Mortellite v. Novartis Crop Protection, Inc. ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
8-21-2006
Mortellite v. Norvatis Crop
Precedential or Non-Precedential: Precedential
Docket No. 03-3847
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 03-3847
GARY MORTELLITE; and GEORGE MORTELLITE,
individually and d/b/a/ BUFFALO FARMS; MICHAEL DIMEO
and WILLIAM DIMEO, individually and d/b/a INDIAN
BRAND FARMS, INC.; ANTHONY DIMEO, JR. and
WILLIAM DIMEO, individually and d/b/a COLUMBIA FRUIT
FARMS, INC.; WILLIAM A. MORTELLITE, individually and
d/b/a WM. MORTELLITE FARMS; JOYCE CAPPUCCIO,
individually and d/b/a WM. CAPPUCCIO & SONS; JOSEPH D.
BERENATO, individually and d/b/a CHAPPINE FARMS;
GENE J. MARTINELLI, individually and d/b/a COLUMBIA
CRANBERRY CO.; JOSEPH E. MARTINELLI, individually
and d/b/a BLU-JAY FARMS; LOUIS R. CONDO, individually
and d/b/a BIG BUCK FARMS; DAVID RIZZOTTE,
individually and d/b/a GLOSSY FRUIT FARMS, INC.;
GREGORY A. CLARK, individually and d/b/a CLARK
FARMS; JEFFREY WHALEN, individually and d/b/a
WHALEN FARMS; HELEN BARTMER, individually and
d/b/a S.J. BLUEBERRIES; ANTHONY MELORA, individually
and d/b/a MELORA FARMS; BILL AUGUSTINE, individually
and d/b/a BILL AUGUSTINE FARMS; RUSSELL
FRANCESCHINI and SCOTT FRANCESCHINI, individually
and d/b/a R & S FRANCESCHINI FARMS; EVELYN
FRANCHETTI, individually and d/b/a FRANCHETTI FARMS,
ANTHONY VACCARELLA, individually and d/b/a
VACCARELLA FARMS; FRANK JACOBS, individually and
d/b/a JACOBS FARM; JOHN A. DEMARCO, SR., individually
and d/b/a SUN VALLEY FARMS INC.; JOSEPH A.
SILIGATO, individually and d/b/a BLUEMOON BERRY
FARMS; CARMEN MERLINO, JR., individually and d/b/a
OAKCREST FARMS; JOHN DOE(S), as discovered,
1
v.
NOVARTIS CROP PROTECTION, INC.,
a foreign corporation
JOSEPH D. BERENATO; LOUIS R. CONDO; DAVID
RIZZOTTE; JEFFREY WHALEN; BILL AUGUSTINE;
ANTHONY VACCARELLA; CARMEN MERLINO, JR.;
MICHAEL DIMEO; WILLIAM DIMEO; ANTHONY DIMEO,
JR.; WILLIAM DIMEO; JOYCE CAPPUCCIO; GENE J.
MARTINELLI; JOSEPH E. MARTINELLI; GREGORY A.
CLARK; ANTHONY MELORA; RUSSELL FRANCESCHINI
and SCOTT FRANCESCHINI,
Appellants.
On Appeal from the United States District Court for the District
of New Jersey
(D.C. No. 99-cv-02118)
District Judge: Honorable Joseph H. Rodriguez
Argued January 13, 2006
Before: FUENTES, ROSENN,* and ROTH,** Circuit Judges.
(Filed: August 21, 2006)
*
This case was argued before the panel of Judges
Fuentes, Rosenn, and Roth. Judge Rosenn died on February 7,
2006, before the filing of the opinion. The decision is filed by a
quorum of the panel. 28 U.S.C. § 46(d).
**
Effective May 31, 2006, Judge Roth assumed senior
status.
