In a recent decision, the Southern District of Illinois allowed several claims to proceed against the manufacturer and distributor of commercial fish feed that allegedly caused the death of a largemouth bass population. Veath Fish Farm, LLC v. Purina Animal Nutrition, LLC, No. 17-CV-0303-MJR-SCW, 2017 WL 4472784, at *1 (S.D. Ill. Oct. 6, 2017).
The facts as alleged in the complaint were straightforward. Plaintiff, Veath Fish Farm, LLC, owned a largemouth bass farm that was home to about 360,000 bass in June 2015. Plaintiff had been purchasing commercial fish feed called AquaMax 500 and 600 distributed by Purina Animal Nutrition, LLC (“Purina”) since 2008. Plaintiff alleged that up until June 2015, Purina and other suppliers worked together to produce this feed, but in June 2015, Defendant Texas Farm Products Co. (“Texas Farm”) began producing the feed for Purina. Plaintiff alleged that the change in manufacturer was accompanied by a change in the formula of the food and that consumers were not notified of the reformulation. The new formulation allegedly contained higher percentages of digestible carbohydrates than largemouth bass can physically absorb, while Purina continued to represent on packaging and elsewhere that the food was “100% NUTRITIONALLY COMPLETE TO MAXIMIZE GROWTH” for largemouth bass. Plaintiff alleged that it relied upon these representations and, as a result, experienced significant disease and death amongst its largemouth bass population by April of 2016. Id.
Plaintiff filed a nine-count complaint against Purina and Texas Farm alleging fraud under the Illinois Consumer Fraud Act (“ICFA”), breach of express and implied warranties, and negligence. Id. at *2. Both Defendants moved to dismiss.
Illinois Consumer Fraud Act
With respect to Plaintiff’s ICFA claim, Defendants contended that the facts fell squarely within an exception to the statute that prohibits plaintiffs from recovering for damage to property other than the property that is the subject of the allegedly unlawful practice. They argued that this exception was applicable because the allegedly unlawful conduct related to fish food, but Plaintiffs were seeking to recover for damage to separate property: lost fish. Id. at *3.
Interestingly, the parties’ dispute as to the applicability of this exception turned on whether the Public Act containing the provision had been held unconstitutional in Illinois. The Illinois Legislature initially passed the Public Act containing the provision in 1995, but that Act was later held unconstitutional by the Illinois Supreme Court in 1997. See Best v. Taylor Machine Works, 689 N.E.2d 1057 (Ill. 1997). Defendants argued that Public Act 89-152, a second Public Act passed in 1995, contained the same language, has not been held unconstitutional and was therefore good law. Seeking to distinguish the facts from those examined by the Illinois Supreme Court in O’Casek v. Children’s Home and Aid Society of Illinois, 892 N.E.2d 994 (Ill. 2008), Defendants argued that section 89-152 was not a reiteration of previously stricken text, but was instead a separate iteration. Id. at *4-5. The court rejected this argument, holding that because both iterations of the Act predated Best‘s unconstitutionality finding, the minor stylistic changes to the text of the second version did not evidence an intent to change anything substantive that would bolster the provision’s legal force enough to survive Best. As further support, the court noted that multiple other federal courts, in cases involving bad dog treats, had allowed ICFA claims to proceed against manufacturers for harm to property other than the product at issue. This precedent also informed the court’s holding that lack of privity of contract between Plaintiff and Defendants did not preclude a claim under the ICFA. Id. at *6.
Purina argued that the express warranty claim against it should be dismissed because there was no privity of contract between it and Plaintiff. Plaintiff contended that the court should apply an exception in Illinois law that nonetheless imposes an implied warranty on a manufacturer where an article of food or drink intended for human consumption is sold in a sealed container. The court cited examples of federal courts interpreting this exception to also apply to products intended for animal consumption, an extension of the law which Defendants “vehemently oppose[d].” Id. at *7. The court observed that the key distinction between cases that decline to do away with the privity requirement and those that make exceptions to the privity requirement is that where exceptions are made, people or animals have been physically harmed: “Taking this distinction alongside Illinois case law discussing the evolution of competing tort and contract based theories of relief for product liability it is evident that Illinois courts are walking a tight rope attempting to optimize the allocation of risk between parties in a transaction.” Id. at *8. Ultimately, the court agreed with the federal courts which “err[ed] on the side of flexibility applying the privity requirements to express and implied warranty claims where there are allegations that a product harmed animals.” Id. The court applied the same reasoning to Plaintiff’s implied warranty of merchantability claim under UCC Section 2-314. Id.
The court did, however, dismissed Plaintiff’s claims against both Defendants for implied warranty of fitness for a particular purpose, reasoning that the products at issue were fish food meant for commercial fish stocks, such that feeding commercial largemouth bass was not a “particular” use, nor was there any allegation that Defendants represented that the products would do something above and beyond their normal advertised function. Id.
Finally, the court addressed whether Plaintiff’s negligence claims should be dismissed under the economic loss doctrine, referred to as the Moorman doctrine in Illinois. Under this doctrine, claims alleging “damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits—without any claim of personal injury or damage to other property” must proceed in contract, not tort. The doctrine has three recognized exceptions, including the “sudden and dangerous occurrence exception,” which applies if two elements are satisfied: (1) the event at issue constituted a sudden and dangerous occurrence, and (2) the damage sustained constituted “property damage.” The court looked to precedent interpreting this exception, including Starks Feed Co. v. Consol. Badger Coop., Inc., 592 F. Supp. 1255, 1257 (N.D. Ill. 1984), and held that Plaintiff’s negligence claim was sufficiently pled to proceed beyond the motion to dismiss phase because Plaintiff alleged that it suffered property damage in excess of the value of the fish feed because its largemouth bass died. Id. at *9.
Although this case dealt specifically with Illinois law, the court’s inclination to liberally apply privity requirements and exceptions to the economic loss doctrine might signal a broader tendency to allow contract and tort claims to proceed against manufacturers and distributors of animal food where there are allegations that animals have been harmed by such products. And, where the animals at issue are livestock or otherwise used for commercial purposes—like the largemouth bass at Veath Fish Farm—the alleged damages are likely to be significant. In that vein, this decision serves as a potential cautionary tale for sellers of packaged animal food that their products might be subject to the similar legal scrutiny or implied warranty standards as packaged food intended for human consumption.