Charles BEEN, individually and d/b/a Creekside Farm, Inc.; Donald Frost; Edwin Johnston; Bob Fields, individually and dba Okie Blue Sky Farm, Inc.; Gene Blackwell, Class Representatives, Plaintiffs-Appellants, v. O.K. INDUSTRIES, INC.; O.K. Foods, Inc.; O.K. Farms, Inc., all Arkansas corporations, individually and as administrators of health and benefit plans; O.K. Broiler Farms Limited Partnership, an Arkansas limited partnership, individually and as administrator of health and benefit plans; Collier Wenderoth, Jr.; Randall Goins; Tom Webb, individually and as trustees of health and benefit plans; OK Industries, Inc. Employee Benefit Plan; OK Industries, Inc. Employee Funded Group Health Care Plan; OK Industries, Inc. and its Subsidiaries Employee Funded Health Care Plan; OK Industries, Inc. and Affiliates Flexible Benefits/Health Care Plan; OK Industries, Inc. and Affiliates Flexible Benefits Plan; Retirement Savings Plan of OK Industries, Inc. and Subsidiaries; Retirement Savings Plan of OK Industries, Inc.; Group Long Term Disability Plan; Group Life Health Insurance Plan; Group Voluntary Term Life Insurance Plan; Ken Primm, Defendants-Appellees.
No. 05-7079.
United States Court of Appeals, Tenth Circuit.
July 31, 2007.
495 F.3d 1217
The majority might be correct that the district court will impose the same sentence on remand. But such speculation is not justified because of something the district court said or did. Although Arrevalo-Olvera might not obtain a lower sentence on remand, that should be for the district court to decide while free of the erroneous belief that it must choose a sentence between 57 and 71 months merely because that range is reasonable.
The Government has not shown by a preponderance of the evidence that this error was harmless. Accordingly, we should reverse the district court‘s decision and remand for resentencing. I therefore respectfully dissent.
Matthew Horan, Smith, Maurras, Cohen, Redd & Horan, PLC, Fort Smith, AR, (James M. Sturdivan and Ronald N. Ricketts, Gable & Gotwals, P.C., Tulsa, OK, and Don A. Smith, Smith, Maurras, Cohen, Redd & Horan, PLC, Fort Smith, AR, with him on the briefs), appearing for the Appellees.
Before TACHA, Chief Circuit Judge, BRISCOE, and HARTZ, Circuit Judges.
TACHA, Chief Circuit Judge.
This appeal presents a matter of first impression for this Circuit, namely whether § 202(a) of the Packers and Stockyards Act (“PSA“),
I. BACKGROUND
Defendants-Appellants OK Industries, OK Farms, Inc., and OK Foods, Inc. (collectively “OK“) constitute a vertically integrated poultry producer operating in Arkansas and Oklahoma. OK is involved in almost every stage of the production and wholesale of poultry and poultry products: it breeds, hatches, provides feed for, transports, slaughters, and processes poultry. One aspect of poultry production OK does not handle is the raising of broiler chickens to slaughtering age. OK enters into contracts with various “growers” who handle that part of the production process.
The Plaintiffs-Appellants (“Growers“) are a class of growers operating in Oklahoma under contract with OK. In addition to alleging that the process by which OK and its growers enter into contracts is unconscionable under Arkansas law, the Growers argue that the terms of the contracts, as well as OK‘s performance under the contracts, violate the Packers and Stockyards Act,
OK is the largest poultry integrator in Oklahoma. With limited exceptions, no other integrators operate in the geographic markets in which OK operates. At the time of this lawsuit, OK had a waiting list of over 130 persons desiring to become growers for OK or to expand their existing operations. When OK needs to expand its production, it contacts persons on the waiting list to determine whether they are still interested, and if so, whether they will be suitable growers. Prior to entering into a contract with a grower, OK requires the grower to first obtain financing and build chicken houses to specifications set by OK. In exchange for a grower‘s expenditure of money to build the requisite chicken houses, OK signs a letter of intent, agreeing to enter into a broiler contract with the grower upon satisfactory completion of the chicken houses. One chicken house can cost a grower nearly $160,000, not including the cost of land and equipment.
