The Iowa Supreme Court recently blessed a class action, paving the way for roughly 4,000 Muscatine residents to potentially obtain damages from a local corn wet milling plant.
The case was filed in 2012 by eight Muscatine residents living near a milling plant operated by Grain Processing Corporation (GPC). GPC has used this plant to convert corn kernels into products for commercial and industrial use since 1943. This is the second time the Iowa Supreme Court has heard claims relating to this case. In 2014, the Court ruled that the plaintiffs’ claims were not preempted by the federal Clean Air Act. This month, the Court affirmed the district court’s certification of a class action.
The class representatives filed their state court action strategically to maximize the likelihood of class certification. They alleged common law and statutory claims of nuisance, trespass, and negligence. Significantly, the plaintiffs seek only property damages from their claims, foregoing any claims for damages stemming from diminution in value or personal injury. Generally, the plaintiffs allege that GPC operated its facility with outdated and worn technology, leading to unnecessary and harmful emissions that damaged plaintiffs. The plaintiffs allege that particulate matter is visible on their properties and that smoke, odor, and a haze harms all residents within one-and-one-half miles of the facility.
GPC resisted the motion for class certification, arguing that the residents’ claims were inherently individual. In particular, GPC alleged that (1) there were not questions of law or fact common to the class, that (2) individual issued predominated over class issues, and that (3) its due process rights were violated by the certification. The district court granted the motion.
On appeal, the Iowa Supreme Court first ruled that commonality was present in this case because the plaintiffs allegedly suffered a common injury—air pollution emanating from the factory that interfered with the use and enjoyment of the plaintiffs' property. The Court also found that the plaintiffs alleged that GPC engaged in a common course of conduct with respect to all potential plaintiffs by operating outdated, high-polluting dryers and coal-boilers, with virtually no controls to reduce emissions. This allegedly led to the release of noxious smoke, odor, and haze into the neighborhood over a course of years. The Court also agreed that the district court’s decision to create two sub-classes, one including those plaintiffs living in close proximity to the plant and another including those plaintiffs living in peripheral proximity, alleviated the potential for great disparity in the impact of the emissions on the class plaintiffs.
The Court also agreed that individual issues did not appear to predominate at this phase of the proceedings. The plaintiffs would have to submit common proof of GPC’s course of conduct, level of emissions, and resulting interference with “a normal person on the community’s” use and enjoyment of his or her property. These common questions, the Court ruled, were at the heart of the plaintiffs’ claims. The plaintiffs were able to meet this key standard because they chose not to seek damages for physical harm or for diminution in value of their property. Such claims require more individualized proof. The loss of use or enjoyment of property, the crux of the plaintiffs’ nuisance claim, is measured by an objective person standard. As such, proof of harm could be established through representative testimony from members of the community alleging that they were disturbed by the facility’s emissions. Property-by-property evidence would not be required.
Finally, the Court ruled that GPC’s due process rights were not (at least at this stage) violated by certification of the class. GPC argued that class treatment of the claims would deprive GPC of its rights to pursue individual issues that might reduce certain class members’ damages. The Court relied on a 2016 U.S. Supreme Court case[i] to find that representative evidence can be used to prove an “average” or, in this case, “normal person” standard. The Court noted that if individual defenses became unmanageable down the road, the trial court would have the discretion to decertify the class, bifurcate the trial (to separate proof of liability from proof of damages), or create additional subclasses.
The Court ruled that the district court did not abuse its broad discretion in certifying the class. Class action treatment appeared to be the most efficient way to resolve the plaintiffs’ asserted claims.
Justice Appel concurred separately to emphasize that the Iowa standard for class certification is more generous than the federal standard. He noted that Iowa is one of only two states to adopt a version of the Uniform Class Actions Act. As such, Iowa courts have consistently held that Iowa class action rules are “remedial in nature and should be liberally construed to favor the maintenance of class actions.” Justice Appel concluded by stating that federal class action precedent is thus of “limited value” in determining class certification under Iowa law.
Five years after this action was filed, the case is now cleared to proceed as a class action. We will closely follow this matter to see if it proceeds to trial or settles. This case is important to any business that may emit pollutants or odor. Class treatment can transform a manageable disagreement into a tremendous liability. Small damages, multiplied by 4,000 plaintiffs, add up quickly. This opinion provides a solid review of the rules governing Iowa class actions, Iowa R. Civ. P. 1.261 - 1.263. The points raised by Appel’s concurrence also suggest that plaintiffs’ attorneys considering a class action may choose to tailor their claims to remain in state court, rather than risking removal to federal court where stricter certification standards may apply.
We will keep you posted!
[i] Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016) (In a Fair Labor Standards Act class action, Supreme Court ruled that proof of the average amount of time it took employees to don and doff (put on and take off) protective equipment could be established through representative evidence).
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