Thornton v. The Kroger Co.

• Decision Date: 17 February 2022
• Docket Number: CIV 20-1040 JB/JFR
• Court: U.S. District Court — District of New Mexico
• Parties: ROBIN G. THORNTON, on behalf of herself and others similarly situated, Plaintiffs, v. THE KROGER COMPANY, ALBERTSONS, and PAY AND SAVE INC., Defendants.

ROBIN G. THORNTON, on behalf of herself and others similarly situated, Plaintiffs, v. THE KROGER COMPANY, ALBERTSONS, and PAY AND SAVE INC., Defendants.

No. CIV 20-1040 JB/JFR

United States District Court, D. New Mexico

February 17, 2022

Marshall J. Ray Law Offices of Marshall J. Ray, LLC and A Blair Dunn Jared Robert Vander Dussen Western Agriculture Resource and Business Advocates, LLP Albuquerque, New Mexico Attorneys for the Plaintiffs

Monica R. Garcia Butt Thornton & Baehr PC Albuquerque, New Mexico and Nathaniel Lampley, Jr. Jessica K Baverman Victor Allen Walton, Jr. Jeffrey A. Miller Vorys, Sater, Seymour and Pease LLP Cincinnati, Ohio Attorneys for Defendants Albertsons Companies and the Kroger Company

Hugh N. Lyle Mullin, Hoard & Brown, LLP Lubbock, Texas Attorneys for Defendant Pay and Save Inc.

MEMORANDUM OPINION AND AMENDED ORDER ^[1]

THIS MATTER comes before the Court on: (i) the Defendants' Motion to Dismiss with Prejudice, filed November 13, 2020 (Doc. 14)(“MTD”); (ii) the Plaintiff's Opposed Emergency Motion to Vacate and Stay filed August 23, 2021 (Doc. 22)(“Stay Motion”); and (iii) the Plaintiff's Motion for Preliminary Injunction, filed November 10, 2021 (Doc. 36)(“PI Motion”). The Court held a status conference on August 24, 2021, see Clerk's Minutes at 1, filed August 24, 2021 (Doc. 25); a hearing on the MTD on August 25, 2021 see Clerk's Minutes at 1, filed August 25 2021 (Doc. 26); and a hearing on the PI Motion on December 17, 2021, see Clerk's Minutes at 1, filed December 17, 2021 (Doc. 71). The Court orally denied the Stay Motion on August 25, 2021. See Clerk's Minutes at 2, filed August 24, 2021 (Doc. 25). The Court entered an Order denying the MTD on September 30, 2021. See Order at 1, filed September 30, 2021 (Doc. 28). The main issues in deciding the MTD are: (i) whether collateral estoppel bars the Plaintiff Robin G. Thornton from bringing similar claims to those that the Honorable Kea W. Riggs, United States District Judge for the United States District Court for the District of New Mexico, dismissed with prejudice in the consolidated case, Thornton v. Tyson Foods, Inc., 482 F.Supp.3d 1147 (D.N.M. 2020)(Riggs, J.)(“Tyson Foods”); (ii) whether federal law preempts Thornton's State law claims where the Federal Meat Inspection Act, 21 U.S.C. §§ 601-695 (“FMIA”), regulates meat labeling, and the Food Safety and Inspection Services (“FSIS”) division of the United States Department of Agriculture (“USDA”) issued guidance in 2005 and 2020 on food product labeling; (iii) whether Thornton's New Mexico Unfair Practices Act, N.M.S.A. §§ 57-12-1 through 57-12-26 (“NMUPA”) claims are actionable under State law where § 57-12-7 of the NMUPA exempts “actions or transactions expressly permitted under laws administered by a regulatory body of . . . the United States, ” but not “actions and transactions forbidden by the regulatory body, and about which the regulatory body remains silent . . .”; (iv) whether Thornton's breach of express warranty claims are actionable, where Thornton did not provide Defendants the Kroger Company and Albertsons Companies notice of the alleged breach of express warranty before filing this case; (v) whether Thornton's claims fail under the Dormant Commerce Clause; and (vi) whether Thornton's Class Action Complaint, filed February 5, 2020 (Doc. 1-1), states a plausible claim for relief under the standards in Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007)(“Twombly”) and Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(“Iqbal”). See MTD at 6-23. The main issues in deciding the PI Motion are: (i) whether Thornton demonstrates that she has a substantial likelihood of success on the merits of her claim; (ii) whether Thornton will face irreparable injury should the Court not issue an injunction, where Thornton no longer purchases beef products from the Defendants; (iii) whether the balance of equities weigh in Thornton's favor, where Thornton does not demonstrate irreparable injury; and (iv) whether a PI is in the public interest, where the PI targets the Defendants' use of the official USDA grade shields. The Court grants the MTD on Thornton's claims relating to the official USDA grade shields, but denies the rest of the MTD, because, although: (i) collateral estoppel does not bar Thornton's claims in this case; (ii) federal law does not preempt Thornton's claims insofar as she is not seeking the reinstatement of country-of-origin labeling requirements; (iii) NMUPA's safe harbor clause does not exempt the Defendants' conduct; (iv) Thornton's lack of pre-suit notice does not preclude her breach-of-express-warranty claims; and (v) Thornton's claims do not fail under the Dormant Commerce Clause; nevertheless (vi) Thornton does not state a claim upon which relief may be granted as to the Defendants' use of the official USDA grade shields in their advertisements, because the grade shields are not misleading facially. The Court denies the PI Motion enjoining the Defendants from using color versions of the official USDA grade shields, because: (i) Thornton does not demonstrate a substantial likelihood of success on the merits of her official USDA grade shield claims, which the Court dismisses for failure to state a claim; (ii) Thornton has not shown that she will suffer irreparable injury, should the Court not grant the PI; (iii) the balance of equities weighs in the Defendants' favor; and (iv) a PI would not be in the public interest, given that the purpose of the grade shields is to inform consumers about the beef's grade and not its origin. Finally, for the reasons stated on the record at the August 24, 2021, status conference, the Court denies Thornton's Stay Motion. See Transcript of Hearing at 11:15-16 (Court)(taken August 24, 2021)(“Status Conf. Tr.”).^[2]

