Date: Aug 01, 2014
August 2014-Western Grower Ag Legal Network

There are dozens of attorneys representing the agricultural industry in their work, with their specialties ranging from food safety to labor law to water rights.

Western Growers has more than two dozen law firms that are members of the association with many of these also being members of Western Growers Ag Legal Network (see attorney listings beginning on page 18).  The network is simply a referral service with participating attorneys offering a discount to members of the association.  Western Growers General Counsel Jason Resnick keeps a list of the member firms handy and refers other WG members to a participant when various legal questions arise.  It is not an everyday occurrence, nor is it rare, according to Resnick.

A quick survey of some attorney members of the association found a wide range of specialties and litigation trends in the agricultural sector.

Russell McGlothlin, who is with the law firm of Brownstein Hyatt Farber Schreck LLP, specializes in water litigation and regulations from the firm’s Santa Barbara office.  He said other attorneys in the practice have other ag issue specialties.

“For me, this is the year of groundwater,” he said.  “There are two bills pending in Sacramento and the (Brown) Administration is working on its own set of proposals.”

As a bit of a primer, McGlothlin said that while surface water has been regulated in California for the past century, groundwater has not.  However, the drought of the past three years, and the subsequent over drafting of underground aquifers, has convinced many people that regulations are needed to make sure that there are groundwater sources for generations to come.

“If it happens, it will be a sea change…and I think for the better,” he said.

McGlothlin said many representatives from all segments of agriculture and other interests are at the table discussing the need for regulations.  While he would not go out on a limb and predict that a bill will definitely be passed this year, he indicated cautious optimism because of the diversity of interests involved in the discussions.  He said there are many people calling for groundwater regulation that he never had imagined would do so.

In general, the longtime water expert said the legislation being looked at would rank the aquifers around the state on a four-level scale based on the amount of over drafting that has occurred.  Ultimately, the legislation would regulate the over drafting of the most critical aquifers with a goal of having each aquifer in the state being sustainable within 20 years.

The legislation being considered does get deep in the woods and involves many different concepts, including historical rights to the water, the ability to transfer those rights and the governance of what would be a newly-created system.  While there is always concern when new regulations are implemented, McGlothlin was confident that these regulations would protect the interests of agriculture.  And, most importantly, assure that future generations have a groundwater system to rely on.

But he did call water “the third rail of Sacramento politics” and said agricultural interests should be vigilant in protecting their rights as the bills move through the Legislature.

Sarah Brew, who is a partner in the Minneapolis, MN-based firm of Faegre Baker Daniels LLP, also is the head of that firm’s Food Litigation & Regulation practice.  It is a national firm with offices all over the country specializing in a variety of issues.  For example, she said the Boulder, CO, office is very much involved in the organic food sector while many of her colleagues in Minnesota deal with issues such as the yields promised by manufacturers of seed.  Brew said the firm’s Midwest beginnings more than a century ago were rooted in the grain industry and the legal issues of farmers of that era.  Issues surrounding the grain crop industry remain an important part of their business.

Today, the food safety arena is where Brew spends much of her time.  She has been involved in most of the produce contamination cases from spinach to cantaloupe, typically representing distributors of the product and their liability issues.  Surprisingly, she said, there has been a down tick in food safety cases.  With the Food Safety Modernization Act imposing more regulations on growers, and thus creating additional liability issues, Brew expected more lawsuits.  She surmised that the adherence to good food safety practices has reduced the number of contamination cases, and accordingly, the number of lawsuits.

She said some of the more recent cases have involved imported produce, especially on the fruit side.  Recently, she presented a webinar for Western Growers members on the criminal aspects of a food safety contamination.  It is a daunting realization that under certain circumstances accidental food contamination can be a crime.

Riley Walter of the Walter & Wilhelm Law Group in Fresno, CA, also had food safety issues on the mind when talking to WG&S in mid-July.  “I have conducted an informal survey and discovered that many processors don’t have product liability insurance.”

He added that growers tend to believe the processors do have liability insurance, but they are often mistaken.  He has been advising his grower clients that it may very well be necessary that they carry their own insurance for protection.

Walter gets involved in a lot of insolvency work and he said the lack of proper insurance is often a cause of insolvency.  However, he noted that insolvencies are way down in the last couple of years, presumably because the economy is up.  However, he worries that the current drought in California could cause financial problems for many growers if it persists.  He says many growers do use their land for collateral and they could be in for rough times if the lack of water does not allow for production on that land.

He also said that the time to work on legal strategies to protect their assets in downtimes is when businesses are doing well.  In many situations, he said the courts have look-back provisions and so when you are in trouble, it is not the time to try to protect your assets.  In other cases, he said lack of knowledge can create a bad situation.  “I have a client who helped his mother-in-law out by putting three quarters of her house in his name.  If he has financial problems, she could lose her house.  There are ways to deal with that (before the event occurs) that we can help him with.”

But Walter said by nature, farmers are optimistic so it is often difficult to get them to plan for bad times.  “When things are going good, they think they are going to stay good forever.  And when things are going bad, they think they’ll change for the better.”

Ron Barsamian, a partner in Fresno-based Barsamian & Moody, said wage and hour issues continue to be a problem as more and more plaintiff’s attorneys look for class action work.  When an attorney can find a group of employees that have a wage issue, such as improper calculation of piece-rate pay, as has been chronicled in previous issues of this publication, Barsamian said the financial damages can multiply quickly.  He urged employers to examine their piece-rate policies and make sure they are in compliance with the way pay regulations are now interpreted.

“Piece-rate pay is a big issue,” he said.  “You have to make sure your employees are being paid at least minimum wage for the times they are not engaged in work covered by the piece-rate.  Even walking across the field might be an issue.”

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