RCBA Nutraceuticals LLC v. Proampac Holdings Inc.
| Docket Number | 23-CV-305 |
| Decision Date | 29 June 2023 |
| Parties | RCBA NUTRACEUTICALS, LLC, Plaintiff, v. PROAMPAC HOLDINGS, INC., Defendant. |
| Court | U.S. District Court — Eastern District of Wisconsin |
DECISION AND ORDER
On March 6, 2023, plaintiff RCBA Nutraceuticals, LLC (“RCBA”) filed a complaint against defendant ProAmpac Holdings, Inc. (“ProAmpac”), alleging breach of implied warranty of fitness for particular purpose (count I), breach of implied warranty of merchantability (count II), breach of contract as third-party beneficiary (count III), civil conspiracy (IV), fraudulent misrepresentation (count V), and negligence (count VI). (ECF No. 1.)
ProAmpac has moved to dismiss RCBA's complaint on the ground that this court lacks personal jurisdiction over it or alternatively, on the ground that the complaint fails to state a claim on which relief can be granted. (ECF No. 9.) ProAmpac also asks this court to take judicial notice of RCBA's “nearly identical lawsuit” in Florida state court.
(ECF No. 9 at 12.) ProAmpac's motion is fully briefed and ready for resolution. Both parties have consented to this court's jurisdiction. (ECF Nos. 4, 10.)
Because this matter is before the court on defendant ProAmpac's motion to dismiss, the information in this section comes directly from RCBA's complaint, the allegations in which the court accepts as true. Bonte v. U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir. 2010).
RCBA is a Florida limited liability company in the nutritional supplement business that sells its supplements in plastic zipper bags. (ECF No. 1 at ¶¶ 1, 9, 15.) It is owned by two individuals, Ronnie Coleman and Brendan Ahern, neither of whom are citizens of Wisconsin. (ECF No. 1 at ¶ 2.) Until 2016 RCBA had purchased the plastic bags used to package its “King Mass. XL” supplement product from a Chinese manufacturer. (ECF No. 1 at ¶ 16.) Beginning in late 2016 RCBA started looking to shift its manufacturing operations to an American-based company that could produce a higher quality flexible packaging product. (ECF No. 1 at ¶¶ 20-21.)
In October or November of 2016 nonparty Western Packaging, Inc. (“Western”), a Texas corporation, offered to manufacture the packaging for RCBA's King Mass. XL product. (ECF No. 1 at ¶ 22.) Western shared a common ownership with another nonparty company, PolyFirst Packaging, Inc. (“PolyFirst”), a Wisconsin corporation whose principal place of business was in Hartford, Wisconsin. (ECF No. 1 at ¶¶ 4, 24.)
Western asked RCBA to provide it with a sample of RCBA's current King Mass. XL packaging, a plastic zipper pouch bag. (ECF No. 1 at ¶ 28.) After assessing the sample bag, Western represented to RCBA that it could manufacture the bags; that it would manufacture the bags in its Texas facility; that the bags would be “stronger, higher in quality, of greater mil strength and thickness, more durable, fully and successfully tested with RC[BA]'s product inside the bags before mass manufacture, and/or usable and fault-free for sale to RC[BA]'s customers”; and that there would be “shorter lead times and more favorable pricing.” (ECF No. 1 at ¶¶ 25, 26, 32, 34, 35, 37.)
Western was not and never had been a manufacturer of flexible packaging products. (ECF No. 1 at ¶ 27.) And at no point did Western represent to RCBA that it would subcontract out the manufacturing of the bags to PolyFirst or any other manufacturer. (ECF No. 1 at ¶ 38.) But that is what happened: from 2016 through late 2017 RCBA placed a series of written purchase orders with Western to engineer and manufacture over 180,000 zipper pouch bags for RCBA's supplement products. (ECF No. 1 at ¶ 55.) Rather than manufacture the bags itself, Western converted RCBA's purchase orders into its own purchase orders to be fulfilled by PolyFirst in PolyFirst's Hartford manufacturing facility. (ECF No. 1 at ¶ 56.)
On September 1, 2017, defendant ProAmpac, a Delaware corporation based out of Cincinnati, Ohio (ECF No. 1 at ¶ 5), purchased 100 percent of the stock, assets, and liabilities of PolyFirst. (ECF No. 1 at ¶¶ 39, 40.) Beginning on September 1, 2017, ProAmpac assumed all duties relating to the manufacturing of RCBA's bags and began manufacturing the bags at its newly acquired facility in Hartford, Wisconsin. (ECF No. 1 at ¶¶ 43, 44.) The employees at the Hartford manufacturing plant continued to manufacture RCBA's bags, now working for ProAmpac. (ECF No. ¶ 40.)
