Dimare Fresh, Inc. v. United States , 2014 U.S. Claims LEXIS 985 ( 2014 )

In the United States Court of Federal Claims
No. 13-519 C
(Filed September 18, 2014)
* * * * * * * * * * * ** *
DIMARE FRESH, INC., et al., *
*
* No Plausible Claims for Regulatory
Plaintiffs, * Takings Arising from Warnings to
* Consumers of a Possible Link between
v. * Tomatoes and Salmonella Outbreak.
*
THE UNITED STATES, *
*
Defendant. *
* * * * * * * * * * * * * *
M. Stephen Turner, Tallahassee, FL, for plaintiffs.
Eric E. Laufgraben, United States Department of Justice, with whom were
Stuart F. Delery, Assistant Attorney General, Robert E. Kirschman, Jr., Director,
Franklin E. White, Jr., Assistant Director, Washington, DC, for defendant.
Darieta M. Hawkins, United States Department of Health and Human Services
Office of General Counsel, Washington, DC, of counsel.
__________________________
OPINION
__________________________
Bush, Senior Judge.
Currently before the court is defendant’s motion to dismiss the complaint
brought under Rule 12(b)(6) of the Rules of the United States Court of Federal
Claims (RCFC). The motion has been fully briefed, and oral argument was neither
requested by the parties nor deemed necessary by the court. For the reasons stated
below, defendant’s motion is granted.
BACKGROUND1
I. Warning the Public Not to Buy Certain Tomatoes
Plaintiffs are “growers, packers, and shippers of tomatoes in Florida and
South Georgia.” Compl. at 2. The Food and Drug Administration (FDA)
responded to an outbreak of salmonella-related illnesses in June 2008. Id. ¶¶ 8-15.
Two warnings were issued to the public, on June 3 and June 7, 2008. Id. ¶¶ 9-15.
The warnings linked the salmonella outbreak to certain types of tomatoes. Id.
Plaintiffs in this case were substantially invested in the production, distribution
and bulk sale of tomatoes at the time the FDA warnings linking salmonella and
tomatoes were issued. Id. ¶ 2.
The FDA also held a media briefing on June 13, 2008, again linking the
salmonella outbreak to certain types of tomatoes. Compl. ¶¶ 16-19. All of these
warnings had a burdensome effect on the market for plaintiffs’ tomatoes. Id. ¶ 21.
Although any link between plaintiffs’ tomatoes and the salmonella outbreak was
eventually disproved and the FDA lifted its warning against tomatoes on July 17,
2008, all or almost all of the value of plaintiffs’ perishable tomatoes was destroyed
by the collapse in the market for tomatoes triggered by the FDA’s warnings. Id.
¶¶ 6, 20-21, 24, 30-32, 34, 37. Plaintiffs characterize the FDA warnings as
regulatory takings of their property. Id. ¶¶ 1, 30-31, 35-40.
According to plaintiffs, the FDA “had no confirmation” of the link between
their tomatoes and the salmonella outbreak and plaintiffs further allege that the
FDA’s analysis of the outbreak was flawed. Compl. ¶¶ 22-23. Plaintiffs aver that
their tomatoes “presented no danger, defect or threat to consumers.” Id. ¶ 25.
Plaintiffs also contend that the FDA delayed its revocation of the warnings against
tomatoes for over a month “[d]espite accumulating evidence to the contrary.” Id.
1
/ All references to the complaint are to the amended complaint filed April 16, 2014,
unless otherwise noted. The facts presented in the complaint are undisputed for the purpose of
resolving defendant’s motion to dismiss. Def.’s Mot. at 2 n.1. The court makes no findings of
fact in this opinion.
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¶ 22.
II. Excerpts from the FDA Warnings Issued on June 3 and June 7, 2008
Plaintiffs attached the FDA warnings to their complaint. The warning
issued on June 3, 2008 stated in relevant part that:
The Food and Drug Administration is alerting consumers
in New Mexico and Texas that a salmonellosis outbreak
appears to be linked to consumption of certain types of
raw red tomatoes and products containing raw red
tomatoes. . . .
