Mortellite v. Novartis Crop Protection, Inc.

Opinions of the United

2006 Decisions States Court of Appeals

for the Third Circuit

8-21-2006

Mortellite v. Norvatis Crop

Precedential or Non-Precedential: Precedential

Docket No. 03-3847

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 03-3847

GARY MORTELLITE; and GEORGE MORTELLITE,

individually and d/b/a/ BUFFALO FARMS; MICHAEL DIMEO

and WILLIAM DIMEO, individually and d/b/a INDIAN

BRAND FARMS, INC.; ANTHONY DIMEO, JR. and

WILLIAM DIMEO, individually and d/b/a COLUMBIA FRUIT

FARMS, INC.; WILLIAM A. MORTELLITE, individually and

d/b/a WM. MORTELLITE FARMS; JOYCE CAPPUCCIO,

individually and d/b/a WM. CAPPUCCIO & SONS; JOSEPH D.

BERENATO, individually and d/b/a CHAPPINE FARMS;

GENE J. MARTINELLI, individually and d/b/a COLUMBIA

CRANBERRY CO.; JOSEPH E. MARTINELLI, individually

and d/b/a BLU-JAY FARMS; LOUIS R. CONDO, individually

and d/b/a BIG BUCK FARMS; DAVID RIZZOTTE,

individually and d/b/a GLOSSY FRUIT FARMS, INC.;

GREGORY A. CLARK, individually and d/b/a CLARK

FARMS; JEFFREY WHALEN, individually and d/b/a

WHALEN FARMS; HELEN BARTMER, individually and

d/b/a S.J. BLUEBERRIES; ANTHONY MELORA, individually

and d/b/a MELORA FARMS; BILL AUGUSTINE, individually

and d/b/a BILL AUGUSTINE FARMS; RUSSELL

FRANCESCHINI and SCOTT FRANCESCHINI, individually

and d/b/a R & S FRANCESCHINI FARMS; EVELYN

FRANCHETTI, individually and d/b/a FRANCHETTI FARMS,

ANTHONY VACCARELLA, individually and d/b/a

VACCARELLA FARMS; FRANK JACOBS, individually and

d/b/a JACOBS FARM; JOHN A. DEMARCO, SR., individually

and d/b/a SUN VALLEY FARMS INC.; JOSEPH A.

SILIGATO, individually and d/b/a BLUEMOON BERRY

FARMS; CARMEN MERLINO, JR., individually and d/b/a

OAKCREST FARMS; JOHN DOE(S), as discovered,

1

v.

NOVARTIS CROP PROTECTION, INC.,

a foreign corporation

JOSEPH D. BERENATO; LOUIS R. CONDO; DAVID

RIZZOTTE; JEFFREY WHALEN; BILL AUGUSTINE;

ANTHONY VACCARELLA; CARMEN MERLINO, JR.;

MICHAEL DIMEO; WILLIAM DIMEO; ANTHONY DIMEO,

JR.; WILLIAM DIMEO; JOYCE CAPPUCCIO; GENE J.

MARTINELLI; JOSEPH E. MARTINELLI; GREGORY A.

CLARK; ANTHONY MELORA; RUSSELL FRANCESCHINI

and SCOTT FRANCESCHINI,

Appellants.

On Appeal from the United States District Court for the District

of New Jersey

(D.C. No. 99-cv-02118)

District Judge: Honorable Joseph H. Rodriguez

Argued January 13, 2006

Before: FUENTES, ROSENN,* and ROTH,** Circuit Judges.

(Filed: August 21, 2006)

*

This case was argued before the panel of Judges

Fuentes, Rosenn, and Roth. Judge Rosenn died on February 7,

2006, before the filing of the opinion. The decision is filed by a

quorum of the panel. 28 U.S.C. § 46(d).

**

Effective May 31, 2006, Judge Roth assumed senior

status.