All the broiler contracts are materially identical; they are standard contracts drafted by OK and are not subject to negotiation. Under the standard contract, a grower agrees to use only chicks, feed, and medicine supplied by OK. OK is not
The contract also details the method OK uses to calculate a grower‘s pay. OK uses a “competitive ranking” system to reward growers who produce chickens at the least cost to OK. Under OK‘s system of payment, OK first calculates the production cost per pound2 of each grower‘s flock and labels this production cost the grower‘s “flock prime cost.” It then lists the flock prime cost of each grower in order from lowest to highest. The flock prime cost of the grower that is numerically in the middle of the list is designated as the “average prime cost.” If any individual grower‘s flock prime cost is less than the average prime cost, then OK pays that grower a higher rate per pound than those whose flock prime cost is higher than the average prime cost. In other words, a grower‘s pay is based on how growers in a group rank against each other, not on the individual grower‘s production.
The Growers in this case filed suit in the United States District Court for the Eastern District of Oklahoma. They obtained class certification to challenge the following conduct: (1) OK deducts from the Growers’ pay certain charges for medicine and supplies; (2) OK sometimes delivers dead chicks to the Growers and causes the Growers to pay for them because OK counts chicks to be delivered at the hatchery, rather than at the Growers’ premises; and (3) OK has reduced the number of birds placed per year with the Growers, causing a substantial decrease in the Growers’ income. The Growers also challenged OK‘s competitive ranking system, arguing it is unfair and unconscionable because (1) OK uses the median flock prime cost as the average prime cost, which alters the rankings in a way that benefits OK to the detriment of the Growers; (2) OK exercises control over factors affecting the Growers’ performance; and (3) OK calculates the weight of condemned birds, for which OK will not pay Growers, based on the weight of healthy birds, even though condemned birds can weigh up to 50% less than healthy birds. The Growers alleged that OK‘s conduct constitutes a breach of contract and violates
OK moved for judgment on the pleadings, arguing, inter alia, that proof of an
Subsequently, in response to a motion filed by the Growers for an interlocutory appeal, the District Court supplemented its summary judgment ruling disposing of the PSA claim. It held that, even if
In yet another order, the District Court entered summary judgment in favor of OK on the Growers’ unconscionability claim. With respect to the broiler contracts governed by Oklahoma law,3 the court concluded that Oklahoma would not recognize an affirmative claim for damages based on unconscionability. With respect to the broiler contracts governed by Arkansas law, the court concluded that, although Arkansas recognizes an affirmative cause of action for unconscionability, the Arkansas courts have not specifically addressed an affirmative claim for damages, and in any event, these contracts were not unconscionable under Arkansas law.
Following these rulings, the parties settled the pending class claims for breach of contract. The Growers now appeal the District Court‘s rulings on their PSA and unconscionability claims.
II. DISCUSSION
A. The Packers and Stockyards Act § 202(a)
1. Law of the Case
The Growers first contend that the District Court‘s initial ruling that
Finding no Supreme Court or Tenth Circuit authority interpreting
2. Interpretation of “Unfair Practices” under § 202(a)
Section 202 of the PSA makes it unlawful for a “live poultry dealer”5 to
(a) Engage in or use any unfair, unjustly discriminatory, or deceptive practice or device; or
(b) Make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect whatsoever, or subject any particular person or locality to any undue or unreasonable prejudice or disadvantage in any respect whatsoever; or
(c) Sell or otherwise transfer to or for any other packer, swine contractor, or any live poultry dealer, or buy or otherwise receive from or for any other packer, swine contractor, or any live poultry dealer, any article for the purpose or with the effect of apportioning the supply between any such persons, if such apportionment has the tendency or effect of restraining commerce or of creating a monopoly; or
(d) Sell or otherwise transfer to or for any other person, or buy or otherwise receive from or for any other person, any article for the purpose or with the effect of manipulating or controlling prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce; or
(e) Engage in any course of business or do any act for the purpose or with the effect of manipulating or controlling
prices, or of creating a monopoly in the acquisition of, buying, selling, or dealing in, any article, or of restraining commerce; or (f) Conspire, combine, agree, or arrange with any other person (1) to apportion territory for carrying on business, or (2) to apportion purchases or sales of any article, or (3) to manipulate or control prices; or
(g) Conspire, combine, agree, or arrange with any other person to do, or aid or abet the doing of, any act made unlawful by subdivisions (a), (b), (c), (d), or (e) of this section.