The specific type and source of tomatoes are under
investigation. However, preliminary data suggest that
raw red plum, red Roma, or round red tomatoes are the
cause. At this time, consumers in New Mexico and
Texas should limit their tomato consumption to tomatoes
that have not been implicated in the outbreak. These
include cherry tomatoes, grape tomatoes, tomatoes sold
with the vine still attached, and tomatoes grown at home.
....
In order to ensure that consumers can continue to enjoy
tomatoes that are safe to eat, FDA is working diligently
with the states, the Centers fo[r] Disease Control and
Prevention, the Indian Health Service, and various food
industry trade associations to quickly determine the
source and type of the contaminated tomatoes. As more
information becomes available, FDA will update this
warning.
Compl. Ex. 1.
The second warning, issued by the FDA on June 7, 2008, expanded the
advisory against certain tomatoes to consumers nationwide. In relevant part, this
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warning stated that:
The Food and Drug Administration is expanding its
warning to consumers nationwide that a salmonellosis
outbreak has been linked to consumption of certain raw
red plum, red Roma, and red round tomatoes, and
products containing these raw, red tomatoes.
FDA recommends that consumers not eat raw red Roma,
raw red plum, raw red round tomatoes, or products that
contain these types of raw red tomatoes unless the
tomatoes are from the sources listed below. If unsure of
where tomatoes are grown or harvested, consumers are
encouraged to contact the store where the tomato
purchase was made. Consumers should continue to eat
cherry tomatoes, grape tomatoes, and tomatoes sold with
the vine still attached, or tomatoes grown at home.
On June 5, using traceback and other distribution pattern
information, FDA published a list of states, territories,
and countries where tomatoes are grown and
harvested which have not been associated with this
outbreak. This updated list includes: Arkansas,
California, Georgia, Hawaii, North Carolina, South
Carolina, Tennessee, Texas, Belgium, Canada,
Dominican Republic, Guatemala, Israel, Netherlands,
and Puerto Rico. . . .
FDA recommends that retailers, restaurateurs, and food
service operators not offer for sale and service raw red
Roma, raw red plum, and raw red round tomatoes
unless they are from the sources listed above. Cherry
tomatoes, grape tomatoes, and tomatoes sold with the
vine still attached, may continue to be offered from
any source.
Compl. Ex. 2.
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III. Excerpts from the FDA Media Briefing on June 13, 2008
Plaintiffs provide a twenty-six page transcript of the FDA media briefing
held on June 13, 2008. The court references here the portions of this transcript
necessary for context. The participants were welcomed to a briefing on the FDA’s
“salmonella in tomatoes investigation.” Compl. Ex. 3 at 1. An FDA spokesman
noted that “as . . . yet there is no specific geographic location identified” for the
tomatoes that were the source of the salmonella outbreak. Id. at 3.
Apparently Florida had been the subject of much speculation as a possible
source for the salmonella, so an FDA official addressed the “complicated” issue of
the safety of Florida tomatoes. Compl. Ex. 3 at 3 (“I’m not wanting to put the
focus on Florida specifically, but this is an opportunity for us to explain what the
status of Florida is, because it is a little complicated.”). Parts of Florida were still
suspected, but the northern part of Florida was apparently considered safe. Id. at
4, 18. As for other producing states, consumers were urged to consider tomatoes
on the shelf that came from states deemed safe by the FDA to be safe for purchase
and consumption. Id. at 4-5.
When asked where most of the tomatoes consumed in the United States
originated at the time of the salmonella outbreak, an FDA official stated that
Mexico and Florida supplied most of those tomatoes. Compl. Ex. 3 at 8. The
official also stated that he thought it unlikely that the salmonella had come from
two different geographic locations, because of the identical genetic material found
in the salmonella outbreak. Id. at 9. In addition, the official noted that there were
no FDA investigators traveling to Mexico to investigate the outbreak. Id. at 11.
