TANYA WALTON PRATT, District Judge.
This matter is before the Court on a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by Defendant Berry Plastics Corporation ("Berry Plastics"). (
Although the factual allegations are contested, as required for the purposes of this motion, the Court accepts as true all well-pleaded facts alleged in the Amended Complaint, and draws all possible inferences in the Plaintiff's favor. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) ("[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint.").
Berry Plastics is a Delaware corporation whose corporate executive office is located in Indiana and it conducts business within the state. (
Vexol is a Mexican entity that conducts business in the Republic of Mexico and Mr. Torreblanca, a citizen of Mexico, is an officer of the company. The Plaintiffs are also in the plastic business. Vexol has provided plastic film to its customers for over fifteen years. Id. at 3. In 2009, Plaintiffs entered into a series of purchase orders with Pliant, whereby Pliant would provide and deliver large shrink wrap orders to Vexol. Id. As orders were placed and delivered, Vexol's customers complained that the shrink wrap was not performing adequately and Vexol's customers began returning the product. Vexol informed Pliant that the shrink wrap provided was defective and that Vexol was incurring losses due to the low quality of the Pliant's product leading to customer dissatisfaction. Id. Vexol returned the products to Pliant and demanded an adjustment to the balanced owed. Id.
Instead of working out a business solution and recognizing the defective products, Pliant embarked on a series of acts to disparage the Plaintiffs. Specifically, Plaint caused Aspen Industrial S.A. de C.V. ("Aspen"), a separate Mexican entity, to bring a claim against Vexol in a Mexican Mercantile Court. Id. at 3-4. In that case, Aspen alleged that Vexol had executed a "pagare", the Mexican equivalent of a promissory note, which was assigned to Aspen. Id. In the pagare, Aspen claimed that Vexol had agreed to pay Pliant $5,000,000.00 in Mexican pesos. Id. Aspen attempted to have the Mexican Mercantile Court recognize the pagare note and hold Vexol responsible for it. Id.
On April 10 2013, the Mexican Mercantile Court ruled that the pagare did not meet the requirements of Article 170 of the General Law of Titles of Credit and Credit Operations and issued a ruling in favor of Vexol, which Plaintiffs contend was largely due to forged signatures on the pagare. Id. at 4-5. Aspen filed an appeal contesting the order of the Mexican Mercantile Court and on July 12 2013, the Mexican Mercantile Court's order was confirmed by an "appellate" court panel in Mexico, and that court issued a mandate.
Undaunted, on April 2, 2014, Pliant initiated a criminal complaint against Plaintiffs based on the fabricated pagare and for unpaid invoices. Id. at 6-7. Pliant is using the criminal proceeding to disparage Plaintiffs and to steal Plaintiffs' shrink wrap customers. Id. at 7. Additionally, Pliant's criminal complaint has caused Plaintiffs to be in constant fear of being arrested and Pliant's fraud allegations have disrupted Plaintiffs' ability to conduct business. Id. Pliant's lawyers have called and threatened Plaintiffs with arrest unless they pay Pliant, even though the criminal proceeding has yet to be decided. Id.
In response, Plaintiffs filed this action alleging that Berry Plastics, the parent company of Pliant, ordered its officers and agents to engage in the disparaging conduct. Notably, however, Pliant is not named as a party. In their Amended Complaint, Plaintiffs' bring claims against Berry Plastics under Indiana law for commercial disparagement and defamation, tortious interference with actual and prospective contracts and business relations. Plaintiffs also bring claims against Berry Plastics under Mexican law for civil responsibility and illicit acts, fraud and willful misrepresentation ("dolus"), and/or moral damages. Berry Plastics denies the allegations and has moved for dismissal pursuant to Fed. R. Civ. P. 12(b)(6).