2
David C. Frederick (Argued)
Kellogg, Huber, Hansen, Todd, Evans & Figel
1615 M Street, N.W.
Suite 400
Washington, DC 20036
R.C. Westmoreland
Kathleen F. Beers
Westmoreland, Vesper, Schwartz & Quattrone
Bayport 1, Suite 500
8025 Black Horse Pike
West Atlantic City, NJ 08232
ATTORNEYS FOR APPELLANTS
John P. Mandler (Argued)
Bruce Jones
Kristin R. Eads
Faegre & Benson, LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Robert Machi
Morgan, Melhuish, Monaghan, Arvidson, Arbutyn & Lisowski
Suite 200
651 W. Mt. Pleasant Avenue
Livingston, NJ 07039
ATTORNEYS FOR APPELLEE
OPINION OF THE COURT
FUENTES, Circuit Judge
Plaintiffs are New Jersey blueberry farmers who filed suit
against a pesticide company for damages to their crops based on
3
theories of products liability, negligence, consumer fraud, and
breach of express warranty. In two separate orders, the District
Court granted summary judgment in favor of defendant Novartis 1)
based on releases that some of the plaintiffs had signed before
filing suit, and 2) based on its holding that the remaining plaintiffs’
claims were preempted by the Federal Insecticide, Fungicide, and
Rodenticide Act (“FIFRA”).
The principal issue on appeal is whether Plaintiffs’ claims
are preempted by FIFRA. We conclude that, under Bates v. Dow
Agrosciences LLP, 544 U.S. 431 (2005), decided after the District
Court’s rulings in this case, Plaintiffs’ claims for defective design,
defective manufacture, negligent testing, negligent
misrepresentation, and fraud are not preempted because those
claims do not impose labeling requirements in addition to or
different from those required by FIFRA. Accordingly, we vacate
the District Court’s judgment as to those claims and remand for
further proceedings. We also remand for the District Court to
consider whether, under Bates, FIFRA preempts Plaintiffs’ failure-
to-warn claim.
Plaintiffs also appeal the District Court’s granting of
summary judgment against the claims of seven farmers who signed
releases with Novartis. For the reasons that follow, we affirm the
District Court’s dismissal of those claims.
I. Factual and Procedural Background
For several years, Plaintiffs (the “farmers”) treated the
blueberry plants on their farms with two insecticides manufactured
by defendant Novartis Crop Protection, Inc. (“Novartis”): Diazinon
50 WP (“50 WP”) and Diazinon AG 500 (“AG 500”). Before
applying the insecticide to the plants, the farmers engaged in the
practice of “tank mixing,” whereby they would mix these
insecticides with the fungicides Captan or Captec (the
“fungicides”). The farmers allege that tank mixing is a common
and well-known practice among virtually all farmers that dates
back to the introduction of pesticides. For several years, the
farmers safely mixed the fungicides with Diazinon 50 WP or
Diazinon AG 500 and experienced no crop damage.
4
This changed, however, when Novartis produced and
marketed to the farmers a new insecticide known as Diazinon AG
600 (“AG 600”). The company distributed advertising literature
claiming that its new product was safer and more effective than AG
500 or 50 WP. The farmers began buying and using AG 600 in the
Spring of 1997, mixing the new product with the fungicides as they
had done with previous Novartis insecticides. Unbeknownst to the
farmers, however, AG 600 contained an additional ingredient
known as a “surfactant,” which was not found in 50 WP or AG
500.1 The farmers allege that the surfactant, when mixed with the
fungicides, caused systematic injury to their blueberry plants, such
as blotches, depressions, and spots on the plants, as well as plant
death. The farmers also allege that Novartis failed to reveal the
addition of the surfactant to Novartis field personnel and failed to
include this information in any of its marketing materials.
In response to the damages to their 1997 blueberry crop, the
farmers hired Dr. William Sciarappa (“Sciarappa”), a plant
pathologist, to investigate the farmers’ crop damage. Novartis sent
its representative, Dr. Neil Lapp (“Lapp”), also a plant pathologist.
Almost all contact between the farmers and Novartis between
August 1997 and December 1997 was conducted by Lapp on
behalf of Novartis and Sciarappa on behalf of the farmers.
Sciarappa’s investigations concluded that AG 600 can cause plant
damage when mixed with the fungicides.
Novartis decided to explore “goodwill” settlement
agreements with the farmers to compensate them for the damage to
their crops. Betweem November 1997 and January 1998, Novartis
entered into settlement agreements with thirteen of the fifteen
farmers (the “settling farmers”).2 As part of each settlement, the
settling farmer signed a release indicating that he or she received
the settlement proceeds
1
The surfactant is intended to enhance the ability of the
active ingredient in AG 600 to spread evenly across plant tissue
and adhere to plant structure.
2
The other farmers were not paid any damages.
