An Appeals Court has reversed a previous decision that dismissed a fraud lawsuit against Hill’s Prescription Pet Food and Petsmart. The lawsuit continues. A huge win for pet owners.
On August 20, 2019, the United States Court of Appeals for the Seventh Circuit issued a potentially future changing decision. Pet food future changing in that the Appeals Court confirmed FDA’s policies are NOT law. The Appeals Court upheld law, not FDA’s policy.
The Appeals Court decision provides background of this lawsuit:
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.
In non-legal language – two pet owners filed a lawsuit against Hill’s Pet Food and Petsmart that argued prescription pet food is not a legal product. Hill’s Pet Food and Petsmart argued that FDA’s Compliance Policy Guide allows prescription pet foods to be legal. And the lower federal court agreed with Hill’s Pet Food and Petsmart dismissing the lawsuit.
But these two determined pet owners (and their attorney) appealed. Through appeal, the FDA’s Compliance Policy Guide was closely scrutinized. The FDA policy in question – “Labeling and Marketing of Dog and Cat Food Diets Intended to Diagnose, Cure, Mitigate, Treat, or Prevent Diseases” – is a “nonbinding” FDA statement that basically tells the pet food industry the agency won’t enforce law when a pet food makes a drug claim. (To read more about this policy, Click Here.)
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.
In other words, the argument from Hill’s and Petsmart was that because FDA is the regulatory authority over pet food, “the agency’s guidance” (Compliance Policy Guides) is/should be considered law. The appeals court responded with a big NO!, FDA Compliance Policy Guides are not law. It doesn’t matter if Hill’s and Petsmart is abiding by the the FDA Guidance document, requiring a veterinarian prescription for the product. The appeals court ruled FDA policy is not law. Quoting (bold added):
Hill’s and PetSmart characterize the Compliance Policy Guide as informal regulatory activity specifically authorizing the prescription requirement and prescription label for Hill’s Prescription Diet pet food. They are mistaken.
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 considered “drugs” under the FDCA. Id. § 321(g)(1)(B). Without FDA approval, a new animal drug cannot be sold in interstate commerce, id. § 331(a), and the product is deemed misbranded and adulterated, id. §§ 352(o), 351(a)(5).
Manufacturers face two additional requirements, regardless of whether the animal drug at issue has been approved. All drug manufacturers must list their drugs and register their facilities or else the drugs are misbranded. Id. § 352(o). And animal drug products must be manufactured in compliance with current good-manufacturing practices applicable to drugs, otherwise the drugs are adulterated. Id. § 351(a)(2)(B).
Most pet-food products claiming to treat or prevent disease lack FDA approval and do not comply with the FDCA’s drug registration and listing requirements. Nor do the manufacturers of these products follow the appropriate manufacturing practices for animal drugs. The FDA issued guidance acknowledging this longstanding noncompliance and identifying circumstances in which the agency may exercise its discretion against initiating an enforcement action.
To be sure, if pet food intended to treat or prevent disease is purchased from or under the direction of a licensed veterinarian, the FDA is less likely to initiate an enforcement action based on the lack of an approved new animal drug application—provided, however, that the other 10 factors are also present. And “less likely” does not mean “will not”; it certainly doesn’t signal authorization. Because the Compliance Policy Guide doesn’t specifically authorize the Hill’s prescription requirement, prescription label, and related marketing representations, the safe harbor does not apply.
The original lawsuit and appeal also argued that Hill’s Pet Food and Petsmart was deceptive, committed fraud and asked for restitution based on “unjust enrichment” (charging higher prices for claimed prescription pet foods). The appeals court allowed everything to move forward.
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. The request for restitution based on unjust enrichment therefore rests entirely on the consumer fraud claim, and it too may move forward.
With the safe harbor off the table, our next question is whether the complaint adequately alleges that Hill’s and PetSmart committed a deceptive or unfair practice. Specifically, the complaint must identify the “who, what, when, where, and how” of the alleged fraud.
Here, the complaint alleges that the prescription requirement, prescription label, and associated marketing materials for Hill’s Prescription Diet were deceptive; that Vanzant and Land saw the specific “prescription” language and symbols when they made their purchases; that the prescription pet food was something less than they expected; and that they suffered damages because they paid a higher price. These allegations detail the “who,” “what,” and “how” of the fraud claim with particularity.
The complaint also alleges the “when” and “where” of the fraud. Vanzant saw marketing materials for Prescription Diet pet food before purchasing the cat food at PetSmart in February 2013 and thereafter. Land saw similar marketing materials before purchasing Prescription Diet cat food from PetSmart in November 2013 and thereafter. Nothing more is needed.
To read the full Appeals Court decision, Click Here.
There are many other serious issues that are allowed in pet food based solely on FDA policy or belief. As example, as recent as April 2019 the FDA responded to a formal consumer complaint regarding illegal ingredients in pet food with no warning or disclosure to pet owners: “we do not believe that the use of diseased animals or animals that died otherwise than by slaughter to make animal food poses a safety concern…” As we pointed out in our response to FDA (and as this Appeals Court decision points out), FDA belief is not law.
With this Appeals Court decision – legal confirmation that FDA policy is NOT law – we now have solid ground to move forward on many injustices of pet food. There IS a light at the end of the illegal pet food tunnel!
Congrats and thank you to these pet owners for continuing their fight against the illegal activities of pet food. We would also like to thank the Appeals Court for their ruling – thank you for standing up for enforcement of law in pet food.
Wishing you and your pet(s) the best,
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