INCUBADORA MEXICANA, SA DE CV et al v. ZOETIS, INC. et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE WENDY BEETLESTONE ON 9/16/15. 9/16/15 ENTERED AND COPIES E-MAILED.(mbh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
INCUBADORA MEXICANA, SA DE CV
and INCUBADORA RANCHO GRANDE
S.A. DE C.V.,
ZOETIS, INC. and PFIZER, INC.,
Plaintiffs are Mexican chicken breeders who have sued two American pharmaceutical
companies, Defendant Zoetis Inc. and Defendant Pfizer Inc., for claims based upon Defendant’s
alleged manufacture, sale, and distribution of a defective poultry vaccine, “Poulvac,” which
failed to prevent the infection of the Marek virus in Plaintiffs’ livestock. Before the Court is
Defendant Zoetis, Inc.’s and Pfizer Inc.’s Motion to Dismiss Plaintiffs’ Amended Complaint.
Defendants argue that under Federal Rule of Civil Procedure 12(b)(7), the Court should dismiss
Plaintiffs’ action in its entirety for failure to join indispensable parties as required by Rule 19.
Additionally, Defendants move to dismiss various claims under Rule 12(b)(6) for failing to meet
the pleading requirements under Rules 8 and 9.
The relevant facts of this case have already been set forth in the Court’s previous opinion
on Defendants’ Motion to Dismiss on the grounds of forum non-conveniens. That discussion is
herein incorporated by reference. See Incubadora Mexicana, SA de CV v. Zoetis, Inc., -- F.
Supp. 3d --, No. 15-216, 2015 WL 4598031, at *1 (E.D. Pa. July 31, 2015).
Defendants move to dismiss this action under Rule 12(b)(7) for failing to join Zoetis
Mexico, Defendant Zoetis, Inc.’s Mexican subsidiary, as well as two Mexican companies that
were not identified in Plaintiffs’ Amended Complaint, Distribuidora Agropecuaria de Sonora SA
de CV (“DAS”) and Insumos Agropecuarios Algran SA de CV (“Algran”), which Defendants
describe as the “distributors of vaccine and other animal health products” that contracted with
Plaintiffs for the sale of the defective Poulvac vaccine lots and that are “not subsidiaries or
corporate affiliates of Defendants.” Mot. at 3, Ex. B ¶ 6. In essence, Defendants argue that
DAS, Algran, and Zoetis Mexico (together, the “Mexican entities”) are necessary parties to the
litigation because: (1) the Mexican entities, not Defendants, actually entered into contracts with
Plaintiffs for the Poulvac vaccine; and (2) the Mexican entities, not Defendants, are responsible
for damaging the vaccine lots that that Plaintiffs ultimately received. Mot. at 10-11. Defendants
further argue that because this Court does not have personal jurisdiction over the Mexican
entities, and because those entities are indispensable, this case must be dismissed. Id. at 15.
To determine if a party is “indispensable” under Rules 12(b)(7) and 19, a court must
perform a two-step analysis. Gen. Refractories Co. v. First State Ins. Co., 500 F.3d 306, 312 (3d
Cir. 2007). First, the court must determine if the absent parties are “necessary” pursuant to Rule
19(a). Id. Rule 19(a)(1) provides:
A person who is subject to service of process and whose joinder will not deprive
the court of subject-matter jurisdiction must be joined as a party if: (A) in that
person’s absence, the court cannot accord complete relief among existing parties;
or (B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person’s absence may: (i) as a practical
matter impair or impede the person’s ability to protect the interest; or (ii) leave an
existing party subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest.
Subsections (a)(1)(A) and (a)(1)(B) are listed in the disjunctive. Gen. Refractories Co., 500 F.3d
at 312. If the parties are necessary under either subsection (a)(1)(A) or (a)(1)(B) but joinder is
not feasible, then the court must determine whether the parties are “indispensable” pursuant to
Rule 19(b), which provides factors for the Court to consider in determining “whether, in equity
and good conscience, the action should proceed among the existing parties or should be
dismissed.” Fed. R. Civ. Proc. Rule 19(b). However, if the court concludes in its Rule 19(a)
analysis that the absent parties are not necessary under either subsection (a)(1)(A) or (a)(1)(B),
the Court need not engage in any analysis under Rule 19(b). See Gen. Refractories Co., 500 F.3d
at 313 (“[A] holding that joinder is compulsory under Rule 19(a) is a necessary predicate to a
district court’s discretionary determination under Rule 19(b) that it must dismiss a case. . . .”).
