Summary
The Eighth Circuit addressed whether crop-loss disputes under pipeline easements were subject to arbitration. The court held that the arbitration provisions covered damages issues and related questions concerning the Crop Yield Program, causation, and declaratory relief, and that Alliance had not waived arbitration. The court affirmed in part and reversed in part, directing dismissal without prejudice of class members subject to arbitration agreements while allowing other class members to proceed.
Topics
Practice areas
Questions Presented
- Whether Alliance waived its contractual right to compel arbitration by waiting until after class certification to seek arbitration.
- Whether arbitration provisions requiring arbitration of disputed crop damages encompass claims characterized as compensation for diminished or ongoing crop yield.
- Whether the State Agreements, which lacked arbitration provisions, prevented enforcement of arbitration provisions in the individual landowners' easements.
- Whether issues concerning termination of the Crop Yield Program, causation of crop damage, and declaratory relief were within the scope of the arbitration provisions.
Holdings
- Alliance did not waive its right to enforce the arbitration provisions by waiting until after class certification to move to compel arbitration because none of the named plaintiffs were subject to arbitration and the motion was filed promptly after arbitration-bound class members were added.
- For plaintiffs whose easements contain arbitration provisions, disputes concerning whether the pipeline caused crop damage and the value and nature of that damage are subject to arbitration, including disputes described as diminished or ongoing crop yield.
- The State Agreements do not invalidate or prohibit enforcement of arbitration provisions contained in individual landowners' easements.
- The issues concerning Alliance's obligation to continue the Crop Yield Program, whether plaintiffs must prove that Alliance caused the crop damage, and the requested declaratory relief are also subject to arbitration for plaintiffs whose easements contain arbitration provisions.
Key quotations
“We find the arbitration agreements to be enforceable and to cover all issues.” (8)
“Essentially, the district court will be required to dismiss from the class those members subject to arbitration agreements.” (10)
Factual background
Alliance entered into agricultural impact mitigation agreements with North Dakota, Minnesota, Iowa, and Illinois and separately negotiated pipeline easements with individual landowners. The easements generally required Alliance to pay for crop damages arising from pipeline-related activities, and most included provisions requiring arbitration of damages not mutually agreed upon. Alliance operated an optional Crop Yield Program beginning after the pipeline became operational, later restricted the program, and ended it in 2015. Landowners then filed a class action alleging that Alliance denied crop-loss claims and seeking compensation and declaratory relief; some class members' easements contained arbitration provisions, while none of the named plaintiffs' easements did.
Procedural history
Landowners filed a class action alleging breach of contract, nuisance, and fraudulent inducement and seeking declaratory relief concerning compensation for crop losses. The district court certified a class and later granted Alliance's motion to compel arbitration in part, sending two damages issues to arbitration while retaining three issues for litigation. Alliance timely appealed the scope of the arbitration order; the Eighth Circuit affirmed in part and reversed in part.
Remand instructions
The district court must dismiss from the class those members subject to arbitration agreements and dismiss their claims without prejudice. Class members whose easements lack arbitration provisions may proceed with the lawsuit in the ordinary course.