Agriculture: The Sixth Circuit Allows Punitive Damages for Negligent Manufacture of Alpaca Seed

By: Meghan Jackson Tyson, Staff Member

The United States Court of Appeals for the Sixth Circuit recently decided a case regarding the allowance of punitive damages in products liability suits. Magical Farms, Inc. v. Land O'Lakes, Inc., No. 07-3568, 2009 WL 4641742 (6th Cir. Dec. 8, 2009). Magical Farms, an alpaca farm, filed suit against Land O'Lakes Farmland Feed alleging that Land O'Lakes' alpaca feed was contaminated with a toxic ingredient (salinomycin) that caused the deaths of 73 alpacas. Id. at *1. Although Magical Farms was successful on its negligence claim, the district court denied Magical Farms' request for punitive damages. Id. Specifically, the district court noted that the Ohio Legislature requires a showing of "flagrant disregard of the safety of persons who might be harmed by the product in question" for an award of punitive damages. Id. at *2-*3. The district court determined that Magical Farms did not meet this burden because "the harm caused injury to alpacas, not to humans." Id. at *2. The court of appeals refused to apply so strict a standard, stating that the Ohio Supreme Court has allowed punitive damages "where the plaintiff alleged only that the defendant consciously disregarded its rights, and specifically its property rights, rather than the safety of a person." Id. at *4. The decision of the court of appeals is significant in that it affords protection to the property interests of persons in their animals. It is interesting to note that although the appellate court was applying Ohio law, this decision could have a significant impact in Kentucky as the Kentucky Legislature has established a standard regarding the allowance of punitive damages similar to that of the Ohio Legislature. See Ky. Rev. Stat. Ann. § 411.184 (1988) (using language including "human death and bodily injury"). It is also interesting to consider whether the court would have reached the same result had the alpacas been pets as opposed to essential elements of a business enterprise.

Unknown Economic Effects of Greenhouse Gas Regulation on Agriculture May be Forestalled

By: Anthony Cash, Staff Member

The Southwest Farm Press recently reported that the American Farm Bureau Federation ("AFBF") voted at their annual meeting to oppose "cap and trade legislation," such as the American Clean Energy and Security Act ("ACES") that was passed by the House of Representatives on June 26, 2009, and any attempt by the EPA to regulate green house gases under the Clean Air Act. Top Concerns of AFBF Delegates, Southwest Farm Press, Jan. 15, 2010, http://southwestfarmpress.com/news/afbf-concerns-0115/ (last visited Jan. 21, 2010). However, commentators have pointed out that the economic impact of ACES or any greenhouse gas regulation on farmers is widely contested, with the AFBF estimating income losses to farmers at $5 Billion by 2020 and Iowa State's Center for Agricultural and Rural Development arguing that there will be very little impact to farmers. USDA Climate Bill Analysis: Ag Gains, Southwest Farm Press, Jan. 15, 2010, http://southwestfarmpress.com/legislative/laws-column-0118/ (last visited Jan. 21 2010).

With such widely varying economic analysis, it is difficult for lay persons to understand exactly what impact such legislation would have on agriculture, generally, and in the state of Kentucky, specifically. Clearly, more public debate is needed on the issue to fully vet the claims proffered by various groups. However, such a debate cannot fully occur if the Environmental Protection Agency succeeds in its attempts to regulate greenhouse gas emissions through the powers granted to it under the Clean Air Act. This action by the EPA follows from the Supreme Court case of Massachusetts v. EPA, in which Justice Stevens wrote for a five member majority. Justice Stevens wrote, "In short, EPA has offered no reasoned explanation for its refusal to decide whether greenhouse gases cause or contribute to climate change." Massachusetts v. Envtl. Prot. Agency, 549 U.S. 497, 534 (2007).

As James Madison, speaking of the importance of the Senate in Federalist No. 63, articulated "[T]here are particular moments in public affairs . . . when the people may call for measures which they themselves will afterwards be most ready to lament and condemn. In these critical moments, how salutary will be the interference of some temperate and respectable body of citizens[.]" The Federalist No. 63 (James Madison). Thus, the recent renewal of attempts by Senator Lisa Murkowski of Alaska to pass legislation that would foreclose the EPA's ability to regulate greenhouse gases, regardless of the motivations behind the legislation or the wisdom of a policy regulating greenhouse gas emissions, may enable a more meaningful public discourse on the possible economic effects of such legislation on agriculture in the United States and fulfill an important function of the United States' bicameral system of legislature.

