Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-03758/USCOURTS-ca8-14-03758-0/pdf.json

Parties Involved:
Don M. Downing
Appellee
Gray Ritter & Graham
Appellee
Adam J. Levitt
Appellee
Looper Reed & McGraw
Appellee
Riceland Foods
Appellant
Wolf Haldenstein Adler Freeman & Herz
Appellee

Document Text:

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

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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 court dismissed Riceland’s counterclaims and certified the

1

dismissal as a final judgment under Federal Rule of Civil Procedure 54(b). Riceland

The HonorableCatherine D. Perry, UnitedStatesDistrict Judge for the Eastern 1

District of Missouri.

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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 millsfiled suit

against Bayer CropScience (“Bayer”) following an announcement by the United

States Department ofAgriculture (“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

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contributions to the fund in state court cases. We affirmed the district court’s

establishment of the fund as well asthe 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. The Settlement Agreement included a General Release of 2

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 ofmoney,

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 Settlement Agreement was a global producer settlement comprised oftwo 2

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.

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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 trialschedule in the Arkansas state case,

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prompting Plaintiffs to request an order fromthe 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 sufferinjustice if entry offinal 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

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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 counterclaimwhich could

result in setoff against the judgment sought to be made final;

(5) miscellaneous factors such as delay, economic and solvency

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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

ofthat 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 orinterfered 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

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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 courtsto use their 54(b) powersto 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

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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 resjudicata

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

Federalism cases may aid in determining when certification could improperly

3

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).

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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)). 

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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

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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 fromthe subject matter ofthe present lawsuit, which isRiceland’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 ofsuch dismissal as final under Rule 54(b). 

____________

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