Seed piracy verdict against Arkansas co-op reversed

This is a story about a wrongly accused man caught in a net swung by the well-intentioned.

In 2001, the word was out and it spread quickly. Several seed companies let it be known they wouldn’t stand for seed piracy. Through their attorneys, the companies said investigations were being conducted across the Mid-South, and prosecutions were planned under the Plant Variety Protection Act.

The warnings weren’t idle. By October 2002, at least six lawsuits against Mid-South farmers and/or agri-businesses had been filed and more were promised.

A year later, in mid-September, Wade Castleberry was in his northeast Arkansas office when a man pulled into the parking lot. Summoned to the front desk, Castleberry took papers from the man and learned he was being sued for seed piracy.

Castleberry’s first reaction was shock. His next was outrage. As his and the co-op’s legal saga unfolded over the next four years, those same emotions repeatedly surfaced.

The co-op

Wade Castleberry is the general manager of Marmaduke, Ark.-based Delta Cotton Co-op. He is an articulate young man with an earnest, friendly demeanor. He is easy-going and easy to like.

Not long after the century’s turn, in an attempt to find seed pirates, seed companies sent private investigators on scouting trips. The private investigators drove Delta roads, stopping at chemical companies, co-ops and grain elevators.

On a November day in 2001, a private investigator walked to the Delta Cotton counter and asked to buy feed wheat for deer. Because it was then deer season, the request raised no concerns.

“I’m a hunter and I use wheat for deer feed,” says Castleberry. “So do our salesmen. The deer eat it just as they do corn.

“We’ve got wheat for feed and wheat for seed. We didn’t think this guy wanted to plant it and grow a crop. Had we thought that, we’d have sold him a wheat seed with a germ test — something we knew would emerge.”

The transaction was entirely above board, says Castleberry. He’d even checked with the Arkansas Plant Board prior to the investigator’s visit.

“I understand patent laws and I know the difference between right and wrong. When I had a question about the wheat, I went to find an answer… The wheat we sell for bait and for chicken feed was initially a concern. I called the Plant Board to ensure we had our ducks in a row.

“The Plant Board rep told me, ‘You need to put it in a bag, guarantee its weight, and send it off for crude fiber fat and protein analysis to protect the customer.’

“I asked what else was required. He said, ‘(Label it properly) and you’re good to go.’ Once we took those steps, I didn’t think anything else about it.”

Not long after, the private investigator bought three bags of the wheat. But he didn’t drive to a hunting camp. After dipping in the sacks and sending samples to a lab, Syngenta was informed that one of its varieties — Coker 9663 — was in the bags’ mix.

Germ tests

The Delta Cotton Co-op has been in business since 1965. In its history, Castleberry says, there’s never been a germination test on wheat seed. Why is that significant?

“To sell a product for someone to plant and grow, I do germ tests. Otherwise, I’d end up with (angry) customers. You think I want a producer mad because seed I sold won’t come up? That would be a poor business decision.”

With the feed wheat, “we never took steps to preserve the germ — to keep it cool or anything else. We had a 108,000-bushel bin and 56,000-bushel bins to work with.”

When delivering grain to the co-op, farmers cross the scale with many varieties of wheat. None is segregated.

“Every load is documented, and they all are dumped together. It could have been (X variety) in this load and (Z variety) the next. We didn’t ask — as it came in, we dumped it into one big bin.”

Later, as grain was needed, it was placed in 60-pound bags, tagged and put on the floor. The bagged portion of the amount stored “was probably less than a tenth of 1 percent.”

Out of the three years the co-op was investigated, some 2,000 bags of wheat feed were sold. In comparison, more than 200,000 bags of corn (which is handled the same as wheat) were sold.

Finding representation

Less than an hour after being told the co-op was being sued, Castleberry was on the phone with Hunter Hanshaw, a Jonesboro, Ark.-based attorney. Soon, stories about the co-op began appearing in the media.

“Some of the statements in the press left the impression Delta Cotton was an unscrupulous seed pirate, that it was commercially exploiting Syngenta’s technology,” says Hanshaw. “That was not the case.”

