Farmers win multi-million dollar judgment against herbicide manufacturer for deceptive advertising and marketing practices

April 3, 2006 | Roger McEowen

 

The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) authorizes the EPA to regulated pesticide sale and use. Under FIFRA, it is unlawful to use any registered pesticide in a manner inconsistent with its labeling. While this “label use” provision gives the EPA authority to assess civil penalties against producers that use pesticides improperly or damage the environment, it also limits the ability of injured parties to sue pesticide manufactures in state court on either an inadequate labeling or wrongful death theory. This is known as “FIFRA preemption,” but in 2005 the U.S. Supreme Court ruled in a case involving Texas peanut farmers that their state law claims for defective design, defective manufacture, negligent testing and breach of express warranty with respect to a pesticide that damaged their peanut crops on highly acidic soils (the pesticide label said it was fit for all areas where peanuts were grown) were not preempted. That reversed an opinion of the U.S. Court of Appeals for the Fifth Circuit where the claims were held to be preempted on the basis that if the claims were successful, the pesticide manufacturer would be induced to change its label.  The U.S. Supreme Court said that test was too broad.  The test for preemption, the Court said, was whether successful claims would actually require a pesticide label to be changed. The key is whether state law imposes broader obligations on pesticide manufacturers than does FIFRA. It was believed that the Court’s opinion would lead to a greater percentage of farmers’ claims not being preempted.

In a significant recent case, the Minnesota Supreme Court has held that a claim was not preempted by FIFRA. In this class-action case, farmers sued BASF for what they alleged were deceptive marketing practices involving Poast and Poast Plus herbicides. BASF registered both products with the EPA under FIFRA for use on the same crops and they each contained the identical amounts of the same active ingredient, but the company’s marketing strategy involved utilizing a label for Poast Plus that did not indicate it was suitable for use on minor crops (sugarbeets, vegetables and fruits, for example). In addition, BASF used ads and brochures designed to prevent farmers from learning that the lower-priced Poast Plus was EPA-registered for minor crops and was the equivalent of Poast. A jury found that BASF had violated the New Jersey Consumer Fraud Act, and the trial court entered judgment for the farmers in an amount in excess of $52 million. The Minnesota Court of Appeals affirmed, as did the Minnesota Supreme Court. BASF had argued that the farmers’ claim was preempted by FIFRA, but that was rejected because the courts determined that the farmers’ claim was based on marketing and advertising actions and not on the content of the herbicide labels. 

After losing in the state courts, BASF asked the U.S. Supreme Court to review the case. The Court granted BASF’s petition, vacated the state court judgment, and sent the case back to the Minnesota Supreme Court for reconsideration in light of the U.S. Supreme Court’s opinion in 2005. The Minnesota Supreme Court, on further review, again held that the farmers’ claim was not preempted by FIFRA. The court was convinced that the farmers’ claim challenged not the label, but BASF’s misrepresentations concerning the two herbicides. The issue was not whether the manufacturer, in seeking to avoid liability, would choose to alter the product or label, but whether the claim was a label-based claim that, if successful, would cause the federally-required label to be changed. That wasn’t the case and the claim was not preempted by FIFRA. Peterson, et al. v. BASF Corp., 711 N.W.2d 470 (Minn. Sup. Ct. 2006).