S & A Farms, Inc. v. Farms.com, Inc.

862 F. Supp. 2d 898 (2011)

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S & A Farms, Inc. v. Farms.com, Inc.

United States District Court for the Southern District of Iowa
862 F. Supp. 2d 898 (2011)

  • Written by Brett Stavin, JD

Facts

S & A Farms, Inc. (S & A) (plaintiff) was an Iowa corporation that sold soybeans and hogs. As part of its hog-raising business, S & A also grew corn, which it used to feed the hogs. S & A’s sole employee was Scott Renaud, an individual with almost no college education and no formal training in hedging or risk management. A local feed salesman who knew Renaud introduced him to Victor Aideyan, a senior consultant/manager for Farms.com, Inc. (defendant), who had over 14 years’ experience in commodity trading and marketing. In September 2007, Renaud met with Aideyan and another Farms.com employee, informing them that he intended to increase the size of his hog-production business and that he needed risk-management services relating to the corn production that he used as hog feed. On September 17, Aideyan and Renaud executed an agreement in which Farms.com agreed to provide consulting services relating to the corn inputs and hog outputs of S & A’s business. Renaud subsequently established a commodities trading account with MF Global, Inc. Although only Renaud was able to make trades in the account, he almost always discussed the trades with Aideyan beforehand. At times, Aideyan also participated in Renaud’s calls with MF Global. In September 2008, Aideyan left employment with Farms.com, and his advisory role was filled by Maurizio Agostino. Almost all trades in S & A’s MF Global account were recommended by either Aideyan or Agostino. On February 24, 2009, S & A closed its MF Global account. By then, S & A had incurred a net loss of $1,040.958.75. On December 8, S & A filed an action in federal district court against Farms.com, alleging that Farms.com violated the Commodity Exchange Act (CEA) by failing to register as a commodity trading advisor with the Commodity Futures Trading Commission and by failing to notify S & A that it was not registered. Farms.com moved for summary judgment.

Rule of Law

Issue

Holding and Reasoning (Pratt, J.)

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