jack-and-the-beanstalk-1473274899vysUpdate (May 2, 2017): In the dirty seed code war, discussed below, we chalk up another successful prediction of Minnesota Litigator. U.S. District Court Judge Wilhemina M. Wright (D. Minn.) stayed the lawsuit in favor of arbitration.

So Plaintiff’s lawsuit was a seven month, plus two weeks, plus two days detour in federal court — “unfortunate and destructive for both sides (except for the hourly billing lawyers)” (quoting our own earlier post).

Update (December 2, 2016): This post is unsolicited grandstanding about the just, fair, and proper application of U.S. contract law.

Here’s the deal: there is something fundamentally unfair about the “click-through” contracts that we all experience when we make consumer on-line purchases, sign lengthy rental car contracts, and receive small print, light-gray inked disclaimers on the backs of receipts, plane tickets, and the like. The small print is literally impossible (and I use “literally” in its real sense) for many contracting parties (that is, retail consumers) to read and understand.

As to the “micro contract terms” in the small print, any suggestion that these consumer warnings are contracts in the strict sense (that is, that they involve an offer, acceptance, consideration, mutuality of obligation, competence and capacity) is an illusion. Assuming that consumers read and understand the fine print denies reality; to the extent our law is premised on this assumption, it is indulgent and self-serving fantasy. And the result is that such terms are coercive, since in order, say, to rent a car, the consumer has no choice but to sign the supposed agreement including the micro contract terms that the consumer cannot realistically have read or understood.

On the other hand, it seems far more fair and important to hold so-called “sophisticated parties,” otherwise known as businesses or business people, those who engage in repeated and specialized transactions in the course of their work, to the fine print in their transactions. For one thing, we can and do recognize that these are businesses. Businesses are more often in a position to hire lawyers to look after their interests, and specifically, to vet contracts. Even if their lawyers let them down or if they cannot afford a lawyer, businesses cannot starve to death or be homeless as a result of a bad deal. At worst, they go out of business. Again, they’re businesses, so we should not protect them from market forces. Competitors all have to abide by the same rules. So, to the extent we let businesses off on “the fine print defense,” we are setting up incentives for businesses to ignore contractual terms and penalizing others who agree to abide by the terms.

This is all by way of saying that I will again predict that Plaintiff/Farmer Nielsen will not be allowed to argue in federal court that his soy beans had clean coats. Plaintiff/Farmer Nielsen, I predict, will be held to have agreed to have the decision go to arbitration under the Trade Rules of the National Grain and Feed Association (NGFA)notwithstanding his lawyers’ dogged efforts to keep his case in court

Update (October 31, 2016) (under the headline, “Silence Can be so Expressive; One Word Even More?”): I am feeling more optimistic about my prediction in the post below (that the lawsuit mentioned will be stayed in favor of arbitration), having read the defendant’s reply brief in support of its motion to stay the case in favor of arbitration, filed late last week.

The plaintiff in the case blew past the deadline for a response to the defendant’s motion, so the motion is unopposed. The Court is not obligated to grant motions that are unopposed, but silence is audible.

And I appreciate the Defendant’s characterization of a plaintiff’s memo as “cannibalizing” the plaintiff’s complaint. One word, vivid and succinct.

Update (October 5, 2016) (under the headline: Beans, Battles, & Beyond): The defendant has moved for dismissal of the bean battle discussed recently and below, based on an arbitration agreement pursuant to the Trade Rules of the National Grain and Feed Association (NGFA). I will go out on a stalk and predict that we’ll be saying bye-bye to the bean battle in days to come. That is, I predict defendant Grain Millers will get this dispute thrown out in favor of arbitration.

Who’s better suited to decide whether “dirty seedcoat” was a legitimate reason to turn down Farmer Nielson’s product or a ruse, a federal district court or three arbitrators — here “employees, active partners, principals, officers, or directors of Active and Associate trading members…selected based upon their personal experience in the type of trade practices or questions involved in the case“?

Original post (September 21, 2016) (under headline, “Dirty Beans or Dirty Bean Buyer?”): 

The soybeans being sold under this contract are intended for use as human food and shall be free from corn, black nightshade, peas, moldy and/or green soybeans, split seedcoat, dirty seedcoat, purple mottling, or stained seedcoat, off type soybeans or any other contamination deemed undesirable by the BUYER, in its sole determination, and fall within the Contract Specifications as listed on the front of this contract, unless otherwise provided for by the BUYER in writing.

Farmer Joshua Nielson (“Plaintiff”) has sued Grain Millers, Inc., an Eden Prairie, Minnesota-based bean buyer. Nielsen argues that contracts that allow the bean buyer to reject beans “in its sole discretion” (on account of “dirty seedcoats” and the like) are “illusory contracts.” In other words, if there is no implicit requirement of good faith or veracity of the buyer’s bases for blackballing beans, these are not true contracts. The buyer is, in effect, agreeing to and committing to nothing in exchange for the sellers’ commitment to deliver a hill of beans.

soybean-usdaAs I read Plaintiff’s prolix, long-winded, verbose, argumentative, discursive, rambling, drawn out, lengthy, protracted, and seemingly interminable (really, only 47 pages) class action complaint, it seems that the point (oddly never briefly or plainly pled in the complaint although court rules specifically require brevity and plain speech ) is that Nielsen agreed to grow non-GMO (genetically modified organism) soybeans in reliance on Defendant Grain Millers’ agreement to buy them but then Defendant Grain Millers walked away from Plaintiff’s beans using a made-up excuse:  “dirty seed coat” (see, e.g. Complaint at Para. 6) allegedly found in one “small delivery request…rejected by the Japan buyer” (Complaint, Para. 89, p.32).

As with so much commercial litigation (see, for example, disputes about buying sugar, about a pasta-boxing machine, and about an egg carton moulding machine), this case may have a false foundation. In all too many commercial disputes, all of the parties know from the get-go whether buyer and seller had a deal, whether the products met specifications, or whether, in this case, buyer really rejected seller’s beans due to their dirty coats. Maybe Grain Millers just couldn’t find any downstream premium non-GMO bean buyers at a profitable price to make the deal work.

Even when the parties and lawyers know (but one side won’t admit) that a purported contract breach excusing performance is pretextual, this kind of commercial dispute can drag on, can be expensive, and, like some protracted divorces, they can be unfortunate and destructive for both sides (except for the hourly billing lawyers).

 

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