2

David C. Frederick (Argued)

Kellogg, Huber, Hansen, Todd, Evans & Figel

1615 M Street, N.W.

Suite 400

Washington, DC 20036

R.C. Westmoreland

Kathleen F. Beers

Westmoreland, Vesper, Schwartz & Quattrone

Bayport 1, Suite 500

8025 Black Horse Pike

West Atlantic City, NJ 08232

ATTORNEYS FOR APPELLANTS

John P. Mandler (Argued)

Bruce Jones

Kristin R. Eads

Faegre & Benson, LLP

2200 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402

Robert Machi

Morgan, Melhuish, Monaghan, Arvidson, Arbutyn & Lisowski

Suite 200

651 W. Mt. Pleasant Avenue

Livingston, NJ 07039

ATTORNEYS FOR APPELLEE

OPINION OF THE COURT

FUENTES, Circuit Judge

Plaintiffs are New Jersey blueberry farmers who filed suit

against a pesticide company for damages to their crops based on

3

theories of products liability, negligence, consumer fraud, and

breach of express warranty. In two separate orders, the District

Court granted summary judgment in favor of defendant Novartis 1)

based on releases that some of the plaintiffs had signed before

filing suit, and 2) based on its holding that the remaining plaintiffs’

claims were preempted by the Federal Insecticide, Fungicide, and

Rodenticide Act (“FIFRA”).

The principal issue on appeal is whether Plaintiffs’ claims

are preempted by FIFRA. We conclude that, under Bates v. Dow

Agrosciences LLP, 544 U.S. 431 (2005), decided after the District

Court’s rulings in this case, Plaintiffs’ claims for defective design,

defective manufacture, negligent testing, negligent

misrepresentation, and fraud are not preempted because those

claims do not impose labeling requirements in addition to or

different from those required by FIFRA. Accordingly, we vacate

the District Court’s judgment as to those claims and remand for

further proceedings. We also remand for the District Court to

consider whether, under Bates, FIFRA preempts Plaintiffs’ failure-

to-warn claim.

Plaintiffs also appeal the District Court’s granting of

summary judgment against the claims of seven farmers who signed

releases with Novartis. For the reasons that follow, we affirm the

District Court’s dismissal of those claims.

I. Factual and Procedural Background

For several years, Plaintiffs (the “farmers”) treated the

blueberry plants on their farms with two insecticides manufactured

by defendant Novartis Crop Protection, Inc. (“Novartis”): Diazinon

50 WP (“50 WP”) and Diazinon AG 500 (“AG 500”). Before

applying the insecticide to the plants, the farmers engaged in the

practice of “tank mixing,” whereby they would mix these

insecticides with the fungicides Captan or Captec (the

“fungicides”). The farmers allege that tank mixing is a common

and well-known practice among virtually all farmers that dates

back to the introduction of pesticides. For several years, the

farmers safely mixed the fungicides with Diazinon 50 WP or

Diazinon AG 500 and experienced no crop damage.

4

This changed, however, when Novartis produced and

marketed to the farmers a new insecticide known as Diazinon AG

600 (“AG 600”). The company distributed advertising literature

claiming that its new product was safer and more effective than AG

500 or 50 WP. The farmers began buying and using AG 600 in the

Spring of 1997, mixing the new product with the fungicides as they

had done with previous Novartis insecticides. Unbeknownst to the

farmers, however, AG 600 contained an additional ingredient

known as a “surfactant,” which was not found in 50 WP or AG

500.1 The farmers allege that the surfactant, when mixed with the

fungicides, caused systematic injury to their blueberry plants, such

as blotches, depressions, and spots on the plants, as well as plant

death. The farmers also allege that Novartis failed to reveal the

addition of the surfactant to Novartis field personnel and failed to

include this information in any of its marketing materials.

In response to the damages to their 1997 blueberry crop, the

farmers hired Dr. William Sciarappa (“Sciarappa”), a plant

pathologist, to investigate the farmers’ crop damage. Novartis sent

its representative, Dr. Neil Lapp (“Lapp”), also a plant pathologist.

Almost all contact between the farmers and Novartis between

August 1997 and December 1997 was conducted by Lapp on

behalf of Novartis and Sciarappa on behalf of the farmers.

Sciarappa’s investigations concluded that AG 600 can cause plant

damage when mixed with the fungicides.

Novartis decided to explore “goodwill” settlement

agreements with the farmers to compensate them for the damage to

their crops. Betweem November 1997 and January 1998, Novartis

entered into settlement agreements with thirteen of the fifteen

farmers (the “settling farmers”).2 As part of each settlement, the

settling farmer signed a release indicating that he or she received

the settlement proceeds

1

The surfactant is intended to enhance the ability of the

active ingredient in AG 600 to spread evenly across plant tissue

and adhere to plant structure.

