Wallace v. Conagra Foods, Inc.

• Decision Date: 04 April 2014
• Docket Number: No. 13–1485.,13–1485.
• Citation: 747 F.3d 1025
• Parties: Melvin WALLACE; Shirley Hardt; Lewis Simpson; William Cobb; Erica Davis–Holder; Rotem Cohen; Julian Wagner; Rose Wagner; Erin Stilwell; Maria Eugenia Saenz Valiente; Adam Burnham, individually and on behalf of all others similarly situated, Plaintiffs–Appellants v. CONAGRA FOODS, INC., doing business as Hebrew National, a Delaware corporation, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

747 F.3d 1025

Melvin WALLACE; Shirley Hardt; Lewis Simpson; William Cobb; Erica Davis–Holder; Rotem Cohen; Julian Wagner; Rose Wagner; Erin Stilwell; Maria Eugenia Saenz Valiente; Adam Burnham, individually and on behalf of all others similarly situated, Plaintiffs–Appellants

v.CONAGRA FOODS, INC., doing business as Hebrew National, a Delaware corporation, Defendant–Appellee.

No. 13–1485.

United States Court of Appeals,

Eighth Circuit.

Submitted: Dec. 19, 2013.

Filed: April 4, 2014.

Anne T. Regan, argued, Minneapolis, MN (Hart L. Robinovitch, Scottsdale, AZ, Christopher J. Kuhlman, Minneapolis, MN, Christopher P. Ridout and Caleb L.H. Marker, Long Beach, CA, on the brief), for Appellant.

Corey L. Gordon, argued, Minneapolis, MN (Jennifer Yatskis Dukart and Emily A. Ambrose, on the brief), for Appellee.

Before RILEY, Chief Judge, WOLLMAN and LOKEN, Circuit Judges.

RILEY, Chief Judge.

Melvin Wallace and several other named consumers (collectively, consumers) claim some Hebrew National beef products are not, as the label reads, “100% kosher.” Seeking to represent a class consisting of all Hebrew National buyers in the United States over a multi-year period, the consumers sued Hebrew National's parent corporation, ConAgra Foods, Inc. (ConAgra), in Minnesota state court, alleging numerous violations of state law.¹ As their purchase and consumption of the Hebrew National brand products was not motivated by faith, the consumers do not assert any personal religious injury. Instead, the consumers aver ConAgra's representations that kosher is the “New Organic,” a promise of food purity amid other products full of artificial ingredients, led them to pay an unjustified premium for Hebrew National's ostensibly kosher beef.

ConAgra first removed to federal court, invoking the Class Action Fairness Act of 2005 (CAFA), 28 U.S.C. § 1453, then moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) and (6), contending the consumers lacked Article III standing and the district court lacked jurisdiction to address religious questions underlying the consumers' claims. Without addressing standing, the district court decided the First Amendment prohibits the courts from adjudicating the consumers' legal claims and, without noting 28 U.S.C. § 1447(c), dismissed the case with prejudice. The consumers appeal. Because the consumers lack traditional Article III standing to pursue this case, we vacate the district court's judgment, reverse the prejudicial dismissal, and instruct the district court to remand this case to state court as required by 28 U.S.C. § 1447(c).

I. BACKGROUNDA. Factual Allegations

The consumers premise their suit on the following allegations, which we accept as true at this juncture. ConAgra manufactures Hebrew National meat products (notably hot dogs) using beef slaughtered by AER Services, Inc. (AER). The slaughtering takes place in the facilities of another entity, American Foods Group, LLC (AFG), which sells meat classified as kosher to ConAgra and sells any remaining meat to third parties. AER employs the religious slaughterers who perform the “shechitah” (i.e., the ritual slashing of the cow's throat) along with the other individuals responsible for marking particular meat as kosher. One such individual is supposed to inspect the freshly slaughtered carcass while another examines the lungs for signs of injury. If a lung cannot hold air because, for example, there is a small perforation, the meat should be deemed non-kosher. A third party kosher certification entity named Triangle K, Inc., nominally monitors whether AER, AFG, and ConAgra comply with the kosher rules. Triangle K is a for-profit New York company owned and run by Ayreh Ralbag, an orthodox rabbi.

ConAgra promotes these kosher requirements as a reason to purchase Hebrew National products, which cost more than similar non-kosher competitors. As American consumers sought purer foods prepared in accordance with strict safety standards, the kosher food industry expanded by catering to non-religious consumers. Like the consumers bringing this case, an increasing number of Americans chose to pay more for Hebrew National's supposedly kosher products based on ConAgra's representations that the kosher label was a guarantee of quality and superior taste.

