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Case 1:08-cv-01627-JDB Document 1 Filed 09/23/08 Page 1 of 15

IN THE UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF COLUMBIA

SYNGENTA CROP PROTECTION, ) Case No.


INC. )
P.O. BOX 18300 )
GREENSBORO, NC 27409 )
)
Plaintiff, )
)
v. )
)
DREXEL CHEMICAL COMPANY )
P.O. BOX 13327 )
1700 CHANNEL AVENUE )
MEMPHIS, TN 38113-0327 )
)
AMERICAN ARBITRATION )
ASSOCIATION )
BROADWAY, 10TH FLOOR
1633 )
NEW YORK, NY 10019 )
)
FEDERAL MEDIATION & )
CONCILIATION SERVICE )
2100KSTREETNW )
WASHINGTON, DC 20427 )
)
Defendants. )

COMPLAINT

Plaintiff Syngenta Crop Protection, Inc. (“Syngenta”), by and through legal

counsel, brings this suit for declaratory relief against Defendants Drexel Chemical Company

(“Drexel”), the American Arbitration Association (“AAA”), and the Federal Mediation &

Conciliation Service (“FMCS”), and states as follows:


Case 1:08-cv-01627-JDB Document 1 Filed 09/23/08 Page 2 of 15

NATURE OF THE ACTION

1. This is an action seeking a declaratory judgment that a federally-appointed

arbitration panel does not have jurisdiction to adjudicate state law claims arising under a private

contract between Plaintiff Syngenta and Defendant Drexel that does not contain an arbitration

clause. Plaintiff Syngenta seeks a declaratory judgment that the assertion of authority to

adjudicate such claims by a federally-appointed arbitration panel exceeds the panel’s statutory

authority and violates Article III of the United States Constitution.

JURISDICTION AND VENUE

2. The Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C.

§ 1331, because this action arises under the laws of the United States, and pursuant to Section

16(a) of the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”), 7 U.S.C. § 136n, and

Section lOof the Administrative Procedure Act, 5 U.S.C. §~ 701-706, and 28 U.S.C. § 1361.

3. The Court also has subject-matter jurisdiction pursuant to 28 U.S.C. § 1332,

based on diversity of citizenship. The matter in controversy exceeds the value of $75,000 and is

between citizens of different States. Defendant American Arbitration Association (“AAA”) is a

New York corporation doing business in the District of Columbia, and the Federal Mediation &

Conciliation Service is an agency of the United States government residing in Washington, DC.

Syngenta is a Delaware corporation and Drexel is a Tennessee company.

4. The declaratory and other relief requested by Plaintiff is authorized by 5 U.S.C.

§~ 702 and 706; 28 U.S.C. §~ 1361, 1651, 2201-02; and this Court’s equitable powers.

5. Venue in this district is proper pursuant to 28 U.S.C. § 1391(a), (b), and (e) in

that a substantial part of the events or omissions giving rise to the claim occurred in the

jurisdiction. Specifically, the arbitration at issue is scheduled to take place in Washington, DC.

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Preliminary hearings and other matters related to the arbitration have already taken place in

Washington, DC.

THE PARTIES

6. Plaintiff Syngenta is a Delaware corporation that specializes in the research,

development and manufacture of crop protection chemicals, such as herbicides. Syngenta is the

owner and developer of several hundred safety and environmental studies on the herbicide

“atrazine.” Certain of these studies are the subject of a federally-authorized arbitration,

conducted pursuant to Section 3(c)(1)(F)(iii) of FIFRA, 7 U.S.C. § 136a(c)(1)(F)(iii), in which

Syngenta seeks compensation for Drexel’s use of the atrazine studies to renew Drexel’s license

to sell atrazine issued by the U.S. Environmental Protection Agency (“EPA”). In the Matter of

the Arbitration Between Syngenta Crop Protection, Inc., Claimant, and Drexel Chemical

Company, Respondent, AAA Docket No. 16 171 Y 00386 07.

7. Defendant Drexel is a privately-owned company based in Memphis, Tennessee,


and is a producer of crop protection chemicals. In 2004, Drexel offered to compensate Syngenta

“to the extent required by FIFRA” for the use of its atrazine studies to renew Drexel’s license to

sell atrazine. Drexel is the respondent in the above-referenced arbitration.

8. Defendant FMCS is a federal agency that is vested with the authority under

Section 3(c)(l)(F)(iii) of FIFRA to appoint arbitrators to resolve disputes over the terms and

amount of compensation to be paid for use of pesticide safety and environmental data pursuant to

FIFRA.

9. Defendant AAA is a dispute resolution service provider headquartered at 1633

Broadway, 10th Floor, New York, NY 10019, with regional offices throughout the United States.

By regulation, FMCS designated AAA to administer FIFRA arbitrations. 29 C.F.R. pt. 1440.

