Harnish et al v. Liberty Farm Equine Reproduction Center LLC et al

Filing 121

OPINION AND ORDER granting 112 Motion to Dismiss for Failure to State a Claim. The First amended Third Party Complaint is DISMISSED WITH PREJUDICE.. Signed by Chief Judge Philip P Simon on 7/23/12. (jld)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
BRENT HARNISH, JULIE HARNISH,
STEVEN HECKAMAN, and
JANIS KENGIS,
Plaintiffs,

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)
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)
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v.
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LIBERTY FARM EQUINE
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REPRODUCTION CENTER, LLC,
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DEGRAFF STABLES KENTUCKY, LLC, )
DEGRAFF STABLES, INC., and
)
ROBIN DEGRAFF,
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Defendants,
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Third Party
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Plaintiffs,
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v.
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UNITED STATES,
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)
Third Party
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Defendant.
)

3:10 CV 511 PPS

OPINION AND ORDER
Several valuable stallions contracted an equine disease from a breeding facility in
Kentucky. The owners of those horses sued Defendants Liberty Farm Equine Reproduction
Center, LLC, DeGraff Stables Kentucky, LLC, DeGraff Stables Inc., and Robin DeGraff (which
I will refer to collectively as “the Stables”). The Stables added the United States as a Third Party
Defendant, but the complaint was dismissed. The Stables then filed a First Amended Third Party
Complaint, and the United States now once again seeks dismissal. [DE 112.] For the following
reasons, the United States’ motion will once again be granted.

Background
The factual background of this case has been sketched out in numerous prior opinions,
but I will reiterate it here for the uninitiated reader, along with the new allegations contained in
the Amended Third Party Complaint.
A hodgepodge of federal entities and regulations deal with the importation of foreign
animals. The United States Department of Agriculture (“USDA”) monitors the importation of
foreign animals through the Animal and Plant Health Inspection Service (“APHIS”) and the
National Veterinary Services Laboratories (“NVSL”) division. The NVSL is responsible for
diagnosing domestic and foreign animal diseases. The Department of Veterinary Services
(“VS”) is an operational program within the USDA responsible for improving the health, quality,
and marketability of animals, animal products, and veterinary biologics in the United States.
The USDA accredits and works in conjunction with non-Federal laboratories that assist in
animal testing. These non-Federal laboratories are referred to collectively as the National
Animal Health Laboratory Network (“NAHLN”).
The USDA has implemented a series of regulations to ensure that imported animals do
not carry contagious diseases. When a foreign horse arrives at the port of entry, it must be
quarantined, regardless of its country of origin. See 9 C.F.R. § 93.303(a) (“The following ports
have APHIS inspection and quarantine facilities necessary for quarantine stations and all horses
shall be entered into the United States through these stations [except as otherwise provided]: Los
Angeles, California; Miami, Florida; and Newburgh, New York.”); see also 9 C.F.R. § 93.308(a)
(“[H]orses intended for importation into the United States from any part of the world shall be
shipped directly to a port designated in §§ 93.303 and 92.324 and be quarantined at said port

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until negative results to port of entry tests are obtained and the horses are certified by the port
veterinarian to be free from clinical evidence of disease.”).
This initial quarantine at or near the port of entry is referred to as the “Federal
quarantine,” and during the Federal quarantine the horse is subject to an examination for
communicable diseases and “port of entry tests.” See 9 C.F.R. § 93.306 (release from Federal
quarantine is permitted if the horse is “found to be free from communicable diseases and not
exposed thereto within 60 days prior to their exportation”); see also 9 C.F.R. § 93.308(a) (horses
shall be “quarantined at said port until negative results to port of entry tests are obtained and the
horses are certified by the port veterinarian to be free from clinical evidence of disease.”).
The port of entry tests conducted at the Federal quarantine do not, however, include
testing for Contagious Equine Metritis (“CEM”), a foreign animal disease that’s characterized as
a transmissible venereal disease. See 9 C.F.R. § 93.308(a)(3) (requiring testing at the port of
entry for dourine, glanders, equine piroplasmosis, and equine infectious anemia). The USDA
has promulgated separate regulations dealing with CEM. See 9 C.F.R. § 93.301(e). First, the
USDA has identified several countries as “CEM-affected regions” and requires that stallions and
mares from these regions be tested for CEM in the country of origin prior to export. See 9
C.F.R. § 93.301(e)(1)(iii) (a “set of specimens must be collected from each horse within 30 days
prior to the date of export” and “cultured for CEM with negative results in a laboratory approved
to culture for CEM by the national veterinary service of the region of origin”). If the results of
this pre-import CEM test are negative, then, following the Federal quarantine, the horse is
transported to a state that has been approved by the Administrator of APHIS to quarantine horses
from CEM-affected regions. 9 C.F.R. §§ 93.301(e)(1)(i), (e)(2)(i).

