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IDAHO POTATO COMMISSION v. M & M PRODUCE FARMS & SALES

April 26, 2000

IDAHO POTATO COMMISSION, PLAINTIFF,
V.
M & M PRODUCE FARMS & SALES D/B/A M & M PRODUCE, M & M PACKAGING, INC., MATTHEW ROGOWSKI, MARK ROGOWSKI, JOHN DOE NO 1. THROUGH DOE NO. 100, DEFENDANTS. HAPCO FARMS, INC., PLAINTIFF, V. IDAHO POTATO COMMISSION, DEFENDANT. IDAHO POTATO COMMISSION, PLAINTIFF, V. MAJESTIC PRODUCE CORP., MAJESTIC PRODUCE TRUCKING CORP., CHRISTINE RICHARDSON, RITA STRUMPH, JOSEPH STRUMPH, GEORGE RICHARDSON, JOHN DOE NO 1. THROUGH JOHN DOE NO. 100, DEFENDANTS. G & T TERMINAL PACKAGING CO., INC., INTERVENOR, V. IDAHO POTATO COMMISSION, DEFENDANT.



The opinion of the court was delivered by: Charles L. Brieant, United States District Judge

MEMORANDUM & ORDER

Before this Court for decision is the second motion by the Idaho Potato Commission, represented by the Attorney General of the State of Idaho, for relief under Rule 60(b) of the Federal Rules of Civil Procedure, representing the third attempt by the Idaho Potato Commission (hereinafter the "IPC") to assert Eleventh Amendment immunity.

Familiarity on the part of the reader with this Court's prior decisions, Idaho Potato Commission v. M&M Produce Farms & Sales, 35 F. Supp.2d 313 (SDNY January 22, 1999) (First Opinion) denying IPC's motion to dismiss, and this Court's subsequent unreported decision dated August 18, 1999 (Second Opinion) denying the first Rule 60(b) motion is assumed.

The sole issue is whether the IPC enjoys sovereign immunity as an agency created by the Idaho Legislature charged with promoting the sale of Idaho potatoes. The legislative purpose of the IPC is to exercise the power of the State of Idaho in resisting the unlawful branding of other potatoes as Idaho potatoes and protect the quality of Idaho potatoes. In an effort to further this result and to protect the identity and integrity of Idaho potatoes, pursuant to Idaho Code §§ 22-1207(9), the IPC is required to "devise and require the application of either a seal, label brand package or other suitable device that will protect the identity of the original Idaho pack of potatoes as near to the final consumer as possible." In furtherance of this statutory mission, the IPC or the State of Idaho itself, duly registered in the principal register of the United States Patent and Trademark Office the five certification marks described in this Court's First Opinion.

The IPC requires all shippers who buy potatoes in bulk and then repackage them in consumer bags to obtain a license from the Commission and agree to submit to IPC's audit and inspection process. Naturally, this service implicates payment of a fee. The licensing agreements also require the packers to acknowledge that certain of the Idaho marks are valid registered marks, and that they will not during the term of the agreement or at any time thereafter attack the title or any rights of the IPC in and to the relevant Idaho marks. The parties opposing the IPC in this litigation are packers or re-packers of produce (the "Packers"). They seek declaratory and injunctive relief cancelling the Idaho marks under federal and state law, and compensatory and treble damages for three claims of anti-trust violations by IPC.

In its original motion to dismiss, the LPC argued that as an agency of the state it was immune from suit by the Packers under the Eleventh Amendment and that it was entitled to sovereign immunity from the Packers' counterclaims.

The Packers claimed, and the Court found in its First Opinion that IPC was not entitled to Eleventh Amendment immunity, and that assuming it was, any immunity from Hapco's and G&T's claims for cancellation of the IPC's marks had been abrogated by the Lanham Act as amended by the Trademark Remedy Clarification Act of 1992, 15 U.S.C. § 1122.

Our First Opinion turned essentially on this Court's Mancuso analysis of Eleventh Amendment immunity, based upon Mancuso v. New York State Thruway Authority, 86 F.3d 289, 292 (2d Cir. 1996) cert. denied 519 U.S. 992 (1996). Mancuso jurisprudence allows a state created entity such as IPC to enjoy Eleventh Amendment immunity if it can demonstrate that it is "more like `an arm of the state' such as an agency, than like `a municipal corporation or other political subdivision."' Mancuso, 86 F.3d at 292 (quoting Mt. Healthy School District Bd. of Educ. v. Doyle, 429 U.S. 274 (1977)).

In our initial Mancuso analysis this Court considered the six factors listed in that case and found that the issue of "whether allowing the entity to be sued in federal court would put the State Treasury at risk and/or whether it would threaten the integrity of the State" to be the most salient factor under Mancuso where, as in this case, the remaining five factors are evenly balanced or point in different directions. The Court concluded that the State Treasury of Idaho was not at risk, and denied the motion to dismiss on the ground of Eleventh Amendment immunity.

Idaho took an immediate appeal, but while the appeal was pending returned to this Court for the first Rule 60(b) motion, based on subsequently adopted legislation in the State of Idaho which purported to alter the Court's analysis of the sixth Mancuso factor. Prior to the first legislative change of § 22-12 10, the statute read in relevant part as follows:

All expenses incurred by the [IPC] in performing its duties and exercising its powers shall be without liability on the part of the state.

The first legislative change in Idaho Code § 22-12 10 read as follows:

All contractual expenses incurred by the [IPC] in performing its duties and exercising its powers shall be without liability on the part of the state. (Emphasis in original)

The IPC then argued that the purpose of the amendment was to make clear that the state was not responsible for the IPC's contractual obligations, but was [by negative implication] liable for its torts. (IPC's memorandum of law in ...


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