Shaker v. Champion Petfoods USA, Inc.Shaker v. Champion Petfoods USA, Inc.
OPINION AND ORDER GRANTING DEFENDANTS’ REVISED MOTION FOR SUMMARY JUDGMENT [110] AND DENYING ALL OTHER PENDING MOTIONS AS MOOT [104–109]
A group of Michigan dog owners believe that they overpaid for certain varieties of
So these Plaintiffs sued Champion on behalf of themselves and other consumers. (See generally ECF No. 25.) And Plaintiffs were not alone. Suits based on similar alleged misrepresentations and omissions by Champion were filed in at least 16 jurisdictions.1 See Song v. Champion Petfoods USA, Inc., No. 18-CV-3205, 2020 WL 7624861, at *1 n.1 (D. Minn. Dec. 22, 2020) (collecting cases).
After several years of discovery in this and related cases, Champion has now filed a revised motion for summary judgment. (See ECF No. 110.) Because the Court finds that the distribution of dog food is exempt from Michigan‘s Consumer Protection Act and because Plaintiffs’ other claims are barred by state law, the Court will GRANT the motion, DENY all other pending motions as moot, and DISMISS the case.
I. Background
Plaintiffs are Michigan-based “pet parents” willing to pay “ultra premium prices” for their dogs’ food. (ECF No. 116, PageID.21181.) Accordingly, they purchased various types of premium Champion dog food from their local pet stores. (ECF No. 25, PageID.220–221.) But, say Plaintiffs, they and other pet parents were misled into overpaying for Champion‘s premium food based on misrepresentations and omissions on the labels. (Id.) They note that Champion marketed its food as “‘Biologically Appropriate’ dog food made with ‘regional,’ ‘fresh,’ and ‘natural’ ingredients[, when in] reality, the dog food contains and/or is at risk of containing heavy metals, Bisphenol A (“BPA“), pentobarbital, non-fresh ingredients, and non-regional ingredients.” (Id.)
So Plaintiffs sued, arguing that Champion‘s “packaging statements misled consumers as to the content and quality of its dog food.” (Id.) Specifically, Plaintiffs assert claims for: (1) breach of the Michigan Consumer Protection Act; (2) breach of express and implied warranties; and (3) fraudulent misrepresentation and concealment. (ECF No. 25, PageID.278–292.)
Now before the Court is Champion‘s revised motion for summary judgment (ECF No. 110), Champion‘s revised motions to exclude several of Plaintiffs’ experts (ECF Nos. 106–109), and Plaintiffs’ revised motion for class certification (ECF Nos. 104–105). Given the clear briefing and record, the Court considers the motions without further argument. See E.D. Mich. LR 7.1(f).
II. Legal Standard
Under
III. Analysis
As explained, the following claims are at issue: (1) breach of the Michigan Consumer Protection Act; (2) breach of express and implied warranties; (3) fraudulent misrepresentation and concealment. (See ECF No. 25; ECF No. 101, PageID.12870.) There are legal bars to each of Plaintiffs’ claims.
A. The MCPA
Plaintiffs allege that Champion‘s dog food labels violated the Michigan Consumer Protection Act (MCPA) in various ways. (See ECF No. 25, PageID.278–280.) But according to Champion, the MCPA does not apply to the distribution of dog food. (ECF No. 110, PageID.16871.)
Before proceeding to the merits of this argument, the Court notes that the availability of this affirmative defense has been subject to some debate. In response to Champion‘s prior motion for summary judgment, Plaintiffs argued that Champion forfeited this affirmative defense by failing to raise it in its answer. (See ECF No. 73, PageID.9137–9139 (citing Liss v. Lewiston-Richards, Inc., 732 N.W.2d 514, 517 n.13 (Mich. 2007)). And Plaintiffs urged the Court to prohibit Champion from raising this defense late in the litigation
A few things have since changed to minimize any prejudice to Plaintiffs. As requested, the Court granted Plaintiffs a limited period of discovery on this defense (at Champion‘s expense) and Plaintiffs were permitted to reinstate certain claims they had voluntarily dismissed. (See ECF Nos. 98, 101.) So the Court will permit Champion to raise this defense now. And even if the Court were not so inclined, Champion filed an amended answer explicitly raising this defense. (ECF No. 102, PageID.12975); see also B & H Med., L.L.C. v. ABP Admin., Inc., 526 F.3d 257, 264 n.8 (6th Cir. 2008); 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1476 (3d ed. 2022) (“Once an amended pleading is interposed, the original pleading no longer performs any function in the case and any subsequent motion made by an opposing party should be directed at the amended pleading.“).
