MEMORANDUM
I. INTRODUCTION
Before the court is Defendant United States of America’s Motion to Dismiss Plaintiff Moyer Packing Company’s Complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1)
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of the Federal Rules of Civil Procedure and Plaintiffs Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiffs claims arise from a government inspector’s alleged release into production of a beef carcass, the tissue of which had been sent for testing, before the test results were obtained and returned. The carcass was permitted to be commingled and processed. The test results showed the carcass to be contaminated. Promptly thereafter, all meat that was so processed was successfully recalled from public sale and destroyed along with
Plaintiff brings suit pursuant to the Federal Tort Claims Act (“FTCA”), 28 U.S.C. § 1346(b), alleging negligent inspection (Count I), negligent performance of undertaking to render services to Plaintiff (Count II), and negligent performance of undertaking of services to the general public causing harm to Plaintiff (Count III).
Issues raised by the parties’ motions are whether: (1) Plaintiffs claims for Good Samaritan liability satisfy the private analogue requirement under the FTCA so as to permit the exercise of jurisdiction; (2) Plaintiffs FTCA claims are barred by the misrepresentation defense so as to preclude jurisdiction; and (3) genuine issues of material fact exist as to actual negligence.
For the reasons that follow, Defendant’s Motion to Dismiss is GRANTED, IN PART, and DENIED, IN PART, and Plaintiffs Motion for Summary Judgment is DENIED, in its entirety.
In summary, after determining that Defendant brings a factual challenge under Rule 12(b)(1), the court finds that Plaintiff cannot satisfy the private analogue requirement under the FTCA for its Good Samaritan claim for liability for negligently performing services Defendant undertook to provide to Plaintiff, applying the Restatement (Second) of Torts § 323. Plaintiff was not the direct intended beneficiary of Defendant’s conduct. Therefore, Count II will be dismissed for lack of jurisdiction. However, the court finds that Plaintiff could conceivably satisfy the private analogue requirement as to its negligent inspection and Good Samaritan claims for negligently performing services that Defendant undertook to render to the general public, thereby causing harm to Plaintiff, applying Restatement (Second) of Torts § 324A. Therefore, Counts I and III cannot be dismissed. The court also concludes that Plaintiffs FTCA claims are not barred by the misrepresentation defense inasmuch as they are not for negligent misrepresentation, but rather negligent conduct. Finally, as to Plaintiffs summary judgment motion, the court concludes that genuine issues of material fact exist as to whether Defendant failed to exercise reasonable care in releasing or permitting the release of carcass No. 05125274 and whether Plaintiffs reliance on the government inspector’s alleged negligent conduct was reasonable under the circumstances presented.
II. FACTUAL BACKGROUND
Assertions of fact are derived from memoranda submitted in support of and in opposition to Defendant’s motion to dismiss pursuant to Rule 12(b)(1) and Plaintiffs motion for summary judgment pursuant to Rule 56(c), and all exhibits attached thereto. 2 Undisputed facts follow. Disputed issues of fact are duly noted.
Plaintiff is a beef processing and rendering company located in Souderton, Pennsylvania. (Pl.’s Mot. for Summ. J., Ex. 1, Raspaldo Decl. (hereinafter “Raspaldo Deck”) ¶ 1; Def.’s Resp. to Statement of Undisputed Facts in Supp. of Pk’s Mot. for Summ. J. (hereinafter “Def.’s Resp. to SUF” ¶ 1.) It is agreed that Plaintiff operates under the oversight of the United States Department of Agriculture’s (“USDA”) Food Safety and Inspection Service (“FSIS”), but the oversight level is in dispute. (Raspaldo Deck ¶ 3; Def.’s Resp. to SUF ¶ 2.) The FSIS conducts
The FSIS performs two types of tests on beef carcasses: (1) a Fast Antimicrobial Screen Test (“FAST test”), which is performed in-plant and is designed to detect anti-microbial drug residues, and (2) a laboratory test (“LAB test”), which is performed at an FSIS laboratory and is designed to diagnose a pathological condition and/or confirm the results of a FAST test. FSIS Directive 10,230.6 (Jan. 6, 2006), available at http://www.fsis.usda.gov/ OPPDE/rdad/FSISDirectives/10230-6.pdf; FSIS Directive 10,220.3 (Aug. 23, 2006), available at http://www.fsis.usda.gov/ OPPDE/rdad/FSISDirectives/10220-3.pdf. At Plaintiffs plant in February 2006, FAST test results were generally processed for the FSIS within forty-eight hours. (Raspaldo Decl. ¶4; Def.’s Resp. to SUF ¶ 3.) LAB test results usually took at least five to seven days to process. (Raspaldo Decl. ¶ 4; Def.’s Resp. to SUF ¶ 4; Pl.’s Mot. for Summ. J., Ex. 5, FSIS Pathology Report (hereinafter “FSIS Pathology Report”); Pl.’s Reply Mem. of Law in Supp. of Pl.’s Mot. for Summ. J. 2.) FSIS personnel decided which tissue samples needed to be sent for LAB tests and which tissue samples needed FAST tests. (Raspaldo Decl. ¶ 5; Def.’s Resp. to SUF ¶ 5.)