At issue in this case is only what constitutes an “unfair” practice within the meaning of
We first address the Growers’ suggestion that we must defer to the USDA‘s reasonable interpretation of the statute because the agency is authorized to make rules and regulations necessary to carry out the PSA. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984) (holding that when Congress has implicitly delegated legislative authority to an agency, “a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency“). To that end, the Growers claim that the USDA “has consistently taken the position that in order to prove that any practice is ‘unfair’ under [§] 202(a) of the Act, it is not necessary to prove predatory intent, competitive injury, or likelihood of injury; and that it is the Department‘s duty to stop unlawful practices in their incipiency prior to actual injury.” In re Ozark County Cattle Co., Inc., 49 Agric. Dec. 336, 365 (1990). They also note that the USDA filed an amicus brief before the Eleventh Circuit in London v. Fieldale Farms Corp., 410 F.3d 1295 (11th Cir. 2005), stating that the Secretary of Agriculture‘s position is that the PSA prohibits all unfair practices, regardless of whether a practice causes a competitive injury.
Although we generally defer to an agency‘s interpretation of an ambiguous statute that it implements, “[d]ifferent types of agency pronouncements are entitled to different degrees of deference.” Newton v. FAA, 457 F.3d 1133, 1136 (10th Cir. 2006). As the Supreme Court has explained:
[A]dministrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority. Delegation of such authority may be shown in a variety of ways, as by an agency‘s power to engage in adjudication or notice-and-comment rulemaking, or by some other indication of a comparable congressional intent.
United States v. Mead Corp., 533 U.S. 218, 226-27 (2001).
Regulations promulgated by an agency exercising its congressionally granted rule-making authority are clearly entitled to Chevron deference. Newton, 457 F.3d at 1137. So too is an agency‘s adjudication of matters over which it has the authority to adjudicate, as such decisions carry the force of law. See id.;
Having concluded that we need not defer to the agency‘s interpretation of the statute, we turn to the District Court‘s construction of
Against this backdrop, other circuits have concluded that “unfair[ness]” under
In a more recent case, based on facts similar to those at issue here, the Eleventh Circuit similarly held that a claim brought under
The Growers argue, however, that because § 202‘s other subsections contain language prohibiting acts that tend to restrain commerce or create monopolies, see, e.g.,
The Growers also argue that because other subsections require proof of a competitive injury, limiting subsection (a) to anticompetitive acts would render it superfluous and would therefore violate one of the “cardinal principle[s] of statutory construction” to “give effect, if possible, to every clause and word of a statute.” Williams v. Taylor, 529 U.S. 362, 404 (1900) (quotation omitted). To the contrary, such an interpretation is far from rendering subsection (a) superfluous because it serves as a catchall for acts that Congress could not, at the time of enactment, have foreseen and specified. Cf. Excel Corp. v. USDA, 397 F.3d 1285, 1293 (10th Cir. 2005) (recognizing that new techniques and tools utilized by covered entities can violate the PSA even if the USDA has not previously declared them unlawful). While the other subsections make certain acts explicitly unlawful, Congress acknowledged with subsection (a) that it could not list the full panoply of unfair, unjustly discriminatory, or deceptive practices or devices that a covered entity might utilize.
Although we have never expressly held that unfairness under
In Excel Corp. v. USDA, 397 F.3d 1285 (10th Cir. 2005), we reviewed the USDA‘s determination that Excel violated
In Hays Livestock Commission Co. v. Maly Livestock Commission Co., 498 F.2d 925 (10th Cir. 1974), we reviewed the Secretary of Agriculture‘s determination that a dealer‘s refusal to honor a draft to pay for livestock was “unjust and unreasonable” under
The Growers note, however, that we have also resolved cases under
3. OK‘s Alleged Violations of § 202(a)
After determining that
In granting summary judgment in OK‘s favor, the District Court held:
To prove monopoly power typically requires the wilful acquisition or maintenance of such power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. Monopoly power includes power to exclude competition. Plaintiffs have not presented evidence demonstrating entry barriers or other circumstances which improperly preclude other integrators from competing in this market with defendants. The mere fact that the defendants are the sole integrator does not demonstrate an illegal monopsony. Moreover, the plaintiffs are not competitors of defendants. Thus, injury to them by the allegedly “unfair” contract does not demonstrate injury to competition.
(internal citations omitted). The Growers argue that the District Court erred because it implied that (1) an injury to competition only arises in the context of unlawful monopolization; and (2) an injury to competition only arises when a competitor is injured.