Each Hebrew National package says the contents are “Made With Premium Cuts of 100% Kosher Beef.” ConAgra says Hebrew National “answer[s] to a higher authority” and sells only products that “meet a higher standard.” ConAgra reported “[t]he Kosher trend is ... gaining momentum as more people come to understand the quality connection associated with the Kosher seal—which certifies both high-quality ingredients and processes that meet strict Kosher standards.” Hebrew National's director of marketing declared “[f]oods like Hebrew National's 100 percent kosher beef franks give parents quality assurance and purity of ingredients they can trust.”

Yet, according to the consumers, “manufacturing quotas—not kosher rules—are the deciding factor as to whether any batch of meat harvested at the AFG slaughterhouses is ultimately designated as kosher or non-kosher.” Employees face such pressure to meet a quota of approximately 70% for kosher meat that “the kosher inspection process becomes defective and unreliable” and some “meat from cows that should not qualify for kosher certification ends up being marked kosher and used in Hebrew National products.”

B. Procedural History

This case began as a state class action filed in Minnesota state court. ConAgra removed to federal court in the District of Minnesota, then moved for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6). Although ConAgra itself first invoked federal jurisdiction, ConAgra submitted that the federal district court lacked subject matter jurisdiction because (1) the consumers' claims were “barred” by the First Amendment, and (2) the consumers lacked Article III standing. The district court granted ConAgra's motion under Rule 12(b)(1), reasoning the First Amendment stripped the federal courts of subject matter jurisdiction over the consumers' state law claims. The district court believed that “the determination of whether a product is in fact ‘kosher[ ]’ [is] intrinsically religious in nature,” so adjudicatingthis case “would necessarily intrude upon rabbinical religious autonomy.” Finding “it lack[ed] the requisite subject matter jurisdiction to preside over th[e] dispute,” the district court dismissed the case with prejudice. The consumers now appeal.

II. DISCUSSION

It is a foundational principle in our legal system, enunciated by Justice Brandeis in a familiar concurrence, that courts must make every effort to avoid deciding novel constitutional questions. See Ashwander v. TVA, 297 U.S. 288, 345–47, 56 S.Ct. 466, 80 L.Ed. 688 (1936) (Brandeis, J., concurring). “It is not the habit of the court to decide questions of a constitutional nature unless absolutely necessary to a decision of the case.” Burton v. United States, 196 U.S. 283, 295, 25 S.Ct. 243, 49 L.Ed. 482 (1905) (emphasis added). A corollary to Burton's cardinal rule is that if a case may be resolved on easy and settled constitutional grounds, the court should do so instead of deciding the case on difficult and novel constitutional grounds. See, e.g., Ashwander, 297 U.S. at 346, 56 S.Ct. 466 (Brandeis, J., concurring). “[C]ourts should think hard, and then think hard again, before turning small cases into large ones.” Camreta v. Greene, 563 U.S. ––––, ––––, 131 S.Ct. 2020, 2032, 179 L.Ed.2d 1118 (2011). Rather than rushing to decide a difficult First Amendment question of first impression in this circuit, we begin with “the threshold jurisdictional question: whether” the consumers “ha[ve] standing to sue.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 102, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

A. Article III Standing

Considering the question de novo, see, e.g., Red River Freethinkers v. City of Fargo, 679 F.3d 1015, 1022 (8th Cir.2012), we conclude the consumers lack traditional Article III standing.

1. Economic Injury in Fact

ConAgra initially argues the consumers lack Article III standing because they suffered no “concrete and particularized injury.” According to ConAgra, the consumers' failure to allege “that they keep kosher” is fatal to their case. The consumers retort that the factual injury they allege was pecuniary, not religious: they claim to have “paid a premium price for a deceptively marketed product that failed to meet the manufacturer's guarantee.” On this point, ConAgra's argument is little more than a dispute over how best to read the consumers' complaint in the light most favorable to the consumers. If the consumers' complaint is accepted as true, the consumers may have paid too much for Hebrew National products based on ConAgra's misleading representations. When the alleged harm is “economic,” “the ‘injury in fact’ question is straightforward.” Hein v. Freedom From Religion Found., Inc., 551 U.S. 587, 642, 127 S.Ct. 2553, 168 L.Ed.2d 424 (2007) (Souter, J., dissenting); accord, e.g., Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 184, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (holding plaintiffs had standing because their “economic interests” were “directly affected”); Ben Oehrleins & Sons & Daughter, Inc. v. Hennepin Cnty., 115 F.3d 1372, 1379 (8th Cir.1997) (concluding even “indirect” financial harm “constitutes an injury in fact”). The consumers' alleged economic harm—even if only a few pennies each—is a concrete, non-speculative injury. ConAgra's argument on this point must fail.

2. Particularized, Actual Injury in Fact

Yet ConAgra has another standing challenge—this one well founded. ConAgra arguesthat even if the consumers would have overpaid if the Hebrew National products they bought were not actually kosher, the consumers “have not alleged that the products they each purchased were...