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Downing v. Riceland Foods, Inc.

United States District Court, E.D. Missouri, Eastern Division

August 20, 2014

DON M. DOWNING, et al., Plaintiffs,
v.
RICELAND FOODS, INC., Defendant.

MEMORANDUM AND ORDER

CATHERINE D. PERRY, District Judge.

This court established a trust to compensate some attorneys who shouldered enormous costs for their clients as part of the ongoing multi-district litigation that began when Bayer's genetically modified rice entered the domestic rice supply. There are two groups of plaintiffs in this case. Co-trustees of the trust 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 trust. Each set of plaintiffs sued Riceland Foods, Inc., under theories of quantum meruit and unjust enrichment, because Riceland has refused to contribute to the trust except where ordered by the courts.

Riceland brought a counterclaim against Plaintiffs, alleging that by bringing this lawsuit, they breached and tortiously interfered with a settlement agreement reached in the underlying multi-district litigation, to which Riceland was a third-party beneficiary, and the settlement's accompanying release.

This matter reaches the court on Plaintiffs' motion to dismiss Riceland's counterclaim. Because Plaintiffs' quantum meruit and unjust enrichment claims are not governed by the settlement agreement and release, I will grant the motion to dismiss.

1. Background

This case is tangentially related to the continuing multi-district litigation ("MDL") that began after the introduction of Bayer's genetically modified rice into the United States domestic rice supply.[1] Thousands of rice producers and non-producers filed suit against various Bayer entities in federal and state court. Riceland Foods was named as a defendant along with Bayer in more than 200 cases. Riceland also acted as a plaintiff in several state cases.

To make the MDL more manageable for the plaintiffs, the court appointed Don Downing and Adam Levitt as Co-Lead Counsel of a leadership group of attorneys. A common benefit trust fund was ordered established to compensate attorneys for services rendered on behalf of all the plaintiffs; Downing and Levitt were named as Co-Trustees of the trust. That order required that a portion of any recovery obtained by plaintiffs in federal court be set aside and contributed to the trust. It also allowed contributions to the trust to be made in state court cases if ordered by the state court or if plaintiffs in those cases agreed to contribute to the trust. Riceland, in the cases in which it is a state-court plaintiff, has steadfastly refused to contribute to the trust.

Most of the rice cases have now been tried or settled. The settlements involved a Settlement Agreement entered into by Bayer, the Negotiating Claimants' Counsel (defined as the group of five signatories, including counter-defendants Downing and Levitt), and each Enrolled Claimant and Eligible Claimant, which are defined terms under the Settlement Agreement. Among the documents incorporated by the Settlement Agreement was a General Release of All Claims ("the Release"). The Release required execution by the Settling Claimant and Claimant's Counsel and named Riceland as a third-party beneficiary.

This case represents an attempt to force trust contributions from Riceland under theories of quantum meruit and unjust enrichment. The amended complaint is brought by the Co-Trustees and by three law firms[2] that are the named plaintiffs on behalf of a class of those persons or entities that provided or paid for common-benefit services, materials, and expenses.

The amended complaint alleges that Riceland had access to the common-benefit services, materials, and expenses paid for by the Class. The complaint further alleges that Riceland used these benefits in its state court cases for its trial strategy, discovery, motions, responses, exhibits, arguments, testimony, and cross-examination - sometimes using material verbatim from the MDL cases. Riceland eventually received a settlement as a plaintiff in one such case for approximately $80 million. The amended complaint asserts counts against Riceland for unjust enrichment and quantum meruit based upon the benefits conferred upon Riceland, for which Riceland has not reimbursed the trust.

Riceland brought a counterclaim, asserting that the filing of this lawsuit constitutes breach of contract and tortious interference; both counts are predicated upon the Settlement Agreement and Release. It is Riceland's counterclaim that is the subject of the motion to dismiss. Plaintiffs present three main arguments for dismissal. First, Plaintiffs contend that the claims presented in their lawsuit do not "grow out of, " "arise out of, " or "accrue on account of" the presence of Bayer GM rice seed, and so the claims were not settled or released. Plaintiffs next contend that they and the class members do not qualify as "Settling Claimant Releasing Parties, " and so they are not bound by the terms of the Release. Plaintiffs' third argument is that a release, unlike a covenant not to sue, cannot serve as the basis for a breach of contract action. Because I agree that the claims brought by Plaintiffs were not released, I need not reach the remaining arguments.

As alluded to above, the Settlement Agreement established a program to resolve claims against Bayer. To fully participate in the program, each person with an interest in a crop of rice affected by the presence of Bayer GM Rice Seed in the United States Rice Supply (an "Eligible Claimant") submitted a completed "Enrollment and Claims Package" (Package). The Package included an agreement to be bound by the Settlement Agreement and a Release, among other documents. An "Enrolled Claimant, " was defined as an Eligible Claimant who had submitted the Package. The Settlement Agreement further reserved for Bayer the ability to seek contribution from any "Additional Released Party, " defined to include Riceland, and incorporated the Release: "This Agreement and the Release extinguish any and all Liability on behalf of the Additional Released Parties to the Enrolled Claimants in any way growing or arising out of the detection in the United States Rice Supply of Bayer GM Rice Seed. Settlement Agreement ΒΆ 14.15.

The Release defines the claims subject to its terms:

[Settling Claimant Releasing Parties[3] release the Bayer Released Parties[4] and the Additional Released Parties, [5] defined to include Riceland, ] of and 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 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").

Release p. 2-4 (emphasis in original). The Release also includes a covenant not to sue:

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 ...

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