On Today's Menu: 3 Dismissals of Fraud Suits Involving Food
In order to help you meet your recommended daily allowance of defense-related information, today I'm serving up three heaping helpings of cases where consumer fraud claims involving food were dismissed on the pleadings.
In Ciszewski v. Denny's Corp., Case No. 09 C 5355, Slip op. (N.D. Ill. Apr. 7, 2010) (subscription to Law360 required), plaintiff had brought a class action against Denny's, claiming that the restaurant's classic dishes like "Moons over My Hammy" (a personal favorite of mine), "SuperBird Sandwich," and the "Meat Lover's Scramble" contain from double to almost five times the CDC's recommended daily sodium intake of 1,500 milligrams per day. Plaintiff has high blood pressure, for which he must take medication and limit his salt intake. He alleged that Denny's knew the amounts of sodium in its dishes were excessive and that it concealed the sodium levels because consumers would not eat the dishes otherwise.
Plaintiff sued under Illinois's Consumer Fraud Act ("ICFA"). Denny's first argued that plaintiffs' claims were precluded by ICFA's provision that "full compliance with applicable disclosure requirements is a defense . . . to a claim of fraud based on failure to make additional disclosures." The court rejected this argument, because the defendant was arguing that it did not have to make any disclosures under the federal Nutritional Labeling and Education Act because its food was served in restaurants. The court reasoned: "Denny's argument amounts to a contention that because federal disclosure requirements do not apply, the ICFA cannot impose a disclosure requirement. Nothing in the ICFA or the law under it supports this contention." Slip op. at 4. The court also rejected Denny's argument that plaintiff failed to allege intent with sufficient particularity.
But the court accepted Denny's argument that plaintiff failed to meet the Rule 9(b) requirements applying to allegations of deception. The court explained that plaintiff's complaint relied solely upon deceptive omissions, and yet it failed to allege with any particularity any communication from Denny's that omitted the allegedly crucial information. Citing a case previously noted in this blog, the court recognized that "[a] consumer cannot maintain an action under the Illinois Consumer Fraud Act when the plaintiff does not receive, directly or indirectly, communication or advertising from the defendant.'" Slip op. at 6 (quoting DeBouse v. Bayer AG, 235 Ill. 2d 544, 550 (2009)). The court explained:
In short, a deceptive communication is a critical element of an ICFA deception claim. Because [plaintiff] identifies no communication that he received that was generated by Denny's, he has failed to plead the circumstances constituting the fraud with the particularity required by Rule 9(b).
Slip op. at 6-7.
The court also dismissed the unjust enrichment claim, holding that it could not be maintained absent fraud. It also dismissed plaintiff's implied contract claim, which was premised on an implied duty to provide meals that are safe for human consumption. The court explained that "[Plaintiff] does not allege, however, that any given Denny's meal is unsafe in and of itself. To put it another way, he does not allege that exceeding the CDC-recommended maximum for a day, or several days, in a single meal is by itself unsafe." The court also dismissed plaintiff's request for an accounting, as it must be grounded on fraud under Illinois law.
Our second special serving today is Shepard v. Applebee's Int'l, Inc. (D. Kan. Apr. 7, 2010) (subscription to Law360 required). In Shepard, plaintiff had sued Applebee's and Weight Watchers, among others, because the calorie and nutritional information on the menus were allegedly false. The trial court previously had dismissed the state-law claims brought under the Kansas Consumer Protection Act, civil conspiracy, and unjust enrichment, holding that they were preempted to the extent they failed to incorporate the federal standards of the Nutrition Labeling and Education Act -- namely, the requirement that the alleged fraudulent representations lacked a "reasonable basis." The court had, however, allowed certain RICO claims to stand. Defendants then brought a motion for judgment on the pleadings directed at the remaining RICO claims.
Defendants argued in support of their motion for judgment on the pleadings that plaintiffs could not establish a predicate act under RICO unless they could meet the NLEA standard, i.e., unless they could allege that the representations had no "reasonable basis" under NELA. Plaintiffs responded that although the NLEA might preempt state law claims, it could not "preempt" federal claims like RICO.
In analyzing the issue, the court determined that in the Tenth Circuit, when looking to what constitutes a predicate act of wire or mail fraud, the courts look to underlying state law to determine what constitutes fraud. Slip op. at 5. The court previously had held that the NLEA preempts all state law claims that impose a nutrition labeling standard higher than the NLEA's "reasonable basis" standard. Because that same standard must govern the determination of whether there has been a predicate RICO violation, the court concluded that judgment on the pleadings was appropriate because plaintiffs had not pled a violation of the NLEA's "reasonable basis" standard.
The third case in our trio of food decisions is: O'Donnell v. Kraft Foods, Inc., Civ. A. No. 09-4448, Slip op. (D.N.J. Mar. 18, 2010). In O'Donnell, plaintiffs brought suit under New Jersey's Consumer Fraud Act, alleging that hot dogs and other processed meats cause cancer and demanding that a special cancer warning be put on the product.
The court failed to reach the defendant's primary jurisdiction and federal preemption arguments. For the court, it was enough that this was a product liability action masquerading in consumer fraud attire. The New Jersey Supreme Court has been clear that where the subject of the case is really product liability, the state's Product Liability Act -- rather than its Consumer Fraud Act -- applies. Slip op. at 4-6. Plaintiff's case -- although expertly pled as a claim for economic harm -- was clearly one based on physical harm that allegedly could result from hot dogs. Accordingly, the case was really a product liability case and, as such, was properly dismissed.
These three cases today demonstrate the range of creativity that plaintiffs are using to attempt to impose liability on the food industry, as well as the clear-eyed view that courts from around the country are taking of such tactics.
