Franklin Livestock, Inc. et al v. Boehringer Ingelheim Vetmedica, Inc.

Filing 37

ORDER denying as moot 29 Motion to Stay, granting 34 Motion for Extension of Time to Complete Discovery and denying 20 Motion to Dismiss. Signed by District Judge Terrence W. Boyle on 6/22/2015. (Marsh, K)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:15-CV-63-BO

FRANKLIN LIVESTOCK, INC., J AND K
CATTLE, KEVIN VAN BEEK, AND JAY
LELOUX,
Plaintiffs,
V.

BOEHRINGER INGELHEIM VETMEDICA,
INC.,
Defendant.

)
)
)
)
)
)
)
)
)

ORDER

This matter is before the Court on defendant Boehringer Ingelheim Vetmedica Inc.'s
motion to dismiss pursuant to Rule 12(b)( 6) and 12(c) of the Federal Rules of Civil Procedure.
[DE 20]. Plaintiff responded, and a hearing was held on June 16, 2015, in Edenton, North
Carolina. Also before the Court are defendant's motion to stay discovery [DE 29] and motion for
extension of time to complete discovery [DE 34], which are ripe for ruling. For the reasons stated
herein, defendant's motion to dismiss is denied, the motion to stay discovery is denied as moot,
and the motion for extension of time to complete discovery is granted.
BACKGROUND
Plaintiffs are commercial cattle farmers who owned cattle that were conditioned on a
farm in Franklin County, North Carolina. Beginning in 2010 and through 2013, plaintiffs
purchased vaccines which were designed and manufactured by defendant Boehringer Ingelheim
Vetmedica Inc. (Boehringer). Each of the vaccines is licensed by the United States Department
of Agriculture (USDA) and tested by the Animal and Plant Health Inspection Service (APHIS),
an agency within the USDA. After administering the vaccines to their cattle, plaintiffs cattle
suffered symptoms of endotoxemia, leading to death or severely reduced performance. Plaintiffs

ultimately lost thousands of cattle and diminished value of thousands of additional cattle.
Plaintiffs allege that high levels of endotoxins within the vaccines caused these injuries.
Plaintiffs filed suit in Franklin County Superior Court, alleging breach of express and
implied warranties, negligent design and manufacture, failure to warn, failure to comply with the
Viruses, Serums, Toxins, and Anti-Toxins Act (VSTAA), codified at 21 U.S.C. §§ 151-159, and
unfair and deceptive trade practices. Boehringer removed the case to this Court and filed the
instant motion to dismiss. 1
DISCUSSION
A Rule 12(b)(6) motion to dismiss for failure to state a claim for which relief can be
granted challenges the legal sufficiency of a plaintiffs complaint. Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009). When ruling on the motion, the court "must accept as true all of
the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007)
(citing Bell At!. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Although complete and
detailed factual allegations are not required, "a plaintiffs obligation to provide the 'grounds' of
his 'entitle[ment] to relief requires more than labels and conclusions ... ."Twombly, 550 U.S. at
555 (citations omitted). "Threadbare recitals ofthe elements of a cause of action, supported by
mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing

Twombly, 550 U.S. at 555). Similarly, a court need not accept as true a plaintiffs "unwarranted
inferences, unreasonable conclusions, or arguments." E. Shore Mkts., Inc., v. JD. Assocs. Ltd.,
213 F.3d 175, 180 (4th Cir. 2000).

1

Defendant also asks for summary judgment pursuant to Rule 56 ofthe Federal Rules of Civil
Procedure. Defendant argues that Rule 56 governs if the Court considers matters outside the
pleadings on a Rule 12(b)(6) motion. While defendant submitted an affidavit [DE 22], the Court
declines to consider the affidavit at this time, and will instead allow defendant to present a fully
briefed motion for summary judgment following the close of discovery.
2

I.

Preemption
Defendant contends that each of plaintiffs' state law claims is preempted by APHIS's

regulations. The affirmative defense of preemption may be resolved on a motion to dismiss,
provided the facts necessary to determine the issue clearly appear on the face of the complaint.