In conducting a Rule 19 analysis the Court must accept as true the allegations in the
Amended Complaint and draw all reasonable inferences in the non-moving party’s favor. The
party moving for dismissal for failure to join an absent party “bears the burden of showing why
an absent party should be joined under Rule 19.” Disabled in Action of Pa. v. Se. Pa. Transp.
Auth., 635 F.3d 87, 97 (3d Cir. 2011).
Rule 19(a) Analysis
The question of whether the Mexican entities are “necessary” parties under subsection
(a)(1)(A) of Rule 19 turns on whether “complete relief” can be accorded to the parties in the
action in the absence of the Mexican entities. See Gen. Refractories Co., 500 F.3d at 313.
Defendants argue that Plaintiffs cannot obtain complete relief in this lawsuit absent the Mexican
entities because Plaintiffs’ “tort claims on their face implicate [those] entities.” Mot. at 11.
Among other things, Defendants note that the Amended Complaint alleges that Plaintiffs reached
out to Zoetis Mexico when the problem with their vaccine first surfaced, a “fair implication” of
which, Defendants contend, is that “Plaintiffs believed this non-party had a role in the alleged
product issues.” Id. Defendants reason that if the Mexican entities are found to have caused the
damage to Plaintiffs’ vaccine lots instead of Defendants, Plaintiffs will be left without a
complete remedy. In support of this conclusion, Defendants rely heavily upon the reasoning in
Whyham v. Piper Aircraft Corp., 96 F.R.D. 557 (M.D. Pa. 1982), which held that foreign third
parties were necessary because they, not the defendant, might be liable for the alleged damage.
In response, Plaintiffs argue that a Rule 19(a)(1)(A) inquiry is limited to whether the Court can
grant complete relief to the persons already parties to the action, regardless of whether the
plaintiff may have a better or separate claim against an absent party. Opp’n at 16 (citing Janney
Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399, 405-06 (3d Cir. 1993)). The Court
Because the goal of Rule 19 is to preclude multiple lawsuits on the same cause of action,
some courts, including Whyham, have interpreted the “complete relief” clause broadly,
commanding joinder whenever nonjoinder will fail to resolve all related claims of all potentially
interested persons. See Whyham, 96 F.R.D. at 560. Since Whyham, however, the Third Circuit
has conclusively held that “[c]ompleteness is determined on the basis of those persons who are
already parties, and not as between a party and the absent person whose joinder is sought.”
Angst v. Royal Maccabees Life Ins. Co., 77 F.3d 701, 705 (3d Cir. 1996); see also Janney, 11
F.3d at 405 (“A Rule 19(a)(1) inquiry is limited to whether the district court can grant complete
relief to the persons already parties to the action. The effect a decision may have on the absent
party is not material.”). Accordingly, a party is necessary only when nonjoinder precludes the
court from effecting relief not in some overall sense, but between current parties only. See
Angst, 77 F.3d at 705. Here, Plaintiffs and Defendants will effectively resolve their entire
controversy despite the Mexican entities’ absence. In other words, this action will determine
whether Defendants are liable to Plaintiffs for Plaintiffs’ loss. If Defendants are found liable,
Plaintiffs will be made whole. If Defendants are found not liable, Plaintiffs will have resolved
their controversy with Defendants. The fact that Plaintiffs have elected not to bring a separate
cause of action against the Mexican entities here – and therefore could not obtain relief from the
Mexican entities in this litigation should the facts show that they, and not Defendants, are liable
for Plaintiffs’ injuries – does not make the Mexican entities necessary parties. See Temple Univ.
Hosp., Inc. v. Grp. Health, Inc., 413 F. Supp. 2d 420, 429 (E.D. Pa. 2005) (“The mere theoretical
possibility that [plaintiff] may choose to sue [a third party] if the defendants prevail in this action
is not sufficient to demonstrate that [the third party] is necessary.”). Nor are the Mexican entities
necessary because Defendants could – should they be found liable – theoretically seek
contribution from those entities in a later lawsuit. See Freedom Int’l Trucks, Inc. v. Eagle
Enters., Inc., No. 97-4237, 1998 WL 695397, at *3 (E.D. Pa. Oct. 5, 1998) (citations omitted)
(“[I]t is well established that Rule 19 does not require the joinder of . . . persons against whom
the defendant may have a claim for contribution.”). Accordingly, the Court concludes that the
Mexican entities are not necessary parties under subsection (a)(1)(A).
