Rydman v. Champion Petfoods USA, Inc.

Opinion

WESTERN DISTRICT OF WASHINGTON

8 HOLLY RYDMAN, individually and on CASE NO. C18-1578 RSM behalf of a class of similarly situated 9 individuals, ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS COUNTS IV AND 10 Plaintiffs, VI OF PLAINTIFFS’ SECOND AMENDED COMPLAINT 11 v.

12 CHAMPION PETFOODS USA, INC., a Delaware corporation, and CHAMPION 13 PETFOODS LP, a Canadian limited partnership, 14 Defendants. 15 17 This matter is before the Court on Defendants’ Motion to Dismiss Counts IV and VI of 18 Plaintiffs’ Second Amended Complaint. Dkt. #56. Plaintiffs oppose the motion and have 19 requested oral argument. Dkt. #58. The Court finds oral argument unnecessary to its resolution 20 of this matter and denies the request. See Local Rules W.D. Wash. LCR 7(b)(4). Having 21 considered the matter, the Court grants Defendants’ motion. 23 Defendants manufacture premium dry dog food which they sell at prices higher than other 24 brands of premium dry dog food. Dkt. #46 at ¶¶ 20, 47. Defendants marketed these dog foods 1 with phrases such as: “Ingredients We Love [From] People We Trust;” “Nourish as Nature 2 Intended;” “Delivering Nutrients Naturally;” “Biologically Appropriate™;” and “Fresh Regional 3 Ingredients.” Id. at ¶ 11. Plaintiffs allege that they viewed these representations on the packaging 4 of Defendants’ premium dry dog food and relied on the representations in deciding to initially 5 purchase Defendants’ dog food from third-party retailers. Id. at ¶¶ 7–10. Plaintiffs thereafter

6 continued to buy Defendants’ dog food from retailers for several years. Id. 7 Plaintiffs allege that Defendants “[t]argeted consumers who were willing to pay the 8 Defendants’ premium prices” and used improper marketing practices to make “misleading 9 representations and warranties” about the quality of their dog food. Id. at ¶ 2. Plaintiffs allege 10 that Defendants’ “dog food contained and/or had a material risk of containing non-conforming 11 ingredients and contaminants, such as: (1) Heavy Metals; (2) non-fresh ingredients; (3) non- 12 regional ingredients; (4) BPA; and/or (5) pentobarbital.” Id. at ¶ 12. Plaintiffs allege that 13 Defendants failed to disclose and intentionally omitted that their dog food could contain these 14 “non-conforming ingredients and contaminants” and that Plaintiffs relied on the packaging’s

15 omissions. Id. at ¶¶ 13–14. 16 On these allegations, Plaintiffs brought claims for violation of the Washington Consumer 17 Protection Act, negligent misrepresentation, fraudulent misrepresentation, fraudulent 18 concealment, breach of express warranty, breach of implied warranty, and unjust enrichment. Id. 19 at ¶¶ 247–327. Defendants seek dismissal of Plaintiffs’ fraudulent concealment and breach of 20 implied warranty claims. Defendants’ motion does not seek dismissal of Plaintiffs’ other claims. 22 A. Legal Standard for Motion to Dismiss 23 Dismissal under Federal Rule of Civil Procedure 12(b)(6) “can be based on the lack of a 24 cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” 1 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990); see also FED. R. CIV. P. 2 8(a)(2). While considering a Rule 12(b)(6) motion, the court accepts all facts alleged in the 3 complaint as true and makes all inferences in the light most favorable to the non-moving party. 4 Baker v. Riverside Cnty. Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009) (citations omitted). 5 The court is not required, however, to accept as true a “legal conclusion couched as a factual

6 allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 7 550 U.S. 544, 555 (2007)). “Determining whether a complaint states a plausible claim for relief 8 will . . . be a context-specific task that requires the reviewing court to draw on its judicial 9 experience and common sense.” Id. at 679 (citations omitted). 10 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 11 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. at 678 (quoting 12 Twombly, 550 U.S. at 570). This requirement is met when the plaintiff “pleads factual content 13 that allows the court to draw the reasonable inference that the defendant is liable for the 14 misconduct alleged.” Id. (quoting Twombly, 550 U.S. at 556). The complaint need not include

15 detailed allegations, but it must have “more than labels and conclusions, and a formulaic 16 recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. “The 17 plausibility standard is not akin to a probability requirement, but it asks for more than a sheer 18 possibility that a defendant has acted unlawfully. . . . Where a complaint pleads facts that are 19 merely consistent with a defendant’s liability, it stops short of the line between possibility and 20 plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556, 21 557). Absent facial plausibility, a plaintiff’s claims must be dismissed. 22 B. Plaintiffs’ Fraudulent Concealment Claim 23 Applicable here, Federal Rule of Civil Procedure 9 further requires that Plaintiffs plead 24 “fraud or mistake” with particularity. FED. R. CIV. P 9(b). This generally requires allegations 1 “specific enough to give defendants notice of the particular misconduct . . . . [and] must be 2 accompanied by the who, what, when, where, and how of the misconduct charged.” Vess v. Ciba- 3 Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (internal quotation marks and citations 4 omitted). The requirements are relaxed in fraudulent omission cases, however, because plaintiffs 5 generally will not know the specific circumstances under which factual material was omitted, as

