GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 1997

H	1 

HOUSE BILL 1055*

Short Title:  Arbitration of Seed Claims.	(Public)

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Sponsors: Representative Russell.

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Referred to:  Agriculture, if favorable, Finance.

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April 21, 1997

A BILL TO BE ENTITLED
AN ACT TO PROVIDE FOR THE MANDATORY ARBITRATION OF CLAIMS RELATED TO DEFECTIVE SEED.
The General Assembly of North Carolina enacts:
Section 1. G.S. 106-277.29 is repealed.
Section 2.  Article 31 of Chapter 106 of the General Statutes is amended by adding the following new sections:
"§ 106-277.30.  Condition precedent to filing an action; notice required.
(a)	Complaint by Buyer. – When a buyer believes that he or she has suffered damages due to the failure of agricultural or vegetable seed to produce or perform as labeled, as warranted, or as a result of negligence, the buyer shall make a sworn complaint against the dealer from whom the seeds were purchased, alleging the damages sustained or to be sustained, and file the complaint with the Commissioner of Agriculture within such time as to permit inspection of the seed, crops, or plants.  The buyer shall send a copy of the complaint to the dealer by registered mail.  A filing fee of one hundred dollars ($100.00) shall be paid to the Commissioner of Agriculture with each complaint filed.  This fee may be used by the Commissioner to offset the expenses of the arbitration committee incurred under G.S. 106-277.32.  Within 10 days after receipt of a copy of the complaint, the dealer may file an answer to the complaint and, in that event, shall send a copy to the buyer by registered mail.
(b)	Notice Required. – The seed dealer shall legibly print or type on the seed container or affix a label on the seed container a notice in the following form or using reasonably equivalent language:
‘Notice of Mandatory Arbitration
Under the seed laws of some states, arbitration is required as a precondition of maintaining certain legal actions against a seller of seed.  Information about this requirement where applicable, may be obtained from a State's Commissioner of Agriculture or corresponding chief agricultural official.'
(c)	Condition Precedent. – Complying with subsection (a) of this section is a condition precedent to the buyer's right to file an action against the seed dealer.  This subsection does not apply if the seed dealer fails to provide notice as required under subsection (b) of this section.
(d)	Investigation Requested by Seed Dealer. – Any seed dealer against whom an action is brought in any court, State or federal, by a buyer who alleges that the buyer has suffered damages due to the failure of seeds purchased from a seed dealer to perform as labeled, as warranted, or as a result of negligence may request an investigation by the arbitration committee pursuant to G.S. 106-277.32.  A filing fee of one hundred dollars ($100.00) shall be paid to the Department of Agriculture by the party requesting the investigation.
(e)	Referral to Committee. – The Commissioner of Agriculture shall refer the complaint and the answer to the complaint, if any, to the arbitration committee to investigate and make findings and recommendations on the matters complained of pursuant to G.S. 106-277.32.
"§ 106-277.31.  Arbitration committee created; membership; duties.
(a)	The Commissioner of Agriculture shall appoint an arbitration committee composed of five members, three of whom shall be appointed upon the recommendation of the following:  Director of the Agricultural Research Service, North Carolina State University;  Director of the North Carolina Cooperative Extension Service, North Carolina State University; and President of the North Carolina Seedsmen's Association.  The other two members shall include: one farmer who is not connected in any way to selling seeds at retail or wholesale and one employee of the Department of Agriculture.  An alternate for each member shall also be appointed in the same manner as that member was appointed to serve whenever that member is unable or unwilling to serve.  Each member of the committee shall serve until replaced by the Commissioner of Agriculture.  The committee shall elect a chairperson.  The chairperson shall conduct all meetings and deliberations and direct all other activities of the committee.
(b)	A clerk shall be appointed to serve the committee.  The clerk shall be an employee of the Department of Agriculture.  The clerk shall keep accurate and correct records of all meetings and deliberations and perform other duties for the committee as directed by the chairperson.
(c)	The purpose of the arbitration committee is to assist seed buyers and agricultural seed dealers in determining the matters alleged in complaints made by buyers against seed dealers.
(d)	The arbitration committee may be called into session by the Commissioner of Agriculture at the Commissioner's discretion or upon the direction of the chairperson to consider the matters referred to it by the Commissioner of Agriculture.
(e)	The Department shall provide administrative support for the investigation under this section.  The committee shall adopt rules to govern investigations and hearings.  A copy of the rules shall be mailed to each party to a dispute upon receipt of a complaint.
(f)	Members of the committee appointed by the Commissioner who are not governmental employees shall be entitled to receive reimbursement for necessary travel and subsistence expenses pursuant to G.S. 138-5.  Other members of the committee shall not be entitled to any compensation or reimbursement of expenses from the Department of Agriculture.
(g)	The Attorney General shall represent the committee in any and all legal proceedings that may arise concerning or against the committee.
"§ 106-277.32.  Duties of arbitration committee.
(a)	In conducting its investigation of claims referred by the Commissioner of Agriculture, the arbitration committee may engage in all of the following activities:
(1)	Examine the buyer regarding the buyer's use of the seed of which the buyer complains and examine the seed dealer on the dealer's packaging, labeling, and selling of the seed alleged to be faulty.
(2)	Grow a representative sample of the alleged faulty seed to production when such action is deemed by the committee to be necessary.
(3)	Hold informal hearings at a time and place directed by the chairperson upon reasonable notice to the buyer and the seed dealer.
(4)	Seek evaluations from authorities in allied disciplines, when deemed necessary by the committee.
(5)	Visit and inspect the affected site and take samples, make plant counts, and take pictures of affected and unaffected areas.
(b)	The committee shall keep a record of its activities and reports on file in the Department of Agriculture.  The Department shall transmit all findings and recommendations to the buyer and to the seed dealer within 30 days of completion of the arbitration.
(c)	No investigation shall be made by less than the whole membership of the committee unless the chairperson directs such investigation in writing.  Such investigation shall be summarized in writing and considered by the committee in reporting its findings and making its recommendations.
(d)	The report of arbitration shall be binding upon all parties to the extent, if any, that they have so agreed in any contract governing the sale of the seed.
"§ 106-277.33. Filing an action regarding a defective seed claim.
(a)	In the absence of an agreement to be bound by arbitration, a buyer may file an action against a seed seller or assert such claim as a counterclaim or defense in any action brought by the seed seller at any time after the receipt of the report of arbitration under G.S. 106-277.32.
(b)	In any action involving a complaint that has been the subject of arbitration under G.S. 106-277.32, any party may introduce the report of arbitration as evidence of the facts found in the report, and the court may give such weight to the committee's findings and conclusions of law and recommendations as to damages and costs as the court deems appropriate, based upon all the evidence before the court.  The court may consider any finding of the committee with respect to the failure of any party to cooperate in the arbitration proceedings, including any finding as to the effect of delay in filing the arbitration claim upon the committee's ability to determine the facts of the case."
Section 3.  There is appropriated from the General Fund to the Department of Agriculture the sum of ten thousand dollars ($10,000) for the 1997-98 fiscal year and the sum of ten thousand dollars ($10,000) for the 1998-99 fiscal year to be used to implement and administer this act.
Section 4.  This act becomes effective July 1, 1997.