The FDA made it clear that it had only issued a warning, not a recall, of
tomatoes from states not yet listed as safe. Compl. Ex. 3 at 12. The legal
consequences of a warning are that sellers of tomatoes are not required to pull
their tomatoes from store shelves, even if these tomatoes originated from a state
still under investigation as a possible source for the salmonella. Id. at 13. Instead,
the focus of the FDA warnings was to educate consumers about which tomatoes
were safe to eat and which were not safe to eat. Id. at 12-13.
IV. Procedure
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After plaintiffs’ amended complaint was filed on April 16, 2014, defendant
filed a motion to dismiss under RCFC 12(b)(6) on May 5, 2014. Soon thereafter,
plaintiffs filed a motion to join an additional plaintiff, which was granted by the
court on May 27, 2014. At defendant’s request, however, the court ordered that
the claims of this additional plaintiff be subject to the government’s motion to
dismiss. Thus, defendant’s motion to dismiss addresses all claims before the court
in this case and is ripe for decision.
DISCUSSION
I. Jurisdiction
The Tucker Act delineates this court’s jurisdiction. 28 U.S.C. § 1491(2012). This statute “confers jurisdiction upon the Court of Federal Claims over
the specified categories of actions brought against the United States.” Fisher v.
United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc) (citations omitted).
These include claims “founded either upon the Constitution, or any Act of
Congress or any regulation of an executive department, or upon any express or
implied contract with the United States, or for liquidated or unliquidated damages
in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1).
The court must determine, at the outset, whether plaintiffs’ claims fall
within the “specified categories of actions brought against the United States” that
are within this court’s jurisdiction. Fisher, 402 F.3d at 1172. The Tucker Act
concurrently “waives the Government’s sovereign immunity for those actions.”
Id. However, if jurisdiction for a cause of action is lacking this court must dismiss
the suit. RCFC 12(h)(3). The court may, and should, raise the issue of its own
jurisdiction sua sponte when it appears in doubt. Arctic Corner, Inc. v. United
States, 845 F.2d 999, 1000 (Fed. Cir. 1988) (citation omitted).
II. Standard of Review for a Motion Brought under RCFC 12(b)(6)
It is well-settled that a complaint should be dismissed under RCFC 12(b)(6)
“when the facts asserted by the claimant do not entitle him to a legal remedy.”
Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002). When
considering a motion to dismiss for failure to state a claim, “the allegations of the
complaint should be construed favorably to the pleader.” Scheuer v. Rhodes, 416
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U.S. 232, 236 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457
U.S. 800 (1982). The court must also inquire whether the complaint meets the
plausibility standard described by the United States Supreme Court, i.e., whether it
adequately states a claim and provides a “showing [of] any set of facts consistent
with the allegations in the complaint.” Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 563 (2007) (citations omitted).
III. Analysis
A. Do Plaintiffs’ Claims Sound in Tort?
A court’s inquiry into the nature of a plaintiff’s claim “does not end with the
words of the complaint, however instructive they may be, for [the court] still must
‘look to the true nature of the action in determining the existence or not of
jurisdiction.’” James v. Caldera, 159 F.3d 573, 579 (Fed. Cir. 1998) (quoting
Katz v. Cisneros, 16 F.3d 1204, 1207 (Fed. Cir. 1994)). Here, plaintiffs in their
complaint avoid any mention of negligence, misrepresentation, or failure to
observe a duty of care on the part of the FDA. Nevertheless, plaintiffs
characterize the actions of the FDA as lacking “confirmation that any tomatoes
were involved in the illness outbreak,” as evincing “a lack of understanding of
industry distribution channels,” and as “fail[ing] to correct the public warnings . . .
