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Syngenta Crop Protection, Inc. v. Drexel Chemical Co.

August 24, 2009

SYNGENTA CROP PROTECTION, INC., PLAINTIFF,
v.
DREXEL CHEMICAL COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

Plaintiff Syngenta Crop Protection, Inc. ("Syngenta") and defendant Drexel Chemical Company ("Drexel") are currently engaged in a binding arbitration proceeding initiated under the data-sharing provisions of the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. §§ 136 et seq. Syngenta seeks a declaratory judgment that the arbitration panel cannot consider a 1993 Agreement and Stipulation in evaluating Syngenta's data compensation award. Now before the Court is Drexel's motion to dismiss for lack of subject matter jurisdiction and failure to state a claim under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons discussed below, Drexel's motion to dismiss will be granted.

BACKGROUND

Enacted in 1972, FIFRA governs the registration of pesticides and sets forth the requirements for the submission of health, safety, and environmental data. Under FIFRA, pesticide registrants must demonstrate that their pesticide will "perform its intended function without unreasonable adverse effects on the environment." 7 U.S.C. § 136a(a). To satisfy this requirement, a registrant must either submit its own data or cite to data that "appear in the public literature or that previously had been submitted to the Administrator [of the Environmental Protection Agency]." § 136a(c)(1)(F). Applicants citing to another company's data must offer to compensate the original data submitter. § 136a(c)(1)(F)(iii). If no compensation agreement can be reached, either party may initiate a binding arbitration, governed by the procedures set forth by the Federal Mediation Conciliation Service ("FMCS"). Id.

The FIFRA arbitration scheme was created in response to the "'logjam of litigation that resulted from controversies over data compensation.'" Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 573 (1985) (quoting S. Rep. No. 95-334, at 3 (1977)). Congress found that the EPA "'lacked the expertise necessary to establish the proper amount of compensation,'" and hence compensation "'should be determined to the fullest extent practicable, within the private sector.'" Id. (quoting 123 Cong. Rec. 25709-10 (1977) (statement of Sen. Leahy)). For arbitration proceedings under FIFRA, the FMCS incorporated the rules of the American Arbitration Association ("AAA"), a private arbitration service organization. See 29 C.F.R. § 1440.1; 29 C.F.R. Pt. 1440, App. FIFRA provides that "the findings and determination of the arbitrator shall be final and conclusive, and no official or court of the United States shall have power or jurisdiction to review any such findings and determination, except for fraud, misrepresentation, or other misconduct by one of the parties to the arbitration or the arbitrator."

7 U.S.C. § 136a(c)(1)(F)(iii).

In 2004, the EPA required Drexel to offer to compensate Syngenta for using its studies on the safety of the herbicide atrazine if Drexel wished to renew its registration for atrazine. Syngenta Opp'n at 3. The parties could not agree on a compensation amount and Syngenta subsequently initiated arbitration under FIFRA. Am. Compl. ¶¶ 16-17. Eleven months after Syngenta filed the demand for arbitration, Drexel introduced a 1993 Agreement and Stipulation pertaining to the atrazine studies, which was entered into by Ciba-Geigy Corporation (Syngenta's predecessor) and Drexel as part of a prior FIFRA arbitration. Id. ¶¶ 18-19. Syngenta moved to exclude "all claims, evidence and argument" related to the 1993 Agreement and Stipulation. Id. ¶ 20. The arbitration panel denied Syngenta's motion in an "Interim Order" on September 5, 2008, stating that "it does have jurisdiction to consider at the hearing of this matter any defense raised by Drexel based on the 1993 settlement agreement." Id. ¶ 23, Ex. 1, Ex. A.

On September 23, 2008, Syngenta filed a complaint in this Court, seeking a declaratory judgment that Article III of the Constitution bars the arbitration panel from considering the 1993 Agreement and Stipulation. Syngenta then filed an amended complaint asserting subject matter jurisdiction under: (1) 28 U.S.C.§ 1331, because this action arises under the Constitution and laws of the United States, and pursuant to Sections 3(c)(1)(F)(iii) and 16(c) of FIFRA, 7 U.S.C. §§ 136a(c)(1)(F)(iii), 136n(c); (2) 28 U.S.C. § 1332(a) based on diversity of citizenship; (3) the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-06; (4) the Mandamus Statute, 28 U.S.C. § 136; (5) the All Writs Act, 28 U.S.C. § 1651; and (6) the Declaratory Judgment Act, 28 U.S.C. § 2201-02. Am. Compl. ¶¶ 2-4.

Now before the Court is Drexel's motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and failure to state a claim under Rule 12(b)(6). Drexel argues that Syngenta cannot establish the Court's subject matter jurisdiction for this interlocutory appeal of the FIFRA arbitration panel's interim decision, and that, even if it can, the Court should decline to exercise its discretion to grant declaratory judgment. See Drexel Mem. at 1. Syngenta responds that review of the arbitration panel's decision and entry of a declaratory judgment are appropriate at this time. See Syngenta Opp'n at 1.

LEGAL STANDARD

"[I]n passing on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see Leatherman v. Tarrant Cty. Narcotics and Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C. Cir. 1979). Therefore, the factual allegations must be presumed true, and plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer, 416 U.S. at 236; Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). However, the Court need not accept as true "a legal conclusion couched as a factual allegation," nor inferences that are unsupported by the facts set out in the complaint. Trudeau v. Federal Trade Comm'n, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).

Under Rule 12(b)(1), the party seeking to invoke the jurisdiction of a federal court --plaintiff here -- bears the burden of establishing that the court has jurisdiction. See US Ecology, Inc. v. U.S. Dep't of Interior, 231 F.3d 20, 24 (D.C. Cir. 2000) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103-04 (1998)); see also Orlov v. Howard, 523 F. Supp. 2d 30, 32 (D.D.C. 2007). Although a court must accept as true all the factual allegations contained in the complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1), Leatherman, 507 U.S. at 164, "'plaintiff[s'] factual allegations in the complaint... will bear closer scrutiny in resolving a 12(b)(1) motion' than in resolving a 12(b)(6) motion for failure to state a claim." Grand Lodge, 185 F. Supp. 2d at 13-14 (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1990)). At the stage of litigation when dismissal is sought, a plaintiff's complaint must be construed liberally, and the plaintiff should receive the benefit of all favorable inferences that can be drawn from the alleged facts. See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). Additionally, a court may consider material other than the allegations of the complaint in determining whether it has jurisdiction to hear the case, as long as it still accepts the factual allegations in the complaint as true. See Jerome Stevens Pharmaceuticals, Inc. v. FDA, 402 F.3d 1249, 1253-54 (D.C. Cir. 2005); St. Francis Xavier Parochial Sch., 117 F.3d at 624-25 n.3.

DISCUSSION

I. Federal Question and Diversity ...


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