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Breaking Free LLC v. JCG Foods of Alabama LLC

United States District Court, N.D. Alabama, Middle Division

April 8, 2019

BREAKING FREE, LLC, and CONNIE BUTTRAM, Plaintiffs,
v.
JCG FOODS OF ALABAMA, LLC, KOCH MEAT CO., INC., and KOCH FOODS, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          ANNEMARIE CARNEY AXON, UNITED STATES DISTRICT JUDGE

         Plaintiff Connie Buttram owns Plaintiff Breaking Free, LLC (“Breaking Free”). Plaintiffs are contract poultry growers for Defendants JCG Foods of Alabama, LLC (“JCG”), Koch Meat Co., Inc., and Koch Foods, Inc. (collectively “Koch”). Plaintiffs allege that Defendants prevented them from growing chickens in a fair and profitable manner. Plaintiffs filed this lawsuit, asserting federal claims against Defendants for violations of the Packers and Stockyards Act (“PSA”) and the Agricultural Fair Practices Act (“AFPA”). Plaintiffs also assert claims under Alabama state law for fraud, breach of contract, breach of the covenant of good faith and fair dealing, and negligent, willful, and reckless misrepresentation.

         This case is before the court on Defendants' motions to dismiss. (Doc. 11; Doc. 25). Defendants seek dismissal of Plaintiffs' PSA claim and their state law claims for fraud, breach of the covenant of good faith and fair dealing, and negligent, willful, and reckless misrepresentation. Defendants also ask the court to dismiss Plaintiffs' request for consequential and punitive damages.[1]

         For the reasons explained below, the court GRANTS IN PART and DENIES IN PART the motions to dismiss.

         I. BACKGROUND

         At this stage, the court must accept as true the factual allegations in the complaint and construe them in the light most favorable to the plaintiff. Butler v. Sheriff of Palm Beach Cty., 685 F.3d 1261, 1265 (11th Cir. 2012). The court also may consider documents attached to a motion to dismiss if it is central to the plaintiff's claims and the authenticity of the document is not challenged. Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005). Defendants attach to their motions to dismiss a copy of one of Plaintiffs' contracts with JCG Foods and a letter from Defendants' counsel to Plaintiffs' counsel. (Doc. 11-1; Doc. 11-2; Doc. 25-1; Doc. 25-2). The documents are central to Plaintiffs' claim, and Plaintiffs have not challenged their authenticity. Therefore, the court's description of the facts incorporates Plaintiffs' allegations and the content of the documents attached to Defendants' motions to dismiss.

         Defendants operate a poultry processing plant in Collinsville, Alabama. (Doc. 1 at ¶ 12). Defendants utilize poultry growing arrangements where poultry farmers or independent contractors known as growers care for poultry pursuant to instructions provided by Defendants. (Doc. 1 at ¶ 12).

         Plaintiffs operate a poultry growing farm in DeKalb County, Alabama. (Doc. 1 at ¶¶ 1-2, 13). Ms. Buttram's husband, Jonathan Buttram, lives on the farm with her. (Doc. 1 at ¶ 13). Ms. Buttram and Mr. Buttram are members of the Alabama Contract Poultry Growers Association (“ALCPGA”), and both have served as officers of the organization. (Doc. 1 at ¶ 13).

         In late 2005, Koch contacted Ms. Buttram about growing poultry, and Koch personnel stated that upon the company's approval of poultry facilities, Koch “would place birds in the facilities and would enter into a poultry growing arrangement with [Ms.] Buttram for the production of broilers.” (Doc. 1 at ¶ 15). Koch personnel also promised Ms. Buttram “that as long as she grew a good bird, she would continue to receive baby chicks from Koch.” (Doc. 1 at ¶ 15).

         Plaintiffs allege that “JCG's and Koch's representations that [Ms.] Buttram would continue to receive chickens was the primary inducement for [Ms.] Buttram to enter into the agreement with JCG and Koch as well as to expend funds to improve her chicken houses.” (Doc. 1 at ¶ 17). Plaintiffs also allege that JCG and Koch “knew that their representations to [Ms.] Buttram that she would continue to receive chickens as long as she grew good birds were false and were intended to induce [Ms.] Buttram to improve her facilities on at least five (5) different occasions at her expense and to continue to contract with JCG and Koch.” (Doc. 1 at ¶ 18).

         It is unclear from the complaint what the relationship is between JCG and Koch. It is also unclear from the complaint when Plaintiffs first contracted with Defendants or how many total contracts were signed, but the complaint refers to two specific agreements. Plaintiffs entered a contract with JCG titled Broiler Production Agreement (“BPA”). (Doc. 1 at ¶ 11). The complaint does not state when the BPA was executed or how long it was in effect. According to Plaintiffs, pursuant to the terms of BPA,

JCG and Koch supply the chicks, feed, medicine, and other necessary supplies to the growers (Plaintiffs). The growers care for the chicks for approximately 5 to 6 weeks. Growers own their farms, chicken houses and equipment, and provide labor, materials, and utilities necessary to care for the chicks. The chicken houses and equipment must originally meet JCG's and Koch's strict requirements dealing with design plans and specifications subject to JCG's and Koch's sole approval before a grower is accepted by JCG and Koch. JCG and Koch also dictate the type of veterinary care provided to the birds throughout their lives and the birds' condition of confinement.