FMCS and AAA appointed an arbitration panel to resolve the compensation dispute between

Syngenta and Drexel in the above-referenced matter, AAA Docket No. 16 171 Y 00386 07.

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STATUTORY PROVISIONS

10. FIFRA requires that all pesticide products sold in the United States be registered

with EPA. 7 U.S.C. § 136a(a).

11. An applicant for registration of a pesticide under FIFRA must support its

application with data that establish the safety of its product and has the option of supplying the

data itself, or citing data previously submitted by another registrant (commonly referred to as a

“me-too” registration). FIFRA § 3(c)(l)(F), 7 U.S.C. § 136a(c)(l)(F). An applicant that relies

on another company’s data must offer to pay compensation to the data owner. FIFRA §

3(c)(1)(F)(iii), 7 U.S.C. § 136a(c)(1)(F)(iii).

12. The statute provides that compensation may be determined by agreement or by

arbitration: “The terms and amount of compensation may be fixed by agreement between the

original data submitter and the applicant, or, failing such an agreement, binding arbitration under

this subparagraph.” Id. If, and only if, the parties fail to agree on the terms and amount of

compensation, either party may initiate binding arbitration by requesting the Federal Mediation

and Conciliation Service to appoint an arbitrator. Id.

13. By statute, arbitration may be initiated only in the absence of an agreement:

If, at the end of ninety days after the date of delivery to the original
data submitter of the offer to compensate, the original data
submitter and the applicant have neither agreed on the amount and
terms of compensation nor on a procedure for reaching an

agreement the amount and terms of compensation, either person


on

may initiate binding arbitration proceedings ...

Id.

14. The authority to enforce private agreements concerning compensation, on the

other hand, is granted by statute only to EPA, not arbitration panels: “If the Administrator of

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EPA] determines that an original data submitter has. . .


failed to comply with the terms of an

agreement. .concerning compensation under this subparagraph, the original data submitter shall
.

forfeit the right to compensation....” FIFRA § 3(c)(1)(F)(iii), 7 U.S.C. § 136a(c)(1)(F)(iii).

Similarly, “if the Administrator determines that an applicant has... failed to comply with the

terms of an agreement. .concerning compensation under this subparagraph, the Administrator


.

shall deny the application or cancel the registration of the pesticide in support of which the data

were used without further hearing.” Id. A party that believes a private agreement on FIFRA data

compensation has been breached also has the right to seek redress in a court of law.

FACTUAL ALLEGATIONS

15. In 1994, EPA published notice that atrazine potentially posed certain risks and

that the agency had adopted a presumption against the continued registration of atrazine.

Although EPA did not request or require the registrants of atrazine to conduct any studies, the

notice put the burden on the registrants to “definitively refute” the risks or face the regulatory

consequences, including removal from the market. Atrazine, Simazine, and Cyanazine; Notice

of Initiation of Special Review, 59 Fed. Reg. 60,412, 60,417 and 60,436 (Nov. 23, 1994).

16. In 1994, Syngenta and Drexel were both registrants of atrazine. To refute the

alleged risks referred to in EPA’s notice, Syngenta voluntarily conducted approximately 200

additional studies to establish atrazine’s safety. In 2003, EPA accepted Syngenta’s studies and,

on the basis of those data, decided to allow the renewal of atrazine registrations. In 2004, EPA

compelled Drexel to offer to compensate Syngenta pursuant to FIFRA if Drexel wished to renew

its registration for atrazine.

17. The underlying arbitration at issue in this case was triggered by offers made by

Drexel in 2004 to compensate Syngenta “to the extent required by FIFRA” for Drexel’s use of

Syngenta’s studies to renew its atrazine registrations. Because the parties did not reach an

agreement on the terms and amount of such compensation, Syngenta filed a demand for

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arbitration pursuant to FIFRA. Drexel did not oppose the demand for arbitration, and did not

assert that arbitration was not legally available because the parties already had an agreement on

the amount and tenns of compensation, or on a procedure for determining the amount and terms

of compensation.

18. Eleven months after the demand had been filed, Drexel for the first time asserted

that a certain 1993 settlement agreement between Ciba-Geigy Corporation and Drexel, rather

than FIFRA, governed the compensation that Syngenta was entitled to receive under Drexel’s

2004 offers. Syngenta is the successor in interest to Ciba-Geigy Corporation under the contract.

In other words, Drexel sought to substitute the terms of a contract for compensation determined

pursuant to FIFRA.