Agriculture's Role in Federal Climate Legislation

The following post was written by staff member Natasha Farmer.

On June 26, 2009 the House of Representatives passed the American Clean Energy and Security Act, H.R. 2454, also known as the Waxman-Markey Bill. Pew Center on Global Climate Change, http://www.pewclimate.org/acesa (last visited Nov. 3, 2009). If passed by the Senate, the bill would cut emissions by putting a cap on planet-warming greenhouse gases. Id. Emission cuts would start in 2012 and this comprehensive legislation would regulate 85 percent of the overall economy, however because of vulnerability to climate change agriculture would not be directly regulated. Kentucky Resource Council, http://www.kyrc.org/webnewspro/125347301215435.shtml (last visited Nov. 3, 2009).

Kentucky Resources Council Director, Tom Fitzgerald, believes the Act offers agriculture a role in helping reduce greenhouse gas loading into the atmosphere. Id. Director Fitzgerald relied on a report issued by the U.S. Global Change Research Program to explain that many crops show positive responses to elevated carbon dioxide and low levels of warming. Id. In addition, weeds, diseases, and insects benefit from warming, and increased heat and weather extremes are likely to reduce livestock production. Id. With the implementation of this law, agriculture would thrive because of the reduced amount of heat caused by greenhouse gases.

Agriculture has much to gain from this widespread policy. The bill makes agriculture part of the solution by offering incentives, greenhouse gas offsets, and opportunities to supply bio-energy. Pew Center Global Climate Change, http://www.pewclimate.org/federal/what-waxman-markey-does-for-agriculture (last visited Nov. 9, 2009). Title III of the Act will provide gas emission allowances for agriculture projects that reduce pollution to prevent the conversion of land that would increase greenhouse emissions. Id. The Act will also increase the demand for bio-based forms of energy and provide incentives to stimulate this industry. Id. The Act requires that 20% of electricity come from renewable power by 2020. Id. This could incentivize wind power on agriculture farms. Id.

Even though this Act has benefits for agriculture, there are also cost increases associated. The cost for transitioning away from fossil fuels will most likely cause fossil-based energy and products such as nitrogen fertilizer to rise. Id. However, the overall benefits of this legislation to the agriculture sector outweigh the increased costs. Therefore, implementation should be the path taken.

Protecting the Roads Not Traveled: The Continued Conflict Around the “Roadless Rule” of 2001

This post was written by Assistant Online Editor Zach Becker.

On August 3, 2009, the State of Colorado proposed a petition to send to the USDA as to the management of the national forest "roadless areas" within the State of Colorado. On that same day, began a 60 day public comment period as to the proposed petition, which has provided an opportunity for the general public to critique and/or praise the proposals by Colorado before the state forwards its roadless rule petition to the USDA for approval. As one can imagine, this 60 day period has been filed with emotional pleas from environmental groups and surprisingly sportsmen. Pleas that point out legitimate and critical flaws in the proposed plan's ability to effectively protect some of the majestic, and largely untouched natural forests of Colorado and the fish and wildlife that call these habitats home. One of the areas of highest concern is the Currant Creek area, located of the North Fork of the Gunnison River, which is of interest for its coal mining potential. This area of undisturbed and pristine aspen and oak forests is a key location for elk and mule deer rearing, migration and hunting and would be immensely impacted by an allowance of mining in this pristine and remote habitat, high in the Colorado Rockies.

