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Agrolabs, Inc. v. Innovative Molding, Inc.

United States District Court, D. New Jersey

July 16, 2014

AGROLABS, INC., Plaintiff,
v.
INNOVATIVE MOLDING, INC. and THE PACKAGING DESIGN GROUP, INC. Defendants.

OPINION

KEVIN MCNULTY, District Judge.

Defendant Innovative Molding, Inc. ("Innovative") has moved to dismiss Counts 1-3 of the Complaint ("Compl., " Docket No. 1). (Docket No. 13, "Innovative MTD"). Defendant The Packaging Design Group, Inc. ("PDG") also moves to dismiss Count 6, the negligence claim brought against it. (Docket No. 21, "PDG MTD"). Plaintiff, AgroLabs, Inc. ("AgroLabs") has responded.

For the reasons set forth below, PDG's motion to dismiss is granted and Innovative's motion to dismiss in granted in part and denied in part. Both negligence claims will be dismissed (Counts 3 and 6). The remaining claims survive.

I. BACKGROUND

A. Factual Averments[1] and Procedural History

Plaintiff AgroLabs is a company organized under New Jersey law with its principal place of business in Hillside, New Jersey. Compl. ¶ 9. The company is engaged in the manufacturing, sale, and marketing of nutritional supplements and health care products. Compl. ¶ 2. Defendants Innovative Molding, Inc. ("Innovative") is a corporation organized under California law with its principal place of business in Rohnert Park, California. Compl. ¶ 10. The Packaging Design Group, Inc. ("PDG") is a corporation organized under Maryland law with its principal place of business in Hunt Valley, Maryland. Compl. ¶ 11.

AgroLabs manufactured Wheatgrass and Peaceful products, which are sold in liquid form. Compl. ¶¶ 4, 21. These products were toll manufactured by Flavours, Inc., a non-party. Innovative and PDG are "manufacturers of plastic closure packaging products for the chemical, pharmaceutical and food and beverage industries." Compl. ¶ 3. Between April and August 2012, PDG contracted with AgroLabs to manufacture bottles. At the same time, Innovative contracted with AgroLabs to manufacture of bottle caps. AgroLabs' Wheatgrass and Peaceful products were sold in bottles manufactured by PDG, sealed with caps manufactured by Innovative. Compl. ¶ 21.

AgroLabs learned that customers had found that the capped bottles leaked, allowing air to penetrate. This problem, says AgroLabs, was attributable to defective bottles, defective caps, or both. Compl. ¶ 22.

AgroLabs commissioned a laboratory analysis of the bottles and caps. This analysis "confirmed the defective nature of the bottle and/or caps manufactured by the Defendants, demonstrating that the sealing problems resulted from loose caps, bad seals and leakers." Compl. ¶ 23.

As a result of the defective packaging, many of Plaintiff's products were recalled. That recall resulted in lost profits in excess of $350, 000, consequential damages related to the shipment of the products, and loss of goodwill with longtime customers. Compl. ¶¶ 6, 7, 24, 25.

On November 17, 2013, Plaintiff filed a Complaint in this Court alleging the following six claims: (1) Breach of Contract against Innovative; (2) Breach of Implied Warranty against Innovative; (3) Negligence against Innovative; (4) Breach of Contract against PDG; (5) Breach of Implied Warranty against PDG; and (6) Negligence against PDG.

B. The Pending Motions

Innovative now moves to dismiss all claims brought against it (Counts 1-3) pursuant to Fed. R. Civ. P 12(b)(6). As to the breach of contract claim, Innovative argues that AgroLabs fails to allege how the bottle caps delivered did not conform to the specifications of the purchase and sales orders or how the "defective bottle caps" caused the bottles to leak. Innovative adds that the laboratory analysis cited in the Complaint found that the "root cause of the bottle/Closure defect was due to the incorrect bottle neck finish T and E dimension" and that, after modification of the bottles, AgroLabs sealed the bottles with the Innovative caps "without further issues." Docket No. 13-4 ("Laboratory Report"). Therefore, Innovative concludes, the breach of contract claim cannot survive. As to the breach of implied warranty claim, Innovative argues that the Complaint fails to identify any precise specification or particular purpose. Finally, Innovative argues that the negligence claim must be dismissed because commercial parties cannot seek purely economic damages due to a product defect.

PDG joins in Innovative's arguments as to negligence, and, invoking the economic loss doctrine, moves for dismissal of Count 6, the negligence claim brought against it by AgroLabs. Docket No. 21. PDG denies the validity of the warranty ...


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