Starr Surplus Lines Ins. Co. v. Mountaire Farms Inc.
Opinion
This appeal concerns a suit in the District of Maine by the insurer of a chicken products manufacturer to recoup the losses that it paid to the manufacturer for the losses that the manufacturer incurred when its products were recalled following a salmonella outbreak. Subrogated to the rights of the manufacturer, the insurer sought damages from the manufacturer's chicken supplier for claims under Maine law for breach of warranty and strict product liability. In support of those claims, the insurer's complaint alleged that the manufacturer received two truckloads of raw chicken from the supplier that was contaminated with Salmonella Enteritidis and was therefore "defective" under Maine law. The supplier filed a motion to dismiss, which the District Court granted as to all claims. The District Court did so after ruling that the complaint's allegations did not suffice to plausibly allege that the raw chicken that the supplier sent to the manufacturer was "defective." The District Court also concluded that the insurer's strict liability claim was independently barred by the economic loss doctrine. We affirm.
I.
The insurer is Starr Surplus Lines ("Starr"). Starr is subrogated to the rights that its insured, AdvancePierre, had under a contract with Mountaire Farms ("Mountaire"). Starr's complaint alleges the following
*113
facts, which we accept as true in reviewing the grant of a motion to dismiss.
See
Fantini
v.
Salem State Coll.
,
Mountaire is a regional fresh chicken producer located in North Carolina. In December 2014, Mountaire entered into a contract (the "Contract") with AdvancePierre, which is a national manufacturer of "value-added proteins and sandwich products to foodservice, retail, schools, and convenience channels." AdvancePierre's products are sold under various brand names, including Barber Foods.
Mountaire agreed under the Contract to deliver raw chicken parts to AdvancePierre's Barber Foods facility in Portland, Maine (the "Portland Facility"). In February 2015, Mountaire shipped 120,000 pounds of fresh boneless chicken breasts to the Portland Facility in connection with three separate purchase orders that AdvancePierre made under the Contract. AdvancePierre logged each purchase order, which was assigned a unique lot number, into its computer system, along with the supplier information and the time and date that the products that had been ordered were received.
The fresh chicken that AdvancePierre purchased from Mountaire was "contaminated with Salmonella Enteritidis at the time of delivery to AdvancePierre." AdvancePierre used this chicken from Mountaire to produce value-added raw chicken products, such as frozen raw stuffed chicken breasts ( e.g. , "Chicken Kiev, Chicken Cordon Bleu, [Chicken Stuffed with] Broccoli Cheese"), at the Portland Facility.
Between February and June of 2015, clusters of individuals (initially a total of six) in Minnesota and Wisconsin became infected with Salmonella Enteritidis . These cases were reported to the federal Food Safety Inspection Service ("FSIS") on June 24, 2015.
Through genetic testing, the FSIS identified "PFG pattern combinations" of the salmonella pathogen in all six of these patients that were "unique and new to the [Centers for Disease Control ('CDC') ] Pulse Net Database." The FSIS then linked the unique PFG pattern combinations to chicken products made by AdvancePierre at the Portland Facility. Later, the FSIS learned of two additional individuals who had contracted a Salmonella Enteritidis infection after being exposed to AdvancePierre products produced at the Portland Facility on the same production dates as the products linked to the other infected individuals.
Based on this testing, the FSIS issued a public health alert on July 1, 2015. On July 2, 2015, AdvancePierre initiated a recall with respect to 58,320 pounds of chicken products made on specific dates in 2015 at the Portland Facility. "[A]t the insistence of [the] FSIS," AdvancePierre soon thereafter expanded the recall to encompass a total of 1,707,494 pounds of raw chicken products produced by AdvancePierre at the Portland Facility on specific production dates between February 2015 and May 2015. Using its computer system, AdvancePierre determined that the chicken products associated with the Salmonella Enteritidis outbreak and the subsequent recall were made with chicken from the two truckloads of raw chicken parts that Mountaire had supplied in February 2015.
