Veath Fish Farm, LLC v. Purina Animal Nutrition, LLC et al
ORDER: For the reasons set forth in the attached Memorandum and Order, the Court finds the Plaintiff has set forth sufficiently detailed information in the Complaint to warrant proceeding beyond dismissal on seven of the nine counts-Counts I, II, III, V, VI, VII, and IX. Accordingly, the Motions to Dismiss (Docs. 27 and 31 ) are DENIED in part as to these counts, and are GRANTED in part as to Counts IV and VIII. Signed by Chief Judge Michael J. Reagan on 10/6/2017. (rah)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
VEATH FISH FARM, LLC,
PURINA ANIMAL NUTRITION, LLC,
and TEXAS FARM PRODUCTS CO.,
Case No. 17–cv–0303–MJR–SCW
MEMORANDUM & ORDER
REAGAN, Chief District Judge:
This matter is before the Court on Motions to Dismiss by Defendants Purina
Animal Nutrition, LLC (“Purina”) (Docs. 31, 32), and Texas Farm Products Co. (“Texas
Farm”) (Docs. 25, 26, 27). The essence of the dispute is a claim by Veath Fish Farm, LLC
(“Veath”) that Purina and Texas Farm both harmed Veath by selling commercial fish
feed that caused a significant number of Veath’s largemouth bass to die. Veath seeks to
proceed under theories of: breach of the Illinois Consumer Fraud Act (“ICFA”), breach
of various warranties, and negligence. In total, the Complaint contains five counts
against Purina and four against Texas Farm (Docs. 1, 16). This Court enjoys diversity
jurisdiction under 28 U.S.C. § 1332 because Veath is an Illinois corporation, Purina is a
Delaware corporation (with a primary place of business in Minnesota), and Texas Farm
is a Texas corporation. For the reasons set forth below, the Court GRANTS the Motion
to Dismiss as to two counts, and DENIES the motion as the other seven counts.
PROCEDURAL & FACTUAL BACKGROUND
In June 2015, Plaintiff’s largemouth bass farm was home to about 360,000 bass of
varying sizes and ages (Doc. 16 at 3). Many fish are sold at age three; though a portion
of the one- and two-year-old fish are sold annually (Id.). Plaintiff has been purchasing
fish food distributed by Purina since 2008. Up until June of 2015, Purina and other
suppliers worked together to produce the feed Plaintiff purchased—namely, AquaMax
500 and AquaMax 600. Plaintiff alleges that in June of 2015 Defendant Texas Farm
began producing the AquaMax 500 and 600 feed for Purina.
The change in
manufacturer was allegedly accompanied by a change in the formula of the food—
though it is alleged that consumers were not notified of the reformulation (Id. at 3-4, 7).
Plaintiff alleges that the new formulation produced by Texas Farm contained,
among other things, higher percentages of digestible carbohydrates than largemouth
bass can physically absorb (Id. at 7-8). According to Plaintiff, the higher carbohydrate
percentages cause liver damage in largemouth bass. Despite the reformulation, the
statements, representations, guaranties, and warranties on the packaging of AquaMax
500/600 and on the Defendants’ web pages, continued to represent that the food was
“100% NUTRITIONALLY COMPLETE TO MAXIMIZE GROWTH” for largemouth bass
(Id. at 8) (emphasis in original).
Purina and Texas Farm made many similar
representations regarding the quality and composition of the feed on websites, on
packaging, and by Purina via sales representatives (Id. at 5-8). A number of specific
statements are excerpted in the Complaint, but it is not necessary to repeat those
statements here to assess the motions pending before the Court (See id.).
Plaintiff apparently relied on the representations made by Texas Farm and
Purina when purchasing feed for its largemouth bass (Id. at 8-9). Plaintiff contends that
Texas Farm and Purina failed to warn consumers of the reformulation (Id. at 7-8). Prior
to Texas Farm allegedly reformulating the AquaMax feed, Plaintiff encountered no
significant problems with the AquaMax feed (Id. at 7). By contrast, post-reformulation,
by April of 2016 Plaintiff experienced significant disease and death amongst the
largemouth bass population (Id. at 9). Plaintiff alleges that the substantial population
problems were a direct and proximate result of feeding the fish the reformulated
AquaMax 500 and 600 feed (Id.). According to Plaintiff, the feed was not consistent
with the representations of nutritional adequacy because of the heightened
carbohydrate percentages (Id.).
Plaintiff’s nine-count Complaint contains: two counts of fraud under the Illinois
Consumer Fraud Act (I, VI), one count of breach of express warranty against Purina
(Count II), two counts of breach of implied warranty of merchantability (III, VII), two
counts of breach of implied warranty of fitness for a particular purpose (IV, VIII), and
two counts of negligence (V, IX) (Id. at 9-21). Plaintiff seeks compensatory and punitive
damages, as well as costs and any additional relief the Court deems just and proper (Id.