5
in full satisfaction and extinguishment of all claims and
causes of action against [Novartis] . . . arising out of any
damage or loss, present or future, to crops, plants, animals,
fish or land, direct or indirect, known or unknown,
allegedly sustained by the [settling plaintiff] as a result of
the use of [AG 600].
The releases also provided that “[i]t is agreed that this is a business
decision in compromise of a disputed claim and that the making of
this payment is not an admission of liability on the part of
[Novartis].”
The following year, the farmers noticed continuing damage
to their blueberry crop, including continued inhibition of plant
growth, from their use of AG 600 in 1997. When the farmers
contacted Novartis, Novartis informed them that it would not
compensate the farmers for any damages to their 1998 crop
because the releases signed by the settling farmers precluded any
future claims.
The farmers commenced this action seeking damages based
on claims of strict products liability, negligence, negligent
misrepresentation, fraud, breach of express warranty, and breach
of the New Jersey Consumer Fraud Act. The thirteen farmers who
signed settlement agreements bring additional claims of fraud in
the inducement and breach of the covenant of good faith and fair
dealing.
Novartis moved for summary judgment against the settling
farmers based on the releases that they had signed. The District
Court granted summary judgment dismissing the claims of seven
of the thirteen settling farmers based on the releases. The District
Court found that, with regard to the remaining six settling farmers,
genuine issues of material fact existed as to whether Novartis
fraudulently induced them to sign the settlement agreements or
breached the covenant of good faith and fair dealing in negotiating
the settlement agreements. Novartis brought a subsequent motion
for summary judgment on the grounds that the remaining farmers’
claims were preempted by FIFRA. The District Court granted the
motion, finding that FIFRA preempted all of the farmers’ claims
except the claims for fraud in the inducement and breach of the
6
covenant of good faith and fair dealing, which the District Court
dismissed as dependent on the preempted claims. See Mortellite v.
Novartis Crop Prot., Inc., 278 F. Supp. 2d 390 (D.N.J. 2003). The
principal issue presented in this appeal is whether FIFRA preempts
Plaintiffs’ claims that are based on theories of products liability,
negligence, negligent misrepresentation, fraud, breach of warranty,
and breach of the New Jersey Consumer Fraud Act.3
II. Legal Analysis
A. Preemption Under FIFRA
FIFRA is comprehensive regulatory statute that covers,
among other things, the use, sale, and labeling of pesticides.
FIFRA requires a manufacturer seeking to register a pesticide to
submit a proposed label to the EPA along with supporting data. 7
U.S.C. § 136a(c)(1)(C), (F). The EPA will register the pesticide if
it determines that the pesticide is efficacious and will not cause
unreasonable adverse effects on humans and the environment, and
that its label complies with FIFRA’s prohibition on misbranding.
A pesticide is “misbranded” under FIFRA if its label contains a
statement that is “false or misleading in any particular,” does not
contain adequate instructions for use, or omits necessary warnings
or cautionary statements. 7 U.S.C. § 136(q)(1)(A), (F), (G).
FIFRA also provides that states “shall not impose or continue in
effect any requirements for labeling or packaging in addition to or
different from those required under this Act.” 7 U.S.C. § 136v(b).
1. The inducement test and the Bates test
3
The District Court had diversity jurisdiction over this case
pursuant to 28 U.S.C. § 1332. We have jurisdiction over the
District Court’s final order pursuant to 28 U.S.C. § 1291. We
exercise plenary review over the District Court’s grant of summary
judgment. See Turner v. Hershey Chocolate U.S., 440 F.3d 604,
611 (3d Cir. 2006). Our review must determine whether “the
pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).
7
The District Court held that FIFRA preempts the farmers’
claims of strict products liability, negligence, breach of express
warranty, negligent misrepresentation, fraud, and breach of the
New Jersey Consumer Fraud Act. In determining that § 136v(b)
preempted the farmers’ claims, the District Court applied the
“inducement test” used by the majority of circuits at the time,
whereby claims are preempted by FIFRA “‘if a judgment against
[the defendant] would induce [the defendant] to alter its product
label.’” Mortellite, 278 F. Supp. 2d at 398 (quoting Dow
Agrosciences LLC v. Bates, 332 F.3d 323, 331 (5th Cir. 2003)).
