Sultan Chemists, Inc. v. United States Environmental Protection Agency

No. 00-3711 (281 F.3d 73) (UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT February 6, 2002)

ELR Digest

The court upholds a U.S. Environmental Protection Agency Environmental Appeals Board decision finding a dental supplies distribution company liable under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) for distributing unregistered pesticides. A sales agreement the company entered into with the manufacturers contained an explicit guaranty as to one of the product's registration. Thus, the company argued that it was shielded from liability under FIFRA § 12(b)(1), which allows persons to avoid liability if they received the pesticide from a person who guaranteed, in writing and in a specified form, that the pesticide was legally registered and satisfied the requirements of FIFRA.

The court first holds that the sales agreement does not satisfy the requirements for a guaranty under FIFRA. The guaranty for one product does not create a guaranty for the other unregistered products. Moreover, while FIFRA's guaranty provision releases an innocent distributor who reasonably relies on the written assurances of the products' manufacturers, it does not shield the distributor of pesticides from the responsibility of ensuring to the extent possible that the manufacturer has complied with FIFRA's requirements. Although a distributor's good-faith belief is one of the six requirements to qualify for the guaranty exemption from liability under § 12(b)(1), it is not the only factor required and it is not by itself sufficient to escape liability. In addition, the court holds that the company's extrinsic evidence pertaining to its course of dealing with the manufacturers was insufficient to show that the guaranty applied to the entire product line. Finally, the court holds that the $ 175,000 penalty assessment was proper. The penalty is well within the limits set by FIFRA, and the company offered no evidence to show an abuse of discretion at any point during the penalty calculation process.

The full text of this decision is available from ELR (10 pp., ELR Order No. L-451).

Counsel for Petitioner
Bruce Robins
Feder, Kaszovitz, Isaacson, Weber, Skala & Bass
750 Lexington Ave., New York NY 10022
(212) 888-8200

Counsel for Respondent
Michele L. Walter
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]