Restitution – Unjust Enrichment

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7^th Circuit Court of Appeals

Case Name: Holly B. Vanzant, et al. v. Hill’s Pet Nutrition, Inc., et al.

Case No.: 17-3633

Officials: FLAUM, MANION, and SYKES, Circuit Judges.

Focus: Restitution – Unjust Enrichment

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 ILL. 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.

Reversed

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.