Williams v. Dow Chemical Co.
| Decision Date | 21 March 2003 |
| Docket Number | No. 01 CIV. 4307(RMB).,01 CIV. 4307(RMB). |
| Parties | John WILLIAMS and Tina Williams, individually and as guardians of their minor children, Linda McElver, individually and as guardian of her minor child, Laurie Enger, Nancy Barrera, individually and as guardian of her minor children, Nancy Bostic and Lisa Ferguson, on behalf of themselves and all others similarly situated, Plaintiffs, v. The DOW CHEMICAL COMPANY, Dow Agrosciences, L.L.C. and John Does # 1 Through 100, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Curtis V. Trinko, Law Offices of Curtis V. Trinko, LLP, Kenneth F. McCallion, Rajan Sharma, McCallion & Associates, LLP, New York City, for John Williams, Tina Williams, Plaintiffs.
Morton Donald Dubin, III, Daniel J. Thomasch, Richard W. Mark, Orrick, Herrington & Sutcliffe LLP, New York City, Dean T. Barnhard, Joseph G. Eaton, Robert D. MacGill, Barnes & Thornburg, Indianapolis, IN, for The Dow Chemical Company, Dow Agrosciences, Defendants.
Dean T. Barnhard, Joseph G. Eaton, Robert D. MacGill, Barnes & Thornburg, Indianapolis, IN, for John Doe 1-100, Defendant.
On or about May 5, 2001, Plaintiffs filed this class action against Defendant Dow Chemical Company ("Dow") alleging, inter alia, that Dow had fraudulently obtained approval from the Environmental Protection Agency ("EPA") for the use and sale of Dursban, a non-agricultural pesticide. On August 27, 2001, Plaintiffs filed an Amended Class Action Complaint, adding Dow AgroSciences, L.L.C. ("Dow AgroSciences"), the Dow subsidiary that manufactures Dursban, as a defendant, and claims for conspiracy and racketeering in violation of 18 U.S.C. § 1961 est seq., the Racketeer Influencing Corrupt Organizations Act ("RICO"). On November 8, 2001, Dow and Dow AgroSciences filed a motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure and a motion for summary judgment pursuant to Rule 56. Thereafter, Plaintiffs sought and were granted leave to submit a Second Amended Complaint rather than respond to the motion. The Second Amended Complaint added nine (new) causes of action, including inter alia, claims of false advertising under the Lanham Act, 15 U.S.C. § 1051 et seq.; intentional and negligent misrepresentation under state law; and breach of express warranty under state law. The Second Amended Complaint also named "John Does # 1 through 100" as defendants (collectively with Dow and DowAgroSciences, "Defendants").
On February 15, 2002, Defendants filed a (second) motion for judgment on the pleadings pursuant to Rule 12(c), ("Def.Mem."), asking the Court to dismiss with prejudice six of the thirteen counts in the Second Amended Complaint and to dismiss Plaintiffs' allegations of "fraud on the EPA" and "failure to warn or failure to disclose information." On March 18, 2002, Plaintiffs submitted a memorandum of law opposing Defendants' motion ("Pl.Mem."). On April 2, 2002, Defendants filed a reply memorandum ("Def.Reply"). The Court heard helpful oral argument on March 3, 2003. For the reasons set forth below, the Court grants in part and denies in part Defendants' motion.
The following facts set forth in the Second Amended Complaint are taken as true for the purposes of this motion. See Dempsey v. Sanders, 132 F.Supp.2d 222, 224 (S.D.N.Y.2001).
Plaintiffs bring this class action to redress physical and property injuries allegedly caused by Dursban.1 SAC ¶ 2. The (seven) individual Plaintiffs sue on their own behalf, on behalf of their children, and on behalf of two "nationwide classes." SAC H1. The first class consists of all children under the age of eighteen who were "exposed to `Dursban' products of Defendants" and who have symptoms consistent with chemical poisoning. Id. The second class consists of all persons who "have suffered injury to their employment, business and/or property" from exposure to Dursban.2 Id.