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal if the complaint fails to sets forth a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). "The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits." Gibson v. City of Chi., 910 F.2d 1510, 1520, (7th Cir. 1990). Accordingly, when analyzing a Rule 12(b)(6) motion to dismiss, a court construes the complaint in the light most favorable to the plaintiff, accepts all factual allegations as true, and draws all reasonable inferences in favor of the plaintiff. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).
Federal Rule of Civil Procedure 8 requires that a complaint set forth a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). At a minimum, the complaint must give the defendant fair notice of what the claim is and the grounds upon which it rests; and the factual allegations must raise a right to relief above the speculative level. See Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602-03 (7th Cir. 2009) (explaining that, consistent with the notice pleading standard, the purpose of the statement required by Rule 8 is to provide the defendant with fair notice of what the claim is and the grounds upon which it rests), Tamayo, 526 F.3d at 1081, 1083.
While a complaint need not include detailed factual allegations, a plaintiff has the obligation to provide the factual grounds supporting his entitlement to relief; and neither bare legal conclusions nor a formulaic recitation of the elements of a cause of action will suffice in meeting this obligation. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). See also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although this does not require heightened fact pleading of specifics, it does require the complaint to contain enough facts to state a claim to relief that is plausible on its face. Twombly, 550 U.S. at 570; Tamayo, 526 F.3d at 1083 ("(a) plaintiff still must provide only enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests, and, through his allegations, show that it is plausible rather than merely speculative, that he is entitled to relief"); Bissessur, 581 F.3d at 603 ("(a) claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.").
In their Amended Complaint, Plaintiffs make claims under Indiana tort law, alleging commercial disparagement, defamation, and tortious interference with actual and prospective contracts. (
In a diversity suit, a federal court, "[a]pplies the law of the state in which it sits, including the state's choice-of-law rules." BB Syndication Servs., Inc. v. First Am. Title Ins. Co., 780 F.3d 825, 829 (7th Cir. 2015). In tort cases, the Indiana choice of law analysis is a two-step inquiry; first, the court must determine whether the differences between the laws of the states are "important enough to affect the outcome of the litigation", second, if the court finds that a difference in the laws will affect the outcome of litigation, the lex loci delicti rule applies. See Simon v. United States, 805 N.E.2d 798, 805 (Ind. 2004) (explaining that the lex loci delicti rule "applies the substantive laws of the state where the last event necessary to make an actor liable for the alleged wrong takes place"); Roe I v. Bridgestone Corp., No. 1:06-cv-0627-DFH-JMS, 2008 WL 2732192, *1 (S.D. Ind. July 11, 2008). However, "absent circumstances where the place of the tort bears little connection to the lawsuit, Indiana still applies the traditional lex loci delicti rule when determining choice of law for tort claims". Viera v. Eli Lilly & Co., No. 1:09-cv-0495-RLY-DML, 2010 WL 3893791, *3 (S.D. Ind. Sept. 30, 2010); see also Roe I, 2008 WL 2732192 at *2.
The Plaintiffs' Amended Complaint clearly alleges that the wrongs took place solely in Mexico, causing harm to a Mexican company and its officer in Mexico. The Plaintiffs allege that they entered into a business relationship with non-party Pliant in Mexico; that the non-performing product was delivered and returned in Mexico; that non-party Aspen and non-party Pliant conspired to harass Plaintiffs with civil and criminal litigation in Mexico; that the Plaintiffs are losing customers in Mexico; and that Plaintiffs, who reside in Mexico, are afraid of criminal penalties being wrongfully imposed upon them in Mexico. (See
Without question, Mexican law applies to this case, requiring dismissal of the Plaintiffs' Indiana law claims.
Plaintiffs Amended Complaint raises several claims against Berry Plastics in which they rely upon violations of Mexican law. As an initial matter, the Court notes that Plaintiffs have failed to provide sufficient notice of the application of foreign law as required under Fed. R. Civ. P. 44.1. See Viera, 2010 WL 3893791 at *5.
