UNITED STATES DISTRICT COURT NORTHERN DISTRICT ......2:3 (5th ed.)); and the Complaint here does...

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION BETH BERAROV and ANNELISA BINDRA, individually, and on behalf of all others similarly situated, Plaintiffs/Class Representatives, v. ARCHER-DANIELS-MIDLAND COMPANY, and ADM ALLIANCE NUTRITION, INC.,

Defendants.

Case No. 1:16-cv-07355 Hon. Jorge L. Alonso

ADM’S MEMORANDUM IN SUPPORT OF ITS COMBINED

MOTION TO DISMISS PLAINTIFFS’ COMPLAINT UNDER RULES 12(b)(6) AND 12(c)

AND MOTION TO STRIKE CLASS ALLEGATIONS UNDER RULE 12(f)

Case: 1:16-cv-07355 Document #: 21 Filed: 09/12/16 of 24 PageID #:99

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TABLE OF CONTENTS

Page

INTRODUCTION .......................................................................................................................... 1

RELEVANT FACTS ...................................................................................................................... 3

ARGUMENT .................................................................................................................................. 4

I. Plaintiffs’ Claims are Preempted. ........................................................................... 5

II. The Court Should Strike Plaintiffs’ Class Allegations. .......................................... 7

III. Count I Fails to State a Claim. ................................................................................ 9

IV. Count II Fails to State a Claim. ............................................................................. 11

V. Count III Fails to State a Claim. ........................................................................... 12

VI. Count IV Fails to State a Claim as to Plaintiff Berarov. ....................................... 13

VII. Count V Fails to State a Claim. ............................................................................ 15

VIII. Count VI Fails to State a Claim. ........................................................................... 15

CONCLUSION ............................................................................................................................. 16



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TABLE OF AUTHORITIES

Page(s)

Cases

Arango v. Work & Well, Inc., 2012 WL 3023338 (N.D. Ill. July 24, 2012) ..............................................................................7

Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................................................13

Aux Sable Liquid Prod. v. Murphy, 526 F.3d 1028 (7th Cir. 2008) ...............................................................................................5, 7

Avery v. State Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100 (2005) ........................................................................................................10, 11

Avila v. CitiMortgage, Inc., 801 F.3d 777 (7th Cir. 2015) .....................................................................................................4

Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023 (8th Cir. 2010) ...............................................................................................2, 8

Baye v. HBI Branded Apparel Enterprises, 2012 WL 6049656 (E.D. Mich. Dec. 5, 2012) ........................................................................13

BBL, Inc. v. City of Angola, 809 F.3d 317 (7th Cir. 2015) .....................................................................................................4

Blythe Holdings, Inc. v. DeAngelis, 750 F.3d 653 (7th Cir. 2014) ...................................................................................................15

Bohn v. Boiron, Inc., 2013 WL 3975126 (N.D. Ill. Aug. 1, 2013) ..............................................................................8

Chicago Faucet Shoppe, Inc. v. Nestle Waters N. Am. Inc., 24 F. Supp. 3d 750 (N.D. Ill. 2014) .........................................................................................15

Citadel Grp. Ltd. v. Washington Reg’l Med. Ctr., 692 F.3d 580 (7th Cir. 2012) .....................................................................................................3

Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (2013) ...............................................................................................................8

Corwin v. Conn. Valley Arms, Inc., 74 F. Supp. 3d 883 (N.D. Ill. 2014) .........................................................................................15



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Crichton v. Golden Rule Ins. Co., 576 F.3d 392 (7th Cir. 2009) ...................................................................................................11

Cuyler v. United States, 362 F.3d 949 (7th Cir. 2004) .....................................................................................................9

Dixon v. Ladish Co., 785 F. Supp. 2d 746 (E.D. Wis. 2011), aff’d sub nom. Dixon v. ATI Ladish LLC, 667 F.3d 891 (7th Cir. 2012) ..........................................................................................14

Dow v. Rheem Mfg. Co., 2012 WL 1621368 (E.D. Mich. May 9, 2012) .........................................................................13

Duncan Place Owners Ass’n v. Danze, Inc., 2016 WL 3551665 (N.D. Ill. June 30, 2016) .............................................................................8

Flying J Inc. v. City of New Haven, 549 F.3d 538 (7th Cir. 2008) ...................................................................................................14

Galvan v. NCO Fin. Sys., Inc., 2016 WL 792009 (N.D. Ill. Mar. 1, 2016) ...............................................................................10

Geier v. Am. Honda Motor Co., 529 U.S. 861 (2000) ...............................................................................................................5, 7

Glass v. Kemper Corp., 133 F.3d 999 (7th Cir. 1998) ...................................................................................................10

GoHealth, LLC v. Simpson, 2013 WL 6183024 (N.D. Ill. Nov. 26, 2013) ..........................................................................12

Greene v. Sears Prot. Co., 2016 WL 397375 (N.D. Ill. Feb. 2, 2016) ...............................................................................11

Hill v. Wells Fargo Bank, N.A., 946 F. Supp. 2d 817 (N.D. Ill. 2013) .....................................................................................4, 7

In Retail Fund Algonquin Commons, L.L.C. v. Abercrombie & Fitch Stores, Inc., 2010 WL 1874054 (N.D. Ill. May 10, 2010) ...........................................................................12

Int’l Administrators, Inc. v. Life Ins. Co. of N. Am., 753 F.2d 1373 (7th Cir. 1985) .................................................................................................13

Korean Am. Broad. Co. v. Korean Broad. Sys., 2011 WL 2436281 (N.D. Ill. June 9, 2011) .............................................................................12