Turning next to subsection (a)(1)(B) of Rule 19, the Court must consider whether the
Mexican entities “claim[ ] an interest relating to the subject of the action” and are “so situated
that disposing of the action without them may” either: (i) impair or impede the Mexican entities’
ability to protect their interests; or, (ii) subject an existing party “to a substantial risk of incurring
double, multiple or otherwise inconsistent obligations” because of the Mexican parties’ interest.
Rule 19(a)(1)(B). With respect to subsection (a)(1)(B)(i), Defendants have failed to show that
the absent Mexican entities in fact “claim an interest” in the subject of this litigation such that
their interests need protecting. On the record before the Court, none of the Mexican parties have
claimed any interest in the subject matter of this litigation. See Opp’n at 20. Defendants posit
that because the Mexican entities “may claim an interest relating to the subject matter of the
action,” Mot. at 13 (emphasis added), and that “findings [in this litigation] may weaken the
[Mexican] entities’ bargaining position and/or impair their ability to protect their interests in a
future litigation,” id. at 14 (emphasis added), they are necessary parties. Huber v. Taylor,
however, puts paid to that argument from possibility. In Huber, the Third Circuit held that an
unsubstantiated or speculative risk will not satisfy Rule 19(a)(1)(B) criteria, and the possibility
that an absent party’s rights will be harmed under subsection (a)(1)(B)(i) must be real. See
Huber v. Taylor, 532, F.3d 237, 250-51 (3d Cir. 2008). Accordingly, Defendants have failed to
show that the Mexican entities are necessary under subsection (a)(1)(B)(i) of Rule 19.
Similarly, Defendants have failed to establish that they would be subject to a substantial
risk of incurring double, multiple, or otherwise inconsistent obligations by reason of a claimed
interest under subsection (a)(1)(B)(ii) of the Rule. Defendants express concern that “[i]f
Plaintiffs lose this suit, or are unhappy with any damages awarded, they could presumably
attempt to try again [by] su[ing the Mexican] nonparties.” Mot. at 14. Defendants also argue
that if they are found liable in this action, they may pursue contribution claims against the
Mexican entities in Mexico, which may result in a different assessment of liability. Id. at 15. As
stated above, speculation as to what might happen in a potential future litigation does not satisfy
the standard. Absent pending litigation between Defendants and the absent parties, there is no
real risk of multiple or inconsistent obligations. See Diaz Contracting, Inc. v. Lisbon
Contractors, Inc., No. 88-9203, 1991 WL 53663, at *6 (E.D. Pa. Apr. 2, 1991). But even if such
a lawsuit were to occur, the fact that another court may assign liability differently from this
Court does not subject Defendant to multiple or inconsistent obligations within the meaning of
subsection (a)(1)(B)(ii). See, e.g., Janney, 11 F.3d at 411 (holding that the risk of “double
liability” does not include the situation where, if a defendant loses, he may, or is likely to, seek
recovery or indemnification from the absent party.”); Micheel v. Haralson, 586 F. Supp. 169,
171 (E.D. Pa. 1983) (“Rule 19(a)[(1)(B)(ii)] was intended to protect against inconsistent
obligations, not inconsistent adjudications” (emphasis added)). Accordingly, the Court finds
that the Mexican entities are not necessary parties under subsection (a)(1)(B)(ii).
Because joinder is not required under either Rule 19(a)(1)(A) or (B), the Court concludes
that the Mexican entities are not necessary parties to this action. Accordingly, it is unnecessary
for the Court to analyze whether the Mexican entities are indispensable under Rule 19(b). See
Janney, 11 F.3d at 413.
Rules 8 and 12(b)(6)
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss an
action for failure to state a claim upon which relief could be granted. Defendants move to
dismiss Plaintiffs’ Amended Complaint under the pleading standards of Federal Rule of Civil
Procedure 8(a). To survive a motion to dismiss under Rule 8(a), “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). “In light of Twombly, ‘it is no longer sufficient to allege mere elements of a cause
of action; instead a complaint must allege facts suggestive of [the proscribed conduct].’” Great W.