As a result of the recall, AdvancePierre incurred losses in excess of $ 10 million, "including but not limited to return and destruction of the recalled chicken products, lost sales opportunities, loss of business, and loss of customers." Starr paid AdvancePierre $ 10 million for the losses that it had sustained in connection with the recall. Starr subrogated to the rights of *114 AdvancePierre under the Contract with Mountaire.
Starr then filed suit against Mountaire in Cumberland County Superior Court in Maine. Starr brought claims under Maine law for breach of the implied warranty of merchantability,
see
Me. Rev. Stat. tit. 11, § 2-314, breach of the implied warranty of fitness for a particular purpose,
see
Mountaire filed a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), which the District Court granted as to all claims.
See
Starr Surplus Lines Ins. Co.
v.
Mountaire Farms Inc.
, No. 2:18-CV-00067-JDL,
II.
We review the grant of a motion to dismiss de novo.
See
Schatz
v.
Republican State Leadership Comm.
,
In undertaking our review, we first set aside legal conclusions and those factual allegations "too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture."
In re Curran
,
III.
We begin with Starr's breach of warranty claims. Under Maine law, "in order to maintain a claim for breach of the implied warranties of merchantability and fitness for particular purpose," the "plaintiff must show some defect in the product at the time it was sold."
Walker
v.
Gen. Elec. Co.
,
Starr accepts that, under Maine law, raw chicken that contains
salmonella
that can be eliminated by proper cooking cannot be considered "defective."
See, e.g.
,
Kobeckis
v.
Budzko
,
In attempting to make the contrary case, Starr does not dispute that "[t]he allegations in the ... complaint do not" once mention cooking, let alone "include a direct allegation that" the chicken from Mountaire was contaminated with a type -- insofar as there is such a type -- of
salmonella
resistant to proper cooking.
Cardigan Mountain Sch.
v.
New Hampshire Ins. Co.
,
In arguing otherwise, Starr first points to the complaint's allegation that, "[t]hrough genetic testing, the FSIS identified PFG pattern combinations ... in all of six of the patients initially infected with Salmonella Enteritidis in Wisconsin and Minnesota." In that same vein, Starr also notes, the complaint alleges that "[t]hese genetic pattern combinations were unique and new to the [Centers for Disease Control ('CDC') ] Pulse Net Database, and enabled the FSIS to link the illnesses directly to products produced at AdvancePierre."
But, "documents incorporated by reference into the complaint, matters of public record, and facts susceptible to judicial notice,"
Haley
,
Starr places great emphasis on the fact that the complaint alleges that the "genetic pattern combinations" of the salmonella pathogen found in the patients linked to the outbreak "were unique and new to the CDC Pulse Net Database." The complaint further alleges that these "unique and new" "genetic pattern combinations" "enabled the FSIS to link the illnesses directly to products produced at AdvancePierre." But, the key question with respect to the viability of Starr's breach of warranty claims is not whether the type of salmonella alleged to have contaminated the chicken supplied by Mountaire was found in the persons who suffered the illnesses that led to the recall. The key question is whether that type of salmonella is resistant to proper cooking. The complaint's allegations concerning the "unique" genetic pattern combinations simply do not bear on that question.
Starr next points to the complaint's allegation that a total of eight individuals in Minnesota and Wisconsin became infected with
Salmonella Enteritidis
after being exposed to products produced by AdvancePierre at the Portland Facility that contained the chicken from Mountaire. The complaint does not allege, however, that any of the eight patients contracted the
Salmonella Enteritidis
infection after eating properly cooked AdvancePierre chicken products or even after eating the products at all. In fact, Starr's counsel represented at oral argument only that the infected patients were "exposed" to AdvancePierre products containing the chicken at issue and conceded that the patients could have contracted the infections from merely touching the raw AdvancePierre chicken products. Nor does the complaint "refer[ ] to individuals with relevant knowledge who are recalling facts plausibly known to them" to help tip the allegations past the point of plausibility.
