Downing et al v. Riceland Foods, Inc.
Filing
94
MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that defendant's motion to dismiss for lack of jurisdiction [# 86] is denied. IT IS FURTHER ORDERED that plaintiffs' motion for order under Rule 54(b) entering final judgment on Riceland's c ounterclaims [# 74] is granted. IT IS FURTHER ORDERED that JUDGMENT BE ENTERED with respect to the issues determined in this court's Memorandum and Order dated August 20, 2014 [Doc. 72] and I will today enter a final judgment in favor of plainti ffs dismissing with prejudice the claims asserted by Riceland in its Counterclaim. IT IS FINALLY ORDERED that plaintiffs' motion to expedite ruling on the pending motion for an order under Rule 54(b) entering final judgment on Riceland's counterclaims [# 85] is denied as moot, and its motions to supplement [## 92 & 93] are granted. Signed by District Judge Catherine D. Perry on November 7, 2014. (MCB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
DON M. DOWNING, et al.,
Plaintiffs,
v.
RICELAND FOODS, INC.,
Defendant.
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Case No. 4:13CV321 CDP
MEMORANDUM AND ORDER
Plaintiffs sued Riceland Foods, Inc., claiming that Riceland had been
unjustly enriched at plaintiffs‟ expense. Riceland brought counterclaims for breach
of contract and tortious interference, and it has sued plaintiffs and some other
parties in state court under identical claims. I dismissed Riceland‟s counterclaims
on plaintiffs‟ motion, and plaintiffs now ask that I issue an expedited Order
entering final judgment of those counterclaims under Rule 54(b) of the Federal
Rules of Civil Procedure. Riceland opposes entry of final judgment and for the
second time moves to dismiss for lack of subject-matter jurisdiction. This court
has already determined that it has subject-matter jurisdiction over this matter, and
nothing in Riceland‟s motion changes that conclusion. I see no just reason for
delaying entry of final judgment on Riceland‟s dismissed counterclaims, and so I
will grant the plaintiffs‟ motion.
Background
In 2006, the USDA announced that the rice supply in the United States had
been contaminated by Bayer‟s genetically modified rice. Thousands of rice
producers and non-producers filed suit against various Bayer entities in federal and
state court. The Judicial Panel on Multidistrict Litigation transferred all pending
federal cases to this court, and I appointed leadership counsel to oversee a group of
attorneys working on behalf of the federal plaintiffs. Over the course of the next
several years, this leadership group and various other attorneys and law firms
invested considerable time and resources into the cases, providing substantial
benefits to other plaintiffs in the litigation.
Most of the rice cases have now been tried or settled. The settlements
included a Release of all claims “arising out of” the presence of Bayer‟s rice in the
United States rice supply. The Release named Riceland as a third-party
beneficiary.
In the MDL, I ordered that a common benefit trust fund (the Fund) be
established to compensate attorneys for services rendered on behalf of all the
plaintiffs. This order required that a portion of any recovery obtained by plaintiffs
in federal court be set aside and contributed to the Fund. It also allowed
contributions to the Fund to be made in state-court cases if ordered by the state
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court or if plaintiffs in those cases agreed to the contributions. The leadership
group has twice tried to expand that order to state cases.
The first attempt occurred in the formation of the order. The leadership
group‟s motion to create the Fund asked that it apply to state cases. This motion
was opposed by Bayer and some attorneys who represented both MDL plaintiffs as
well as plaintiffs in state cases. I determined that I lacked jurisdiction over state
cases. In re Genetically Modified Rice Litig., No. 4:06MD1811 CDP, 2010 WL
716190, at *4–5 (E.D. Mo. Feb. 24, 2010) (MDL ECF Doc. 2574), aff’d, 764 F.3d
864, 873–74 (“Even if the state plaintiffs‟ attorneys participated in the MDL, the
district court overseeing the MDL does not have authority over separate disputes
between state-court plaintiffs and Bayer.”).
The second attempt to expand the order occurred after Riceland reached a
settlement in its state case and refused to contribute to the Fund. Riceland was a
defendant in that case and asserted cross-claims against Bayer; Riceland was
simultaneously a plaintiff in a federal case against Bayer as part of the MDL.
