Health Law Daily Safe harbor not applicable in a consumer fraud claim against prescription pet food manufacturer and retailer
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Thursday, August 22, 2019

Safe harbor not applicable in a consumer fraud claim against prescription pet food manufacturer and retailer

By Elena Eyber, J.D.

Consumer fraud claim against prescription pet food manufacturer and retailer was allowed to move forward when the safe harbor provision did not apply and the fraud claim was pleaded with sufficient particularity.

Consumer fraud claim brought by consumers who purchased prescription pet food was allowed to move forward by the Seventh Circuit. The safe harbor provision did not apply. The FDA Compliance Policy Guide was not an informal regulatory activity specifically authorizing the prescription requirement and prescription label for the manufacturer’s pet food. Additionally, the consumers pleaded the fraud claim with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. The consumers’ request for restitution based on unjust enrichment rested entirely on the consumer fraud claim, and it was also allowed to move forward (Vanzant v. Hill’s Pet Nutrition, Inc., August 20, 2019, Der-Yeghiayan, S.).

Procedural history. Consumers were purchasing prescription pet food from a pet food retailer for a number of years and eventually learned they were not receiving what they expected. They thought prescription pet food was medically necessary for the health of their pets, had been approved by the FDA, and could not be sold legally without a prescription. But the FDA had not approved it, and nothing required that it be sold with a prescription. They filed a proposed class action in state court against the prescription pet food manufacturer and retailer alleging claims for violation of the Illinois Consumer Fraud Act and unjust enrichment. The district court granted the manufacturer’s and retailer’s motion to dismiss holding that the Consumer Fraud Act claim was foreclosed by the statute’s safe harbor provision, which shields actions authorized by laws administered by a regulatory body. Specifically, the district court relied on an FDA Compliance Policy Guide, which it construed as regulatory authorization. The district court also held that the consumers failed to plead the consumer fraud claim with the particularity required by Rule 9(b). With no underlying fraud claim remaining, the district court dismissed the unjust enrichment claim.

Safe harbor provision. The Seventh Circuit held that the safe harbor provision did not apply. Under the Food, Drug, and Cosmetic Act (FDC Act) pet food intended to treat or prevent disease and marketed as such is considered a drug and requires approval of a new animal drug application. Without FDA approval, the manufacturer may not sell it in interstate commerce and the product is deemed adulterated and misbranded. The FDA issued guidance recognizing that most pet food products in this category do not have the required approval. The guidance states that the agency is less likely to initiate an enforcement action if consumers purchase the food through or under the direction of a veterinarian. Because the guidance did not specifically authorize the manufacturer’s prescription requirement, prescription label, and related marketing representations, the safe harbor did not apply.

Consumer Fraud Act allegations. The appellate court held that the consumer’s complaint adequately alleged that the pet food manufacturer and retailer committed a deceptive or unfair practice. The complaint alleged that the prescription requirement, prescription label, and related marketing materials for the prescription pet food were deceptive because no prescription was necessary and there was no material difference between the prescription food and nonprescription food. The complaint pleaded a deceptive practice claim to the degree of particularity required by Rule 9(b). The Seventh Circuit held that it was enough to reverse the dismissal of the Consumer Fraud Act claim, and it was not necessary to address the adequacy of the allegations under the unfair practices theory of the case.

Unjust enrichment. The appellate court also allowed the consumers’ request for restitution based on unjust enrichment to move forward. In Illinois unjust enrichment is not a separate cause of action but is a condition brought about by fraud or other unlawful conduct. Because the appellate court allowed the statutory fraud claim to move forward, the request for restitution based on unjust enrichment was allowed to move forward as well.

The case is No. 17-3633.

Attorneys: Ellen M. Carey (Forde Law Offices LLP) for Holly B. Vanzant and Dana Land. Hannah Y.S. Chanoine (O'Melveny & Myers LLP) for Hill's Pet Nutrition, Inc. John L. Litchfield (Foley & Lardner LLP) for PetSmart, Inc. Brett Doran (Greenberg Traurig, LLP) for Medical Management International, Inc. d/b/a Banfield Pet Hospital and BluePearl Vet, LLC.

Companies: Hill's Pet Nutrition, Inc.; PetSmart, Inc.; Medical Management International, Inc. d/b/a Banfield Pet Hospital; BluePearl Vet, LLC

MainStory: TopStory CaseDecisions FDCActNews DrugBiologicNews FoodNews LabelingNews VetNews IllinoisNews IndianaNews WisconsinNews

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