Defendants Texas Farm and Purina filed separate motions to dismiss, though
many of the arguments presented are identical or very similar. For brevity, the Court
will group the arguments for dismissal, including a citation to both motions. Plaintiff’s
claims rely on three major theories of relief—the Illinois Consumer Fraud Act (“ICFA”),
warranties based on contract law, and negligence based on tort law. Defendants argue
for dismissal of the ICFA claims based on a statutory exception and a lack of privity; of
the warranty claims based on lack of privity and the inapplicability of exceptions; and
of the negligence claims based on the economic loss doctrine. In reply, Plaintiff points
to a number of exceptions that arguably may apply to allow it a broad scope of relief.
The particulars of these arguments will be discussed in greater detail below in the legal
analysis portion of this memorandum.
It is clear from the briefing before the Court that any number of exceptions could
apply to the facts at hand. There are exceptions that could conceivably work in the
favor of either side. It is apparent that Plaintiff is highly unlikely to, or is legally barred
from, succeeding on all three theories of relief simultaneously. So as the case unfolds,
and discovery is conducted, the Court expects to gain greater clarity about the merits of
various exceptions. For the time being, the Court reviewed the case with a narrow eye
towards the motion to dismiss standard, ensuring only that it is feasible in some
scenario on the facts pled that a viable claim could exist.
STANDARD OF REVIEW
This Court accepts all factual allegations as true when reviewing a 12(b)(6)
motion to dismiss. Erickson v. Pardus, 551 U.S. 89, 94 (2007). To avoid dismissal for
failure to state a claim, a complaint must contain a short and plain statement of the
claim sufficient to show entitlement to relief and to notify the defendant of the
allegations made against him. FED. R. CIV. P. 8(a)(2); Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555-57 (2007). To meet this standard, a complaint must describe the claims in
sufficient factual detail to suggest a right to relief beyond a speculative level. Id.;
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); EEOC v. Concentra Health Servs., 496 F.3d
773, 776 (7th Cir. 2007). A complaint need not contain detailed factual allegations, Scott
v. Chuhak & Tescon, P.C., 725 F.3d 772, 782 (7th Cir. 2013), but it must go beyond “mere
labels and conclusions” and contain “enough to raise the right to relief above the
speculative level,” G&S Holdings, LLC v. Cont’l Cas. Co., 697 F.3d 534, 537-38 (7th Cir.
The Seventh Circuit has outlined the boundaries of 12(b)(6) with two major
principles. First, although facts in the pleadings must be accepted as true and construed
in the plaintiff’s favor, allegations in the form of legal conclusions are insufficient to
survive a motion to dismiss. McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 885
(7th Cir. 2012). And, second, “the plausibility standard calls for a ‘context-specific’
inquiry that requires the court ‘to draw on its judicial experience and common sense.’”
Id. Threadbare recitals of elements and conclusory statements are not sufficient to state
a claim. Id. Put another way, to survive a motion to dismiss “the plaintiff must give
enough details about the subject-matter of the case to present a story that holds together
[. . .] the court will ask itself could these things have happened, not did they happen.”
Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).
Federal Rule of Civil Procedure 9(b) requires that allegations of fraud be pled
with particularity—a heightened standard of pleading. Windy City Metal Fabricators
& Supply, Inc. v. CIT Technology Financing Serv., Inc., 536 F.3d 663, 668 (7th Cir. 2008).
Particularity requires alleging the circumstances of fraud or mistake, including: “the
identity of the person who made the misrepresentation, the time, place, and content of
the misrepresentation, and the method by which the misrepresentation was
communicated to the plaintiff.” Id. (internal citation omitted). The complete lack of
information about the timing, place, or manner of communicating alleged
misrepresentations may render a claim insufficiently pled, particularly where the
plaintiffs are the alleged audience for the misrepresentations. See Gandhi v. Sitara
Capital Mgmt., LLC, 721 F.3d 865, 870 (7th Cir. 2013).
Defendants contend that Plaintiff cannot state a claim under the Illinois
Consumer Fraud Act (“ICFA”) because the facts fall squarely within an exception to the
statute (Section 10(b)(5)) that prohibits plaintiffs from recovering for damage to
property other than the property that is the subject of the allegedly unlawful practice
(Doc. 26 at 5-6; Doc. 32 at 5-6). Applied to this case, the exception prohibits Plaintiff
from seeking to recover for lost fish where the allegedly unlawful conduct relates
directly to fish food, not fish (Doc. 26 at 5-6; Doc. 32 at 5-6). Second, Defendants argue
that the ICFA claims fail because they are merely duplicitous of available contractual
relief (Doc. 26 at 6; Doc. 32 at 6). Defendant Purina additionally contends that if the
Court allows a breach of express warranty claim to proceed, then the ICFA claim should
be dismissed as duplicitous (Doc. 32 at 6, note 2).