2

The other farmers were not paid any damages.

5

in full satisfaction and extinguishment of all claims and

causes of action against [Novartis] . . . arising out of any

damage or loss, present or future, to crops, plants, animals,

fish or land, direct or indirect, known or unknown,

allegedly sustained by the [settling plaintiff] as a result of

the use of [AG 600].

The releases also provided that “[i]t is agreed that this is a business

decision in compromise of a disputed claim and that the making of

this payment is not an admission of liability on the part of

[Novartis].”

The following year, the farmers noticed continuing damage

to their blueberry crop, including continued inhibition of plant

growth, from their use of AG 600 in 1997. When the farmers

contacted Novartis, Novartis informed them that it would not

compensate the farmers for any damages to their 1998 crop

because the releases signed by the settling farmers precluded any

future claims.

The farmers commenced this action seeking damages based

on claims of strict products liability, negligence, negligent

misrepresentation, fraud, breach of express warranty, and breach

of the New Jersey Consumer Fraud Act. The thirteen farmers who

signed settlement agreements bring additional claims of fraud in

the inducement and breach of the covenant of good faith and fair

dealing.

Novartis moved for summary judgment against the settling

farmers based on the releases that they had signed. The District

Court granted summary judgment dismissing the claims of seven

of the thirteen settling farmers based on the releases. The District

Court found that, with regard to the remaining six settling farmers,

genuine issues of material fact existed as to whether Novartis

fraudulently induced them to sign the settlement agreements or

breached the covenant of good faith and fair dealing in negotiating

the settlement agreements. Novartis brought a subsequent motion

for summary judgment on the grounds that the remaining farmers’

claims were preempted by FIFRA. The District Court granted the

motion, finding that FIFRA preempted all of the farmers’ claims

except the claims for fraud in the inducement and breach of the

6

covenant of good faith and fair dealing, which the District Court

dismissed as dependent on the preempted claims. See Mortellite v.

Novartis Crop Prot., Inc., 278 F. Supp. 2d 390 (D.N.J. 2003). The

principal issue presented in this appeal is whether FIFRA preempts

Plaintiffs’ claims that are based on theories of products liability,

negligence, negligent misrepresentation, fraud, breach of warranty,

and breach of the New Jersey Consumer Fraud Act.3

II. Legal Analysis

A. Preemption Under FIFRA

FIFRA is comprehensive regulatory statute that covers,

among other things, the use, sale, and labeling of pesticides.

FIFRA requires a manufacturer seeking to register a pesticide to

submit a proposed label to the EPA along with supporting data. 7

U.S.C. § 136a(c)(1)(C), (F). The EPA will register the pesticide if

it determines that the pesticide is efficacious and will not cause

unreasonable adverse effects on humans and the environment, and

that its label complies with FIFRA’s prohibition on misbranding.

A pesticide is “misbranded” under FIFRA if its label contains a

statement that is “false or misleading in any particular,” does not

contain adequate instructions for use, or omits necessary warnings

or cautionary statements. 7 U.S.C. § 136(q)(1)(A), (F), (G).

FIFRA also provides that states “shall not impose or continue in

effect any requirements for labeling or packaging in addition to or

different from those required under this Act.” 7 U.S.C. § 136v(b).

1. The inducement test and the Bates test

3

The District Court had diversity jurisdiction over this case

pursuant to 28 U.S.C. § 1332. We have jurisdiction over the

District Court’s final order pursuant to 28 U.S.C. § 1291. We

exercise plenary review over the District Court’s grant of summary

judgment. See Turner v. Hershey Chocolate U.S., 440 F.3d 604,

611 (3d Cir. 2006). Our review must determine whether “the

pleadings, depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).

7

The District Court held that FIFRA preempts the farmers’

claims of strict products liability, negligence, breach of express

warranty, negligent misrepresentation, fraud, and breach of the

New Jersey Consumer Fraud Act. In determining that § 136v(b)

preempted the farmers’ claims, the District Court applied the

“inducement test” used by the majority of circuits at the time,

whereby claims are preempted by FIFRA “‘if a judgment against

[the defendant] would induce [the defendant] to alter its product

label.’” Mortellite, 278 F. Supp. 2d at 398 (quoting Dow

Agrosciences LLC v. Bates, 332 F.3d 323, 331 (5th Cir. 2003)).

