New Yorkers always warn: "Don't buy a dog at a pet store! They all come from puppy mills, are sick, and were raised in deplorable conditions."
But I bought my dog at a mall pet store. I wasn't shopping for a dog nearly two years ago when Ted came into my life. But decisions have consequences, and the decision to kill time at a pet store while waiting for friends to arrive for dinner at a nearby restaurant resulted in me sharing my apartment with Mr. Ted E. Bear.
I didn't know much about where he came from. His papers said a farm in Missouri, my home state.
And frankly, I didn't care. Although I sincerely hoped he had not come from a puppy mill, he had a very chill personality and I could tell we would get along well together. If he had the croup and I had to pay for a vet visit, so be it. (Thankfully, he didn't.)
Given this experience, I read Martinelli v. Petland, Inc., 2010 WL 376921 (D. Ariz. Jan. 26, 2010) with great interest. In Martinelli, 32 plaintiffs brought a class action against Petland, alleging that they defrauded consumers by selling sick dogs that were raised in puppy mills while representing to the public that the puppies were "healthy," "the finest available," bred by "professional and hobby breeders who have years of experience in raising quality family pets," and "bred under safe and humane conditions by a reputable breeder with proper canine husbandry practices." Plaintiffs plead causes of action under RICO, state consumer protection statutes, and unjust enrichment.
The court in Martinelli dismissed all but two plaintiffs' RICO and consumer protection claims for failure to adequately plead causation. The complaint was chock full of allegedly fraudulent statements made by Petland and the breeder, The Hunte Corporation, on websites and in written materials. Conspicuously absent from the complaint, however, were allegations saying that these statements caused them to make their purchase. The court noted that "not a single Plaintiff has alleged that he or she ever visited Defendants' websites, received Defendants' written brochures, or relied on a written health certificate or warranty." Id. at *3.
The court held that "absent some allegation of reliance, Plaintiffs have not pled a 'direct and proximate causal relationship' between Plaintiffs' injuries and [the] purported fraudulent scheme." Id. The plaintiffs argued that causation should be inferred as a matter of common sense, as no one would want to purchase defective goods. But the court noted that even if plaintiffs had received the alleged misrepresentations, the court could not presume that they were material to the plaintiffs' decisions to purchase the animals:
[T]here is no single, common-sense reason for a puppy purchase. A person might buy a puppy because he falls in love with it in the store window, he has heard it will make a good guard dog, he likes the price, he is referred to the store by a friend, or he finds the store convenient. It is not necessarily true that every purchaser would base his or her decision on the fact that the puppy was "the finest available" or was bred by professional, hobby, or USDA-approved breeders -- key misrepresentations identified in the amended complaint.
In making their common-sense causation argument, Plaintiffs focus exclusively on the health of the puppies, asserting that "it is illogical that Plaintiffs would purchase their sickly or dying puppy mill puppy absent a misrepresentation as to its health. . . . A person who falls in love with a puppy in the store window might well purchase the puppy in the absence of any representation concerning its health. However unwise, some people may even buy a sick puppy in order to provide it a good home and nurse it back to health. It simply cannot be said that a representation concerning the puppy's health is obviously relied on in the same way that a consumer looking for car wax relies on the product's label as "car wax" or in the same way that a person paying for a tax service relies on the assumption that the service will be available. Plaintiffs conspicuously have failed to allege that they relied on representations concerning the puppies' health, and the Court cannot assume that such representations were the reason Plaintiffs purchased the puppies.
Id. at *4 (citations omitted).
The court dismissed the RICO claims of all plaintiffs except two -- Plaintiffs Moskow and Galatis -- who alleged reliance upon oral representations made by Petland (but not the breeder, Hunte). Plaintiff Galatis allegedly was specifically reassured by a Petland employee that the puppy was healthy and "(1) it had never been sick, (2) was up to date on his shots, (3) was not hypoglycemic, and (4) was lethargic and quiet only because he was stuck in a cage all day long." Id. at *5. Plaintiff Moskow asked whether his puppy was from a puppy mill and he was assured that it was not. The court held that these oral representations were part of the scheme alleged in the complaint, and it inferred that plaintiffs had relied upon them in making their purchase. Thus, the RICO claim survived for Plaintiffs Moskow and Galatis.
The court applied the same analysis to the Rule 9(b) challenge to the complaint and to the state consumer protection act claims. The generic allegations of the vast majority of the plaintiffs failed to sufficiently plead causation:
Plaintiffs assert that reliance is not an element of many state consumer protection claims. But plaintiffs do not dispute that causation is an essential element. Indeed, "whether it be termed an issue of reliance or an issue of proximate cause, an appropriate rule is that where the defendant is alleged to have made material misrepresentations or misstatements, there must be a cause and effect relationship between the defendant's acts and the plaintiff's injuries. Thus, regardless of whether reliance is a required element under state consumer protection statutes, Plaintiffs "must at least allege that they were exposed to the offensive conduct." Plaintiffs other than Moskow and Galatis have made no such allegation.
Id. at *9 (citations omitted).
The court thus dismissed the state consumer protection claims except for Plaintiff Moskow's claim under the Maine consumer protection act. (Plaintiff Galatis was from Massachusetts, but the Massachusetts act had not been pled in the amended complaint.) It also dismissed the unjust enrichment claims for all plaintiffs except Moskow and Galatis; because the two had adequately pled a fraud-based claim, the unjust enrichment claim could stand, the court held.
Finally, the court rejected the defendant's assertion of the economic loss doctrine as a defense to the claims. Petland argued that because plaintiffs allegedly received damaged goods, they therefore were asserting typical warranty claims that give rise to purely economic loss. The court disagreed, observing that plaintiffs were seeking damages for being fraudulently induced into entering into the sales contract.
Martinelli is an interesting decision because it parses through the possible motivations underlying the purchase decision and holds that, after already having been given one chance to amend the complaint, a plaintiff cannot plead consumer fraud or RICO without pleading a causal connection between the allegedly fraudulent statements and the reason he made the purchase. Because this is an essential element of each class member's claim, it seems clear that individual issues would predominate a trial, making class certification unlikely.
