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Downing v. Riceland Foods, Inc.

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

November 7, 2014

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

MEMORANDUM AND ORDER

CATHERINE D. PERRY, District Judge.

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 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., 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. 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. ยง 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 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 ...


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