Cardigan Mountain
,
These deficiencies are significant because, as we have already explained, the complaint makes no allegation -- directly -- that the type of salmonella found in the chicken linked to the infected persons could not have been eliminated by proper cooking. In the absence of any allegation of that sort, we do not see how the mere fact that those persons became ill from that type of salmonella after being "exposed" to the AdvancePierre chicken products provides a plausible basis for inferring that the type of salmonella that those products were contaminated with was of such a kind.
Finally, Starr points to the complaint's allegations that the FSIS determined that the outbreak was severe enough to warrant a recall of the AdvancePierre products containing the chicken from Mountaire and "therefore [that] these products [
from Mountaire
] were adulterated within the meaning of
Mountaire counters that we should set aside the complaint's allegation that the chicken from Mountaire "w[as] adulterated within the meaning of
Federal law governing recalls provides no basis for concluding that, if chicken is "adulterated within the meaning of
Nor does the complaint allege that the FSIS was required under the relevant federal laws to make -- or that the FSIS in this instance made -- any other determinations about the chicken products at issue. In fact, the published FSIS guidance materials cited by Mountaire confirm that the FSIS may in some instances deem poultry products to be "adulterated" under the PPIA merely because the "products are associated with an illness outbreak." HAACP Plan Reassessment for Not-Ready-To-Eat Comminuted Poultry Products and Related Agency Verification Procedures Notice,
We recognize that "this is a commercial case between two businesses," and we do not mean to suggest that, as a categorical matter, "a seller of raw chicken products has no recourse against a raw chicken supplier when the federal government determines that the supplied chicken is adulterated and warrants a massive Recall." But, after considering "the cumulative effect of the factual allegations contained in the complaint,"
A.G. ex rel. Maddox
v.
Elsevier, Inc.
,
IV.
Starr's complaint also alleges, separate from its breach of warranty claims, that
*118
Mountaire is strictly liable for selling "raw chicken products to AdvancePierre in a defective condition that was unreasonably dangerous in a way not contemplated or expected by users and consumers" in violation of Me. Rev. Stat. tit. 14, § 221. Section 221 allows a plaintiff to recover in tort from a seller "for physical harm" to the plaintiff "or to his property" resulting from "goods or products [sold] in a defective condition unreasonably dangerous to the user or consumer or to his property."
A plaintiff "alleging damage or injury from a faulty or defective product" may, as Starr did here, bring "[a] lawsuit [under Maine law] ... based on a number of theories, including ... strict liability ... and breach of warranty."
Oceanside at Pine Point Condo. Owners Ass'n
v.
Peachtree Doors, Inc.
,
Here, as we have explained, the complaint does not sufficiently plead facts permitting us to plausibly infer that the raw chicken that Mountaire sold to AdvancePierre was contaminated with a type of salmonella that could not be eliminated by proper cooking and thus was defective under Maine law. 2 Nor does Starr contend that its strict liability claim may survive if we conclude that the complaint fails to allege facts that could suffice to show that the chicken supplied by Mountaire to AdvancePierre was defective.
We thus affirm the District Court's dismissal of Starr's strict liability claim on this basis alone.
See
MacDonald
v.
Town of Eastham
,
V.
For the foregoing reasons, we affirm the District Court's dismissal of Starr's breach of warranty and strict liability claims. Each party shall bear its own costs.
The parties do dispute whether Maine law applies the "foreign-natural" test,
see
Kobeckis
,
As we noted earlier, the parties do dispute whether the "foreign-natural" test,
see
Kobeckis
,
Reference
- Full Case Name
- STARR SURPLUS LINES INSURANCE COMPANY, as Subrogee to AdvancePierre Foods, Inc., Plaintiff, Appellant, v. MOUNTAIRE FARMS INC., Defendant, Appellee.
- Cited By
- 25 cases
- Status
- Published