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Tennessee farmer appeals ruling in Monsanto lawsuit

(Sunday, June 6, 2004 -- CropChoice news) -- Greg Little, The Covington Leader:
A federal court case against a Covington farmer is taking even more twists and turns. The case is Monsanto Company of St. Louis versus Kem Ralph, who does have a judgment outstanding against him.

However, lawyers representing Ralph said the case is being appealed and are trying to stop the company from executing a notice to begin the procedure of collecting nearly $3 million.

Monsanto won a case against Ralph and was awarded $2.9 million for patent infringement. The judge in the case, Rodney Sippel, also handed out a judgment of $2.7 million under the liquidated damages clause of the Monsanto Technology Agreement.

Just last week, Monsanto executed Rule 69, which is seeking to get depositions from Ralph about his assets, which would set in motion the collection process. It would also likely bankrupt Ralph and his family farm would be lost.

The Rule 69 motion was filed in Tipton, Haywood and Shelby counties. Ralph owns land in all three counties.

"We're going to be digging our boots deep into the dirt of the Ralph Brothers farm," said Memphis lawyer Marc Schatten, who is representing Ralph in the proceedings now taking place in Tennessee. An email response from Monsanto was received by The Covington Leader on Tuesday afternoon regarding several aspects of this case.

Concerning why they are now beginning the process, following was the response:

"We have two judgments in the Ralph matter. The procedure to collect on the first Ralph judgment has been ongoing for more than a year. We started collecting on the $105,000 in sanctions that we were awarded in attorneys' fees late in 2002."

The response came from Julie R. Doane, manager of public affairs for Monsanto.

The filing by Monsanto is requesting a deposition be taken this Thursday, but Schatten says that's not going to happen.

Attack strategy
In fact, Schatten said on April 30, they are going to file a series of motions on behalf of the Covington farmer, claiming an injustice was done and nothing should happen until the United States Court of Appeals in Washington, D.C., makes a decision. Schatten said there will be two attacks coming from the filings.

The first, he said, is procedural.

"What Monsanto is doing now is improper," said Schatten. "The proper procedure is to wait for the appeal to conclude and that is the only time they should be issuing a Rule 69 deposition notice." The second tactic, he said, is substantive.

The heart of the matter
"That runs to the heart of the suit," said Schatten. "Citizens are given constitutional rights of due process and the right to a fair trial. Our position is his rights were trampled upon."

He said another part of their plan is to argue that Ralph was "never provided" the opportunity to provide a defense and answer allegations against him. They claim the judge would not allow necessary evidence and testimony to make that happen. For example, they claim the contract with Monsanto, from which the judgment was based, was not signed by Ralph.

Schatten said there are handwriting experts which can prove it is a forgery.

Lawyer Jimmy Robertson of Jackson, Miss., who represented Ralph in the federal suit, agreed, saying the judge should have allowed that to take place.

Robertson also said there is another lawsuit in the Southern District of Illinois which addresses that very issue.

"Monsanto doesn't like to talk about a suit against it...where farmers are charging that Monsanto has been using forged technology agreements on a broad scale," said Robertson.

Doane of Monsanto said that the company "prevailed at the trial of the Stratemeyer case and was awarded its damages from a soybean grower found to have infringed Monsanto's patents."

"The defendant in that case filed a counterclaim alleging that someone signed his name to a Technology Agreement without his permission. However, at the trial of Monsanto's patent infringement case against the grower, the jury specifically found that neither Monsanto nor its agents signed the grower's name to the agreement."

She further stated that Monsanto "expects it will prevail in the case alleging forgeries, particularly in light of the jury's finding that neither Monsanto nor its agents signed that grower's name to the agreement."

Judge questions
Robertson also claims that Judge Sippel may be biased in the matter, noting the judge worked for the law firm representing Monsanto prior to taking his seat on the bench. In fact, he argued that before the judge last month, but the judge denied the motion, saying he did not work directly on any action on behalf of Monsanto.

In a faxed replay to The Covington Leader last month, Sippel said he could not comment about an ongoing case and said the lawyers have a right to appeal his ruling about conflict of interest. It has not yet been decided whether Robertson will appeal that ruling to the U.S. Court of Appeals.

The Monsanto spokesman said that doesn't matter.