We agree that the District Court erred in its legal analysis of what constitutes a competitive injury under
The record contains evidence that supports the Growers’ contention that OK is a monopsony in the relevant regional market. A monopsony is “a condition of the market in which there is but one buyer for a particular commodity.” Telecor Commc‘ns, Inc. v. Sw. Bell Tel. Co., 305 F.3d 1124, 1133 n. 4 (10th Cir. 2002) (quotation omitted). Because the poultry market is vertically integrated, if OK is the only integrator in the area, as the Growers suggest, it may constitute a monopsony. The District Court‘s characterization of this logic as a “non sequitur” is therefore incorrect. We have previously acknowl
Furthermore, we have acknowledged that, like a monopoly, a monopsony can threaten competition. Id. at 1135 (“Economists ... have long recognized that market inefficiencies created by anticompetitive restraints on input markets can be as destructive of a free market economy (and therefore ultimately damaging to consumers) as restraints on output markets.“). According to economists, without competition from other buyers, a monopsonist will lower prices paid to sellers, which over time results in higher consumer prices.10 In other words, a poultry processor with monopsony power can fix and manipulate prices resulting in injury to both poultry producers (i.e., growers) and end-users (i.e., consumers). We explained why depression of prices potentially injures both producers and consumers in Telecor: “Some producers will either produce less or cease production altogether, resulting in less-than-optimal output of the product or service, and over the long run higher consumer prices, reduced product quality, or substitution of less efficient alternative products.” Id. at 1136.
In addition, in the vertically integrated poultry market, a processor with monopsony need not wait for poultry growers to produce less to increase prices on the wholesale market because the processor also controls the growers’ supply. It may simply deliver fewer chicks to the growers, pay them the same low prices, and resell at the same or a higher price. When this happens, both the growers and the end-users are adversely affected. That is, by manipulating prices to suppliers, a monopsonist threatens to injure the end-users. Id. at 1136 (“[M]onopsonies fall under antitrust purview because monopsonistic practices will eventually adversely affect consumers.“); id. at 1134 (“Tenth Circuit case law ... reject[s] the notion that a monopsony plaintiff must prove end-user impact.“); see also Mandeville Island Farms v. Am. Crystal Sugar Co., 334 U.S. 219, 235 (1948) (holding that sugar beet growers had stated a valid monopsony claim under the Sherman Act even though they did not allege end-user impact). Hence, to establish that the practices of a monopsonist have injured or are likely to injure competition, a plaintiff does not have to be a competitor of the buyer or demonstrate that the buyer has improperly excluded other competitors. Instead, the plaintiff must show that the monopsonist‘s practices have caused or are likely to cause the anticompetitive effect associated with monopsonies, namely the arbitrary manipulation of market prices by unilaterally depressing seller prices on the input market with the effect (or likely effect) of increasing prices on the output market.
As we noted above, shortly after the PSA‘s passage, the Supreme Court identified these very harms as the reason Congress passed the Act: the “chief evil” Congress sought to prevent was “the monopoly of the packers, enabling them unduly and arbitrarily to lower prices to the shipper who sells, and unduly and arbitrarily to increase the price to the consumer who buys.” Mahon v. Stowers, 416 U.S. 100, 106 (1974) (quoting Stafford v. Wallace, 258 U.S. 495, 514-15 (1922)); see also Swift & Co. v. United States, 393 F.2d 247, 254 (7th Cir. 1968) (“The lack of competition between buyers,
Although other circuits have noted that supply contracts between producers and processors of livestock can increase efficiency, they tend to focus on the benefits to the processor, rather than the market as a whole. See Pickett, 420 F.3d at 1283 (“[B]eing able to keep its processing plants operating at capacity has increased [the processor‘s] efficiency.“); IBP, Inc., 187 F.3d at 978 (concluding that the terms of the contracts allowed the processor “to have a more reliable and efficient method of obtaining a supply of cattle“). But even if supply contracts increase a processor‘s efficiency, they may threaten the efficiency of the relevant market when a monopsony is able to manipulate the market by depressing producers’ prices and increasing resale prices.11 Hence, to demonstrate that a monopsonist has engaged in “unfair practices” under
After reviewing the record in the case before us, we find that a genuine issue of material fact exists as to whether OK engaged in unfair practices in violation of
We are not suggesting that uncompetitive prices alone are unlawful. Courts have routinely noted that, short of predatory pricing, a monopolist‘s uncompetitive prices do not violate antitrust laws. See, e.g., Kartell v. Blue Shield of Mass., Inc., 749 F.2d 922, 927 (1st Cir. 1984) (“Ordinarily ... even a monopolist is free to exploit whatever market power it may possess when that exploitation takes the form of charging uncompetitive prices.“).12 But if a monopsonist‘s uncompetitive prices are a result not solely of its market power, but also of practices that result in complete control of the input (supply) market, the effect of the monopsonist‘s practices may be an injury to competition. Moreover, although PSA claims against processors for practices associated with supply contracts have not enjoyed much success, these cases are factually different from the one before us. See Pickett, 420 F.3d 1272; IBP, Inc., 187 F.3d 974. For example, the producers in these cases did not allege the existence of a monopsony. In addition, the supply contracts guaranteed producers a price tied to market prices, and overall, the arrangements created incentives and efficiencies that benefitted consumers. Pickett, 420 F.3d at 1284 (“[I]t was undisputed ... that marketing agreements are a more efficient means for both meat packers and cattle producers to operate in the market.“); IBP, Inc., 187 F.3d at 978 (explaining that the marketing agreements “essentially ensure[] that the potential for undue or arbitrary lowering of prices is eliminated“); see also Griffin v. Smithfield Foods, Inc., 183 F.Supp.2d 824, 827 (E.D.Va. 2002) (granting summary judgment in favor of a defendant packer because the plaintiff producers had not identified any specific practices that violated the PSA).
