U.S. District Judge Thomas Schroeder in a decision on Tuesday said farmers from California, Illinois, Florida, Texas and five other states who sued the companies can proceed for now with some claims under federal and state laws.

Schroeder said the farmers can seek an order to force the pesticide makers to end their allegedly anti-competitive conduct. The judge cut a federal antitrust damages claim, but the farmers could be eligible for compensation under some state law claims remaining in the litigation.

Syngenta and lawyers for the plaintiffs declined to comment, and Corteva did not immediately respond to a request for one.

The farmers’ lawsuit alleged Syngenta and Corteva used loyalty agreements and rebate programs with distributors to block generic manufacturers from making inroads into the market. That allowed the companies to charge higher prices, according to the farmers. Syngenta and Corteva have denied the claims.

The lawsuit mirrors a case being pursued by the FTC and a group of states, including California, Texas, Indiana and Illinois. The alleged exclusive-dealing scheme has caused farmers to overpay annually by “many millions,” according to the FTC.

Schroeder of the federal court in Winston-Salem, North Carolina, in a ruling last year said the government litigation could move ahead.

Syngenta and Corteva had argued the farmers had not shown how they were harmed, since they said they buy products from distributors and retailers and not from the manufacturers.

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The settlement disclosed late on Friday culminated nearly a decade of litigation in federal court in Colorado against Pilgrim’s Pride, one of the largest U.S. poultry processors.

The 2016 lawsuit accused Colorado-based Pilgrim’s Pride of concealing an industry-wide price-fixing scheme to charge artificially high prices for chicken. The shareholders said Pilgrim’s Pride misrepresented that its profitability was based on its product mix, pricing strategy and other factors.

The settlement covers purchases of stock in the company between February 2014 and November 2016. U.S. District Judge R. Brooke Jackson must approve the deal.

Pilgrim’s Pride, owned mainly by Brazil’s JBS SA, and a lead attorney for the plaintiffs did not immediately respond to requests for comment.

Pilgrim’s Pride has denied the claims and did not admit wrongdoing in agreeing to settle.

The plaintiffs’ lawyers said the estimated average settlement recovery is $0.59 per affected share, before deductions of fees and expenses.

The class attorneys said they would seek up to 33.3 per cent, or about $13.8 million (C$19.8 million), in legal fees from the settlement fund.

Pilgrim’s Pride has earlier faced antitrust lawsuits over pricing and competition.

The company in 2021 pleaded guilty in federal court and was ordered to pay a $107.9 million (C$155.2 million) fine, resolving U.S. charges that it conspired to fix chicken prices.

In 2023, the meat processor agreed to pay $100 million to settle claims that it conspired with rivals to underpay chicken farmers.

—Reporting by Mike Scarcella

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Court of Queen’s Bench Justice Chris Martin delivered his written judgment Tuesday in Winnipeg, clearing the way for a judge to hear the allegations on behalf of an estimated 70,000 or so western Canadian farmers who delivered grain to the wheat board’s pool accounts in 2010-11 and 2011-12.

“I think it is good news for the farmers who felt they weren’t dealt with fairly when (Agriculture Minister Gerry) Ritz and (Prime Minister Stephen) Harper were privatizing the wheat board,” Stewart Wells, a Swift Current, Sask., farmer and member of the Friends of the Canadian Wheat Board, said in an interview Thursday. “The wheels of justice grind slowly but they’re still grinding.

“It’s the first major progress since the case was launched in 2012 and it’s certified so this is going to be heard in court. It’s just not going to be swept under the rug somewhere. So that’s a pretty major advancement.”

However, Wells didn’t rule out the possibility that the government and G3 will appeal Justice Martin’s decision.

An out-of-court settlement is also possible.

The Harper government government removed the CWB as the sole marketer of western Canadian wheat and barley destined for export or domestic human consumption Aug. 1, 2012.

In 2015, G3 (Global Grain Group), newly formed to subsume the CWB, agreed to invest $250.5 million and in return received the CWB’s assets from the federal government.

G3 is a joint venture firm majority-owned by the state-owned Saudi Agricultural Livestock Investment Co. (SALIC) and Bunge.

The lawsuit brought by Brookdale, Man., farmer Andrew Dennis alleges Ritz acted unlawfully by taking $150.9 million of farmers’ money from the CWB’s pool accounts to help privatize the wheat board.

One hundred and forty-five million dollars was used to triple the wheat board’s contingency fund and $5.9 million went to cover some of the transition costs.

Under the Canadian Wheat Board Act, all money collected in the CWB’s pool accounts earned from marketing farmers’ grain was required to be paid to farmers, less board operating expenses.

