Terry Lusk v. C.H. Robinson Worldwide, Inc.
- Patrick Schiltz
- 0:20-cv-00879
- U.S. District Court · District of Minnesota
- 22
In JMR Farms, Inc. v. C.H. Robinson Worldwide, Inc. (Case No. 20-CV-0879), Chief Judge Patrick J. Schiltz granted summary judgment dismissing produce farmers' claims under the federal Perishable Agricultural Commodities Act but allowed their breach-of-fiduciary-duty claim to proceed, ruling that C.H. Robinson acted as the farmers' agent and breached its fiduciary duty by secretly marking up freight charges without disclosure, and that the farmers may recover a portion of the sales commissions they paid to C.H. Robinson without needing to prove they were directly harmed by the freight markups.
Produce farmers who contracted with large agricultural logistics companies to sell crops on consignment, particularly those involved in 'delivered-sale' arrangements where the logistics company also arranged freight and may have charged undisclosed freight markups; also relevant to agricultural commodities brokers and consignment agents in the produce industry.
What happened
This case, JMR Farms, Inc. v. C.H. Robinson Worldwide, Inc., involves a group of produce farmers (called 'Growers') who hired C.H. Robinson (a large logistics company) to market and sell their fruits and vegetables to grocery stores, restaurants, and wholesalers. The farmers paid C.H. Robinson a commission—typically around 10% of the sale price—for each transaction. When C.H. Robinson also arranged transportation of the produce, it used an internal division to quote freight costs that included a hidden markup (extra profit on top of the actual shipping cost). The farmers claim they were never told about these markups, which they call 'freight topping,' and that the practice effectively reduced the money the farmers received for their crops.
The farmers brought two main legal claims: one under the Perishable Agricultural Commodities Act (a federal law, abbreviated PACA, that regulates the sale of fresh produce and requires accurate accounting to farmers) and one for breach of fiduciary duty (a legal obligation to act loyally and honestly on behalf of someone who has placed trust in you). The court had previously ruled that to win on either claim, the farmers needed to show that they—rather than the buyers or C.H. Robinson itself—actually bore the financial burden of the freight markups. The farmers' only evidence on this point was an expert report showing that, on average across all transactions, higher freight charges correlated with lower payments to farmers, but the expert did not analyze any individual transaction. The court found this was not enough proof transaction-by-transaction.
Chief Judge Schiltz granted summary judgment to C.H. Robinson on the PACA claim, dismissing it permanently, because the farmers could not show that the freight markups were a charge against their specific shipments. However, the judge denied summary judgment on the breach-of-fiduciary-duty claim. The court found that C.H. Robinson was legally the farmers' agent—not merely an independent buyer—based on the structure of the contracts and a seven-factor legal test, and that C.H. Robinson breached its duty of loyalty by failing to disclose the freight markups, which created a conflict of interest. Critically, the judge reversed his own prior position and ruled that farmers do not need to prove they were financially harmed by the freight markups in order to seek forfeiture of the sales commissions they paid to C.H. Robinson. The amount of commissions to be forfeited will be determined at a later stage using factors set by Minnesota law. The judge also invited the farmers to ask the court to reconsider whether this remaining claim can be pursued as a class action on behalf of all affected farmers.
The detailed version
- JMR Farms, Inc. et al. v. C.H. Robinson Worldwide, Inc. et al., Case No. 20-CV-0879 (PJS/ECW), United States District Court, District of Minnesota
- Chief Judge Patrick J. Schiltz. **Opinion Date:** August 22, 2025
Parties and Background
Plaintiffs are a group of produce farmers (collectively 'Growers') who contracted with defendants C.H. Robinson Worldwide, Inc., C.H. Robinson Company, Inc., and C.H. Robinson Company (collectively 'CHR') to market and sell their produce on a consignment basis. CHR's Robinson Fresh ('RF') division managed sales, earning commissions of approximately 10% of the FOB (freight on board) price—the price at which produce is sold before transportation costs. In 'delivered-sale transactions,' CHR's separate North American Surface Transportation ('NAST') division arranged freight and quoted transportation costs that included an undisclosed markup above actual carrier costs. Growers alleged this 'freight topping' practice either reduced the FOB price allocated to them or constituted an undisclosed charge against their proceeds.
Claims at Issue
Growers originally brought claims under the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. § 499a et seq. (requiring accurate accounting for produce sold on behalf of others), breach of fiduciary duty, breach of contract, and breach of the implied covenant of good faith and fair dealing. Growers voluntarily abandoned the contract and implied-covenant claims, which the court dismissed with prejudice. The court adjudicated CHR's motion for summary judgment on the PACA and fiduciary-duty claims.
Prior Proceedings
In an earlier summary judgment order, the court held that Growers must prove they bore the 'economic impact' of the freight markups to recover on either claim. The court twice denied class certification—first because legal questions remained, and second (in September 2024) because determining economic impact required a transaction-by-transaction analysis.
