Cathy Bissoon, United States District Judge
Pending before the Court is Defendants' Motion to Dismiss Plaintiffs' Class Action Complaint ("Motion to Dismiss," Doc. 36). For the reasons below, Defendants' Motion to Dismiss will be granted in part, and denied in part.
On June 5, 2018, Plaintiffs Anthony Cesare, Elizabeth Donatucci and Taylor Kennedy
The FAC alleges that Defendants, nationwide sellers of premium-priced dry dog foods under the Orijen and Acana brand names ("Products"), have misrepresented the Products to sell them at higher prices—that is, more than four times the prices of their competitors. ¶¶1-2. Contrary to Defendants' representations, Plaintiffs claim that "the Products do not mirror what a dog would eat in the wild because they contain virtually no animal muscle meat and instead consist largely of animal waste and byproducts"; "[t]he Products are not made from ingredients that are fresh and regionally sourced and, instead, contain ingredients sourced from foreign suppliers and shipped through middle men throughout the continent"; and "[t]he Products are also not made from ingredients of a quality fit for human consumption, as evidenced by the fact that the Products contain levels of heavy metals exponentially higher than those found in foods consumed by humans."
Plaintiffs state that "Champion touts its products as `The World's Best Petfood,'" (
Plaintiffs claim that another variety of Acana "states that the product is `bursting with richly nourishing meat and protein from free-run chicken, whole, nest-laid eggs and wild-caught flounder—all delivered fresh from our region so they're loaded with goodness and taste,'" and "further boasting that all content is `from poultry, fish and eggs passed fit for human consumption.'" FAC ¶16.
Likewise, according to Plaintiffs, the packaging of another Product, Orjen Original dry dog food, "touts the food as `the fullest expression of our biologically appropriate and fresh regional ingredients commitment,' and further describes its supposed `unmatched inclusions of free-run poultry, wild-caught fish and whole nest-laid eggs — sustainably farmed or fished in our region and delivered daily, fresh or raw and preservative-free.'"
Plaintiffs contend that each of these claims were false and misleading. For example:
These allegations give rise to six Counts against Defendants, all under Pennsylvania law: (I) violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. C.S. §§ 201-1 et seq. (the "UTPCPL"); (II) breach of express warranty; (III) breach of implied warranty; (IV) fraudulent omission; (V) unjust enrichment; and (VI) negligent misrepresentation. FAC ¶¶39-95.
Defendants' Motion to Dismiss rests on seven arguments: (1) All claims in the First Amended Complaint ("FAC") fail to state a claim for relief; (2) The economic loss doctrine bars the UTPCPL, fraudulent omission and negligent misrepresentation claims; (3) Plaintiffs fail to plead the UTPCPL, fraudulent omission and negligent misrepresentation claims with sufficient particularity to satisfy Federal Rule of Civil Procedure 9(b); (4) Plaintiffs' fraudulent omission claim fails because they do not allege that Defendants had a duty to disclose; (5) Plaintiffs' breach of express warranty claim fails because they have not pleaded the existence of a warranty or facts suggesting that any of Defendants' statements are untrue; (6) Plaintiffs' breach of implied warranty claim fails because they do not allege that the dog food was unmerchantable or unfit for its ordinary use; and (7) Plaintiffs' unjust enrichment claim fails because they have not pleaded facts establishing that it would be inequitable for Defendants to retain any benefits conferred. Motion to Dismiss at ¶1.
As a threshold matter, the Court will address Defendants' Rule 12(b)(6) argument, before addressing the merits of each individual count. Defendants argue that Plaintiffs cannot state any claims on either the alleged presence of heavy metals or based on the ingredients in the Products purchased. Defendants state that Plaintiffs have failed to show that the heavy metal content of Defendants' Products are "exponentially high" compared to reported averages in human foods, and cite its publicly available White Paper, published in May 2017, to support its contention. Def. Mem. at 7-8.
