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Ackerman v. United States Department of Agriculture

United States District Court, E.D. Michigan, Northern Division

June 1, 2018

GREGORY ACKERMAN, et al, Plaintiffs,
v.
UNITED STATES DEPARTMENT OF AGRICULTURE, Defendant.

          ORDER GRANTING IN PART MOTION FOR RECONSIDERATION AND REINSTATING, SEVERING, AND TRANSFERRING CERTAIN PLAINTIFFS' CLAIMS AGAINST FEDERAL DEFENDANTS TO THE DISTRICT OF MINNESOTA

          THOMAS L. LUDINGTON, UNITED STATES DISTRICT JUDGE.

         On June 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 Plaintiffs.

         ECF No. 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 policies.

         On May 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.

         I.

         The 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.

         April 18, 2018, Op. & Order at 2, ECF No. 70.

         II.

         Plaintiffs 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).

         III.

         Plaintiffs 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.

         A.

         In the 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.

         Plaintiffs 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.”

         Although 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).

         Now, 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. ...


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