices Act unless the sale is accomplished by a misrepresentation—which is what Dean’s argument
comes to—would be to read section 4-88-101(3) out of the Code.
For the foregoing reasons, Helena Chemical Company’s motion for partial summary judgment
on RM Dean Farms’ claim under the Arkansas Deceptive Trade Practices Act (Count II) is
GRANTED. Document #21.
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IT IS SO ORDERED this 15th day of March, 2012.

J. LEON HOLMES
UNITED STATES DISTRICT COURT

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