Plaintiffs filed a motion in the MDL to compel Riceland to contribute a portion of
its recovery from the state case. I denied that motion, holding that although I had
jurisdiction over Riceland as part of the MDL, I lacked jurisdiction to compel
Riceland to do anything in the state case. In re Genetically Modified Rice Litig.,
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No. 4:06MD1811 CDP, 2011 WL 601627, at *1 (E.D. Mo. Feb. 11, 2011) (MDL
ECF Doc. 4033).
The dispute here involves one of three cases that were consolidated for
limited purposes and treated as ancillary to the MDL. See Order dated March 26,
2013 (ECF Doc. 10). There are two groups of plaintiffs in this case. The Fund‟s
co-trustees compose the first group; the second group comprises three law firms
acting as named plaintiffs on behalf of a class whose members contributed to or are
allegedly owed reimbursement from the Fund (the Class). The plaintiffs sued
Riceland in this case under theories of quantum meruit and unjust enrichment,
alleging that it used the common-benefit services, materials, and expenses paid for
and developed by the Class. The complaint alleges that Riceland has received
favorable settlements by using those materials without reimbursing the Fund.
Riceland raised the terms of the Release as an affirmative defense. It also
brought counterclaims, asserting that the filing of this lawsuit constitutes breach of
contract and tortious interference with the Release. Riceland sought its fees and
costs spent defending this action as well as punitive damages.
Plaintiffs moved to dismiss Riceland‟s counterclaims. After construing the
Release‟s terms, I determined that plaintiffs‟ claims, as a matter of law, do not
“arise” out of the presence of Bayer‟s rice and so are not subject to the Release.
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I therefore granted plaintiffs‟ motion and dismissed Riceland‟s counterclaims with
prejudice. See Order dated August 20, 2014 (ECF Doc. 72).
Shortly after filing its answer in this court and approximately one week
before amending that answer to include its counterclaims, Riceland sued the lawfirm plaintiffs and some additional law firms in Arkansas state court under the
same legal theories and facts presented in its counterclaims. As part of its relief in
the Arkansas case, Riceland requested a declaratory judgment as to the “scope and
effect” of the Release. Riceland has since sought an expedited trial schedule in
that case.
Plaintiffs now request an expedited order certifying my dismissal of
Riceland‟s counterclaims as a final judgment under Rule 54(b), so that my
interpretation of the Release may bind Riceland in the Arkansas court and compel
dismissal of that case. Riceland opposes an expedited ruling on the issue and
certification generally.
The day after plaintiffs filed their motion for an expedited ruling on its
motion for certification, Riceland filed its second motion to dismiss this case for
lack of subject-matter jurisdiction. The first such motion argued that the court
lacked jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d), and
that the plaintiffs‟ complaint represented a collateral attack on this court‟s earlier
orders in the MDL that it could not compel state court parties to contribute to the
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Fund. I denied that motion because plaintiffs had established that this court has
original jurisdiction under CAFA over this case and because my earlier Orders
dealt with different jurisdictional issues. See Order dated March 31, 2014 (ECF
Doc. 51), reported at Downing v. Riceland Foods, Inc., 298 F.R.D. 587, 590 (E.D.
Mo. 2014).
Riceland‟s second motion to dismiss does not address CAFA jurisdiction,
but instead argues that this court is bound by the law of the case doctrine because
of its earlier orders. Riceland cites its jurisdictional challenge as an impediment
that must be resolved before ruling on plaintiffs‟ motion to certify as final the
dismissal of Riceland‟s counterclaims.
Discussion
Subject-Matter Jurisdiction
“If the court determines at any time that it lacks subject-matter jurisdiction,
the court must dismiss the action.” Fed. R. Civ. P. 12(h). Subject-matter
jurisdiction refers to the court‟s “statutory or constitutional power to adjudicate the
case.” United States v. Cotton, 535 U.S. 625, 630 (2002) (emphasis omitted)
(quoting Steel Co. v. Citizens for Better Env’t, 523 U.S. 83, 89 (1998)).
This court has already held that it possesses subject-matter jurisdiction over
this case under the Class Action Fairness Act‟s expansion of diversity jurisdiction.