According to Defendants, the White Paper states that the presence of certain heavy metals is within the maximum tolerable limits established by the Federal Drug Administration in its Target Animal Safety Review Memorandum.
The Court finds that Plaintiff has opened the door to the admittance of the White Paper. Plaintiffs cite the White Paper as part of the FAC to support their allegations that Defendants' Products contain "high levels of heavy metals." FAC at ¶26. As this is an explicit basis for Plaintiffs' claims, the very case cited by Plaintiff supports admitting the White Paper. The general concern about courts looking to documents outside the complaint, lack of notice to the plaintiff, "is dissipated where plaintiff has actual notice ... and has relied upon these documents in framing the complaint."
A court "may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff's claims are based on the document."
Nonetheless, the Court agrees with the rationale in
Also, Defendants' claim in the White Paper that its Products purportedly contain heavy metal under the maximum tolerable limits for animal safety do not contradict Plaintiffs' claims that the heavy metal occurred in levels significantly higher than those safe for human consumption. The Court finds Plaintiffs' argument that the presence of significantly higher levels of heavy metals than those found in human foods is a sufficient fact that, taken as true, forms a plausible claim that Defendants' statements that its Products consist of "human grade ingredients prior to inclusion in the Products" were deceptive and misleading.
Similarly, the Court finds that Plaintiffs have alleged sufficient facts with respect to their claims that Defendants' marketing of the ingredients in their Products is false and misleading. Plaintiffs have alleged that contrary to Defendants' claims, ingredients are not "fresh" but are "expired"; rather than being "regional," ingredients are mostly "import[ed] ... from outside the Commonwealth of Kentucky" with "a substantial portion [being] imported from outside the United States"; instead of being supplied by "PEOPLE WE TRUST," ingredients are acquired through a "complex, convoluted supply chain" with multiple processors that Defendants may be unaware of; and that ingredients are "clearly [designated by bills of lading] to be inedible and unfit for human consumption" before inclusion in the Products. FAC ¶¶18-20, 22, 28-29. These facts, if true, are sufficient under Fed. R. Civ. P. 12(b)(6).
Plaintiffs allege that Defendants have violated the UTPCPL by "lying about the
Defendants argue that the economic loss doctrine bars Plaintiffs' UTPCPL claim, and that the claim also is not pleaded with the required particularity pursuant to Fed. R. Civ. P. 9(b). Defendants further argue that Plaintiffs fail to allege that they justifiable relied on any of Defendants' alleged wrongful representations. The Court will address the economic loss doctrine first.
Defendants cite
This Court has held that, until the Court of Appeals for the Third Circuit or the Pennsylvania Supreme Court rules otherwise, the Court will apply the economic loss doctrine to UTPCPL claims, particularly where the claims "are plain and obvious restatements of contract-theories."
In the FAC, Plaintiffs allege that Defendants made affirmations of fact on labels and marketing materials that created express warranties, such as:
Defendants states that this claim fails because Plaintiffs have not pleaded the existence of a warranty or facts that suggest that any of Defendants' statements are untrue. They further allege that even if an express warranty exists, that Plaintiffs have failed to establish justifiable reliance. Under Pennsylvania law, a seller creates an express warranty through "[a]ny description of the goods which is made part of the basis of the bargain." 13 Pa. C.S.A. § 2313(a)(2). However, such descriptions do not include "affirmation[s] merely of the value of the goods or a statement purporting to be merely the opinion of the seller or commendation of the goods." 13 Pa. C.S.A. § 2313(b). The Court disagrees with Defendants' opinion that statements such as "biologically appropriate" and "fresh, regional ingredients" (Def.'s Mem. at 19) are affirmations of value or the opinion of the seller.
The Court also finds that Plaintiffs have alleged sufficient facts that, construed in their favor, would show that such statements are untrue. FAC at ¶¶17-30 (i.e., that the Products contained expired ingredients, ingredients imported from outside the United States, and consisted of inedible animal byproducts). Defendants' argument that it "did not market that all of its ingredients in its dog food were fresh or regional" is flawed. Def. Mem. at 19.
