Kucharski-Berger v. Hill's Pet Nutrition, Inc.
| Decision Date | 20 August 2021 |
| Docket Number | No. 122,833,122,833 |
| Citation | 494 P.3d 283 |
| Court | Kansas Court of Appeals |
| Parties | Stevie KUCHARSKI-BERGER, Appellant, v. HILL'S PET NUTRITION, INC., Appellee. |
James P. Frickleton, of Bartimus Frickleton Robertson Rader, P.C., of Leawood, Kimberly J. Johnson and Wade H. Tomlinson, pro hac vice, of Pope McGlamry, PC, of Atlanta, Georgia, and Edward J. Coyne III, pro hac vice, of Ward and Smith, P.A., of Wilmington, Delaware, for appellant.
Jennifer B. Wieland, of Berkowitz Oliver LLP, of Kansas City, Missouri, Thomas P. Schult, pro hac vice, of the same firm, Yaira Dubin and Hannah Y. Chanoine, pro hac vice, of O'Melveny & Myers LLP, of New York, New York, Richard B. Goetz, pro hac vice, of the same firm, of Los Angeles, California, and Michael F. Tubach, pro hac vice, of the same firm, of San Francisco, California, for appellee.
Before Arnold-Burger, C.J., Gardner and Isherwood, JJ.
Stevie Kucharski-Berger bought prescription pet food manufactured by Hill's Pet Nutrition, Inc. (Hill's), on the advice of and with a required prescription from her veterinarian. After learning that Hill's prescription pet food has no medicine or drug, that no prescription is legally required to purchase it, and that it is not tested and approved for medicinal purposes by the Food and Drug Administration (FDA), Kucharski-Berger sued Hill's alleging that Hill's and other pet food manufacturers conspired to monopolize the prescription pet food market and to artificially inflate prices by self-imposing the prescription requirement. Her petition alleges violations of the Kansas Restraint of Trade Act (KRTA) and the Kansas Consumer Protection Act (KCPA). She also raised an unjust enrichment claim against Hill's.
The district court dismissed Kucharski-Berger's petition, holding that she failed to state a claim upon which relief could be granted. We reverse and remand for further proceedings.
In February 2019, Kucharski-Berger filed a petition in Johnson County alleging that Hill's, along with other pet food manufacturers, created and enforced an unnecessary prescription requirement for select pet food which misleads reasonable consumers and violates Kansas law. The other pet food companies alleged to be involved in the case, although not named parties, include Mars Petcare US, Inc. (Mars), Royal Canin U.S.A., Inc. (Royal Canin), Nestle Purina Petcare Company (Purina), PetSmart, Inc. (PetSmart), Medical Management International, Inc. d/b/a Banfield Pet Hospital (Banfield), BluePearl Vet, LLC (Blue Pearl), and VCA Inc. (VCA).
In broad terms, which will be more fully discussed below, Kucharski-Berger alleged that prescription pet food manufacturers "combined and conspired with pet food retailers and veterinary clinics ... to communicate [a] false and misleading message" that prescription pet food offered benefits over nonprescription pet food justifying its higher price. She asserts that prescription pet food is largely the same as nonprescription pet food and that any differences in similar products "are not sufficient to justify one product being sold by prescription for a significantly higher price." For example, "Hill's Prescription Diet d/d Canine Skin Support Potato & Duck Dry Dog Food currently sells for $4.00 per pound and Hill's Science Diet Adult Sensitive Stomach & Skin Dry Dog Food sells for $1.65 per pound" and has a 65% overlap in ingredients.
According to the petition, federal and Kansas law do not require prescription pet food to be sold with a prescription from a veterinarian. Similarly, none of the prescription pet food bought by Kucharski-Berger contains a drug, nor has it been submitted to the FDA for review, analysis, or approval.
As Kucharski-Berger states it, reasonable consumers are willing to pay a premium for prescription pet food because a reasonable consumer would expect that pet food that requires a prescription from a veterinarian as a condition of purchase has been approved by the FDA. When purchasing the prescription pet food, a consumer must either buy it directly from the veterinarian who prescribes it or take the prescription to a business that sells the food, such as Banfield, Blue Pearl, VCA, or a PetSmart store with a Banfield on-site. By imposing a requirement of a prescription, Hill's and other manufacturers can sell prescription pet food at "excessive, inflated prices."