In February 2006, all carcasses which FSIS designated for either a FAST or LAB test were placed under official FSIS retention by FSIS inspectors until the test results were returned. (Raspaldo Decl. ¶ 6; Def.’s Resp. to SUF ¶6.) Plaintiff contends that once a test was returned, the FSIS inspector would either sign to release a carcass to Plaintiff if the test result was negative or direct the condemnation of a carcass if the test result was positive. (Raspaldo Decl. ¶ 6.) Defendant asserts that the effect of the FSIS inspector’s signature on a document evidencing negative test results was authorization for another FSIS inspector, but only the federal inspector, to retrieve the carcass from the USDA retention area and then turn it over to Plaintiffs employees for production processing. (Def.’s Resp. to SUF ¶ 6; Def.’s Mem. of Points and Authorities in Opp. to PL’s Mot. for Summ. J. (hereinafter “Def.’s Mem. Opp. Summ. J.”), Ismail Decl. (hereinafter “Ismail Decl.”) ¶ 9.)
Plaintiff maintained a Carcass Retained Log (“CRL”). The CRL listed all carcasses that FSIS had designated for a FAST or LAB test and reflected Plaintiffs understanding of the dates that the FSIS took the tissue sample and the type of test FSIS ordered. (Raspaldo Decl. ¶ 7; Def.’s Resp. to SUF ¶ 7.) Plaintiff contends, and Defendant disputes, that in February 2006, the FSIS inspector not only reviewed the test results daily but advised an employee in Plaintiffs Quality Assurance Group of the results of each test. (Raspaldo Decl. ¶ 8; PL’s Mot. for Summ. J., Ex. 2, Figueroa Decl. (hereinafter “Figueroa Decl.”) ¶¶ 2-3; Def.’s Resp. to SUF ¶ 8.) Plaintiff further contends that an FSIS inspector would sign the CRL to release to Plaintiff carcasses that had negative test results. (Raspaldo Decl. ¶ 8; Figueroa Decl. ¶ 3.) Defendant, however, asserts that the effect of the FSIS inspector’s signature was only to permit an FSIS inspector to retrieve carcasses with negative test results from the USDA retention area to turn over to Plaintiffs employees. (Def.’s Resp. to SUF ¶ 9; Ismail Decl. ¶ 10.)
It is undisputed that, on February 1, 2006, FSIS inspectors took tissue samples from several carcasses, which were segregated under the control of FSIS and listed on the CRL. (Figueroa Decl. ¶ 4; PL’s Mot. for Summ. J., Ex. 3, Carcass Retained Log (hereinafter “Carcass Retained Log”); Def.’s Resp. to SUF ¶ 10.) Most of
On February 3, 2006, Sheila Figueroa, an employee in Plaintiffs Quality Assurance Group, met with the FSIS Inspector-in-Charge, Dr. Nader Ismail. (Figueroa Decl. ¶ 7; Raspaldo Decl. ¶ 9; Def.’s Resp. to SUF ¶ 13; Ismail Decl. ¶ 7.) What happened at that meeting is at the core of the liability question. The two participants offer significantly conflicting versions of events.
Figueroa avers that during the meeting she had a discussion with Ismail regarding test results. (Figueroa Decl. ¶¶ 8-12.) She claims that she specifically recalls that she asked Ismail whether he had any carcasses that had been sent for FAST test results and which could be released. (Figueroa Decl. ¶ 8.) She states that Ismail took the CRL and began signing it to release carcasses. (Figueroa Decl. ¶ 9.) She avers that she saw Ismail sign for release of carcass No. 05125274, which was clearly designated on the CRL for a LAB test. (Figueroa Decl. ¶ 10.) She states that she asked Ismail unequivocally whether carcass No. 05125274 could be released because the CRL listed the carcass as a LAB test and not a FAST test. (Figueroa Decl. ¶ 11.) Figueroa avers that Ismail told her that it was “OK,” and continued to sign the CRL. (Figueroa Decl. ¶ 12.)
Figueroa declares that, on that same day, she consulted with her supervisor, Jose Raspaldo, as to the actions of Ismail pertaining to carcass No. 05125274. (Figueroa Decl. ¶ 13; Raspaldo Decl. ¶ 9.) Raspaldo told her that the FSIS knew which test it performed on carcasses. (Id.) Figueroa avers that Raspaldo then directed her to change the note on the CRL for carcass No. 05125274 from “LAB” to “FAST.” (Figueroa Decl. ¶ 13; Raspaldo Decl. ¶ 10.) In his declaration, Raspaldo corroborates this conversation. (Raspaldo Decl. ¶¶ 9-10.) Figueroa states that she followed Raspaldo’s directive, made the change, and initialed it on the CRL. (Figueroa Decl. ¶ 13.)