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Once the horse from a CEM-affected region is transported to the approved state, the
horse must be quarantined until additional CEM testing is conducted – this is known as “the
CEM quarantine” (as opposed to the aforementioned “Federal quarantine”). 9 C.F.R. §
93.301(e)(2)(ii) (the horse “shall be quarantined under State or Federal supervision until the
[horses] have met the [applicable] testing and treatment requirements”). The additional CEM
testing can be conducted at either the National Veterinary Services Laboratories (NVSL) in
Ames, Iowa, which is part of the USDA, or at non-Federal laboratory approved by the APHIS
Administrator to conduct CEM cultures and tests. See 9 C.F.R. § 93.301(e)(2)(iii). If the horse
tests positive for CEM while quarantined in the approved state, then the CEM quarantine facility
must comply with the treatment and re-testing procedures described at 9 C.F.R. § 93.301(e)(3).
According to the First Amended Third Party Complaint, in late 2000 a CEM-infected
horse was imported into the United States without detection. Apparently the index horse was a
Norwegian Fjord stallion imported into Wisconsin from Denmark in 2000 (the parties call this
the “Danish Index Stallion” and I will adopt that moniker in this opinion). The Stables allege
that this importation is linked to the CEM outbreak in 2008 that led to this dispute. According to
the First Amended Third Party Complaint, a stallion owned by Tim and Shannon Gillespie and
named Zips Heaven Sent was also boarded at a Wisconsin facility and was infected with CEM.
Zips Heaven Sent was then transferred to the Stables’ facility in Kentucky for breeding. He
arrived there on December 12, 2007, and he brought along with him the CEM. This caused an
outbreak of the disease at the Stables and led to several of the Plaintiffs’ prized stallions to be
infected. The Stables allege that it had no knowledge that Zips was infected with CEM and that
no one knew he was infected, including the USDA, which didn’t issue a CEM outbreak warning.

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The Plaintiffs seek recovery from the Stables, alleging that the Stables were negligent in
causing their horses to be infected by CEM while they were boarded there. The Stables in turn
have alleged that the CEM infection is the USDA’s fault because it failed to ensure that the
Danish Index Stallion was properly examined, tested, and quarantined.
All of that was generally sketched out in the Stables’ original complaint. The new
allegations in the First Amended Third Party Complaints are focused on a USDA memorandum
and a 2007 directive from USDA Deputy Administrator of VS, John R. Clifford. On January 18,
2007, Clifford advised all VS Regional Directors that the United States had been experiencing a
CEM outbreak from two imported Lippenzaner stallions. Clifford therefore reminded the VS
Regional Directors of the CEM procedures laid out in VS Memorandum 558.3, which had been
in existence in 2000 and dates as far back as 1992.1 The memorandum outlined procedures for
treating stallions imported for breeding purposes from countries affected with CEM. [DE 1051.] It essentially just reiterates the regulations discussed above, providing that horses imported
from specified countries would be sent to an approved state and tested by an accredited
veterinarian from that state, the specimens collected would be submitted to a State or Federal
laboratory, and the horses would be quarantined if necessary. [DE 105-1, at 7-8.] The
memorandum also provided a “CEM worksheet” to guide state veterinarians. [DE 105-1, 10.]
The Stables’ original complaint sought to hold the USDA liable via the Federal Tort
Claims Act, but it was dismissed, in part because the allegations against the USDA fell under the
discretionary function exception to FTCA (about which more below). The Stables seem to

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The Stables Amended Complaint also includes allegations regarding VS Memorandum 558.4, which is
similar to Memorandum 558.3, save for that it applies to mares rather than stallions. However, because the Stables
allege that the Danish Index Horse was a stallion, VS Memorandum 558.4 is inapplicable here.