Mining & Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 177 (3d Cir. 2010) (quoting Phillips
v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). Indeed, Twombly held that Rule 8(a)
“contemplates the statement of circumstances, occurrences, and events in support of the claim
presented and does not authorize a pleader’s bare averments that he wants relief and is entitled to
it.” Twombly, 550 U.S. at 555 n.3. In other words, the “threshold requirement” of Rule 8(a) is
that the allegations in the complaint “possess enough heft to show that the pleader is entitled to
relief.” Id. at 557.
Breach of Warranty
Defendants assert that Plaintiffs’ breach of express warranty claim in Count Three fails
for two reasons. First, they argue that Plaintiffs have failed to state a claim for breach of express
warranty because they “have not pled the specific statement(s) they allege constituted the express
warranty, how the alleged warranty was made, by whom the alleged warranty was made, or
when the alleged warranty was made.” Mot. at 23. Second, Defendants argue that Plaintiffs’
breach of express warranty claim fails because Plaintiffs “have not pled facts sufficient to show
compliance with Pennsylvania’s pre-suit notice requirement,” which requires a buyer to provide
notification of the alleged product defect to the manufacturer prior to bringing suit on a breachof-warranty theory. Mot. at 24 (citing 13 Pa. Cons. Stat. § 2607(c)(1)).1
With respect to Defendant’s first argument, under the Pennsylvania Commercial Code,
“[a]ny 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.” 12 Pa. Cons. Stat. § 2313(a)(1). “To create an express
In deciding Defendants’ motion to dismiss on grounds of forum non conveniens, the Court analyzed whether
Mexican or Pennsylvania law would apply and concluded that under Federal Rule of Civil Procedure 44.1
Defendants had failed to satisfy their burden to articulate the applicable Mexican law and thus the law of the forum,
Pennsylvania, applies. See Incubadora Mexicana, 2015 WL 4598031, at *5. Defendants’ motion to dismiss at issue
here does not include any further explanation of Mexican law that would allow the Court to reach a different
warranty, the seller must expressly communicate the terms of the warranty to the buyer in such a
manner that the buyer understands those terms and accepts them.” Shuker v. Smith & Nephew
PLC, No. 13-6158, 2015 WL 1475368, at *12 (E.D. Pa. Mar. 31, 2015), motion to certify appeal
denied, No. 13-6158, 2015 WL 4770987 (E.D. Pa. Aug. 13, 2015) (citations omitted). A
promise becomes the basis of the bargain if the plaintiffs can prove “that [they] read, heard, saw
or knew of the advertisement containing the affirmation of fact or promise.” Parkinson v.
Guidant Corp., 315 F.Supp.2d 741, 452 (W.D. Pa. 2004) (quoting Cipollone v. Liggett Grp.,
Inc., 893 F.2d 541, 567 (3d Cir. 1990), rev’d on other grounds, 505 U.S. 504 (1992)). Absent a
demonstration that a promise or affirmative statement was made, how or by whom the promise
was made, or what was in fact promised, a claim for breach of express warranty is not
sufficiently pled. Gross v. Stryker Corp., 858 F. Supp. 2d 466, 501–02 (W.D. Pa. 2012).
In response to Defendants’ motion to dismiss, Plaintiffs point to the following allegations
in the Amended Complaint:
As a result of numerous visits by Defendant Pfizer’s, and then Defendant Zoetis’s
sales and marketing staff, Plaintiffs began ordering poultry vaccine from Defendants.
Plaintiffs’ accounts were handled by Jaime Gallardo and Victor Perez. Both Mr.
Gallardo and Mr. Perez were long time employees of Defendant Pfizer and are current
members of Defendant Zoetis’ senior sales and marketing staff.
During these visits, the sales and marketing staff of Defendant Pfizer and
Defendant Zoetis promised Plaintiffs that their line of Market vaccine was the most
effective on the market. Defendants’ agents and their promotional material promised
that their vaccines were manufactured, shipped and stored under optimal
conditions to insure [sic] maximum inoculation of their chickens.
As a result of Defendants’ statements and promotional material, Plaintiffs decided
to switch suppliers.