In his declaration, on the other hand, Ismail avers that on February 3, 2006, he did not have a discussion of any kind with Figueroa, let alone regarding test results, when she presented the CRL to him. (Def.’s Resp. to SUF ¶¶ 8,14; Ismail Decl. ¶ 9.) According to Ismail, when Figueroa presented him with the CRL, next to one of the carcasses listed on the form, the word “LAB” was already crossed out and Figueroa’s initials were written in. (Ismail Decl. ¶ 7.) He states that he believed Figueroa was only seeking FAST test results for each carcass listed on the CRL. (Ismail Decl. ¶ 8.) Ismail claims that he verified the FAST test results for each carcass and signed across every carcass on the CRL, confirming only negative FAST test results. (Id.) Nevertheless, Ismail did sign for release of carcass No. 05125274. (Figueroa Decl. ¶ 10; Carcass Retained Log; Def.’s Resp. to SUF ¶ 16; Ismail Decl. ¶ 8.) He contends that he did so only because of a misrepresentation created on the CRL by Plaintiff, a misrepresentation upon which he relied. (See Ismail Decl. ¶ 8.)
Ismail avers that the effect of his signature, or that of any FSIS inspector, on the CRL was only to permit Plaintiff to seek the USDA processing inspector or other USDA employee to unlock the FSIS locked hold rail to retrieve a designated carcass from the USDA retention area. (Ismail Decl. ¶ 10.) He avers that his signature did not authorize Plaintiff to re
Ismail further avers that, on February 3, 2006, Plaintiffs employees removed carcasses from the USDA retention area entirely at Plaintiffs direction and approval, without FSIS presence or authority. (Ismail Decl. ¶ 12.) He declares that Plaintiffs employees removed the carcasses from the USDA retention area by improper and unauthorized mechanical manipulation of the USDA carcass lock rail, and without unlocking the government lock. (Id.) Ismail avers that Plaintiffs employees also removed retained tags from carcasses. (Id.)
Regardless of which version of events is correct, on February 3, 2006 at 1:41 p.m. carcass No. 05125274 was sent into production. (Figueroa Decl. ¶ 12; Pl.’s Mot. for Summ. J., Ex. 4, Stoltzfus Decl. (hereinafter “Stoltzfus Decl.”) ¶ 4; Def.’s Resp. to SUF ¶ 22.) On February 8, 2006, the test result for the tissue from carcass No. 05125274, which had been sent for LAB test on February 1, 2006, was returned positive for malignant lymphoma. (FSIS Pathology Report; Figueroa Decl. ¶ 4; Carcass Retained Log; Def.’s Resp. to SUF ¶ 10, 23-25; Def.’s Mem. Opp. Summ. J., Tawadrous Decl. (hereinafter “Tawad-rous Decl.”) ¶ 11.)
Upon receiving the LAB results for carcass No. 05125274, Dr. DiLella, another FSIS inspector, inquired as to the whereabouts of the carcass. (Figueroa Decl. IT 15; Def.’s Resp. to SUF ¶ 26; Tawad-rous Decl. ¶ 11.) Hibraim Lopez, another employee in Plaintiffs Quality Assurance Group, looked up its location and informed DiLella that it had already been released into production. (Figueroa Decl. ¶ 16; Def.’s Resp. to SUF ¶ 27.) DiLella requested Plaintiff to conduct a voluntary recall, directing that all beef product that had come into contact with carcass No. 05125274 be retrieved and destroyed. (Figueroa Decl. ¶ 17; Def.’s Resp. to SUF ¶ 28; Tawadrous Decl. ¶ 14.) Plaintiff instituted product recovery and market withdrawal actions related to all beef product potentially commingled with contaminated meat from carcass No. 05125274. (Stoltzfus Decl. ¶ 2; Def.’s Resp. to SUF ¶ 29; Tawadrous Decl. ¶¶ 14^19.)
Plaintiff claims that it retrieved and destroyed 543,661 pounds of beef product. (Pl.’s Mot. for Summ. J., Ex. 6, Claim for Damage, Injury, or Death (hereinafter “PL’s Claim for Damage, Injury, or Death”), Attachment B: Losses and Expenses Attributable to Incident (hereinafter “Attachment B”).) Some, Plaintiff directed its customers to destroy and some Plaintiff had not yet shipped. (Id.) The claimed value of the destroyed beef product is $868,430.85. (Stoltzfus Decl. ¶¶ 5-6; PL’s Claim for Damage, Injury, or Death, Attachment B.) Plaintiff claims that in retrieving the beef it incurred freight costs, external inspection fees, additional labor costs, disposal costs, and storage costs, such that its total damages are $1,014,933.39. (Stoltzfus Decl. ¶¶ 7-10; PL’s Claim for Damage, Injury, or Death, Attachment B.)