for over a month.” Compl. ¶¶ 22-23. Although plaintiffs describe their claims as
demanding just compensation for a regulatory taking, a more obvious legal theory
of recovery would have been to argue that the FDA negligently misrepresented the
danger of consuming plaintiffs’ tomatoes and that the United States is liable to
plaintiffs as a result of the government’s negligence.2
As the court discusses infra, plaintiffs have not cited to any cases where a
consumer warning issued by a federal agency constituted a regulatory taking. A
much more typical analysis for such a factual scenario is whether an inaccurate
consumer warning or some other release of inaccurate information triggered tort
liability on the part of the government. See, e.g., Mizokami v. United States, 414
F.2d 1375, 1377-78 (Ct. Cl. 1969) (discussing potential tort liability for an
2
/ In plaintiffs’ original complaint, the growers candidly discussed the barriers to bringing
a tort claim based on the FDA’s warnings; the discretionary nature of the warnings renders the
FDA “typically immune from tort liability.” Orig. Compl. ¶ 6.
7
inaccurate notice of contamination in spinach by reviewing cases where negligent
misrepresentations on the part of the government had been alleged); Banfi Prods.
Corp. v. United States, 40 Fed. Cl. 107, 139-42 (1997) (holding that the
government’s misstatement as to the danger of a contaminant in wine did not rise
to the level of a negligent request to recall the wine); Lance Indus. v. United
States, 3 Cl. Ct. 762, 775-76, 779-80 (1983) (holding that the government’s
dissemination of an inaccurate rumor regarding a pharmaceutical did not trigger
liability for negligence); see also H.F. Allen Orchards v. United States, 749 F.2d
1571, 1576 (Fed. Cir. 1984) (“[T]he negligent disclosure of information by the
government, when the government had no contractual duty to supply such
information may sound in tort.”) (citation omitted). Although a tort claim founded
on the FDA’s warnings at issue here would likely have been futile if brought in a
district court for the reasons stated in plaintiffs’ original complaint, see supra note
2, the facts alleged in the amended complaint appear to be have far greater
resonance in tort jurisprudence than in takings cases.
The complaint could be read either to present claims sounding in tort, or to
present claims which seek to extend the limits of takings jurisprudence. The court
will follow the parties’ lead in reviewing the sufficiency of the takings claims
presented in the complaint, but expresses some doubt at the outset as to its
jurisdiction over claims that might more accurately be characterized as tort claims.
The court notes that it is well established that if plaintiffs’ claims are truly tort
claims this court has no jurisdiction over their suit. 28 U.S.C. § 1491(a)(1);
Somali Dev. Bank v. United States, 508 F.2d 817, 820 (Ct. Cl. 1974).
B. Plaintiffs’ Regulatory Takings Claims Are Not Plausible
Plaintiffs allege that the warnings issued by the FDA regarding a possible
connection between their tomatoes and the salmonella outbreak “caused the loss of
all or substantially all the value of Plaintiffs’ property . . . [;] [t]his action
appropriated a benefit to the Government and the public at the expense of the
Tomato Farmers and Producers.” Compl. ¶ 37. Thus, they argue that the “FDA’s
action constitutes a regulatory taking of the Plaintiffs’ perishable tomatoes.” Id.
¶ 38. Just compensation, based on the fact that “all economic value was lost due
to the collapse of the market for [plaintiffs’] tomatoes,” is allegedly due each of
the plaintiffs under the authority of the Fifth Amendment of the United States
Constitution. Id. ¶¶ 30, 40.
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Defendant argues that the effect of the FDA warnings on the market for
plaintiffs’ tomatoes does not constitute a regulatory taking. The government relies
on cases which have denied takings claims founded on pronouncements by the
government which, although they may have caused financial consequences for the
plaintiffs, lacked the requisite “legal effect” to rise to the level of a regulatory
taking. See Def.’s Mot. at 6 (“Courts routinely reject takings claims when, as in
this case, the alleged Government action does not have any legal effect,
notwithstanding any allegations concerning the practical, financial impact of the
alleged action.”) (citing cases). Defendant’s arguments are persuasive, and a brief
recitation of the cited cases proves the point.