MacDonald v. Thomas M. Cooley Law Sch., 724 F.3d 654 (6th Cir. 2013) ...................................................................................................13



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Marconi v. Indiana Mun. Power Agency, ISC, Inc., 2016 WL 4530307 (N.D. Ill. Aug. 30, 2016) ..........................................................................12

Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) .....................................................................................................8

Metzger v. DaRosa, 209 Ill. 2d 30 (2004) ..................................................................................................................9

Nat’l Grain & Feed Ass’n v. OSHA, 866 F.2d 717 (5th Cir. 1988) .............................................................................................2, 5, 6

Phillips v. Bally Total Fitness Holding Corp., 372 Ill. App. 3d 53 (1st Dist. 2007) .........................................................................................11

Pressalite Corp. v. Matsushita Elec. Corp. of Am., 2003 WL 1811530 (N.D. Ill. Apr. 4, 2003) .............................................................................15

Sanders v. Apple, Inc., 672 F. Supp. 2d 978 (N.D. Cal. 2009) .......................................................................................8

Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) ...........................................................................................................7, 8

Thorogood v. Sears, Roebuck & Co., 2006 WL 3302640 (N.D. Ill. Nov. 9, 2006) ............................................................................15

United Food & Commercial Workers Unions v. Walgreen Co., 2012 WL 3061859 (N.D. Ill. July 26, 2012), aff’d, 719 F.3d 849 (7th Cir. 2013) ..........................................................................................................................................9

Wooley v. Bridgeview Bank Mortgage Co., LLC, 2015 WL 327357 (N.D. Ill. Jan. 23, 2015) ..............................................................................10

In re Yasmin & Yaz, 2015 WL 7272766 (S.D. Ill. Nov. 18, 2015) .............................................................................9

Zahran v. Bank of Am., 2016 WL 826402 (N.D. Ill. Mar. 3, 2016) .................................................................................4

Statutes

410 ILCS 620/3 ..............................................................................................................................10

410 ILCS 620/7 ................................................................................................................................9

410 ILCS 620/22.2 ...........................................................................................................................9



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410 ILCS 620/25 ..............................................................................................................................9

740 ILCS 14/20 ................................................................................................................................9

740 ILCS 10/7(2) .............................................................................................................................9

21 U.S.C. 371(a) ..............................................................................................................................5

Mich. Comp. Laws Ann. § 600.2946 .............................................................................................14

Mich. Comp. Laws Ann. § 600.2946(2) ........................................................................................14

Mich. Comp. Laws Ann. § 600.2946(4) ........................................................................................14

Other Authorities

21 C.F.R. § 225.1 .............................................................................................................................6

21 C.F.R. § 225.65 ...........................................................................................................................5

21 C.F.R. § 225.165 .........................................................................................................................5

FDA Compliance Policy Guide 680.500 .........................................................................................6

FDA Compliance Policy Guide 680.600 .........................................................................................5

51 Fed. Reg. 7382 (1986) ................................................................................................................6

Fed. R. Civ. P. § 12(b)(6) ............................................................................................................2, 4

Fed. R. Civ. P. § 12(c) .............................................................................................................2, 4, 7

Fed. R. Civ. P. § 12(f) ..................................................................................................................2, 4

Fed. R. Civ. P. § 23 ......................................................................................................................4, 7

Newberg on Class Actions § 2:3 (5th ed.) ...........................................................................2, 4, 7, 8



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INTRODUCTION

This is a case involving federal regulation of facilities that manufacture animal feed for mul-

tiple species—feed that, depending on the batch, may be treated with medication. For decades, the

U.S. Food and Drug Administration has recognized that “carryover” of medication from one batch to

the next can be a problem; and for decades FDA has published “acceptable means of preventing un-

safe contamination of medicated and non-medicated feeds with drug residues.” Plaintiffs’ complaint

is an attack on this sensible federal regulation under the guise of state law. It should be dismissed.

According to the Complaint, horses in South Carolina and Michigan died after purportedly

ingesting an antibiotic called monensin. The horses’ owners are convinced that the monensin must

have come from ADM horse feed produced at a dual-species plant. Yet the Complaint itself cites an

FDA report that cleared the specific ADM facility at issue—stating that “no evidence was found in-

dicating that the [relevant] feed produced at this facility was contaminated with monensin.” This

was no offhand conclusion. As FDA itself states in its regulations, “in each and every instance

where the mill clean-out procedures or other manufacturing practices are such that carryover is sus-

pected, it is our burden to prove that the contamination is ‘unsafe.’” (Emphasis added.) Relying on

state law, Plaintiffs invite this Court to second-guess FDA’s scientific conclusion.

Remarkably, Plaintiffs’ counsel also style this case as a class action on behalf of anyone at

any time who ever purchased horse feed anywhere from ADM—even if the feed they bought con-

tained no monensin. According to the Complaint, “ADM’s choice to manufacture horse feed and

supplements in the same facility as monensin-laced cattle feed … poses an extraordinarily high, un-

acceptable, and undisclosed risk of cross-contamination.” In other words, FDA’s longstanding car-

ryover regulations themselves must effectively go out the window—because even if the regulations

are followed, as FDA found ADM did here, all horses that ingest feed from a facility where carryo-



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ver could occur face a “risk” of contamination. And by itself, says the Complaint, that mere risk

creates a cause of action under state law for anyone who bought the feed.