Beginning in around July 2017 and continuing into 2018, PolyFirst and, later, ProAmpac shipped bags from the Hartford, Wisconsin manufacturing facility to RCBA's “fillers,” Nutrablend Foods in Lancaster, New York, and JW Nutritional, LLC in Allen, Texas, where RCBA's nutritional products were filled into the bags. (ECF No. 1 at ¶ 63.) RCBA then shipped the finished products-the bags filled with RCBA's nutritional products-to customers and distributors worldwide. (ECF No. 1 at ¶ 66.)
In March 2018 RCBA began receiving complaints about the bags from customers and distributors. (ECF No. 1 at ¶ 69.) Specifically, the bags' seams split apart, causing RCBA's nutritional products to spill out. (ECF No. 1 at ¶ 72.) Employees at RCBA's filling facilities in New York and Texas discovered the defects. (ECF No. 1 at ¶¶ 70-71.)
RCBA has incurred substantial damages due to ProAmpac's manufacture of defective bags. (ECF No. 1 at ¶ 82.) Such damages include, but are not limited to, pulling its products from the marketplace; finding another packaging source for its products; giving refunds to customers; increasing its workforce to accommodate customer complaints and demands by customers for credits; discounting certain products to retain its customer base; suffering decreases in sales and profits; and suffering damage to its brand image. (ECF No. 1 at ¶ 84.)
RCBA previously brought a lawsuit in Florida state court, initially naming only ProAmpac and Western as defendants (ECF No. 9-2), but later adding PolyFirst (ECF No. 9-3). ProAmpac moved to dismiss for lack of personal jurisdiction, which motion was denied by the trial court. (ECF No. 9-4 at 4.) ProAmpac appealed, and the Florida appellate court reversed the trial court's ruling, remanding with instructions to dismiss ProAmpac as a defendant for lack of personal jurisdiction. (ECF Nos. 9-4 at 15-16; 9-5 at 2-3.) Following ProAmpac's dismissal from the Florida lawsuit, RCBA brought this lawsuit.
ProAmpac argues that this court lacks personal jurisdiction over it and, therefore, must dismiss this case pursuant to Rule 12(b)(2). Alternatively, it argues that RCBA's six causes of action are barred by the applicable statutes of limitations and, therefore, this court should dismiss this action pursuant to Rule 12(b)(6). In the event any of RCBA's causes of action sounding in tort (counts IV, V, and VI) are not deemed untimely, ProAmpac argues that they are nonetheless barred by the economic loss doctrine and, for that separate reason, should be dismissed pursuant to Rule 12(b)(6).
2.1. Personal Jurisdiction
A defendant may move to dismiss a lawsuit on the ground that the court lacks personal jurisdiction over it. Fed.R.Civ.P. 12(b)(2). “A district court sitting in diversity has personal jurisdiction over a nonresident defendant only if a court of the state in which it sits would have jurisdiction.” Purdue Rsch. Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 779 (7th Cir. 2003) (citing Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002)).
Wisconsin courts employ a two-step inquiry to determine whether personal jurisdiction may be exercised over nonresident defendants. First, the court determines whether a defendant meets any of the criteria for personal jurisdiction under Wisconsin's long-arm statute, Wis.Stat. § 801.05. Kopke v. A. Hartrodt, S.L.R., 2001 WI 99, ¶ 8, 245 Wis.2d 396, 408, 629 N.W.2d 662, 667. “If the statutory requirements are satisfied, the court then considers whether the exercise of jurisdiction comports with due process requirements.” Id.
When the defendant moves to dismiss the complaint under Fed.R.Civ.P. 12(b)(2), “[t]he plaintiff bears ‘the minimal burden of establishing a prima facie threshold showing that the statutory and constitutional requirements are satisfied.'” Englewood Mktg. Grp., Inc. v. ONL-RBW Logistics, LLC, No. 23-C-227, 2023 WL 3061253, at *2 (E.D. Wis. Apr. 24, 2023) (quoting Kopke, 2001 WI 99, ¶ 8, 245 Wis.2d at 408, 629 N.W.2d at 667). In determining whether the plaintiff has met its burden, the court may rely on the complaint, affidavits, exhibits, or other evidence in the record, resolving any material conflicts in the plaintiff's favor. Purdue, 338 F.3d at 782-83.
2.1.1. Wisconsin's Long-Arm Statute
RCBA contends that the court has general personal jurisdiction over ProAmpac under Wis.Stat. § 801.05(1)(d), which gives the court jurisdiction over a defendant who, when the action is commenced, “[i]s engaged in substantial and not isolated activities within this state, whether such activities are wholly interstate, intrastate, or otherwise.” RCBA also contends that the court has specific personal jurisdiction under § 801.05(3), which gives the court jurisdiction “[i]n any action claiming injury to person or property within or without this state arising out of an act or omission within this state by the defendant,” and § 801.05(5)(c), which provides jurisdiction in any action which “[a]rises out of a promise, made anywhere to the plaintiff or to some 3rd party for the plaintiff's benefit, by the defendant to ... ship from this state goods.”
General personal jurisdiction over a nonresident corporation exists “when their affiliations with the State are so ‘continuous and systematic' as to render them essentially at home in the forum...
To continue reading
Request your trial