Thornton v. Tyson Foods, Inc.

482 F.Supp.3d 1147

Robin G. THORNTON, on behalf of herself and others similarly situated, Plaintiff,

v.TYSON FOODS, INC.; Cargill Meat Solutions Corp.; JBS USA Food Company; and National Beef Packing Company, LLC, Defendants.

Michael Lucero, on behalf of himself and others similarly situated, Plaintiff,

v.Tyson Foods, Inc.; Cargill Meat Solutions Corp.; JBS USA Food Company; and National Beef Packing Company, LLC, Defendants.

No. 1:20-cv-105-KWR-SMV

No. 1:20-cv-106-KWR-SMV

United States District Court, D. New Mexico.

Filed August 27, 2020

A. Blair Dunn, Western Agriculture, Resource and Business Advocates, LLP, Albuquerque, NM, for Plaintiff.

Amir M. Nassihi, Shook, Hardy & Bacon, L.L.P., San Francisco, CA, Armand D. Huertaz, Brian J. Fisher, Mayer LLP, Albuquerque, NM, Mark Tatum, Pro Hac Vice, Kansas City, MO, for Defendant Tyson Foods, Inc.

Alex Cameron Walker, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, Michael M. Sawers, Pro Hac Vice, Tyler A. Young, Pro Hac Vice, Faegre Drinker Biddle & Reath LLP, Minneapolis, MN, for Defendant Cargill Meat Solutions, Corp.

Matthew G. Munro, Pro Hac Vice, Patrick E. Brookhouser, Jr., Pro Hac Vice, McGrath North, Omaha, NE, Andrew G. Schultz, Rodey Dickason Sloan Akin & Robb, P.A., Albuquerque, NM, for Defendant JBS USA Food Company.

Cassandra Rose Wait, Pro Hac Vice, Bryan Cave Leighton Paisner, LLP, Kansas City, MO, Debashree Nandy, Eric R. Burris, Brownstein Hyatt Farber Schreck, LLP, Albuquerque, NM, Jennifer A. Jackson, Pro Hac Vice, Bryan Cave Leighton Paisner, LLP, Santa Monica, CA, Robert M. Thompson, Bryan Cave Leighton Paisner, LLP, Kansas City, MS, for Defendant National Beef Packing Company, LLC.

MEMORANDUM OPINION AND ORDER

KEA W. RIGGS, UNITED STATES DISTRICT JUDGE

THIS MATTER is before the Court on Defendants’ Motion to Dismiss Plaintiff Lucero's Complaint, filed on March 9, 2020 (Doc. 45, 1:20-cv-106), Defendants’ Motion to Dismiss Plaintiff Thornton's Complaint, (Doc. 43, 1:20-cv-105) , and Plaintiff Lucero's Motion to File Second Amended Complaint, filed on May 12, 2020 (Doc. 55). Having reviewed the pleadings and arguments, the Court finds Defendants’ arguments well-taken, therefore the Motions to Dismiss are GRANTED and the Motion to Amend is DENIED as futile.

BACKGROUND

Plaintiffs Robin Thornton and Michael Lucero filed substantially similar putative class actions and their cases were consolidated for pretrial matters. Defendants produce and sell beef products to retailers. Both Plaintiffs assert that Defendants are misleading retailers and consumers by labeling their beef "Product of the USA", when in fact the cattle are raised in foreign countries, imported into the United States live, then slaughtered and processed in the United States. Plaintiff Thornton asserts a putative class of consumers who were deceived into paying higher prices for American beef when it was allegedly foreign beef. Plaintiff Lucero asserts a putative class of American Ranchers who receive less for their American cattle because of the influx of imported cattle sold as product of the USA.

A. Procedural History

Plaintiff Michael Lucero is a "long time producer of beef cattle with a multi-general history of ranching in New Mexico." 20-cv-106, Doc. 1-1 ¶ 14. Plaintiff Lucero brings a class and subclass of all ranchers and Farmers in the United States (or New Mexico) who produced beef cattle for the commercial sale that were born, raised, and slaughtered in the United States. 20-cv-106, Doc. 1-1, 58 of 67, ¶49.

Plaintiff Thornton is a consumer who bought Defendants’ beef from various retail stores. She brings a putative class action of retail consumers allegedly deceived by Defendants’ county or origin label. Aside from the different classes, the two complaints appear to be substantially similar.

Plaintiff Thornton filed a complaint alleging violation of the New Mexico Unfair Practices Act pursuant to NMSA § 57-12-1 ; (2) breach of express warranty; and (3) unjust enrichment. Plaintiff Lucero's complaint alleges (1) violation of the NM UPA and (2) unjust enrichment.

On March 11, 2020, the cases were consolidated for all pre-trial purposes, and the parties agreed the cases would be tried separately before the undersigned. Doc. 47.

After briefing on the motions to dismiss were complete, Plaintiff Lucero filed a motion to amend complaint to replace his New Mexico Unfair Practices Act Claim with a violation of the New Mexico Antitrust Act. Defendants opposed the motion as futile.