“What’s alleged is that Gerry Ritz… was acting illegally and not in good faith — the legal phrase is misfeasance while in public office — when he directed money to the contingency fund that we argue ought to have been paid to farmers instead,” Wells said.

“We argue that he was morally and legally wrong to be hiving off money that should have gone to the pooling accounts and been paid to farmers but instead he was trying to build up the Canadian Wheat Board as an entity so he could later on give it away to Saudi Arabia and Bunge.”

The CWB’s board of directors unanimously passed a resolution calling on the government to cover the cost of privatizing the board instead of farmers, Wells said.

“And then Ritz said in public that he would pick up all the cost, but when the (CWB’s) final annual report came out it showed that they had taken $5.9 million out of the pooling account to cover restructuring costs,” he said. “It makes no sense. It just loops back to the notion that farmers weren’t being treated fairly.”

The suit also asks for $10 million, plus interest since 2012, in damages, bringing the total compensation sought to $160.9 million, excluding interest.

“It’s not that much per individual farmer (if the suit is won),” Wells said. “It totally depends how many tonnes they (farmers) delivered to the pools in those two years, but that’s one of the reasons class actions were invented. It wouldn’t make sense for one or a very small group of farmers to take this sort of action, but it certainly makes sense to launch it as a class.”

Farmers who delivered to the pools in 2010-11 and 2011-12 are automatically part of the class action lawsuit unless they opt out, Wells said.

More information for affected farmers will be posted on a website, he added.

Wells doesn’t know when the case will be heard, but doesn’t rule out it taking another three to five years to resolve.

“They (federal government and G3) have been deliberately trying to delay this process all the way along for the last 10 years… but this is a very significant step toward getting the action certified having the representative plaintiff Andrew Dennis named in the action so he can carry it forward on behalf of all these farmers,” Wells said. “It’s a really crucial step. Without this the case couldn’t have gone anywhere.”

Wells declined to disclose how much money has been spent litigating the case so far.

“We have said all along that we are very grateful to all of the farmers that supported us when we started fundraising for this action back in very, very late 2011 and then in 2012, 2013 and 2014,” he added. ‘We wouldn’t have gotten anywhere without the support of those farmers there’s no question about that. This is truly the farmers’ action. Everybody is looking forward to the result.”

While the case is about the alleged misuse of farmers’ money, it’s also about holding government to account, Wells said.

“Cabinet, through orders-in-council, can change some things but they can never override the existing legislation,” he said. “And that’s what we are arguing happened here — that Ritz was overriding the original legislation with his orders-in-council, which in turn makes his actions illegal.

“Whether they (farmers) agreed with the wheat board being a (mandatory) marketing agency or not they still didn’t deserve to have money taken from the pooling accounts and just given to the King of Saudi Arabia and Bunge.”

After taking over the CWB, the new G3, renamed G3 Canada Ltd., was 50.1 per cent owned by SALIC and Bunge and up to 49.9 per cent potentially owned by farmers, depending on how much grain they delivered to the new firm.

Farmers were to earn $5 of G3 equity for every tonne.

G3 Canada had two shareholders — G3 Global Grain Group and the farmers’ equity trust. Farmers who deliver to CWB own units in the trust and the trust owns shares in G3 Canada Limited.

After the farmers’ equity is fully allocated, or in seven years (2022), G3 Canada Ltd. can buy the equity, but isn’t obliged to.

In 2016 Reuters reported SALIC’s ownership within G3 Global Grain Group jumped to 75 per cent from 49 per cent, according to an April 28, 2016 Bunge filing.

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man.

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“At a time of high inflation, it is unacceptable to make the price of beef even more expensive than it already is,” Sylvie De Bellefeuille, a lawyer for Option Consommateurs and the representative plantiff in the proposed suit, said in French in a release Tuesday.

The organization, a Quebec-based consumer protection group, said its lawyers filed an application last Thursday in the provincial Superior Court’s Montreal district for leave to bring a class action. At time of writing, the suit had not yet been authorized and its allegations have not been proven.

Option Consommateurs alleges Cargill, JBS, Tyson Foods and National Beef Packing Co., which control the lion’s share of both the Canadian and U.S. beef markets, have “reportedly been plotting at least since 2015 to fix the price of beef.”

Anyone who has purchased beef in Quebec since Jan. 1, 2015 would form part of the class in this case, the group said.

The suit may be inspired by a similar case recently settled in the U.S., said Sylvain Charlebois, a food systems analyst with Dalhousie University.

JBS last month said it would pay US$52.5 million to settle litigation accusing meat-packing companies of conspiring to limit supply in the U.S. beef market in order to inflate prices.