We therefore conclude that, if the Growers prove that OK engaged in the arbitrary price manipulation described above with the effect or likely effect of depressing prices to the growers and reselling at increased prices, they may establish that OK engaged in unfair practices in violation of
4. Discovery Ruling
Following the District Court‘s adverse ruling on their PSA claim, the Growers moved the court to reopen discovery for the limited purpose of discovering information regarding the likelihood of an injury to competition. The District Court denied the motion. The Growers argue that, because of the first judge‘s ruling that such proof is not required and because discovery had closed in the interim, the District Court erred in refusing to reopen discovery.
We review a district court‘s denial of a motion to reopen discovery for an abuse of discretion. SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1514 (10th Cir. 1990). “Under this standard, a trial court‘s decision will not be disturbed unless the appellate court has a definite and firm conviction that the lower court made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances.” Id. (quotation omitted).
When OK moved for summary judgment on the Growers’ PSA claim, it explicitly reraised the issue in dispute.13 The Growers therefore had fair warning that the issue was back on the table for resolution. In fact, they addressed the argument in their response to OK‘s motion. They argued that the law of the case bound the court to the prior ruling, but that in any event they had presented sufficient evidence of an injury to competition to withstand summary judgment. Only when the District Court disagreed with both propositions did the Growers seek to reopen discovery, arguing that they did not have an opportunity to discover the relevant information.
“The Supreme Court has held that, under
B. The Growers’ Unconscionability Claim
The Growers claim that the broiler contract is unconscionable because of the gross imbalance of obligation borne by growers. For example, they point to the fact that the contract guarantees only a single flock of chicks although a grower must raise broilers for at least fifteen years to recoup its investment. They also note that OK is not obligated to place a minimum number of chicks or flocks with each grower, and growers are obligated to make improvements to chicken houses before OK will place additional flocks with them.
We must first address a threshold choice-of-law question. Beginning in 1997, OK‘s broiler contracts included a choice-of-law provision, designating the law of Arkansas as the governing law. Consequently, in its order granting summary judgment, the District Court held that Oklahoma law governed the pre-1997 contracts and Arkansas law governed the contracts entered into thereafter.
To decide the effect of the contractual choice-of-law clause, we look to the forum state‘s choice-of-law rules. See Dang v. UNUM Life Ins. Co. of Am., 175 F.3d 1186, 1190 (10th Cir. 1999) (“A federal court adjudicating state law claims must apply the forum state‘s choice of law principles.“). Under Oklahoma law, “a contract will be governed by the laws of the state where the contract was entered into unless otherwise agreed and unless contrary to the law or public policy of the state where enforcement of the contract is sought.” Williams v. Shearson Lehman Bros., Inc., 917 P.2d 998, 1002 (Okla.Civ.App. 1995). Because we conclude that the Growers’ unconscionability claim fails under both Oklahoma and Arkansas law, we need not decide whether the application of Arkansas law would be contrary to Oklahoma‘s law or public policy. In reaching this decision, we review the District Court‘s interpretation of state law de novo. Steiner Corp. v. Johnson & Higgins of Cal., 135 F.3d 684, 690 (10th Cir. 1998) (citing Salve Regina College v. Russell, 499 U.S. 225 (1991)). As an initial matter, the Oklahoma Supreme Court has never addressed whether Oklahoma common law would recognize an affirmative cause of action seeking damages for unconscionability in contract. Nevertheless, Oklahoma‘s unconscionability standard is so onerous that the Growers cannot meet that standard here. An unconscionable contract is one in which, “at the time of making of the contract, and in light of the general commercial background and commercial needs of a particular case, clauses are so one-sided as to oppress or unfairly surprise one of the parties.” Barnes v. Helfenbein, 548 P.2d 1014, 1020 (Okla. 1976). “Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties, together with contractual terms which are unreasonably favorable to the other party.” Id.