The District Court determined that, although the farmers’

claims are purportedly based on other theories, they in fact “relate

directly or indirectly to the fact that Novartis did not warn on its

product label that [AG 600] should not be tank mixed with Captan

or Captec.” Id. Because the current label on Novartis had been

approved by the EPA pursuant to FIFRA, the District Court

concluded that “[a]llowing these claims to proceed would be, in

effect, permitting State law damages claims to impose label

requirements in addition to or different from the federally approved

label and FIFRA,” contrary to FIFRA’s preemption component.

Id. (internal quotation marks omitted). Thus, the District Court

held that the claims were preempted by FIFRA.

Following the District Court’s decision, the Supreme Court

clarified the scope of FIFRA preemption in Bates. v. Dow

Agrosciences LLP, 544 U.S. 431 (2005). In Bates, Plaintiffs were

Texas peanut farmers who brought actions against a pesticide

manufacturer based on alleged injuries to their crops. Id. at 435.

The pesticide’s label stated that it was recommended for use in the

areas where the peanut farmers experienced crop damage. Id. The

farmers alleged that, in reality, the pesticide was unsafe for crops

grown in soil with a pH level of 7.0 or greater and that, as a result,

it injured their peanut crops, which were grown in soil with pH

levels of 7.2 or higher. Id. The farmers brought claims based on

theories of strict liability and negligence, and claims of fraud,

breach of warranty, and violation of the Texas Deceptive Trade

Practices-Consumer Protection Act. The District Court dismissed

one of the plaintiffs’ claims on state law grounds and rejected the

others under FIFRA’s preemption provision. The Court of Appeals

8

affirmed, concluding that the plaintiffs’ claims were preempted by

FIFRA because those claims, if successful, “would give Dow a

‘strong incentive’ to change its label.” Id. at 436 (quoting Dow

Agrosciences, 332 F.3d at 331-32).

The Supreme Court reversed, rejecting the inducement test

as a means of determining preemption by FIFRA. Id. at 444-46.

The Court stated that an “event, such as a jury verdict, that might

‘induce’ a pesticide manufacturer to change its label” should not be

viewed as imposing a new labeling requirement in conflict with

FIFRA. Id. at 443-45. Such an event “merely motivates an

optional decision” to change a label and therefore “does not qualify

as a requirement” to change a label. Id. Moreover, the Court

reasoned that, even where a claim would impose a requirement to

change a label, such a claim is not preempted by FIFRA unless it

imposes a requirement in addition to or different from those under

FIFRA. Id. at 444.

In place of the inducement test, the Supreme Court set forth

a two-part test for determining whether a state statute or common

law claim is preempted by FIFRA. First, the statute or common

law rule must create a requirement for labeling or packaging. Id.

Second, the labeling or packaging requirement must be in addition

to or different from those required under FIFRA. Id. An action is

preempted by FIFRA only if it fulfills both requirements of the test.

Id.

2. Claims of strict liability, negligent testing, and breach of

express warranty

Under the Bates test, the farmers’ claims of strict liability,

negligent testing, and breach of warranty are not preempted by

FIFRA. In Bates, the Supreme Court faced an almost identical

question and concluded that the plaintiffs’ claims for strict liability,

negligent testing, and breach of warranty were not preempted by

FIFRA because such claims do not require the manufacturer to

label or package the products in any particular manner. Id. at 444-

46. The Supreme Court reasoned that “[r]ules that require

manufacturers to design reasonably safe products, to use due care

in conducting appropriate testing of their products, to market

products free of manufacturing defects, and to honor their express

9

warranties or other contractual commitments plainly do not qualify

as requirements for ‘labeling or packaging.’” Id. at 444. The Court

added that, “[n]one of these common-law rules requires that

manufacturers label or package their products in any particular

way.” Id. Although the express warranty in Bates was located on

the product’s label, the state express warranty rule would not

impose a labeling requirement because the cause of action asked

“only that a manufacturer make good on the contractual

commitment that it voluntarily undertook by placing that warranty

on its product.” Id. Because an express warranty rule does not

“require the manufacturer to make an express warranty, or in the

event that the manufacturer elects to do so, to say anything in

particular in that warranty, the rule does not impose a requirement

for labeling or packaging.” Id. (internal quotation marks and

citation omitted).

