Elbert v. United States Department of Agriculture

CourtDistrict Court, D. Minnesota
DecidedJuly 24, 2023
Docket0:18-cv-01574
StatusUnknown

This text of Elbert v. United States Department of Agriculture (Elbert v. United States Department of Agriculture) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elbert v. United States Department of Agriculture, (mnd 2023).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

RICH ELBERT, JEFF A. KOSEK, REICHMANN LAND & CATTLE LLP, LUDOWESE A.E. INC., Civil No. 18-1574 (JRT/TNL) and MICHAEL STAMER,

Plaintiffs, MEMORANDUM OPINION AND ORDER

GRANTING IN PART AND DENYING IN v. PART MOTION FOR ATTORNEYS’ FEES

UNITED STATES DEPARTMENT OF AGRICULTURE, RISK MANAGEMENT AGENCY, and FEDERAL CROP INSURANCE CORPORATION,

Defendants.

John D. Tallman, JOHN D. TALLMAN, PLLC, 4020 East Beltline Avenue Northeast, Suite 101, Grand Rapids, MI 49525; Markus C. Yira, YIRA LAW OFFICE, LTD, P.O. Box 518, Hutchinson, MN 55350 for plaintiffs.

David W. Fuller, UNITED STATES ATTORNEY’S OFFICE, 300 South Fourth Street, Suite 600, Minneapolis, MN 55415, for defendants.

Plaintiffs are dark red kidney bean farmers from Minnesota that purchased revenue insurance coverage from the U.S. Department of Agriculture Risk, Management Agency, and the Federal Crop Insurance Corporation (together the Defendants”) to protect against a decline in bean prices. Plaintiffs succeeded in their claim against the Defendants for improperly altering their insurance plan and converting their revenue coverage into yield protection. The Plaintiffs seek $347,006.50 in attorneys’ fees and costs under the Equal Access to Justice Act (“EAJA”). Because the Court finds that Plaintiffs are the prevailing party and

that the Defendants’ pre-litigation and litigation positions were not substantially justified, the court will grant Plaintiffs attorneys’ fees and costs under the EAJA. However, the Court will reduce the total fees awarded by one-fifth because one of the five plaintiffs did not certify that it was an eligible party under the EAJA. The Court increases the statutorily

provided hourly rate to adjust for inflation, and to account for counsel’s experience and expertise. Thus, the Court grants Plaintiffs a total of $258,064.00, which represents $256,945.00 in attorneys’ fees and $1,119.00 in costs.

BACKGROUND I. FACTUAL BACKGROUND The Court provided the relevant facts in detail in a previous order and will provide only an abbreviated version here. See Elbert v. U.S. Dep’t of Agric. (“Elbert II”), 546 F. Supp. 3d 814, 816 (D. Minn. 2021).1

Defendant Federal Crop Insurance Corporation (“FCIC”) provides crop insurance policies under the Federal Crop Insurance Act. 7 U.S.C. § 1508. To obtain a policy, the private-party applicants first design policies and submit them to the FCIC Board (“the Board”) for approval, these submissions are known as Section 508 (h) submissions. 7

1 See also Elbert v. U.S. Dep’t of Agric. (“Elbert I”), No. 18-1574, 2020 WL 4926635 (D. Minn. Aug 21, 2020). U.S.C. § 1508(h)(1)(A). The Board must approve a 508(h) submission if it determines, among other things, that the crop insurance policy will adequately protect the interests

of producers. 7 U.S.C. § 1508(h)(3)(A)(i). In 2011, Watts and Associates, Inc., the Northarvest Bean Growers Association, and the USA Dry Pea and Lentil Council (collectively, “Watts”) made a 508(h) submission to the Board that included a proposal to provide revenue protection to pulse-crop farmers

for an additional premium. Elbert II, 546 F. Supp. 3d at 816. The policy would insure against a drop in crop prices, as measured by the difference between the spring projected price and the actual fall harvest price. Id. The submission specified that the projected

price would be obtained from processors in January and February and the harvest price would be set using data published by the AMS Bean Market News (the “AMS Method”). Id. The proposed policy provisions and handbook to accompany the policy stated that if the AMS data was insufficient to set the harvest price for the year, the FCIC would set the

harvest price. Id. However, in its submission, Watts also included language that dictated that when the harvest price could not be determined, the “projected price be substituted for any missing AMS monthly harvest price observations.” Id. During the agency review of the submission, an expert reviewer recommended

against substituting with the projected price because “[i]n the extreme case where AMS fails to report a price for September, October, and November the harvest price would be equal to the projected price and the revenue insurance product . . . would revert to a yield insurance product,” which would be “unfair to growers who pay for revenue insurance[.]” Id. at 817. The Risk Management Agency (“RMA”) echoed this same concern to the Board.

Id. And during the final consideration of Watt’s proposal, the Board was presented with a PowerPoint that noted that substituting the projected price for the harvest price would convert the proposed revenue-coverage policy to yield protection. Id. Therefore, the Board was “unmistakably told three times that setting the harvest price equal to the

projected price would make the policy worthless, as it would convert the policy’s intended revenue protection into mere yield protection[.]” Id. at 821. In 2012, the Board approved the submission and permitted the RMA to make

technical changes necessary to make the policy legally sufficient. Id. at 818. For reasons unclear in the administrative record, the section of the policy dealing with the substitution of the harvest price was completely rewritten after approval. Id. Under the altered policy, if the harvest price could not be calculated using the AMS Method, it would equal the

projected price. Id. In 2015, Plaintiffs purchased the plan that contained this substituted language. Id. In December of that year, it became clear that there would not be sufficient AMS data to establish a harvest price for dark red kidney beans in Minnesota. Id. As a result, the RMA

announced that pursuant to the policy language in the Endorsement, the harvest price would be set to the projected price. Id. And, as predicted, this essentially converted the Plaintiffs’ revenue policies into expensive yield policies, which meant the Plaintiffs could not recoup their revenue losses. Id.

II. PROCEDURAL HISTORY The Plaintiffs initially brought this case in the Eastern District of Michigan as a putative class action on behalf of farmers in Michigan, Minnesota, and North Dakota, arguing that the Defendants actions were arbitrary and capricious. (See generally Compl.,

June 5, 2017, Docket No. 1.) The Eastern District of Michigan dismissed the Minnesota Plaintiffs for improper venue and transferred them to the District of Minnesota. (Order Granting Mot. Dismiss at 19, Apr. 18, 2019, Docket No. 70; Transfer, June 8, 2018, Docket No. 81.) The parties filed cross motions for summary judgment and the Court initially

granted summary judgment for the Defendants. Elbert v. U.S. Dep’t of Agric. (“Elbert I”), No. 18-1574, 2020 WL 4926635, at *1 (D. Minn. Aug 21, 2020). The Eastern District of Michigan similarly granted summary judgment for the Defendants. Elbert II, 546 F. Supp. 3d at 819. But the Sixth Circuit subsequently reversed that decision in part because the

policies actually sold to the bean farmers did not include the same provisions that were approved by the Board and such changes were significant and required resubmission to the Board. Id. at 819–20.

The Minnesota Plaintiffs requested permission to file a motion for reconsideration—which the Court granted—to address whether the changes made to the policy were “significant” under regulations in place at the time and, if they were, whether the policy should have been resubmitted to the Board. (Request, Sept. 3, 2020, Docket No. 172; Order at 6–7, Oct. 1, 2020, Docket No.

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