Of the statements identified above, the second bolded statement constitutes an express
warranty. Unlike the statement that Defendants’ Marek vaccine was “the most effective on the
market,” which is an exaggeration or overstatement “expressed in broad, vague, and
commendatory language,” Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993), the
statement in the promotional material concerning the manufacturing, shipping, and storing of the
Poulvac vaccine specifically describes a promise to monitor the product from the manufacturing
stage up until the delivery to customers to ensure that the vaccine is still effective. Accordingly,
the Amended Complaint alleges an express warranty as to ensuring that the conditions in which
the vaccine was stored and shipped would not compromise the efficacy of the vaccine.2
With respect to Defendants’ argument that Plaintiffs failed to comply with
Pennsylvania’s pre-suit notice requirement, Defendants argue that although the Amended
Complaint alleges that Plaintiffs notified Zoetis Mexico about the defective vaccine lots, “they
do not plead that they adequately and timely notified both Defendants.” Mot. at 24. A review of
the Amended Complaint clearly indicates that while Plaintiffs notified Defendant Zoetis about
the defective lots prior to bringing this lawsuit, they did not give the same notice to Defendant
Pfizer. Specifically, the Amended Complaint states that as a result of Plaintiffs’ discussion with
Zoetis Mexico, Plaintiffs were told that “the matter was being handled out of the legal
department of Defendant Zoetis’s corporate headquarters in New Jersey,” Am. Compl. ¶ 56, and
at Defendant Zoetis’ suggestion, the parties, including representatives from Zoetis’ U.S.-based
legal team, met in January 2015 at the International Production and Processing Expo in Atlanta,
where Plaintiffs were “advised . . . that this was a matter to be addressed with Zoetis in the
United States.” Id. ¶¶ 63-65. Moreover, the Amended Complaint alleges that the attendees in
Atlanta “assured Plaintiffs that Defendant Zoetis was aware of the problem with the vaccine that
Defendants also argue that the Amended Complaint does not include a factual basis to support Plaintiffs’
contention that Jaime Gallardo or Victor Perez, identified as Defendants’ “senior sales and marketing staff” are in
fact agents or representatives of Defendants. Mot. at 23-24. Because paragraph 33 of the Amended Complaint
alleges that the express warranty was made both by Defendants’ “agents and their promotional material,” the Court
need not analyze the nature of Mr. Gallardo and Mr. Perez’s employment relationship with Defendants at this time.
they sold to Plaintiffs and that they wanted to reestablish their commitment to their one time
partner.” Id. ¶ 65. These allegations sufficiently plead that Plaintiffs notified Defendant Zoetis’
legal representatives in the United States about their grievances and gave Defendant Zoetis an
opportunity to resolve the dispute regarding an alleged breach before Plaintiffs initiated this
lawsuit. However, no similar allegations were made with respect to Defendant Pfizer. “[T]he
purpose of notification under § 2607(c) is to allow the seller an opportunity to resolve the dispute
regarding an alleged breach before the buyer initiates a lawsuit.” Schmidt v. Ford Motor Co.,
972 F. Supp. 2d 712, 718 (E.D. Pa. 2013) (citation omitted). Plaintiffs have not alleged facts to
support an inference that they gave Defendant Pfizer an opportunity to resolve the dispute prior
to bringing this lawsuit. Accordingly, the Court shall deny Defendants’ motion to dismiss Count
Three with respect to Defendant Zoetis and grant the motion with respect to Defendant Pfizer.
Breach of Implied Warranty of Fitness for a Particular Purpose
Plaintiffs have brought three implied warranty claims. In Count Five, Plaintiffs assert a
“breach of implied warranty,” although the theory underlying this claim is unclear. See Am.
Compl. ¶¶ 95-102. In Count Six, Plaintiffs assert both a breach of implied warranty of
merchantability and a breach of implied warranty of fitness for a particular purpose. See id. ¶¶
103-107. Defendants’ motion to dismiss addresses only the implied warranty claims brought in
Count Six. See Mot. at 24. First, Defendants argue that Plaintiffs’ claims for breach of implied
warranty under Count Six fail generally because they do not comply with the notice requirements
of Section 2607(c). See id. For reasons identified in Section B.2 above, the Court finds that
Plaintiffs have alleged facts to support an inference that they complied with Section 2607(c) with
respect to Defendant Zoetis, but not Defendant Pfizer. Accordingly, Defendants’ motion to
dismiss Count Six shall be granted with respect to Defendant Pfizer for Plaintiffs’ failure to
comply with Section 2607(c).
The Court shall, however, deny Defendants’ motion to dismiss Plaintiffs’ Count Six
claim for breach of the implied warranty of fitness for a particular purpose. The implied
warranty of fitness for a particular purpose “arise[s] by operation of law and serve[s] to protect
buyers from loss where the goods purchased are below commercial standards or are unfit for the
buyer’s purpose.” Altronics of Bethlehem, Inc. v. Repco, Inc., 957 F.2d 1102, 1105 (3d Cir.
