Clasing v. Hormel Corp., 993 F. Supp. 2d 960

Diversity lawsuit by Jade Farms against Hormel over an oral contract for Canadian-born hogs after COOL (country-of-origin labeling) was enacted.
Written Hog Procurement Agreement with Hormel expired; parties’ ongoing dealings continued under an oral framework labeled the September 29, 2008 Oral Agreement.
COOL required Category B hogs (Canadian-born) to be segregated from Category A; Hormel notified termination of the Written Agreement effective December 31, 2008.
Oral Agreement provided that Hormel would continue to accept Category B hogs “until further notice” at the prior price; a later April 2009 amendment allegedly changed pricing to Western Cornbelt Price plus $1.50 with a 94% USDA cutout cap.
Clasings contend Hormel unilaterally changed pricing and delivery terms in April 2009 without adequate notice or consent; Hormel contends changes were authorized by the Oral Agreement and its course of dealing.
Court granted summary judgment in part: denied for breach of contract (Count I) and granted for implied covenant and implied-contract claims (Counts II–IV) while preserving trial on Count I

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Hormel breached the Oral Agreement’s pricing term	Clasings assert six months’ notice required and that price change was not consented	Hormel claims pricing term continued until further notice and was validly changed with notice	Genuine issues of material fact; not entitled to summary judgment on pricing term breach
Whether Hormel breached the Oral Agreement’s delivery term	Delivery modifications violated the Oral Agreement as a course of dealing	Delivery changes were part of COO-era practice and not a breach	Genuine issues of material fact; not entitled to summary judgment on delivery term breach
Whether Hormel is liable for breach of the implied covenant of good faith and fair dealing	Implied covenant claims decry discriminatory/retaliatory actions	Covenant cannot create new terms beyond contract; actions tied to contract terms	Hormel entitled to summary judgment; implied covenant claim dismissed
Whether implied-in-fact and quasi-contract claims survive given existence of an enforceable express Oral Agreement	Implied/partial contracts available as alternatives	Express contract bars recovery on implied contracts	Hormel granted summary judgment on Counts III and IV; no recovery on implied-contract theories

Bagelmann v. First National Bank, 823 N.W.2d 18 (Iowa 2012) (implied covenant must attach to a contract term; cannot create new terms)
Mid-America Real Estate Co. v. Iowa Realty Co., 406 F.3d 969 (8th Cir. 2005) (implied covenant prevents using contract compliance as shield unless justified by contract’s purpose)
Royal Indemnity Co. v. Factory Mutual Ins. Co., 786 N.W.2d 839 (Iowa 2010) (elements of a breach-of-contract claim under Iowa law)
Pillsbury Co., Inc. v. Wells Dairy, Inc., 752 N.W.2d 430 (Iowa 2008) (extrinsic evidence aids contract interpretation; words of integrated agreement dominate)
Scott v. Grinnell Mut. Reinsurance Co., 653 N.W.2d 556 (Iowa 2002) (express and implied contracts generally cannot coexist on same subject matter)