With that decided, the Court will next consider whether the distribution of dog food is exempt from the MCPA. The MCPA prohibits a number of “[u]nfair, unconscionable, or deceptive” practices in trade or commerce. See
But by its own terms, the MCPA does not apply to a “transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” See
As Plaintiffs acknowledge, the “Michigan Supreme Court has given the MCPA exemption a broad reading[.]” (ECF No. 116, PageID.21228 (internal quotation omitted).) To determine whether the MCPA exemption applies, “the relevant inquiry ‘is whether the general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited.‘” Liss v. Lewiston-Richards, Inc., 732 N.W.2d 514, 518 (Mich. 2007) (quoting Smith v. Globe Life Ins. Co., 597 N.W.2d 28, 38 (Mich. 1999)). Conduct is “specifically authorized” when the general transaction is “explicitly sanctioned” by law. Liss, 732 N.W.2d at 520 (holding that a licensed home builder was exempt from the MCPA in a suit about poor workmanship because the “general transaction” of building residential homes is “specifically authorized” by Michigan state law and overseen
Champion says it is not subject to the MCPA because the “labeling, manufacture, and distribution of dog food in the state of Michigan” is specifically authorized by the Michigan Feed Law and regulated by the Michigan Department of Agriculture and Rural Development (MDARD). (ECF No. 110, PageID.16871 (citing
Champion is, by statutory definition, licensed to “distribut[e] commercial feed within this state.” See
Plaintiffs protest on a few grounds, but none persuade. First, they argue that “the Packaging Claims and Omissions are not general transactions specifically authorized by the [Feed Law] and are thereby not subject to exemption.” (ECF No. 116, PageID.21229.) In other words, Plaintiffs seek to distinguish between “manufacturing and distribution activities” (which they concede are regulated by the Feed Law) and “marketing activities” (which they argue are not regulated by the Feed Law). (Id. at PageID.21230.)
Plaintiffs misunderstand the scope of the MCPA‘s general-transaction exemption. The Michigan Supreme Court has repeatedly explained that “the relevant inquiry is not whether the specific misconduct alleged by the plaintiffs is ‘specifically authorized.’ Rather, it is whether the general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited.” Smith, 597 N.W.2d at 38; see also Liss, 732 N.W.2d at 519. As explained above, the general transaction that Plaintiffs challenge is Champion‘s labeling and distribution of dog food to Michigan consumers. See
One case cited by Plaintiffs clarifies the distinction between a general transaction and specific misconduct. See Wong v. T-Mobile USA, Inc., No. 05-73922, 2006 WL 2042512, at *7 (E.D. Mich. July 20, 2006). In Wong, the court explained that “[e]ven if a defendant is licensed or regulated, it may remain liable under the MCPA for conduct outside the scope of its license or the pertinent regulations.” Id. at *7. Accordingly, the court found that, while defendant T-Mobile was regulated as a cellular provider by the Federal Communications Act and the Federal Communications Commission, the “general transaction” of billing its customers was not regulated by those entities. Id. at *8–9. So T-Mobile was subject to suit under the MCPA for double-billing. But here, Plaintiffs seek to hold Champion liable for conduct within the scope of its license and pertinent regulations. As explained, the Michigan Feed Law and MDARD regulate the distribution of commercial feeds, including their labeling. So unlike Wong, Plaintiffs challenge an aspect of Champion‘s business that is specifically overseen by MDARD pursuant to the Feed Law. Accordingly, Champion is exempt from the MCPA in this suit.
Second, and relatedly, Plaintiffs argue that Champion “has alleged no evidence that the [Feed Law or MDARD] specifically authorize[d] its Packaging Claims and Omissions” or that any labels at issue here were “actually submitted” to or “approved” by MDARD. (ECF No. 116, PageID.21233–21235.) But this argument seeks to hold Champion to an even higher standard than the one this Court just rejected. Champion does not need to show that MDARD “approved” these specific labels. It only needs to show that the general transaction at issue here is authorized and regulated by the Feed Law and overseen by MDARD, which it has done.
Finally, Plaintiffs argue that the Feed Law is “concerned with ingredients and guaranteed analysis” (similar to the nutrition facts found on human food labels) and not with “marketing claims.” (ECF No. 116, PageID.21232–21233.) That is not an accurate statement of law. First, the Feed Law defines “labeling” as “all labels and other written, printed, electronic, or graphic matter, and includes advertising.”
