No. 03 C 4385, MDL No. 1403 Page 5

Adler vy. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10" Cir. 1998)). See also Owens vy.

Sprint/United Mgmt. Co., 333 F. Supp. 2d 1094, 1098 (D. Kan. 2004). When the evidence in
the record shows that no material dispute of fact exists, we will grant a summary judgment
motion. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

The dispositive issue is whether plaintiff is a third party beneficiary that may enforce
the Agreement. Before we decide plaintiff’s rights to enforce the Agreement, we must find in

the Agreement a provision that operates to plaintiff’s benefit. State ex rel. Stovall v. Reliance

Ins. Co., 91 P.3d 531, 543 (Kan. 2004) (quoting Hartford Fire Ins. Co. v. Western Fire Ins, Co.,
597 P.2d 622 (1979)). For third party beneficiary status to exist, “the contract must be made
for the third party’s benefit as its object, and he must be the party intended to be benefitted
in order to be entitled to sue upon it.” Stovall, 91 P.3d at 543 (quoting Fasse v. Lower Heating
& Air Conditioning, Inc., 736 P.2d 930, 932 (Kan. 1987)). The intent to benefit the third party
must be clearly expressed in the contract because Kansas law presumes that contracting
parties “act for their own benefit.” Tradesmen Int’]v. United States Postal Serv., 234 F. Supp.
2d 1191, 1202 (D. Kan. 2002). See also, United States v. United Services Auto. Assen, 968 F.2d
1000, 1001-02 (10" Cir. 1992); Lewis v. Globe Constr. Co., 6 Kan. App. 2d 478, 485 (Kan. Ct.
App., 1981). The right of a third party beneficiary to enforce a contract “rests chiefly upon
the fact that the contract will create reasonable expectations on his part and will induce him

to change his position in reliance.” Noller y. GMC Truck & Coach Div., General Motors

Corp., 772 P.2d 271, 275 (Kan. 1989) (quoting 4 CORBIN ON CONTRACTS § 775 (1951)).
We apply general rules of contract construction to determine the contracting parties’
intent with respect to a third party’s rights. United Services Auto. Assen, 968 F.2d at 1002;

Rigby v. Clinical Reference Lab., 995 F. Supp. 1217, 1226 (D. Kan. 1998). When the contract


No. 03 C 4385, MDL No. 1403 Page 10

hypothetical claims brought by growers — claims that are not before the court now — plaintiff
cannot step in and sue as a third party beneficiary to the Agreement.

Defendants also argue that plaintiff failed to comply with the claims procedures when
it submitted its “Elevator/Grain Handler” claim form. Plaintiff was unable to supply certain
information, such as transportation and storage costs, because it is not an elevator. It also
checked “rejection of load by destination” as the method of discovery. However, as defendants
correctly identify, ConAgra was the destination for the corn delivered by plaintiffs growers,
and it did not reject a delivery. Plaintiff asserts that strict compliance with the claim form was
not required due to defendants’ representations that they would be flexible and
accommodating when processing claims, Even if we accept plaintiff’s position, the claim form
is inadequate for the fundamental reason that plaintiff is not an elevator. The fact that no
claim procedure exists for a party in plaintiff's position further illustrates that plaintiff is not
an intended beneficiary and lacks standing to enforce the Agreement. See Bodine v. Osage
County Rural Water Dist. No. 7, 949 P.2d 1104, 1112-13 (Kan. 1997); Stockman v. Unified
Gov’t of Wyandotte County, 6 P.3d 900, 909 (Kan. App. Ct. 2000).

CONCLUSION
For the foregoing reasons, defendant’s motion for summary judgment is granted, and

plaintiff's motion to compel discovery is dismissed as moot.

JAMES B. MORAN
ior Judge, U. S. District Court
F.0d & 2005,


No. 03 C 4385, MDL No. 1403 Page 7

mem. 3). The testimony of Daryll Jamvold, chief executive officer of AgraMarke, is consistent
with that admission (Jamvold dep. 68). Plaintiff is not an elevator because it does not store
corn for its members, unlike other agricultural cooperatives (Jamvold dep. 7, 67-68). Plaintiff
is not a grower because it grows no corn; instead, its growers produce the corn.

