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International Flavors & Fragrances Inc. v. McCormick & Co.

September 12, 2008

INTERNATIONAL FLAVORS & FRAGRANCES INC., PLAINTIFF,
v.
MCCORMICK & COMPANY, INC., DEFENDANT.



The opinion of the court was delivered by: Hochberg, District Judge

FOR PUBLICATION

ORDER and OPINION

This matter is before the Court upon Defendant McCormick & Company, Inc.'s ("McCormick") motion for partial summary judgment as to Plaintiff's Counts III and IV pursuant to Federal Rule of Civil Procedure 56. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because the parties are diverse and the amount in controversy exceeds $75,000. The Court has considered the arguments of the parties pursuant to Federal Rule of Civil Procedure 78.

I. FACTS*fn1

IFF is a New York corporation, headquartered in New York City, with manufacturing facilities in New Jersey and Texas. McCormick is a Maryland Corporation, headquartered in Maryland, with warehousing facilities in Maryland. McCormick is a wholesale supplier of paprika to IFF.

On July 28, 2003, McCormick shipped approximately 5,000 pounds of paprika to IFF's New Jersey plant (referred to by the parties as "IFF Dayton" or "IFF New Brunswick"). On July 31, 2003, McCormick shipped approximately 10,000 pounds of paprika to IFF's Carrollton, Texas plant ("IFF Carrollton"). Both of these shipments were taken from Lot 1202, a 45,000 pound lot that McCormick received from its supplier on July 22, 2003. On October 7, 2003 McCormick sent another shipment of 4,000 pounds of paprika to IFF's Carrollton plant. This shipment was from Lot 1206.

On or around October 9, 2003, IFF Dayton discovered that the paprika powder it had received from McCormick was infested with cigarette beetles. Second Amended Complaint ("Compl.") ¶ 13. IFF Dayton isolated the infested paprika and directed IFF Carrollton to inspect its paprika for beetles. Id. IFF Carrollton discovered that its paprika -- also from Lot 1202 -- was infested. Compl. ¶ 14. IFF notified McCormick of the infested paprika in "mid-October." In response to IFF's notification, McCormick asked to inspect the areas at the IFF Carrollton and IFF Dayton plants where the paprika had been stored (the paprika was moved to trailers after the infestation was discovered), but IFF denied the request. McCormick allowed IFF to return all of the remaining McCormick paprika from both warehouses.

IFF used a portion of the Lot 1202 paprika stored in its Carrollton, TX facility to make barbeque seasoning for Frito-Lay. See Compl. ¶ 15 ("IFF then determined that a portion of the contaminated paprika power had been incorporated into IFF's BBQ seasoning at IFF Carrollton, and, accordingly, IFF isolated all remaining stock of that product. IFF also notified its customers who had purchased the BBQ seasoning which incorporated the contaminated lots of paprika powder."). IFF halted shipments of the barbeque seasoning when it learned of the beetle infestation. Frito-Lay informed IFF that it would not accept any barbeque seasoning from IFF's current inventory. IFF alleges that it incurred "significant expense" attempting to supply FritoLay with barbeque seasoning from an alternate source.

IFF brings claims for breach of express warranty (Count I), breach of implied warranty (Count II), products liability (Count III), and fraudulent concealment/legal fraud (Count IV). McCormick has moved for partial summary judgment on IFF's product liability and fraud claims.

II. STANDARD

Pursuant to Federal Rule of Civil Procedure 56(c), a motion for summary judgment will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Accordingly, "summary judgment may be granted only if there exists no genuine issue of material fact." Miller v. Ind. Hosp., 843 F.2d 139, 143 (3d Cir. 1988). A fact is material if it might affect the outcome of the case, and an issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. All facts and inferences must be construed "in the light most favorable to the non moving party." Peters v. Del. River Port Auth., 16 F.3d 1346, 1349 (3d Cir. 1994).

The nonmoving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id. at 587 (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)). Further, summary judgment may be granted if the nonmoving party's "evidence is merely colorable, or is not significantly probative." Anderson, 477 U.S. at 249-50 (internal citations omitted).

III. ANALYSIS

A. Count III -- Products Liability

The gravamen of Plaintiff's product liability claim is that "[t]he paprika powder supplied to IFF by McCormick was defective", Compl. ¶ 32, and "IFF suffered injury and incurred damages relating to its flavor products which incorporated the contaminated paprika powder supplied by McCormick." Compl. ¶ 34. More specifically, Plaintiff alleges that the defective paprika damaged the barbeque seasoning into which the paprika was ultimately incorporated, and this damage 'is in the nature of a tort.' Defendant moves to dismiss Plaintiff's product liability claim on the ground that it is precluded by the economic loss doctrine. Under the economic loss doctrine "a plaintiff cannot sue in tort to recover for purely monetary loss -- as opposed to physical injury or property damage -- caused by the defendant." BLACK'S LAW DICTIONARY 552 (8th ed. 2004).

1. Choice of Law

"As this is a diversity case, we must apply the choice of law principles of . . . the forum state[] to determine what law governs this dispute." DL Res., Inc. v. FirstEnergy Solutions Corp., 506 F.3d 209, 216 (3d Cir. 2007) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)). New Jersey "currently subscribe[s] to the more flexible governmental- interests analysis." Rowe v. Hoffman-La ...


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