Reuters quoted JBS at the time as saying the company did not admit liability but found settling that suit was in its best interest and would still defend against beef price-fixing claims by other plaintiffs.

The settlement came a month after U.S. President Joe Biden announced a plan to stop alleged “exploitation” in the meat sector.

In the U.S. suit, JBS, Cargill, National Beef and Tyson had been accused of conspiring since 2015 to create supply shortfalls.

“It’s a very bizarre lawsuit,” Charlebois said of the Quebec suit.

Grocers are excluded, he said, which implies only the packers were colluding with no other beneficiaries. However, transactions are mostly between grocery stores and consumers.

He doesn’t know how they’ll determine the specific prices grocers paid, Charlebois said.

However, he said, it’s not unwarranted for consumers to be wary of big food companies. “There is baggage created by the bread-price fixing scandal back in 2017.”

Loblaw and its parent company George Weston Ltd. that year admitted they’d been involved in a scheme to artificially raise bread prices between the early 2000s and 2015.

Class action suits are in progress in Ontario and Quebec against Loblaw and alleged co-conspirators, according to a Jan. 7 report from the Globe and Mail.

In 2017, Loblaw offered $25 gift cards as compensation to customers. However, the price of bread doubled during the period of alleged price fixing — outstripping food inflation significantly, Maclean’s writer Jason Markusoff and market analyst Kevin Grier wrote in 2018.

If a household was buying one loaf of bread a week, they wrote, the excessive price increase cost about an extra $370 between 2002 and 2015.

The beef lawsuit may spill into the rest of Canada, said Charlebois. It may also be the first of many lawsuits targeting other products. Food prices are high and people are skeptical, he said.

“If a consumer out there is skeptical, he or she has every right to be skeptical given what has happened in recent years,” Charlebois said.

— Geralyn Wichers is a reporter for the Manitoba Co-operator.

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U.S. District Court Judge Vince Chhabria in San Francisco said the proposal “would accomplish a lot for Monsanto,” which Bayer acquired for $63 billion in 2018, and “would accomplish far less for the Roundup users” who are currently healthy (all figures US$).

The agreement would have paused litigation linking Roundup to non-Hodgkin lymphoma (NHL) for four years and would have barred Roundup users from seeking punitive damages once the pause on litigation expired.

In return, users could be eligible for free medical exams and compensation if they were diagnosed with NHL.

The proposed class action settlement was aimed at claims by people who have been exposed to the herbicide and who become sick in the future.

Separately, Bayer has committed up to $9.6 billion to resolve ongoing claims of people who blame glyphosate — the main active ingredient in Roundup — for an existing illness. The company’s CEO told analysts this month that 90,000 existing claims have been resolved and 30,000 are still being negotiated.

The company has said that decades of studies have shown that Roundup and glyphosate are safe for human use. Bayer did not immediately respond to a request for comment on the judge’s decision.

Bayer, which inherited both the Roundup brand and the litigation from its acquisition of Monsanto, said last June its proposed U.S. settlements “have no bearing on litigation in Canada” and the company is “not contemplating a settlement of the Canadian cases related to glyphosate.”

‘No closure’

Bayer has been criticized by consumer advocates for fighting efforts to add a warning label to Roundup or pull it from the herbicide market, which it dominates along with other glyphosate products.

Chhabria had suggested a warning label might provide a way to prevent future lawsuits, which are based on the theory that Bayer failed to warn consumers of Roundup’s link to cancer.

Bayer has called the class action settlement proposal one of the “building blocks” to “provide closure” on the Roundup litigation.

Leslie Brueckner, an attorney with Public Justice, which objected to the proposal, called the ruling important for public health and said the risk of substantial punitive damages might force Bayer to change.

Chhabria’s ruling meant the company faced continued lawsuits, she said.

“So as long as Roundup stays on the market, Bayer will continue to be sued by Roundup victims who get NHL,” said Brueckner. “That means no closure.”

The four-year plan would have grouped potentially millions of residential users and farm laborers in a class and provided them the medical exams and up to $200,000 if they were diagnosed with NHL.

Chhabria’s six-page order cast doubt on the value of the medical exam offer, given the 10-year to 15-year lag time between exposure and potential onset of cancer symptoms.

He also said most claimants could expect $60,000 or less in compensation and that compensation might not be available after the plan expired.

Attorneys for the class said at last week’s hearing that Bayer could extend the agreement and provide additional compensation.

The judge also questioned how healthy users of Roundup could be adequately notified of a settlement that bound them in the future if they develop NHL.

“Mere tweaks cannot salvage the agreement,” Chhabria said.

— Reporting for Reuters by Tom Hals in Wilmington, Delaware.