The District Court determined that, although the farmers’
claims are purportedly based on other theories, they in fact “relate
directly or indirectly to the fact that Novartis did not warn on its
product label that [AG 600] should not be tank mixed with Captan
or Captec.” Id. Because the current label on Novartis had been
approved by the EPA pursuant to FIFRA, the District Court
concluded that “[a]llowing these claims to proceed would be, in
effect, permitting State law damages claims to impose label
requirements in addition to or different from the federally approved
label and FIFRA,” contrary to FIFRA’s preemption component.
Id. (internal quotation marks omitted). Thus, the District Court
held that the claims were preempted by FIFRA.
Following the District Court’s decision, the Supreme Court
clarified the scope of FIFRA preemption in Bates. v. Dow
Agrosciences LLP, 544 U.S. 431 (2005). In Bates, Plaintiffs were
Texas peanut farmers who brought actions against a pesticide
manufacturer based on alleged injuries to their crops. Id. at 435.
The pesticide’s label stated that it was recommended for use in the
areas where the peanut farmers experienced crop damage. Id. The
farmers alleged that, in reality, the pesticide was unsafe for crops
grown in soil with a pH level of 7.0 or greater and that, as a result,
it injured their peanut crops, which were grown in soil with pH
levels of 7.2 or higher. Id. The farmers brought claims based on
theories of strict liability and negligence, and claims of fraud,
breach of warranty, and violation of the Texas Deceptive Trade
Practices-Consumer Protection Act. The District Court dismissed
one of the plaintiffs’ claims on state law grounds and rejected the
others under FIFRA’s preemption provision. The Court of Appeals
8
affirmed, concluding that the plaintiffs’ claims were preempted by
FIFRA because those claims, if successful, “would give Dow a
‘strong incentive’ to change its label.” Id. at 436 (quoting Dow
Agrosciences, 332 F.3d at 331-32).
The Supreme Court reversed, rejecting the inducement test
as a means of determining preemption by FIFRA. Id. at 444-46.
The Court stated that an “event, such as a jury verdict, that might
‘induce’ a pesticide manufacturer to change its label” should not be
viewed as imposing a new labeling requirement in conflict with
FIFRA. Id. at 443-45. Such an event “merely motivates an
optional decision” to change a label and therefore “does not qualify
as a requirement” to change a label. Id. Moreover, the Court
reasoned that, even where a claim would impose a requirement to
change a label, such a claim is not preempted by FIFRA unless it
imposes a requirement in addition to or different from those under
FIFRA. Id. at 444.
In place of the inducement test, the Supreme Court set forth
a two-part test for determining whether a state statute or common
law claim is preempted by FIFRA. First, the statute or common
law rule must create a requirement for labeling or packaging. Id.
Second, the labeling or packaging requirement must be in addition
to or different from those required under FIFRA. Id. An action is
preempted by FIFRA only if it fulfills both requirements of the test.
Id.
2. Claims of strict liability, negligent testing, and breach of
express warranty
Under the Bates test, the farmers’ claims of strict liability,
negligent testing, and breach of warranty are not preempted by
FIFRA. In Bates, the Supreme Court faced an almost identical
question and concluded that the plaintiffs’ claims for strict liability,
negligent testing, and breach of warranty were not preempted by
FIFRA because such claims do not require the manufacturer to
label or package the products in any particular manner. Id. at 444-
46. The Supreme Court reasoned that “[r]ules that require
manufacturers to design reasonably safe products, to use due care
in conducting appropriate testing of their products, to market
products free of manufacturing defects, and to honor their express
9
warranties or other contractual commitments plainly do not qualify
as requirements for ‘labeling or packaging.’” Id. at 444. The Court
added that, “[n]one of these common-law rules requires that
manufacturers label or package their products in any particular
way.” Id. Although the express warranty in Bates was located on
the product’s label, the state express warranty rule would not
impose a labeling requirement because the cause of action asked
“only that a manufacturer make good on the contractual
commitment that it voluntarily undertook by placing that warranty
on its product.” Id. Because an express warranty rule does not
“require the manufacturer to make an express warranty, or in the
event that the manufacturer elects to do so, to say anything in
particular in that warranty, the rule does not impose a requirement
for labeling or packaging.” Id. (internal quotation marks and
citation omitted).
