SARAH S. VANCE, District Judge.
Defendants Degesch America, Inc. and D & D Holdings, Inc. (collectively, "Degesch") move the Court to dismiss under Federal Rule of Civil Procedure 12(b)(6) plaintiffs' products liability, fraudulent misrepresentation, negligent misrepresentation, and unfair trade practices claims. For the following reasons, defendants' motion is GRANTED with respect to plaintiffs' products liability, fraudulent misrepresentation, and unfair trade practices claims, and DENIED with respect to plaintiffs' negligent misrepresentation claim.
This case arises out of a fire aboard the vessel M/V MARIA V. Plaintiffs Cargill International SA (CISA) and Cargill Inc. (collectively, "Cargill plaintiffs") contend that they were the owners, buyers, sellers, consignees, successors in title, and/or shippers of 59,691.878 metric tons of yellow corn loaded aboard the vessel at the Westwego, Louisiana export grain elevator.
Plaintiffs allege that, pursuant to a grain sales contract dated April 15, 2010, Cargill sold 60,000 metric tons of yellow corn to CISA, which CISA then sold to a Syrian buyer.
On August 19, 2010, after the grain was loaded aboard the vessel at a berth by Cargill's export grain elevator in Westwego, Louisiana, Degesch fumigated the corn with the fumigant Phostoxin in all seven of the vessel's cargo holds.
Allegedly in reliance on these representations, the vessel's crew closed and secured the cargo hatch covers, and Cargill permitted the M/V MARIA V to depart for the destination port in Syria.
The investigation concluded that the fumigant was applied in piles on the surface of the cargo rather than applied uniformly subsurface, as required by defendants' own Application Manual, FGIS regulations, and the terms of the contract.
In their amended complaint,
The Court heard oral argument on defendants' motion to dismiss and requested additional briefing on the choice of law analysis.
To survive a Rule 12(b)(6) motion to dismiss, the plaintiffs must plead enough facts "to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is facially plausible when the plaintiff pleads facts that allow the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S.Ct. at 1949; Hale v. King, 642 F.3d 492, 499 (5th Cir.2011). A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232-33 (5th Cir. 2009); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.1996). But the Court is not bound
A legally sufficient complaint must establish more than a "sheer possibility" that plaintiffs' claim is true. Id. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. In other words, the face of the complaint must contain enough factual matter to raise a reasonable expectation that discovery will reveal evidence of each element of the plaintiffs' claim. Lormand, 565 F.3d at 255-57. If there are insufficient factual allegations to raise a right to relief above the speculative level, Twombly, 550 U.S. at 555, 127 S.Ct. 1955, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007); Carbe v. Lappin, 492 F.3d 325, 328 n. 9 (5th Cir.2007), the claim must be dismissed.
Plaintiffs' products liability claim alleges that the fumigant used was unsafe for its intended use because of "impurities and/or diphosphine" present within the fumigant, and that defendants negligently failed to warn of these impurities. Plaintiffs' theory appears to be grounded in the suggestion of one of the surveyors that this defect caused or contributed to the explosions. Defendants claim that this "slim reed" is the sort of conclusory allegation that fails to satisfy the Rule 8 "plausibility" standard explained in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
Courts recognize the doctrine of strict products liability as part of the federal maritime law, see E. River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 865, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986); Vickers v. Chiles Drilling Co., 822 F.2d 535, 538 (5th Cir.1987), and generally embrace § 402 of the Restatement (Second) of Torts as "the best expression of the [doctrine of strict liability] as it is generally applied." In re Parker Drilling, 2006 WL 285602, at *2, 2006 U.S. Dist. LEXIS 4332, at *12 (E.D.La.2006) (quoting Ocean Barge Transp. v. Hess Oil Virgin Islands, 726 F.2d 121, 123 (3rd Cir.1984) (collecting cases)). The Restatement provides:
Restatement (Second) of Torts § 402A.
In this case, further expression of the principles of strict products liability is unnecessary, since plaintiffs have plainly failed to state a claim that is plausible on its face. Plaintiffs base their allegation solely on the opinions of a surveyor unnamed in the complaint. There is no indication of what the impurities might be, how they might have caused the explosions, the basis upon which the surveyor formed his theory, or his qualifications for so doing. There is likewise no description of diphosphine or its properties, why its presence in the fumigant is plausible, or how it might have caused the explosions. Absent these allegations, there is no plausible
At oral argument, the Court allowed plaintiffs to amend their complaint to state a products liability claim that is plausible on its face. Now four months later, plaintiffs still have not so amended. Their strict products liability claim is therefore dismissed. Plaintiffs' failure-to-warn claim, sounding in negligence, is similarly dismissed; since plaintiffs have failed to demonstrate an unreasonable danger with the fumigant caused by diphosphine or unnamed impurities, they likewise have failed to demonstrate any negligence of defendants in failing to warn of such dangers.
The Fifth Circuit has noted that federal maritime law recognizes the tort of negligent misrepresentation, see Otto Candies, LLC. v. Nippon Kaiji Kyokai Corp., 346 F.3d 530, 534-35 (5th Cir.2003), and has approvingly cited Section 552 of the Restatement (Second) of Torts for the controlling standard. Thus, to state a claim for negligent misrepresentation under general maritime law, plaintiffs must allege that
Otto Candies, 346 F.3d at 535.