This court considered a similar claim when tobacco vending machine
owners asserted a temporary regulatory taking arising from the notice and
promulgation of pending FDA regulations banning most tobacco sales from
vending machines. A-1 Cigarette Vending, Inc. v. United States, 49 Fed. Cl. 345,
348-49 (2001), aff’d sub nom. Brubaker Amusement Co. v. United States, 304 F.3d
1349 (Fed. Cir. 2002). In A-1 Cigarette Vending, letters and pamphlets informing
businesses about impending tobacco vending machine regulations did not
constitute regulatory takings because “[o]nly a Government regulatory act that
actually restricts property may effectuate a taking.” Id. at 356 & n.15 (citations
omitted). When the United States Court of Appeals for the Federal Circuit
considered these regulatory takings claims upon appeal, the Federal Circuit agreed
with the lower court and held that tobacco vending machine regulations which had
not yet gone into effect did not effect a taking of the plaintiffs’ property rights in
vending machine contracts. Brubaker, 304 F.3d at 1358. Thus, pronouncements
and promulgated regulations which had not yet had any legal effect on the
plaintiffs did not effect a regulatory taking of their property interests.
In another case somewhat analogous to the one at bar, the publicized intent
of Air Force officials to take adjoining properties by eminent domain to enlarge an
Air Force base, notwithstanding the consequences of these statements on the real
estate market, was insufficient to effect a taking of any property rights of the
landowner plaintiffs in NBH Land Co. v. United States, 576 F.2d 317, 319 (Ct. Cl.
1978). In yet another case, a Federal Aviation Administration (FAA)
“Determination of Hazard to Air Navigation,” which determined that a proposed
building near an airport runway would create a hazard, was not found to be a
regulatory taking because the ruling was advisory and did not affect the property
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owner’s legal right to construct a building on its property. Flowers Mill Assocs. v.
United States, 23 Cl. Ct. 182, 189-90 (1991). Both of these cases show that public
statements by government officials are not sufficient, by themselves, to effect a
regulatory taking, even if these statements profoundly affect the market for the
plaintiffs’ properties.
Flowers Mill is particularly instructive because of the advisory nature of the
“Determination of Hazard” issued by the FAA. As the court noted, there might
indeed be great economic impact on the property owner because of the publicized
ruling of the FAA. Flowers Mill, 23 Cl. Ct. at 189. The court remarked, too, that
the FAA’s “Determination of Hazard” could “interfere with [the plaintiff’s]
distinct, investment-backed expectations.” Id. Nonetheless, the court concluded
that “the FAA action cannot be the basis of a Fifth Amendment taking because of
the voluntary nature of the regulatory scheme.” Id. (citation omitted). The
summary of the holding in that case provides a concise rejection of regulatory
takings claims which are founded on warnings provided to the public which are
merely advisory in nature:
Plaintiff’s taking claim is based on the practical effect of
the FAA [Determination of Hazard to Air Navigation].
While there may be practical consequences to an FAA
finding of hazard which present obstacles to desired
development (e.g., adverse impact on availability of
financing and casualty insurance coverage), the FAA
determination is advisory only and has no enforceable
legal effect. For this reason it cannot be considered the
type of governmental action necessary to sustain a Fifth
Amendment taking claim. Accordingly, plaintiff has
failed to state a claim upon which relief against the
United States can be granted.
Flowers Mill, 23 Cl. Ct. at 183.
Thus, from these cases cited by the government a general principle or rule
may be discerned. A regulatory takings claim is not plausible and cannot proceed
when the government action at issue has no legal effect on the plaintiff’s property
interest. Advisory pronouncements, even those with significant financial impact
10
on the marketplace, are not enough to effect a taking of property under the Fifth
Amendment.
