United States District Court, E.D. Michigan, Northern Division
ORDER GRANTING IN PART MOTION FOR RECONSIDERATION AND
REINSTATING, SEVERING, AND TRANSFERRING CERTAIN
PLAINTIFFS' CLAIMS AGAINST FEDERAL DEFENDANTS TO THE
DISTRICT OF MINNESOTA
L. LUDINGTON, UNITED STATES DISTRICT JUDGE.
5, 2017, a group of farmers and incorporated farms filed suit
against a number of insurance companies, the United States
Department of Agriculture, the Risk Management Agency, and
the Federal Crop Insurance Corporation. ECF No. 1. The
Plaintiffs are dry bean farmers in Michigan, Minnesota, and
North Dakota who have not received indemnity for crop
insurance to which they believe they are entitled. On
November 22, 2017, the Federal Defendants and Insurance
Defendants both filed motion to dismiss. ECF No. 51, 52. On
March 8, 2018, Plaintiffs filed a motion for leave to file a
second amended complaint which corrects the names of certain
64. On April 18, 2018, the Court issued an order granting the
motions to dismiss and also granting the motion for leave to
file an amended complaint. ECF No. 70. In that order, the
Court dismissed without prejudice all Plaintiffs who do not
farm or reside in the Eastern District of Michigan. The Court
also dismissed all Insurance Defendants after concluding that
the Plaintiffs had failed to comply with the contractual
requirements for bringing suit found within the insurance
2, 2018, Plaintiffs filed a motion for reconsideration. ECF
No. 74. In the motion, Plaintiffs argue that the plaintiffs
from outside the Eastern District of Michigan should have
been transferred to the proper venue instead of dismissed.
They also argue that the claims against the Insurance
Defendants should not have been dismissed because the
Insurance Defendants never refused to provide indemnification
(which would have triggered the mandatory arbitration
provisions of the policies) and because Plaintiffs' claim
for contractual damages from the Insurers can be advanced
without first receiving a determination of noncompliance with
the policy from the FCIC or undergoing arbitration. For the
following reasons, the motion for reconsideration will be
granted in part.
relevant allegations were summarized in the Court's April
18, 2018, opinion and order. ECF No. 70. That summary will be
adopted in full here. The following paragraph from that prior
opinion provides a basic introduction to the case:
Plaintiffs are bringing this putative class action “on
behalf of all dry bean farmers in Michigan (navy [pea] beans
and small red beans), Minnesota (dark red kidney beans), and
North Dakota (dark red kidney beans).” Am Compl. at 2,
ECF No. 50. Each Plaintiff purchased Dry Bean Revenue
Endorsement (“DRBE”) crop insurance for their dry
bean crops in 2015. Id. “The purpose of this
insurance was to protect dry bean farmers against a market
price decline.” Id. However, even though
“dry bean market prices declined greatly in 2015, no
indemnity was paid to Plaintiffs.” Id. In the
present suit, Plaintiffs seek a declaratory judgment
invalidating certain administrative determinations related to
the DBRE, reforming or invaliding the insurance contracts,
and ordering Defendants to pay indemnity to Plaintiffs.
18, 2018, Op. & Order at 2, ECF No. 70.
have filed a motion for reconsideration. Pursuant to Eastern
District of Michigan Local Rule 7.1(h), a party can file a
motion for reconsideration of a previous order, but must do
so within fourteen days. A motion for reconsideration will be
granted if the moving party shows: “(1) a palpable
defect, (2) the defect misled the court and the parties, and
(3) that correcting the defect will result in a different
disposition of the case.” Michigan Dept. of
Treasury v. Michalec, 181 F.Supp.2d 731, 733-34 (E.D.
Mich. 2002) (quoting E.D. Mich. LR 7.1(g)(3)). A
“palpable defect” is “obvious, clear,
unmistakable, manifest, or plain.” Id. at 734
(citing Marketing Displays, Inc. v. Traffix Devices,
Inc., 971 F.Supp.2d 262, 278 (E.D. Mich. 1997).
“[T]he Court will not grant motions for rehearing or
reconsideration that merely present the same issues ruled
upon by the Court, either expressly or by reasonable
implication.” E.D. Mich. L.R. 7.1(h)(3). See also
Bowens v. Terris, No. 2:15-CV-10203, 2015 WL 3441531, at
*1 (E.D. Mich. May 28, 2015).
raise two arguments in their motion for reconsideration.
First, they argue that the Court should have transferred the
Minnesota Plaintiffs to the District of Minnesota instead of
dismissing them without prejudice for lack of venue. Second,
Plaintiffs argue that the Court should not have dismissed the
Insurance Defendants. Neither argument identifies a palpable
defect in the Court's prior order. Nevertheless, in the
interests of justice, the Court will reinstate the claims of
the Minnesota Plaintiffs against the Federal Defendants and
transfer them to the District of Minnesota. Plaintiffs'
present arguments simply demonstrate exactly why their claims
against the Insurance Defendants must be dismissed, and so no
relief is warranted in that respect.
April 18, 2018, opinion and order, the Court concluded that 7
U.S.C. § 1506(d), part of the Federal Crop Insurance
Act, identifies limitations on venue for claims brought
against the FCIC. See April 18, 2018, Op. &
Order at 17-19. That provision specifies that “[a]ny
suit against the Corporation shall be brought in the District
of Columbia, or in the district wherein the plaintiff resides
or is engaged in business.” § 1506(d). Based on
that language (and related precedent), the Court dismissed
without prejudice all Plaintiffs who did not specifically
allege that they farmed in the Eastern District of Michigan.
argue that the Court should have transferred the Plaintiffs
from Minnesota to the District of Minnesota instead of
dismissing them. Plaintiffs argue that transfer is typically
preferable to dismissal, especially when dismissal might
prejudice the plaintiff. And Plaintiffs indicate that, if
forced to file anew in the District of Minnesota, their
claims against the FCIC might be barred by the six year
statute of limitations under the Administrative Procedure
Act. See 28 U.S.C. § 2401. Plaintiffs rely upon
28 U.S.C. § 1406(a), which specifies that if a district
court determines that venue is lacking in a case, it
“shall dismiss, or if it be in the interest of justice,
transfer such case to any district or division in which it
could have been brought.”
the Insurance Defendants argued that venue was improper at
the pleading stage, the Plaintiffs did not cite §
1406(a) or seek transfer to a proper district. Rather, they
argued (incorrectly) that venue was proper in the district of
the named class representative (even though class
certification has not been sought, much less granted).
Plaintiffs argue for the first time that the improperly
joined Plaintiffs should be transferred to a proper venue.
Section 1406(a) is manifestly discretionary, and so there was
no error in declining to sua sponte transfer several
named Plaintiffs to another district (especially when proper
venue existed in two districts, and Plaintiffs had provided
no indication of where they wished to litigate their claims).
Nevertheless, because Plaintiffs have now expressly requested
transfer and have identified potential prejudice which might
result from dismissal, their request will be granted.