Dursban is a pesticide which was developed and patented by Dow in or around 1965. SAC ¶ 59. Between 1965 and 2000, Dursban became one of the most widely used pesticides in the United States, and could be found in products ranging "from pet collars to roach spray." SAC 145. Between 1965 and 1989, Dow was "responsible for all of the research, testing marketing, manufacture and sale of Dursban products in the United States." SAC U 38. In 1989, a wholly owned Dow subsidiary, Rofan Services, Inc., formed a joint venture with Epco, Inc. ("Epco"), a wholly owned subsidiary of Eli Lily and Company ("Eli Lily"), called DowElanco. Id. From 1989 on, Dow and Dow Elanco "acted in concert and cooperated in order to manufacture, market and distribute Dursban products to the public." Id.3
Since 1981, Dursban has been subject to the registration requirements of the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. § 136 et seq. SAC K 3. FIFRA provides that no pesticide may be sold or distributed in the United States unless it has first been registered by the EPA. See 7 U.S.C. § 136a(a).4
Plaintiffs allege that, since at least 1965, "Defendants have engaged in a conspiracy and fraudulent scheme, involving a continuous pattern of racketeering activity through mail and wire fraud, to mislead the public and consumers (as well as the EPA) about the safety of Dursban, a product which was dangerously defective ... when used in [its] intended ... manner." SAC ¶ 7. Plaintiffs allege that Defendants effected their RICO scheme through an enterprise consisting of "all persons or entities who were or are associated in fact with the Defendants' design, testing, marketing, sale and distribution of Dursban and Dursban products, and the promotion of sales of Dursban including, but not limited to, the entities or persons that have assisted Defendants in doctoring scientific evidence and withholding scientific information from the public," SAC ¶ 105, including all named Defendants, SAC K 105(a), the employees and agents of Defendants who "subscribed to and actively pursued the `common goal'" of the enterprise, SAC K 105(b), Eli Lilly and its wholly owned subsidiary Epco, SAC 11105(c), and the "numerous pesticide applicators across the United States such as Terminix, Orkin and Pelican Pest Control" that distributed "Defendants' misrepresentations to consumers through pamphlets and informational materials." SAC 11105(d).5
Plaintiffs contend that Dow obtained "approval of Dursban by the federal regulatory authorities under FIFRA by intentionally concealing the dangerously defective nature of its product," SAC 1160, and has spent more than $100 million to "falsely suggest that Dursban is safe when used as intended and that chlorpyrifos does not cause unreasonable adverse effects on humans." SAC ¶ 62. Defendants allegedly did not provide "adverse incident reports" to the EPA although, under FIFRA, Defendants were required to do so. SAC ¶¶ 64-65. In August of 1995, Dow paid a $876,000 fine for failing to inform the EPA about reports of "249 Dursban poisoning cases that it had received." SAC 164. Plaintiffs also allege that Defendants "continuously misrepresented scientific literature, studies and other test results to the EPA." SAC ¶ 76. Among other incidents, on or about March 31, 1997, Defendants submitted a review of adverse incident reports and poison surveillance data to the EPA which included statements that were "clearly inaccurate or misleading." SAC 177.
Defendants also used false advertising "to misrepresent the dangers and health risks of Dursban to the public and consumers who, in justifiable reliance upon such misrepresentations, allowed the pesticide to be used in their homes and/or allowed themselves or their family members to be exposed to Dursban." SAC 169.6 Defendants allegedly distributed to pest control companies newsletters and promotional materials containing false and misleading representations about the safety of Dursban "with the specific intent that such material be provided to homeowners who sought to have their homes treated for [sic] pesticides." SAC ¶ 70. Plaintiffs allege that "these false and misleading representations were, clearly, intended to convince Plaintiffs and members of the Class that Dursban was not only effective, but that it was safe and did not constitute a serious health risk." Id.
By 1999, "enough adverse incident reports and scientific data" about products containing chlorpyrifos had come to light, and the EPA entered into negotiations with pesticide manufacturers, including Defendants, "in order to compel them to voluntarily withdraw or phase out" the use of products containing chlorpyrifos in the United States. SAC 182. On or about June 8, 2000, the EPA reached an agreement with the Defendants to "restrict virtually all residential usage of Dursban and to phase out the residential and commercial sales of the product altogether." SAC 14. As part of that agreement, the EPA cancelled FIFRA registration of a number of Dursban products. See 65 Fed.Reg. 76, 233 (Nov. 27, 2000) ( ). While the agreement between Defendants and the EPA bans "[a]U uses of Dursban in schools, daycare centers, nursing homes, and shopping centers, among other places," the EPA "will not order retail products containing Dursban to be pulled from store shelves." SAC 183-84. It is not clear from the Second Amended Complaint whether the EPA cancellation affects some or all of Defendants' Dursban products; nor is the extent of the restrictions imposed on the use of Dursban in the future made clear.
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