1992) (citation omitted). To establish a breach of the implied warranty of fitness for a particular
purpose, a plaintiff must show that the seller had reason to know of the buyer’s particular
purpose at the time of sale and that the buyer was relying on the seller’s expertise. Id. (emphasis
added). In that case, the goods are implicitly warranted to be fit for that particular purpose. Id.;
13 Pa. Cons. Stat. § 2315. Moreover, a plaintiff must show that the goods they purchased from
defendant were defective. Altronics, 957 F.2d at 1105.
The Amended Complaint alleges that Defendants marketed the Poulvac vaccine as one
that effectively prevented the infection of the Marek virus in chickens, and as a result of these
marketing efforts, Plaintiffs began to order their Marek vaccine from Defendants. Am. Compl.
¶¶ 33-34. Plaintiffs have therefore established that, for purposes of this motion, Defendants
knew their customers would use the Poulvac vaccine to inoculate chickens against the Marek
disease and relied on their expertise in selecting which vaccine to purchase. Plaintiffs have
further alleged that the Poulvac vaccine lots they received from Defendants in the summer of
2013 were defective because after administering the defective lots Plaintiffs began to experience
significant loss of livestock among their poultry stocks due to the Marek virus. Id. ¶¶ 53-54.
Thus, Plaintiffs have successfully pleaded a claim for breach of implied warranty of fitness for a
particular purpose against Defendants Zoetis.
Economic Loss Doctrine
Defendants argue that Plaintiffs’ tort-based claims in Count One (Negligence), Count
Two (Negligent Hiring and Supervision), Count Nine (Negligent Misrepresentation), and Count
Ten (Strict Liability) are barred by Pennsylvania’s economic loss doctrine. Mot. at 19.
Specifically, Defendants argue that because Plaintiffs have alleged that they had a “commercial
relationship” with Defendants, the parties’ respective duties and obligations are “essentially
contractual in nature” and therefore “defined by the terms of an alleged contract.”3 Id. at 20.
Plaintiffs respond that the applicability of the economic loss doctrine depends on whether the
alleged tortious conduct overlaps with the specific obligations set forth in the commercial
relationship between the parties, and because there is no written contract governing Plaintiffs’
relationship with Defendants, it is unclear at this stage of the litigation what the precise terms of
any relevant agreement entails. Opp’n at 24-25. Because the tort claims at issue may have a
legal foundation separate and apart from any underlying contractual relationship with
Defendants, Plaintiffs therefore urge the Court to refrain from deciding whether the economic
loss doctrine bars their tort claims until they have had an opportunity for discovery and can
determine the precise contours of the agreement between the parties. Id. at 25-26.
A review of the relevant case law indicates that Plaintiffs’ tort claims are barred by the
economic loss doctrine regardless of the precise contours of their commercial relationship with
Defendants. The “economic loss doctrine” prohibits tort damages when a product malfunctions
and the only damages alleged are economic loss resulting from disappointed commercial
Defendants also cite to paragraph 92 of the Amended Complaint, which they represent includes an allegation
about statements that formed the “basis of the contract for sale” between the parties. Mot. at 20. Defendants
misquote Plaintiff’s Amended Complaint, which did not include an explicit reference to a contract.
expectations. See Werwinski v. Ford Motor Co., 286 F.3d 661, 671 (3d Cir. 2002); REM Coal
Co. v. Clark Equipment Co., 563 A.2d 128, 129 (Pa. Super. 1989). Where the purchaser of a
product has sued the manufacturer, and the only loss that the purchaser alleges is economic loss
stemming from the product’s failure to operate as expected, “express and implied warranties
under contract law are best suited to compensate [the purchaser] for a loss in product value.”
Werwinski, 286 F.3d at 671 (citing East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858,
872-73 (1986)). Like Plaintiffs here, the plaintiff in Werwinski alleged that a particular product
was defective and that the manufacturer had known of the defect but continued to sell the
product with the defective part. The question in Werwinski was whether tort damages, such as
punitive damages, should be awardable if the plaintiff could prove fraudulent breach of warranty.
Holding that tort damages were not available even in the case of intentional fraud, the Third
Circuit noted that the manufacturer’s state of mind is largely irrelevant because the economic
damages are the same whether the warranty was breached innocently, negligently, maliciously or
fraudulently. See id. at 679-80. Thus, the Third Circuit concluded, “when loss of the benefit of a
bargain is the plaintiff’s sole loss, . . . the undesirable consequences of affording a tort remedy in
addition to a contract-based recovery [are] sufficient to outweigh the limited interest of the
plaintiff in having relief beyond that provided by warranty claims.” Id.
Here, the plain language of the Amended Complaint confirms that Plaintiffs’ negligence,
negligent hiring, negligent misrepresentation, and strict liability claims arise from economic loss
they suffered because the product they purchased from Defendants failed to operate as
warranted. The Amended Complaint alleges losses to livestock, lost profits, loss of reputation,
loss of business opportunity, and damage to goodwill, see id. ¶¶ 54-58, all of which constitute
economic losses resulting from disappointed commercial expectations. See, e.g., East River, 476
U.S. at 871 (noting that when a product malfunctions, “the commercial user stands to lose the
value of the product, risks the displeasure of its customers who find that the product does not
meet their needs, or . . . experiences increased costs in performing a service”); Lucker Mfg. v.
Milwaukee Steel Foundry, 777 F. Supp. 413, 416 (E.D. Pa. 1991) (interpreting East River to
prohibit tort damages resulting from loss of goodwill and/or reputation); see also D’Huyvetter v.
A.O. Smith Harvestore Prods., 164 N.W.2d 587, 595 (Wis. Ct. App. 1990) (holding that recovery
in tort for damages to plaintiff’s livestock was barred by economic loss doctrine where plaintiff
purchased a faulty feeding system from defendant and the compromised feed caused harm to the
plaintiff’s livestock). As addressed above, Plaintiffs have adequately alleged breach of warranty
claims against Defendants for harm resulting from the allegedly defective products. Should
these claims succeed, Plaintiffs will be entitled to damages that would place them in the position
they would have been in had the vaccine functioned properly. Plaintiffs’ argument that it would
be premature to dismiss their tort claims without knowing the exact terms of the contract is
therefore unpersuasive. Whatever Plaintiffs’ precise relationship with Defendants may have
been, they have only alleged economic losses resulting from their receipt of the defective vaccine
lots. Accordingly, the Court shall grant Defendants’ motion to dismiss Counts One, Two, Nine,
and Ten of the Amended Complaint.
Turning next to Plaintiffs’ claim for unjust enrichment, Defendants argue that Plaintiffs
have failed to satisfy the pleading requirements for unjust enrichment in Count Seven because:
(1) the defective vaccine lots may have become ineffective after they left Defendants’ hands, and
(2) Plaintiffs did not allege that they made any direct payments to either Defendant. Mot. at 2627.
Viewing the allegations in the light most favorable to the plaintiffs, the Amended
Complaint sufficiently states a cause of action for unjust enrichment. Plaintiffs need not have
purchased the vaccine lots at issue directly from Defendants to have “conferred benefits on the
defendant.” See Baker v. Family Credit Counseling Corp., 440 F. Supp. 2d 392, 420 (E.D. Pa.
2006); D.A. Hill Co. v. CleveTrust Realty Investors, 573 A.2d 1005, 1009 (Pa. 1990); Com. ex
rel. Pappert v. Tap Pharm. Prods., Inc., 885 A.2d 1127, 1137-38 (Pa. Commw. 2005). Although
discovery may reveal that, in fact, Plaintiffs do not have an unjust enrichment claim, it would be
premature at this juncture to so conclude. Accordingly, the Court shall deny Defendants’ motion
to dismiss Plaintiffs’ unjust enrichment claim.
In Count Eight, Plaintiffs allege that Defendants are liable for fraud because they “knew
at the time they contracted to sell Poulvac vaccine to Plaintiffs, or at some critical point in time
before Plaintiffs actually used the subject Poulvac vaccine on their livestock, that the lot or lots
from which the shipment had come was defective and would not prevent Marek’s virus.” Am.
Compl. ¶ 124. Defendants argue that Plaintiffs’ fraud claim should be dismissed because the
Amended Complaint does not plead fraud with sufficient particularity as required under Rule
9(b). Mot. at 24. Rule 9(b) provides: “In alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and
other conditions of a person’s mind may be alleged generally.” This heightened pleading
standard requires “plaintiffs to plead with particularity the ‘circumstances’ of the alleged fraud in
order to place the defendants on notice of the precise misconduct with which they are charged,
and to safeguard defendants against spurious charges of immoral and fraudulent behavior.”
Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984). Stated
differently, “Rule 9(b) requires, at a minimum, that plaintiffs support their allegations of . . .
fraud with all of the essential background that would accompany the first paragraph of any
newspaper story[,] that is, the who, what, when, where and how of the events at issue.” In re
Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 217 (3d Cir. 2002) (citation and internal
quotation marks omitted). Defendants here argue that Plaintiffs fail to allege when the parties
entered into a contract, when they received the allegedly defective products, or when the
Plaintiffs in fact administered those lots. Mot. at 25.
An analysis of the Amended Complaint supports Defendants’ position. In order to
adequately plead fraud under Pennsylvania law, Plaintiffs had to allege, inter alia, that: (1)
Defendants knew their vaccine was defective at the time Plaintiffs’ placed their order in 2013;
and, (2) Defendants made a material misrepresentation about the quality of their vaccine with the
intent to mislead Plaintiffs into making the purchase. See Freeman v. Pittsburgh Glass Works,
LLC, 709 F.3d 240, 256-57 (3d Cir. 2013). Although the Amended Complaint alleges in a
conclusory manner that Defendants “knew or should have known” that the 2013-2014 lots were
defective, id. ¶ 49, it does not include any factual allegations from which the Court could
conclude that Defendants in fact knew in the summer of 2013 that the lots they were selling to
Plaintiffs were defective. Nor does the Amended Complaint allege that Defendants made any
misstatements concerning the efficacy of their product during the relevant time period, i.e., the
summer of 2013, when Plaintiffs made their purchase of the allegedly defective lots. In fact,
Plaintiffs specifically allege that Defendants only began to investigate the claims that their
vaccine was ineffective “[s]ometime in January of 2014,” approximately six months after
Plaintiffs made their order for the defective lots at issue.” Id. ¶ 114. It is no surprise, therefore,
that in their responsive memorandum Plaintiffs point to no statements in the Amended
Complaint that, as required under Rule 9(b), could put Defendants on notice of who made
fraudulent statements to Plaintiffs about the defective Poulvac vaccine lots, what those
statements were, when those statements were made, where those statements were made, and how
those statements were misleading at the time they were made. Instead, Plaintiffs merely assert
that “[a]ccording to Plaintiffs’ Amended Complaint, Moving Defendants through its [sic] sales
and marketing staff . . . decided to continue to sell defective and ineffective lots of poultry
vaccine in the Mexican market, including to Plaintiffs” and that “[b]y continuing to actively sell
vaccine known to be defective, Moving Defendants clearly engaged in fraud and
misrepresentation.” Opp’n at 33-34. These statements do not satisfy the particularity
requirements under Rule 9(b) and, accordingly, the Court shall dismiss Plaintiffs’ fraud claim.4
Because Defendants raised the Rule 9(b) issue in their motion to dismiss the original complaint,
and Plaintiffs had an opportunity to, but did not, re-plead their fraud claim with particularity in
their Amended Complaint, the Court dismisses Count Eight with prejudice. 5
For the reasons stated herein, the motions to dismiss Count One (negligence), Count Two
(negligent hiring and supervision), Count Eight (fraud), Count Nine (negligent
misrepresentation), and Count Ten (strict liability) are granted; the motions to dismiss Count
Three (breach of express warranty) and Count Six (breach of implied warranties of
merchantability and/or fitness for a particular purpose) are granted with respect to Defendant
Defendants move to dismiss Plaintiffs’ claims for punitive damages. Mot. at 26. Because Plaintiffs’ request
punitive damages is tied to their fraud claim, which the Court has dismissed, the Court need not analyze separately
whether Plaintiffs have alleged facts sufficient to substantiate a demand for punitive damages.
Defendants do not argue that Plaintiffs’ fraud claims should be dismissed pursuant to the economic loss
doctrine. However, the Court notes that Plaintiffs’ fraud claim would also be barred by that doctrine because
Plaintiffs have pled only economic losses resulting from their purchase of the Poulvac vaccine and under Werwinski
there is no exception for intentional tort claims under Pennsylvania law. Werwinski, 286 F.3d at 681. For this
reason, the Court concludes that any attempt to amend the complaint would be futile.
Pfizer and denied with respect to Defendant Zoetis; and the motion to dismiss Count Seven
(unjust enrichment) is denied. An order shall follow consistent with this Opinion.
BY THE COURT:
/S/WENDY BEETLESTONE, J.
WENDY BEETLESTONE, J.
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