Suko: Scotts' dispute belongs in state, not federal court
By MATEUSZ PERKOWSKI
A federal judge has thrown out a lawsuit filed by the Scotts lawn and garden company against two seed processors in Washington.
U.S. District Judge Lonny Suko dismissed the complaint on jurisdictional grounds, ruling that the dispute over payments for seed belongs in state court, not federal court.
The broader controversy involves several lawsuits between Scotts, the seed processors and grass seed farmers in Washington.
Scotts was the first to file a legal complaint in September 2010, claiming the two processors -- Dye Seed Ranch and Seeds Inc. -- violated their contractual obligations by failing to submit to audits to "confirm the source, quality and identity of the seed."
The company asked the judge to declare that it's not required to pay the two processors for Kentucky bluegrass seed until those audits were completed.
In October 2010, several farmers filed a legal complaint against Scotts and the processors in Washington state court in Whitman County, alleging they had not been paid for deliveries of seed. Another lawsuit was soon filed by growers against Scotts and one of the processors.
Farmers claim that Scotts tried to back out of contracts for Kentucky bluegrass seed after the housing market collapse caused demand for new lawns to plummet.
Last month, a judge in one of the state lawsuits ruled that Scotts must pay the one of the processors about $8 million, so that the company can in turn compensate growers for part of the seed deliveries, according to the Lewiston Tribune.
However, the Lewiston Tribune reported that Scotts may end up contesting that judgment, potentially drawing out the litigation.
In federal court, Judge Suko has now found that the primary dispute pits farmers against Scotts and the processors. The disagreement about audits is an ancillary matter, he said.
It's apparent Scotts knew the growers would file a complaint in state court, which prompted the company to preemptively file its own lawsuit in federal court, the judge said.
"There is no compelling reason for this court, at least at this point, to wade into a dispute that involves only state law issues which are already before the Whitman County Superior Court in two lawsuits that involve all of the parties and which seemingly have the capacity for resolving all of the issues presented," Suko said.