As we show in this combined motion under Rules 12(b)(6), 12(c), and 12(f), this is not the

law. For one thing, all these claims are preempted. “Feed mills are subject to the good manufactur-

ing practice (GMP) and inspection requirements of the FDA, which pervasively regulates the pro-

cessing of animal feed.” Nat’l Grain & Feed Ass’n v. OSHA, 866 F.2d 717, 736 n.35 (5th Cir.

1988). FDA regulations state how to manufacture feed in dual-species plants. If the Complaint is

successful, though, manufacturers will always have to make feed in separate plants, rendering

FDA’s rules for operating combined plants a dead letter. That would defeat the purposes of Con-

gress.

Further, this case has no business being styled as a class action on behalf of purchasers

who—unlike the name-plaintiffs—are not even alleged to have received feed containing monensin,

much less been injured by it. After all, “[a] class must … be defined in such a way that anyone with-

in it would have standing.” Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010).

This is not to say that injury must be proved as to every member before a class is certified. It is to

say, however, that “Article III … requires that the complaint allege that absent class members have

been injured” (Newberg on Class Actions § 2:3 (5th ed.)); and the Complaint here does not.

Finally, even if not preempted, the claims here should be dismissed as to the name-plaintiffs.

Count I, under the Illinois Food, Drug, and Cosmetic Act, should be dismissed as that law provides

no private right of action. Count II, under the Illinois Consumer Fraud Act, should be dismissed be-

cause that law does not apply outside Illinois, and the events here occurred in South Carolina and

Michigan. Count III, for negligent misrepresentation, is based on opinion statements, which are not

actionable. And for reasons we will explain, part of Count IV (strict liability), all of Count V (unjust



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enrichment), and all of Count VI (breach of express warranty) should be dismissed as untenable.

RELEVANT FACTS

Defendant ADM Alliance Nutrition manufactures animal feeds, including feeds for horses.

(Compl. ¶¶ 1, 10.) Defendant Archer Daniels Midland Company owns ADM Alliance Nutrition.

(Id. at ¶¶ 9–10.) Although their principal places of business are in Illinois, the Defendants (jointly,

“ADM”) manufacture horse feeds at a facility in Cordele, Georgia. (Compl. ECF No. 1-4.)

Plaintiffs Beth Berarov and Annelisa Bindra are horse owners from Michigan and South

Carolina, respectively. (Compl. ¶¶ 5, 7–8.) Berarov owns and operates Moonlyte Equestrian Center

in Carleton, Michigan. (Id. at ¶ 69.) Bindra owned a horse that she stabled at Camelot Farms in

Beaufort, South Carolina. (Id. at ¶ 78.) In December 2014, Bindra’s horse fell ill while stabled

there and ultimately died—along with several other horses at that facility. (Id. at ¶¶ 79–80.) In early

2015, some of the horses at Berarov’s facility fell ill, and they, too, died. (Id. at ¶¶ 71, 75–77.) Both

plaintiffs assert their horses ingested monensin, which they say came from ADM feeds. (Id. at ¶¶

73, 79.)

When ADM learned about the problem at Camelot Farms in December 2014, it immediately

began a voluntary investigation. (Compl. ECF No. 1-5.) ADM’s investigation involved collecting

samples of the horse feed from Camelot Farms and submitting it for testing at independent laborato-

ries. (Ex. 1, FDA Rep’t, at 12-13; Compl. ECF No. 1-4.) 1 All tests confirmed that the ADM prod-

ucts “had monensin levels below the limit of detection,” meaning there was no “evidence that

[ADM] feed contain[ed] harmful levels of monensin.” (Compl. ECF No. 1-4.) Meanwhile, FDA

started its own investigation into ADM’s Georgia facility and, specifically, the allegations that ADM

1 As the Complaint references the FDA report (Compl. ECF No. 1-4, 1-5), it is appropriate for the Court to consider. E.g., Citadel Grp. Ltd. v. Washington Reg’l Med. Ctr., 692 F.3d 580, 591 (7th Cir. 2012) (court “may consider documents … referenced in the pleading if central to the claim”).



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feed made there contained monensin. (Id.; see also Ex. 1.) FDA reviewed all of the lab reports and

“verified” that “[monensin] is non-detectable in the sampled products.” (Ex. 1 at 14.)

Ultimately, after multiple visits to the Georgia facility and a thorough vetting of all relevant

records, FDA found “[n]o objectionable conditions,” and “no evidence … indicating that the Alli-

ance 12 % horse feed produced at this facility was contaminated with monensin and was the source

leading to the deaths/illnesses of six horses [at Camelot Farms].” (Ex. 1 at 2.) Further, FDA “ob-

served that [ADM] was performing the correct procedures and safeguards for the production of med-

icated feeds and were within compliance with medicated feed regulations.” (Id. at 14.)

Eventually, Plaintiff Berarov had her situation investigated. (See ECF Nos. 1-6–1-14.)

Some reports concluded that the horses’ symptoms were “consistent with … exposure to monensin”

(e.g., ECF No. 1-13) whereas at least one report concluded that “[t]he characteristic features of

monensin toxicity … include massive scarring and fibrosis that were absent in this animal” (id. at 1-

14).

With this suit, Plaintiffs seek relief for themselves and “all persons who purchased ADM eq-

uine feeds and nutritional supplements.” (Compl. ¶ 87.) These class members allegedly were

harmed economically, as the feed was “not worth the purchase price that … class members paid.”

(Id. at ¶ 68.) On behalf of this purported class, Plaintiffs assert six causes of action. Supra at 2.