On June 9, 2006, Plaintiff submitted a Claim for Damage, Injury, or Death to the
III. DEFENDANT’S MOTION TO DISMISS
A. Applicable Standard of Review.
1. Legal Standard For A Motion To Dismiss Under Rule 12(b)(1).
Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, a court must dismiss the matter if it lacks subject matter jurisdiction over the complaint. Fed.R.Civ.P. 12(b)(1). Dismissal is warranted under Rule 12(b)(1) only if the claim “clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or is wholly insubstantial and frivolous.”
Gould Elec. Inc. v. United States,
A factual challenge contests the existence of subject matter jurisdiction, apart from any pleadings.
Id.
In reviewing a factual challenge, the court “is free to weigh the evidence and satisfy itself as to the existence of its power to hear 'the case,” even where disputed material facts exist.
Mortensen,
Nevertheless, in deciding a factual challenge under Rule 12(b)(1), the court “must demand
less
in the way of jurisdictional proof than would be appropriate at a trial stage.”
Mortensen,
2. Application Of The Rule 12(b)(1) Standard Of Review.
Defendant does not allege that it brings its motion to dismiss pursuant to Rule 12(b)(1), although such is assumed because it is styled as a motion to dismiss for lack of subject matter jurisdiction. Neither party addresses the applicable standard of review. Defendant does not
In response to Defendant’s motion to dismiss for lack of subject matter jurisdiction, Plaintiff appears to treat Defendant’s motion as a facial challenge. The Response does not include a factual background section, attach any exhibits, or raise any issue of disputed fact. Defendant filed its motion to dismiss simultaneously with its response to Plaintiffs motion for summary judgment, in which Plaintiff argued that subject matter jurisdiction under the FTCA exists. In support of its summary judgment motion, Plaintiff submitted several exhibits, including the CRL at issue, the government’s pathology report, Plaintiffs claim to the government for damage, injury, or death, and declarations of several of Plaintiffs employees, Jose Raspaldo, Sheila Figueroa, and Gary Stoltzfus. Defendant submitted the same exhibits, referenced above, both in support of its motion to dismiss and its response in opposition to Plaintiffs motion for summary judgment. The court held oral argument on both motions, at which time disputed material facts were raised. Thus, both Defendant’s motion to dismiss and Plaintiffs motion for summary judgment, and contested issues of FTCA jurisdiction raised therein, have been fully briefed.
Therefore, to the extent that Plaintiffs response to Defendant’s motion to dismiss treats Defendant’s motion as a factual challenge, the court considers Plaintiffs exhibits attached to its motion for summary judgment
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and concludes that Plaintiff has had the opportunity to present facts by affidavit or deposition consistent with its burden of persuasion to show that subject matter jurisdiction under the FTCA exists.
See Gould,
B. Discussion.
1. Whether Plaintiffs Claims Satisfy The Private Analogue Requirement.
a. The Private Analogue Requirement.
Defendant first argues that this court does not have jurisdiction over Plaintiffs claims because they do not satisfy the private analogue requirement under the FTCA. Generally, the United States may not be sued because it enjoys sovereign immunity.
Beneficial Consumer Discount Co. v. Poltonowicz,
claims against the United States, for money damages ... for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.
28 U.S.C. § 1346(b)(1) (emphasis added). It is undisputed that Plaintiff has exhausted the administrative requirements under the FTCA. See 28 U.S.C. § 2675; (Def.’s Resp. to SUF ¶¶ 36-38).
Under the rubric courts reference as the private analogue requirement, the government is liable under the FTCA if a private person would be liable under state law in like circumstances.
United States v. Olson,
Defendant argues that the private analogue requirement is not satisfied because under state law Defendant did not owe Plaintiff a duty to inspect the plant. Plaintiff counters that its claims satisfy the private analogue requirement because Defendant can be liable for alleged negligent conduct under three state tort law theories: (1) negligent inspection; (2) Good Samaritan liability for negligently performing services Defendant undertook to render to a party, as stated in the Restatement (Second) of Torts § 323; and (3) Good Samaritan liability for negligently performing services Defendant undertook to render to the general public causing harm to a party, as stated in the Restatement (Second) of Torts § 324A. See Restatement (Second) of Torts §§ 323, 324A (1965). Plaintiff correctly argues that even if the source of any duty here is in part under federal law, Plaintiffs claim is not barred if it can show that Defendant’s conduct nevertheless violated state Good Samaritan laws.
See Sea Air Shuttle,
Under the Good Samaritan rule, which has been adopted as the law of Pennsylvania, a person is “liable to another for breach of a duty voluntarily assumed by affirmative conduct, even when that assumption of duty is gratuitous.”
Patentas v. United States,
Courts have treated negligent inspection liability as subsumed under the Good Samaritan rule analysis.
See Blessing,
The basic precept of the Good Samaritan rule, the “duty is measured by the undertaking,” is applied to negligent inspection claims.
Id.; see Patentas,
It is undisputed that the FSIS physically inspected carcass No. 05125274, the specific instrumentality at issue here, by taking a tissue sample from it and sending it for testing. At issue is whether Plaintiff can show that the requirements for Good Samaritan liability under Sections 323 and 324A are otherwise met.
c. Section 323 Does Not Apply To Plaintiff.