PACA Claim — Granted (Dismissed with Prejudice)
PACA and its regulations require that a produce handler provide an 'accurate and itemized report of sales and expenses charged against the shipment' when selling on another's behalf. The court reaffirmed that Growers must prove they bore the economic impact of the freight markups—i.e., that the markups constituted a 'charge against the shipment'—for each specific transaction. Growers' sole evidence was an expert report prepared for class certification purposes that analyzed aggregated data from 212 putative class members and found a negative statistical correlation between CHR's freight profits and Growers' revenues on average. The expert expressly did not opine on the economic impact of any particular transaction. The court held this aggregate evidence was insufficient to establish a PACA violation with respect to any individual transaction, and granted summary judgment dismissing all PACA claims with prejudice.
Breach of Fiduciary Duty — Denied
Existence of Fiduciary Duty: The court applied the seven-factor test from Jurek v. Thompson, 241 N.W.2d 788 (Minn. 1976), to determine whether the consignment arrangement created a fiduciary (agent-principal) or non-fiduciary (buyer-seller) relationship. Factors favoring fiduciary status include: (1) consignee does not obtain legal title or possession; (2) consignee is not responsible for a set price; (3) consignee must account to the transferor for proceeds; (4) goods are not modified by the consignee; (5) risk of loss remains with the consignor. Factors favoring buyer-seller status include: (6) consignee deals with multiple principals; (7) consignee deals in its own name without disclosing the true owner.
The court found that factors 1–5 strongly favored a fiduciary relationship: CHR never took title or possession; CHR bore no obligation to achieve a fixed price; CHR was contractually required to account for and remit FOB proceeds less commission only; CHR made no additions to the produce; and Growers bore all risk of loss until buyer acceptance. Factors 6 and 7 favored a buyer-seller relationship (CHR dealt with multiple growers and sold under its own 'Robinson Fresh' brand without disclosing the growers' identity), but the court gave these little weight. The court rejected CHR's argument that granting CHR 'full control' over pricing destroyed any agency relationship, citing Restatement (Second) of Agency § 14, which holds that control may be exercised through contractual preconditions, that a right to control may exist even if the principal agreed not to exercise it, and that the principal retains the power to revoke authority. The court concluded CHR was Growers' agent and owed fiduciary duties including the duty to disclose all material matters bearing on undivided loyalty, citing Rice v. Perl (Perl I), 320 N.W.2d 407 (Minn. 1982), and Holzer v. Tonka Bay Yachts & Marine Sales, Inc., 386 N.W.2d 285 (Minn. Ct. App. 1986).
Breach: The court held that CHR breached its fiduciary duty by failing to disclose the freight markups. Under Perl I, a fiduciary breaches its duty when its undisclosed conduct puts the principal at 'potential risk' of harm from divided loyalties—actual self-dealing need not be proven. The court found that even under CHR's own version of events (freight and FOB prices quoted independently by separate divisions), CHR simultaneously negotiated FOB prices for Growers and freight markups for itself, creating a perverse incentive to accept lower FOB prices (reducing Growers' returns) in exchange for higher freight charges (which accrued entirely to CHR). CHR's undisputed failure to disclose the freight markups constituted a breach regardless of which party's factual narrative is accepted.
Damages — Partial Reconsideration of Prior Rulings: The court expressly reversed its prior position that Growers must prove economic impact to recover for breach of fiduciary duty. Under the Perl line of cases (Perl I; Perl v. St. Paul Fire & Marine Ins. Co. (Perl II), 345 N.W.2d 209 (Minn. 1984); Gilchrist v. Perl (Perl III), 387 N.W.2d 412 (Minn. 1986)), a fiduciary that breaches its duty forfeits compensation paid by the principal without requiring proof of actual harm. The 'right to loyalty' is an absolute right, and the principal is deemed injured even without actual loss. Recovery is limited to forfeiture of compensation paid by the principal (not third-party commissions), and cannot exceed the amount of fees earned. The court noted that law-of-the-case doctrine does not bind a court to interlocutory rulings before final judgment, citing First Union Nat'l Bank v. Pictet Overseas Tr. Corp., 477 F.3d 616 (8th Cir. 2007) and Fed. R. Civ. P. 54(b).
As to the freight markups specifically: because Growers have no evidence that they (rather than buyers or CHR) bore the economic impact of the markups, the markups do not constitute 'compensation paid by' Growers and are not subject to forfeiture.
As to sales commissions: it is undisputed that commissions were deducted directly from the FOB price, reducing Growers' proceeds. Commissions therefore constitute compensation paid by Growers to CHR and are subject to forfeiture. Because there is no evidence of actual fraud, bad faith, or actual harm to any individual grower, and there are multiple potential plaintiffs, the forfeiture need not be total. Under Perl III, the amount of forfeiture is to be determined by reference to the statutory factors for measuring punitive damages—a determination left for a future proceeding.
Class Certification Invitation
Because proof of economic impact is no longer required for the commissions forfeiture claim, the court stated that class treatment may be appropriate for that claim and invited Growers to move for limited reconsideration of the September 2024 order denying class certification.
Disposition
- CHR's motion for summary judgment GRANTED IN PART: PACA, breach of contract, and implied-covenant claims dismissed WITH PREJUDICE. - CHR's motion for summary judgment DENIED as to the breach-of-fiduciary-duty claim. - Central Florida Fruit Sales, LLC dismissed and replaced by Sandway Farms, Inc. by agreement of the parties.
Reviewer note from the AI+
Read the full 22-page opinion on CourtListener, the free public archive maintained by the Free Law Project.