(Doc. 1 at ¶ 11).

         The second agreement specifically mentioned in the complaint is a Poultry Production Agreement (“PPA”) that Plaintiffs and JCG executed on October 9, 2015. (Doc. 1 at ¶ 20; see Doc. 11-1). Pursuant to the terms of the PPA, JCG delivers to Plaintiffs chickens along with feed, medication, other supplies, and technical instruction. (Doc. 11-1 at 5). In exchange, Plaintiffs grow and care for the chickens consistent with guidelines provided by JCG. (Doc. 11-1 at 5). The PPA gives JCG sole discretion to determine the number, type, and size of chickens placed on Plaintiffs' farm; the time for processing chickens; and the date, time, and interval of placement of future chickens. (Doc. 11-1 at 6). The PPA prohibits Plaintiffs or its employees from owning, maintaining, or caring for other poultry or birds, including “domestic poultry, fowl, turkey, ostrich, emu, rhea, or guinea” on their farm. (Doc. 11-1 at 8). JCG pays Plaintiffs based on a specific formula that incorporates a number of criteria determined by JCG. (Doc. 11-1 at 9-10, 22-23). The PPA also contains a clause regarding limitation of damages. (Doc. 11-1 at 16).

         During the week of November 9, 2016, JCG picked up a flock of broilers from Ms. Buttram's farm for processing, and consistent with the terms of the PPA, Ms. Buttram began preparing her poultry houses for the next flock of birds. (Doc. 1 at ¶ 22). JCG and Koch personnel told her to expect new chicks on her farm within a few days. (Doc. 1 at ¶ 22). Ms. Buttram relied on these representations, and during the week of November 14, 2016, she continued preparing her poultry houses for the next flock of chicks. (Doc. 1 at ¶¶ 23, 27-28). By the following week, JCG and Koch had sprayed the poultry houses for insect and rodent control. (Doc. 1 at ¶ 28).

         On November 23, 2016, JCG and Koch representative Mike Hales called Ms. Buttram and summoned her to meet with JCG representatives to discuss Ms. Buttram's husband. (Doc. 1 at ¶ 29). Specifically, JCG representatives wanted information regarding Mr. Buttram's involvement with a restaurant in Ohio and the restaurant's role in assisting with a documentary called “Super Size Me 2: Holy Chicken!”. (Doc. 1 at ¶¶ 29, 34). The meeting was to take place on November 28, 2016. (Doc. 1 at ¶ 26).

         On the morning on November 28, 2016, Ms. Buttram called JCG's and Koch's office to ask why her feed had not been delivered and when she could expect her next placement of birds. (Doc. 1 at ¶ 30). Mr. Hales told Ms. Buttram that she needed to come to his office to discuss her husband's activities. (Doc. 1 at ¶ 30). Because feed is generally delivered about a week before birds arrive, Ms. Buttram was concerned that JCG and Koch would not deliver birds until after the meeting. (Doc. 1 at ¶ 30). Mr. Hales assured Ms. Buttram that she would receive birds on December 2, 2016. (Doc. 1 at ¶ 30).

         Later on November 28, 2016, Ms. Buttram called Mr. Hales again and told him that she needed to postpone the meeting. (Doc. 1 at ¶ 31). When Ms. Buttram told Mr. Hales that she could not meet on November 28, 2016, Mr. Hales informed her that she would not receive additional birds until the meeting took place. (Doc. 1 at ¶¶ 24, 32). Since then, JCG and Koch have continued to deny placement of chicks on Ms. Buttram's farm. (Doc. 1 at ¶ 32). JCG and Koch also have refused to allow the Buttram's children to grow chickens for them. (Doc. 1 at ¶ 33).

         On February 23, 2017, counsel for JCG sent a letter to Plaintiffs' counsel. (Doc. 26; see Doc. 11-2). The letter states, in pertinent part:

In late November, JCG Foods requested a meeting with Connie Buttram to discuss important issues under her Poultry Production Agreement relating to significant biosecurity concerns that arose relating to poultry growing activities in which [JCG] learned Jonathan Buttram was engaged. Specifically, [JCG] learned that Mr. Buttram was engaged in growing free-range poultry while also assisting with the operations of Ms. Buttram's farm, Breaking Free Farm.
As you are likely aware, biosecurity and the prevention of bird disease, such as Avian Influenza, is an extremely important issue in the poultry industry. An outbreak of Avian Influenza at a farm growing chickens for [JCG] could be devastating to [JCG] and the industry. As a result of the risks associated with the possible spread of contagious disease, Ms. Buttram, just as all independent contractor producers under contract with [JCG], is required under her agreement to comply with [JCG's] biosecurity requirements and is prohibited from raising any other flocks, poultry or birds on the farm or on any other premises. This prohibition includes anyone providing services on Ms. Buttram's behalf. [JCG's] understanding is that Mr. Buttram carries out day-to-day operational activities at the Breaking Free Farm.
The biosecurity risk associated with raising free-range poultry is particularly significant because of the potential exposure to wild birds, rodents, and animals through which transmission of infectious diseases may take place. For these reasons, when the Company learned that Mr. Buttram was involved with other poultry growing operations, it reached out to Ms. Buttram as the contracting party so that [JCG] could promptly and cooperatively assess the risks associated with Mr. Buttram's activities and determine how to proceed. Meeting with ...

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