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believe that the new allegations included in their amended complaint push it beyond the zone of
“discretionary function” because the actions of Clifford and the VS Memorandum confirm that
the USDA was required to prevent the Danish Index Stallion from triggering the CEM outbreak.
As the Stables’ Response brief to the new motion to dismiss puts it:
Specifically, Liberty Farm asserts at least four duties that were breached by the
United States and its employees: (a) to quarantine the CEM-infected Danish
Index Stallion in 2000; (b) to test the CEM-infected Danish Index Stallion in
2000; (c) to examine the CEM-infected Danish Index Stallion in 2000; and (d) to
halt the importation of the CEM-infected Danish Index Stallion once the CEM
was apparent.
[DE 118, at 2.] Or, as it reiterates the point later in its briefing: “The basis of Liberty Farm’s
Complaint . . . is the United States’ failure to quarantine the infected incoming horse, or
alternatively to test the infected incoming horse, or alternatively to examine the infected
incoming horse, or alternatively to halt importation of the infected horse once CEM was
discovered.” [DE 118, at 5.] The alleged breach of these duties forms the basis of First
Amended Third Party Complaint’s four counts – contribution, negligence, negligence per se, and
common law indemnity – brought against the United States. These counts also allege that the
USDA had a duty to exercise reasonable case in quarantining, testing, and examining foreign
horses under Kentucky and Indiana state law principles.
Discussion
The legal background at issue here is generally the same that was an issue in the
government’s original motion to dismiss. The first basic issue is the government’s sovereign
immunity: “Absent a waiver, sovereign immunity shields the Federal Government and its
agencies from suit.” FDIC v. Meyer, 510 U.S. 471, 475 (1994). The Federal Tort Claims Act
contains a limited waiver of this immunity. 28 U.S.C. §§ 1346(b)(1), 2671-80. Section
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1346(b)(1) permits recovery of money damages against the United States in the following
circumstances:
[F]or injury or loss of property, or personal injury or death caused by the negligent
or wrongful act or omission of any employee of the Government while acting within
the scope of his office or employment, under circumstances where the United States,
if a private person, would be liable to the claimant in accordance with the law of the
place where the act or omission occurred.
28 U.S.C. §§ 1346(b)(1).
However, there are a number of exceptions to the FTCA’s limited waiver, including the
discretionary function exception, which states that the United States will not be held liable based
on “the exercise or performance or the failure to exercise or perform a discretionary function or
duty on the part of a federal agency or any employee of the Government, whether or not the
discretion involved be abused.” 28 U.S.C. § 2680(a). This exception to the FTCA arose from
“Congress’ desire to prevent judicial ‘second-guessing’ of legislative and administrative
decisions grounded in social, economic, and political policy through the medium of an action in
tort.” Berkovitz v. United States, 486 U.S. 531, 536-37 (1988).
To be within the discretionary function exception, the challenged conduct must involve
an “element of judgment or choice.” United States v. Gaubert, 499 U.S. 315, 322 (1991);
Reynolds v. United States, 549 F.3d 1108, 1112 (7th Cir. 2008). This occurs when no federal
statute, regulation, or policy prescribes a course of action for an employee to follow. Gaubert,
499 U.S. at 322; Calderon v. United States, 123 F.3d 947, 949 (7th Cir. 1997). In addition, the
challenged conduct must involve policy considerations. Gaubert, 499 U.S. at 322; Calderon,
123 F.3d at 949.
The Stables claim the USDA can be held liable because it breached four “duties” that

