Justia Commercial Law Opinion Summaries

Imperial Sugar went bankrupt in 2001 and suffered a costly accident in 2008, prompting its sale to Louis Dreyfus. Imperial receives from Louis Dreyfus only minimal investment and is an “import-based, price-uncompetitive sugar refinery” that is “structurally uncompetitive” and lost roughly 10 percent of its customers from 2021-2022. Florida-based refiner U.S. Sugar agreed to purchase Imperial. The government sought an injunction (Clayton Act. 15 U.S.C. 18), arguing that the acquisition would have anticompetitive effects, leaving only two entities in control of 75% of refined sugar sales in the southeastern United States. The government applied the hypothetical monopolist test to demonstrate the validity of its proposed product and geographic markets. U.S. Sugar responded that it does not sell its own sugar but participates with other producers in a Capper-Volstead agricultural cooperative that markets and sells the firms’ output collectively but exercises no control over the quantities produced. At capacity, Imperial’s facility could produce only about seven percent of national output. U.S. Sugar argued that distributors constitute a crucial competitive check on producer-refiners that would undermine any attempt to increase prices and noted evidence of the high mobility of refined sugar throughout the country.The Third Circuit affirmed the denial of an injunction, upholding a finding that the government overlooked the pro-competitive effects of distributors in the market, erroneously lumped together heterogeneous wholesale customers, and defined the relevant geographic market without regard for the high mobility of sugar throughout the country. View "United States v. United States Sugar Corp." on Justia Law

The Supreme Court held that the federal Food Security Act of 1985 (FSA) was preemptive of Kentucky's Uniform Commercial Code (UCC) and that thoroughbreds and the right to breed them are farm products within the meaning of the FSA and, as a result, any security interest in those products was extinguished when they were sold to their respective buyers.The FSA abrogated a common exception in the UCC allowing for a security interest to remain when a farm product pass from seller to buyer. At issue in this case was (1) whether the FSA applies when the product at issue was a thoroughbred horse with particularly valuable breeding rights, and (2) whether breeding rights are farm products within the FSA. The Supreme Court held (1) the FSA preempts Kentucky's farm products exception; and (2) the plain language of the FSA demonstrates that thoroughbred horses are farm products within the meaning of the FSA, and breeding rights are also farm products under the FSA. View "MGG Investment Group LP v. Bemak N.V., Ltd." on Justia Law

Phytelligence, an agricultural biotechnology company that used tissue culture to grow trees, and Washington State University (WSU) contracted for the propagation of WSU's patented “WA 38” apple trees. Section 4 of the agreement was entitled “option to participate as a provider and/or seller in [WSU] licensing programs.” The parties acknowledged that WSU would need to “grant a separate license for the purpose of selling.” Phytelligence expressed concern about the “wispy forward commitment.” WSU responded that “Phytelligence and others would have a shot at securing commercial licenses.”WSU later requested proposals for commercializing WA 38. Phytelligence did not submit a proposal. WSU accepted PVM’s proposal, granting PVM an exclusive license that required PVM to subcontract exclusively with NNII, a fruit tree nursery association, to propagate and sell WA 38 trees. Phytelligence later notified WSU that it wanted to exercise its option. WSU responded that PVM was WSU’s “agent.” Phytelligence rejected PVM’s requirement to become an NNII member and two non-membership proposals for obtaining commercial rights to WA 38. WSU terminated the Propagation Agreement, alleging that Phytelligence breached the Agreement when it sold WA 38 to a third-party without a license and that such actions infringed its plant patent and its COSMIC CRISP trademark.Phytelligence sued, alleging breach of the Agreement. The Federal Circuit affirmed summary judgment in favor of WSU. Section 4 is an unenforceable agreement to agree. WSU did not commit to any definite terms of a future license. View "Phytelligence Inc. v. Washington State University" on Justia Law