Plaintiff responded to each motion to dismiss in turn, though both responses are
nearly identical (Docs. 35, 36). As to the allegation that an exception to ICFA precludes
Plaintiff’s claims, Plaintiff responded that the cited exception was overruled by the
Illinois Supreme Court in 1997 when the Court held that Public Act 89-7 was
unconstitutional in its entirety (thus voiding Section 10(b)(5) cited by Defendants) (Doc.
35 at 2-3; Doc. 36 at 2-3). In support of its position, Plaintiff cites two Northern District
of Illinois cases allowing ICFA claims to proceed against dog treat manufacturers for
harm to dogs caused by bad treats (Doc. 35 at 3; Doc. 36 at 3). See Bietsch v. Sergeant’s
Pet Care Products, Inc., 2016 WL 1011512 (N.D. Ill. 2016); Adkins v. Nestle Purina
Petcare Company, 973 F.Supp.2d 905 (N.D. Ill. 2013).
As to the argument that the ICFA claim is precluded by the availability of a basic
contract action, Plaintiff contends that its allegations go beyond contract because there
are allegations of deceptive or unfair representations by the Defendants (Doc. 35 at 3-5;
Doc. 36 at 3-5). Plaintiffs cite multiple cases in support of this position, including
Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 399 (7th Cir. 2011). Plaintiff also
contends that at this juncture it can plead alternative theories of relief (Doc. 35 at 5).
Texas Farm and Purina filed a joint reply to Plaintiff’s responses (Docs. 37, 38)
focused solely on the validity of the ICFA exception. Defendants insist that the 10(b)(5)
exception to ICFA is applicable in this case because it was enacted twice in 1995 and the
Illinois Supreme Court only invalidated one enactment (Doc. 37 at 3-4). Defendants
bolster this assertion by citing to other provisions of enactments that have been stricken
and subsequently considered by Illinois courts (Id.).
“To state a violation of the [Consumer Fraud Act], the plaintiffs must prove three
elements: (1) an unfair or deceptive act or practice by the defendant; (2) the defendant’s
intent that plaintiff rely on the deception; and, (3) the occurrence of the deception in the
course of conduct involving trade or commerce.”
Parks v. Wells Fargo Home
Mortgage, Inc., 398 F.3d 937, 943 (7th Cir. 2005). Like any fraud claim in Illinois, a
plaintiff must plead a consumer fraud claim with particularity by alleging the identity
of the person who made the misrepresentation, the time, place, and content of the
misrepresentation, and the method by which the misrepresentation was communicated.
Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677, 683-84 (7th Cir. 1992). Though
there may be flexibility in the pleading standard where the plaintiffs allege that they do
not have access to the information needed to show a fraud, the flexibility is not so great
that plaintiffs can satisfy the particularity requirement by simply asserting that on
“information and belief” the defendants committed consumer fraud. Id.
In Greenberger, the Seventh Circuit clearly held that a claim cannot proceed
under the ICFA if it is a mere duplicate of available contract-based claims.
When allegations of consumer fraud arise in a contractual setting, the
plaintiff must prove that the defendant engaged in deceptive acts or
practices distinct from any underlying breach of contract…a deceptive act
or practice involves more than the mere fact that a defendant promised
something and then failed to do it. That type of ‘misrepresentation’
occurs every time a defendant breaches a contract.
Greenberger, 631 F.3d at 399 (internal quotations and citations omitted).
Greenberger Court concluded that it was not the existence of a contract that prevented
the plaintiff from bringing an ICFA claim, but rather the lack of any distinct allegations
of unfair or deceptive conduct in the contractual setting that prevented the claim.
Here, the Plaintiff alleges that Defendants violated ICFA by falsely representing
that their AquaMax fish food products were nutritionally optimal for largemouth bass.
Plaintiff alleges that it relied on this statement in feeding its fish the AquaMax products,
and that, as a result the fish died because the feed was not nutritionally adequate.
These allegations satisfy the basic components of an ICFA claim—that a defendant
engage in a deceptive act or practice; with the intent the plaintiff rely on the deception;
in the course of trade; and that the deception proximately caused harm to the plaintiff.
See e.g. IWOI, LLC v. Monaco Coach Corp., 581 F.Supp.2d 994, 1002 (N.D. Ill. 2008).
Defendants argue that a plaintiff cannot bring such a claim against a manufacturer, but
Illinois law contradicts this argument. See id. The ICFA claim also circumvents the
Greenberger problem because Plaintiff seeks to recover for loss of the fish—something
above and beyond the AquaMax product itself. However, the basic components of an
ICFA claim are not the Plaintiff’s only problem according to the Defendants.