"Any appeal of Judge Sippel's ruling will have no impact on the ongoing collection efforts," said Doane. "Monsanto is very confident that Judge Sippel's ruling will be upheld if appealed. The law is very clear that Judge Sippel's ruling is correct and his actions were appropriate."

Paying the price
Robertson said Ralph has been ordered to pay $2.9 million to Monsanto for using its Roundup Ready and Bollgard traits, when the cost at the farm supply store would have been $145,159.

Ralph admitted in court that instead of saving the seeds and returning them to Monsanto, which was in the agreement, that he gave them to other farmers and also burned about 700 bags of seeds. The court found he destroyed evidence when that took place.

Another major issue in the case came just two weeks ago from the U.S. Court of Appeals when Mississippi farmer Homan McFarling had his judgment reduced dramatically in a case which is very similar to the one against Ralph.

In that case, the three appeals court judges ruled that the summary judgment against McFarling on the breach-of-contract claim would be for the liability only.

And in what Ralph's lawyers view as a major breakthrough, a multiplier factor of 120 times in the Monsanto contract was ruled invalid by the judges.

"... we vacate the district courtıs damages award because we hold that under Missouri law the provision in the Technology Agreement applying a 120 multiplier to the technology fee is an unenforceable and invalid penalty clause."

That, says Robertson, is critical.

"That should mean the $2.9 million judgment is certain to be vacated," said Robertson. However, Robertson also said just because that is a "highly likely" outcome in Ralph's case, it doesn't mean the appeal will be expedited. He said it will likely have to run its normal course, meaning a decision isn't likely to be handed down until 2005.

Schatten compared the award to a car dealership. "If a car dealer sold a lemon, the proper remedy would be to get a new car," said Schatten. "The party should not get the entire dealership."

But Monsanto says the McFarling case should not have a bearing on the case against Ralph.

"The McFarling opinion does not affect Monsanto's ability to collect these patent damages from the Ralph defendants," said Doane. "Because under the law, Monsanto is limited to collecting its contract damages or its patent damages but it cannot collect both, Monsanto is collecting the patent damages from the Ralph defendants."

She went on to say that in addition to the "liquidated damage award (the only part of the Ralph judgment affected by the McFarling ruling), Monsanto was awarded approximately $350,000 in other contract damages.

"The McFarling decision does not impact this $350,000 award. More importantly, the jury award at the Ralph trial resulted in Monsanto receiving $2,410,206 in patent damages and more than $500,000 in interest, attorney fees and costs."p>

More twists and turns
Robertson said there is another ironic twist to this case. He found it very ironic that Monsanto "has waited nine months" to start the collection procedure but then moves ahead just as planting season has arrived in West Tennessee.

"Crop lenders don't like to lend money to farmers with big judgments against them," he said. "Kem is having to scramble as best he can." Robertson characterized Ralph's situation as being "between a rock and a hard place."

He said Monsanto has started the process to collect the funds "for more money than Kem can possibly pay. Kem can't begin to make a bond to stop enforcement of the judgment. He can't get a crop loan because the judgment is on his credit record.

"It doesn't matter that he's always repaid his loans in full at the end of every crop year in the past. His legal battles with Monsanto have cost him an arm and a leg, and his legal bills are mounting. And Monsanto is making serious noise about taking everything."

Monsanto's spokesman pointed to the failure to secure a bond as a reason the company is now proceeding.

"Because the defendants have not taken the appropriate steps to stay enforcement of the judgment (put it on hold with the use of a bonding firm), it is appropriate for Monsanto, as the holder of a valid judgment, to execute that judgment," said Doane. "We are confident that the judgment will be affirmed as to our patent infringement jury award."

Home field advantage?
Schatten said he thinks it is positive the case is now back in West Tennessee, where he and Robertson believed it belonged all along. In the Monsanto contract, there is a stipulation that cases must be tried in the federal circuit court in St. Louis, the home of Monsanto.

"Being in St. Louis gives Monsanto an unfair advantage," said Robertson. "Imagine how the rest of the National League would feel if the Cardinals got to play all 162 games in Busch Stadium."

"We're very relieved the litigation has moved to Tennessee," said Schatten. He said although there are three separate venues in the three counties, it is his understanding the proceedings will likely take place in Shelby County's court system.