A comprehensive summary of today’s judicial, legislative, and regulatory developments in agriculture and food. Email important additions HERE.

Judicial: Arbitration Agreement

In Martinez-Gonzalez v. Elkhorn Packing Co. LLC, 17 F.4th 875 (9th Cir. 2021), the court considered whether plaintiff signed arbitration agreement while under economic duress or undue influence. Plaintiff brought a claim against defendant for federal and state labor and wage violations. Defendant moved to compel arbitration because plaintiff signed an arbitration agreement at the start of his employment. The district court did would not enforce the arbitration agreement, finding that the plaintiff lack reasonable alternatives to signing the arbitration agreement due to his financial situation.

In California, a contract signed under economic duress may be rescinded. Economic duress occurs when a party “commits a wrongful act and that act is sufficiently coercive to cause a reasonably prudent person faced with no reasonable alternative to agree to an unfavorable contract.”  Plaintiff claimed that defendant committed a wrongful act by asking him to sign the arbitration agreement after he had already traveled from Mexico to California and was therefore dependent on the defendant for housing.  The Court of Appeals found that this did not constitute a wrongful act because (1) plaintiff did not allege that defendant’s actions were unlawful or tortious; (2) there were no false claims, bad-faith threats, or refusal to repay debts; and (3) defendant’s actions did not fit the description of impermissible threats identified in the Restatement of Contracts that the California courts have adopted. The Court of Appeals held that plaintiff did not show a wrongful act under California law.

The Court of Appeals then looked to whether plaintiff demonstrated a lack of reasonable alternatives. A reasonable alternative is one that “a reasonably prudent person would follow to avoid a coerced agreement.” The Court of Appeals found that the circumstances did not show a lack of reasonable alternative because plaintiff could have asked whether signing the arbitration agreement was necessary to keep his job. The Court of Appeals concluded that it was clearly erroneous for the district court to conclude that the plaintiff lacked a reasonable alternative.

The Court of Appeals then addressed the issue of undue influence. Undue influence involves the “use of excessive pressure to persuade one vulnerable to such pressure” and is composed of two elements, (1) undue susceptibility and (2) excessive pressure. The Court of Appeals found that the district court made no explicit finding that the plaintiff was especially vulnerable to pressure but that the district court found that excessive pressure did exist. However, the Court of Appeals held that the district court erred in finding that excessive pressure existed because the actions were not considered oppressive under California law.

The Court of Appeals reversed and remanded the case to the district court.

REGULATORY: FCA, FDA, FNS, NOAA

FARM CREDIT ADMINISTRATION

Final rule amending the regulatory capital requirements for Farm Credit System institutions. The amendments clarify certain provisions in the Tier 1/Tier 2 Capital Framework and codify the guidance provided in an FCA bookletter. Info here.

FOOD AND DRUG ADMINISTRATION

Notice announcing an opportunity for public comment on the proposed collection of certain information regarding the regulation requiring the manufacturer, packer, or distributor of a dietary supplement to notify FDA that it is marketing a dietary supplement product that bears on its label or in its labeling a statement provided for in the Federal Food, Drug, and Cosmetic Act. Info here.

FOOD AND NUTRITION SERVICE

Notice inviting public to comment on the revision of the currently approved OMB collection for the 2023 Farm to School Census. Info here.

NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

Proposed rule proposing Atlantic bluefish specifications for the 2022 fishing year, and projected specifications for fishing year 2023, as recommended by the Mid-Atlantic Fishery Management Council. Info here.

Proposed rule announcing a 90-day finding on a petition to list the Atlantic humpback dolphin (Sousa teuszii) as threatened or endangered under the Endangered Species Act. Info here.