Goodman v. Praxair, Inc., 494 F.3d 458 (4th Cir. 2007) (en bane); see also Great-W Life &
Annuity Ins. Co. v. Irifo. Sys. & Networks Corp., 523 F.3d 266, 272 (4th Cir. 2008).
The Supremacy Clause of the United States Constitution "invalidates state laws that
interfere with, or are contrary to, federal law." Hillsborough County v. Automated Med Labs.,

Inc., 471 U.S. 707, 712 (1985) (internal quotation omitted). Federal law may preempt state law
by expressly declaring Congress' intent to do so. Cox v. Shalala, 112 F.3d 151, 154 (4th Cir.
1997). It may "occupy the field" by regulating so pervasively that there is no room left for the
states to supplement federal law." Id (citing Fid Fed Sav. & Loan Ass 'n v. de la Cuesta, 458
U.S. 141, 153 (1982). State law also is preempted "to the extent that it actually conflicts with
federal law." Id (citing Pac. Gas & Elec. Co. v. State Energy Res. Conservation and Dev.

Comm 'n, 461 U.S. 190,204 (1983). "Federal regulations have no less pre-emptive effect than
federal statutes." de la Cuesta, 458 U.S. at 153. Nevertheless, it is the intent of Congress, rather
than the agency's interpretation of whether its regulations preempt state law, that controls. Wyeth

v. Levine, 555 U.S. 555, 576 (2009).
"In all preemption cases, and particularly in those in which Congress has legislated
in a field which the States have traditionally occupied,' ... we 'start with the assumption that the
historic police powers of the States were not to be superseded by the Federal Act unless that was
the clear and manifest purpose of Congress."' Id at 565 quoting Medtronic Inc. v. Lohr, 518
U.S. 470,485 (1996). This has come to be known as the presumption against preemption. See,

3

e,g., Nat'! City Bank of Ind. v. Turnbaugh, 463 F.3d 325, 330 (4th Cir. 2006). It applies to both
federal laws, Riegel v. Medtronic, Inc., 552 U.S. 312,335 (2008), and asserted agency
preemption, Automatic Me d. Labs., 4 71 U.S at 715-16, but is "stronger against preemption of
state remedies, like tort recoveries, when no federal remedy exists," College Loan Corp. v. SLM
Corp., 396 F.3d 588, 597 (4th Cir. 2005). See also Abbot v. Am. Cyanamid Co., 844 F.2d 1108,
1112 (4th Cir. 1988).

It is clear that Congress intended to create nationally uniform standards for the
preparation and sale of animal vaccines via the VSTAA. See, e.g., S. Rep. No. 145 at 339. The
VST AA, however, does not expressly include any intent to preempt state law. Boehringer relies
heavily on the fact that APHIS has expressly preempted all state remedies. After the 1985
amendments to the VSTAA which broadened its scope, APHIS declared that "[s]tates are not
free to impose requirements which are different from, or in addition to, those imposed by USDA
regarding the safety, efficacy, potency, or purity of a product. Similarly, labeling requirements
which are different from or in addition to those in the regulations under the Act may not be
imposed by the States." APHIS Final Rule, 57 Fed. Reg. 38,758-38,759 (Aug. 27, 1992).
Boehringer argues that express preemption in the agency context involves a simple
analysis ofwhether the agency intended to preempt state law and whether the act of preemption
is within the scope of authority delegated to the agency by Congress. de Ia Cuesta, 458 U.S. at
154. It is true that following the Supreme Court's decision in de Ia Cuesta, a number of courts
held that APHIS preempted state law in the field of contamination and dangerousness of animal
vaccines. See, e.g., Lynnbrook Farms v. SmithKline Beecham Corp., 79 F.3d 620, 625-26 (7th
Cir. 1996); Symens v. SmithKline Beecham Corp., 152 F .3d 1050 (8th Cir. 1998); Cooper v.

4

United Vaccines, Inc., 117 F.Supp.2d 864 (E.D. Wis. 2000). All of these cases, however, were
decided before the Supreme Court's decision in Wyeth v. Levine, 555 U.S. 555 (2009).

