Court overturns order forcing newsletter to print response
MISSOURI–A federal District Court in Des Moines, Iowa, abused its discretion when it ordered Farmland Industries to print an article in its newsletter and refrain from publishing articles that might be construed as asking plaintiffs to opt out of a class action suit, the U.S. Court of Appeals in St. Louis (8th Cir.) ruled in mid-July.
The appeals court ruled that a court may issue orders restraining communications only after making “specific findings that reflect a weighing of the need for a limitation and the potential interference with the rights of the parties.” The District Court had based its order on insufficient findings, the appeals court ruled.
The court also ruled that Farmland should not be required to print a rebuttal statement in its newsletter because the District Court had failed to make specific findings that the need for enforced speech outweighed the company’s First Amendment rights to choose what it would publish.
The order arose out of a class action suit filed by Great Rivers Cooperative of Southeastern Iowa against Farmland Industries alleging, among other things, fraud and federal securities violations. In response to the suit and the publicity that followed, Farmland published an article in its newsletter attacking the lawsuit and its allegations. The newsletter is distributed to 150,000 active Farmland members and their shareholders, 99 percent of whom are not potential plaintiff class members, according to Farmland’s brief to the appeals court.
In mid-November 1994, the federal District Court in Des Moines granted Great Rivers’ motion to regulate Farmland’s communications. The court ordered Farmland to print a rebuttal article written by Great Rivers in its newsletter and to refrain from writing anything that sounded like an invitation to members of the class to opt out of the class action suit.
Farmland appealed this order to the U.S. Court of Appeals in St. Louis in mid-May, which reversed the order.
In a separate opinion, one judge agreed that the court could not require publication of a rebuttal in Farmland’s newspaper, but said the District Court’s restriction on future publications was justified. The lower court, he said, had made specific findings that “communications to class members concerning the litigation pose a serious threat to the fairness of the litigation process.” (Great Rivers Cooperative of Southeastern Iowa v. Farmland Industries Inc.; Media Counsel: Terry W. Schackmann, Kansas City)