10th Circuit Dismisses Claims Stemming From $1.51 Billion Class Action Settlement

Background

Thousands of farmers in the United States purchased a genetically modified corn-seed product from seed supplier Syngenta. The farmers intended to export the corn to China, but the Chinese government refused to import the genetically modified corn. After corn prices tumbled, the farmers filed thousands of claims against Syngenta. Some of the farmers pursued their claims in the form of individual lawsuits, while other farmers participated in a class action against Syngenta. After Syngenta agreed to pay $1.51 billion to resolve the farmers’ claims, the individual and class action lawsuits were combined in one nationwide settlement class. The settlement was then divided into two pools: roughly $1 billion was set aside to fund plaintiff recoveries, while the remaining $500 million was set aside to fund attorney fee and expense awards.

The plaintiffs in the Kellogg lawsuit were six farmers who filed individual lawsuits against Syngenta, and each of them was a member of the nationwide settlement class. The Kellogg plaintiffs sought disgorgement of more than $100 million of attorneys’ fees that were awarded to the counsel that represented plaintiffs during the Syngenta litigation. The Kellogg plaintiffs alleged two forms of injury: (1) the defendant law firms excluded the Kellogg plaintiffs from Syngenta class proceedings, and (2) the defendant law firms’ contingent fee contracts would cause the Kellogg plaintiffs to pay a contingent fee in addition to the amount each plaintiff owed as members of the nationwide settlement class.

Analysis

In 2019, Judge John W. Lungstrum dismissed all but one of plaintiffs’ claims for lack of Article III standing and failure to plead essential elements of their claims.² After plaintiffs refused to pay monetary sanctions imposed due to plaintiffs and their counsel’s litigation misconduct, plaintiffs’ remaining claim for an alleged breach of the defendant law firms’ fiduciary duty was dismissed because “Plaintiffs and their counsel have repeatedly, obstinately refused to accept the Court’s rulings or to comply with its orders, even after warnings that continued noncompliance could result in dismissal.”³

In a unanimous ruling, a three-judge panel in the Tenth Circuit Court of Appeals affirmed the dismissal of plaintiffs’ claims and upheld the monetary and dismissal sanctions. The Tenth Court agreed with Judge Lungstrum that any injury the plaintiffs allegedly suffered “vanished” when the district court abrogated all contingent fee contracts and created a separate, $500 million pool to fund the attorney fee awards. Further, the Tenth Court upheld the monetary and dismissal sanctions due to plaintiffs’ “willful noncompliance” with the district court’s orders—including plaintiffs’ refusal to pay the monetary sanctions or recognize the district court’s jurisdiction over the case. The decision resulted in a complete victory for Thompson Coe’s clients.

¹ See Kellogg v. Watts Guerra LLP, — F.4^th. —, No. 20-3172, 2022 WL 2948910,  (10th Cir. July 26, 2022)

² See In re Syngenta AG MIR 162 Corn Litig., No. 14-MD-2591-JWL, 2019 WL 3801719, at *1 (D. Kan. Aug. 13, 2019), adhered to in part on reconsideration, No. 14-MD-2591-JWL, 2019 WL 6894675 (D. Kan. Dec. 18, 2019)

³In re Syngenta AG MIR 162 Corn Litig., No. 14-MD-2591-JWL, 2020 WL 4333559, at *1 (D. Kan. July 28, 2020); see also Kellogg v. Watts Guerra, LLP, No. 18-2408-JWL, 2020 WL 1028211, at *1 (D. Kan. Mar. 3, 2020).