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were imposed on it by regulations: it failed to (1) quarantine, (2) test, (3) and examine the CEMinfected Danish Index Stallion, and then failed to (4) halt the importation of the stallion once the
CEM was apparent. As discussed above, the First Amended Third Party Complaint includes
new allegations focused mainly on the existence of the VS Memorandum in 2000 when the
Danish Index Horse arrived in the United States and the fact that VS Deputy Administrator
Clifford recirculated the memorandum in 2007 when the USDA became aware of CEM in the
United States. The new allegations provide flavor to the Stables claims and are an attempt to
demonstrate that the regulatory structure places mandatory duties on the USDA. I find,
however, that these new allegations are insufficient to change the fact that the Stables’ claims are
barred by the discretionary function exception. That is, the ostensible “duties” of the USDA to
quarantine, test, examine, and halt the importation of the Danish Index Stallion are not duties at
all because they fall under the discretionary function exception.
Let’s start with the alleged failure to test for CEM. The problem with this theory is that
the USDA doesn’t have a regulatory duty to test for CEM; rather, the regulations put the onus on
the importer to have CEM-testing done on their horse prior to import. See 9 C.F.R. §
93.301(e)(1)(iii) (a “set of specimens must be collected from each horse within 30 days prior to
the date of export” and “cultured for CEM with negative results in a laboratory approved to
culture for CEM by the national veterinary service of the region of origin”). After the Federal
quarantine when the horse first arrives, the imported horse is transported to an approved state
where it undergoes testing. The regulations never state that the USDA (or its subdivisions) have
a duty to perform the testing – the duty is on the importer on both pre- and post-import. See 9
C.F.R. §§ 93.301(e)(1), (2). The United States can’t be sued on a theory that the USDA

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breached a duty that it didn’t owe the Stables in the first place.
The allegations that the USDA breached duties to examine and quarantine the Danish
Index Horse suffer from the same flaw. It is true that once a foreign stallion (like the Danish
Index Horse) has been transported to a State approved for the quarantine of horses from CEMaffected regions, it remains under quarantine until it has “met the testing and treatment
requirements of paragraph (e)(5) of this section.” 9 C.F.R. §93.301(e)(2)(ii). But, once again,
Section 93.301(e) proscribes requirements that the regulated industry must comply with – it does
not state, or even imply, that the USDA is responsible for actually performing the “testing and
treatment” of the horse while it is quarantined at the non-Federal boarding facility in the
approved State. Instead, it is the importer of the horse who is responsible for arranging to have
the requisite testing and treatment conducted while the horse remains under quarantine in the
approved State. Thus, since there is no statute, regulation or policy that places the burden on the
USDA to test, examine, or quarantine the foreign stallions, the discretionary function exception
applies. See Gaubert, 499 U.S. at 322 (to overcome the discretionary function exception, there
must be a failure to follow a “federal statute, regulation, or policy [that] specifically prescribes a
course of action for an employee to follow”).
Lastly, the Stables argue that the USDA breached a duty “to halt the importation” of the
Danish Index Horse. This is an amorphous “duty” that really just describes the whole point of
the entire regulatory scheme: it is an attempt to stop the importation of infected horses, most of
which falls directly on the importers themselves, by testing, examining, and quarantining. As
already demonstrated, all three of those alleged duties fall under the discretionary function
exception, and thus a more generalized duty that is invented by combining those three also

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obviously comes under the exception too.
Moreover, to the extent the Stables’ are attempting to place the blame with the state
officials who didn’t examine, treat, and quarantine the Danish Index Stallion in 2000, they have
no theory that would hold the United State liable for the actions of a non-Federal state
veterinarian. See 28 U.S.C. § 1346(b)(1) (United States can only be liable for “the negligent or
wrongful act or omission of any employee of the Government”). Perhaps the Stables’ argument
is that the USDA failed to adequately supervise and monitor the non-Federal entities, but, as I
explained in my prior opinion, this is discretionary conduct falling under the discretionary
function exception. [See DE 104 at 6-7.]
Conclusion
For the foregoing reasons, the United States’ Motion to Dismiss is GRANTED and the
First Amended Third Party Complaint is DISMISSED WITH PREJUDICE.
SO ORDERED.
ENTERED: July 23, 2012
s/ Philip P. Simon
PHILIP P. SIMON, CHIEF JUDGE
UNITED STATES DISTRICT COURT

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