ARGUMENT

To survive a 12(b)(6) or (c) motion, “a complaint must contain sufficient factual matter, ac-

cepted as true, to state a claim to relief that is plausible on its face.” Zahran v. Bank of Am., 2016

WL 826402, at *2 (N.D. Ill. Mar. 3, 2016) (citation omitted); BBL, Inc. v. City of Angola, 809 F.3d

317, 325 (7th Cir. 2015) (12(b)(6) and 12(c) are “governed by the same standards”). It must also

rely on theories that are “legally sound.” Avila v. CitiMortgage, Inc., 801 F.3d 777, 781 (7th Cir.



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2015). Here, the Complaint lacks facts and is not legally sound. Further, under Rule 12(f), the

Court should strike Plaintiffs’ class allegations, which “make clear that the suit cannot satisfy Rule

23”—or even Article III. Hill v. Wells Fargo Bank, N.A., 946 F. Supp. 2d 817, 830 (N.D. Ill. 2013).

I. PLAINTIFFS’ CLAIMS ARE PREEMPTED.

Under the Constitution’s Supremacy Clause, federal law preempts any state law that “stands

as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”

Aux Sable Liquid Prods. v. Murphy, 526 F.3d 1028, 1033 (7th Cir. 2008) (quotations omitted). “To

determine whether state and federal law are in conflict,” courts “examine the federal statute as a

whole and identify its purpose and intended effects.” Id. at 1034 (quotations and alterations omit-

ted). In so doing, courts must weigh whether “common-law actions … actually conflict with federal

regulations.” Geier v. Am. Honda Motor Co., 529 U.S. 861, 872 (2000) (quotations omitted).

Here, FDA exercised its “authority to promulgate regulations for the efficient enforcement”

of the Federal Food, Drug, and Cosmetic Act (“FDCA”). 21 U.S.C. § 371(a). In particular, “[f]eed

mills are subject to the good manufacturing practice … and inspection requirements of the FDA,

which pervasively regulates the processing of animal feed.” Nat’l Grain, 866 F.2d at 736 n.35. This

includes processing by equipment that makes both medicated and non-medicated feed. In such facil-

ities, “[a]dequate procedures shall be established and used for all equipment … to avoid unsafe con-

tamination of medicated and nonmedicated feeds.” 21 C.F.R. § 225.165.

These regulations provide for dual-species plants, noting that “[t]he level of drugs in animal

feeds which will constitute unsafe contamination may vary among species.” FDA Compliance Poli-

cy Guide 680.600. In all such plants, FDA offers manufacturers a menu of adequate procedures, in-

cluding “cleaning by physical means, e.g., vacuuming, sweeping, washing, etc. Alternatively, flush-

ing or sequencing or other equally effective techniques may be used whereby the equipment is



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cleaned either through use of a feed containing the same drug(s) or through use of drug free

feedstuffs.” 21 C.F.R. § 225.65. As to “sequencing,” FDA offers a list of five “acceptable princi-

ples” to ensure safety. FDA Compliance Policy Guide 680.600.

These FDA procedures and “requirements are enforced through rigorous governmental in-

spections” (Nat’l Grain, 866 F.2d at 736 n.35), and if a manufacturer “fail[s] to adhere to the regula-

tions,” the “feed shall be deemed to be adulterated.” 21 C.F.R. § 225.1. Here, ADM conducted in-

spections and did not find “any evidence that [ADM] feed contain[ed] harmful levels of monensin.”

(Compl. ECF No. 1-4.) FDA reviewed all of the lab reports and “verified” that “[monensin] is non-

detectable in the sampled products.” (Ex. 1 at 14.) Ultimately, after multiple visits to the facility,

FDA found “[n]o objectionable conditions”; and “no evidence … that the … horse feed produced at

this facility was contaminated with monensin and was the source leading to the deaths/illnesses of

six horses [at Camelot Farms].” (Ex. 1 at 2.) Further, FDA “observed that [ADM] was performing

the correct procedures and safeguards for the production of medicated feeds and were within com-

pliance with medicated feed regulations.” (Id. at 14.) This investigation was FDA’s duty: “[I]n

each and every instance where the … manufacturing practices are such that carryover is suspected, it

is our burden to prove that the contamination is ‘unsafe.’” FDA Compliance Policy Guide 680.500.

With these comprehensive regulations, one of FDA’s primary goals was “uniformity” and

eliminating “piecemeal policies.” 51 Fed. Reg. 7382 (1986). And in light of this uniform program,

all of Plaintiffs’ claims are preempted. FDA prescribes how to use the same plant to make medicat-

ed and non-medicated feed—including for multiple species—and found ADM in compliance. But if

Plaintiffs prevail, no manufacturers will ever use dual-species plants—lest they face liability thanks

to a “high risk” that the feed could be contaminated. (Compl. ¶ 55.)

The Complaint states: “ADM’s choice to manufacture horse feed and supplements in the



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same facility as monensin-laced cattle feed … poses an extraordinarily high, unacceptable, and un-

disclosed risk of cross-contamination.” (Compl. ¶ 3.) Accordingly, Plaintiffs seek “damages” for

those who purchased “ADM’s feed” made in dual-species facilities—whether or not it contained any

monensin. And “Plaintiffs seek … either to require ADM to change its manufacturing processes to

eliminate the risk of monensin contamination, or, alternatively, to require ADM to disclose to pur-

chasers that its feed and supplements are manufactured in facilities creating a high risk of contami-

nation.” (Compl. ¶ 6.) All three components of Plaintiffs’ claims—adulteration, misbranding, and

mislabeling—are aspects of this attack on ADM’s FDA-approved manufacturing process.