Plaintiff is an agent acting on behalf of growers, meaning that it facilitates transactions
of IP corn by contracting with a buyer of IP corn, and then contracting separately with its
grower members and requiring them to produce and deliver IP corn to that buyer (Jamvold
dep. 10-11). As mentioned above, this is precisely how ConAgra received the IP corn that
eventually became contaminated with Cry9C. Plaintiff agreed to have 5,000,000 bushels of IP
corn delivered to ConAgra (id. at 17). Then the growers, pursuant to separate production
contracts with plaintiff, delivered approximately 3,700,000 bushels of corn directly to ConAgra
(id.). Prior to accepting the corn, ConAgra tested the corn to ensure it met IP standards, which
it did (id. at 27). ConAgra paid the growers directly (id. at 11). ConAgra then processed the
corn and attempted to deliver it to Meiji Seika. Plaintiff never took possession of the corn at
any time during the production process (id. at 67). Indeed, plaintiff could not have possessed
the corn because it lacked storage facilities (id. at 8). The corn was stored either at the
growers’ farms or at facilities owned by ConAgra. Under the Agreement, an elevator was
eligible to recover only if it was “documented to have received StarLink corn and/or buffer
corn.” Further, plaintiff never took title to the corn, as it transferred directly from the
growers to ConAgra (id. at 32),

Plaintiff's stake in the transaction was the 25¢ premium that it was to receive if
ConAgra sold the corn products as non-genetically modified corn to third parties. Section 8(d)

of the “Non-GMO Corn Purchase Agreement,” which is the contract that plaintiff entered into


No. 03 C 4385, MDL No, 1403 Page 6

terms are plain and unambiguous, the intent of the parties and the meaning of the contract are
determined exclusively from the contract. Rigby, 995 F. Supp. at 1226. It is only when the
contract is ambiguous that extrinsic evidence, such as “the facts and circumstances
surrounding the execution of the instrument,” may be consulted for clarification. Id. We
turn, then, to the Agreement.

In the paragraph entitled “Purpose of Agreement,” which is quoted in sum above,
defendants and the states expressed a clear intent to benefit “growers and grain elevators” who
suffered financial losses as a result of Aventis’ decision to license Cry9C technology. The
Agreement specifically covers growers who encountered contaminated corn in a number of
settings. For example, growers are covered if they were StarLink growers (section 4(a)(1)) or
if they suffered losses related to non-StarLink corn containing Cry9C (section 4(a)(2)). The
latter category lists four additional subcategories of growers who are entitled to compensation
for StarLink-related losses.‘

Plaintiff admits that it is neither a grower nor an elevator in its memorandum (plaintiff

>The Agreement specifically defined who was entitled to recover, as the indented excerpts below
illustrate.
StarLink growers and buffer growers who suffered losses due to StarLink corn include:
StarLink Growers: growers who grew corn from StarLink hybrids (“StarLink Corn”) and grew
other corn within 860 feet of StarLink corn (“Buffer Corn”) and whose StarLink Corn remains on
farm or was on farm as of September 29, 2000, and
Buffer Growers: growers who did not grow any corn from StarLink hybrids but who grew another
variety of corn (including but not limited to white corn and popcorn) within 660 feet of StarLink
Corn (“Buffer Corn”) and whose Buffer Corn remains on farm.
For growers who suffered losses due to non-StarLink corn, the eligible class include only:
Growers with corn that remains on farm or was on farm as of September 29, 2000 and that tests
positive for Cry9C protein or Cry9C DNA but who did not grow from StarLink hybrids and did not
grow corn within 660 feet of corn grown from StarLink hybrids.

‘Category 1 covers non-StarLink growers who grew hybrids and have confirmation that those
hybrids contained Cry9C. Category 2 includes growers whose hybrids may have contained Cry9C but lack
actual confirmation of contamination from their seed supplier. Category 3 covers growers whose hybrids may
have contained Cry9C and whose seed supplier denies Cry9C contamination. Category 4 applies to growers
who have no explanation why their grain tests positive for Cry9C. Specific testing requirements and
procedures are described for the growers included in Categories 2-4.


No, 03 C 4385, MDL No. 1403 Page 9

is no language that clearly expresses an intent for the defendants to assume a duty to plaintiff.
See In re StarLink, 2004 WL 547244, * 2 (“There is no indication that defendants ever agreed
to cover plaintiff for any Joss”). Similarly, in Stovall the Kansas Supreme Court concluded
that the state lacked third party beneficiary status because the contract that it sought to
enforce contained no duties that were owed to it. Stovall, 91 P.3d at 544. The Agreement’s
terms are not ambiguous or vague and there is no need to reference any extrinsic evidence.
While caution is required when granting summary judgment if the material issues involve
intent (Noller, 772 P.2d at 274), here the intent of the contracting parties is clearly expressed,
leaving no dispute of material fact.®

Plaintiff claims that the Kansas Cooperative Marketing Act (Kan. Stat. Sec. 17-1601
et seq.) establishes its status as an intended beneficiary. But that statute authorizes plaintiff
to act as an agent for growers and to facilitate transactions without taking title to the
commodities. Plaintiffs position further illustrates that it is neither grower nor elevator
because it shows that plaintiff is statutorily defined as an agent, and the Agreement does not
intend to benefit agents. Plaintiff also asserts that it intended to distribute the 25¢ premium
among its members, and its loss of the premium harmed those members. It is true that those
members, as growers, have a stronger case for recovery under the Agreement. But their
recovery is far from certain, as it is not disputed that StarLink contamination occurred after
the growers relinquished both possession and title to the corn, and the Agreement stipulates

that eligible growers must have corn that tests positive for Cry9C. Regardless of any