Section 323 of the Restatement provides:
One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other’s person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking, if (a) his failure to exercise such care increases the risk of such harm, or (b) the harm is suffered because of the other’s reliance upon the undertaking.
Restatement (Second) of Torts § 323. Plaintiff argues that Defendant is liable under Section 323 because FSIS undertook to perform services to Plaintiff that FSIS should have recognized as necessary for the protection of Plaintiffs property— that is, testing, segregating, reporting results on, and directing the release or destruction of Plaintiffs carcasses—and then allegedly negligently rendered those services. Plaintiff argues that FSIS’s negligent performance of those services increased its risk of harm and that it relied upon FSIS to perform the services undertaken non-negligently.
The government can be held liable under Section 323 only if the FSIS inspected the meat at Plaintiffs facility for the benefit of Plaintiff.
See Patentas,
Defendant argues that Plaintiff cannot meet the requirements of Section 323 because the public, and not Plaintiff, was the intended direct beneficiary of Defendant’s conduct. (Def.’s Reply Brief in Supp. of Mot. to Dismiss Pl.’s Compl. 2.) In support of its argument, Defendant cites Congress’ purpose in enacting the Federal Meat Inspection Act (“FMIA”), which was to protect the public by “assuring that meat and meat food products distributed to them are wholesome, not adulterated, and properly marked, labeled, and packaged.” 21 U.S.C. § 602. Thus, Defendant argues that it did not engage in its inspection duties to benefit Plaintiff, but rather that its duty to inspect carcasses flowed only to the public.
Plaintiff argues that it was the intended direct beneficiary because Defendant owed Plaintiff, and not only the public, a statutorily-imposed, non-delegable duty. In the alternative, Plaintiff argues that by retaining carcass No. 05125274 for testing, FSIS assumed a duty to Plaintiff to carry out the testing process competently and thus Plaintiff was the direct intended beneficiary of that duty.
Discussion of the relevant statutes and regulations is necessary. The FMIA “directs USDA to inspect the sanitary conditions of meat processing plants and to ‘prescribe the rules and regulations of sanitation under which these establishments [are] maintained.’ ”
Munsell v. Dep’t of Agriculture,
In 1996, the FSIS promulgated a regulation, known as the Hazard Analysis and Critical Control Point (“HACCP”), which was aimed at industry self-regulation and required that all meat processing plants develop and implement controls to address various food safety hazards. 9 C.F.R. pt. 417; 61 Fed.Reg. 38,806 (July 25, 1996); see 21 U.S.C. § 621 (granting the Secretary authority to “make such rules and regulations as are necessary for the efficient execution” of the FMIA). Under the HACCP, plants have “considerable flexibility” to design plans to prevent food safety hazards, subject to performance standards set by FSIS.
Munsell,
In
American Federation of Government Employees, AFL-CIO v. Department of Agriculture,
the U.S. Court of Appeals for the District of Columbia Circuit was presented with apparently conflicting mandates under the FMIA and HACCP as to which entity, the FSIS or plant employees, were responsible for the personal inspection of carcasses.
Thus, by law, the FSIS must do more than “monitor[ ] compliance by meat processors with their HACCP plans,” (Def.’s Mem. of Points and Authorities in Supp. of Mot. to Dismiss Pl.’s Compl. (hereinafter “Def.’s Mem. Supp. Mot. to Dismiss”) 4), and ultimately has a duty personally to inspect each carcass and make the determination whether it is adulterated or unadulterated. Having established this duty, however, Plaintiff has not established that this duty runs directly to it by statute.
Plaintiff relies upon the district court decision in
General Public Utilities Corporation v. United States
for the proposition that Defendant owes it, as well as the public, a direct duty under the FMIA.
See
The FMIA, however, has no requirement that the government disseminate reports or warnings of abnormal occurrences to the meat industry, or require that the government provide any other type of service directly to the meat industry. Rather, the FMIA merely notes the consequences of adulterated meat on the meat industry. 21 U.S.C. § 602 (stating that adulterated meat products “result in sundry losses to ... processors of meat”). Based on the plain language of the statute, as Defendant correctly argues, the purpose of the FMIA is to protect the “health and welfare of consumers.”
Id.
Therefore Plaintiff, as a matter of law, is not the intended direct beneficiary of Defendant’s inspection duties under the FMIA. See
Barnes v. United States,
Plaintiffs alternative argument that Defendant owed Plaintiff a duty the moment FSIS retained and tested carcass No. 05125274 does not change the court’s conclusion. Plaintiff seems to conflate Section 323’s requirement for an intended direct beneficiary, expressed in the language “[o]ne who
undertakes
... to render service to another,” with the requirement that the person should recognize those services “as necessary for the protection of the other’s person or things.”
See
Restatement (Second) of Torts § 323 (emphasis added). A party that meets the latter requirement may not necessarily meet the former requirement. The fact that Section 323 does not apply to Plaintiff does not preclude government liability under Section 324A.