In 1995 the Illinois Legislature passed Public Act 89-7, which contained 815 ILCS
505/10(b)(5). Section 10(b)(5) provided that “[c]laims seeking damages for conduct that
results in bodily injury, death, or damage to property other than the property that is the
subject of the practice claimed [are] unlawful.” The language of Section 10(b)(5) does
appear directly applicable to this case, but, the validity of that language is subject to
question because the Public Act containing this provision was held unconstitutional by
the Illinois Supreme Court in 1997. See Best v. Taylor Machine Works, 689 N.E.2d 1057
Interestingly, Defendants point to Public Act 89-152—a second Public Act passed
in 1995 that apparently contained the same Section 10(b)(5) language as 89-7. Public Act
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89-152 has not been found unconstitutional, so Defendants argue that Section 10(b)(5) is
still good law. The portion of Public Act 89-152 that contains Section 10(b)(5) is focused
on insurance producers. Public Act 89-152 contains the following underlined changes
to Section 10(b)(5) and also adds Section 10(b)(6) anew:
Nothing in this Act [i.e., the Consumer Fraud Act] shall apply to
any of the following:
(5) Claims seeking damages for conduct that results in bodily injury,
death, or damage to property other than the property that is the subject of
the practice claimed to be unlawful. This item (5) applies to causes of
action filed on or after its effective date.
(6) The communication of any false, misleading, or deceptive information
by an insurance producer, registered firm, or limited insurance
representative, as those terms are defined in the Illinois Insurance Code,
or by an insurance agency or brokerage house concerning the sale,
placement, procurement, renewal, binding, cancellation of, or terms of any
type of insurance or any policy of insurance unless the insurance producer
has actual knowledge of the false, misleading, or deceptive character of
This provision shall be effective as to any
communications, whenever occurring. This item (6) applies to all causes
of action that accrue on or after the effective date of this amendatory Act
P.A. 89-152 (S.B. 977) (approved Jul. 14, 1995) (underlining in original). Aside from the
underlined text, Section 10(b)(5) as contained in 89-152 is consistent with Section
10(b)(5) in Public Act 89-7. Defendants argue that Section 10(b)(5) is still good law by
distinguishing it from a case where the Illinois Supreme Court examined the legitimacy
of another portion of Public Act 89-7 that parties tried to rely on after the 1997 Best
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In O’Casek v. Children’s Home and Aid Society of Illinois, 892 N.E.2d 994 (Ill.
2008), the Illinois Supreme Court addressed the medical malpractice provision of Public
Act 89-7 that was found unconstitutional in Best but appeared to be revived by a 1998
Public Act. The medical malpractice language existed prior to 1995. In 1995, Public Act
89-7 edited the medical malpractice text. The Illinois Supreme Court then found the
entire Public Act 89-7 unconstitutional. In 1998, a subsequent public act used the
medical malpractice language that had appeared in public act 89-7 without any mention
of the Best unconstitutionality holding. The O’Casek Court engaged in a very detailed
analysis of legislative history, statutory construction, and legal reasoning. The Court
ultimately concluded that the use of the 1995 unconstitutional text was a mere
legislative oversight, and that the latter Public Act did not re-enact the unconstitutional
text. Notably, the Court stated, “we will not construe the mere iteration of a prior law
as a new enactment.” Id. at 1012.
Here, Defendants argue that because section 89-152 was not a reiteration of
previously stricken text, but was instead a separate iteration, it is still valid law.
Though Defendants’ argument is clever, this Court is not persuaded that two
enactments of identical text both pre-dating the Best unconstitutionality finding
demonstrate an intent by the Legislature that Section 10(b)(5) survive Best. The minor
textual alterations identified by Defendants as distinguishing 89-7’s version of 10(b)(5)
from 89-152 are stylistic and are designed to make the text flow with the addition of
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Section 10(b)(6). The Court is not persuaded that these stylistic changes evidence an
intent to change anything substantive about 89-7’s version of 10(b)(5) or to bolster the
legal force of Section 10(b)(5). It may be a closer call if, as in O’Casek, one Public Act
containing 10(b)(5) came before Best and one came after, but that is not the situation
Multiple other federal courts have allowed ICFA claims to proceed against
manufacturers for harm to property other than the product at issue suggesting that
Section 10(b)(5) is dead, and this Court is inclined to follow suit. See e.g., Bietsch, 2016
WL 1011512 (case about bad dog treats); Adkins, 973 F.Supp.2d 905 (case about bad
In light of the holdings of other federal courts, this Court is also not persuaded
that privity is a prerequisite to an ICFA action against a manufacturer. See e.g. IWOI,
LLC, 581 F.Supp.2d at 1004 (“manufacturers can be liable under the [ICFA] when they
knowingly place a materially defective product into the stream of commerce whether
or not they are in privity of contract with or communicate directly to the end
consumer”). Finally, this Court agrees that at this point Plaintiff can plead alternative
theories of relief, so Defendant Purina’s argument that Plaintiff cannot simultaneously
recover under ICFA and an express warranty claim is premature. Thus, the motions to
dismiss counts I and VI of the complaint are DENIED.