See Order dated March 31, 2014 (ECF Doc. 51), reported at Downing v. Riceland
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Foods, Inc., 298 F.R.D. 587, 590 (E.D. Mo. 2014) (citing 28 U.S.C. § 1332(d)); cf.
also Raskas v. Johnson & Johnson, 719 F.3d 884, 886 (8th Cir. 2013) (“CAFA
confers federal jurisdiction over class actions . . . .”) (internal quotation marks and
citation omitted)). Despite this court‟s finding that it has subject-matter
jurisdiction, Riceland argues that my common-benefit rulings in the MDL case are
the law of the case, and so dispositively establish the absence of jurisdiction.
Riceland‟s arguments improperly conflate the cases: while I may have lacked
jurisdiction in the earlier cases, I have definitively ruled that jurisdiction is proper
in this case under CAFA.
Law of the case is an “amorphous” doctrine that requires a legal decision,
once made by the court, to “continue to govern the same issues in subsequent
stages in the same case.” Arizona v. California, 460 U.S. 605, 618 (1983) (citation
omitted). The doctrine is intended to prevent “relitigation of settled issues in a
case.” First Union Nat. Bank v. Pictet Overseas Trust Corp., Ltd., 477 F.3d 616,
620 (8th Cir. 2007). It requires that a prior decision be “followed in later
proceedings „unless a party introduces substantially different evidence, or the prior
decision is clearly erroneous and works a manifest injustice.‟” United States v.
Bartsh, 69 F.3d 864, 866 (8th Cir. 1995) (quoting United States v. Callaway, 972
F.2d 904, 905 (8th Cir. 1992) (per curiam)).
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The first cases to which Riceland refers involved a dispute within the MDL
between the leadership group, Bayer, and some attorneys who represented
plaintiffs in state cases. The leadership group was attempting to expand this
court‟s orders relating to the Fund beyond the scope of the federal MDL to all
cases involving Bayer‟s rice. I found that I lacked jurisdiction to require Bayer to
hold back and contribute to the Fund a portion of any recovery in state court. In re
Genetically Modified Rice Litig., No. 4:06MD1811 CDP, 2010 WL 716190 at *4–
5 (E.D. Mo. Feb. 24, 2010) (MDL ECF Doc. 2574). The Eighth Circuit affirmed,
holding that that the statute authorizing multi-district federal litigation, 28 U.S.C. §
1407, does not confer jurisdiction over state cases and parties not before the federal
district court. See, e.g., In re Genetically Modified Rice Litig., 764 F.3d 864, 873–
74 (8th Cir. 2014). In finding an absence of jurisdiction, the Eighth Circuit noted
that because “no independent basis for jurisdiction” existed as to the state-court
actions, the district court could not “order parties in cases not before it to
contribute to the Fund.” Id. at 873–74.
Riceland next points to my ruling in the MDL dated February 11, 2011. In
re Genetically Modified Rice Litig., No. 4:06MD1811 CDP, 2011 WL 601627
(E.D. Mo. February 11, 2011) (MDL ECF Doc. 4033). That order pertained to a
motion by the leadership group to require Riceland, which was both a
defendant/cross-claimant in Arkansas court and an MDL plaintiff, to contribute a
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portion of its Arkansas recovery to the federal MDL. I denied that motion, because
I lacked jurisdiction to issue orders over a party in a state case, even where that
party also appeared before me on a related matter. Id. at *1.
The cases Riceland cites dealt with whether an MDL court could issue
orders within the MDL that would be applicable to state cases and binding upon
parties not before the court. But here Riceland is a defendant in this very case
based on claims of unjust enrichment and quantum meruit. This case is one over
which the court has subject-matter jurisdiction by operation of CAFA. The
situation here is obviously distinguishable from those discussed above, and the law
of the case doctrine does not prevent this case from going forward. See U.S. v.
Bates, 614 F.3d 490, 494 (8th Cir. 2010) (“[A] a statement . . . was not the law of
the case where the court was considering and deciding a different issue.”) (citing
United States v. Montoya, 979 F.2d 136, 138 (8th Cir. 1992)).
Riceland‟s jurisdictional arguments are not taken in good faith. This court
has already determined, over Riceland‟s objections, that the MDL rulings do not
affect its subject-matter jurisdiction over this case.1 See Order dated March 31,
2014 (ECF Doc. 51), reported at Downing, 298 F.R.D. at 590. Riceland does not
even mention that ruling in its motion to dismiss.