The U.S. National Forest Service divides each of its "management area" into different units. Each unit is provided with a different "forest plan" in order to achieve desires objectives, goals and management prescriptions for that unit. "Activities proposed to occur within a management area must be consistent with the management-area prescriptions as well as with the prescriptions applicable to the entire forest unit." Cal. ex. rel. Lockyer v. USDA, 2009 U.S. App. LEXIS 19219 at *6 (9th Cir. 2009). One such national forest unit distinction is the "roadless area." The roadless areas are largely undeveloped areas of wilderness, generally without roads. Before the promulgation of the "Roadless Rule" in 2001, "most forest plans provided for the extraction uses, including logging, mining, oil and gas development, and construction of off-road vehicle routes, on at least some portion of what are classified as inventoried roadless areas." Id at *7-8. In 1999, President Clinton asked the National Forest Service to devise a rule that would provide permanent protection to roadless areas in the national forests. Within a week, the Forest Service had begun work on the "Roadless Rule" and the rule was promulgated on January 5, 2001, just prior to Clinton leaving office, and went into effect on May 12, 2001. This provided the requested protection to all of the nation's roadless areas, other than select areas in Alaska and Idaho. The "Roadless Rule" was met almost immediately with opposition, with several cases calling into question the validity of such a blank rule throughout the US with little concern for state economies and objectives.

In response to this opposition and now within the Bush era, the National Forest Service devised and announced in 2005, the "State Petition Rule", which was thought to replace the "Roadless Rule." The "State Petition Rule" provided that a state could petition the Forest Service to make state-specific considerations for projects and treatment schemes for the roadless areas within that state's borders.

On August 25, 2009, The Ninth Circuit Court of Appeals ruled that the "State Petition Rule", was promulgated incorrectly, having violated the statutory requirements for promulgation of both the National Environmental Policy Act and the Endangered Species Act. Cal. ex. rel. Lockyer v. USDA, 2009 U.S. App. LEXIS 19219 (9th Cir. 2009). The Court then reinstated the Clinton era "Roadless Rule", which provides greater protection to the wildlife and environment found within the roadless areas of the nation's federal forests, and permanently enjoined the "State Petition Rule".

The state petition that may be forwarded by Colorado depending on the public comment period's reaction, is a petition as would be compliant with the "State Petition Rule", which would not be possible under the "Roadless Rule." There have been U.S. District Court decisions that have come to the opposite conclusion of the Ninth Circuit as to the validity of the two rules in question, in fact actually permanently enjoining the "Roadless Rule" throughout the U.S. Wyoming v. United States Dep't of Agric., 570 F. Supp. 2d 1309 (D. Wyo. 2008). Nevertheless, the Ninth Circuit opinion followed in 2009. The situation in Colorado presents a fork in the road for both the State of Colorado and the USDA. If the state chooses to forward its petition for consideration as allowed by the "State Petition Rule", then the USDA will have to directly address the question that has provided a split within authorities throughout the U.S. Without such action by the USDA, the only way for the roadless areas to be totally protected is by express action of President Obama to uphold the 2001 national rule, asking for the USDA to reinstate the "Roadless Rule", so as to pursue the same direction and objective as Clinton had in mind when he first asked for the rule to be created in 1999. With such explicit action, the roadless areas of our nation's forests can once again be guaranteed permanent and effective protection, thus ensuring that these areas and the wildlife that are contained within them, may be present for future generation within this country.

Exactly how "organic" does organic food have to be?

This post was written by staff member Derek Leslie.

As one peruses the local grocery store, or spends a Saturday morning at their local farmer’s market, it quickly becomes apparent that foods labeled natural or organic have really taken off. Grocery store chains devoted to the once-niche organic food market have expanded rapidly in the past decade. Indeed, it is hard to grab a bite these days at all without hearing the buzz words associated with this bona fide food phenomenon. And while its success as a brand and a marketing tool seems clear, the word organic may not be as straightforward as you might have hoped.

In 1990 Congress enacted the Organic Foods Production Act (OFPA) in order to provide consistent national standards for producing and marketing organically produced agricultural products. Organic Foods Production Act (OFPA), 7 U.S.C.A. §6501 (West 2009). OFPA requires the Department of Agriculture to promulgate regulations to effectuate its purpose. These regulations, then, provide the legal standard for the certification of foods as “organic”. Specifically, to be sold as organic, a food must “be produced and handled without the use of synthetic substances, such as pesticides, and in accordance with an organic plan agreed to by an accredited certifying agent and the producer and handler of the product.” Harvey v. Veneman, 396 F.3d 28, 32 (1st Cir. 2005) (citing 7 U.S.C. § 6504). An organic plan refers simply to an agreed upon procedure to follow in the care of the agricultural product in order to ensure it meets the standards set forth in the OFPA and the associated regulations. Organic Production and Handling System Plan, 7. C.F.R. 205.201 (2009). This includes plans to make certain synthetic substances as well as products exposed to synthetic substances do not come into contact with the organic product. Id. This, however, is just the beginning of the process.