Defendants' packaging claims that its Products are "FRESH or RAW and preservative-free" and "focus on local ingredients... delivered to our kitchens fresh or raw each day" and "features fresh, raw or dehydrated ingredients, from minimally processed poultry, fish and eggs that are deemed fit for human consumption prior to inclusion in our foods." FAC at ¶¶14-15. Contrary to Defendants' claims, the descriptions as written represent that the Products, as a whole, are "FRESH or RAW and preservative-free" with a special focus on local ingredients.
Finally, the Court finds that Plaintiffs have pleaded that they saw these statements and relied on them prior to their purchase of Defendants' products.
In Pennsylvania, the merchantability of goods is an implied warranty in a contract where the seller is a merchant of those goods. 13 Pa.C.S. § 2314(a). To be merchantable, the goods must meet certain terms. Plaintiffs allege that Defendants' Products do not meet the following requirements of merchantability:
Specifically, Plaintiffs argue that the Products fail to meet the "fair average quality within he description" because "they do not contain fresh, regionally sourced, biologically appropriate ingredients and were not made from ingredients fit for human consumption prior to inclusion
Defendants argue that this claim fails because Plaintiffs do not allege that the dog food was not merchantable or fit for its ordinary use. Def. Mem. at 20. But that is both a circular argument and misstates Plaintiffs' alleged injury. As outlined in the paragraph above, Plaintiffs set forth many allegations in the FAC claiming that Defendants failed to conform to 13 Pa.C.S. § 2314. Such allegations, if true, show that Defendants did not sell Plaintiffs merchantable goods. As a result, Plaintiffs' loss is that they purchased items "worth substantially less than the products Defendants promised and represented." FAC ¶72. Defendants' examples in their Memorandum of Law of what Plaintiffs supposedly failed to plead are not persuasive. For instance, Defendants are correct that Plaintiffs "do not plead that their dogs suffered any ill effects"—because that is not the nature of the injury alleged. Def. Mem. at 20. The Court agrees with Plaintiffs that the injury at issue is the allegation that Defendants' Products are not merchantable under the statute and sold far below commercial standards for high-quality dog food. Pl. Opp. at 24.
As to their second argument that Plaintiffs failed to allege that the Products were fit for ordinary use, Defendants further state in that Plaintiffs have not alleged facts "that demonstrate that any specific ingredients were marketed as fresh, regional, biologically appropriate, or fit for human consumption prior to their inclusion and were not so." Def. Reply at 5. The Court disagrees. The FAC provides, for example, labeling of Defendants' Products that claim, "ORJEN features FRESH, RAW, or DEHYDRATED INGREDIENTS, from minimally processed poultry, fish and eggs that are deemed fit for human consumption prior to inclusion in our foods." ¶14.
This alleges that at least one of Defendants' Products claims that the poultry, fish and eggs included are "minimally processed," are fresh, raw or dehydrated, and "fit for human consumption prior to inclusion" in the Products. The FAC then alleges that "the vast majority of animal ingredients Champion uses arrive with bills of lading clearly designating the material to be inedible and unfit for human consumption..."; that "ingredients are also contaminated with excessive quantities of hair .... insects, plastic ear tags from livestock, feathers, and bones ..."; and that "ingredients in large part exclude nutritious muscle meats and ... are largely composed of inedible animal byproducts...."
In addition, Defendants provide no legal authority that suggests that Plaintiffs must specifically plead to each ingredient in each product, especially as Defendants' labeling and packaging skews to the general. Taking all factual allegations in Plaintiffs' favor, if Defendants' Products generally contain contaminated and inferior ingredients, it is a reasonable inference that the Products purchased by Plaintiffs also would generally contain contaminated and inferior ingredients.
