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Riceland Foods v. Don Downing, 14-3758 (2016)

Court: Court of Appeals for the Eighth Circuit Number: 14-3758 Visitors: 30
Filed: Jan. 14, 2016
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 14-3758 _ Don M. Downing; Adam J. Levitt; Wolf Haldenstein Adler Freeman & Herz, LLC on behalf of themselves and those similarly situated; Looper Reed & McGraw, P.C. on behalf of themselves and those similarly situated; Gray Ritter & Graham, PC on behalf of themselves and those similarly situated lllllllllllllllllllll Plaintiffs v. Riceland Foods, Inc. lllllllllllllllllllll Defendant - Riceland Foods lllllllllllllllllllllCounter Claiman
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                United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 14-3758
                        ___________________________

Don M. Downing; Adam J. Levitt; Wolf Haldenstein Adler Freeman & Herz, LLC
 on behalf of themselves and those similarly situated; Looper Reed & McGraw,
P.C. on behalf of themselves and those similarly situated; Gray Ritter & Graham,
            PC on behalf of themselves and those similarly situated

                             lllllllllllllllllllll Plaintiffs

                                           v.

                               Riceland Foods, Inc.

                            lllllllllllllllllllll Defendant

                            ------------------------------

                                  Riceland Foods

                  lllllllllllllllllllllCounter Claimant - Appellant

                                           v.

                        Don M. Downing; Adam J. Levitt

                 lllllllllllllllllllllCounter Defendants - Appellees

                            ------------------------------

                               Riceland Foods, Inc.

                  lllllllllllllllllllllCounter Claimant - Appellant
                                          v.

  Don M. Downing; Gray Ritter & Graham; Adam J. Levitt, as Co-Trustee of the
    Common Benefit Trust Fund; Looper Reed & McGraw, P.C. on behalf of
themselves and those similarly situated; Wolf Haldenstein Adler Freeman & Herz,
            LLC on behalf of themselves and those similarly situated

                  lllllllllllllllllllllCounter Defendants - Appellees
                                        ____________

                     Appeal from United States District Court
                   for the Eastern District of Missouri - St. Louis
                                   ____________

                           Submitted: September 22, 2015
                              Filed: January 14, 2016
                                  ____________

Before LOKEN, BENTON, and SHEPHERD, Circuit Judges.
                           ____________

SHEPHERD, Circuit Judge.

       Plaintiffs, a group of attorneys who performed work on behalf of farmers in
underlying multi-district litigation regarding genetically-modified rice, brought a
class action suit against Riceland Foods, Inc. (“Riceland”), requesting the district
court compel Riceland to contribute a portion of its recoveries in various cases to the
common benefit fund established by the district court to compensate Plaintiffs for
their work. In response to Plaintiffs’ unjust enrichment and quantum meruit claims,
Riceland counterclaimed, asserting breach of contract and tortious interference
claims. The district court1 dismissed Riceland’s counterclaims and certified the
dismissal as a final judgment under Federal Rule of Civil Procedure 54(b). Riceland

      1
       The Honorable Catherine D. Perry, United States District Judge for the Eastern
District of Missouri.

                                         -2-
argues that this Court lacks jurisdiction to hear this appeal because the district court
erred in certifying the dismissal as a final judgment under Rule 54(b). Riceland
further contends that the district court erred in dismissing its counterclaims because
a settlement agreement expressly released Riceland from Plaintiffs’ claims because
the claims “arise out of, accrue on account of, or grow out of” the presence of
genetically-modified rice in the United States rice supply. We affirm.

                                           I.

       Beginning in 2006, hundreds of long-grain rice farmers and rice mills filed suit
against Bayer CropScience (“Bayer”) following an announcement by the United
States Department of Agriculture (“USDA”) that LLRICE, a genetically-modified rice
which had not been approved for human consumption, had tainted the United States
commercial long-grain rice supply. In more than two hundred LLRICE cases,
Riceland was named as a defendant with Bayer. The cases were originally filed in
multiple states, but were consolidated into a multi-district litigation (“MDL”) case in
the Eastern District of Missouri. See In Re Genetically Modified Rice Litigation, No.
4:06-MD-1811-CDP, 
2010 WL 716190
(E.D. Mo. Feb. 24, 2010).