In other words, whereas FDA offers a mix of choices “to avoid unsafe contamination of med-

icated and nonmedicated feeds” (21 C.F.R. § 225.165), including in dual-species facilities, Plaintiffs

say that state-law effectively offers manufacturers one choice: stop using such facilities. That

would defeat the purposes and objectives of Congress, as understood by FDA. Aux Sable Liquid

Prods., 526 F.3d at 1033. This tracks what happened in Geier, in which the plaintiffs demanded that

the defendant car-makers install airbags in all vehicles. But the Department of Transportation had

rejected an “all airbag” standard and instead prescribed a mix of passive restraints. 529 U.S. at 879.

The Supreme Court held this mix supreme, and that an “all airbag” requirement was an obstacle to

achieving “the variety and mix of devices that the federal regulation sought.” Id. at 881.

So too here. For these reasons, all of Plaintiffs’ claims must be dismissed under Rule 12(c).

II. THE COURT SHOULD STRIKE PLAINTIFFS’ CLASS ALLEGATIONS.

Further, the Court should strike Plaintiffs’ class allegations, which “make clear that the suit

cannot satisfy Rule 23”—or even Article III. Hill, 946 F. Supp. 2d at 829, 833 (striking class allega-

tions “ma[king] it obvious that the plaintiff will be unable to satisfy Rule 23”); Arango v. Work &



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Well, Inc., 2012 WL 3023338, at *2–4 (N.D. Ill. July 24, 2012) (“courts may—and should—address

the plaintiff’s class allegations when the pleadings are facially defective”). “Where, as here, a case

is at the pleading stage, the plaintiff must clearly ... allege facts demonstrating each element.”

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (internal citations omitted).

Moreover, “Article III … requires that the complaint allege that absent class members have

been injured.” Newberg, supra, at § 2:3. Thus, “[a] class must … be defined in such a way that an-

yone within it would have standing.” Avritt , 615 F.3d at 1034; Mazza v. Am. Honda Motor Co., 666

F.3d 581, 594 (9th Cir. 2012) (same). When class allegations fail to allege Article III injury, it is

appropriate to strike them at the pleading stage. See, e.g., Bohn v. Boiron, Inc., 2013 WL 3975126,

at *6 (N.D. Ill. Aug. 1, 2013) (striking class allegations based on lack of standing as to name-

plaintiff); Sanders v. Apple, Inc., 672 F. Supp. 2d 978, 991 (N.D. Cal. 2009) (striking class allega-

tions because class definition included members who “suffered no damages” and therefore “lack[ed]

standing”).

Here, the Complaint says the name-plaintiffs’ horses were harmed by consuming ADM feed

containing monensin. Yet they purport to sue for “all persons who purchased ADM equine feeds”—

even if the feed contained no monensin. (Compl. ¶ 87.) Indeed, Plaintiffs say “ADM injured …

class members in that they … paid … for a product containing … a high risk of monensin.”

(Id. ¶ 55.b.) Plaintiffs offer no facts to support this conclusion. But regardless, the mere possibility

that plaintiffs could have, but did not, suffer is not an “actual or imminent” injury. Spokeo, Inc., 136

S. Ct. at 1548. It is no injury at all. Nor do the “at-risk-only” class members have standing to seek

injunctive relief, which requires that the “threatened injury must be certainly impending.” Clapper

v. Amnesty Int’l USA, 133 S. Ct. 1138, 1143 (2013). Plaintiffs label the risk “high.” Even if sup-

ported by facts (it is not), that is not enough. All class claims must be stricken for this reason alone.



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Still further, “[i]n Illinois, economic loss is not recoverable under the tort theor[y] of strict li-

ability.” Duncan Place Owners Ass’n v. Danze, Inc., 2016 WL 3551665, at *14 (N.D. Ill. June 30,

2016) (citing Moorman Mfg. Co. v. Nat’l Tank Co., 435 N.E. 2d 443, 451–53 (Ill. 1982)). Here,

Plaintiffs claim only economic loss for everyone but the name-plaintiffs, who alone allegedly suf-

fered property injury. The “at-risk-only” class tort claims must be stricken for this reason, as well.

III. COUNT I FAILS TO STATE A CLAIM.

Count I alleges violations of the Illinois Food, Drug, and Cosmetic Act, 410 ILCS 620/1 et

seq. (“Illinois FDCA” or “the Act”). This count fails for at least two reasons.

For starters, “the Illinois [FDCA] … do[es] not create a private right of action.” United Food

& Commercial Workers Unions v. Walgreen Co., 2012 WL 3061859, at *3 (N.D. Ill. July 26, 2012),

aff’d, 719 F.3d 849 (7th Cir. 2013); see also In re Yasmin & Yaz, 2015 WL 7272766, at *4 n.1 (S.D.

Ill. Nov. 18, 2015) (same). Nowhere does the Act bestow a private right, as is done in countless oth-

er statutes. E.g., 740 ILCS 10/7(2); 740 ILCS 14/20.

Nor does the Act suggest any intent to imply a private right of action, which is only “appro-

priate if: (1) the plaintiff is a member of the class for whose benefit the statute was enacted; (2) the

plaintiff’s injury is one the statute was designed to prevent; (3) a private right of action is consistent

with the underlying purpose of the statute; and (4) implying a private right of action is necessary to

provide an adequate remedy for violations of the statute.” Metzger v. DaRosa, 209 Ill. 2d 30, 36

(2004) (emphasis added); see also generally Cuyler v. United States, 362 F.3d 949, 955 (7th Cir.