Wyeth dealt with the Food and Drug Administration's approval of pharmaceutical drug
labelling. The preamble to a 2006 FDA regulation governing prescription drug labels asserted
that FDA approval oflabeling preempted conflicting or contrary state law. !d. at 575. The Wyeth
Court concluded that reviewing courts should not defer "to an agency's conclusion that state law
is preempted," but instead should conduct their own conflict determination, "relying on the
substance of federal law and not on agency proclamations of pre-emption." !d. at 576. The
weight accorded to an agency's explanation of state law's impact on the federal scheme depends
on its "thoroughness, consistency, and persuasiveness." !d. at 576-77. The Court ultimately
determined that the FDA's proclamation did not merit deference because there was no effort by
the agency to create a record showing how it had accommodated conflicting policies, that tort
enforcement of non-federal standards burdened commerce, or that imposing damages on a
manufacturer was incompatible with the regulatory scheme. !d. at 577-79.
Though Wyeth did not explicitly overrule de la Cuesta, the two decisions espouse
opposing principles. While de Ia Cuesta states that an agency's intent to preempt is partially
determinative and necessary to a preemption determination, Wyeth holds that an agency's intent
to preempt is not sufficient. The trend appears to be away from broad presumptions of
preemption. See, e.g., Weyth, 555 U.S. at 576; Medtronic v. Lohr, 518 U.S. 470 (1996). The
Court, therefore, will follow Wyeth, as the more recent case addressing express preemption. 2

2

It appears that the only court to consider whether APHIS preempts state law remedies following
Wyeth is the District of Wyoming. Wyoming Premium Farms, LLC v. Pfizer, Inc., No. 11-CV282-J, 2013 WL 1796965 (D.Wy. Apr. 29, 2013). That court distinguished Wyeth, finding that
APHIS's "regulatory scheme ... is comprehensive and thorough, has been consistent over an
extensive period of time, and may be considered persuasive." !d. at 7n.2 The Court did not,
5

The VSTAA provides no federal remedy, thus the presumption against preemption is
strong. This case does not deal with a specific regulation that conflicts with state law, but instead
with an agency's proclamation of preemption. The VSTAA, however, does not expressly
prohibit state law actions, nor did APHIS explicitly state that it intended to abolish state law
remedies in the field of animal vaccine product liability. In fact, when publishing its preemption
declaration in 1992, APHIS left in place the labeling regulation prohibiting manufacturers from
publishing "disclaimers of merchantability, fitness for the purpose offered, or responsibility for
the product," 9 C.F.R. § 112.29, which is an "express recognition that common law remedies are
not entirely preempted," Symens, 152 F.3d at 1055. Although there are significant difference
between the FDCA at issue in Wyeth and the VST AA, Wyeth counsels against construing
APHIS's preemption proclamation so broadly as to leave plaintiff with no remedy in the instant
case. The "purpose of the [VSTAA] is to assure that biologics used in the treatment of animals
are pure, safe, potent, and efficacious." 57 Fed. Reg. 38758. "If [the Act] is interpreted to
completely insulate manufacturers from liability, it cannot achieve its purposes because
manufacturers would have no incentive to maintain quality control after USDA approval."
Gresham v. Boehringer Ingelheim Animal Health, Inc., No. 1:95-CV-3376-0DE, 1996 WL
751126, *3 (D.S.D. Oct. 7, 1997).
Despite the complete primer on the VSTAA and APHIS set forth in the memorandum in
support of its motion to dismiss, Boehringer did not undertake the Wyeth analysis. It did not
discuss whether APHIS analyzed whether tort enforcement of state standards burdened
commerce or whether imposing damages on a manufacturer was incompatible with the
regulatory scheme. Boehringer does not argue that the USDA discussed any way in which the

however, address whether APHIS considered the impact of preemption on state common-law
remedies, so this Court gives that decision little weight.
6

existence of state remedies interfered with the agency's regulation, or an instance where the
statutory goal of uniformity was placed at risk by state common-law actions. Nor has Boehringer
explained whether or how each of plaintiffs claims directly conflicts with a specific federal
regulation. In sum, Boehringer merely relies upon the agency's proclamation that its regulations
preempt state law. In light of Wyeth, this is insufficient, and as Boehringer has not engaged in
any further analysis that would lead this Court to conclude that plaintiffs claims are preempted,
the Court denies the motion to dismiss.
II.