       The district court appointed Plaintiffs Don Downing (“Downing”) and Adam
Levitt (“Levitt”) as co-lead counsel for the MDL plaintiffs and created a “Plaintiffs’
Executive Committee” consisting of six other attorneys. Collectively, these eight
attorneys constituted the “MDL Leadership Group.” The district court also ordered
that a common benefit trust fund (the “fund”), with Downing and Levitt as
co-trustees, be established to compensate attorneys for services performed for the
benefit of all plaintiffs. The order required a portion of any recovery obtained by the
plaintiff farmers in federal court to be contributed to the fund to pay fees and
expenses of attorneys who performed work benefitting all of the plaintiff farmers.
Contributions to the fund could also be made in related state court cases if so ordered
by the state court, but the district court concluded that it lacked jurisdiction to order


                                          -3-
contributions to the fund in state court cases. We affirmed the district court’s
establishment of the fund as well as the district court’s jurisdictional ruling regarding
state cases. See In Re Genetically Modified Rice Litig., 
764 F.3d 864
, 873 (8th Cir.
2014).

       Following trial or settlement in the LLRICE cases, Bayer, the Negotiating
Claimants’ Counsel, and each Enrolled Claimant and Eligible Claimant entered into
a Settlement Agreement.2 The Settlement Agreement included a General Release of
All Claims (the “Release”), in which each farmer (“Settling Claimant”) and each
farmer’s attorney (“Settling Claimant Releasing Party”) released their claims against
Bayer. In the Release, Riceland was listed as an “Additional Released Party.”

       The Release provides, in relevant part, that the Settling Claimant and any
Settling Claimant Releasing Party “hereby releases, acquits, and forever discharges”
the Bayer Released Parties and Additional Released Parties, including Riceland,
from:

      any and all claims, demands, causes of action, liabilities, sums of money,
      damages (including, but not limited to, punitive damages), loss of
      service, expenses, compensation, costs and losses, of any type, kind,
      nature, description or character whatsoever, whether based on tort,
      contract or other theory of recovery and including claims for
      contribution and indemnity, whether known or unknown, suspected or
      unsuspected, whether liquidated or unliquidated, which the Settling
      Claimant Releasing Parties, or any of them, now has or which may
      hereafter accrue on account of or in any way growing or arising out of

      2
       The Settlement Agreement was a global producer settlement comprised of two
separate settlements: (1) the MDL Settlement Agreement, which provided monetary
recovery for farmer-plaintiffs in federal court cases; and (2) the “GMB Settlement
Agreement,” a settlement entered into by and among Bayer and four attorneys who
are not involved in the present litigation, which provided monetary recovery for
farmer-plaintiffs in state court cases.

                                          -4-
      the presence in the United States rice supply of Bayer GM Rice Seed,
      against any Bayer Released Party or any Additional Released Party
      (collectively, the “Settling Claimant Released Claims”).

      The Release also contains a clause which provides:

      Settling Claimant, on Settling Claimant’s behalf and all other Settling
      Claimant Releasing Parties, covenants and agrees that except to the
      extent provided herein Settling Claimant will not sue or bring any action
      or cause of action, including, without limitation, by way of third party
      claim, cross-claim or counterclaim, against any Bayer Released Party
      and/or Additional Released Party in respect of any Settling Claimant
      Released Claim.

       In February 2013, Plaintiffs, consisting of the fund established by the district
court and law firms whose attorneys were part of the MDL Leadership Group, filed
the instant class action case against Riceland asserting claims for unjust enrichment
and quantum meruit individually and “on behalf of all persons and entities that
provided or paid for common benefit services, materials, and/or related expense
items” in the MDL. Plaintiffs alleged that Riceland refused to contribute to the
common-benefit fund despite being awarded a large recovery against Bayer in state
court. Riceland counterclaimed, asserting that Plaintiffs’ filing of this lawsuit
constitutes breach of contract and tortious interference with the Release. Riceland
also raised the terms of the Release as an affirmative defense.

       Plaintiffs moved to dismiss Riceland’s counterclaim. Concluding that
Plaintiffs’ claims do not, as a matter of law, “arise” or “grow” out of the presence of
Bayer’s LLRICE in the United States rice supply and are therefore not subject to the
Release, the district court granted Plaintiffs’ motion to dismiss Riceland’s
counterclaim. Riceland then sued the law-firm plaintiffs and additional law firms in
Arkansas state court, asserting the same legal theories and facts presented in its
counterclaim. Riceland sought an expedited trial schedule in the Arkansas state case,

                                         -5-
prompting Plaintiffs to request an order from the district court certifying the dismissal
of Riceland’s counterclaim as a final judgment under Rule 54(b). Such an order
presumably would bind Riceland in the Arkansas state court and compel dismissal of
that case. Finding that Plaintiffs would suffer injustice if entry of final judgment were
delayed, the district court certified the dismissal as a final judgment under Rule 54(b).
Riceland appeals both the Rule 54(b) certification and the dismissal of its
counterclaims.