In conclusion, because Champion “is licensed to perform the general transaction or conduct [of distributing commercial feed in Michigan] and is subject to oversight by a regulatory board or officer acting under statutory authority [namely, MDARD], it necessarily follows that the subject transaction or conduct falls under the [MCPA] exemption[.]” See Cyr, 2019 WL 7206100, at *2. And though the MCPA does not apply to the labeling and distribution of commercial feed, the Feed Law itself does provide various remedies and penalties. See
Champion next argues that the express and implied warranty claims fail as a matter of law because Plaintiffs failed to provide the required pre-suit notice. (ECF No. 110, PageID.16876.) Plaintiffs argue that Champion received pre-suit notice in “a written CLRA [California Consumers Legal Remedy Act] notice dated March 7, 2018” on behalf of the named plaintiffs in Reitman v. Champion Petfoods USA, Inc. (See ECF No. 116, PageID.21237; ECF 116-91); see also Reitman v. Champion Petfoods USA, Inc., No. 18-1736 (C.D. Cal. filed Mar. 1, 2018) (voluntarily dismissed with prejudice in Jan. 2021). And, say Plaintiffs, “after that notice was given, on April 19, 2018,” Ramy Shaker, a named plaintiff in this case, was added as a named plaintiff in Reitman. (ECF No. 116, PageID.21236.)
Michigan‘s Uniform Commercial Code requires that “[w]here a tender has been accepted . . . the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy[.]”
Champion did not receive reasonable pre-suit notice under Michigan law when plaintiffs in an unrelated suit sent Champion a letter demanding that they rectify violations of a different state‘s law. (See ECF No. 116-91, PageID.22190.) Plaintiffs have provided no authority to suggest that a letter that does not reference any Michigan plaintiffs or Michigan law can amount to “reasonable notice” of a potential breach of warranty claim in Michigan. See Gorman, 839 N.W.2d at 229. And this Court does not find such notice reasonable. To hold otherwise would thwart the purposes of the Michigan UCC by injecting considerable surprise and uncertainty into contractual relationships. Such a finding would require sellers to anticipate suits from unrelated parties under unrelated laws each time it received any notice of a potential breach. See Am. Bumper & Mfg. Co., 652 N.W.2d at 256. So the Court simply cannot agree with Plaintiffs that “the notice was mailed one month prior to Plaintiff Shaker bringing any claims in any case,” when neither Shaker nor Michigan‘s UCC were mentioned in the letter. (See ECF No. 116, PageID.21237.)
And adding Shaker to the Reitman action cannot provide reasonable pre-suit notice to Champion either. As this Court has previously held, “filing suit does not amount to ‘reasonable’ notice.” Johnston, 2018 WL 646683, at *3 (citing Rosipko v. FCA US, LLC, No. 15-11030, 2015 WL 8007649, at *5 (E.D. Mich. Dec. 7, 2015)).
In a final effort to avoid this conclusion, Plaintiffs cite cases applying other states’ less stringent pre-suit notice requirements
Plaintiffs failed to provide the required notice under Michigan law to enforce their implied or express warranties. So they are “barred from any remedy[.]” See
One final note. Plaintiffs’ express warranty claims fail for another reason: Plaintiffs lack privity of contract with Champion because they purchased their dog food from local pet stores. See Montgomery v. Kraft Foods Global, Inc., 822 F.3d 304, 309 (6th Cir. 2016) (citing Heritage Res., Inc. v. Caterpillar Fin. Servs. Corp., 774 N.W.2d 332, 343 n.12 (Mich. Ct. App. 2009) (“[P]rivity of contract is necessary for a remote purchaser to enforce a manufacturer‘s express warranty.“)). And Plaintiffs’ argument that they have privity with Champion by virtue of being intended beneficiaries of its contracts with third-party retailers also fails. They neither identified the specific contracts that allegedly made them beneficiaries nor provided evidence to suggest that the parties to such a contract intended to benefit them. See Schechner v. Whirlpool Corp., 237 F. Supp. 3d 601, 608 (E.D. Mich. 2017) (“Plaintiffs do not plead facts to identify the specific contract to which they claim privity. And Plaintiffs’ allegations fail to show that Whirlpool and the retailers intended in entering their contract to directly benefit Plaintiffs[.] . . . Moreover, Plaintiffs muster no authority to support the proposition that an end-user consumer is an intended beneficiary to a contract between a remote manufacturer and a retailer.” (internal quotations omitted)).
So the Court dismisses Plaintiffs’ breach of express and implied warranties claims for lack of pre-suit notice, and the breach-of-express-warranties claim is additionally dismissed for lack of privity.
C. Fraudulent Misrepresentation and Concealment
Finally, Champion argues that Plaintiffs’ fraudulent-misrepresentation and fraudulent-concealment claims are barred by the economic-loss doctrine. (ECF No. 110, PageID.16879–16881.) Plaintiffs argue that the doctrine does not apply (1) when a product is “adulterated with toxins;” (2) when the parties did not negotiate a contract; and (3) when fraud “pervades the transaction.” (ECF No. 116, PageID.21238–21240.) Champion has the better of the arguments.
