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Vanzant v. Hill's Pet Nutrition, Inc.

United States Court of Appeals, Seventh Circuit

August 20, 2019

Holly B. Vanzant and Dana Land, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,
v.
Hill's Pet Nutrition, Inc., and PetSmart, Inc., Defendants-Appellees.

          Argued September 27, 2018

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 17-cv-2535 - Samuel Der-Yeghiayan, Judge.

          Before Flaum, Manion, and Sykes, Circuit Judges.

          Sykes, Circuit Judge.

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

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

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

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

         I. Background

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

         In January 2013 Holly Vanzant's cat Tarik underwent emergency surgery for bladder stones. At a follow-up appointment, Tarik's veterinarian prescribed Hill's Prescription Diet c/d Multicare Feline Bladder Health cat food. That same day Vanzant purchased the food at a PetSmart store. Inside she saw marketing materials indicating that the cat food is "prescription only/' and the label on the bag read "Hill's Prescription Diet." PetSmart provided her with a pet prescription card listing Tarik's name, prescription number, and prescription date. For three years Vanzant purchased Hill's Prescription Diet cat food from PetSmart, paying a higher price than for nonprescription food. She showed the prescription card to the cashier each time.

         Land had a similar experience. In October 2013 a veterinarian diagnosed her cat Chief with diabetes and prescribed Hill's Prescription Diet m/d Feline Glucose/Weight Management cat food. Within a few weeks, Land purchased Hill's Prescription Diet cat food at a PetSmart store. She too saw marketing materials inside the store indicating that the food is meant to treat or control diabetes. PetSmart provided Land with a pet prescription card listing Chief's name, prescription number, and prescription date. For two years Land purchased Hill's Prescription Diet cat food from PetSmart, paying a higher price than for nonprescription food. She too showed the prescription card each time.

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

         The judge granted the motion. He held that the Consumer Fraud Act claim is foreclosed by the statute's safe-harbor provision, which shields actions authorized by laws administered by a regulatory body. Specifically the judge relied on an FDA Compliance Policy Guide, which he construed as regulatory authorization for "the gate-keeping role of veterinarians in ensuring that pet owners purchase only appropriate therapeutic foods." The judge also concluded that Vanzant and Land failed to plead the consumer-fraud claim with the particularity required by ...


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