                                           II.

       Riceland raises two arguments on appeal: (1) this Court lacks jurisdiction to
hear this appeal; and (2) the district court erred in holding that Plaintiffs did not
release their claims against Riceland. We address each of these arguments in turn.

                                    A. Jurisdiction

       We first address Riceland’s argument that this court lacks jurisdiction because
the district court abused its discretion in directing entry of final judgment pursuant
to Rule 54(b). “This court independently reviews . . . appellate jurisdiction.”
Outdoor Cent., Inc. v. GreatLodge.com, Inc., 
643 F.3d 1115
, 1118 (8th Cir. 2011)
(citing Matschiner v. Hartford Life & Acc. Ins. Co., 
622 F.3d 885
, 886 n. 1 (8th Cir.
2010) (“We independently review whether the district court’s Rule 54(b)
determination that there was ‘no just reason for delay’ properly conferred appellate
jurisdiction under 28 U.S.C. § 1291.” (quoting Interstate Power Co v. Kansas City
Power & Light Co., 
992 F.2d 804
, 806-07 (8th Cir. 1993)))). In reviewing Rule 54(b)
determinations, we apply an abuse of discretion standard and “largely defer[] to the
district court’s weighing of the equities, but more closely scrutinize[] the analysis of
judicial administrative interests.” 
Id. at 1118-19.
Appellate courts leave the
determination of the “appropriate time when each final decision in a multiple claims



                                          -6-
action is ready for appeal” to the “sound judicial discretion of the district court.”
Curtiss-Wright Corp. v. Gen. Elec. Co., 
446 U.S. 1
, 8 (1980).

       Generally, we only consider orders that dispose of all claims as final and
appealable under 28 U.S.C. § 1291. Williams v. Cnty. of Dakota, Neb., 
687 F.3d 1064
, 1067 (8th Cir. 2012). “Rule 54(b) creates a well-established exception to this
rule by allowing a district court to enter a final judgment on some but not all of the
claims in a lawsuit.” 
Id. (quoting Clark
v. Baka, 
593 F.3d 712
, 714 (8th Cir. 2010)
(per curiam)). We have established that the district court must undertake a two-step
analysis when deciding whether to certify an order under Rule 54(b). See 
id. at 1067-
68. 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.” 
Id. at 1067
(quoting
Outdoor 
Cent., 643 F.3d at 1118
). Second, the district court must determine whether
a just reason for delay exists. 
Id. In making
such determination, “the district court
must consider both the equities of the situation and judicial administrative interests,
particularly the interest in preventing piecemeal appeals.” 
Id. (citation and
quotation
marks omitted). It is a long-standing rule of the Eighth Circuit that “[c]ertification
should be granted only if there exists some danger of hardship or injustice through
delay which would be alleviated by immediate appeal.” Hayden v. McDonald, 
719 F.2d 266
, 268 (8th Cir. 1983) (per curiam) (citation and quotation marks omitted).

      In Hayden, we identified several factors that should be considered in
determining whether danger or hardship through delay exists:

      (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

                                          -7-
      considerations, shortening the time of trial, frivolity of competing
      claims, expense, and the 
like. 719 F.2d at 269
(quoting Allis-Chalmers Corp. v. Phila. Elec. Co., 
521 F.2d 360
, 364
(3d Cir. 1975)).

       After noting that the first step of this Court’s two-step analysis of Rule 54(b)
determinations was satisfied because Riceland’s counterclaims were dismissed in
their entirety, the district court analyzed whether a just reason existed to deny
certification of the order for appeal.

       First, the district court examined the relationship between the adjudicated and
unadjudicated claims. The court noted that Plaintiffs’ claims involve facts
“surrounding their work on behalf of the individual MDL plaintiffs, Riceland’s use
of that work, this court’s common-benefit orders, and Riceland’s refusal to contribute
to the Fund,” all of which occurred prior to the filing of this case. On the contrary,
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.”
We agree with the district court’s conclusion that the theories and facts in Plaintiffs’
claims and Riceland’s counterclaims are distinct from one another; thus, the first
factor weighs in favor of certification under Rule 54(b). Despite its argument that
Rule 54(b) certification is inappropriate, Riceland fails to demonstrate how the need
for review might be mooted by future developments in district court. Furthermore,
because Plaintiffs’ claims are distinct from Riceland’s counterclaim, there is no
possibility that a reviewing court might be obliged to consider the “same issue a
second time.” Riceland’s argument that its unadjudicated affirmative defenses mirror
its dismissed counterclaims is without merit because Plaintiffs’ claims rely on facts
and legal theories that are entirely separate from those relied upon by Riceland’s
counterclaim. Therefore, the second and third factors also weigh in favor of
certification. Next, given that no money judgment has been entered in favor of either


                                          -8-
party, no potential for setoff exists, tipping the fourth factor in favor of certification
as well.