Growers sold their perishable agricultural products on credit to a distributor, Tanimura, which made Tanimura trustee over a Perishable Agricultural Commodities Act (PACA), 7 U.S.C. 499a-499t, trust holding the perishable products and any resulting proceeds for the Growers as PACA-trust beneficiaries. Tanimura then sold the products on credit to third parties and transferred its own resulting accounts receivable to Agricap through a Factoring Agreement or sale of accounts. In this suit against Agricap, Growers alleged that the Factoring Agreement was merely a secured lending arrangement structured to look like a sale but transferring no substantial risk of nonpayment on the accounts; the accounts receivable and proceeds remained trust property under PACA; because the accounts receivable remained trust property, Tanimura breached the PACA trust and Agricap was complicit in the breach; and PACA-trust beneficiaries such as Growers held an interest superior to Agricap, and Agricap was liable to Growers. The court agreed with the district court's conclusion that Boulder Fruit Express & Heger Organic Farm Sales v. Transportation Factoring, Inc., controls the outcome of the case. The district court noted that the Ninth Circuit in Boulder Fruit expressly addressed the commercial reasonableness of a factoring agreement but implicitly rejected a separate, transfer-of-risk test. The district court further noted that the factoring agreement in Boulder Fruit transferred even less risk than the Factoring Agreement in the present case. Accordingly, the court affirmed the judgment. View "G.W. Palmer & Co. v. Agricap Financial" on Justia Law

Between 2009 and 2012, Sunshine and Purdy, a Kentucky dairy farmer, entered into “Dairy Cow Leases.” Purdy received 435 cows to milk, and, in exchange, paid monthly rent to Sunshine. Purdy’s business faltered in 2012, and he sought bankruptcy protection. Sunshine moved to retake possession of the cattle. Citizens First Bank had a perfected purchase money security interest in Purdy’s equipment, farm products, and livestock, and claimed that its perfected security interest gave Citizens First priority over Sunshine with regard to the cattle. Citizens argued that the “leases” were disguised security agreements, that Purdy actually owned the cattle, and that the subsequently-acquired livestock were covered by the bank’s security interest. The bankruptcy court ruled in favor of Citizens, finding that the leases were per se security agreements. The Sixth Circuit reversed, noting that the terms of the agreements expressly preserve Sunshine’s ability to recover the cattle. Whether the parties strictly adhered to the terms of these leases is irrelevant to determining whether the agreements were true leases or disguised security agreements. Neither the bankruptcy court nor the parties sufficiently explained the legal import of Purdy’s culling practices or put forward any evidence that the parties altered the terms of the leases making them anything but leases. View "In re: Purdy" on Justia Law

VLM, a Canadian agricultural supplier, sold frozen potatoes to Illinois Trading, a reseller. VLM sued Illinois Trading for $184,000 owed on the contract, with counts based on the Perishable Agricultural Commodities Act, which creates a trust in favor of the seller when a buyer purchases agricultural goods on short-term credit, 7 U.S.C. 499e(c)(2). To protect the trust assets, VLM sought a preliminary injunction. Illinois Trading had obtained loans from TAB Bank, giving a security interest in its assets. By the time VLM filed suit, TAB had seized Illinois Trading’s assets. The PACA-created trust made VLM’s claim superior to TAB’s security interest. VLM added a claim against TAB for seizing PACA trust assets. Before the amendment, VLM had successfully moved for consolidation of the preliminary-injunction hearing with trial on the merits. The consolidated hearing pertained only to counts against Illinois Trading, not Count V, pertaining to TAB. The court, however, issued an opinion resolving Counts I through IV and also entered judgment for TAB on Count V, because VLM had not presented evidence on that claim. The district court awarded VLM attorney’s fees and interest on the unpaid balance based on provisions in VLM’s invoices. The Seventh Circuit reversed with respect to Count V; held that the United Nations Convention on Contracts for the International Sale of Goods, was controlling not the Illinois Uniform Commercial Code; and reversed and remanded with respect to attorney’s fees and interest View "VLM Food Trading Int'l, Inc. v. Transp. Alliance Bank,Inc." on Justia Law