19. The 1993 settlement agreement was executed on December 10, 1993, to resolve

certain contested issues in an unrelated, then-ongoing arbitration pertaining to studies on atrazine

and simazine (another herbicide) that had been explicitly required by seven formal data requests

issued by EPA between 1981 and 1990. Drexel asserts that the 1993 settlement agreement gives

it certain rights to use and pay for the approximately 200 studies Syngenta conducted in response

to EPA’s 1994 Special Review notice, such that Drexel has no obligation to pay compensation

under FIFRA, and had no obligation to make an offer to pay compensation under FIFRA in

2004. Syngenta denies that the 1993 settlement agreement confers any such rights to Drexel.

The 1993 settlement agreement does not contain an arbitration clause.

20. After Drexel asserted that the terms of compensation were governed by the 1993

agreement, Syngenta moved the arbitration panel, on June 20, 2008, to exclude from the

arbitration all claims, evidence and argument based on the 1993 agreement. Syngenta contended

that, by arguing that compensation was to be determined according to the 1993 agreement,

Drexel was attempting to substitute the enforcement of a private contract for compensation

determined pursuant to FIFRA. This was inconsistent with Drexel’s 2004 offers, which stated

that Drexel would compensate Syngenta “to the extent required by FIFRA” and did not assert

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that Drexel had a prior right to use the studies pursuant to the 1993 settlement agreement, or that

the terms of compensation for the 2004 offers were fixed by that agreement.

21. Syngenta’ s motion argued that the adjudication of private contract claims would

exceed the statutory authority delegated to the arbitrators by FIFRA. Under FIFRA Section

3(c)(1 )(F)(iii), the terms and amount of compensation may be fixed by arbitration only in the

event of a failure of the parties to re~ich agreement (“The terms and amount of compensation

may be fixed by agreement between the partiesj, or, failing such agreement, binding arbitration

under this subparagraph.”). FIFRA provides authority to arbitrators only to determine

compensation under FIFRA, and not to adjudicate the rights of parties under a private

compensation agreement.

22. Syngenta further noted that under Thomas v. Union Carbide Agricultural

Products Co., 473 U.S. 568, 584 (1985), the FIFRA arbitration panel’s adjudication of private

contract rights would violate Article III of the Constitution. In Union Carbide, the Supreme

Court considered the constitutionality of FIFRA’s delegation of authority to non-Article III

arbitrators to determine compensation pursuant to Section 3(c)(1)(F)(iii), and upheld the

constitutionality of the statute only because the arbitrators were not adjudicating traditional

contract rights: “Congress may not vest in a non-Article III court the power to adjudicate, render

final judgment, and issue binding orders in a traditional contract action arising under state law,

without consent of the litigants, and subject only to ordinary appellate review.” Id. For these

reasons, Syngenta contended that Drexel’s claim that the rights of the parties were fixed by-the

1993 agreement was exactly the type of “traditional contract action” which the Court held could

not be resolved in a non-Article III arbitration tribunal.

23. On September 5, 2008, the arbitration panel issued a one-page order denying

Syngenta’s motion declaring that the panel has “jurisdiction to consider at the hearing of this

matter any defense raised by Drexel based on the 1993 Settlement Agreement.” Declaration of

K. Weinstein, Exhibit 1. The order contains no further explanation or analysis. During the

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hearing on the motion, the Panel made clear its expectation that the jurisdictional issue would be

presented to a court of law for resolution.

CLAIM FOR DECLARATORY RELIEF

24. Plaintiff realleges and incorporates by reference as if set forth fully herein the

statements in paragraphs 1 through 23 above.

25. The 1993 settlement agreement is a private contract. Syngenta has a right to a

judicial determination of the rights and obligations of the parties to that contract. An arbitration

panel appointed to adjudicate federal rights to compensation arising under FIFRA does not have

jurisdiction under FIFRA Section 3(c)(1)(F)(iii) to adjudicate and enforce a private contract

between Syngenta and Drexel. The September 5, 2008, order asserting jurisdiction by the

arbitration panel to adjudicate the parties’ rights under the 1993 contract violates Article III of

the Constitution, exceeds the panel’s statutory authority, and constitutes “other misconduct” that

is judicially reviewable pursuant to FIFRA Section 3(c)(1)(F)(iii). “FIFRA. . .


allows private

parties to secure Article III review of the arbitrator’s ‘findings and determination’ for fraud,

misconduct, or misrepresentation,” and this provision “protects against arbitrators who abuse or

exceed their powers or willfully misconstrue their mandate under the governing law.” Union

Carbide, 473 U.S. at 592 (emphasis added).

REQUEST FOR RELIEF

WHEREFORE, Plaintiff requests that judgment be entered in its favor and against

Defendants as follows:

26. That this Court declare that the arbitration panel convened pursuant to Section 3

of FIFRA has no jurisdiction to adjudicate contract claims under the private 1993 contract

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between Syngenta and Drexel, and that the exercise of such jurisdiction would violate Article III

of the Constitution and exceed the authority of the arbitration panel under FIFRA.

27. That this Court set aside the September 5, 2008, order and enjoin Defendants

from adjudicating any rights or obligations of the parties with respect to the 1993 contract.