6 they would in a false representation claim. Carideo v. Dell, Inc., 706 F. Supp. 2d 1122, 1132 7 (W.D. Wash. 2010) (citing Falk v. Gen Motors Corp., 496 F. Supp. 2d 1088, 1098–99 (N.D. Cal. 8 2007)). 9 A fraudulent concealment claim is premised on a duty to disclose. See Schreiner Farms, 10 Inc. v. Am. Tower, Inc., 173 Wash. App. 154, 163, 293 P.3d 407, 412 (2013) (fraudulent 11 concealment may be established by the nine elements of fraud1 or breach of “an affirmative duty 12 to disclose a material fact”) (quoting Crisman v. Crisman, 84 Wash. App. 15, 21, 931 P.2d 163 13 (1997)). “Ordinarily, the duty to disclose a material fact exists only where there is a fiduciary 14 relationship and not where the parties are dealing at arm’s length.” See Tokarz v. Frontier Fed.

15 Sav. & Loan Ass’n, 33 Wash. App. 456, 463–64, 656 P.2d 1089, 1094–95 (1982) (citing Oats v. 16 Taylor, 31 Wash.2d 898, 903, 199 P.2d 694 (1948)). However, Washington courts sometimes 17 find a duty to disclose where the court can conclude there is a quasi-fiduciary relationship, . . . where a special relationship of trust and confidence has been 18 developed between the parties, . . . where one party is relying upon the superior specialized knowledge and experience of the other, . . . where a seller has 19

20 1 Washington law requires fraud to be proven with clear, cogent, and convincing evidence of:

21 (1) representation of an existing fact; (2) materiality; (3) falsity; (4) the speaker’s knowledge of its falsity; (5) intent of the speaker that it should be acted upon by 22 the plaintiff; (6) plaintiff's ignorance of its falsity; (7) plaintiff’s reliance on the truth of the representation; (8) plaintiff’s right to rely upon it; and (9) damages 23 suffered by the plaintiff.

24 Stiley v. Block, 130 Wash. 2d 486, 505, 925 P.2d 194, 204 (1996) (citation omitted). 1 knowledge of a material fact not easily discoverable by the buyer, . . . and where there exists a statutory duty to disclose.” 2

3 Favors v. Matzke, 53 Wash. App. 789, 796, 770 P.2d 686, 690 (1989) (citations omitted).2 4 The Court agrees with Defendants that the relationship between the parties does not give 5 rise to a duty for Defendants to disclose the possible presence of “non-conforming ingredients 6 and contaminants.” Several theories are easily disposed of. Plaintiffs do not allege a factual 7 basis for a fiduciary or quasi-fiduciary relationship with Defendants. Plaintiffs do not sufficiently 8 allege facts establishing any special relationship of trust and confidence at the time they were 9 allegedly mislead by Defendants’ material omissions.3 Nor do Plaintiffs sufficiently allege that 10 they relied on Defendants’ specialized knowledge and experience manufacturing dog food in 11 concluding that the dog food could not possibly contain “non-conforming ingredients and 12 13

14 2 The cases cited by the Favors court, which the Court has otherwise omitted, clearly deal with substantial relationships between the parties and support the Court’s conclusion in this case. See 15 Boonstra v. Stevens–Norton, Inc., 64 Wash. 2d 621, 393 P.2d 287 (1964) (duty to disclose in quasi-fiduciary relationship between loan broker and lender because lender relied on experience 16 and knowledge of broker); Salter v. Heiser, 36 Wash.2d 536, 219 P.2d 574 (1950) (lessor had duty to disclose existing liquor license when representing to inexperienced lessee that he could 17 sell liquor on the premises); Hutson v. Wenatchee Fed. Savs. & Loan Ass’n, 22 Wash. App. 91, 588 P.2d 1192 (1978) (lender had duty to disclose because of “complex relationship” with 18 borrower); Sorrell v. Young, 6 Wash. App. 220, 491 P.2d 1312 (1971) (real property seller had a duty to disclose prior filling of land where the fact was “not apparent or readily ascertainable”); 19 and Kaas v. Privette, 12 Wash. App. 142, 529 P.2d 23 (1974) (seller of corporate stock had a statutory duty to disclose material facts). 20

3 Plaintiffs make much of the “relationship of trust and confidence” between Defendants and 21 their customers. Dkt. #58 at 12. But, the Court finds it significant that Plaintiffs allege Defendants’ marketing fraudulently concealed the possible presence of “non-conforming 22 ingredients and contaminants” at both the time of Plaintiffs’ first purchase and several years later at the time of their last purchase of Defendants’ dog food. Plaintiffs do not allege any interactions 23 with Defendants prior to their first purchase, much less facts giving rise to a special relationship. Nor do they allege any actions that altered the relationship of the parties during the time they 24 purchased Defendants’ dog food. 1 contaminants.”4 Lastly, Plaintiffs have not adequately alleged that a relevant statute obligated 2 Defendants to disclose the information that Plaintiffs maintain was fraudulently concealed.5 3 Necessitating slight consideration, Plaintiffs argue that material facts as to the contents 4 of Defendants’ dog food were available only to Defendants and that those facts were not easily 5 discoverable by Plaintiffs. But Plaintiffs could have determined precisely what was in