Here, plaintiffs have stated a plausible negligent misrepresentation claim. They have alleged that Degesch's Certified Applicator certified to plaintiffs that the fumigant was applied subsurface, that the fumigant actually was not applied subsurface, that plaintiffs acted in reliance on this false information, and that they suffered damages as a result. An inference that the Certified Applicator failed to act with reasonable care is reasonable from the allegations in the complaint. Defendants' motion to dismiss plaintiffs' negligent misrepresentation claim is therefore denied.
It is well settled that a federal court sitting in admiralty is to apply the common law of fraud. Elmwood Dry Dock & Repair v. H & A Trading Co., 1997 U.S. Dist. LEXIS 20309, *67 (E.D.La.1997) (citing Black Gold Marine, Inc. v. Jackson Marine Co., Inc., 759 F.2d 466 (5th Cir. 1985)). Stating a fraud claim thus requires that plaintiffs allege:
Plaintiffs' allegations of fraud implicate the heightened pleading requirements of Fed.R.Civ.P. 9(b). See Conerly Corp. v. Regions Bank, 2008 WL 4975080, at *10, 2008 U.S. Dist. LEXIS 94674, at *27-28 (E.D.La.2008) (citing Unimobil 84, Inc. v. Spurney, 797 F.2d 214, 217 (5th Cir.1986)). "In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir.2008) (quoting Fed.R.Civ.P. 9(b)). The Fifth Circuit "interprets Rule 9(b) strictly, requiring a plaintiff [who pleads] fraud to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent." Id. (citations omitted). "Put simply, Rule 9(b) requires the complaint to set forth the who, what, where, and how of the events at issue." Id. (citations and quotation marks omitted). The second sentence of Rule 9(b) "relaxes the particularity requirement for conditions of the mind such as scienter: Malice, intent, knowledge, and other conditions of the mind may be alleged generally." Id. (citations omitted). But while Rule 9(b) "expressly allows scienter to be `averred generally,' simple allegations that defendants possess fraudulent intent will not satisfy Rule 9(b)." Id. (citations omitted). Rather, the plaintiffs "must allege specific facts supporting an inference of fraud." Id. (citations omitted).
Plaintiffs' second cause of action contends that the damages plaintiffs suffered:
Absent from the complaint are facts that invite an inference of fraudulent intent, as plaintiffs do not allege that Degesch's Certified Applicator knew or had reason to believe that the fumigant was not applied in accordance with the contract and FGIS regulations. Nor do plaintiffs state that (much less explain why) defendants would intentionally misrepresent the particular fumigation procedure used. Alleged facts are sufficient to support an inference of fraudulent intent if they either "(1) show a defendant's motive to commit [] fraud or (2) identify circumstances that indicate conscious behavior on the part of the defendant." Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 565 (5th Cir.2002). But "[p]laintiffs do not sufficiently
Without alleging facts to invite an inference of fraudulent intent, plaintiffs have failed to satisfy Rule 9(b)'s mandate. This is notwithstanding plaintiffs' citation to Diamond Servs. Corp. v. Oceanografia, S.A. De C.V., 2011 WL 938785, 2011 U.S. Dist. LEXIS 27358 (W.D.La.2011), in which the court denied defendant's motion to dismiss despite the plaintiff's failure to allege facts relating to certain elements of his claim. The court there noted that certain factual details could be obtained only through discovery, and since judging the sufficiency of the complaint was a "context-specific task" requiring the court "to draw on its judicial experience and common sense," denial of summary judgment was appropriate in context. Id., at *6, 2011 U.S. Dist. LEXIS 27358 at *19. Importantly, however, that case involved the Rule 8 standard, whereas this case involves Rule 9's heightened pleading standard. And even though fraud may be averred generally under Rule 9(b), "simple allegations that defendants possess fraudulent intent will not satisfy[.]" Dorsey, 540 F.3d at 339 (citations omitted). Plaintiffs "must allege specific facts supporting an inference of fraud," id., and they have failed to do so. Their fraudulent misrepresentation claim is hereby dismissed.
LUTPA prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce[,]" La. R.S. § 51:1405, and confers a private right of action on "any person who suffers any ascertainable loss of money or movable property, corporeal or incorporeal," from these unfair trade practices. La. R.S. § 51:1409(A). To succeed on a LUTPA claim, a plaintiff must show that the alleged conduct "offends established public policy and ... is immoral, unethical, oppressive, unscrupulous, or substantially injurious." Cheramie Servs. v. Shell Deepwater Prod., 35 So.3d 1053, 1059 (La.2010) (quoting Moore v. Goodyear Tire & Rubber Co., 364 So.2d 630, 633 (La.App. 2nd Cir.1978)). What constitutes an unfair trade violation is determined on a case-by-case basis. Cheramie Servs., 35 So.3d at 1059. However, conclusory allegations of unethical or oppressive conduct not supported by the record are insufficient. See Lilawanti Enters. v. Walden Book Co., 670 So.2d 558, 561 (La.App. 4th Cir.1996).
Here, plaintiffs' LUTPA claims fail for much the same reason their fraud claim fails: they have not adequately alleged defendants' intent to deceive. Critically,
For the foregoing reasons, plaintiffs' strict products liability, fraudulent misrepresentation, and unfair trade practices claims are hereby DISMISSED. Their negligent misrepresentation claim survives defendants' motion to dismiss.