Friday, September 11, 2015

Lanham Act doesn't allow defendants to seek indemnity/contribution

Nestlé Purina Petcare Co. v. Blue Buffalo Co., No. 4:14 CV 859, 2015 WL 5226462 (E.D. Mo. Sept. 8, 2015)
Third-party defendant Diversified Ingredients moved to dismiss Blue Buffalo’s claims against it, arising from an underlying action in which Purina alleged that Blue Buffalo falsely advertised its pet foods as free of poultry by-product meal in violation of the Lanham Act. Blue “Buffalo now admits that poultry by-product was in some of its pet foods. However, it claims that its ingredient supplier, Wilbur–Ellis, and ingredient broker, Diversified Ingredients, deceived Blue Buffalo when they sold it by-product meal instead of chicken and turkey meal.”  Thus, Blue Buffalo sought indemnification and contribution from its ingredient suppliers. (Wilbur-Ellis’s similar motion to dismiss was resolved separately, with no difference in the Lanham Act reasoning to come.)  Blue Buffalo also sought additional damages under theories of breach of contract, breach of warranty, fraud, misrepresentation, negligence, unjust enrichment, unfair competition, and other statutory violations.
First, the court agreed with Diversified that there was no right to indemnity or contribution for Lanham Act claims, despite policy arguments in favor of the same.  There is no federal common law right to indemnity or contribution, and no express right of contribution or indemnity under the Lanham Act.  Other courts have refused to imply such rights.  (Contrast the implication of secondary liability which is universally accepted—why the difference?  Would Blue Buffalo have been able to successfully plead inducement or some other form of contributory liability?)
Diversified further argued that Blue Buffalo couldn’t unjust enrichment and unfair competition under Missouri common law because they are intentional torts.  But when the underlying causes of action are “broad enough to encompass both intentional and negligent conduct,” the intentional misconduct rule may not apply, and Purina’s claims here were pled that broadly.  Accepting Blue Buffalo’s allegations as true—that the byproduct was in its food without its knowledge or intent—the court found that Blue Buffalo had stated a claim for indemnity or contribution for Purina’s unjust enrichment and unfair competition claims.

The court further declined to dismiss the remaining claims as improperly joined, or to sever the third-party claims from the main case.

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