B. Federal Meat Inspection Act and beef labeling.

Federal law "regulates a broad range of activities" related to meat processing. Nat'l Meat Ass'n v. Harris, 565 U.S. 452, 455-456, 132 S.Ct. 965, 181 L.Ed.2d 950 (2012). Labels on beef products are regulated under the Federal Meat Inspection Act ("FMIA"), codified at 21 U.S.C. § 601 et seq. Meat products may not be sold "under any ... labeling which is false or misleading, but ... labeling and containers which are not false or misleading and which are approved by the Secretary are permitted." § 607(d). The FMIA allows the USDA to ban labeling for meat products that it finds to be false or misleading. § 607(e).

The USDA regulates beef labels through its Food Safety and Inspection Service ("FSIS"). FSIS administers a label approval program which ensures that no meat products "bear any false or misleading marking, label, or other labeling and [that] no statement, word, picture, design or device which conveys any false impression or gives any false indication of origin or quality or is otherwise false or misleading shall appear in any marking or other labeling." 9 C.F.R. § 317.8(a).

FSIS has provided by regulation that "no final label may be used on any [meat] product unless the label has been submitted for approval to FSIS Labeling and Program Delivery Staff, accompanied by FSIS form 7234-1, Application for Approval of Labels, Marking, and Devices, and approved by such staff." 9 C.F.R. § 412.1(a). Here, it is undisputed that the label at issue has been approved by FSIS and found to not be misleading or false.

Defendants recite the history of "country of origin labels" thoroughly in their briefs. See Doc. 46, 1:20-cv-00106, at 19-23. In 2016, Congress made country or origin labeling optional for beef products. Pub. L. No. 114-113, 759, 129 Stat. 2242, 2284-85 (2016). The USDA treats country of origin labels as optional. The USDA continues to approve beef labels; if a producer wants to label its beef with a country of origin, it must comply with FSIS's approved standard before doing so. 21 U.S.C. § 607(d) ; See Food Safety Inspection Service's Food Standards and Labeling Policy Book, available at https://www.fsis.usda.gov/wps/wcm/connect/ 7c48be3e-e516-4ccf-a2d5-b95a128f04ae/Labeling-PolicyBook.pdf?MOD=AJPERES (last visited March 9, 2020). The FSIS approval process is required by federal law and beef products could not be sold unless the seller complied with that process. See Kuenzig v. Kraft Foods, Inc. , 2011 WL 4031141, at *7 n.8 (M.D. Fla. Sept. 12, 2011) ("The regulations relating to the FMIA and the PPIA are clear that Defendants’ labels were required to be submitted to the FSIS for approval prior to their use, and given that the labels were, in fact used, the Court will presume that the labels received the FSIS's approval."), aff'd , 505 F. App'x 937 (11th Cir. 2013).

C. Beef Labels at issue were approved by USDA.

As noted above, before a label may be used, it must be approved by the USDA. It appears to be undisputed that the labels at issue here were approved. Moreover, the label at issue is consistent with USDA regulations.

According to the FSIS labelling book "labeling may bear the phrase ‘product of USA’ under one of the following conditions: 1. If the Country to which the product is exported requires this phrase, and the product is processed in the U.S., or 2. The product is processed in the U.S. (i.e. is of domestic origin)." FSIS Labeling Book at 147. "Processed" means as follows:

Labeling to Meet Export Requirements

.... "Product of the U.S.A." has been applied to products that, at a minimum, have been prepared in the United States. It has never been construed by FSIS to mean that the product is derived only from animals that were born, raised, slaughtered, and prepared in the United States. The only requirement for products bearing this labeling statement is that the product has been prepared (i.e., slaughtered, canned, salted, rendered, boned, etc.). No further distinction is required. In addition, there is nothing to preclude the use of this label statement in the domestic market, which occurs, to some degree. This term has been used on livestock products that were derived from cattle that originated in other countries and that were slaughtered and prepared in the United States. Also, the cattle could have been imported, raised in U.S. feed lots, and then slaughtered and prepared in the United States. The beef products from these cattle can be labeled as "Product of the U.S.A." for domestic and export purposes.

Labeling of Imported Beef Products

Under Section 20 of the FMIA ( 21 U.S.C. § 620 ), imported beef products are to be treated as "domestic" product upon entry into the United States.

66 Fed. Reg. 41160, at 41160-61 (Aug. 7, 2001) (emphasis added). Therefore, the regulations are clear that cattle born and raised in a foreign country but slaughtered in the United States may use the "Product of the USA" label.

LEGAL STANDARD

In reviewing a Fed. R. Civ. P. 12(b)(6) motion to dismiss, "a court must accept as true all well-pleaded facts, as distinguished from conclusory allegations, and those facts must be viewed in the light most favorable to the non-moving party." Moss v. Kopp , 559 F.3d 1155, 1159 (10th Cir. 2009). "To withstand a motion to dismiss, a complaint must contain enough allegations of fact ‘to state a claim to relief that is plausible on its face.’ "

Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoti...