Federal Court Dismisses Class Action Alleging Fraud Most Fowl
Last week District Court Judge Virginia Kendall gave Jim Perdue, the Chairman of Perdue Farms, a nice St. Patrick's Day present: she dismissed with prejudice a two-year-old putative class action that accused the poultry supplier of a fraud most fowl. See Nieto v. Perdue Farms Inc., 2010 WL 1031691 (N.D. Ill. Mar. 17, 2010).
Plaintiff, an Illinois resident, had alleged that Perdue, a Maryland corporation, was involved in an offal scheme to defraud consumers. Because so much of what Perdue sells is packaged chicken breasts, Plaintiff alleged that Perdue had a policy of taking leftover giblets from packaged parts processing and stuffing them into whole chickens, thereby increasing the weight of the chickens by as much as a quarter pound. Plaintiff alleged that Perdue's failure to disclose that there are extra giblets in whole chickens was a violation of the Illinois Consumer Fraud Act (or, alternatively, Maryland's Consumer Protection Act), as well as unjust enrichment.
Judge Kendall held that she properly had subject matter jurisdiction over the putative class action pursuant to CAFA. She then analyzed whether plaintiff's complaint met the requirements of Rule 9(b), holding that it did not. Plaintiff failed to identify who made any misrepresentation and when it was made. As the court explained: "Nieto does not allege in what capacity these [Perdue employees] were involved in the alleged fraud, nor does she allege that these people made any misrepresentations-- rather only that they are 'important' to the fraud." In addition, Plaintiff failed to provide any date for the misrepresentations; rather, she simply alledged that she bought her chicken on October 18, 2008. And she failed to allege any facts about Perdue's so-called giblet-stuffing policy; rather, she simply pled that she found extra giblets in one chicken. Accordingly, the court held that she failed to plead her fraud claim with particularity.
The court also dismissed the unjust enrichment claim, noting that in Illinois it is "not a self-sufficient claim, but must rely upon an underlying claim of fraud or breach of fiduciary duty." The court rejected the notion that a mere product seller is in a fiduciary duty with the purchaser, and it held that plaintiff's failure to meet the "pleading fraud with particularity requirement" required dismissal of the unjust enrichment claim as well.
Having thus cut to the heart of the matter, the court dismissed the case with prejudice, observing that plaintiff had received multiple opportunities to amend her complaint. Judge Kendall's opinion is a strong reminder that free-range allegations of fraud, without underlying facts, are insufficient to state a claim.
