Vanzant v. Hill's Pet Nutrition, Inc.

Decision Date20 August 2019
Docket NumberNo. 17-3633,17-3633
Citation934 F.3d 730
Parties Holly B. VANZANT and Dana Land, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. HILL’S PET NUTRITION, INC., and PetSmart, Inc., Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

Ellen M. Carey, Attorney, FORDE LAW OFFICES LLP, Chicago, IL, for Plaintiffs-Appellants.

Hannah Y.S. Chanoine, Attorney, O'MELVENY & MYERS LLP, New York, NY, John C. Gekas, Attorney, SAUL EWING ARNSTEIN & LEHR LLP, Chicago, IL, Richard Blair Goetz, Attorney, O'MELVENY & MYERS LLP, Los Angeles, CA, Jonathan Hacker, Attorney, O'MELVENY & MYERS LLP, Washington, DC, for Defendant-Appellee HILL'S PET NUTRITION, INCORPORATED.

John L. Litchfield, Attorney, FOLEY & LARDNER LLP, Chicago, IL, Eileen R. Ridley, Attorney, FOLEY & LARDNER LLP, San Francisco, CA, for Defendant-Appellee PETSMART, INC.

Brett Doran, Attorney, GREENBERG TRAURIG, LLP, Chicago, IL, for Defendants-Appellees MEDICAL MANAGEMENT INTERNATIONAL, INC., BLUEPEARL VET, LLC.

Before Flaum, Manion, and Sykes, Circuit Judges.

Sykes, Circuit Judge.

Holly Vanzant and Dana Land own cats with health problems. Their veterinarians prescribed cat food manufactured by Hill’s Pet Nutrition, Inc., and sold under Hill’s "Prescription Diet" brand. For several years Vanzant and Land purchased this higher-priced cat food from their local PetSmart stores using their veterinarian’s prescriptions. They eventually learned, however, that the Prescription Diet cat food is not materially different from nonprescription cat food. And the prescription requirement is illusory; no prescription is necessary. Feeling deceived, Vanzant and Land filed a class-action lawsuit against Hill’s and PetSmart, Inc., asserting claims under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILL. COMP. STAT. 505/1 et seq. , and for unjust enrichment.

The district judge dismissed the Consumer Fraud Act claim for two reasons: (1) the complaint lacked the specificity required for a fraud claim; and (2) the claim is barred by a statutory safe harbor for conduct specifically authorized by a regulatory body—here, the U.S. Food and Drug Administration ("FDA"). The judge dismissed the unjust-enrichment claim because it was premised on the same conduct as the statutory claim.

We reverse. First, the safe-harbor provision does not apply. Under the Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301 et seq. , pet food intended to treat or prevent disease and marketed as such is considered a drug and requires approval of a new animal drug application. Without FDA approval, the manufacturer may not sell it in interstate commerce and the product is deemed adulterated and misbranded. The FDA issued guidance recognizing that most pet-food products in this category do not have the required approval; the guidance states that the agency is less likely to initiate an enforcement action if consumers purchase the food through or under the direction of a veterinarian (among other factors guiding the agency’s enforcement discretion). But the guidance does not specifically authorize the conduct alleged here, so the safe harbor does not apply.

And the plaintiffs pleaded the fraud claim with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. So the statutory claim may proceed. The unjust-enrichment claim is more appropriately construed as a request for relief in the form of restitution based on the alleged fraud. In Illinois unjust enrichment is not a separate cause of action but is a condition brought about by fraud or other unlawful conduct. Toulon v. Cont’l Cas. Co. , 877 F.3d 725, 741 (7th Cir. 2017). The request for restitution based on unjust enrichment therefore rests entirely on the consumer-fraud claim, and it too may move forward.

I. Background

The case comes to us from a dismissal at the pleadings stage, so we recount the facts as alleged in the amended complaint. Hill’s Pet Nutrition manufactures a variety of pet food, and this case concerns its Prescription Diet brand. Hill’s sells its Prescription Diet pet food through veterinarians and pet-food retailers, though consumers may purchase it from a retailer only with a veterinarian’s prescription. PetSmart sells pet supplies and pet food, including Hill’s Prescription Diet brand. Consumers need a veterinarian’s prescription to purchase Hill’s Prescription Diet food at PetSmart.

