Dimare Fresh, Inc. v. United States

• Decision Date: 28 October 2015
• Docket Number: No. 2015–5006.,2015–5006.
• Parties: DIMARE FRESH, INC., Dimare Ruskin, Inc., Dimare Johns Island, Inc., Butler Farms, Inc., Circle C Produce, LLC, Flowers Farms, LLC, Gregory Enterprises, LLC, High Hope Farms, LLC, Hopkins Farms, LLC, Fred Jackson, dba Jackson Farms, Dan Jones, Juniper Tomato Growers, Inc., JWM Farms, LLC, Mobley Greenhouse Investments, LLC, Dale Murray, Greg Murray, dba Murray Farms, Patterson Farm, Inc., Quality Produce, LLC, SK Enterprises of North Florida, Inc., Townsend Brothers Farms, Inc., Two Feathers Farms, Inc., Gargiulo, Inc., DMB Packing Corp., Artesian Farms Incorporated, Kuzzens, Inc., Farm Op, Inc., West Coast Tomato, LLC, Michael Borek Farms, LLC, East Coast Broker's and Packers, Inc., A Florida Corporation, c/o Gerard A. McHale, Jr. As Trustee, Diehl and Lee Farms, Frank Diehl, dba Frank Diehl Farms, Ora Diehl, Plaintiffs–Appellants v. UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

808 F.3d 1301

DIMARE FRESH, INC., Dimare Ruskin, Inc., Dimare Johns Island, Inc., Butler Farms, Inc., Circle C Produce, LLC, Flowers Farms, LLC, Gregory Enterprises, LLC, High Hope Farms, LLC, Hopkins Farms, LLC, Fred Jackson, dba Jackson Farms, Dan Jones, Juniper Tomato Growers, Inc., JWM Farms, LLC, Mobley Greenhouse Investments, LLC, Dale Murray, Greg Murray, dba Murray Farms, Patterson Farm, Inc., Quality Produce, LLC, SK Enterprises of North Florida, Inc., Townsend Brothers Farms, Inc., Two Feathers Farms, Inc., Gargiulo, Inc., DMB Packing Corp., Artesian Farms Incorporated, Kuzzens, Inc., Farm Op, Inc., West Coast Tomato, LLC, Michael Borek Farms, LLC, East Coast Broker's and Packers, Inc., A Florida Corporation, c/o Gerard A. McHale, Jr. As Trustee, Diehl and Lee Farms, Frank Diehl, dba Frank Diehl Farms, Ora Diehl, Plaintiffs–Appellants

v.UNITED STATES, Defendant–Appellee.

No. 2015–5006.

United States Court of Appeals, Federal Circuit.

Oct. 28, 2015.

M. Stephen Turner, Broad & Cassel, Tallahassee, FL, argued for plaintiffs-appellants. Also represented by David K. Miller.

Eric Laufgraben, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Benjamin C. Mizer, Robert E. Kirschman, Jr., Franklin E. White, Jr. ; Daretia Hawkins, Office of the General Counsel, United States Department of Health and Human Services, Washington, DC.

William S. Bilenky, MansonBolves, P.A., Tampa, FL, for amici curiae The Florida Tomato Exchange, The Florida Fruit and Vegetable Association.

Baylen Linnekin, North Bethesda, MD, for amici curiae Keep Food Legal Foundation, Baylen Linnekin.

Before WALLACH, BRYSON, and HUGHES, Circuit Judges.

WALLACH, Circuit Judge.

Plaintiffs–Appellants ("Tomato Producers" or "Appellants") appeal the decision of the United States Court of Federal Claims ("Claims Court") dismissing their Amended Complaint pursuant to Rule 12(b)(6) of the Rules of the United States Court of Federal Claims ("RCFC"). The Claims Court dismissed the Amended Complaint on the ground that press releases issued by the Food and Drug Administration ("FDA" or "Government"), which warned consumers of a possible link between Appellants' tomatoes and an outbreak of Salmonella Saintpaul ("salmonella"), did not effect a regulatory taking. See Dimare Fresh, Inc. v. United States, 118 Fed.Cl. 455 (2014). For the reasons set forth below, we affirm.

I. BACKGROUND

A. FDA Press Releases

Between April 23 and June 1, 2008, there were fifty-seven reported cases of salmonellosis

, an infection caused by the salmonella bacteria. Subsequently, the FDA, federal and state agencies, and food industry trade associations began an investigation to determine the source of the contamination. On June 3, 2008, the FDA issued a press release alerting consumers that the salmonella outbreak "appears to be linked" to the consumption of "raw red plum, red Roma, or round red tomatoes."¹ J.A. 34. In that press release, the FDA also stated that "the source of the contaminated tomatoes may be limited to a single grower or packer or tomatoes from a specific geographic area" and that it was working "diligently ... to quickly determine the source and type of the contaminated tomatoes." J.A. 34.

On June 7, 2008, the FDA released a second press release, informing the public that during the course of its investigation, it used "traceback² and other distribution pattern information" to identify specific geographic sources where tomatoes were safe to consume.³ (footnote added). J.A. 35.