2004) (noting the Illinois Supreme Court’s “increasing reluctance to imply private rights of action”).

Here, the fourth factor alone is dispositive: The Illinois FDCA needs no private right of ac-

tion to be effective. The statute declares that “[a]ll final administrative decisions of the Department

hereunder shall be subject to judicial review pursuant to the … ‘Administrative Review Law.’” 410



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ILCS 620/22.2. And “[w]here the statute … expressly adopts the Administrative Review Law, a cir-

cuit court has no authority to entertain an independent action.” Metzger, 209 Ill. 2d at 43. Further,

the law authorizes “violation[s] of this Act” to “be prosecuted” by “‘state’s attorney[s].” 410 ILCS

620/7. Indeed, Plaintiffs invoke a provision giving “the Director of Agriculture … exclusive juris-

diction to enforce” the provision. 410 ILCS 620/25 (emphasis added); see Compl. ¶ 99.

If that were not enough (and it is), the other three factors confirm this conclusion. First, as

discussed below, the Illinois FDCA was enacted to protect Illinois residents, which excludes Plain-

tiffs, who are residents of South Carolina and Michigan. Second, the Illinois FDCA applies only to

manufacturing in Illinois (see 410 ILCS 620/3), meaning it does not apply to products manufactured,

as here, in Georgia. Third, a private right would be inconsistent with the purpose of the statute for

the same reason it fails factor four. Galvan v. NCO Fin. Sys., Inc., 2016 WL 792009, at *6 (N.D. Ill.

Mar. 1, 2016) (administrative enforcement provisions confirmed no private right).

Moreover, Illinois statutes apply only to conduct that takes place in Illinois, “unless a clear

intent [of extraterritorial effect] appears from the express provisions of the statute.” Avery v. State

Farm Mut. Auto. Ins. Co., 216 Ill. 2d 100, 184–85 (2005); see, e.g., Glass v. Kemper Corp., 133 F.3d

999, 1000 (7th Cir. 1998) (holding that Illinois’ Wage Payment and Collection Act did not apply to

defendants’ employees that lived and worked outside of Illinois, where defendants’ principal place

of business was in Illinois); Wooley v. Bridgeview Bank Mortgage Co., LLC, 2015 WL 327357, at *2

(N.D. Ill. Jan. 23, 2015) (holding that Illinois Minimum Wage Law does not apply extraterritorially,

despite defendant’s principal place of business in Illinois).

Here, the Illinois FDCA applies only to acts within Illinois: “The enumerated acts in Sec-

tions 3.1 through 3.21 and the causing thereof are prohibited in this State.” 410 ILCS 620/3 (em-

phasis added). It is irrelevant that ADM’s headquarters are in Illinois; the defendants in Avery,



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Glass, and Wooley all had their principal places of business in Illinois, too. Yet in each of those cas-

es, that was too tenuous a connection to Illinois for the statute to apply. So too here.

IV. COUNT II FAILS TO STATE A CLAIM.

Count II of the Complaint contends that ADM violated the Illinois Consumer Fraud Act.

This claim fails because the facts alleged did not occur “primarily and substantially” in Illinois.

The Illinois Consumer Fraud Act does not “apply to fraudulent transactions which take place

outside Illinois.” Avery, 216 Ill. 2d at 185. To account for the complexities of modern commerce,

“a fraudulent transaction may be said to take place within a state if the circumstances relating to the

transaction occur primarily and substantially within that state.” Id. at 186. But this principle can be

stretched too far. In Avery, the defendant’s policies were developed at the defendant’s Illinois head-

quarters, but the harm they allegedly caused occurred in other states. Id. at 186–87. Under these

facts, the court held that the fraud took place outside of Illinois, and dismissed the claim. Id. at 188.

Applying Avery, courts routinely dismiss claims brought by non-Illinois residents for harms

based on a tenuous connection to Illinois. E.g., Crichton v. Golden Rule Ins. Co., 576 F.3d 392,

396–97 (7th Cir. 2009) (dismissing class action because most events happened to plaintiff in Flori-

da); Greene v. Sears Prot. Co., 2016 WL 397375, *3 (N.D. Ill. Feb. 2, 2016) (dismissing Consumer

Fraud Act claim because transaction occurred in Pennsylvania); Phillips v. Bally Total Fitness Hold-

ing Corp., 372 Ill. App. 3d 53, 59 (1st Dist. 2007) (dismissing where the only connection to Illinois

was allegation that the “company’s deceptive policy was created” at its Illinois headquarters).

Here, the only allegations related to Illinois are that both defendants have their principal

place of business there. (Compl. ¶¶ 9–10.) Plaintiff Berarov lives in Michigan; Plaintiff Bindra

lives in South Carolina. (Id. at ¶¶ 7–8.) That is where they allege they purchased ADM feeds and

where they say their horses were harmed. (Id. at ¶¶ 69–83.) ADM’s products were made “in Cor-



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dele, Georgia.” (Compl. ECF No. 1-5.) Under Avery, the “transaction” here did not take place

“primarily and substantially” in Illinois, so the Consumer Fraud Act claim must be dismissed.

V. COUNT III FAILS TO STATE A CLAIM.

Count III fails to state a claim for negligent misrepresentation. Under Illinois law, to state

such a claim, Plaintiffs must allege “(1) a false statement of material fact, (2) carelessness or negli-

gence in ascertaining the truth of the statement by the party making it, (3) an intention to induce the

other party to act, (4) action by the other party in reliance on the truth of the statement, and (5) dam-

age to the other party resulting from such reliance, (6) when the party making the statement is under

a duty to communicate accurate information.” In Retail Fund Algonquin Commons, L.L.C. v. Aber-

crombie & Fitch Stores, Inc., 2010 WL 1874054, at *7 (N.D. Ill. May 10, 2010). Plaintiffs cannot

satisfy these requirements.