Beginning in 2007, Mississippi Valley agreed to sell cattle to Swift, planning to fulfill that agreement in part with cattle it had received from J&R. Mississippi Valley was merely the holder of J&R’s cattle, not the purchaser or owner. Because the relationship between Swift and J&R had soured, Mississippi Valley did not inform Swift that some of the cattle were actually J&R’s. Swift paid for the purchases with checks made out to Mississippi Valley, which deposited the checks in its general operating account and periodically sent J&R checks for sales of J&R cattle. Mississippi Valley stopped making timely payments. As the debt mounted, J&R sent increasingly frantic demands for payment. Mississippi Valley sent seven checks to J&R totaling $862,747.31. Less than 90 days later, creditors filed an involuntary Chapter 7 bankruptcy petition against Mississippi Valley. The bankruptcy trustee sought to avoid the seven payments as preferential transfers, 11 U.S.C. 547(b), but J&R argued that Mississippi Valley never had a property interest in the funds but only held the sale proceeds for J&R’s benefit. The bankruptcy court granted J&R summary judgment. The district court affirmed. The Seventh Circuit remanded, stating that it is unclear how much money could properly be traced to a constructive trust in favor of J&R.View "In re: MS Livestock, Inc." on Justia Law

The Scotts Company, an Ohio LLC, brought a diversity action against Seeds, Inc., a Washington corporation, in federal district court. Thereafter, Millhorn Farmers, Maple Leaf Farms, Mica Creek, and Tim Freeburg (Growers) sued Seeds and Scotts in Washington state court. Maple Leaf Farms and Mica Creek were Washington corporations, Millhorn Farms was an Idaho corporation, and Tim Freeburg was a citizen of Idaho. Scotts subsequently filed an amended complaint in federal court adding the Growers as defendants and seeking declaratory relief. The district court subsequently realigned the Growers and plaintiffs and Seeds and Scotts as defendants and held, alternatively, that it would stay the federal proceedings in favor of the related state court proceedings under either the Brillhart doctrine or the Colorado River doctrine. Because the parties' realignment resulted in the absence of complete diversity of citizenship between defendant Seeds and newly-aligned plaintiffs-Growers, the district court dismissed the action for lack of subject matter jurisdiction. The Ninth Circuit Court of Appeals reversed, holding that the district court should not have declined to entertain the claim for declaratory relief under the Brillhart doctrine, and instead, the claims should have been evaluated under the Colorado River doctrine. Remanded. View "Scotts Co., LLC v. Seeds, Inc." on Justia Law

A hog producer with outstanding loans to Primebank went deeper into debt by purchasing feed on credit from Oyens Feed & Supply to fatten the hogs to market weight. The hog producer subsequently filed for bankruptcy. Primebank had a perfected security interest in the hogs to secure two promissory notes predating Oyen Feed's perfected agricultural supply dealer lien on the hogs. The hog producer filed an adversary proceeding to determine the priority of the liens. The bankruptcy court granted Primebank partial summary judgment on grounds that Oyens Feed failed to provide Primebank a certified request under Iowa Code 570A.2. Oyens Feed appealed the bankruptcy court's ruling to the U.S. district court, which then certified a question of law to the Supreme Court. The Court answered by holding that Primebank's prior perfected security interest in the hogs is trumped by Oyen Feed's agricultural supply dealer lien under Iowa Code 570A.5(3) to the extent of the enhanced value of the livestock presumptively attributable to the feed, even though the bank received no certified request before the feed was sold on credit. View "Oyens Feed & Supply, Inc. v. Primebank" on Justia Law

Richard Orr and Sheldon Cook had a partnership agreement to conduct a cow-calf operation. The parties sold the cows and calves in the spring of 2007. Cook received $230,935 from the sale. Orr sued Cook, disputing the reimbursement amount Cook owed him from the sale and for the cost of feeding and caring for the cows during the winter of 2007. The trial court awarded Orr $41,614. The Supreme Court affirmed in part and reversed in part, holding (1) the trial court was not clearly erroneous in determining the value of the calves; (2) the trial court was not clearly erroneous in determining the amount of reimbursement Cook owed Orr for feed and veterinarian costs; and (3) the trial court did err in refusing to award Orr prejudgment interest because it was requested in a manner allowed by statute.