On June 13, 2008, the FDA conducted a media briefing through its then—Associate Commissioner for Foods, Dr. David Acheson. Dr. Acheson stated the FDA suspected the contaminated tomatoes had been shipped from Florida or Mexico, and red plum, red Roma, and red round tomatoes were "incriminated with the outbreak." J.A. 40. Dr. Acheson, however, emphasized that the FDA had only issued a warning to consumers, and had not requested that any producers voluntarily recall tomatoes because the FDA had not "identified the particular source" of the salmonella outbreak. J.A. 48. Dr. Acheson also stated the FDA was still in the process of conducting an "ongoing investigation," and therefore the information gathered thus far was to remain "confidential." J.A. 42.

On July 17, 2008, the FDA issued a third press release announcing that "fresh tomatoes now available in the domestic market are not associated with the current outbreak." J.A. 62. "As a result, the agency [ ] remov[ed] its June 7 warning against eating certain types of red raw tomatoes." J.A. 62. Although the link between the salmonella outbreak and the Appellants' tomatoes was eventually disproved, the Tomato Producers allege that all or almost all of the value of the perishable tomatoes was destroyed due to a decrease in market demand for the Appellants' tomatoes. Appellants' Br. 19.

B. The Tomato Producers' Amended Complaint

The Tomato Producers are "growers, packers, and shippers of tomatoes in Florida and South Georgia." Dimare, 118 Fed.Cl. at 456 (internal quotation and citation marks). The Tomato Producers initially filed this suit as a putative class action on July 29, 2013. Supplemental Appendix 1.⁴ Upon the Government's motion to dismiss the Complaint, the Tomato Producers filed an Amended Complaint on April 16, 2014, electing to remove the class allegations and name additional parties to the suit.

In the Amended Complaint, the Tomato Producers allege the June 3 and June 7, 2008 FDA press releases were harmful to their spring 2008 sales and that "[t]here was no practical or legal opportunity to contest, controvert or prevent the effect of the warnings." J.A. 31. The Tomato Producers also allege they "had [a] reasonable investment backed expectation to realize the market value of their tomatoes, but as a result of [the] FDA's regulatory warnings, all economic value was lost due to the collapse of the market for their tomatoes." J.A. 31. Finally, the Tomato Producers assert that the "only value of the tomatoes was prompt sale in bulk" and they "had a property right in their healthy tomatoes, specifically the right to market and sell them as healthy food." J.A. 31. As a result, the Tomato Producers claim that their "property right was effectively rendered valueless by the FDA's actions." J.A. 31.

Although the Tomato Producers acknowledged they were not mandated to quarantine their crops or prohibited from exercising their right to market or sell the tomatoes, they nonetheless allege that because they "had no practical alternative to preserve their tomatoes," J.A. 31, the FDA press releases "had the same burdensome effect as quarantining or prohibiting sale of [their] tomato crop." J.A. 30. Accordingly, the Tomato Producers allege that due to its practical effect on the market demand for tomatoes, the FDA's issuance of the press releases must be recognized as a "regulatory taking of the [Tomato Producers'] perishable tomatoes." J.A. 32.

C. Procedural Posture and Jurisdiction

On May 5, 2014, the Government moved to dismiss the Tomato Producers' Amended Complaint pursuant to RCFC 12(b)(6) for failure to state a claim upon which relief can be granted. On September 18, 2014, the Claims Court granted the Government's motion and entered a judgment dismissing the Amended Complaint. On October 9, 2014, the Tomato Producers filed a timely notice of appeal. This court has jurisdiction under 28 U.S.C. § 1295(a)(3) (2012).

I. DISCUSSION

A. The General Principle Articulated by the Claims Court Is Not Supported by Our Takings Jurisprudence

Whether the Claims Court properly dismissed a "complaint for failure to state a claim upon which relief could be granted is an issue of law which we review de novo." Cambridge v. United States, 558 F.3d 1331, 1335 (Fed.Cir.2009) (citation omitted). To avoid dismissal for failure to state a claim, a complaint must allege facts "plausibly suggesting (not merely consistent with)" a showing of entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Cambridge, 558 F.3d at 1335. At this point in the proceedings, we accept the Tomato Producers' well-pleaded factual allegations as true. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Although we primarily consider the allegations in a complaint, we are "not limited to the four corners of the complaint." 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2004). We may also look to "matters incorporated by reference or integral to the claim, items subject to judicial notice, [and] matters of public record." Id.

The Claims Court dismissed the Tomato Producers' Amended Complaint because it concluded their "regulatory takings claims are not plausible." Dimare, 118 Fed.Cl. at 459 (capitalization modified). In rendering this decision, the Claims Court specifically identified three of its cases from which it discerned the general principle that "[a] regulatory takings claim is not plausible and cannot proceed when the government action at issue has no legal effect on the plaintiff's property interest." Id. at 460 (citing A–1 Cigarette Vending, Inc. v. United States, 49 Fed.Cl. 345 (2001), aff'd sub nom. Brubaker Amusement Co. v. United States, 304 F.3d 1349 (Fed.Cir.2002) ; Flowers Mill Assocs. v. United States, 23 Cl.Ct. 182 (1991) ; NBH Land Co. v. United States, 576 F.2d 317 (Ct.Cl.1978) ). The bright-line rule articulated by the Claims Court does not reflect applicable precedent.

The Takings Clause of the Fifth Amendment guarantees just compensation when private property is "taken" for public use. U.S. Const. amend. V. "It protects ‘private property’ without any distinction between different types." Horne v. Dep't of Agric., ––– U.S. ––––, 135 S.Ct. 2419, 2426, 192 L.Ed.2d 388 (2015). The "classic taking [is one] in which the government directly appropriates private...