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B. Breach of Express and implied warranties
Purina—the only defendant subject to a breach of express warranty claim—
argues that it cannot be subject to said claim because there is no privity of contract
between it and Plaintiff (Doc. 32 at 10-11). Plaintiff’s Complaint does not identify the
direct seller of the fish food, thus, Purina alleges that the express warranty claim fails as
a matter of law (Id.).
As to the implied warranty claims, Defendants both argue that these claims
cannot proceed because there is not privity of contract between them and Plaintiff in the
sale of the fish feed (Doc. 26 at 9-12; Doc. 32 at 10-12). Three exceptions to the general
privity requirements do not apply here because Plaintiff has not tendered any facts or
evidence tending to suggest an express warranty, an agency relationship, or that the
feed was custom manufactured with Plaintiff in mind (Id.). Neither targeted marketing
and advertising, nor the fact that the fish feed came from the Defendants in sealed
packaging give rise to privity, according to Defendants (Doc. 26 at 11, Doc. 32 at 12).
Additionally, Defendants contend that Plaintiff cannot state a claim for breach of
an implied warranty of fitness for a particular purpose because Plaintiff used the fish
feed for its ordinary purpose, to feed largemouth bass (Doc. 26 at 12-13; Doc. 32 at 13).
As to the stand-alone express warranty claim, Plaintiff argues that Purina is
liable under a theory of express warranty based on the explicit representations made
about AquaMax 500 and 600 on the packaging and on Purina’s website (Doc. 35 at 7).
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In support, Plaintiff cites a number of cases finding that representations on packaging
fall within an exception to the general privity requirement (Doc. 35 at 7 (see e.g. Bietsch,
2016 WL 1011512)).
Turning to the implied warranty claims, Plaintiff argues that it qualifies for an
exception to the privity requirement because the product in question—fish food—came
in a sealed package. In support of this exception, Plaintiff identifies a number of cases
delineating the boundaries of this exception, including cases extending this privity
exception to items intended for animal consumption, Adkins, 973 F. Supp.2d 905; see
also Southland Milling Co. v. Vege Fat, Inc. 248 F.Supp 482 (E.D. Ill. 1965) (Doc. 35 at 8;
Doc. 36 at 6-7).
Alternatively, Plaintiff argues that privity is an issue of fact not
appropriately resolved at the motion to dismiss phase (Doc. 35 at 8-9; Doc. 36 at 7).
Additionally, Plaintiff counters that it stated a viable claim for breach of an
implied warranty of fitness for a particular purpose because the fish feed was
specifically touted to feed largemouth bass (Doc. 35 at 9-10; Doc. 36 at 7-9). Thus,
Plaintiff argues, an exception to strict privity applies (Doc. 35 at 9-10; Doc. 36 at 7-9).
Under the Uniform Commercial Code (“UCC”), Section 2-313,
(1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer
which relates to the goods and becomes part of the basis of the bargain
creates an express warranty that the goods shall conform to the
affirmation or promise.
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(b) Any description of the goods which is made part of the basis of the
bargain creates an express warranty that the goods shall conform to
(c) Any sample or mode which is made part of the basis of the bargain
creates an express warranty that the whole of the goods shall conform
to the sample or model.
Typically to recover for damages that result from a product not living up to an express
warranty, a claimant must establish privity of contract between himself and the alleged
defendant. However, Illinois courts have developed a number of exceptions to the
traditional notions of privity.
Relevant to this case is an Illinois appellate court’s
proclamation that “[w]here an article of food or drink, intended for human
consumption, is sold in a sealed container, an implied warranty is imposed on the
manufacturer that the article was fit for that purpose, enabling a consumer to recover
for the warranty’s breach.” Warren v. Coca-Cola Bottling Co. of Chicago, 519 N.E.2d
1197, 1201-02 (Ill. App. 1988). Federal courts interpreting this exception in Illinois law
have surmised that it should also apply to products intended for animal consumption.
See e.g. Bietsch, 2016 WL 1011512 (allowing an implied warranty claim to proceed
against a dog treat manufacturer based on representations on the packaging); Adkins,
973 F.Supp.2d at 922 (allowing claims to proceed against dog treat manufacturers and
noting there is no reason the Illinois exception for sealed foodstuffs should be
limited to products for human consumption as opposed to canines); Southland
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Milling Co., 248 F.Supp. 482 (allowing claims against manufacturer of component of
chicken feed despite lack of direct privity).