Extending this reasoning to the case at hand, we conclude

that FIFRA does not preempt claims based on theories of strict

liability, negligent testing, and breach of express warranty. As the

Supreme Court explained, such common law claims plainly do not

impose labeling requirements, and therefore cannot conflict with

FIFRA. While success on these claims may induce Defendant to

change the label, this “attenuated pressure” does not amount to a

“requirement” within the meaning of FIFRA’s preemption

provision. In other words, a manufacturer may change its label as

a result of a verdict against it, but it is not required to do so. We

therefore vacate the District Court’s judgment dismissing

Plaintiffs’ claims of strict liability, negligent testing, and breach of

express warranty.

3. Claims for negligent misrepresentation, fraud, and breach

of the New Jersey Consumer Fraud Act

Plaintiffs allege their claims of negligent misrepresentation,

fraud, and breach of the New Jersey Consumer Fraud Act are

primarily based on oral misrepresentations made to them by

representatives of Novartis while marketing AG 600. In Bates, the

Supreme Court determined that claims for negligent

misrepresentation, fraud, and breach of a statutory consumer fraud

act were not preempted to the extent that they were based on oral

representations made by Defendant. Id. at 444 n.17. The Court

10

reasoned that, “[b]ecause FIFRA defines labeling as ‘all labels and

all other written, printed, or graphic matter’ that accompany a

pesticide, § 136(p)(2), any requirement that applied to a sales

agent’s oral representations would not be a requirement for

‘labeling or packaging’” and therefore would not fulfill the first

requirement of the Bates test. Id. We conclude that, to the extent

that Plaintiffs claims for negligent misrepresentation, fraud, and

breach of the statutory consumer fraud act are based on oral

misrepresentations, the claims are not preempted by FIFRA.

Plaintiffs’ claims of negligent misrepresentation, fraud, and

breach of the New Jersey Consumer Fraud Act are also based on

written misrepresentations in brochures and marketing materials

that Novartis used to market AG 600 to Plaintiffs. In determining

that FIFRA preempted these claims, the District Court relied on

Kuiper v. American Cyanamid Company, 131 F.3d 656 (7th Cir.

1997), in which the Seventh Circuit held that claims challenging

off-label statements about product safety that merely reiterate

information found on the label are preempted because such

challenges indirectly challenge the label. Id. at 662-63. This

holding is inconsistent with Bates, which holds that causes of

action which do not directly involve a label but which merely

induce a company to change its label are not preempted under

FIFRA. Bates, 544 U.S. 431 at 444. We conclude that Plaintiffs’

claims of negligent misrepresentation, fraud, and statutory

consumer fraud are preempted only to the extent that those claims

rely on written misrepresentations that qualify as “labels” or

“labeling” as defined by FIFRA.

FIFRA defines a “label” as “the written, printed, or graphic

matter on, or attached to, the pesticide or device or any of its

containers or wrappers.” 7 U.S.C. § 136(p)(1). FIFRA defines

“labeling”as:

all labels and all other written, printed, or graphic matter–

(A) accompanying the pesticide or device at any time; or

(B) to which reference is made on the label or in literature

accompanying the pesticide or device, except to current

official publications of the Environmental Protection

Agency, the United States Departments of Agriculture and

Interior, the Department of Health and Human Services,

11

State experiment stations, State agricultural colleges, and

other similar Federal or State institutions or agencies

authorized by law to conduct research in the field of

pesticides.

7 U.S.C. § 136(p)(2). Because the question of whether the alleged

written misstatements fall within this definition was not fully

briefed and argued on appeal, we remand to the District Court so

that it may consider the issue under Bates.

4. The failure-to-warn claim

Unlike the previous claims, Plaintiffs’ failure-to-warn claim

clearly fulfills the first requirement of the Bates test by creating a

labeling requirement for a product. Id. at 444. That said,

preemption applies only to those claims which, if successful, would

create labeling requirements additional to or different from those

already set forth in FIFRA. Id. Claims that result in requirements

that are consistent with FIFRA requirements and which only

provide new remedies are not preempted. Id. at 447-48, 452.

Plaintiffs allege that Novartis was negligent in its failure to

warn Plaintiffs that AG 600 could be harmful to their crops if

mixed with a fungicide. The issue of whether Plaintiffs’ failure-to-

warn claims would, if successful, create requirements in addition

to or different from those under FIFRA has not been fully briefed

and argued on appeal. We therefore remand that issue to the

District Court.