SPlaintiff also urges us to withhold judgment under Fed. R. Civ. P. 56(f). However, plaintiff admits
to be neither grower nor elevator, and despite its position that such an admission is a non-issue, we view it to
be the crucial issue as the contracting parties clearly created the Agreement to benefit those classes. We can
conceive of no facts, particularly related to any settlement between defendants and ConAgra (which is clearly
an elevator), that would assist plaintiff in defeating defendants’ motion.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

IN RE STARLINK CORN PRODUCTS

LIABILITY LITIGATION MDL No. 1403

This document is applicable to:

AGRA MARKE, INC.,

vs. No. 03 C 4385

AVENTIS CROPSCIENCE USA LP, and

)

)

)

)

)

)

Plaintiff, )
)

)

)

)

STARLINK Logistics, Inc., )
)

Defendants.
MEMORANDUM OPINION AND ORDER

Plaintiff AgraMarke, Inc. brought this action against defendants Aventis CropScience
USA LP (Aventis) and StarLink Logistics Inc. (SLLI) claiming breach of contract, and
promissory estoppel or equitable estoppel. Defendants moved for summary judgment, and on
March 15, 2004, the court granted their motion and suggested that plaintiff may have a third
party beneficiary claim. Plaintiff then amended its complaint and included a third party
beneficiary claim. Defendants now bring a second motion for summary judgment and seek
to dismiss the beneficiary claim. For the following reasons, defendants’ motion is granted.

BACKGROUND

Much of the background here has been discussed in our memorandum and order of
March 15, 2004(2004 WL 547244; 2004 U.S. Dist. LEXIS 4134 (N.D. II. 2004), and in related
litigation. See, Kramer v. Aventis CropScience USA Holding, Inc., 212 F. Supp. 2d 828, 833-35
(N.D. Ill. 2002). To reprise briefly, Aventis engineered and licensed StarLink corn, a

genetically modified corn that produces the protein Cry9C, which protects corn from pests.


No. 03 C 4385, MDL No. 1403 Page 8

with ConAgra on August 8, 2000, clearly required that the premium was due to plaintiff only
after ConAgra made “confirmed sales” of non-genetically modified corn products to its
customers. In contrast, section 8(c) required ConAgra to pay AgraMarke a “milling
premium” of 5¢ per bushel delivered to it by plaintiff's members. Thus, the purchase
premium was conditioned on a subsequent sale of non-genetically modified corn and the
milling premium was conditioned on delivery to ConAgra. In this lawsuit plaintiff only seeks
to recover the purchase premium. It received that premium for 158,997 bushels that ConAgra
sold as non-genetically modified corn. But on June 27, 2001, ConAgra notified plaintiff that
it was not pursuing any new non-genetically modified sales with respect to the 3,700,000
bushels it had received from plaintiff’s growers. It did not pursue such sales because the corn
was contaminated and could not be marketed as non-genetically modified. Also relevant is
that the corn only became contaminated after it was delivered to ConAgra’s processing facility
in Atchison, Kansas.* Due to StarLink contamination, ConAgra stopped production at that
facility on October 16, 2000.

The transactions discussed above fail to indicate that plaintiff was either a grower or
an elevator in that it did not grow, deliver or store any of the corn that eventually commingled
with Cry9C and could not be marketed as non-genetically modified corn. No provision in the
Agreement operates to plaintiff’s benefit or gives it enforceable rights. The Agreement

intends to benefit growers and elevators who suffered losses as a result of Cry9C, and there

Sina letter that plaintiff attached to its “Elevator/Grain Handler” claim form it asserted:

Since the Non-GMO Purchased Corn had previously tested negative for StarLink upon delivery to
ConAgra, we can only assume that ConAgra commingled the Non-GMO Purchased Corn with corn
contaminated with StarLink and then attempted to sell such corn to Meiji Seika, ultimately causing a
loss of all sales of the Non-GMO Purchased Corn since Meiji Seika detected StarLink.


No. 03 C 4385, MDL No, 1403 Page 4

was only an invitation to contract, and that defendants never agreed to cover plaintiff’s losses.
We did, however, observe that “the purpose of the contract was to mitigate potential losses
suffered by grain handlers and elevators,” which indicates the possibility of third party
beneficiary claims.’ On April 27, 2004, plaintiff filed an amended complaint, which added a
third party beneficiary claim.