Rule 44.1 controls the application of foreign law in federal court. Mzamne v. Winfrey, 693 F.Supp.2d 442, 468-69 (E.D. Penn. 2010). Rule 41.1 provides as follows:
Fed. R. Civ. P. 44.1. While Rule 44.1 "empowers a district court with the authority to determine applicable foreign law, it imposes no obligation on the court to inquire into foreign law sua sponte". Mzamne, 693 F. Supp. 2d at 468-69. Under Rule 44.1, the plaintiffs must "carry both the burden of raising the issue that foreign law may apply in an action, and the burden of adequately proving foreign law to enable the court to apply it in a particular case". Id.
In this case, Plaintiffs have not provided any attachments either to the Complaint or to the motion to dismiss briefs, to enable this Court to conduct a meaningful inquiry into the relevant foreign legal authorities cited. See also Viera, 2010 WL 3893791 at *5 (noting that a failure to provide timely notice of reliance on foreign law can result in waiver of that law's application).
Nevertheless, even assuming that Plaintiffs have appropriately cited and applied the applicable law of Mexico in their Amended Complaint and in their response brief, the Court finds significant pleading deficiencies which warrant dismissal of the Plaintiffs' Mexican law claims.
In the first count, Plaintiffs allege that Berry Plastics is civilly responsible for the illicit acts made against them. (
consequence of the victim's non-excusable fault or negligence. (
In making such allegations, Plaintiffs provide significant factual detail regarding the allegedly fraudulent pagare that led non-party Aspen to file a civil claim against them in the Mexican Mercantile Court and that led non-party Pliant to file a criminal proceeding against them. (See
However, to survive a Rule 12(b)(6) motion for dismissal a plaintiff must provide the factual grounds supporting his entitlement to relief; and neither bare legal conclusions nor a formulaic recitation of the elements of a cause of action will suffice in meeting this obligation. Bell Atl. Corp., 550 U.S. at 555. See also Ashcroft, 556 U.S. at 678 ("the pleading standard Rule 8 . . . demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation" and "(t)hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice"). Although heightened fact pleading of specifics is not required, the complaint must contain enough facts to state a claim to relief that is plausible on its face. Twombly, 550 U.S. at 570; Tamayo, 526 F.3d at 1083 ("(a) plaintiff still must provide only enough detail to give the defendant fair notice of what the claim is and the grounds upon which it rests, and, through his allegations, show that it is plausible rather than merely speculative, that he is entitled to relief"). Further, Plaintiffs cannot use a threadbare complaint to justify conducting a fishing expedition in search of a viable cause of action.
As pled, neither Berry Plastics nor the Court can conclude what alleged actions Berry Plastics took that would amount to an "illicit act" under Mexican law or that would justify civil penalties under Article 1910 of the Federal Civil Code of Mexico. Instead, it appears that all of the alleged actions taken against Plaintiffs were made by non-parties Aspen and Pliant. Accordingly, the Plaintiffs have not plausibly pled their illicit acts claim and dismissal is warranted.
In count two, Plaintiffs allege that Berry Plastics is liable for fraud and willful misrepresentation. (
Unlike notice pleading, where it is sufficient that the court be able to identify some set of facts under which plaintiffs could prevail, Rule 9(b) requires that the alleged fraud be pled in detail, stating with particularity the circumstances constituting fraud. City of Austin Police Ret. Sys. v. ITT Educ. Servs., Inc., 388 F.Supp.2d 932, 935 (S.D. Ind. 2005); Plumbers and Pipefitters Local Union 719 Pension Fund v. Zimmer Holdings, Inc. ("Plumbers"), 673 F.Supp.2d 718, 731 (S.D. Ind. 2009). This heightened pleading requirement responds "to the great harm to the reputation of a business firm or other enterprise a fraud claim can do." Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir. 2007); Plumbers, 673 F. Supp. 2d at 731. Accordingly, a plaintiff claiming fraud "must do more pre-complaint investigation to assure that the claim is responsible and supported, rather than defamatory and extortionate." Id. Therefore, the complaint must provide the "who, what, when, where, and how" of the alleged fraud. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990); Plumbers, 673 F. Supp. 2d at 731.