Extending this reasoning to the case at hand, we conclude
that FIFRA does not preempt claims based on theories of strict
liability, negligent testing, and breach of express warranty. As the
Supreme Court explained, such common law claims plainly do not
impose labeling requirements, and therefore cannot conflict with
FIFRA. While success on these claims may induce Defendant to
change the label, this “attenuated pressure” does not amount to a
“requirement” within the meaning of FIFRA’s preemption
provision. In other words, a manufacturer may change its label as
a result of a verdict against it, but it is not required to do so. We
therefore vacate the District Court’s judgment dismissing
Plaintiffs’ claims of strict liability, negligent testing, and breach of
express warranty.
3. Claims for negligent misrepresentation, fraud, and breach
of the New Jersey Consumer Fraud Act
Plaintiffs allege their claims of negligent misrepresentation,
fraud, and breach of the New Jersey Consumer Fraud Act are
primarily based on oral misrepresentations made to them by
representatives of Novartis while marketing AG 600. In Bates, the
Supreme Court determined that claims for negligent
misrepresentation, fraud, and breach of a statutory consumer fraud
act were not preempted to the extent that they were based on oral
representations made by Defendant. Id. at 444 n.17. The Court
10
reasoned that, “[b]ecause FIFRA defines labeling as ‘all labels and
all other written, printed, or graphic matter’ that accompany a
pesticide, § 136(p)(2), any requirement that applied to a sales
agent’s oral representations would not be a requirement for
‘labeling or packaging’” and therefore would not fulfill the first
requirement of the Bates test. Id. We conclude that, to the extent
that Plaintiffs claims for negligent misrepresentation, fraud, and
breach of the statutory consumer fraud act are based on oral
misrepresentations, the claims are not preempted by FIFRA.
Plaintiffs’ claims of negligent misrepresentation, fraud, and
breach of the New Jersey Consumer Fraud Act are also based on
written misrepresentations in brochures and marketing materials
that Novartis used to market AG 600 to Plaintiffs. In determining
that FIFRA preempted these claims, the District Court relied on
Kuiper v. American Cyanamid Company, 131 F.3d 656 (7th Cir.
1997), in which the Seventh Circuit held that claims challenging
off-label statements about product safety that merely reiterate
information found on the label are preempted because such
challenges indirectly challenge the label. Id. at 662-63. This
holding is inconsistent with Bates, which holds that causes of
action which do not directly involve a label but which merely
induce a company to change its label are not preempted under
FIFRA. Bates, 544 U.S. 431 at 444. We conclude that Plaintiffs’
claims of negligent misrepresentation, fraud, and statutory
consumer fraud are preempted only to the extent that those claims
rely on written misrepresentations that qualify as “labels” or
“labeling” as defined by FIFRA.
FIFRA defines a “label” as “the written, printed, or graphic
matter on, or attached to, the pesticide or device or any of its
containers or wrappers.” 7 U.S.C. § 136(p)(1). FIFRA defines
“labeling”as:
all labels and all other written, printed, or graphic matter–
(A) accompanying the pesticide or device at any time; or
(B) to which reference is made on the label or in literature
accompanying the pesticide or device, except to current
official publications of the Environmental Protection
Agency, the United States Departments of Agriculture and
Interior, the Department of Health and Human Services,
11
State experiment stations, State agricultural colleges, and
other similar Federal or State institutions or agencies
authorized by law to conduct research in the field of
pesticides.
7 U.S.C. § 136(p)(2). Because the question of whether the alleged
written misstatements fall within this definition was not fully
briefed and argued on appeal, we remand to the District Court so
that it may consider the issue under Bates.
4. The failure-to-warn claim
Unlike the previous claims, Plaintiffs’ failure-to-warn claim
clearly fulfills the first requirement of the Bates test by creating a
labeling requirement for a product. Id. at 444. That said,
preemption applies only to those claims which, if successful, would
create labeling requirements additional to or different from those
already set forth in FIFRA. Id. Claims that result in requirements
that are consistent with FIFRA requirements and which only
provide new remedies are not preempted. Id. at 447-48, 452.
Plaintiffs allege that Novartis was negligent in its failure to
warn Plaintiffs that AG 600 could be harmful to their crops if
mixed with a fungicide. The issue of whether Plaintiffs’ failure-to-
warn claims would, if successful, create requirements in addition
to or different from those under FIFRA has not been fully briefed
and argued on appeal. We therefore remand that issue to the
District Court.