28. That this Court award all other such relief to Plaintiff as this Court deems just,

proper and equitable.

Dated: September 23, 2008 Respectfully submitted,

LATHAM & WATKINS LLP

~ Kelineth W.
D.C. Bar No. 194548
einstein

William K. Rawson
D.C. Bar No. 367167
Claudia M. O’Brien
D.C. Bar No. 447354
555 1 1th1 Street, N.W.
Suite 1Q00
Washington, D.C. 20004
Telephone: (202) 637-2200
Facsimile: (202) 637-2201
Email: Kenneth.Weinstein@lw.com

ATTORNEYS FOR PLAINTIFF


SYNGENTA CROP PROTECTION, INC.

DC\1137270.1

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EXHIBIT 1
Case 1:08-cv-01627-JDB Document 1 Filed 09/23/08 Page 11 of 15

IN THE UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF COLUMBIA

SYNGENTA CROP PROTECTION, ) Case No.


INC. )
)
)
Plaintiff, )
)
v. )
)
DREXEL CHEMICAL COMPANY )
)
AMERICAN ARBITRATION )
ASSOCIATION )
)
FEDERAL MEDIATION & )
CONCILIATION SERVICE )
)
)
)
)
Defendants. )

DECLARATION OF KENNETH W. WEINSTEIN

I, Kenneth W. Weinstein, declare as follows:

1. I am a partner in the Washington, D.C., office of Latham & Watkins LLP and am counsel

of record for Plaintiff Syngenta Crop Protection, Inc. (“Syngenta”). I am competent to testify

to the matters contained in this declaration, which are true and correct based on my personal

knowledge.

2. This declaration is executed in accordance with Section 3(c)(1)(F)(iii) of the Federal

Insecticide, Fungicide and Rodenticide Act (“FIFRA”), 7 U.S.C. § 136a(c)(1)(F)(iii), for the

purpose of attesting to a specific instance of misconduct by the arbitration panel in the

arbitration captioned In the Matter of the Arbitration Between Syngenta Crop Protection,
Case 1:08-cv-01627-JDB Document 1 Filed 09/23/08 Page 12 of 15

Inc., Claimant, and Drexel Chemical Company, Respondent, AAA Docket No. 16 171 Y

00386 07.

3. In the above-captioned arbitration, Syngenta moved the panel to exclude from the

arbitration all claims, evidence and argument based on a private agreement executed on

December 10, 1993, between Syngenta and Defendant Drexel Chemical Company, on the

basis that claims seeking enforcement of this contract are outside the jurisdiction of the

federally-appointed arbitration panel under Section 3(c)(1)(F)(iii) of FIFRA, and that the

adjudication of such claims by the arbitration panel would violate Article III of the United

States Constitution.

4. On September 5, 2008, the arbitration panel issued an order denying Syngenta’s motion

and upholding jurisdiction to adjudicate issues concerning this private agreement. A copy of

such order is attached as Exhibit A. Because the arbitration panel’s order exceeds its

statutory jurisdiction and is in violation of Article III, it constitutes misconduct within the

meaning of Section 3 (c)( 1 )(F)(iii) of FIFRA.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on September 23, 2008

Kenneth W. Weinstein

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EXHIBIT A
Case 1:08-cv-01627-JDB Document 1 Filed 09/23/08 Page 14 of 15

BEFORE THE
AMERICAN ARBITRATION ASSOCIATION

IN THE MATTER OF THE : CASENO.16171Y0038607


ARBITRATION BETWEEN:

SYNGENTA CROP PROTECTION, INC.

Claimant, INTERIM ORDER ON SYNGENTA


CROP PROTECTION, INC.’S MOTION
and TO EXCLUDE

DREXEL CHEMICAL COMPANY

Respondent.

This matter is before the Panel for entry of an Interim Order on Syngenta Crop

Protection, Inc.’s Motion to Exclude Claims, Evidence and Argument based on a 1993

settlement agreement between the Claimant and Respondent (“Syngenta’s Motion to

Exclude”). Each party has presented to the Panel extensive and well written legal

memoranda setting forth its argument, and oral argument was presented by the parties to

the Panel on July 31, 2008.

After due consideration of the parties’ papers and arguments, it is the decision of

the Panel that Syngenta’s Motion to Exclude is DENIED. The Panel has determined that

it does have jurisdiction to consider at the hearing of this matter any defense raised by

Drexel based on the 1993 settlement agreement. The Panel’s determination and its denial

of the motion, however, are without prejudice to the right of Syngenta to assert any legal

or factual arguments it deems appropriate in response to the assertion of any such

defense.
Case 1:08-cv-01627-JDB Document 1 Filed 09/23/08 Page 15 of 15

DATED: September ____


2008.

1117207524 \ 336260.1