Whether the Growers lacked any meaningful choice is determined by “all the circumstances surrounding the transaction.” Id. at 1020 n. 12 (quoting Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449-50 (D.C.Cir. 1965)). Relevant factors include whether the aggrieved party had a reasonable opportunity to understand the terms of the contract and whether the important terms were
Similar principles apply in Arkansas. In assessing whether a contract or a particular provision is unconscionable, the court must “review the totality of the circumstances surrounding the negotiation and execution of the contract,” taking into consideration “whether there is a gross inequality of bargaining power between the parties and whether the aggrieved party was made aware of and comprehended the provision in question.” Jordan v. Diamond Equipment & Supply Co., 362 Ark. 142, 207 S.W.3d 525, 535 (2005). Importantly, however, “it is [generally] not the province of the courts to scrutinize all contracts with a paternalistic attitude and summarily conclude that they are partially or totally unenforceable merely because an aggrieved party believes that the contract has subsequently proved to be unfair or less beneficial than anticipated.” Assoc. Press v. S. Ark. Radio Co., 34 Ark.App. 211, 809 S.W.2d 695, 697 (1991) (quotation and alteration omitted). Indeed, in Arkansas, “parties are free to make contracts based on whatever terms and conditions they agree upon, provided it is not illegal or tainted with some infirmity such as fraud, overreaching, or the like.” Hancock v. Tri-State Ins. Co., 43 Ark.App. 47, 858 S.W.2d 152, 154 (1993) (en banc).
None of these circumstances are present here. Although the District Court recognized the potential for some inequality of bargaining power, it was not a “gross inequality of bargaining power.” The court noted that the availability of the broiler contracts is well-known in the region and has produced a waiting list of people who wish to become growers under the contract—a contract which is available for review prior to engaging in the capital investment needed to become a grower.
The Growers argue that the inequality of bargaining power should not be determined by reference to the availability of contracts and the fact that many people want to become a grower for OK. Rather, they suggest that the court consider whether they lacked any meaningful choice as to the terms of the contract and whether they had an alternative source for obtaining the desired service or product. Although Arkansas case law does suggest that these are relevant considerations, see Nat‘l Union Fire Ins. Co. of Pittsburgh v. Guardtronic, Inc., 76 Ark.App. 313, 64 S.W.3d 779, 783-84 (2002), the Growers are incorrect in dismissing the fact that they initiated the contracting process with OK (i.e., OK did not solicit their business) as irrelevant to the analysis.
In Jordan, the plaintiff was a landscaper who rented large equipment from the defendant. 207 S.W.3d at 528. The rental agreement contained a boilerplate provision excusing the defendant from liability for the consequences of its own negligence in connection with the rental of the equipment. Id. at 531-32. After the plaintiff was injured by the equipment, he sued, arguing that the exculpatory clause was unconscionable and therefore unenforceable. The Arkansas Supreme Court disagreed. The court found no evidence of a “gross inequality of bargaining power” when the plaintiff “sought out the services” of the defendant and “paid for the rental equipment after being shown how to
Furthermore, the Growers do not suggest that they are unsophisticated parties unable to evaluate the risks of the contract prior to entering into it. And they do not suggest that they failed to read and understand the terms of the contract prior to entering into it or even prior to building the chicken houses. Also worthy of note is that some of the named plaintiffs have been operating under this allegedly “unconscionable” contract for nearly twenty years. Generally, “[t]he fairness or unfairness, folly or wisdom, or inequality of contracts are questions exclusively within the rights of the parties to adjust at the time the contract is made.” Id. We therefore affirm the District Court‘s grant of summary judgment in favor of OK on the Growers’ unconscionability claim.
III. CONCLUSION
Section 202(a) of the Packers and Stockyards Act requires a plaintiff who claims that a defendant‘s conduct was “unfair” to show that such conduct results in or is likely to result in an injury to competition. Because the record contains evidence that raises a genuine issue of material fact concerning the Growers’