Innovative Sols. Int'l v. Houlihan Trading Co.

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INNOVATIVE SOLUTIONS INTERNATIONAL, INC., Plaintiff, v. HOULIHAN TRADING CO., INC., et al., Defendants.

No. C22-0296-JCC

United States District Court, W.D. Washington, Seattle

January 29, 2024

ORDER

JOHN C. COUGHENOUR, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Plaintiff Innovative Solutions International, Inc.'s (“Innovative”) motion for summary judgment (Dkt No. 153) and Defendant Pilgrim's Pride Corporation's (“Pilgrim's”) cross-motion for summary judgment.^[1] (Dkt. No. 162.) Having thoroughly considered the briefing and the relevant record, the Court finds oral argument unnecessary^[2] and hereby GRANTS in part and DENIES in part each motion for the reasons explained herein.

I. BACKGROUND

This action arises from a supply chain dispute associated with chicken “breast trim.” (See generally Dkt. No. 83.) Namely, the parties contest whether “breast trim” may contain bone under their supply agreement(s). (Id.) This, in turn, determines whether those agreement(s) were violated. Defendant Pilgrim's processed the chicken at issue (herein referenced as “chicken 584”).^[3] (Dkt. No. 83 at 9.) And it indisputably contained bone. (Dkt. No. 155-2 at 3.) Yet, when selling “chicken 584,” Pilgrim's included a fact sheet describing the product as “breast trim.” (Dkt. No 163-8 at 2-4.)

Over time, “chicken 584” passed through numerous intermediaries, including Defendant Houlihan Trading Co Inc. (“Houlihan”). (Dkt. No. 163.) Houlihan, in turn, offered to sell the chicken to Innovative, a food products manufacturer. (See generally Dkt. No. 163-8.) In doing so, Houlihan described it as “B/S”^[4] and “breast trim.” (Dkt. No. 163-8 at 2.) Houlihan also sent Innovative a copy of Pilgrim's' fact sheet and an image of a different Pilgrim's label-both of which described the product as “breast trim.” (Id.) Innovative then purchased the chicken, (see Dkt. No. 154-36), to make its Chile Lime Chicken burgers, which it sold exclusively to Trader Joe's supermarket. (Dkt. No. 179-5.) When customers later complained about bones in the Chile Lime Chicken burgers, (a) Innovative recalled the product, (see Dkt. No. 179-3 at 2) (USDA recall notice), and (b) Trader Joe's terminated its business relationship with Innovative. (Dkt. No. 154-2 at 8-10.)

In response, Innovative sued Houlihan and Pilgrim's,^[5] alleging breach of contract, breach of express warranty, breach of implied warranty, negligent misrepresentation, negligence, and Washington's Consumer Protection Act (“CPA”) claims.^[6] (Dkt. No. 83.) Innovative now moves for summary judgment on all claims (Dkt. No. 153), Pilgrim's cross-moves on some of its claims (Dkt. No. 162), and Houlihan joins Innovative in moving for summary judgment on the express warranty and negligent misrepresentation claims (see Dkt. No. 176 at 2).

II. DISCUSSION

A. Legal Standard

“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “If a moving party fails to carry its initial burden of production, the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir. 2000). But once the moving party properly makes and supports their motion, the nonmoving party “must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed.R.Civ.P. 56(e)). Conclusory, non-specific statements in affidavits are not sufficient, and “missing facts” will not be “presumed.” Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 888-89 (1990). Ultimately, summary judgment is appropriate against a party who “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

B. Federal Preemption

According to Pilgrim's, the Poultry Products Inspection Act (“PPIA”) preempts any state claims related to a U.S. Department of Agriculture (“USDA”) approved product label. (See Dkt. No. 162 at 23.)

Pilgrim's argues that because the USDA's Food Safety and Inspection Service (“FSIS”) determined that Pilgrim's did not mislabel “chicken 584,” all claims against it must be dismissed-including those involving the product fact sheet. (Id. at 24.)