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Bayer and class action attorneys hope U.S. District Judge Vince Chhabria in San Francisco will give preliminary approval on Wednesday to create a class of people exposed to Roundup who could get sick in the future.

The agreement would provide free medical exams and up to $200,000 in compensation if a class member is diagnosed with non-Hodgkin’s lymphoma, a cancer (all figures US$).

Chhabria in a court filing asked if it was possible to contact the potentially millions of homeowners and farmworkers who have been exposed to Roundup to notify them they were going to be bound by the settlement.

He also wanted to know how he would determine if the compensation was adequate and whether he should evaluate the plan against other options, including Bayer adding a cancer warning label to Roundup, something the company has resisted.

Chhabria noted in his final question that jury trials have gone very well for plaintiffs. Given that, the judge asked why class members should agree to a settlement that requires them to present at future trials a report from a science panel that will spend the next four years determining if Roundup causes cancer.

“The last question is a killer,” said David Noll, a professor at Rutgers Law School.

The company has said decades of studies have shown Roundup and its active ingredient glyphosate do not cause cancer and are safe for human use. Consumer groups and personal injury lawyers have criticized the plan because it prevents lawsuits for four years and bars class members from seeking punitive damages.

Bayer said in a statement that judges often raise questions for parties to address prior to hearings.

“We look forward to working with the court and the parties through the approval process to ensure the class plan is fair to all parties,” the company said.

Chhabria said if his nine areas of concern were addressed at the hearing, a second hearing would be scheduled to deal with smaller concerns.

The company last June agreed to commit $9.6 billion to settle the existing 125,000 U.S.-based claims over Roundup, which is separate from the class settlement aimed at resolving future claims.

Bayer inherited the glyphosate-based herbicide Roundup, and the litigation, as part of its $63 billion acquisition of Monsanto in 2018.

The Canadian arm of Bayer CropScience last June said those settlements “have no bearing on litigation in Canada” and the company is “not contemplating a settlement of the Canadian cases related to glyphosate.”

— Reporting for Reuters by Tom Hals in Wilmington, Delaware.

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The Manitoba Court of Appeal has overturned a lower court judge’s ruling to strike the suit.

The higher court on Wednesday “ruled that our cause of action — ‘malfeasance while in public office’ — is legitimate, and that our litigation against the federal government can continue,” Wells said Friday via email.

“The alleged offence occurred when Gerry Ritz was the minister of agriculture and the Canadian Wheat Board was being destroyed by the Harper government in 2011.”

The decision, Wells said, means “we can continue our legal process which calls for the repatriation of $150 million to farmers who were marketing wheat and barley through the CWB in 2010-11 and 2011-12. The legal action also calls for $10 million in punitive damages. With interest accruing since 2012 the total number would be in the $190 million range.”

In a phone interview, Wells said the Court of Appeal’s written ruling underscores the suit’s credibility.

“There is nothing on the record before this court to suggest that the allegations (in the suit) are bald conclusions, patently ridiculous or manifestly incapable of proof,” the Court of Appeal’s written ruling states in part.

It goes on to say the lower court judge’s decision to strike the suit “is so clearly wrong as to amount to an injustice.”

Wells said it’s unclear when the suit will go before a judge to be certified. If it is, farmers who did business with the CWB during those two crop years will be part of the action, unless they opt out.

Of the $151 million the suit claims should’ve gone to farmers who delivered to the CWB, it alleges $145.2 million ended up in the CWB’s contingency fund and $5.9 million was withdrawn from the CWB’s pool accounts. The allegations have not been tested in court.

The CWB set up a contingency fund to cover losses that occurred when farmers opted to price grain sales outside the CWB’s pools. It was funded when transactions earned more than the prices farmers at which farmers sold. The fund was meant to break even over time.

“In order to fund the transformation of the board to a privately held entity, the defendants engaged in a course of conduct intended to reduce payments to farmers who had sold and delivered grain to the board during the class period and to increase the monies in the contingency fund,” the claim alleges.

The federal CWB Act didn’t allow the wheat board to use money earned from its pool accounts for anything other than covering its operating expenses. Gerry Ritz, who was agriculture minister at the time, said the government would cover the costs of transitioning the CWB to an entity that could be acquired by a private company.

“Nevertheless, the board improperly charged $5.9 million in transition costs to the pool accounts, which reduced the amount that was available to producers upon payment of their contracts during the 2011-12 crop year,” the claim alleges.

“The plaintiff pleads that the board breached its duty of good faith to the class (farmers who delivered to the CWB) by ignoring its obligations to the producers, and by allocating money to the contingency fund that otherwise would have been paid to the pool account contract holders.”