Castleberry and Hanshaw recognize the need and rights of seed companies to vigilantly protect their property rights.

“In the deposition, we were told there were (Mid-South seed dealers) up to no good,” says Hanshaw. “They apparently were brown-bagging seed, selling it for just under the brand price and using it for propagation purposes.”

“I have no problem — none — with seed companies keeping close tabs,” says Castleberry. “I make my living selling certified seed. I understand the importance of keeping it pure and viable… I support that wholeheartedly. Any bad actors are cutting into my seed sales too. I’m completely against them.

Hanshaw says others accused were selling brown-bagged wheat seed for $1 to $2 under the certified seed market price.

“We were selling mingled wheat feed for $3.50 a bag,” insists Castleberry. “The market price was $8… If I were going to sell a non-certified seed — wink, wink — I’d have been selling it for $6.50 or more. We were selling it at the market price for grain plus $1 for handling and bagging! That should have been a red flag that they were going after the wrong folks. The co-op wasn’t commercially exploiting anyone.”


The trial, originally set for October 2003, was pushed back a year when the trial judge didn’t survive a heart transplant.

During the pre-trial wait and maneuvers, the unproven piracy accusations were causing problems for the co-op.

“We were going back and forth about settlement possibilities,” says Hanshaw. “Wade never wanted to settle… Regardless, a cloud was hanging over the co-op, over Wade. You know, ‘unscrupulous seedsman.’”

Asked about the fallout, Castleberry says, “it affected us badly. The customers who did business with the co-op, or even founded it, felt the ag world was looking at them as if they were criminals… We were named in several newspaper articles. But the 350 members decided to stand strong, toe-to-toe — even if it was with a big company — and fight.”

A big problem was dealing with the manufacturers and seed companies that had “tech agreements” with the co-op. The co-op was seen as a risk.

“If you’re labeled a ‘seed pirate’ — if you’ve been involved in any seed piracy suit — you have to divulge that on questionnaires from those companies. It’s a huge deal when you check ‘yes.’”

Castleberry found that out after a series of “major ordeals — going through a channel of folks, to reach the right people in order to lock down (seed deals).”

Co-op members lost the opportunity to grow seed.

“That would have helped our farmers get into a niche market. When this suit was filed, the company wanted nothing to do with us. They kept us at arm’s length. That’s an opportunity our growers lost.”

Producer meetings were also extremely uncomfortable for Castleberry. “I was constantly explaining our side to folks, hoping they’d believe me. It was so awkward.”

Meanwhile, the suit was addressed by the co-op board and membership.

“They knew the truth. I don’t think there was ever a day when the board felt this wasn’t worth fighting to the end.”

The trial

The trial was held in Circuit Court Judge Susan Webber Wright’s Jonesboro courtroom in April 2005.

“Some rulings made in (Wright’s) chamber left me shaking my head,” says Hanshaw. “I told Wade she’d made some rulings that weren’t in our favor. Wade said, ‘I don’t care. No settlements. We’re going to try this.’”

Castleberry remains adamant. “I was convinced that if I could tell my story, there was no way the jury wouldn’t believe me.”

The trial lasted three days.

“The three potential jurors who knew anything about farming and grain elevators had been rejected,” says Hanshaw. “Feed and seed and the PVPA aren’t very sexy topics. We didn’t want a two-week trial because we’d lose the jury. After hearing ‘wheat seed/wheat feed/seed, feed/feed, seed’ for an hour, they were probably saying, ‘get me out of here.’”

The jury was out only a couple of hours. It found against the co-op on two counts and announced damages of $67,500 for each claim.

“For three bags of deer feed!” says Castleberry. “There’s no way to describe it. It was the most sickening feeling ever. I’ve always believed that if you do right, good things will come to you. If you stand up for right, things will work out, justice will be served. I believed that to my core.

“When this happened, my view of the court system changed in a heartbeat. It was deeply distressing.”

Prior to the verdict, the two men had spoken about having a celebratory drink when they won the case. After the verdict was read, Castleberry leaned over to Hanshaw and whispered, “I don’t think we’re going out for that drink tonight.”

“I don’t know,” replied Hanshaw. “I think I need one.”