Surprisingly, all organic foods are not created equal. Labeling and certification are, therefore, not quite as simple as “organic” or “not organic.” Actually, it consists of a four-tier labeling system based upon the percentage of organic ingredients the food contains: products containing 100% organic ingredients may be labeled “100 percent organic,” products containing 94 to 100% organic ingredients may be labeled “organic,” products made from 70 to 94 % organic ingredients may be labeled “made with organic (specified ingredients or food groups),” and finally, foods that contain less than 70% organic ingredients may identify organic ingredients used on its label as “organic.” Product Composition, 7 C.F.R. § 205.301 (2009).

Moreover, products in the first two tiers of the labeling categories may bear both a United States Department of Agriculture seal and the seal of a private certifying agent. 7 C.F.R. §§ 205.303(b)(4)-(5)(2009). Products in the third tier, those made from 70 to 94% organic ingredients, may bear the seal of a private certifying agent, and products in the final tier, those containing less than 70% organic ingredients, may not bear a USDA seal nor that of a private certifier. 7 C.F.R. § 205.304 (2009); 7 C.F.R. § 205.305(b) (2009).

This, still, is not the end of the process. OFPA requires the Secretary of Agriculture to establish a National Organic Standards Board to create a list of synthetic substances recommended as exceptions to OFPA’s general prohibition against their use in the production of organic products. Another series of guidelines within OFPA exists for these exceptions. 7 U.S.C. 6517(a) (West 2009).

With the growth of the organic food industry, these regulations are having a significant impact on the lives of average American citizens, who remain largely oblivious to their operation. If we are to become savvy organic food consumers, it is necessary to familiarize ourselves with the labels and certifications that come with the territory. Only then will we be equipped to truly know what we are eating.

“The Pending Farmers’ Market Fiasco: Small-Time Farmers, Part-Time Shoppers, and a Big-Time Problem”

Written by staff member Brandon Baird, this Note appeared in KJEANRL Vol. 1 No. 1. This abstract is written by staff member Brandon Wells.

The recent growth in farmer’s markets has created increased complexities in dealing with liability for injuries from food sold at these markets. The main focus of this note is on the implications of applying the modern “consumer expectations” test of food liability to the markets, as well as what duties the vendors at these markets may owe to the consumers that visit them.

The analysis begins with a brief discussion of the history of farmer’s markets, noting that farmer’s markets have been around essentially as long as people have been trading for produce. A brief timeline is provided, outlining the shift from early products liability law that applied a strict liability theory to the sellers of food to the modern “consumer expectations” test. The “consumer expectations” test actually provides food purchasers less protection than strict liability, mainly because the “consumer expectations” test allows a jury to decide whether the reasonable consumer should have expected to find the defective aspect of the food.

The legal liability of the farmer’s markets is of significant importance, and there is much concern over whether the mostly uninsured farmer’s markets can continue to thrive while facing inevitable products liability claims for defective food. There is also an interest in the protection of farmer’s market consumers, and how the law can come to their aid. Courts have found manufacturers and restaurants liable for failing to warn of possible contamination in food, and the duty to warn should be applied to farmers in markets as well.

While some markets do require their vendors to carry liability insurance, unfortunately most do not. This opens up vendors to a potentially unlimited amount of liability. Most farmers’ market vendors don’t have many assets, and while this may prevent them from acquiring insurance; it may also prevent them from ever having to defend against a claim. Pursuing a claim against a vendor with little assets to satisfy a judgment may not be practical for injured consumers.

Although growing more prominent with local purchasers trying to save money in a tough economy and those that just want to enjoy local fresh produce; farmer’s markets are not completely safe for consumers. Contamination of food is at great risk with farmer’s markets, especially since farmers are mostly unregulated and are allowed to process foods such as jam, jelly and cake in their own kitchens. A failure to warn combined with uninsured vendors makes claims against farmers more complex and less remedial than those against large food retailers. While farmer’s markets have the ability to be a great part of our future society, the legal liabilities involved are certainly a risk factor we can’t ignore.