B. Dismissal of the Claims of Seven of the
Thirteen Settling Farmers
The farmers also appeal the District Court’s holding that
seven of the settling farmers (the “dismissed farmers”) could not,
as a matter of law, establish the reasonable reliance on a statement
by Novartis required for a claim of fraud in the inducement.4 Here,
4
As described above, the District Court also found that only
three of the farmers had claims for breach of the covenant of good
12
the settling farmers allege that Novartis made material
misrepresentations that, notwithstanding the language of the
releases, if future crops suffered damage as a result of the farmers’
use of AG 600 in 1997, Novartis would pay for this damage when
it manifested. The settling farmers allege that they relied on this
misrepresentation when signing the releases.
Under New Jersey law, a settlement agreement is a form of
contract, and courts must look to the general rules of contract law
to resolve disputes over a settlement agreement. See Borough of
Haledon v. Borough of N. Haledon, 817 A.2d 965, 975 (N.J. Super.
2003). Generally, the plain language of a settlement agreement is
entitled to a presumption of validity. Peter W. Kero, Inc. v.
Terminal Constr. Corp., 78 A.2d 814, 817-18 (N.J. 1951); see also
Jannarone v. W.T. Co., 168 A.2d 72, 74 (N.J. 1961) (explaining
that settlement agreement should be enforced given high value
judicial system places on settlement). There is an exception to this
presumption of validity where one party alleges fraud in the
inducement of the contract. See Kero, 78 A.2d at 818.
In order to prove equitable fraud in the inducement of the
contract, the plaintiff must demonstrate: 1) a material
misrepresentation of a presently existing or past fact, 2) reasonable
reliance on the misrepresentation by the plaintiff, and 3) resulting
damages to the plaintiff. See Jewish Ctr. of Sussex County v.
Whale, 432 A.2d 521, 524 (N.J. 1981); Weil v. Express Container
Corp., 824 A.2d 174, 182 (N.J. Super. 2003).
None of the dismissed farmers allege that Novartis, either
directly or through a representative such as Lapp, told them that
they would or could receive damages for the 1998 crop. Rather,
the dismissed farmers allege that they heard through Sciarappa and
other farmers that Novartis would pay for damage to the 1998 crop,
and that they relied on this representation when signing their
faith and fair dealing based on Novartis’s alleged threats to
withdraw the settlement offers if these farmers sought legal advice.
Because Plaintiffs do not appeal this part of the District Court’s
decision, we do not address it.
13
settlements and releases. Specifically, Bill Augustine, Lou Condo,
and Jeffrey Whalen allege that they were told by both Sciarappa
and other farmers, and David Rizzotte, Carmen Merlino, Joseph
Berenato, and Anthony Vaccarella allege that they were told only
by other farmers and not by Sciarappa.
The dismissed farmers argue that their reliance on the
statements Novartis allegedly made to Sciarappa and other farmers
supports a claim of fraud in the inducement under the theory of
indirect reliance. Under New Jersey law, the theory of indirect
reliance allows a plaintiff to maintain a fraud action based upon a
statement the plaintiff heard “not from the party that defrauded him
or her but from that party's agent or from someone to whom the
party communicated the false statement with the intention that the
victim hear it, rely on it, and act to his or her detriment.” Kaufman
v. I-Stat Corp., 754 A.2d 1188, 1195 (N.J. 2000). Thus,
[i]f a party to a transaction makes a false statement to
another party, intending or knowing that the other party in
the transaction will hear it and rely on it, and the second
party to the transaction actually hears the substance of the
misrepresentation, by means however attenuated, and
considers the actual content of that misrepresentation when
making the decision to complete the transaction, then that
person has established indirect reliance to support a fraud
claim.
Id. at 1196-97.
Summary judgment was appropriate on the dismissed
farmers’ claims because they cannot demonstrate that their reliance
on the statements of Sciarappa or other farmers was reasonable.