First, Count III fails to identify the statements at issue. Elsewhere, Plaintiffs list statements

they call “false and deceptive,” including “Doing what’s right for the horse” (Compl. ¶ 30), generic

statements about the quality of ADM’s products (id. at ¶ 31), and statements about the safety of

ADM products made “in response to reports” of the deaths of horses alleged here (id. at ¶¶ 33–34).

All of these are statements of opinion, and as such are “not actionable representations.” E.g.,

GoHealth, LLC v. Simpson, 2013 WL 6183024, at *10–11 (N.D. Ill. Nov. 26, 2013); Marconi v. In-

diana Mun. Power Agency, ISC, Inc., 2016 WL 4530307, at *7 (N.D. Ill. Aug. 30, 2016) (same).

Second, Plaintiffs fail to allege plausibly that they relied on ADM’s statements. Plaintiff

Bindra’s horse died on December 16, 2014. (Compl. ¶ 80.) ADM’s statements about “safety” were

made after that, once FDA concluded its investigation. (See Compl. ECF No. 1-4.) So, the only

statements she could have relied on are “Doing what’s right for the horse” and generic lines such as

“[ADM] is dedicated to developing the most effective equine feeding programs with the best value



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for horse owners.” (Compl. ¶¶ 30–31.) These are no more than “puffery, bragging, mere words,

and casual bonhomie, which do not reasonably induce reliance.” Korean Am. Broad. Co. v. Korean

Broad. Sys., 2011 WL 2436281, at *4 (N.D. Ill. June 9, 2011). Plaintiff Berarov’s horses first be-

came ill in March 2015 (Compl. ¶ 71), but the Complaint itself shows that it is not plausible that she

relied on ADM’s 2015 representations about the safety of its feeds. According to the Complaint,

“Berarov has purchased ADM feed and supplements for years” (id. at ¶ 70), meaning ADM’s state-

ments in 2015 could not have induced her purchases. Moreover, neither name-plaintiff alleges that

she saw the representations, or accessed ADM’s website, where all of the statements except “Doing

what’s right for the horse” were made. (Compl ¶¶ 30–34; ECF Nos. 1-4, 1-5.) Plaintiffs’ claim that

they “relied on ADM’s representations” (Compl. ¶ 48) is a “mere conclusory statement[]”—and thus

does “not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 663, 678 (2009).

Lastly, Plaintiff Berarov cannot state a claim because Michigan—the law of which applies

here (see discussion infra at Sec. VI)—does not recognize the tort of negligent misrepresentation for

property damage. MacDonald v. Thomas M. Cooley Law Sch., 724 F.3d 654, 666–67 (6th Cir. 2013)

(“[T]he Michigan Supreme Court [has] recognized the tort of negligent misrepresentation only in the

title-search context.”) (citing Williams v. Polgar, 215 N.W.2d 149, 156 (Mich. 1974)).

For all these reasons, Plaintiffs fail to state a claim for negligent misrepresentation.

VI. COUNT IV FAILS TO STATE A CLAIM AS TO PLAINTIFF BERAROV.

Further, Count IV fails as to Plaintiff Berarov. Because the products liability laws of Illinois

and Michigan conflict, Michigan law applies to Berarov’s claim. Int’l Administrators, Inc. v. Life

Ins. Co. of N. Am., 753 F.2d 1373, 1376 n.4 (7th Cir. 1985) (“In tort, Illinois … applies the law of

the state with the most significant relationship to the transaction”). Berarov alleges that she pur-

chased ADM feed in Michigan, and that horses in Michigan died after consuming it. Supra at 3.



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Thus, Michigan law has the most significant relationship to her claim, and Michigan law applies.

The problem is that Count IV is styled “Strict Products Liability,” but “Michigan does not

recognize strict liability as a theory of recovery in products liability cases.” Baye v. HBI Branded

Apparel Enter., 2012 WL 6049656, at *5 (E.D. Mich. Dec. 5, 2012); Dow v. Rheem Mfg. Co., 2012

WL 1621368, at *9 (E.D. Mich. May 9, 2012) (same) (citation omitted). Instead, Michigan’s prod-

ucts liability statute sounds in negligence. Mich. Comp. Laws Ann. § 600.2946. Because Plaintiff

Berarov invokes a cause of action that does not exist, her claim in Count IV should be dismissed.

Moreover, no matter the title placed on it, Plaintiff Berarov fails to state a claim under Mich-

igan’s products liability statute for two reasons. First, Michigan’s products liability law requires a

plaintiff to show that, “according to generally accepted production practices at the time the specific

unit of the product left the control of the manufacturer or seller, a practical and technically feasible

alternative production practice was available that would have prevented the harm without signifi-

cantly impairing the usefulness or desirability of the product to users and without creating equal or

greater risk of harm to others.” Mich. Comp. Laws Ann. § 600.2946(2) (emphasis added). No-

where does the Complaint attempt to plead such facts. Thus, the claim fails for lack of plausibility.

Second, where “the aspect of the product that allegedly caused the harm … was in compli-

ance with regulations … promulgated by a federal or state agency responsible for reviewing the safe-

ty of the product,” “there is a rebuttable presumption that the manufacturer or seller is not liable.”