Defendants vehemently oppose the extension of the privity exception from
sealed products meant for human consumption to products intended for animal
In a footnote spanning nearly an entire page, they argue that the
exception must not be extended to all sealed products because courts have declined to
extend the privity exception to sealed products such as baby monitoring devices. See
e.g. Jamison v. Summer Infant, Inc., 778 F.Supp.2d 900, 913 (N.D. Ill. 2011) (noting that
the Seventh Circuit generally recognizes a privity requirement and does not find the
requirement satisfied by a written express warranty in packaging); see also IWOI,
LLC, 581 F.Supp.2d at 1000 (noting that the Seventh circuit declined to adopt an
Illinois state court practice that allowed non-privity parties to bring implied warranty
claims). They also note that the Illinois courts have declined to entirely do away with
the concept of privity. They cite a number of cases evidencing this—cases about the
sale of vehicles, motor homes, and prescription drugs. But the key distinction between
all of the cases cited that decline to do away with the privity requirement, and the cases
that make exceptions to the privity requirement is that, where exceptions are made,
people or animals have been physically harmed. Compare IWOI, LLC , 581 F.Supp.2d
at 1000-01; and Williamson v. S.A. Gear Company, Inc., 2017 WL 283373, *1, *2-3 (S.D.
Ill. 2017) (noting that under Illinois law a plaintiff must establish privity of contract
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between a plaintiff and manufacturer in a suit to recover economic loss); Flynn v.
FCA US LLC, 2016 WL 5341749, *1, *7 (S.D. Ill. 2016) (noting that privity must be
established for a warranty claim purely for economic loss); with In re McDonald’s
French Fries Litigation, 503 F.Supp.2d 953, 958 (N.D. Ill. 2007) (finding that because
McDonald’s expressly warranted to fry consumers that fries were allergen free, an
exception to privity existed under Illinois law); see also Adkins , 973 F.Supp.2d at 922
(finding that sealed container exception to the privity requirement for implied
warranty claims can apply to dog treats as well as products for human consumption);
Bloomer Chocolate Co. v. Bongards Creameries, Inc., 635 F.Supp. 911 (N.D. Ill. 1985)
(finding that a lack of apparent privity may not preclude warranty claims against a
whey protein manufacturer selling whey contaminated by salmonella); Southland
Milling Co., 248 F.Supp. 482 (discussing the historical and policy based rationale for
privity and deciding it did not apply to a scenario where a manufacturer of a
component of poultry feed produced toxic fat).
Taking this distinction alongside Illinois case law discussing the evolution of
competing tort and contract based theories of relief for product liability it is evident that
Illinois courts are walking a tight rope attempting to optimize the allocation of risk
between parties in a transaction. See e.g. Moorman Mfg. Co. v. National Tank Co., 435
N.E.2d 443 (Ill 1982) (discussing the evolution of similar causes of action in contract
law and tort law and assessing the appropriate standards to be applied to claims that
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could fall into either bucket to best allocate risk); Szajna v. General Motors Corp., 503
N.E.2d 760 (Ill. 1986) (discussing the appropriateness of the privity requirement in
certain situations as a tool to properly allocate transactional risks). Federal courts
applying Illinois law in recent years err on the side of flexibly applying the privity
requirements to express and implied warranty claims where there are allegations that a
product harmed animals.
F.Supp.2d at 922.
See e.g. Bietsch, 2016 WL 1011512 at *6; Adkins, 973
This Court agrees with this interpretation of Illinois law as an
optimal way to allocate this kind of risk. The total death or serious injury caused to
animals in other Illinois cases and in the case before the Court is more serious than the
harm and frustration that results from a faulty product.
Turning first to Plaintiff’s claim that Defendant Purina violated an express
warranty, this Court will not dismiss the claim for lack of privity. Courts interpreting
Illinois law have allowed claims against a manufacturer or distributor for express
guarantees on the exterior of product packaging or via directed advertising. Here,
Plaintiff alleges that the statements made by Purina online and in marketing materials
guaranteed that the food would be nutritionally adequate. See e.g. In re McDonald’s
French Fry Litigation, 503 F.Supp.2d at 957-58 (allowing express warranty claims to
proceed based on representations made about allergen contents of fries); Bietsch,
2016 WL 1011512 at *6 (allowing warranty claims to proceed based on product
advertising about nutritional contents of dog treats). Thus, Plaintiff has identified the
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essential components of an express warranty claim, so dismissal of Court II is not
Next, as to the claims against both Defendants for implied warranty of fitness for
a particular purpose, this Court finds that dismissal is appropriate. The products in this
case—AquaMax 500 and 600—are fish food meant for commercial fish stocks. Plaintiff
alleges that it used the food to feed commercial largemouth bass. This use was not
‘particular’ and there is no allegation that Plaintiff specifically approached the
manufacturers to ensure that the product would do something above and beyond its
normal advertised function. Absent such an assertion, the claims fail because there is
no ‘particular’ purpose. See e.g. In re McDonald’s French Fry Litigation, 503 F.Supp.2d
at 958 (finding that plaintiffs did not allege that the fries were meant for any
particular consumption, so no warranty for a particular purpose existed).
Accordingly, Counts IV and VIII are dismissed without prejudice.