See Kaufman v. I-Stat Corp., 735 A.2d 606, 609 (N.J. Super. 1999)
(“The maker of a fraudulent misrepresentation is subject to liability
for pecuniary loss to another who acts in justifiable reliance upon
it if the misrepresentation, although not made directly to the other,
is made to a third person and the maker intends or has reason to
expect that its terms will be repeated or its substance
communicated to the other, and that it will influence his conduct in
the transaction or type of transaction involved.”) (emphasis added)
(quoting Restatement (Second) of Torts § 533 (1977)), judgment
14
reversed on other grounds, Kaufman, 754 A.2d at 1201. It is clear
from their deposition testimony that the dismissed farmers were
aware of the possibility of future damages. Moreover, Sciarappa
testified that each individual farmer was responsible for negotiating
his or her own settlement with Novartis.5 Based on this evidence,
no reasonable juror could find that the settling farmers reasonably
relied on the statements of Sciarappa or other farmers in
disregarding the plain language of the releases pertaining to future
damages.
Moreover, the theory of indirect reliance requires that the
fraudulent statement either be made by the defendant’s agent
directly to the victims, or by the defendant to a third person with
the intention that the victim hear it. See Kaufmann, 754 A.2d at
1195. In this case, neither Sciarappa nor any of the farmers was an
agent of Novartis. Furthermore, the dismissed farmers put forth no
evidence that Novartis made the allegedly fraudulent statements to
Sciarappa or the other farmers with the intention that the dismissed
farmers hear the statements. Thus, the dismissed farmers cannot
demonstrate an essential element of indirect reliance.
The dismissed farmers argue that, even if the theory of
indirect reliance is inapplicable, their claims should survive
summary judgment because Sciarappa was their agent and thus all
representations made to him by Novartis were representations
made to them as Sciarappa’s principal.6 Although Sciarappa
performed extensive work for the farmers with regard to
calculating their damages, he was not their agent for the purposes
of negotiating their settlement. Sciarappa’s deposition testimony
5
Sciarappa testified that he never informed any of the
farmers that Novartis would be discussing settlement for any
damages that occurred in 1998 because it was not his
responsibility, as he was “not speaking for Novartis” and “it was up
to [the farmers] to discuss [future damages] with Novartis.”
6
The Appellants acknowledge that this argument does not
apply to Rizzotte and Vaccarella, as these farmers did not hire
Sciarappa.
15
explicitly states that he was an “independent person” and it was
each farmer’s responsibility to negotiate his or her own settlement.
Indeed, Sciarappa was not even aware of the releases until months
after all the settlements had been signed.
In sum, because plaintiffs Augustine, Berenato, Condo,
Merlino, Rizzotte, Vaccarella, and Whalen cannot demonstrate the
necessary elements for their claims of fraud, we affirm the District
Court’s grant of summary judgment enforcing the releases.
Because the plain language of the releases bars these farmers’
remaining claims, we affirm the District Court’s grant of summary
judgment as to those remaining claims.
C. Dismissal of the Fictitious Plaintiffs
The Third Amended Complaint lists as John Doe plaintiffs
“fictitious farmers not yet identified” in order to “protect those
plaintiffs’ interests.” There is no allegation or evidence of the
citizenship of these fictitious farmers. John Doe parties destroy
diversity jurisdiction if their citizenship cannot truthfully be
alleged. See Kiser v. Gen. Elec. Corp., 831 F.2d 423, 426 n.6 (3d
Cir. 1987). However, the Supreme Court has held that courts of
appeals have the authority to dismiss dispensable John Doe parties
in order to preserve diversity jurisdiction. See Newman-Green,
Inc. v. Alfonzo-Larrain, 490 U.S. 826, 827 (1989). Here, the
named plaintiffs can obtain complete relief without the presence of
the John Doe plaintiffs, and any claims arising between the John
Doe plaintiffs and Novartis can be adjudicated in a subsequent
action. We conclude that the John Doe plaintiffs are dispensable
parties, and we will therefore dismiss their claims.
III. Conclusion
For the reasons stated above, we vacate the District Court’s
judgment dismissing the plaintiffs’ claims as preempted by FIFRA
and remand for further proceedings consistent with this opinion.
We also remand to the District Court to determine whether, under
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Bates, FIFRA preempts 1) Plaintiffs’ negligent misrepresentation,
fraud, and statutory fraud claims to the extent they are based on
written misrepresentations and 2) Plaintiffs’ failure-to-warn claim.
We affirm the District Court’s grant of summary judgment
dismissing the claims of plaintiffs Augustine, Berenato, Condo,
Merlino, Rizzotte, Vaccarella, and Whalen, and we dismiss the
claims of the John Doe plaintiffs.
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