The Conservative government ended the CWB’s single-desk marketing authority effective Aug. 1, 2012.

— Allan Dawson is a reporter with the Manitoba Co-operator at Miami, Man.

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The German company announced Wednesday it expects to spend up to $12 billion in the next few years to resolve “major legacy Monsanto litigation” — a reference to the U.S.-based chemical and seed company it bought for $63 billion in 2018 (all figures US$).

Glyphosate

Of that $12 billion, between $10.1 billion and $10.9 billion will go to “resolve current and address potential future Roundup litigation” — referring to about 125,000 “filed and unfiled” lawsuits alleging that the glyphosate-based product caused plaintiffs’ cases of non-Hodgkin’s lymphoma (NHL).

The deal announced Wednesday will settle the “vast majority” of current glyphosate-related suits, including 75 per cent of current cases and 95 per cent of cases set for trial, Bill Dodero, Bayer’s assistant general counsel and global head of litigation, told farm journalists on a conference call Wednesday.

The balance of the funds announced Wednesday are expected to allow for closure of any other related cases “in due course,” he said, noting the company is in negotiations with other lawyers about their “inventories” of such cases.

Class-action mechanisms will also limit future claims yet to be made, he added.

In a separate online notice to Canadian producers Wednesday, Bayer CropScience’s Canadian arm said the settlements “apply only to U.S. litigation” and “have no bearing on litigation in Canada.”

Furthermore, Bayer said in that notice, the company is “not contemplating a settlement of the Canadian cases related to glyphosate.”

While the U.S. and Canadian legal systems have “some similarities,” Bayer said, the two “are in fact quite different, including with respect to damage awards” and “very different considerations apply in Canada.”

At least one Canadian lawyer seeking certification for a class action, with a Saskatchewan farmer as the representative plaintiff and “slightly over 500” interested claimants, also confirmed Bayer’s statement.

Regina layer Tony Merchant told the Western Producer on Wednesday the announced settlements don’t apply to potential actions in Canada.

Bayer also plans to continue its appeals of glyphosate-related U.S. court decisions already made, Dodero said, as those include important arguments which could “reduce or perhaps even eliminate future litigation.”

Those decisions include the Dewayne Johnson, Edwin Hardeman and Alva and Alberta Pilliod cases in California.

In all, Dodero said, the settlements and appeals will provide Bayer with “the closure we require.”

Bayer “is in a position to still defend, and that’s very important, the science behind the product,” Dodero said, and the settlement “keeps our important legal arguments related to pre-emption and causation open” while putting the products’ assessments back in the hands of “regulators and experts.”

A class agreement governing “potential future cases” related to glyphosate includes the creation of an independent “class science panel,” which over the next four years will re-evaluate the chemical, Bayer said.

The panel, Bayer said, “will determine whether Roundup can cause (NHL), and if so, at what minimum exposure levels.”

If that panel finds “no causal connection” between the chemical and NHL, “class members will be barred from claiming otherwise in any future litigation against the company.”

Until the panel releases its findings, Bayer said, class members can’t proceed with Roundup claims or seek punitive damages.

The class agreement also commits Bayer to put $1.25 billion toward NHL research and diagnostic programs as well as “assistance payments to class members who develop NHL” before the panel makes its determination.

The Roundup class agreement, Bayer said, remains subject to approval by Judge Vince Chhabria of the U.S. District Court for the Northern District of California.

Dicamba

Up to $400 million will be set aside to resolve multi-district litigation related to non-targeted damage alleged to be caused by dicamba herbicides due to spray drift between 2015 and the current crop year.

Claimants seeking payouts from that settlement will have to provide proof of damage to crop yields and “evidence that it was due to dicamba” in order to collect, Bayer said.

Bayer also “expects a contribution from its co-defendant, BASF” toward settling those cases.

However, the only related dicamba drift case to have so far gone to trial — the Bader Farms case — is “not included in this resolution,” Bayer said.

The company believes the Bader case’s verdict is “inconsistent with the evidence and the law and will continue to pursue post-trial motions and an appeal, if necessary.”

Bayer said it “stands strongly behind the safety and utility” of its dicamba-based XtendiMax herbicide and “continues to enhance training and education efforts to help ensure growers use these products successfully.”

Asked whether the dicamba settlement might impact Bayer’s efforts to re-register dicamba in the U.S. — in the wake of a recent court case vacating its current federal registration there — Bayer CropScience president Liam Condon said the spray drift settlement is not connected.

Bayer now expects its dicamba re-registration to be approved this fall, based on “the latest data” available, which he said will be more current than the data on which the vacated registration was based.

