The opinion of the court was delivered by: HARRIS
STANLEY S. HARRIS, District Judge.
This matter is before the Court on the motion of plaintiff for summary judgment and the motion of defendant Stauffer Chemical Company (Stauffer) to dismiss, or in the alternative, for summary judgment as to Counts I-IV. The Court denies plaintiff's motion for summary judgment, and grants Stauffer's motion to dismiss Counts I-IV of the complaint.
This case involves an arbitration award issued under the arbitration procedure established by the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. §§ 136 et seq. (1982). FIFRA commits to private arbitrators the authority to determine the amount of compensation a "me-too" pesticide licensee must pay to the original licensee of the pesticide (here, a pesticide containing the active ingredient butylate).
Plaintiff asks this Court to vacate the arbitrators' award. Plaintiff argues in Count I of its complaint that the award is void as arbitrator "misconduct" because the arbitrators failed to apply the proper standard in determining compensation. In Count II, plaintiff alleges that this same failure amounts to a denial of due process. Counts III and IV concern the constitutional validity of the statute itself; plaintiff argues that the arbitration statute is in violation of Article III and the Fifth Amendment. Both of these arguments have been mooted by recent decisions of the Supreme Court, Ruckelshaus v. Monsanto Co., 467 U.S. 986, 81 L. Ed. 2d 815, 104 S. Ct. 2862 (1984) and Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 105 S. Ct. 3325, 87 L. Ed. 2d 409 (1985). In Counts V and VI, plaintiff argues that the Court should vacate the award because of Stauffer's alleged fraud or misrepresentations concerning the evidence presented to the arbitrators.
As Counts III and IV are moot, and Counts V and VI are not addressed in these motions, the issues presented to the Court are limited: whether FIFRA provides a standard of compensation, and, if so, whether it is "misconduct" or a violation of due process for arbitrators to fail to apply that standard. Because the Court discerns no standard in the statute, it is unnecessary to reach the latter two issues. The Court finds that Stauffer is entitled to dismissal of Counts I-IV of the complaint.
Since the enactment of FIFRA in 1947, pesticide manufacturers have been required to register their products, originally with the Department of Agriculture and, since 1970, with the Environmental Protection Agency (EPA), before distribution or sale in interstate commerce. See 7 U.S.C. § 136a (1982). Under FIFRA § 3 (c) (5), an applicant must demonstrate, inter alia, that its pesticide will not cause "unreasonable adverse effects on the environment." Id. § 136a (c) (5). Additionally, for pesticides that may leave a residue on food crops, the applicant must obtain a tolerance from EPA. 21 U.S.C. § 346 (a). To make these showings, applicants conduct tests on their products and submit the results to EPA. 7 U.S.C. § 136a (c) (1) (D).
Section 3 (c) (1) (D) (ii) of FIFRA is a "mandatory data - licensing" provision. Monsanto Co., 467 U.S. at 992. However, subsequent applicants for registration for a particular pesticide may under these provisions use the original registrant's research data to obtain a "me-too" registration.
"Me-too" registrations are only available under § 3 (c) (1) (D) (ii) where "the applicant has made an offer to compensate the original data submitter." 7 U.S.C. § 136a (c) (1) (D) (ii). If the parties cannot agree on the "amount and terms of compensation," either party "may initiate binding arbitration proceedings." Id. The proceedings are conducted by private arbitrators under the auspices of the Federal Mediation and Conciliation Service (FMCS). Under § 3 (c) (1) (D) (ii), the decision of the arbitrators is final and subject only to judicial review for "fraud, misrepresentation, or other misconduct."
The general scope of the arbitrators' duty under FIFRA is clear. The arbitrators are to determine the amount of compensation due an original licensee when a second licensee registers the same pesticide without producing its own test data. The dispute over standards arises in attempting to define what factors the arbitrators may consider in compensating the original licensee, or what sort of formula the arbitrators are to apply.
Plaintiff argues that a cost-sharing standard of compensation is required. Plaintiff seeks a ruling that the arbitrators are limited in their awards to compensating the original licensee for the actual cost of producing the test data relied upon by the later licensee. The award at issue in this case awarded Stauffer one-half of its direct aggregate testing cost ($1,465,000) plus a running royalty of 15 cents on every pound of butylate sold by plaintiff from 1983 to 1992 (subject to certain adjustments). Award at 18-19, 22. Under plaintiff's cost-sharing standard the latter half of the award would be ultra vires as it purportedly compensates Stauffer ...