Mich. Comp. Laws Ann. § 600.2946(4). Here, the Complaint itself shows that FDA found ADM

fully in compliance with FDA regulations. Supra at 3–4. As Plaintiff Berarov pleaded no facts at-

tempting to rebut this presumption—indeed, she attacks the FDA regulations approving dual-species

facilities—Count IV should be dismissed. Flying J Inc. v. City of New Haven, 549 F.3d 538, 548

(7th Cir. 2008) (affirming dismissal for failure to allege facts to “overcome the presumption of ra-



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tionality that attaches to government actions in a class of one equal protection case”); Dixon v. Lad-

ish Co., 785 F. Supp. 2d 746, 750 (E.D. Wis. 2011) (similar; Wisconsin business judgment rule),

aff’d sub nom. Dixon v. ATI Ladish LLC, 667 F.3d 891 (7th Cir. 2012).

VII. COUNT V FAILS TO STATE A CLAIM.

Plaintiffs’ unjust enrichment claim fails because, in Illinois, “a plaintiff may not state a claim

for unjust enrichment when a contract governs the relationship.” Blythe Holdings, Inc. v. DeAngelis,

750 F.3d 653, 658 (7th Cir. 2014). And where, as here, a suit arises out of a consumer’s purchase of

goods, there is a contract. Chicago Faucet Shoppe, Inc. v. Nestle Waters N. Am. Inc., 24 F. Supp. 3d

750, 764–65 (N.D. Ill. 2014). Indeed, Plaintiffs allege that a contract existed here (Compl ¶¶ 55, 60,

130–34) and invoke its alleged express warranty (id. at ¶¶ 130–34). Accordingly, Count V should

be dismissed. See Thorogood v. Sears, Roebuck & Co., 2006 WL 3302640, at *5 (N.D. Ill. Nov. 9,

2006) (dismissing unjust enrichment claim where plaintiff claimed breach of express warranty).

VIII. COUNT VI FAILS TO STATE A CLAIM.

In Count VI, Plaintiffs say that ADM’s feed did not conform to unspecified “affirmations of

fact or promises.” (Compl ¶¶ 130–33.) But under Illinois law, “[t]o state a claim for breach of ex-

press warranty, plaintiffs must allege that (1) the seller made an affirmation of fact or promise; (2)

relating to the goods; (3) which was part of the basis for the bargain; and (4) seller guaranteed that

the goods would conform to the affirmation or promise.” Corwin v. Conn. Valley Arms, Inc., 74 F.

Supp. 3d 883, 891–92 (N.D. Ill. 2014). And here, the statements Plaintiffs mention in passing (as-

suming they are the statements complained of) are not actionable for the same reasons discussed

above: They were mere opinions and/or puffery. Id.; supra at 12. Plaintiffs also fail to allege that

they viewed ADM’s website, where all but one of the statements were made. Pressalite Corp. v.

Matsushita Elec. Corp. of Am., 2003 WL 1811530, at *3 (N.D. Ill. Apr. 4, 2003) (“Under Illinois



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law, a buyer must show reliance on the seller’s representations in order for those representations to

form part of the basis of the bargain.”). For all these reasons, Count VI fails to state a claim.

CONCLUSION

For all these reasons, the Court should, with prejudice: dismiss the Complaint as preempted;

strike the class allegations; and dismiss Counts I, II, III, IV (as to name-plaintiff Berarov), V, and

VI.



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Dated: September 12, 2016 Respectfully submitted,

WINSTON & STRAWN LLP

By: s/ Stephen V. D’Amore Stephen V. D’Amore Patrick R. O’Meara WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, IL 60601 Phone: (312) 558-5600 Facsimile: (312) 558-5700 Email: [email protected] Email: [email protected] Andrew C. Nichols (pro hac vice pending) WINSTON & STRAWN LLP 1700 K Street, N.W. Washington, DC 20006 Phone: (202) 282-5000 Facsimile: (202) 282-5100 Email: [email protected]

Counsel for Defendants Archer-Daniels-Midland Company and ADM Alliance Nutrition, Inc.



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CERTIFICATE OF SERVICE

I hereby certify that on September 12, 2016, I caused the foregoing to be served by filing the

document on the Court’s CM/ECF system, which will notify the following:

Patrick Muench (ILSB #6290298) Email: [email protected] BAILEY & GLASSER, LLP 3930 N. Lowell Avenue Chicago, IL 60641 Telephone: 217-528-1177, Ext. 1404 Fax: 217-528-1198 John W. Barrett Email: [email protected] BAILEY & GLASSER, LLP 209 Capitol Street Charleston, WV 25301 Telephone: (304) 345-6555 Fax: (304) 342-1110

By: s/ Stephen V. D’Amore

Stephen V. D’Amore Patrick R. O’Meara WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, IL 60601 Phone: (312) 558-5600 Facsimile: (312) 558-5700 Email: [email protected] Email: [email protected] Andrew C. Nichols (pro hac vice pending) WINSTON & STRAWN LLP 1700 K Street, N.W. Washington, DC 20006 Phone: (202) 282-5000 Facsimile: (202) 282-5100 Email: [email protected]

Counsel for Defendants Archer-Daniels-Midland Company and ADM Alliance Nutrition, Inc.



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UNITED STATES DISTRICT COURT NORTHERN DISTRICT ......2:3 (5th ed.)); and the Complaint here does...

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Transcript of UNITED STATES DISTRICT COURT NORTHERN DISTRICT ......2:3 (5th ed.)); and the Complaint here does...