Defendants now argue that plaintiff is not a third party beneficiary, as the Agreement
expresses no intent to benefit it. Defendants also advance that the claim form submitted by
plaintiff was incomplete — it provided sufficient ground to deny plaintiffs claim. Plaintiff
contends that it is an intended beneficiary to the Agreement, and that due to its third party
beneficiary status, strict compliance with the claims forms was unnecessary.

DISCUSSION

Summary judgment is proper when the “pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that the moving party is entitled to judgment as
a matter of law.” Fed.R.Civ.P. 56(c). When reviewing a motion for summary judgment, the
court views the evidence and draws all reasonable evidences therefrom in the light most
favorable to the non-moving party. Spaulding v. United Transp. Union, 279 F.3d 901, 904 (10"
Cir. 2002). A fact is material if it is essential to the disposition of a claim. Wright ex rel. Trust
Co, v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10" Cir. 2001). And a fact is genuine if the

evidence produced by each party would enable the court to “resolve the issue either way.”

? Plaintiff misrepresents the March 15, 2004, order when it states that the court accepted that it was
a third party beneficiary. Rather, we only suggested the possibility of third party beneficiary status, and
could not conclude that such status existed as the court was presented with neither facts nor argument on that
issue.


No. 03 C 4385, MDL No. 1403 Page 3

to purchase set amounts of IP grains. Under those agreements plaintiff's members delivered
IP corn directly to ConAgra, and ConAgra paid those members directly for the corn.
Plaintiff's interest in the transactions was a 25¢ per bushel premium that ConAgra was to pay
for each bushel of corn it sold to third parties as non-genetically modified corn. Plaintiffs
members delivered the IP corn to ConAgra, who inspected and accepted the corn. ConAgra
then processed the IP corn into a corn product, which it then shipped to Meiji Seika Kaisha
(Meiji Seika), a Japanese company. Meiji Seika inspected the corn and discovered the
presence of Cry9C. Then, on March 19, 2001, Meiji Seika terminated its order with ConAgra.
As a result, the corn products were not sold as non-genetically modified and plaintiff did not
collect the 25¢ per bushel premium.

Plaintiff submitted a claim in the amount of $946,918.45 to StarLink Logistics Inc.
(SLLI), an entity that purchased Aventis CropScience’s businesses and assumed control of the
Stewardship and Elevator programs. Plaintiff’s claim represented the total premium it would
have received had the corn been sold as non-genetically modified. After SLLI denied that
claim, plaintiff brought this action and raised three grounds for recovery: breach of contract,
and, in the alternative, promissory estoppel and equitable estoppel. Proceeding under Kansas
law' the court dismissed each of those grounds. Plaintiff could not show detrimental reliance
on any promise made by defendants because it began selling IP corn to ConAgra in 1999 and
the Agreement was not signed until 2001. Plaintiff’s failure to show reliance doomed its
estoppel claims, and its breach of contract claim failed because it could not show that it had

avalid agreement with defendants. The court concluded that defendants’ offer to cover claims

‘Kansas law still governs, as it is the best choice of law under Minnesota’s choice of law rules, See In
re StarLink, 2004 WL 547244, *2,


No. 03 C 4385, MDL No. 1403 Page 2

But it shares traits with a known human allergen, causing the Environmental Protection
Agency to prohibit the use of Cry9C in food produced for human consumption. Nevertheless,
Cry9C DNA was detected in taco shells in September 2000, which lead to a widespread recall
of corn products and international restrictions on imports of U.S. corn.

During the fallout caused by the discovery of Cry9C DNA, Aventis launched two
remedial services known as the StarLink Enhanced Stewardship Program and the Elevator
Program, which respectively directed contaminated corn to proper destinations and resolved
claims brought by elevators that suffered financial injuries due to contact with contaminated
corn. Those programs were incorporated into an agreement (the Agreement) that Aventis and
the attorneys general of 17 states entered into on January 22, 2001. The purpose of the
Agreement is as follows:

The States, on behalf of their respective states and on behalf of growers and

grain elevators located in their respective states, and Aventis hereby enter into

this binding contractual Agreement and hereby agree to the following measures

in an effort to mitigate the economic losses suffered by growers and grain

elevators located in their states resulting from Aventis’ decision to license Cry9C

technology in the Untied States.
Aventis and the states supplemented that agreement in June 2001 with a section addressing
claims brought by “non-StarLink growers” who suffered financial injuries. The terms of the
Agreement remained in full effect after the adoption of the supplemental provisions.

Plaintiff is a non-profit agricultural cooperative that markets Identity Preserved (IP)
grains produced by its members. Plaintiff negotiates contracts with buyers of IP grains, and
then essentially acts as an agent or intermediary for its members by causing them to fulfill
those contracts by producing and transporting the grains to the buyer (Jamvold dep. at 10-11).

That arrangement accurately depicts what transpired in this case. In 1999 and 2000, plaintiff

entered into purchasing agreements with ConAgra Corn Processing (ConAgra), who agreed