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Dark Red Kidney Bean Farmers Appeal Insurance Case to Eighth Circuit

A tractor spraying a field

Tractor spraying pesticides on soybean field with sprayer at spring

A lawsuit against the United States Department of Agriculture, the Federal Crop Insurance Corporation, the Risk Management Agency, and various other insurance businesses and government agencies was appealed on Tuesday to the Eighth Circuit Court by kidney bean farmers alleging that they should have received funds from insurance programs after their crops were not as profitable as expected. 

The lawsuit, which originated with a 2017 putative class action case in the Minnesota District Court was filed by dark-red kidney bean farmers in Minnesota after harvest prices were reportedly significantly lower than what had been expected when they planted in the spring. The farmers purchased revenue insurance which should protect them from a fall in price, but did not receive the funds because there was not a sufficient amount of published pricing data. The yield protection, which was still granted, did not cover the drop in price. 

The plaintiffs claimed that under the Administrative Procedure Act, the USDA and other government agencies should not have approved the insurance policy and that the Risk Management Agency should have reformed the policy. The plaintiffs said these actions were “arbitrary and capricious.” The court, however, said in an August summary judgment in the district court that, “although the insurance policy was seriously flawed and resulted in significant losses to the farmers, Plaintiffs have not demonstrated that Defendants’ actions were arbitrary and capricious.”  

The District Court denied a motion to dismiss from the defendants, but granted their motion for summary judgment, denying the plaintiff’s motion for summary judgment. The court said this was because the defendants were aware of the risks but relied on “the majority of experts” and had sufficient information to make its decisions.

The judgment said, “Minnesota dark red kidney bean farmers purchased revenue insurance for the 2015 crop year which was supposed to be designed to protect them against a drop in bean prices.  But a deeply flawed  process overseen by USDA resulted in the farmers instead receiving yield insurance in a year when revenue insurance, not yield insurance , was necessary to compensate for the significant drop in the harvest price of beans.  Why this significant flaw — the potential lack of published pricing data sufficient to establish a harvest price which resulted in a reversion to the projected price — was not noted by most of the ‘experts’ who reviewed the plan is inexplicable.” 

The District of Minnesota gave the plaintiffs permission on October 1, 2020 to file a motion to reconsider in the case, and the plaintiffs, including Rich Elbert, Jeff A. Kosek, Reichmann Land & Cattle LLP, Michael Stamer, and Ludowese A.E. Inc., filed a notice of appeal in the case the next day. 

Rich Elbert is represented by John D. Tallman and Yira Law Office, all other plaintiffs are represented by John D. Tallman. The USDA, the Risk Management Agency, and the Federal Crop Insurance Corporation, are represented by the United States Attorney’s Office. Other insurance company defendants who were involved in the case had the claims against them terminated in 2018. 

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