Failure to Comply
Defendant argues that the VSTAA does not include a private cause of action, thus

plaintiffs failure to comply claim should be dismissed. Even those cases which have afforded
APHIS's regulations broad preemptive effect, however, have held that "state tort claims are
available when APHIS regulatory standards are violated or disregarded." Lynnbrook, 79 F.3d at
629-30; Symens, 152 F.3d at 1055. It is well settled that plaintiffs may bring state law claims that
"parallel" federal requirements. Medtronic, 518 U.S. at 495; see also College Loan Corp. v. SLM
Corp., 396 F.3d 588, 598-99 (4th Cir. 2005). Plaintiffs state tort claim of per se negligence
liability falls directly within this line of cases. Therefore, Boehringer's motion to dismiss
plaintiffs failure to comply claim is denied.
III.

Economic Loss Rule
Boehringer also argues that the negligence and UTDPA claims are barred by the

economic loss rule. Though the rule "prohibits recovery for purely economic loss in tort," a
claimant may recover in tort "for damages to property other than the product itself, if the losses
are attributable to the defective product." Lord v. Customized Consulting Specialty, Inc., 643
S.E.2d 28, 30 (N.C. Ct. App. 2007). To pursue a tort claim stemming from a contract, a plaintiff

7

must allege both damage to property other than the product and "a duty owed him by [a]
defendant separate and distinct from any duty owed under a contract." Crop Prod Servs. Inc. v.

Ormond, No. 4:11-CV-41-D, 2012 WL 147950 at *11 (E.D.N.C. Jan. 18, 2012) (internal
quotation omitted). Courts apply this exception to the economic loss rule unless the "injury was
or should have been reasonably contemplated by the parties to the contract." Palmetto Linen

Serv. v. UNX, Inc., 205 F.3d 126, 130 (4th Cir. 2000).
Here, plaintiffs allege that they contracted for the purchase of vaccines and that the
property damaged was cattle. Their claims that Boehringer violated applicable regulation and
industry standards and that the vaccines contained dangerously high levels of endotoxins allege
duties separate and distinct from the terms of the contract. Defendant argues that this Court
should rely on a case out of the Western District of Michigan that it believes demonstrates that
minks' adverse reactions to vaccines was foreseeable. Theuerkaufv. United Vaccines, 821
F.Supp 1238, 1242 (W.D.Mich. 1993). The Court is not persuaded that adverse reactions
separate and apart from symptoms of the disease the vaccine is intended to prevent are
foreseeable. Given that Theurkaufis non-precedential, the Court finds that plaintiff has stated a
plausible claim for relief.
IV.

Other Motions
In April2015, defendant asked the Court to stay discovery until the Court issued its

ruling on the motion to dismiss. [DE 29]. Because this order moots that motion, defendant's
motion [DE 29] is denied as moot. Defendant recently requested that this Court extend the
discovery response deadline to thirty days after the date of this Order, essentially asking the
Court to effectuate the stay requested in its prior motion. [DE 35]. Plaintiff does not oppose the
request. Pursuant to Rule 26(c), the court may exercise its discretion to issue a stay of discovery

8

pending resolution of dispositive motions. See, e.g., Tilley v. United States, 270 F.Supp.2d 731,
734 (M.D.N.C. 2003), aff'd, 85 F. App'x 333 (4th Cir. 2004), cert. denied, 543 U.S. 8198
(2004); Thigpen v. United States, 800 F.2d 393,396-97 (4th Cir. 1986), overruled on other
grounds by Sheridan v. United States, 487 U.S. 392 (1988). In the interest of efficiency,
defendant's motion is granted and the discovery response deadline is extended to thirty days after
the date of this Order.
CONCLUSION
For the foregoing reasons, defendant's motion to dismiss [DE 20] is DENIED.
Defendant's motion to stay discovery [DE 29] is DENIED AS MOOT. Defendant's motion to
extend the discovery deadline [DE 34] is GRANTED, and the deadline for defendant to respond
to plaintiffs discovery requests is modified to require defendant to respond within 30 days of the
date of this order.

SO ORDERED, this

_ql_ day of June, 2015.

9