B. Dismissal of the Claims of Seven of the

Thirteen Settling Farmers

The farmers also appeal the District Court’s holding that

seven of the settling farmers (the “dismissed farmers”) could not,

as a matter of law, establish the reasonable reliance on a statement

by Novartis required for a claim of fraud in the inducement.4 Here,

4

As described above, the District Court also found that only

three of the farmers had claims for breach of the covenant of good

12

the settling farmers allege that Novartis made material

misrepresentations that, notwithstanding the language of the

releases, if future crops suffered damage as a result of the farmers’

use of AG 600 in 1997, Novartis would pay for this damage when

it manifested. The settling farmers allege that they relied on this

misrepresentation when signing the releases.

Under New Jersey law, a settlement agreement is a form of

contract, and courts must look to the general rules of contract law

to resolve disputes over a settlement agreement. See Borough of

Haledon v. Borough of N. Haledon, 817 A.2d 965, 975 (N.J. Super.

2003). Generally, the plain language of a settlement agreement is

entitled to a presumption of validity. Peter W. Kero, Inc. v.

Terminal Constr. Corp., 78 A.2d 814, 817-18 (N.J. 1951); see also

Jannarone v. W.T. Co., 168 A.2d 72, 74 (N.J. 1961) (explaining

that settlement agreement should be enforced given high value

judicial system places on settlement). There is an exception to this

presumption of validity where one party alleges fraud in the

inducement of the contract. See Kero, 78 A.2d at 818.

In order to prove equitable fraud in the inducement of the

contract, the plaintiff must demonstrate: 1) a material

misrepresentation of a presently existing or past fact, 2) reasonable

reliance on the misrepresentation by the plaintiff, and 3) resulting

damages to the plaintiff. See Jewish Ctr. of Sussex County v.

Whale, 432 A.2d 521, 524 (N.J. 1981); Weil v. Express Container

Corp., 824 A.2d 174, 182 (N.J. Super. 2003).

None of the dismissed farmers allege that Novartis, either

directly or through a representative such as Lapp, told them that

they would or could receive damages for the 1998 crop. Rather,

the dismissed farmers allege that they heard through Sciarappa and

other farmers that Novartis would pay for damage to the 1998 crop,

and that they relied on this representation when signing their

faith and fair dealing based on Novartis’s alleged threats to

withdraw the settlement offers if these farmers sought legal advice.

Because Plaintiffs do not appeal this part of the District Court’s

decision, we do not address it.

13

settlements and releases. Specifically, Bill Augustine, Lou Condo,

and Jeffrey Whalen allege that they were told by both Sciarappa

and other farmers, and David Rizzotte, Carmen Merlino, Joseph

Berenato, and Anthony Vaccarella allege that they were told only

by other farmers and not by Sciarappa.

The dismissed farmers argue that their reliance on the

statements Novartis allegedly made to Sciarappa and other farmers

supports a claim of fraud in the inducement under the theory of

indirect reliance. Under New Jersey law, the theory of indirect

reliance allows a plaintiff to maintain a fraud action based upon a

statement the plaintiff heard “not from the party that defrauded him

or her but from that party's agent or from someone to whom the

party communicated the false statement with the intention that the

victim hear it, rely on it, and act to his or her detriment.” Kaufman

v. I-Stat Corp., 754 A.2d 1188, 1195 (N.J. 2000). Thus,

[i]f a party to a transaction makes a false statement to

another party, intending or knowing that the other party in

the transaction will hear it and rely on it, and the second

party to the transaction actually hears the substance of the

misrepresentation, by means however attenuated, and

considers the actual content of that misrepresentation when

making the decision to complete the transaction, then that

person has established indirect reliance to support a fraud

claim.

Id. at 1196-97.

Summary judgment was appropriate on the dismissed

farmers’ claims because they cannot demonstrate that their reliance

on the statements of Sciarappa or other farmers was reasonable.