The PPIA regulates the nation's poultry market to ensure that poultry is “wholesome, not adulterated, and properly marked, labeled, and packaged.” 21 U.S.C. § 451. As part of the regulation of this market, the PPIA imposes labeling requirements, including mandating that the FSIS preapprove certain products' labels. See generally 9 C.F.R. § 412.1 (2023); 21 U.S.C. § 457(c). And to ensure national uniformity, the PPIA expressly preempts any state from imposing additional or different “marking, labeling, [or] packaging” requirements on poultry labels. 21 U.S.C. § 467e; Nat'l Broiler Council v. Voss, 44 F.3d 740, 744 (9th Cir. 1994) (citing 1968 U.S.C.C.A.N. 3426, 3442). The PPIA also preempts state liability laws that indirectly impose additional or different labeling standards. See Cohen v. ConAgra Brands, Inc., 16 F.4th 1283, 1288 (9th Cir. 2021). This is because complying with such laws would effectively require modifying FSIS-mandated labels. Id. But for the PPIA to apply at all, the representation at issue must constitute “labeling” under the PPIA's express preemption provision. Thus, whether the PPIA preempts Innovative's claims turns, at least in part, on whether Pilgrim's' representations-namely, its product fact sheet-constitute labeling under the PPIA.

Under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), a “label” is “a display of written, printed, or graphic matter upon any article or the [article's] immediate container,” and “labeling” means “all labels and other written, printed, or graphic matter (1) upon any article or any of its containers or wrappers, or (2) accompanying such article.” 21 U.S.C. § 453(s). Here, only the label was affixed to or accompanied the product at issue. (See Dkt. Nos. 163 at 6, 163-9.) The fact sheet was not. (Id.) Because the express preemption provision does not apply to non-labels, see 21 U.S.C. § 467e, the PPIA's express preemption is limited to the representations on the “chicken 584” label.^[7] See, e.g., Chem. Specialties Mfrs. Ass'n, Inc. v. Allenby, 958 F.2d 941, 946 (9th Cir. 1992) (determining that the Federal Insecticide, Fungicide, and Rodenticide Act did not preempt representations on point-of-sale warnings because the warnings were “neither written on the [product] nor attached to it,” and, therefore, were not labels).

Having concluded that the PPIA's express preemption provision governs the “chicken 584” label, the Court next considers whether the FSIS's determination actually preempts claims involving that label. PPIA preemption only occurs if state tort liability imposes requirements “in addition to” or “different from” the federal requirements. 21 U.S.C. § 467e. A state requirement is additional to or different from federal requirements if it is not “identical” or “parallel” to such federal requirements. See Riegel v. Medtronic, Inc., 552 U.S. 312, 330 (2008) (interpreting an identically worded statute); Nat'l Broiler Council, 44 F.3d at 745. Here, Pilgrim's asserts, and the Court agrees, that Innovative's claims impose such requirements. The FSIS's labeling decisions are considered “federal requirements” under the PPIA. Cohen, 16 F.4th at 1288.^[8] Hence, any misrepresentation claim based on an FSIS-approved label (here, the “584 Chicken” label) imposes an “additional or different” requirement and is therefore preempted. Id.

Accordingly, Pilgrim's motion for summary judgment (Dkt. No. 162) on this issue is GRANTED in part and DENIED in part consistent with the reasoning above.

C. Express Warranty^[9]

Innovative and Pilgrim's cross-move for summary judgment on Innovative's breach of express warranty claim against Pilgrim's.^[10] (Dkt. Nos. 153, 162.) Innovative argues that Pilgrim's breached its express warranty when the chicken included “excessive bones and other parts of chicken,” despite Pilgrim's representations that it was “a boneless breast trim product.” (Dkt. No. 153 at 25.) Pilgrim's counters that none of the materials it provided before the time of sale indicated the product was boneless. (Dkt. No. 162 at 15.) Resolution of this issue thus turns on whether an express warranty existed at the time of sale.

When a seller makes an affirmation of fact to a buyer, this creates an express warranty that the good will conform to this affirmation. RCW § 62A.2-313. While generally privity is required to maintain an action for breach of warranty, this requirement is relaxed when the seller makes an express warranty to the buyer. Thongchoom v. Graco Children's Products, 71 P.3d 214, 219 (Wash.Ct.App. 2003). But to recover, a plaintiff must show that it was aware of the seller's representation. Baughn v. Honda Motor Co., 727 P.2d 655, 669 (Wash. 1986).

Here, it is uncontroverted that, when selling “chicken 584,” Pilgrim's included a product fact sheet identifying it as consisting of “large breast trim.” (Dkt. No. 163-8 at 2-4.)^[11] This is sufficient to establish that Pilgrim's made an affirmation regarding “chicken 584,” which Innovative was aware of when it received the product with the label. RCW § 62A.2-313.

However the parties offer conflicting evidence with respect to whether the product that Innovative received fairly constitutes “breast trim.” ...