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Nieto v. Perdue Farms

March 17, 2010

YESENIA NIETO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED. PLAINTIFF,
v.
PERDUE FARMS, INCORPORATED, A MARYLAND CORPORATION DEFENDANT.



The opinion of the court was delivered by: Honorable Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Yesenia Nieto ("Nieto") filed suit against Defendant Perdue Farms, Incorporated ("Perdue") individually and on behalf of all others similarly situated, alleging unjust enrichment (Count I), a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. (Count II) or, alternatively, a violation of the Maryland Consumer Protection Act, Md. Code Ann., Com. Law, §§ 13-301 et seq. (Alternative Count II), and seeking declaratory relief pursuant to 28 U.S.C. § 2201 (Count III). Perdue moves to dismiss Nieto's Second Amended Complaint for failure to state a claim upon which relief can be granted. For the reasons stated below, Perdue's Motion to Dismiss is granted.

BACKGROUND

The following facts are taken from Plaintiff's Amended Complaint and are assumed to be true for purposes of this Motion to Dismiss. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). Perdue, a company that processes chickens for consumers, distributes whole chickens and cut-up chicken portions for sale in grocery stores. Whole chickens contain giblets, a culinary term referring to the fowl's offal including the heart, gizzard, liver, and neck. Cut-up chicken portions do not come with giblets. Because Perdue sells more cut-up chicken portions than whole chickens, it has "an enormous quantity of extra giblet parts to dispose of . . . ." (Compl. ¶ 1.) Perdue sells its extra giblets in packets for consumer use and also sells them to pet food manufacturers. Despite its efforts, Perdue cannot sell all of the extra giblets; therefore, it must pay to properly dispose of them.

Nieto alleges that starting no later than October 13, 2003, and continuing to the present day, "Perdue has [had] a secret practice of disposing of additional giblet parts by inserting them (e.g., more than one heart, liver, gizzard or neck per bird) into Perdue whole chicken sold at retail." (Compl. ¶ 2) (emphasis omitted.) Because consumers pay for Perdue whole chickens by the pound, Perdue's practice of stuffing extra giblets into whole chickens increases the total weight of a whole chicken, effectively forcing consumers to subsidize Perdue's costs of disposing of the extra giblets. Nieto claims that the extra giblet weight can add up to 1/4 pound or more to each chicken.

Nieto alleges that Perdue concealed the inclusion of these extra giblets in its communications with its customers "through advertising generally and at the point of sale." (Compl. ¶ 17). Though Nieto cannot point specifically to any individual by name, she alleges that "those at Perdue responsible for (1) placing giblets into giblet packs, (2) placing giblet packs into whole birds, (3) giblet waste management, and (4) overseeing and auditing these processes and policies are important to this fraud." Id.

STANDARD OF REVIEW

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true all facts alleged in the complaint and construe all reasonable inferences in favor of the plaintiff. See Murphy, 51 F.3d at 717. To state a claim upon which relief can be granted, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when "accepted as true, . . . 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In analyzing whether a complaint has met this standard, the "reviewing court [must] draw on its judicial experience and common sense." Iqbal, 129 S.Ct. at 1950. A claim has facial plausibility when the pleaded factual content allows the court to draw a reasonable inference that the defendant is liable for the misconduct alleged. See id. at 1949.

Perdue also moves to dismiss on the grounds that Nieto has not met he heightened pleading standard set forth in Rule 9. Rule 9 provides that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R. Civ. P. 9. This heightened pleading requirement was intended to protect against the "great harm to the reputation of a business firm or other enterprise a fraud claim can do." Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007). To satisfy the requirements of Rule 9, a plaintiff must set forth "the who, what, when, where, and how" of the alleged fraud. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990).

DISCUSSION

I. Subject Matter Jurisdiction

Nieto claims federal subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d)(2)(A), the Class Action Fairness Act ("CAFA"). CAFA grants federal jurisdiction over a "mass action," that is, a Federal Rule of Civil Procedure 23 class action meeting three criteria: (1) at least 100 members in the class, 28 U.S.C. § 1332(d)(11)(B); (2) with at least $5,000,000 at issue, 28 U.S.C. § 1332(d)(2); (3) where any defendant and any class member are citizens of diverse states ("minimal diversity"), 28 U.S.C. § 1332(d)(2)(A). See Hart v. FedEx Ground Package Sys., 457 F.3d 675 (7th Cir. 2006). That Nieto's class has not yet been certified does not preclude jurisdiction under CAFA. See Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010) ("federal jurisdiction under the Class Action Fairness Act does not depend on certification . . .").

Although Nieto has not specifically addressed these three requirements, all have been satisfied. First, Nieto has defined the class as "[a]ll persons who purchased a Perdue whole chicken at retail from October 13, 2003 to present," which, if certified, would surely exceed 100 members and satisfy CAFA's first requirement. (Compl. ¶ 17). Second, given the large number of plaintiffs, and that the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA") permits recovery of punitive damages and attorney's fees, it is plausible that the amount in controversy will exceed $5,000,000. See Oshana v. Coca-Cola Co., 472 F.3d 506 (7th Cir. 2006) (CAFA's amount in controversy requirement satisfied even though the plaintiff did not specify the amount in controversy, because ICFA ...


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