See Patentas,
The court lacks subject matter jurisdiction, as a matter of law, over Count II for negligent performance of undertaking to render services to Plaintiff. Accordingly, Count II is dismissed.
d. Section 324A Applies To Plaintiff.
Section 324A provides:
One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.
Restatement (Second) of Torts § 324A. Plaintiff argues that Defendant is liable under Section 324A because FSIS undertook to render services to the general public that FSIS should have recognized as necessary for the protection of Plaintiffs property and then allegedly negligently performed those services. Plaintiff argues that FSIS’s alleged negligent performance of the services increased Plaintiffs risk of harm and that Plaintiff relied upon FSIS
Defendant counters that Plaintiff cannot state a claim under Section 324A because: (1) Plaintiff was not a foreseeable third party beneficiary; (2) there was no physical harm; (3) there was no reliance by Plaintiff; and (4) there was no increased risk of harm.
i. Plaintiff Was A Foreseeable Third Party Beneficiary.
Defendant argues that Plaintiff cannot meet the requirements of Section 324A because any harm to Plaintiff was not foreseeable. (Def.’s Reply Brief in Supp. of Mot. to Dismiss Pl.’s Compl. 3.) Section 324A’s requirement that the defendant has undertaken “to render services to another which he should recognize as necessary for the protection of a third person” has been interpreted to state a requirement of foreseeability.
Cantwell v. Allegheny County,
The court rejects Defendant’s argument. Plaintiff clearly benefits from the FSIS’s non-negligent performance of its inspection and testing duties authorized under the FMIA. In rendering these inspection services to the public, Defendant should recognize them as necessary for the protection of Plaintiffs property, that is, its carcasses. The court therefore concludes that Plaintiff was a third person who was a foreseeable beneficiary of the FSIS inspection.
See Patentas,
ii. There Was Physical Harm.
Defendant next argues that Plaintiff cannot meet the requirement of physical harm under Sections 324A because Plaintiffs claimed harm is purely economic. (Def.’s Reply Brief in Supp. of Mot. to Dismiss Pl.’s Compl. 4.) The Ninth Circuit case upon which Defendant relies,
Love v. United States,
iii. Plaintiff Has Shown Reliance.
Defendant argues that Plaintiff cannot show reliance under Sections 324A(c). (Def.’s Reply Brief in Supp. of Mot. to Dismiss PL’s Compl. 4-5.) To establish a claim for detrimental reliance under the Restatement, the plaintiff must show knowledge of the purpose of the government’s inspection and that this knowledge of the government’s undertaking induced the plaintiff “to forego other remedies or precautions against the risk.”
Patentas,
Plaintiff asserts that it knew that FSIS was inspecting its carcasses and that, in the absence of a government inspection process, it would have implemented its own inspection and testing program. (Pl.’s Reply Mem. of Law in Supp. of its Mot. for Summ. J. 9.) It asserts that it did not create its own inspection function in reliance upon FSIS’s inspection and testing of all carcasses for pathological conditions. (Pl.’s Mem. of Law in Supp. of its Mot. for Summ. J. 13.)
Using the lessened standard for jurisdictional proof applicable under Rule 12(b)(1), and assuming
arguendo
that Plaintiffs reliance was reasonable and that Defendant failed to exercise reasonable care, the court finds that Plaintiff meets the reliance requirement under Section 324A.
See Gould Elec. Inc. v. United States,
iv. Plaintiff Has Shown An Increased Risk Of Harm.
Defendant further argues that, under Section 324A(a), Defendant’s alleged conduct could not have increased any risk of harm because at issue is an act of omission, not commission. (Def.’s Reply Brief in Supp. of Mot. to Dismiss Pl.’s Compl. 3-4.) Defendant also argues that the government’s meat inspection did not increase the risk of harm, but simply allowed the hazard to continue. (Def.’s Mem. Opp. Summ. J. § II.A.) Plaintiff counters that Defendant’s negbgent performance of its inspection and testing duties increased Plaintiffs risk of harm. (PL’s Reply Mem. of Law in Supp. of its Mot. for Summ. J. 8.)
Under the full Restatement formulation, reliance need not be proven to hold the government liable under § 324A if the plaintiff can show an increased risk of harm.
Patentas,
Defendant’s conduct in releasing or permitting the release of a contaminated carcass before the test results for that carcass were returned was not an act of omission. The act was not, as Defendant characterizes it, merely Ismail’s alleged failure to cross-reference the CRL with FSIS documentation to determine whether carcass No. 05125274 had undergone a LAB test. Nor was the act, as Defendant argues, simply one of misrepresentation, i.e., Ismail’s alleged statement to Figueroa that the carcass did not undergo a LAB test. 7 Rather, in signing off for carcass No. 05125274, the FSIS inspector undertook an affirmative act of allegedly releasing carcass No. 05125274, or permitted its release, so that it became commingled with other meat, and he did this without awaiting the return of the LAB test results.