PCBs

Also, about $820 million will go to resolve “most” of the company’s exposure to cases from U.S. state and local governments relating to wastewater discharges of polychlorinated biphenyls (PCBs), compounds formerly used mainly in coolants and insulators for electrical equipment.

Monsanto, according to Bayer, “legally manufactured PCBs” up until their manufacture and import were banned across North America in 1977, due to concerns over environmental impacts and risks of cancers and other illnesses in cases of long-term, high-level exposure.

In all, Bayer said Wednesday, cash payments are expected to begin this year, and the company assumes “potential cash outflow” will be no more than $5 billion in each of 2020 and 2021, with the rest to be paid out in 2022 or later.

To finance the payouts, Bayer said it may use current “surplus liquidity,” future free cash flows, bond issuances and/or the proceeds from the previously-announced $7.6 billion sale of its Bayer Animal Health division to Elanco, which it now expects to complete in August.

“Greater certainty”

Bayer emphasized the agreements announced Wednesday “contain no admission of liability or wrongdoing.”

Lisa Safarian, regional head for Bayer CropScience’s North American division, said on Wednesday’s conference call the agreements will “bring greater certainty to our farmer customers about the availability of our products” going forward.

There will be “no change” in availability for the crop chemicals in question due to the agreements, she added.

Asked whether the settlements will lead directly to any changes to label directions for farmers’ use of Bayer’s glyphosate or dicamba products, Condon said the company does “not expect any changes whatsoever to the labels of the products.”

“Basically, every regulator in the world has approved glyphosate as safe and non-carcinogenic,” he said, and “multiple” regulators reaffirmed it as such after the World Health Organization’s International Agency for Research on Cancer (IARC) in 2015 classified glyphosate as “probably carcinogenic to humans.”

“If you kind of step back, what we’re doing here is, in essence, we’re paying an awful lot of money to take the discussion about the safety of glyphosate out of the courtroom and actually put it back in the scientific and regulatory arena, because that’s where it belongs,” Condon said on the call.

The U.S. Environmental Protection Agency, Dodero added, had already written a letter to glyphosate manufacturers in which it “expressly said any label change indicating a cancer or carcinogenicity warning would be false and misleading.” — Glacier FarmMedia Network

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In a written ruling released Monday, Master Shayne Berthaudin of the Manitoba Court of Queen’s Bench ruled against the government’s attempt to walk away from a putative class action, which claims more than $145 million in damages owed to farmers who delivered wheat and barley to the CWB in the 2010-11 and 2011-12 crop years, along with $10 million in punitive damages.

“This ruling puts the government’s shirt in the wringer,” Stewart Wells, a farmer at Swift Current, Sask. and chair of the Friends of the Canadian Wheat Board (FCWB), said in an interview Thursday.

“In the proposed class action farmers contend the former minister of agriculture, Gerry Ritz, deprived farmers of monies they should have received from the 2010 and 2011 crop years. Instead of paying farmers, we believe this money was used to sweeten the pot for whoever was going to acquire the wheat board.”

G3 Global Grain Group, a joint venture of U.S. agribusiness Bunge and Saudi Agricultural and Livestock Investment Co. (SALIC), acquired the CWB and its assets in 2015.

The federal government’s failure to stop the lawsuit clears the way for it being certified, Bruun, a Winnipeg lawyer, said in an interview.

“We have the paperwork filed seeking certification of the class action already,” said Bruun, adding he is confident it will be approved by the court.

Bruun represents the proposed class’ representative plaintiff, Brookdale, Man. farmer Andrew Dennis, together with Jordan Goldblatt and Louis Century, Toronto-based lawyers specializing in civil litigation and class proceedings.

Of the $151 million Dennis claims should’ve gone to farmers who delivered to the CWB, he alleges $145.2 million ended up in the CWB’s contingency fund and $5.9 million was withdrawn from the CWB’s pool accounts. The allegations have not been tested in court.

The CWB set up a contingency fund to cover losses that occurred when farmers opted to price grain sales outside the CWB’s pools. It was funded when transactions earned more than the price farmers sold at. The fund was meant to break even over time.

“In order to fund the transformation of the board to a privately held entity, the defendants engaged in a course of conduct intended to reduce payments to farmers who had sold and delivered grain to the board during the class period and to increase the monies in the contingency fund,” Dennis’ statement of claim alleges.

The federal Canadian Wheat Board Act didn’t allow the wheat board to use money earned from its pool accounts for anything other than covering its operating expenses. Gerry Ritz, the federal agriculture minister at the time, said the government would cover the costs of transitioning the CWB to an entity that could be acquired by a private company.