       Finally, the fifth factor allows for the consideration of “miscellaneous factors.”
Riceland argues that res judicata considerations, standing alone, are insufficient to
support Rule 54(b) certification. In support of its contention that res judicata may
only be considered if the certification is “otherwise permissible,” Riceland cites a
Ninth Circuit case, Cont’l Airlines, Inc. v. Goodyear Tire & Rubber Co., 
819 F.2d 1519
(9th Cir. 1987). Riceland extracts the language “[w]e do not wish to encourage
the district courts to use their 54(b) powers to promote a race to judgment or to snatch
from the state courts a dispute being properly litigated there” to argue that final
judgment may not be entered under Rule 54(b) solely to give an order preclusive
effect in a state court proceeding. Cont’l 
Airlines, 819 F.2d at 1525
(internal citation
and quotation marks omitted). However, in considering whether a Rule 54(b)
certification may be granted for the purpose of producing a res judicata effect in
another proceeding, the Ninth Circuit pointed out that two other circuits had
suggested certification may be granted for such a purpose. 
Id. (citing Bank
of
Lincolnwood v. Fed. Leasing, Inc., 
622 F.2d 944
, 949 n. 7 (7th Cir. 1980) (stating in
dicta that “no just reason for delay” includes not only delay of appeal but delay of res
judicata); Republic of China v. American Express Co., 
190 F.2d 334
, 339 (2d Cir.
1951) (indicating the district court should have made a Rule 54(b) certification to
assure res judicata)). In fact, the Ninth Circuit expressly declined to hold that a
judgment’s res judicata effect is an improper consideration in determining whether
to certify the judgment for appeal under Rule 54(b). 
Id. Instead, it
recognized that
“[b]ecause a 54(b) ruling in fact has res judicata ramifications, which are potentially
very important, it would be unsound and ineffectual to hold that the district courts
may not consider this factor in deciding for or against certification.” 
Id. The Second
Circuit later held that “[t]here is no justification for limiting the issues that a district
court can consider in entering a partial final judgment, nor is it realistic to ask a



                                            -9-
district court to approach the decision while blinding itself to one of the decision’s
most important effects.” Shamley v. ITT Corp., 
869 F.2d 167
, 170 (2d Cir. 1989).

       Here, the district court found that Plaintiffs and the district court itself would
suffer injustice if entry of final judgment was delayed. The significant resources
spent on the case were “at risk of being obviated by a ruling in the later filed
Arkansas case” according to the district court. Significantly, it is undisputed that
Riceland attempted to try the Arkansas state case before the district court’s ruling on
its counterclaims could become binding on the state court.3

       We agree with the other circuits to address the issue and hold that a res judicata
effect can properly be considered as a “miscellaneous factor” under the Hayden factor
analysis. The district court did not err in considering the res judicata ramification in
the Arkansas state court case. Because each factor weighs in favor of Rule 54(b)
certification, we find no just reason for delaying entry of judgment and affirm the
district court’s decision to certify the dismissal of Riceland’s counterclaim as a final
judgment under Rule 54(b).

                             B. Riceland’s Counterclaim

       We now turn to Riceland’s argument on the merits, in which it contends the
district court erred in holding, as a matter of law, that Plaintiffs did not release their
claims against Riceland. We review the district court’s dismissal under Rule 12(b)(6)
de novo. O’Neil v. Simplicity, Inc., 
574 F.3d 501
, 503 (8th Cir. 2009). The parties
do not dispute that Arkansas law governs the interpretation of the Settlement


      3
        Federalism cases may aid in determining when certification could improperly
interfere with state court proceedings. See Quackenbush v. Allstate Ins. Co., 
517 U.S. 706
, 717 (1996) (listing cases in which state interests counsel against federal
court interference).

                                          -10-
Agreement because a choice of law provision in the Settlement Agreement requires
it be construed according to the laws of that state.