Finally, as to the claims that Defendants violated an implied warranty of
merchantability, UCC Section 2-314 requires that goods are fit for the ordinary purpose
for which such goods are used. See Alvarez v. American Isuzu Motors, 749 N.E.2d 16,
22-23 (Ill. App. Ct. 2001). Plaintiff argues that it is not required to establish privity at
the motion to dismiss stage because such an inquiry is fact intensive. Alternatively,
Plaintiff argues that it meets an exception to the traditional privity requirement because
the product at issue—fish food—was in a sealed container and was intended for animal
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consumption. The Court finds that at this juncture, Plaintiff’s assertion that the fish
food was not suitable for its ordinary purpose is enough to allow the claim to proceed
beyond dismissal. As discussed above, in the discreet area of products intended for
consumption that result in physical damage, precedent shows that courts have applied
privity leniently. This Court agrees with the lenient approach in the case at bar. Thus,
the motions to dismiss are denied as to the implied warranty of merchantability
claims—Counts III and VII.
Finally, as to the negligence claims, Defendants argue that these claims are
precluded by the economic loss doctrine—a doctrine barring recovery in tort for purely
economic losses that fall within the purview of contract and the Uniform Commercial
Code (“UCC”) (Doc. 26 at 7-9; Doc. 32 at 7-9). Defendants contend that the facts of this
case do not fall within any of the three exceptions to the doctrine (Doc. 26 at 7-9; Doc. 32
In response, Plaintiff first argues that the economic loss doctrine does not apply
because it is not seeking relief for purely economic damages—it is also seeking recovery
for the deceased largemouth bass population (Doc. 35 at 6; Doc. 36 at 5). Second,
Plaintiff argues that this case potentially fits into an exception to the economic loss
doctrine, though it contends that the determination of which exception may apply is a
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factual determination that should be left for resolution later in the case (Doc. 35 at 5-6;
Doc. 36 at 5-6).
The Moorman doctrine is Illinois’ economic loss doctrine, which holds that claims
alleging only economic loss must proceed in contract, not tort. Moorman Mfg. Co. v.
Nat’l Tank Co., 435 N.E.2d at 448-49.
Economic losses include “‘damages for
inadequate value, costs of repair and replacement of the defective product, or
consequent loss of profits—without any claim of personal injury or damage to other
property . . . ’” Id. at 449 (quoting Note, Economic Loss in Products Liability
Jurisprudence, 66 Colum. L. Rev. 917, 918 (1966)). The Moorman court recognized “three
exceptions to the economic loss rule: (1) where the plaintiff sustained damage; i.e.,
personal injury or property damage, resulting from a sudden or dangerous occurrence; (2)
where the plaintiff’s damages are proximately caused by a defendant’s intentional, false
representation, i.e., fraud; and (3) where the plaintiff’s damages are proximately caused
by a negligent misrepresentation by a defendant in the business of supplying
information for the guidance of others in their business transactions.” In re Chicago
Flood Litigation, 680 N.E.2d 265, 275 (Ill. 1997) (internal citations omitted) (citing
Moorman, 435 N.E.2d 443).
The sudden and dangerous occurrence exception to the Moorman doctrine
consists of two elements: “(1) that the event at issue constituted a sudden and
dangerous occurrence; and (2) that the damage sustained constituted ‘property
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damage.’” ExxonMobil Oil Corp. v. Amex Constr. Co., 702 F. Supp. 2d 942, 968 (N.D.
Ill. 2010). Stated differently, the “exception is composed of a sudden, dangerous, or
calamitous event coupled with personal injury or property damage.” In re Chicago
Flood Litigation, 680 N.E.2d at 275.
When determining whether an occurrence is
sudden, the court must focus on the suddenness of the injurious event, not the
suddenness with which the underlying cause of the injurious event develops. United
Air Lines, Inc. v. CEI Indus. of Ill., Inc., 499 N.E.2d 558, 562 (Ill. App. Ct. 1986). In other
words, a suddenly occurring injurious event that resulted from a slow-developing cause
still qualifies as a sudden occurrence. To satisfy the second prong of the sudden and
dangerous exception, the property damage must be to property extrinsic from the
allegedly defective product. Progressive Northern Insurance Co. of Illinois v. Ford
Motor Co., 2017 WL 1425953, *1, *4 (S.D. Ill. 2017) (“Progressive”) (citing Trans States
Airlines v. Pratt & Whitney Can., Inc., 682 N.E.2d 45, 54-55 (Ill. 1997); Mars, Inc. v.
Heritage Builders of Effingham, Inc., 763 N.E.2d 428, 436-37 (Ill. App. Ct. 2002)).
To satisfy the fraud exception, the defendant must have intentionally, as opposed
to merely negligently, made the misrepresentation. In re Chicago Flood Litigation, 680
N.E.2d at 275 (citing Moorman, 435 N.E.2d 443). Thus, “the second [fraud] exception to
the Moorman doctrine cannot apply to a negligence claim.” Ibarolla v. Nutrex Research,
Inc., 2012 WL 5381236,*1, *6 (N.D. Ill. 2012).