“Nevertheless, the board improperly charged $5.9 million in transition costs to the pool accounts, which reduced the amount that was available to producers upon payment of their contracts during the 2011-2012 crop year,” the claim alleges.

“The plaintiff (Dennis) pleads that the board breached its duty of good faith to the class (farmers who delivered to the CWB) by ignoring its obligations to the producers, and by allocating money to the Contingency Fund that otherwise would have been paid to the pool account contract holders.”

‘Not reason enough’

Dennis’ claim, Berthaudin wrote, alleges regulations passed by the federal government raised the upper limit of funds that could be credited from the Contigency Fund, to $200 million from $60 million, after which $145.248 million, otherwise due to be paid to the class, was diverted to the fund.

The government’s argument behind its motion to strike out the statement of claim, Berthaudin wrote, was that the regulations passed were “statutorily authorized to be passed and are validly enacted (and thus) cannot constitute unlawful conduct.”

However, it’s “not plain and obvious to me that the plaintiff could not establish at trial that there was an unauthorized purpose behind the passage of the regulations and the flowing of funds from the pool account to the contingency fund,” he wrote in his dismissal of the government’s motion.

“More particulars may become apparent once documentary discovery has occurred, but that is not reason enough to conclude that the pleading of material facts thus far is insufficient.”

Further, Berthaudin wrote, the government’s other argument — that Dennis’ claim constitutes an abuse of process — relies on decisions from previous CWB-related proceedings, but the judge found the “underlying factual allegations” in this claim are different from those seen in previous rulings.

The judge specifically noted a 2013 Federal Court ruling which shot down most of a previous class action suit filed by Dennis and other farmers. In that ruling, the Federal Court “specifically did not strike out such claims, allowing them to proceed,” Berthaudin wrote.

FCWB, a longtime opponent of the former Conservative government’s deregulation of the CWB’s single desk marketing authority, is backing the proposed class action suit.

— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man. Follow him at @AllanReporter on Twitter. Includes files from AGCanada.com Network staff.

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Saskatchewan Court of Queen’s Bench Justice Jeffery Kalmakoff on Thursday released his ruling in a pair of actions filed by Input against Terry Gustafson, a farmer at Macoun, Sask., about 30 km northwest of Estevan.

Input filed against Gustafson in 2015 claiming breach of contract, and again last June also alleging breach of contract.

“To make a long story short, (Input) made the advance payments called for in the contracts to Mr. Gustafson, but Mr. Gustafson did not deliver the commodity required by the contracts,” Kalmakoff wrote.

Input, in a release Friday, hailed some aspects of Kalmakoff’s ruling, noting the court “ruled in Input’s favour on a number of issues which have been alleged in recent media reports.”

However, the company said, the court “did make certain findings that Input believes to be in error” and Input is “considering an appeal of these findings.”

Regina-based, publicly-traded Input deals in canola obtained from farmers by way of “multi-year streaming contracts,” including capital streams, marketing streams and, more recently, “mortgage streams,” billed as a “competitive alternative to traditional mortgage products.”

The company’s canola purchases generally involve up-front payments in return for agreed-upon tonnage over a specified number of years. At the end of March, Input reported a total of 353 active streaming contracts in the Prairie provinces, including 260 in Saskatchewan alone.

Gustafson, who owns “a large farming operation, even by contemporary standards,” with 15 owned and 85 rented quarter sections, was “under significant financial pressure” when he began reaching agreements with Input in the spring of 2014, the judge wrote.

Those included a purchase agreement for canola in April 2014; a streaming canola purchase contract later that month including a collateral mortgage and collateral security agreement; a streaming contract in late December that year, with a collateral security agreement and mortgage amending agreement; and an “amending agreement” in late March 2015.

The April 2014 purchase agreement, the judge wrote, was set up as a way to fulfill an earlier “spot” contract with Input under which Gustafson was advanced $800,000 to deliver 2,000 tonnes of canola to Viterra in Weyburn in March 2014. The farmer “was unable to deliver the canola to fill this contract because Viterra would not accept delivery.”

Kalmakoff rejected Gustafson’s claim that his agreement with Input amounted to “a partnership to produce and sell canola, where each party would share in the risks and the profits.”

‘Extra onus’

At the same time, he wrote, the relationship between Input and Gustafson “was not strictly vendor-purchaser or debtor-creditor” but “had elements of both.”

Thus, the judge found various statutes cited during the court case don’t apply to the relationship, including the Cost of Credit Disclosure Act, the Trust and Loan Corporations Act and the Unconscionable Transactions Relief Act.