6 Defendants’ dog food at any time by testing a small amount of it. This contrasts starkly with the 7 other cases in which this Court has found a duty for a manufacturer to disclose material facts. 8 See Zwicker v. Gen. Motors Corp., No. 07-cv-291-JCC, 2007 WL 5309204, at *3 (W.D. Wash. 9 July 26, 2007) (sufficient allegations of fraudulent concealment where purchaser of a vehicle is 10 not able disassemble and inspect the vehicle for defects); Carideo, 706 F. Supp. 2d 1122 (same 11 result, where purchasers cannot take apart and inspect the components of a computer for defects). 12 Defendants’ knowledge did not give rise to a duty to disclose here. 13 As a result, the Court finds that Plaintiffs’ Second Amended Class Action Complaint fails 14 to adequately state a claim for relief based on fraudulent concealment. Count IV of Plaintiffs’

15 Second Amended Class Action Complaint is dismissed. 16 C. Breach of Implied Warranty Claims 17 Defendants argue that Plaintiffs’ implied warranty claim fails for the simple reason that 18 there is no privity between Defendants and Plaintiffs: “Plaintiffs concede that they are not in 19

4 In fact, Plaintiffs allege that they instead relied on the Defendants’ marketing phrases in 20 deciding to purchase Defendants’ dog food. Similarly, Plaintiffs have not alleged any facts establishing a basis for relying on the specialized knowledge and experience of Defendants in 21 relation to other manufactures of premium dry dog food.

22 5 Plaintiffs generally point to Washington’s Consumer Protection Act, which makes a “knowing failure to reveal something of material importance [] ‘deceptive’ within the CPA.” Dkt. #58 at 23 13 (quoting Indoor Billboard/Washington, Inc. v. Integra Telecom of Washington, Inc., 162 Wash. 2d 59, 75, 170 P.3d 10 (2007)) (quotation marks omitted). But nothing in this order 24 prevents Plaintiffs from pursuing their Consumer Protection Act claims. 1 privity with Defendant. [Dkt. #58 at 11]. However, in a last-ditch effort to avoid dismissal of 2 this claim, Plaintiffs implausibly contend that [sic] have pled facts demonstrating that they are 3 third-party beneficiaries of an underlying, unidentified contract between [Defendants] and the 4 retailers that sold its food.” Dkt. #59 at 6. 5 Under Washington law,

6 “[a] third-party beneficiary is one who, though not a party to the contract, will nevertheless receive direct benefits therefrom.” . . . It is insufficient that 7 performance of a contract may benefit a third party; rather, the contract must have been entered for that party’s benefit, or the benefit must be a direct result of 8 performance within the parties’ contemplation.”

9 Key Dev. Inv., LLC v. Port of Tacoma, 173 Wash. App. 1, 29, 292 P.3d 833, 846–47 (2013) 10 (internal citations omitted). In the manufacturing context, Washington courts look to the “sum 11 of interaction and expectations between the purchaser and the manufacturer: [whether] the 12 manufacturer knew the identity, purpose, and requirements of the purchaser’s specifications and 13 shipped the [item] directly to the purchaser.” Touchet Valley Grain Growers, Inc. v. Opp & 14 Seibold Gen. Const., Inc., 119 Wash. 2d 334, 345, 831 P.2d 724, 730 (1992). 15 Plaintiffs’ argument that Defendants “knew the identity, purpose, and requirements of the 16 [Plaintiffs’] specifications” because Defendants marketed their dog food to “Pet Lovers,” such 17 as Plaintiffs, is not persuasive. Identifying a group of potential customers is a far cry from 18 identifying third-party beneficiaries.6 Nor do Plaintiffs identify any specific contract purporting 19 to make them third-party beneficiaries. Plaintiffs have failed to adequately plead a claim for 20 relief based on breach of an implied warranty. Count VI of Plaintiffs’ Second Amended Class 21 Action Complaint is dismissed. 22

6 Nonsensically, extending third-party beneficiary status to all “Pet Lovers” would be over and 23 under inclusive. “Pet Lovers” who never interacted with Defendants or their products would be third-party beneficiaries. Yet purchasers of Defendants’ dog food that did not self-identify as 24 “Pet Lovers” would not be third-party beneficiaries. Plaintiffs’ theory is unworkable. 2 Having considered the motion, the relevant briefing, and the remainder of the record, the 3 Court hereby finds and ORDERS that Defendants’ Motion to Dismiss Counts IV and VI of 4 Plaintiffs’ Second Amended Complaint (Dkt. #56) is GRANTED. Counts IV and VI of 5 Plaintiffs’ Second Amended Class Action Complaint (Dkt. #46) are DISMISSED. Plaintiffs’

6 other claims remain. 7 Dated this 29th day of July, 2020. 8 9 A 10 RICARDO S. MARTINEZ 11 CHIEF UNITED STATES DISTRICT JUDGE

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