Defendant’s alleged negligent performance of its inspection and testing duties therefore would increase Plaintiffs risk of harm. The alleged act of releasing contaminated meat without awaiting test results can lead to the physical, material adulteration of other meat products. It is not the case that negligent meat inspection merely allows a hazard to continue. The harm is not contained in the single contaminated carcass released. The risk of harm is increased exponentially in relation to the amount of meat product potentially commingled with and adulterated by the contaminated meat.
Assuming Defendant acted negligently, Plaintiff can show that FSIS’s alleged negligent performance of inspection and testing duties did in fact cause Plaintiff harm because, once Plaintiffs product was found to be adulterated, Plaintiff had to initiate a product withdrawal. As explained below, however, the issue of whether Defendant failed to exercise reasonable care is a question of disputed fact that goes to actual negligence,
8
and is inappropriate for determination on a Rule 12(b)(1) motion.
See Matsko,
Plaintiff therefore has met its burden to show under Rule 12(b)(1) that its FTCA claims pursuant only to Section 324A of the Restatement—Count I, for negligent inspection, and Count III, for negligent performance of undertaking of services to the general public causing harm to Plaintiff—satisfy the private analogue requirement under the FTCA.
See Gould,
2. Plaintiffs FTCA Claims Are Not Barred By The Misrepresentation Defense.
Defendant next argues that, even if the private analogue requirement is satisfied, Plaintiffs claims are barred by the misrepresentation exception to the waiver of sovereign immunity under the FTCA. (Def.’s Mem. Supp. Mot. to Dismiss 6-9.)
The FTCA precludes recovery for “any claim arising out of misrepresentation.” 28 U.S.C. § 2680(h). A negligent misrepresentation claim alleges that the government “breached its duty to use due care in obtaining and communicating information upon which the plaintiff may rea
Defendant argues that Plaintiffs claims are based on an alleged communication of misrepresentation only, namely Ismail’s alleged oral representation to Figueroa that carcass No. 05125274 had been submitted for a FAST, and not a LAB, test. Defendant characterizes the alleged harm as purely economic and argues plaintiff would not have suffered any injury independent of its reliance on the communication of misinformation.
The Third Circuit’s decision in
Cross Brothers Meat Packers, Inc. v. United States,
is determinative.
The court finds that Plaintiffs claims are not for misrepresentation, but are instead for negligent conduct based on Ismail’s signing for the release of carcass No. 05125274, which he was supposed to know FSIS had sent out for a LAB test, without first verifying the accuracy of the CRL against FSIS records or verifying the return of all test results. As in Cross Brothers, it was not Plaintiffs reliance on Ismail’s alleged statements that affected the value of its meat. See id. Rather, Ismail’s alleged act of releasing carcass No. 05125274, or of permitting that carcass to be released, would have directly “irrevocably devalued” Plaintiffs meat by triggering the release of carcass No. 05125274 to be commingled with and to adulterate other meat product. See id. Once commingled and contaminated, that meat became unfit for human consumption.
In other words, even if Ismail had not made any communication to Plaintiff re
Thus, as in
Cross Brothers,
the crux of Plaintiffs claim is Defendant’s alleged negligent
performance of
operational tasks, which were the duty to inspect and test carcasses.
See id.
Because the FSIS inspector’s alleged misstatement is not essential to Plaintiffs negligence claim, Plaintiffs claims are for negligence, and not negligent misrepresentation.
See Block,
Defendant also attempts to distinguish
National Carriers, Inc. v. United States,
Defendant argues that whereas in National Carriers the inspector had failed to follow regulations to suggest segregating the contaminated meat, Ismail did not know that carcass No. 05125274 had malignant lymphoma when he signed the CRL and therefore had no reason to suggest segregating the carcasses. Defendant ignores that Ismail had a statutory duty to inspect and segregate meat that might be contaminated, and therefore should not have signed for the release of carcass No. 05125274 until he knew there was no positive test result and no potential for adulteration.
Plaintiff has met its burden to show that its remaining FTCA claims are not barred by the misrepresentation defense.
See Gould,
IV. PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
A. Legal Standard For A Motion For Summary Judgment,
Under Fed.R.Civ.P. 56(c), summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the
B. Discussion.
The court has already set forth above the applicable rules for claims under the FTCA and Restatement (Second) of Torts § 324A, and will not reiterate them. The court concludes that genuine issues of material fact exist as to whether Defendant failed to exercise reasonable care in releasing or permitting the release of carcass No. 05125274 and whether Plaintiffs reliance on the FSIS inspector’s conduct was reasonable. 10
Plaintiff presents evidence that Ismail, without awaiting the test results for carcass No. 05125274, signed off for it on the CRL as if it had undergone only a FAST test, even though the CRL listed it for a LAB test. Plaintiff avers that it relied on Ismail’s conduct. In contrast, Defendant presents evidence that when Plaintiffs employee presented the CRL to him, the notation for the LAB test for carcass No. 05125274 had already been crossed out and FAST test designation inserted, and that Ismail relied on that misrepresentation. Whereas Plaintiff contends that Ismail’s signature effectively released the carcass, the government contends that Plaintiff retrieved the carcass alone, and without authorization, from the USDA retention area.
