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Nathan Kimmel, Inc. v. Dowelanco

ELR Citation: 32 ELR 20437
Nos. 99-56746, 275 F.3d 1199/(9th Cir., 01/07/2002)

The court holds that Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) preempts a company's state-law claims against a competing pesticide manufacturer for intentionally interfering with the company's prospective economic advantage. When using the manufacturer's product, food and medicine must either be removed from the area or placed in special nylon polymer bags. After the company created a bag to be used with the manufacturer's product, the manufacturer applied to the U.S. Environmental Protection Agency (EPA) for a new label stating that only its bag could be used, making it illegal to use the company's bag. The manufacturer premised its application on the theory that its bag was the most reliable, even though its own tests revealed that this was false. After EPA granted the manufacturer's application for a new label, the company filed suit. The court first holds that the company's claims are preempted by FIFRA. FIFRA expressly forbids applicants from falsifying "any information relating to the testing of any pesticide . . . including the nature of any . . . observation made, or conclusion or opinion formed." Moreover, the U.S. Congress has afforded EPA substantial enforcement powers under FIFRA that enable it to make a measured response to suspected fraud against it. Here, it is the alleged fraud-on-the-EPA and abuse of the labeling process that give rise to the company's damaged business claims and to its proffered cause of action. Consequently, because the existence of the FIFRA requirements are a critical element of the company's state-law case for intentional interference with prospective business advantage, the company's claims are preempted.

The full text of this decision is available from ELR (17 pp., ELR Order No. L-428).

Counsel for Plaintiffs
Joel R. Bennett
Bennett & Fairshter
225 S. Lake Ave., 9th Fl., Pasadena CA 91101
(626) 568-1200

Counsel for Defendant
Dean T. Barnhard
Barnes & Thornburg
1313 Merchants Bank Bldg.
11 S. Meridian St., Indianapolis IN 46204
(317) 638-1313

OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]