To satisfy the negligent misrepresentation exception, a plaintiff must show:
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(1) a false statement of material fact, (2) carelessness or negligence in
ascertaining the truth of the statement by the party making it, (3) an
intention to induce the other party to act, (4) action by the other party in
reliance on the truth of the statement, and (5) damage to the other party
resulting from such reliance, (6) when the party making the statement is
under a duty to communicate accurate information.
Fox Assocs., Inc. v. Robert Half Int’l, Inc., 777 N.E.2d 603, 606 (Ill. App. Ct. 2002). “This
exception does not apply when the information ‘supplied is merely ancillary to the sale
[of a product or service] or in connection with the sale.’” Id. (citing Fireman’s Fund
Ins. v. SEC Donohue, Inc., 679 N.E.2d 1197 (Ill. 1997)).
In an analogous, yet non-binding, case to the case at bar, the court held that the
death of calves that allegedly resulted from their consumption of defective dry
buttermilk powder satisfied the requirements of the sudden and dangerous exception to
the Moorman doctrine. Starks Feed Co. v. Consol. Badger Coop., Inc., 592 F. Supp. 1255,
1257 (N.D. Ill. 1984).
In Starks Feed, the plaintiff alleged that the defendant feed
company’s defective product caused its calves to become sick and die at an unusually
high rate. Id. Autopsies of the calves “revealed abraded, ulcerated and inflamed
stomach and intestine linings.” Id. The court focused on the property damage aspect of
the two-pronged sudden and dangerous occurrence exception without explicitly
discussing whether the calf deaths were sudden and dangerous. The Starks Feed Court
denied the defendant’s motion to dismiss because the plaintiff could “claim tangible
property damage to other than the product itself, namely the calves. Therefore, its
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claim fits within traditional definitions of non-economic loss, and it is entitled to
proceed in tort.” Id.
The outcome in Starks Feed squares with this Court’s precedent regarding when
the sudden and dangerous exception applies. As stated in a recent decision, “[f]ederal
district courts interpreting Illinois law have  concluded that when damages to other
property are properly pleaded, ‘the sudden and calamitous event exception to the
economic loss rule . . . allows a plaintiff to pursue non-economic damages.’”
Progressive, 2017 WL 142593, at *5 (citing Allstate Ins. v. Pulte Homes of St. Louis,
LLC, 2010 WL 4482360, *1, *5 (N.D. Ill. 2010)). While this Court limited recovery to
damages extrinsic to the defective product (thereby preventing plaintiffs who satisfy the
requirements of the sudden and dangerous exception from recovering for damage to
the defective product itself), the reasoning in Progressive shows that, like in Starks Feed,
damage to personal property can satisfy the requirements of the sudden and dangerous
exception to the Moorman doctrine. Progressive, 2017 WL 142593, at *5.
Here, Plaintiff alleges that it suffered property damage in excess of the value of
the fish feed because its largemouth bass died. In Starks Feed, a case that involves
livestock deaths following the consumption of allegedly defective feed (like the case at
bar), the court did not explicitly perform a two-pronged analysis to determine the
applicability of the sudden and dangerous exception. Yet, the court’s decision to deny
the defendant’s motion to dismiss there suggests that livestock deaths preceded by
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illness satisfy the suddenness component of the first prong. This Court can also infer
from Starks Feed that the death of livestock satisfies the dangerousness component of the
first prong because Plaintiff’s allegations, if proven, would show property damage
because a significant number of the largemouth bass population died. (Doc. 1 at 10).
Like the plaintiff in Starks Feed, Plaintiff here alleges damage to its livestock—damage
that is extrinsic to the allegedly defective product. This Court finds that, in light of
Starks Feed and other precedent, Plaintiff has set forth information sufficient to proceed
beyond the motion to dismiss phase. Starks Feed, 592 F. Supp at 1257. Thus, the
motions to dismiss Counts V and IX are hereby DENIED.
After a thorough review of the pleadings, the Court is left with many
uncertainties about the applicability of various exceptions to this case. However, the
uncertainties are not a result of a deficient complaint, so much as they are a result of the
interchangeable viability of many different theories of relief in consumer fraud,
contract, and tort. The Plaintiff has set forth sufficiently detailed information in the
Complaint to warrant proceeding beyond dismissal on seven of the nine counts—
Counts I, II, III, V, VI, VII, and IX. Accordingly, the Motions to Dismiss (Docs. 27 and
31) are DENIED in part as to these counts, and are GRANTED in part as to Counts IV
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IT IS SO ORDERED.
DATE: October 6, 2017
s/ Michael J. Reagan
MICHAEL J. REAGAN
United States District Judge
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