       Riceland first argues that the district court erred by requiring a strict causal
nexus between Plaintiffs’ claims and LLRICE contamination even though the Release
language did not require such a causal connection. Riceland contends that Arkansas
law requires a broad interpretation of the Release, citing Hisaw v. State Farm Mut.
Auto. Ins. Co., 
122 S.W.3d 1
, 6 (Ark. 2003) and State Farm Mut. Auto. Ins. Co. v.
LaSage, 
559 S.W.2d 702
, 703 (Ark. 1978) for the proposition that the phrase “arising
out of” should be interpreted very broadly. Riceland also points to the Arkansas
Court of Appeals case McGarrah by McGarrah v. Sw. Glass Co., 
852 S.W.2d 328
,
331 (Ark. Ct. App. 1993) (en banc) and argues that the phrases “arising out of”
necessitates “but for” causation. Thus, according to Riceland, because Plaintiffs’
claims ultimately would not exist “but for” the LLRICE contamination, the Release
applies. However, the Arkansas Supreme Court explicitly rejected the use of broad,
“but for” causation in interpreting the phrase “arising out of” in 
Hisaw. 122 S.W.3d at 6-7
. The Court concluded that a “but for” analysis was not appropriate for
determining the meaning of the phrase “arising out of” in the context of an
automobile insurance policy, reasoning that:

      [a] distinguished treatise has challenged the workability of the “but for”
      principle and said: “The event without millions of causes is simply
      inconceivable, and the mere fact of causation, as distinguished from the
      nature and degree of the causal connection, can provide no clue of any
      kind to singling out those which are to be held legally responsible.” We
      agree. A but-for causation analysis would bring into play a multitude of
      causes and would be largely unworkable for interpreting the policy
      language at issue.

Id. at 6
(citing W. Page Keeton, et. al., Prosser & Keeton on the Law of Torts, § 41
(5th ed. 1984)).


                                         -11-
       Because Arkansas law has only addressed the causation required for the
relevant language in the insurance context, the district court determined that it must
look to the contract as a whole. Under this approach, Riceland argues the Release is
all-inclusive, pointing to A.G. Edwards & Sons, Inc. v. Myrick, 
195 S.W.3d 388
(Ark. Ct. App. 2004). Riceland contends that the terms “any,” “all,” and
“whatsoever” are “routinely described as ‘all inclusive.’” However, A. G. Edwards
did not hold that the terms “any,” “all,” and “whatsoever,” are “all inclusive;” rather,
it merely concluded that the specific phrase “any controversy” used in the contract at
issue was “clear and unambiguous 
language.” 195 S.W.3d at 391-92
.

       When we look to the plain language of the Release, it is clear that the language
used was not intended to protect Riceland from litigation related to its refusal to
contribute to the fund. See Douglas v. U.S. Tobacco Co., 
670 F.2d 791
, 795 (8th Cir.
1982) (noting that under Arkansas law, a release is construed “in accordance with the
plain meaning of the language employed” (quoting Green v. Ferguson, 
567 S.W.2d 89
, 91 (Ark. 1978))). The plain language of the Release included a clause absolving
the Bayer Released Parties from litigation-related claims: “This Release shall also
release the Bayer Released Parties and their attorneys from any and all claims . . .
related to the conduct of the Bayer Released Parties and/or their attorneys in the
prosecution or defense of any claim being released hereby.” No such clause existed
in the section of the Release addressing Riceland or the Additional Released Parties.
As the district court recognized, “when reading this clause in tandem with the
paragraph releasing both Bayer and Riceland, it becomes clear that the drafters did
not consider claims ‘related to’ Bayer’s rice-litigation conduct to ‘arise’ out of the
presence of Bayer’s rice in the U.S. market. Had that been the drafter’s intent, this
clause would have been unnecessary.” The litigation-specific release language
included in the section specific to the Bayer Released Parties would be superfluous
if Riceland’s interpretation is applied. See Byme, Inc. v. Ivy, 
241 S.W.3d 229
, 236
(Ark. 2006) (“In seeking to harmonize different clauses of a contract, we should not
give effect to one to the exclusion of another even though they seem conflicting or

                                         -12-
contradictory, nor adopt an interpretation which neutralizes a provision if the various
clauses can be reconciled” (quoting Sturgis v. Skokos, 
977 S.W.2d 217
, 223 (Ark.
1998))). The inclusion of the word “also” in the litigation-specific release indicates
that the litigation-specific release for Bayer Released Parties is in addition to the
general release language that applied to both Bayer and Riceland.

       While we agree that the Release language is broad, the subject matter of the
Release is different from the subject matter of the present lawsuit, which is Riceland’s
failure to contribute to the fund. The claims regarding genetically-modified rice were
released by the Settlement Agreement and Release, but the Release does not govern
the Plaintiffs’ unjust enrichment and quantum meruit claims against Riceland for its
failure to contribute to the fund. We therefore affirm the district court’s dismissal of
Riceland’s counterclaims.

                                          III.

      For these reasons, we affirm the district court’s dismissal of Riceland’s
counterclaims as well as the certification of such dismissal as final under Rule 54(b).
                                    ____________




                                         -13-

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