The appeal

The next day, Castleberry spoke with the co-op board. Again, the board had no intention of backing down.

“I told Hunter, ‘I still believe this can work out in our favor. I can’t believe this will stand, because we’re right. Let’s push on, let’s take it higher.’”

Following legal wrangling, a notice of appeal was filed with the U.S. Court of Appeals for the Federal Circuit. An appeal from the Jonesboro court normally would have been made to the Eighth Circuit in St. Louis. But the federal court of appeals hears patent and international trade cases.

Hanshaw thought it would be strategically beneficial to bring in an attorney who regularly appears in that appeals court.

“I e-mailed a friend and he called me up within a couple of hours. Also on the call was his partner, Bill Bode. It turned out only one PVPA case had gone to the Supreme Court and Bode was one of the litigators. When I heard that I thought, ‘Now we’re moving in the right direction.’”

Bode argued the co-op’s case in April. Months later the appeals court rendered a unanimous judgment.

“One July morning, I got a call from (Bode’s partner). He said, ‘Hunter, I’m thumbing through the mail. The decision came down. Looks like y’all won.’ I was shell-shocked and elated at the same time.”

Upon getting the news, “I was hollering and laughing,” recalls Castleberry. “I felt such joy, such relief after that grueling drag. The four-year cloud lifted from me.”

Castleberry called every co-op board member.

“Then I tried to call every farmer I could find. Over the next couple of days, I printed the judgment and made a copy for any customer who wanted one.”

Word of the verdict reversal filtered out.

“I started getting calls from folks congratulating us and wishing us well. Lots of people were proud of us and offered support. It was wonderful. There was a lot of support from salesmen, suppliers and others.”

Ready to be done

Castleberry is reluctant to complain too much. But Hanshaw isn’t shy about saying how hard the years since 2001 have been for his client.

“This whole process has taken it out of Wade. He spent untold hours fighting this.

“This thing was forced on me,” says Castleberry. “I purposely tried not to bother folks. I took it on personally as much as I could. It was my fight. Of course, my wife and family had to deal with it. Those were difficult years.”

He insists the seed laws are set up in a way that left the co-op exposed.

“Say we bring in 500,000 bushels of wheat. Well, I’ve got to sell them to someone. We don’t have a flour mill. So it has to go.

“Essentially, (if the grain is sold) in a form that can be propagated, that’s illegal. If I sell it to (another elevator), whether it’s in a big truck or in sacks, it’s still capable of propagation.”

The court of appeals reversed the lower court decision as a matter of law, not on a technicality. That’s significant, says Hanshaw.

“We had a high burden to meet and the panel of three judges dug into the record and reviewed the facts and how they lined up with the law. Often, the court of appeals will remand a case to the district court and say, ‘You need another hearing’ or ‘Issue a decision like this.’ That didn’t happen here. A mandate from the appeals court will come with instructions about the case. They flat out reversed the district court’s verdict.”

Asked if he’ll now turn the tables on Syngenta, Hanshaw says, “They were looking at collecting on $148,000 plus interest for a year. As prevailing party, we’re exploring how to handle that. We’ll definitely seek costs and fees.”

Any indication Syngenta will appeal to the U.S. Supreme Court?

“I don’t know. I don’t think they will. At some point you just have to let it go. I’m elated we won, but this has been going on for four years. Enough!”

Castleberry admits to bouts of sleeplessness and second-guessing.

“I’m not going to claim I never had second thoughts about fighting it out. But any thoughts about dropping it were because of the toll it was taking on my family. In the end, I thought it was important my family see me stand on principle.

“If I had settled, I’d have been branded a pirate for the rest of my life. I might as well have put on an eye patch and a big, black hat.

“I’m past ready for the call from Hunter saying, ‘That’s it. You will never have to worry about this again. It’s closed. Go enjoy your family, go get on with your life.’”

Editor’s note: Saying it’s an ongoing legal case, Syngenta declined comment on the case’s particulars. The company did ask the appeals court for a rehearing. In late September that request was denied. Asked for comment, a Syngenta spokesperson said, “We’re evaluating (the appeal court’s) decision and our next steps.

e-mail: [email protected]

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