Kucharski-Berger alleges that Hill's managed to maintain the high prices due to agreements between the pet food manufacturers, distributors, and veterinarians. As a result of their agreements, Hill's, Mars, and Purina "created a separate and distinct market for Prescription Pet Food, which had not previously existed, which enabled them to sell Prescription Pet Food at anticompetitive, enhanced prices, and which they have dominated."
Kucharski-Berger noted that Kansas defines " ‘drug’ " as " ‘articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in human or other animals,’ K.S.A. § 65-1626(t)(2)" and defines " ‘[p]rescription-only drug’ " as " ‘any drug whether intended for use by human or animal, required by federal or state law, including 21 U.S.C. § 353, to be dispensed only pursuant to a written or oral prescription or order of a practitioner or is restricted to use by practitioners only,’ K.S.A. § 65-1626(eee)." Given her assertion that prescription pet food is a drug, Kucharski-Berger asserts that the prescription pet food must be registered with the FDA—which it is not.
Kucharski-Berger claimed that Hill's actions caused her injury because she bought Hill's prescription dog food at a higher price because she believed the prescription dog food contained some medicine or drug which was intended to treat a specific disease or health problem.
As to Kucharski-Berger's claims under the KCPA, the district court held that Hill's self-imposed prescription requirement was not deceptive, and Hill's did not do it to take advantage of consumers because the FDA "expressly wants veterinarians to provide direction and supervision to pet owners" who are purchasing prescription pet food.
The district court also found that Kucharski-Berger failed to plead the fraud with sufficient particularity. The court also found that when Kucharski-Berger's veterinarian advised her to purchase the prescription pet food, it constituted an intervening event that precluded her from properly pleading causation against Hill's. The court noted that Kucharski-Berger
The district court dismissed Kucharski-Berger's claim under an unjust enrichment theory because the claim was seeking relief for the same underlying conduct as her KCPA claim and, generally, an equitable remedy is unavailable if there is a possible adequate remedy at law.
The district court dismissed Kucharski-Berger's claim that Hill's and the other companies formed a trust to fix prices because she failed to plead facts that would show that Hill's and the other nonparties created a trust that manipulated the market. Instead, the court reasoned that Kucharski-Berger was merely describing an "open and free market."
Similarly, the district court dismissed Kucharski-Berger's claim that Hill's and the other nonparties conspired to create a monopoly. The court reasoned that she provided nothing to support her speculation that Hill's and the other nonparties made agreements or combinations to restrict market access to other competitors. The court noted that Kucharski-Berger's theory would lead to unintended results because "any time a new producer of a product failed to successfully gain market share, an action could be brought against the top ... companies for violations of the KRTA."
Kucharski-Berger timely appealed the district court's decision.
Whether a district court erred by granting a motion to dismiss for failure to state a claim is a question of law subject to unlimited review. Williams v. C-U-Out Bail Bonds , 310 Kan. 775, 784, 450 P.3d 330 (2019). The appellate court will view the well-pleaded facts in a light most favorable to the plaintiff and assume as true those facts and any inferences reasonably drawn from them. If those facts and inferences state any claim upon which relief can be granted, then dismissal is improper. Dismissal is proper only when the allegations in the petition clearly demonstrate the plaintiff does not have a claim. Steckline Communications, Inc. v. Journal Broadcast Group of Kansas, Inc. , 305 Kan. 761, 767-68, 388 P.3d 84 (2017) ; see K.S.A. 2020 Supp. 60-212(b)(6). As a result, we need not give any deference to the district court's decision and will not seek to outline our agreement or disagreement with any of its findings. Hill's has adopted most of the district court's positions as its own, and we will address them as such.
Kansas is a notice pleading state. Generally, a petition needs only "(1) [a] short and plain statement of the claim showing that the pleader is entitled to relief; and (2) a demand for relief sought." K.S.A. 2020 Supp. 60-208(a). Courts are to construe pleadings "so as to do justice." K.S.A. 2020 Supp. 60-208(e). A legal theory of relief need not be detailed, so long as the petition apprises the defendant of the facts upon which the plaintiff claims to be entitled to relief. Beck v. Kansas Adult Authority , 241 Kan. 13, 25, 735 P.2d 222 (1987).
A court cannot resolve factual disputes on a motion to dismiss for failure to state a claim. Under notice pleading, the petition is not intended to govern the entire course of the case. Instead, the pretrial order determines the ultimate legal issues and theories of the case. Because a party...
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