Associated Wholesale Grocers, Inc. v. United Potato Growers of America, Inc. et al
MEMORANDUM DECISION. The rule of reason standard shall apply to Potandons counterclaim. Potandon shall notify the Court and AWG on or before 7/29/2015whether it intends to pursue its counterclaim. If it does, the Court will consider the process for w hether Potandon can amend its counterclaim inlight of the Courts ruling. Signed by Judge B. Lynn Winmill. Associated Cases: 4:10-md-02186-BLW-CWD, 4:13-cv-00251-BLW-CWD(caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
IN RE: FRESH AND PROCESS
Case No. 4:10-MD-2186-BLW
THIS DOCUMENT RELATES TO:
Kansas Tag-Along Action Only
Associated Wholesale Grocers, Inc. v.
United Potato Growers of America, et.
On June 2, 2015, the Court heard oral argument on the legal question whether the
per se or rule of reason standard will apply to Potandon’s counterclaim against AWG.
The Court issues this Memorandum Decision explaining why the rule of reason standard
The Kansas statute on retroactive application of certain amendments, K.S.A. 50164, states that that the rule of reason standard will apply in KRTA cases retroactively
“but causes of action that were pending in any court before the effective date of this act,
shall not be abated.” Kansas, like almost every other state, follows the rule that when a
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statute is plain and unambiguous, courts must give effect to the statute’s express
language, rather than determine what the law should or should not be. O’Brien v. Leegin
Creative Leather Products, Inc., 277 P.3d 1062 (Kan. 2012).
Here, the statute unambiguously states that the rule of reason standard will apply
in KRTA cases except to causes of action pending before the statute’s effective date.
According to Black’s Law Dictionary, a cause of action is “a group of operative facts
giving rise to one or more bases for suing; a factual situation that entitles one person to
obtain a remedy in court from another person; CLAIM.” Black’s Law Dictionary (10 ed.
In this case, AWG’s claim against Potandon, and Potandon’s counterclaim against
AWG, are separate causes of action filed at different times. AWG’s claim against
Potandon had been filed, and was thus pending, before the legislation on retroactive
application was enacted—so the rule of reason standard does not apply. However,
Potandon’s counterclaim was not pending before the legislation was enacted, so the rule
of reason standard does apply. This potentially causes a somewhat odd application of the
law in this case, but that does not mean the retroactive application statute is ambiguous; it
does not change the definition of a pending cause of action.
The real question, then, is whether such an application of the law causes a due
process violation for Potandon. The Court finds that it does not. “A statute does not
operate ‘retrospectively’ merely because it is applied in a case arising from conduct
antedating the statute’s enactment or upsets expectations based in prior law.” Landgraf v.
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USI Film Prods., 511 U.S. 244, 269 (1994) (citations omitted). Whether a plaintiff has a
vested right is primarily determined by whether it has taken action to avail itself of a
right. Montoya v. Holder, 744 F.3d 614, 616 (9th Cir. 2014). Thus, prior to asserting its
counterclaim, Potandon had no vested right – it only had an expectation that the per se
standard would govern a lawsuit under the KRTA. There is no constitutional due process
violation because that expectation was not fulfilled.
As AWG suggested, the Kansas Supreme Court has found the vested rights
analysis inseparable from the ultimate due process analysis. Resolution Trust, 892 P.2d
497, 503 (Kan. 1995). Resolution Trust sets forth a three factor test for considering the
constitutionality of retroactive legislation applied to a pending claim: “(1) the nature of
the rights at stake (e.g., procedural, substantive, remedial), (2) how the rights were
affected (e.g., were the rights partially or completely abolished by the legislation; was
any substitute remedy provided), and (3) the nature and strength of the public interest
furthered by the legislation.” Brennan v. Kansas Ins. Guar. Ass’n, 264 P.3d 102, 113
(Kan. 2011) (quoting Resolution Trust, 892 P.2d at 503 (Kan. 1995)).
Here, the test supports a finding that there is no due process violation. First, the
nature of the right at stake is Potandon’s right to have the per se standard applied to its
counterclaim instead of the rule of reason standard. Applying a difference evidentiary
standard to the counterclaim than the one expected by Potandon does not affect a
substantive legal right. In fact, the Kansas Legislature indicated that the amendment was
only enacted to clarify the applicable evidentiary standards. K.S.A. 50-163(a).
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Second, notwithstanding Potandon’s argument that its counterclaim will be
effectively abolished if the rule of reason standard is applied, the new KRTA does not
eliminate the counterclaim. The Court does agree that the counterclaim is likely
unsustainable – but that is because of the facts of the case, not the evidentiary standard.
And to be completely forthright, the Court has serious concerns about the merits of
Potandon’s counterclaim even under a per se analysis.
Third, by clarifying the applicable evidentiary standard to be applied to KRTA
claims, the Kansas Legislature aligned the Kansas statute with federal law. Such
alignment guides businesses subject to the KRTA prospectively. Carving out exceptions
for any business actions taken before the amendment took effect would defeat this
purpose and the public interest in a uniform application of the law prospectively. Under
all the circumstances, the Court cannot find a due process violation in applying the
amendment as required by the Kansas legislature.
Accordingly, the Court will apply the rule of reason standard to Potandon’s
counterclaim. The Court understands that, with such a finding, Potandon will likely
withdraw its counterclaim. The Court will give Potandon approximately 3 weeks to make
1. The rule of reason standard shall apply to Potandon’s counterclaim.
Potandon shall notify the Court and AWG on or before July 29, 2015
whether it intends to pursue its counterclaim. If it does, the Court will
MEMORANDUM DECISION - 4
consider the process for whether Potandon can amend its counterclaim in
light of the Court’s ruling.
DATED: July 8, 2015
B. Lynn Winmill
United States District Court
MEMORANDUM DECISION - 5
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