See Kaufman v. I-Stat Corp., 735 A.2d 606, 609 (N.J. Super. 1999)

(“The maker of a fraudulent misrepresentation is subject to liability

for pecuniary loss to another who acts in justifiable reliance upon

it if the misrepresentation, although not made directly to the other,

is made to a third person and the maker intends or has reason to

expect that its terms will be repeated or its substance

communicated to the other, and that it will influence his conduct in

the transaction or type of transaction involved.”) (emphasis added)

(quoting Restatement (Second) of Torts § 533 (1977)), judgment

14

reversed on other grounds, Kaufman, 754 A.2d at 1201. It is clear

from their deposition testimony that the dismissed farmers were

aware of the possibility of future damages. Moreover, Sciarappa

testified that each individual farmer was responsible for negotiating

his or her own settlement with Novartis.5 Based on this evidence,

no reasonable juror could find that the settling farmers reasonably

relied on the statements of Sciarappa or other farmers in

disregarding the plain language of the releases pertaining to future

damages.

Moreover, the theory of indirect reliance requires that the

fraudulent statement either be made by the defendant’s agent

directly to the victims, or by the defendant to a third person with

the intention that the victim hear it. See Kaufmann, 754 A.2d at

1195. In this case, neither Sciarappa nor any of the farmers was an

agent of Novartis. Furthermore, the dismissed farmers put forth no

evidence that Novartis made the allegedly fraudulent statements to

Sciarappa or the other farmers with the intention that the dismissed

farmers hear the statements. Thus, the dismissed farmers cannot

demonstrate an essential element of indirect reliance.

The dismissed farmers argue that, even if the theory of

indirect reliance is inapplicable, their claims should survive

summary judgment because Sciarappa was their agent and thus all

representations made to him by Novartis were representations

made to them as Sciarappa’s principal.6 Although Sciarappa

performed extensive work for the farmers with regard to

calculating their damages, he was not their agent for the purposes

of negotiating their settlement. Sciarappa’s deposition testimony

5

Sciarappa testified that he never informed any of the

farmers that Novartis would be discussing settlement for any

damages that occurred in 1998 because it was not his

responsibility, as he was “not speaking for Novartis” and “it was up

to [the farmers] to discuss [future damages] with Novartis.”

6

The Appellants acknowledge that this argument does not

apply to Rizzotte and Vaccarella, as these farmers did not hire

Sciarappa.

15

explicitly states that he was an “independent person” and it was

each farmer’s responsibility to negotiate his or her own settlement.

Indeed, Sciarappa was not even aware of the releases until months

after all the settlements had been signed.

In sum, because plaintiffs Augustine, Berenato, Condo,

Merlino, Rizzotte, Vaccarella, and Whalen cannot demonstrate the

necessary elements for their claims of fraud, we affirm the District

Court’s grant of summary judgment enforcing the releases.

Because the plain language of the releases bars these farmers’

remaining claims, we affirm the District Court’s grant of summary

judgment as to those remaining claims.

C. Dismissal of the Fictitious Plaintiffs

The Third Amended Complaint lists as John Doe plaintiffs

“fictitious farmers not yet identified” in order to “protect those

plaintiffs’ interests.” There is no allegation or evidence of the

citizenship of these fictitious farmers. John Doe parties destroy

diversity jurisdiction if their citizenship cannot truthfully be

alleged. See Kiser v. Gen. Elec. Corp., 831 F.2d 423, 426 n.6 (3d

Cir. 1987). However, the Supreme Court has held that courts of

appeals have the authority to dismiss dispensable John Doe parties

in order to preserve diversity jurisdiction. See Newman-Green,

Inc. v. Alfonzo-Larrain, 490 U.S. 826, 827 (1989). Here, the

named plaintiffs can obtain complete relief without the presence of

the John Doe plaintiffs, and any claims arising between the John

Doe plaintiffs and Novartis can be adjudicated in a subsequent

action. We conclude that the John Doe plaintiffs are dispensable

parties, and we will therefore dismiss their claims.

III. Conclusion

For the reasons stated above, we vacate the District Court’s

judgment dismissing the plaintiffs’ claims as preempted by FIFRA

and remand for further proceedings consistent with this opinion.

We also remand to the District Court to determine whether, under

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Bates, FIFRA preempts 1) Plaintiffs’ negligent misrepresentation,

fraud, and statutory fraud claims to the extent they are based on

written misrepresentations and 2) Plaintiffs’ failure-to-warn claim.

We affirm the District Court’s grant of summary judgment

dismissing the claims of plaintiffs Augustine, Berenato, Condo,

Merlino, Rizzotte, Vaccarella, and Whalen, and we dismiss the

claims of the John Doe plaintiffs.

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