On the other hand, he ruled, under the Farm Debt Mediation Act — which requires a “secured creditor” to serve notice before bringing an action against a farmer — Input meets the definition of a “secured creditor” through the language in its streaming contracts, collateral mortgage and collateral security agreement.

Therefore, Input was obligated to serve notice before launching its court claim against Gustafson, but “failed to do so.”

The judge also criticized Input and its vice-president, Gord Nystuen, for using their “positions of relative power in an unconscionable manner,” adding that the nature of its streaming contracts “places an extra onus on ICC to be diligent in assessing the financial stability of the farmers with whom it engages.”

The judge found that when Gustafson hadn’t delivered the canola required of him in 2014, Input instead advanced the farmer more money and negotiated a second contract making his delivery obligations “much more onerous.”

As the agreements piled up, Input, the judge wrote, wound up in a position of “increasing strength while driving Mr. Gustafson into a position of increasing weakness in their contractual relationship.”

In this case’s circumstances, Kalmakoff wrote, the various agreements between Input and Gustafson are “unconscionable” and “must be set aside.”

The agreements, he wrote, “reflect a highly profitable arrangement for ICC, which is almost entirely without risk.” To a farmer such as Gustafson, “the benefits appear generous at the front end, but the longer the contracts go on, the smaller the benefits, and the greater the risk.

“There is a substantial imbalance to start with, and the more dire the financial situation of the farmer, the more pronounced this imbalance becomes.”

But the judge also ruled he is “unable to conclude that the contracts should be rescinded” over any alleged misrepresentation on Input’s part.

The judge wrote he was satisfied that “any misunderstanding about the nature of the agreement came about more from Mr. Gustafson’s haste and carelessness than from any material misrepresentation by Mr. Nystuen.” Further, he wrote, he was unable to conclude any breach by Input of its contractual obligations to Gustafson.

Despite the judge’s finding that the contractual arrangement between Input and Gustafson was unconscionable, he wrote “it is clear that ICC paid Mr. Gustafson $4,500,000” and that Gustafson did not deliver any canola to Input while continuing to sell “significant quantities” of canola and other crops to other buyers.

Thus, Kalmakoff ruled he was “satisfied that Mr. Gustafson was unjustly enriched” and must be ordered to repay the money, minus proceeds Input gained from selling durum it took from Gustafson and sold in 2015. The judgment against Gustafson thus comes to just under $4.4 million, plus interest and “taxable costs.”

‘Damaged by seizure’

It’s not yet known how Kalmakoff’s ruling will affect other cases involving Input, among them a proposed class action filed on behalf of affected farmers by Regina lawyer Tony Merchant.

However, Merchant on Friday told CBC the Gustafson ruling “may mean the end of Input.”

Merchant on May 2 filed in Court of Queen’s Bench in Regina for representative plaintiff Morris Feduk of Melville, Sask., proposing a “class” of everyone who has had a contract with Input since October 2009 or has been “damaged by seizure” of assets by Input.

The action seeks to have the plaintiff’s and class’ indebtedness to Input either terminated or limited to the sums Input paid out to the farmers plus a “commercially fair” interest rate, along with general and punitive damages and costs.

Class members, Merchant’s statement of claim alleges, “were induced by Input to believe they could rely on help and assistance from Input and that Input would work together with class members in a sort of working partnership.”

Input, the statement alleged, “placed class members in a vulnerable position and would often provide funding while at the same time requiring new streaming contracts or renewal contracts to be undertaken.”

Merchant’s statement of claim also accuses Input of “predatory lending,” in which funds were “always advanced at the last possible moment” when it was “too late to undertake loans with another lender.”

‘Confidence’

Input, meanwhile, is continuing its recent launch of “mortgage streams,” which the company said last Wednesday “has gone better than expected, causing us to accelerate plans to add some term debt tied to mortgages and search out other avenues to fund mortgage deployment.”

Early signs “are excellent,” CEO Doug Emsley said in a release, adding that “without any significant promotion, Input’s internal investment committee has approved over $23 million in mortgages in just three months.”

During its quarter ending March 31, Input reported, it added 30 new producers to its streaming contract portfolio, including 20 in Saskatchewan and 10 in Alberta.

Canola prices have remained strong since last fall’s harvest, Input said last week, a fact that gives farmers “confidence in their own canola marketing programs this year, likely muting some potential uptake on marketing streams.”

Strong prices can contribute to Input’s returns on existing contracts, but can make it harder to acquire new ones, the company said. Weak prices reduce the company’s returns on existing contracts, “but can make it easier to add clients to our client list.” — AGCanada.com Network

CORRECTION, May 30, 2018: An earlier version of this article incorrectly stated the court’s ruling was released Friday rather than Thursday (May 17).

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