There are therefore genuine issues of material fact as to whether Defendant failed to exercise reasonable care and whether Plaintiffs reliance was reasonable. Plaintiff may have erred when it presented its own document, the CRL, to the FSIS inspector. The FSIS inspector
Sufficient undisputed material facts have not been presented to determine at this time the following: the FSIS’s practice or procedure in verifying the test that a carcass had undergone, whether the test result had been returned, and the test result before signing off on the CRL; whether the FSIS inspector in fact followed these steps before signing off on carcass No. 05125274; and whether those steps were reasonable. Thus, the court does not reach whether the FSIS inspector was negligent per se. The court concludes that whether there was negligence on the part of the government, whether there was negligence on the part of Plaintiff, and whether either party was solely, primarily, or contributorily negligent are all questions of fact.
V. CONCLUSION
For the foregoing reasons, Defendant’s Motion to Dismiss is granted, in part, and denied, in part, and Plaintiffs Motion for Summary Judgment is denied. An Order follows.
ORDER
AND NOW, this 8th day of July, 2008, upon consideration of Defendant United States of America’s Motion to Dismiss Plaintiff Moyer Packing Company’s Complaint (Doc. No. 16) for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, Plaintiffs Response in opposition thereto, and Defendant’s Reply, and upon consideration of Plaintiffs Motion for Summary Judgment (Doc. No. 10) pursuant to Rule 56 of the Federal Rules of Civil Procedure, Defendant’s Response in opposition thereto, and Plaintiffs Reply, and in light of oral argument on both motions, it is hereby ORDERED that Defendant’s Motion to Dismiss is GRANTED, IN PART, and DENIED, IN PART, and Plaintiffs Motion for Summary Judgment is DENIED, in its entirety, for the reasons set forth in the attached memorandum. FURTHER, it is ORDERED that Count II of Plaintiffs Complaint is DISMISSED for lack of jurisdiction. Counts I and III remain for trial disposition.
Notes
. Presumably, Defendant’s motion is brought pursuant to Federal Rule of Civil Procedure 12(b)(1).
. See discussion infra. Part III.A.2, Application Of The Rule 12(b)(1) Standard Of Review.
. Even if Defendant brings a facial challenge pursuant to Rule 12(b)(1), the outcome would be the same. Because Defendant's motion to dismiss, brought as a factual challenge, is granted, in part, as a matter of law and denied, in part, as a matter of fact and law under the higher standard, it would necessarily be similarly decided under the lower standard that is applicable to a facial challenge.
. In considering Plaintiff’s exhibits attached to its motion for summary judgment, the court is not converting Defendant’s motion to dismiss pursuant to Rule 12(b)(1) into a motion for summary judgment pursuant to Rule 56(c). The court recognizes that the legal standards of review for motions pursuant to Rule 12(b)(1) and Rule 56(c) are different and should not be confused. However, the factual basis for both motions here are shared. See, e.g., Gould, 220 F.3d at 178 (acknowledging that often in FTCA cases "the merits of the case are closely intertwined with the jurisdictional proof”).
. Nevertheless, the D.C. Circuit later found that this requirement is not inconsistent with an USDA inspection model in which plant employees can remove some adulterated carcasses before they get to FSIS inspectors, so long as FSIS are the last in the line personally inspecting the carcass or its parts.
Am. Fed’n of Gov't Employees, AFL-CIO v. Veneman,
. See discussion infra. Part IV.B.
. See discussion infra. Part III.B.2, Plaintiffs FTCA Claims Are Not Barred By The Misrepresentation Defense.
. See discussion infra. Part IV.B.
. Defendant also argues that whereas the duty in Cross Brothers flowed directly from the inspectors to the plaintiff because there was a contract involved, in this case the duty of the FSIS inspectors flows not to Plaintiff, but to the public. The court has addressed this argument above and, with respect to the Restatement (Second) of Torts § 324A, rejected it.
. Plaintiff raises several jurisdictional arguments in its motion for summary judgment that overlap with those the court has addressed above with respect to Defendant’s motion to dismiss. In addition, Plaintiff argues in its summary judgment motion that its claims are not barred by the discretionary function defense. Under the discretionary function exception to the FTCA, the government retains sovereign immunity with respect to “any claim ... based upon the exercise or performance [of,] or the failure to exercise or perform^] a discretionary function or duty ..., whether or not the discretion involved be abused.” 28 U.S.C. § 2680(a). Defendant in its motion to dismiss does not argue that the discretionary function defense applies to preclude the court's exercise of jurisdiction. In response to Plaintiff's motion for summary judgment, Defendant argues that genuine issues of material fact exist as to whether it applies. Because Defendant does not argue that the discretionary function defense applies and because the court denies Plaintiff's motion for summary judgment on other grounds, the court does not reach Plaintiff's arguments regarding the discretionary function defense.