Plaintiffs’ attempts to disprove or escape this rule are unavailing. First,
plaintiffs state that the FDA’s advisories regarding their tomatoes were
“equivalent [in effect] to a hold on sales of the tomatoes until they perished.” Pls.’
Resp. at 13 (citing Yancey v. United States, 915 F.2d 1534, 1539-43 (Fed. Cir.
1991)). The court cannot agree. There was no ban on the sale of plaintiffs’
tomatoes equivalent to the quarantine of poultry at issue in Yancey. There is an
obvious distinction between an advisory announcement which affects market sales
and a quarantine which prohibits sales. Plaintiffs have failed to allege any
plausible legal effect on their property interests occasioned by the FDA advisories.
Second, plaintiffs attempt to distinguish the FDA’s advisory function
regarding food safety from the cases cited by defendant which involved advisories
or statements issued by the government that had no legal effect. Plaintiffs allege,
for example, that the FDA “had the power to seize the tomatoes or enjoin their
sale, or bring criminal proceedings, and presumably would use this power if its
warnings were not respected.” Pls.’ Resp. at 18 n.5. The complaint does not
allege, however, that the FDA exercised any of these powers to effect the taking of
plaintiffs’ tomatoes. Only the FDA advisories are blamed for the taking of
plaintiffs’ property interests. Compl. ¶¶ 32, 37. These FDA advisories fall within
the rule of government actions that have no legal effect on property interests and
that do not constitute regulatory takings.
Third, plaintiffs argue that it is not necessarily legal effect, but practical
consequences that can create a taking. See Pl.’s Resp. at 14 (“The proper focus is
on practical cause and effect. If government action is ‘functionally equivalent’ to
a physical seizure, it can be a taking.”) (citation omitted). In plaintiffs’ view,
“[g]overnment action that intends to and foreseeably does cause loss of property
value can be a taking even if not legally coercive.” Id. (citations omitted).
Furthermore, according to plaintiffs, the FDA advisories were coercive, at least to
some degree:
The FDA’s actions obviously had a coercive effect on
the market, even if not coercive against any third person
in particular. While the government warning continued
11
in effect, no one would risk buying such tomatoes for
resale to the public. . . . Even if the government’s action
is viewed as instigating a boycott by potential buyers, the
intended and direct result (a market shutdown) was
tantamount to coercion, as [the] FDA knew that no one
would assume the risk of buying or selling food under its
warning.
Id. at 14 n.3.
Unfortunately for plaintiffs, their attempt to eviscerate the rule that must be
discerned in Brubaker, NBH Land, A-1 Cigarette Vending and Flowers Mill is
unsupported by relevant authority. The cases cited by defendant specifically
demonstrate that public statements and advisories by the government are not
regulatory takings if they have no legal effect on property interests. None of
plaintiffs’ cited cases address this issue, and plaintiffs’ attempts to distinguish
defendant’s cases, Pls.’ Resp. at 16-18, are not persuasive.
Finally, the court must agree with defendant that plaintiffs’ regulatory
takings claims would require “independent actions of consumers [and retailers
declining to buy plaintiffs’ tomatoes] to be attributed to the Government.” Def.’s
Reply at 13. The court is aware of no caselaw which would support such a theory
of recovery. Although a wide range of government actions may give rise to
regulatory takings, plaintiffs have not cited any cases which hold that press
releases and consumer advisories, by themselves, can constitute regulatory
takings. Plaintiffs’ regulatory takings claims must be dismissed for failure to state
a claim upon which relief may be granted.
CONCLUSION
Accordingly, it is hereby ORDERED that:
(1) Defendant’s Motion to Dismiss, filed May 5, 2014, is GRANTED;
(2) The Clerk’s Office is directed to ENTER final judgment in favor of
defendant, DISMISSING the complaint with prejudice; and
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(3) No costs.
/s/ Lynn J. Bush
LYNN J. BUSH
Senior Judge
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