1
In fact, Riceland has already raised these rulings when opposing plaintiffs‟ motion for leave to
file an amended complaint and in its first motion to dismiss for lack of subject-matter
jurisdiction. See ECF Doc. 37 at 10 (opposing plaintiffs‟ amended complaint); ECF Doc. 38 at
¶¶ 9, 10 (motion to dismiss for lack of subject-matter jurisdiction).
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Finality
Rule 54(b) allows the court to direct entry of final judgment as to fewer than
all claims for relief only after an express determination that “no just reason”
justifies delay. Fed. R. Civ. P. 54(b). The Eighth Circuit has recently outlined the
analysis that a district court must undertake when deciding whether to grant Rule
54(b) certification:
The court must first determine that it is dealing with a final judgment
in the sense that it is an ultimate disposition of an individual claim.
Second, in determining that there is no just reason for delay, the
district court must consider both the equities of the situation and
judicial administrative interests, particularly the interest in preventing
piecemeal appeals. Certification should be granted only if there exists
some danger of hardship or injustice through delay which would be
alleviated by immediate appeal.
Williams v. Cnty. of Dakota, Neb., 687 F.3d 1064, 1067–68 (8th Cir. 2012)
(internal citations and quotations omitted). Certification should be denied in favor
of a single appeal where a remaining claim requires familiarity with the same
nucleus of operative facts and analysis of similar legal issues as in the adjudicated
claim. Outdoor Cent. Inc. v. GreatLodge.com, Inc., 647 F.3d 1115, 1119 (8th Cir.
2011) (citing Interstate Power Co. v. Kan. City Power & Light Co., 992 F.2d 804,
807 (8th Cir. 1993)).
Several factors should be considered when determining whether a just
reason for delay exists:
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(1) the relationship between the adjudicated and unadjudicated claims;
(2) the possibility that the need for review might or might not be
mooted by future developments in the district court; (3) the possibility
that the reviewing court might be obliged to consider the same issue a
second time; (4) the presence or absence of a claim or counterclaim
which could result in setoff against the judgment sought to be made
final; (5) miscellaneous factors such as delay, economic and solvency
considerations, shortening the time of trial, frivolity of competing
claims, expense, and the like.
Hayden v. McDonald, 719 F.2d 266, 269 (8th Cir.1983) (quoting Allis–
Chalmers Corp. v. Phila. Elec. Co., 521 F.2d 360, 364 (3d Cir. 1975)).
The first inquiry may be answered in the affirmative: Riceland‟s
counterclaims have been dismissed in their entirety. I now look to whether a just
reason prevents certification of the issue for appeal.
I have ruled as a matter of law that the contracts do not encompass plaintiffs‟
suit, and Riceland has not proffered any alternative factual theories that might
reignite its claims for breach of contract and tortious interference. Plaintiffs‟
claims for unjust enrichment and quantum meruit do not depend upon the same
facts and legal theories underlying Riceland‟s dismissed counterclaim. To prove
those quasi-contractual claims, plaintiffs must show that (1) they conferred a
benefit on the defendant; (2) the defendant appreciated the benefit; and (3) the
defendant accepted and retained the benefit under inequitable and/or unjust
circumstances. See Johnson Grp., Inc. v. Grasso Bros., Inc., 939 S.W.2d 28, 30
(Mo. Ct. App. 1997) (noting both causes share elements but differ in recovery).
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Thus, plaintiffs‟ claims will involve the facts surrounding their work on behalf of
the individual MDL plaintiffs, Riceland‟s use of that work, this court‟s commonbenefit orders, and Riceland‟s refusal to contribute to the Fund – facts occurring
before the filing of this case. On the other hand, Riceland‟s counterclaims required
an interpretation of the Release and an analysis of whether, by bringing this case,
plaintiffs breached or interfered with that contract. The legal theories and facts in
support are distinct. This factor weighs in favor of certification.
No potential for setoff exists, as no money judgment has yet been entered in
favor of either party. See Nw. Airlines, Inc. v. Astraea Aviation Servs., Inc., 930
F. Supp. 1317, 1327 (D. Minn. 1996). This factor also weighs in favor of
certification.