In January 2013 Holly Vanzant’s cat Tarik underwent emergency surgery for bladder

stones. At a follow-up appointment, Tarik’s veterinarian prescribed Hill’s Prescription Diet c/d Multicare Feline Bladder Health cat food. That same day Vanzant purchased the food at a PetSmart store. Inside she saw marketing materials indicating that the cat food is "prescription only," and the label on the bag read "Hill’s Prescription Diet." PetSmart provided her with a pet prescription card listing Tarik’s name, prescription number, and prescription date. For three years Vanzant purchased Hill’s Prescription Diet cat food from PetSmart, paying a higher price than for nonprescription food. She showed the prescription card to the cashier each time.

Land had a similar experience. In October 2013 a veterinarian diagnosed her cat Chief with diabetes

and prescribed Hill’s Prescription Diet m/d Feline Glucose/Weight Management cat food. Within a few weeks, Land purchased Hill’s Prescription Diet cat food at a PetSmart store. She too saw marketing materials inside the store indicating that the food is meant to treat or control diabetes. PetSmart provided Land with a pet prescription card listing Chief’s name, prescription number, and prescription date. For two years Land purchased Hill’s Prescription Diet cat food from PetSmart, paying a higher price than for nonprescription food. She too showed the prescription card each time.

Vanzant and Land eventually learned they were not receiving what they expected.

They thought prescription pet food was medically necessary for the health of their pets, had been approved by the FDA, and could not be sold legally without a prescription. But the FDA had not approved it, and nothing required that it be sold with a prescription. They filed a proposed class action in state court against Hill’s and PetSmart alleging claims for violation of the Illinois Consumer Fraud Act and unjust enrichment. The defendants removed the case to federal court and moved to dismiss it under Rule 12(b)(6).

The judge granted the motion. He held that the Consumer Fraud Act claim is foreclosed by the statute’s safe-harbor provision, which shields actions authorized by laws administered by a regulatory body. Specifically, the judge relied on an FDA Compliance Policy Guide, which he construed as regulatory authorization for "the gate-keeping role of veterinarians in ensuring that pet owners purchase only appropriate therapeutic foods." The judge also concluded that Vanzant and Land failed to plead the consumer-fraud claim with the particularity required by Rule 9(b). With no underlying fraud claim remaining, the judge likewise dismissed the unjust-enrichment claim. Vanzant and Land appealed.

II. Discussion

We review the dismissal order de novo. Camasta v. Jos. A. Bank Clothiers, Inc. , 761 F.3d 732, 736 (7th Cir. 2014). To survive a motion to dismiss, the complaint must contain "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). At a minimum it "must give enough details about the subject matter of the case to present a story that holds together." Swanson v. Citibank, N.A. , 614 F.3d 400, 404 (7th Cir. 2010).

The Illinois Consumer Fraud Act "protect[s] consumers ... against fraud, unfair methods of competition, and other unfair and deceptive business practices." Robinson v. Toyota Motor Credit Corp. , 201 Ill.2d 403, 266 Ill.Dec. 879, 775 N.E.2d 951, 960 (2002). Deceptive or unfair practices include any "misrepresentation or the concealment, suppression or omission of any material fact." 815 ILL. COMP. STAT. 505/2. To recover on a claim under the Act, a plaintiff must plead and prove that the defendant committed a deceptive or unfair act with the intent that others rely on the deception, that the act occurred in the course of trade or commerce, and that it caused actual damages. Siegel v. Shell Oil Co. , 612 F.3d 932, 934–35 (7th Cir. 2010). We begin, however, with the Act’s safe-harbor provision.

A. Safe-Harbor Provision

The Illinois Consumer Fraud Act exempts some acts and practices from liability under a safe-harbor provision. See 815 ILL. COMP. STAT. 505/10b(1). One component of that safe harbor covers actions "specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States." Id. This provision allows regulated actors to "rely on the directions received from [regulatory] agencies without risk that such reliance might expose them to ... liability." Price v. Philip Morris, Inc. , 219 Ill.2d 182, 302 Ill.Dec. 1, 848 N.E.2d 1, 38 (2005).

To trigger the safe harbor, the regulatory body must be operating within its statutory authority and the challenged conduct must be "specifically authorized by laws administered by" that regulatory body. § 10b(1). Formal rulemaking is not necessary; "informal regulatory activity" is enough. Price , 302 Ill.Dec. 1, 848 N.E.2d at 46. The FDA’s statutory authority includes regulation of pet food, so the dispute centers on whether the agency’s guidance qualifies as informal regulatory activity and specifically authorizes the relevant conduct.

The Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 301 et seq. , regulates pet food. Because Hill’s Prescription Diet cat food is intended to treat or prevent disease and is marketed as such, the products are...

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