In this regard, the Plaintiffs provide only the following broad statements regarding Berry Plastics's allegedly fraudulent behavior.
warrants against Plaintiffs in order to steal Plaintiff's customer base in Mexico. (
In count three, Plaintiffs also seek moral damages under the Mexican Federal Civil Code for the claims asserted in counts one and two. (
Federal Rule of Civil Procedure 15 directs that courts should "freely" grant leave to amend a pleading "when justice so requires". Fed. R. Civ. P. 15(a)(2). Nevertheless, courts are instructed to deny leave to amend for such reasons as "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, and futility of [the] amendment." Airborne Beepers & Video, Inc. v. A T & T Mobility LLC, 499 F.3d 663, 666 (7th Cir. 2007); Leavell, 600 F.3d at 808.
The Court considers it appropriate to allow Plaintiffs a narrow opportunity to refile their Mexican law claims, should the Plaintiffs be able to cure the numerous deficiencies identified in this Entry. Should Plaintiffs attempt a second amended complaint, there are a number of additional issues which Plaintiffs must also address when filing a second amended complaint. First, it is not clear whether this Court has subject matter jurisdiction over Berry Plastics's claims, as most foreign tort claims are brought pursuant to the narrowly construed Alien Tort Statute, 28 U.S.C. § 1350, rather than brought directly by applying foreign statutes. See, e.g. Roe I, 2008 WL 2732192 (evaluating alleged child labor violations under the Alien Tort Statute); Viera, 2010 WL 3893791 at *2 (evaluating alleged environmental violations under the Alien Tort Statute and noting that "the ATS provides no substantive cause of action and [the] federal courts must be skeptical of attempts to invoke their jurisdiction via the ATS to hear claims outside of their modest number of international law violations"). Therefore, a clear statement of subject matter jurisdiction is required to demonstrate that this Court has jurisdiction over the Plaintiffs' Mexican law claims independent from the Alien Tort Statute.
Second, if Plaintiffs seek to pursue their tort claims against Berry Plastics under Mexican law, they are required to file notice with the Court of their reliance on foreign law. See Viera, 2010 WL 3893791 at *5. Fed. R. Civ. P. 41.1 requires that a party intending to raise an issue about a foreign country's law must inform the court through "pleading or other writing". Fed. R. Civ. P. 44.1. Further, under Rule 44.1, the Plaintiffs must "carry both the burden of raising the issue that foreign law may apply in an action, and the burden of adequately proving foreign law to enable the court to apply it in a particular case". Viera, 2010 WL 3893791 at *5. If the Plaintiffs elect to file a second amended complaint, they are required to file the appropriate notice along with translated copies of all foreign law that they rely on to support their Mexican law claims.
Third, because Indiana treats statutes of limitation as a procedural constraint on when a suit may be filed, before refiling their Mexican law claims, Plaintiffs must carefully consider whether the alleged claims are time-barred by the applicable statute of limitations, which appears to be two years for tort claims under Mexican law. See Viera, 2010 WL 3893791 at *4 (discussing statutes of limitations as a procedural constraint); Banco de Mexico, 680 F. Supp. 2d at 1145-46 (discussing the applicable Mexican statute of limitations).
Accordingly, the Plaintiffs are afforded
For the reasons explained above, the Court
In addition, the Court is not persuaded by the Plaintiffs' considerable effort to explain liability for an "illicit act" under an alter ego or direct actor theory rather than a piercing the corporate veil theory. First, the Court need not evaluate whether Mexican law allows for recovery against a corporate principal under a piercing the corporate veil theory because the Plaintiffs assert that they are not seeking to impose liability under that theory. (See