Riceland argues that entry of final judgment at this time will force a
piecemeal appeal, because it has asserted the Release as an affirmative defense to
plaintiffs‟ claims. But I already determined as a matter of law that the Release did
not apply to those claims. Riceland‟s affirmative defense is, essentially, defective
on arrival. Riceland has not cited to any case holding that a defunct affirmative
defense, as opposed to a live claim, should preclude entry of final judgment under
Rule 54(b).2 Moreover, this case is still in its early stages – the parties have only
2
Although the case lacks precedential value, the Eleventh Circuit has held that certification of
dismissal of a defendant‟s abuse-of-process counterclaim was not abuse of discretion despite the
existence of still-unadjudicated affirmative defenses of waiver, unclean hands, and comity.
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recently finished briefing the issue of class certification. It is possible that an early
appeal might reopen Riceland‟s counterclaims or affirmative defense in time for a
single trial, while a later successful appeal might require a second trial. This factor
is neutral.
As for economic considerations, Riceland‟s counterclaims and its Arkansas
claims seek attorney‟s fees and costs incurred in defending this suit. This situation
is distinguishable from that of Curtis-Wright, where the plaintiff had already won
monetary damages on summary judgment but faced the loss of further money in
the form of interest during the pendency of the remaining litigation. CurtissWright Corp. v. Gen. Elec. Co., 446 U.S.1 (1980). There, the Supreme Court held
that the district court properly considered plaintiff‟s monetary loss as one of the
equities. Id. at 11. Here, plaintiffs have not won any damages. Still, they have
won a respite from having to defend against Riceland‟s counterclaims. Thus, the
continued litigation in state court represents an inequitable expense weighing in
favor of certification.
Finally, I find that plaintiffs and this court will suffer injustice should entry
of final judgment be delayed. The parties and this judicial system have expended
significant resources on this case. Those efforts are at risk of being obviated by a
ClassroomDirect, LLC v. Draphix, LLC, 314 Fed. Appx. 169, 172–73 (11th Cir. 2008) (per
curiam).
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ruling in the later filed Arkansas case. Cf. Cont’l Airlines, Inc. v. Goodyear Tire &
Rubber Co., 819 F.2d 1519, 1525 (9th Cir. 1987) (declaring it “unsound and
ineffectual” to forbid consideration of res judicata effects on other courts as part of
Rule 54(b) analysis) (citations omitted).
This court recognizes the interests of both the parties and Arkansas in
adjudicating cases properly brought. But the risk of injustice is magnified by the
disparate approaches taken by Riceland in this case and in the Arkansas case.
Riceland continues to expedite the proceedings in the Arkansas case over
plaintiffs‟ objections. In this case, however, Riceland delays. As discussed above,
this court has already denied one motion by Riceland to dismiss for lack of subjectmatter jurisdiction. Riceland nevertheless filed a second motion to dismiss that
raises specious arguments; this motion was filed shortly after plaintiffs‟ motion for
entry of final judgment was filed. The timing and substance of that motion suggest
that it was filed, at least in part, to delay my ruling on the certification issue and on
plaintiffs‟ motion to certify a class. Given the circumstances of this case, the
equities favor entry of judgment under Rule 54(b).
This court sees no just reason for delaying entry of judgment under Rule
54(b). I will certify my dismissal of Riceland‟s counterclaims as final and direct
entry of judgment on those claims.
Accordingly,
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IT IS HEREBY ORDERED that defendant‟s motion to dismiss for lack of
jurisdiction [# 86] is denied.
IT IS FURTHER ORDERED that plaintiffs‟ motion for order under Rule
54(b) entering final judgment on Riceland‟s counterclaims [# 74] is granted.
IT IS FURTHER ORDERED that JUDGMENT BE ENTERED with
respect to the issues determined in this court‟s Memorandum and Order dated
August 20, 2014 [Doc. 72] and I will today enter a final judgment in favor of
plaintiffs dismissing with prejudice the claims asserted by Riceland in its
Counterclaim.
IT IS FINALLY ORDERED that plaintiffs‟ motion to expedite ruling on
the pending motion for an order under Rule 54(b) entering final judgment on
Riceland‟s counterclaims [# 85] is denied as moot, and its motions to supplement
[## 92 & 93] are granted.
CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 7th day of November, 2014.
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