Plaintiffs allege that Defendants had a "duty to disclose to Plaintiffs and other
Defendants argue that the economic loss doctrine bars this claim, and that this claim also is not pleaded with the required particularity pursuant to Fed. R. Civ. P. 9(b). Defendants further argue that Plaintiffs fail to allege that they justifiable relied on any of Defendants' alleged wrongful representations. The Court will address the economic loss doctrine first.
Plaintiffs cite two Pennsylvania Supreme Court cases,
The first case,
Plaintiffs' other citation,
The Court finds the case cited by Defendants,
Plaintiffs have failed to establish how their fraud claim is related to inducement and unrelated to the quality or characteristics of the goods sold. The Court finds that the fraudulent omissions that Plaintiffs allege Defendants made directly connect to Plaintiffs' breach of warranty claims, as they were in
All the allegations cited in the FAC relate to the quality or characteristics of the goods sold, such as representations that the Products contained "the fullest expression of ... biologically appropriate and fresh regional ingredients ...," "unmatched inclusions of free-run poultry, wild-caught fish and whole nest-laid eggs..." and featured "fresh, raw or dehydrated ingredients from minimally processed poultry, fish and eggs that are deemed fit for human consumption prior to inclusion in our foods." ¶¶76-77. The Court finds that the fraudulent omission claim is barred by the economic loss doctrine, and the Court will not address the issues of particularity or justifiable reliance by the parties.
Plaintiffs allege that they "purchased Defendants' products to Defendants' benefit and to their detriment because they paid a premium price expecting the goods to conform to the representations on Defendants' labels, on its website and its marketing ..." FAC ¶86. They state that at the time of purchase, Defendants "knew of the low-quality ingredients used and the lack of regionally-sourced ingredients" and despite this knowledge, "sold the Products... at a premium price."
Under Pennsylvania law, unjust enrichment requires proof of the following elements: (1) that Plaintiffs conferred a benefit on Defendants; (2) Defendants appreciated the benefit; and (3) acceptance and retention of those benefits by Defendants would, under the circumstances, make it inequitable for Defendants to retain the benefit without paying for the value of the benefit.
Defendants argue that Plaintiffs fail to "plead facts which establish that it would be inequitable for Champion to retain the purported benefits conferred by Plaintiffs." Def. Mem. at 21. The Court disagrees. Plaintiffs make multiple allegations that the Products were inferior in quality yet could cost more than four times as much as other dog food products. FAC ¶1. Plaintiffs conferred a benefit on Defendants by paying a premium for the Products, which they did only because of Defendants' representations about the quality of its Products. Pl. Opp. at 24. As Plaintiffs contend, if their allegations are true, they "did not receive exactly what was advertised" but received something significantly inferior despite the premium prices paid.
Plaintiffs allege that "[i]ndependent of any contractual relationship between the parties, Defendants had a duty to fairly and accurately disclose and represent their Products on their labels, website, and advertising and marketing literature." FAC ¶90. Plaintiffs state that Defendants "negligently represented, omitted, and concealed from consumers material facts relating to the quality and ingredients of the Products" and were "careless" in making such statements, contravening this duty.
Defendants states that the economic loss doctrine bars this claim, and that it also was not pleaded with the requisite particularity pursuant to Fed. R. Civ. P. 9(b). Defendants further argue that Plaintiffs fail to allege that they justifiable relied on any of Defendants' alleged wrongful representations. Again, the Court will first address the economic loss doctrine.
Plaintiffs once more attempt to use
Again, the Court finds
The Court agrees that Defendants are more analogous to the defendant in
Plaintiffs' arguments under
Plaintiffs have alleged no facts or law to suggest that Defendants had an independent duty and not, instead, one related to their warranty claims about the quality and characteristics of the Products. As no independent duty exists, the Court finds that the negligent misrepresentation claim is barred by the economic loss doctrine, and the Court will not address the
Consistent with the foregoing, Defendants' Motion to Dismiss (
IT IS SO ORDERED.