The economic-loss doctrine “provides that where a purchaser‘s expectations in a sale are frustrated because the product he bought is not working properly, his remedy is said to be in contract alone, for he has suffered only economic losses.” Neibarger v. Universal Cooperatives, Inc., 486 N.W.2d 612, 615 (Mich. 1992) (internal quotations omitted). As the Michigan Supreme Court explained, the doctrine
For starters, Plaintiffs’ claim for damages is purely economic. The complaint articulates the harm they suffered in these terms: “[a]s the result of Defendants’ wrongful conduct, as alleged herein, Defendants injured Plaintiffs when Plaintiffs were misled to pay premium prices for Defendants’ misleadingly-packaged dog food, because the dog food did not deliver what was promised.” (ECF No. 25, PageID.222.) Because their “expectations in a sale [were] frustrated[,]” their “remedy is . . . in contract alone.” See Neibarger, 486 N.W.2d at 615.
Plaintiffs’ arguments to the contrary are not persuasive. As to the first argument, despite the assertion that Champion‘s food was “adulterated with toxins,” nowhere do Plaintiffs claim that their dogs became sick from the dog food or were otherwise injured by the dog food. Indeed, Plaintiffs “agree[d] with [Champion] . . . that safety is not at issue in the present matter.” (See, e.g., ECF No. 70, PageID.8749.) And for that reason, Plaintiffs’ citation to two asbestos cases that declined to apply the economic-loss rule are irrelevant. The main case relied upon, Detroit Board of Education v. Celotex Corp., 493 N.W.2d 513, 518 (Mich. Ct. App. 1992), specifically held that “asbestos cases are unique in the law.” The other, Roseville Plaza Ltd. Partnership v. U.S. Gypsum Co., 811 F. Supp. 1200, 1205 (E.D. Mich. 1992), agreed and further concluded that asbestos remediation is a non-economic damage that was not “caused by the failure of the [product] to perform as expected” as is typical in economic-loss cases. Because no dogs—let alone humans—were injured by any alleged toxins in the dog food, this is simply not a route to avoid the economic-loss doctrine.
Plaintiffs next argue that the economic-loss doctrine should not apply because they did not negotiate with Champion and so could not have negotiated the allocation of risk as to the quality of the dog food. (ECF No. 116, PageID.21239.) But, as the Sixth Circuit explained, a “long line of Michigan cases has applied the economic-loss doctrine to bar a . . . plaintiff‘s tort suit against a product manufacturer even though the plaintiff did not directly contract with the manufacturer.” Crossing at Eagle Pond Apartments, 790 F. App‘x at 778–79 (collecting cases). This is true even where the plaintiff is a consumer rather than another commercial entity. See Davis v. Forest River, Inc., 774 N.W.2d 327, 328 (Mich. 2009) (applying economic-loss doctrine to consumer‘s purchase of a recreational vehicle). So this argument fails too.
And finally, the Court is not convinced that fraud “pervaded the transaction” such that the economic-loss doctrine should not apply. True, fraud in the inducement is an “exception to the [economic-loss] doctrine.” Huron Tool & Eng‘g Co. v. Precision Consulting Servs., Inc., 532 N.W.2d 541, 543 (Mich. Ct. App. 1995). But that exception only applies when the alleged fraud is unrelated to the “quality and character of the goods sold.” See id. at 545; see also Irwin Seating Co. v. Int‘l Bus. Machines Corp., 306 F. App‘x 239, 243 (6th Cir. 2009). Here, the alleged fraud is directly related to the quality and character of the dog food Champion sold, so this exception does not apply.
In sum, Plaintiffs’ fraudulent-misrepresentation and fraudulent-concealment claims are barred by the economic-loss doctrine. See Theuerkauf v. United Vaccines Div. of Harlan Sprague Dawley, Inc., 821 F. Supp. 1238, 1241 (W.D. Mich. 1993) (“[T]he Economic Loss Doctrine prohibits plaintiff from maintaining his tort claims because the dispute here is in essence a contractual dispute in which the damage arose out of the commercial sale of goods.“); see also Cesare v. Champion Petfoods USA Inc., 429 F. Supp. 3d 55, 65 (W.D. Pa. 2019) (dismissing fraud claim as “barred by the economic loss doctrine“).
IV. Conclusion
For the foregoing reasons, Champion‘s revised motion for summary judgment is GRANTED. (ECF No. 110.) Accordingly, all other pending motions are DENIED as moot. (ECF Nos. 104–109.) A separate judgment will follow.
SO ORDERED.
Dated: September 1, 2022
s/Laurie J. Michelson
LAURIE J. MICHELSON
UNITED STATES DISTRICT JUDGE