FACTUAL BACKGROUND

Because the Court addresses two separate motions which are subject to separate standards, the Court includes two factual sections. First, the Court provides the facts that Thornton alleges in her Complaint, which govern the MTD, and any other facts about which the Court may take judicial notice. Second, the Court provides findings of fact that govern the PI Motion.

I. Facts Governing the MTD.

The Defendants filed a MTD under rule 12(b)(6) of the Federal Rules of Civil Procedure. See MTD at 1. The Court may consider the “sufficiency of the allegations within the four corners of the complaint after taking those allegations as true” when evaluating a motion to dismiss under rule 12(b)(6). Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994). The Court also may consider: (i) documents that the complaint incorporates by reference, see Tellabs, Inc. v. Makor Issues & Rights, Ltd., Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); (ii) “documents referred to in the complaint if the documents are central to the Plaintiffs' claim and the parties do not dispute the documents' authenticity, ” Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002); and (iii) “matters of which a court may take judicial notice, ” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. at 322. See Armstrong v. N.M. Disability Det. Servs., 278 F.Supp.3d 1193, 1201 n.3 (D.N.M. 2017)(Browning, J.)(concluding that the Court could consider notices attached to the motion and not to the complaint, because the complaint referenced them, their adequacy was central to the plaintiffs' claims, and their authenticity was unquestioned). See also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. at 322 (“[O]nly if a reasonable person could not draw . . . an inference [of plausibility] from the alleged facts would the defendant prevail on a motion to dismiss.”). The Court takes its facts from the Plaintiff's Class Action Complaint, see Joint Notice of Removal at 19-94, filed October 8, 2020 (Doc. 1)(“Complaint”), and the Plaintiff's Amended Class Action Complaint, filed October 15, 2021 (Doc. 30)(“Amended Complaint”). The Court provides these facts for background to test the Complaint's sufficiency. It does not adopt them for the truth, and it recognizes that the Complaint reflects largely Thornton's version of events.

Thornton is a resident of Bernalillo County, New Mexico, and is “a long-time purchaser of beef Products.” Complaint ¶ 12, at 22. “Thornton has purchased beef products in New Mexico from Smith's Grocery Store and Albertsons grocery store.” Complaint ¶ 12, at 22. Thornton “actively seek[s] products that provide assurances regarding animal welfare, food safety standards, environmentally sound production methods and support for domestic producers.” Complaint ¶ 17, at 23. Thornton is willing to pay more for products marketed with those assurances. See Complaint ¶ 18, at 23.

Defendant the Kroger Company is an Ohio limited liability company with its principal place of business in Cincinnati, Ohio, and the Kroger Company operates Smith's grocery stores and City Market grocery stores in New Mexico. See Complaint ¶ 14, at 23. Defendant Albertsons Companies, Inc., is a Delaware limited liability company with its principal place of business in Boise, Idaho, and operates Albertsons Albertsons Market, Safeway, and Albertsons Market Street grocery stores in New Mexico. See Complaint ¶ 15, at 23. Both Albertsons Companies and the Kroger Company “market or advertise and sell”^[3] beef products “throughout most of the United States, including in New Mexico.” Complaint ¶ 16, at 23. The Kroger Company “markets to consumers that they are concerned about the sustainability.” Complaint ¶ 17, at 23. The Defendants “advertise a variety of product from the muscle cuts of beef and ground beef . . . that are derived both from cattle born and raised in the United States and from imported beef either live or slaughtered...