Judge Says 2 Consumers Can Sue Petland Under RICO

Update Jan. 28, 2010: Arizona U.S. District Court Judge David G. Campbell has issued an opinion agreeing 2 of the plaintiffs suing Petland can proceed with their cases.

The RICO statute makes it unlawful for any person associated with an enterprise to participate in the conduct of such enterprise’s affairs, or to conspire to do so, through a pattern of racketeering. 18 U.S.C. § 1962(c), (d). The alleged pattern of racketeering in this case is mail and wire fraud under 18 U.S.C. §§ 1341 and 1343. To plead a violation of those statutes, Plaintiffs must allege that Petland used the mails and wires to perpetrate a plan to defraud them.

In the first Complaint discussed in Animal Law Coalition’s reports below, the court found the plaintiffs did not allege facts showing the RICO violations proximately caused their injuries.  In this amended Complaint, the judge agreed 2 of the plaintiffs had pleaded the necessary facts and could proceed with their cases against Petland for RICO violations.

Plaintiffs Elliot Moskow and Karen Galatis allege that they received "specific representations by individual Petland employees that their puppies either were healthy or not bred at a puppy mill."

The judge also wrote that these representations were sufficiently pleaded as part the "scheme to defraud… by ‘misrepresenting that the puppies sold at Petland retail stores across the nation  ….. were ‘healthy,’ ‘the finest available,’ and by deliberately misrepresenting puppy mills who bred the dogs as ‘professional and hobby breeders who have years of experience in raising quality family pets,’ and by deliberately misrepresenting that the puppies were from USDA-licensed breeders. …Petland’s misrepresentations purportedly were made [in]… Petland’s ‘uniform standards… health certificate and/or warranty provided at the time of sale’… and in statements made on Petland’s website and in written brochures ‘mailed and/or provided to consumer[s] in its retail locations’".

The judge also agreed Moskow and Galatis could sue Petland on a theory of unjust enrichment, and Moskow could proceed with a claim against Petland under the Maine Unfair Trade Practices.

Hunte Corporation was named in the amended complaint, but neither Moskow nor Galatis purchased dogs produced or brokered by Hunte. Claims against Hunte Corp. were dismissed.   A copy of the Amended Complaint and latest order are attached below.

Update Aug. 9: On August 7, 2009 U.S. District Judge David G. Campbell, sitting in the Arizona federal district court, dismissed without prejudice the plaintiffs’ Complaint against Petland and Hunte Corporation. The judge did not allow oral argument. (A copy of the judge’s dismissal is attached and can be downloaded at the end of this article.)

 

(Photo credit: Wesley Kolk, http://sccworlds.com)

The plaintiffs can re-file their complaint or lawsuit but must add some allegations.

The judge found that the plaintiffs had not established that Petland and Hunte had a duty to tell them the puppies were from mills. Thus, said the judge, they could not sue Petland and  Hunte under RICO for this non-disclosure. 

The judge also said the plaintiffs must specifically describe the circumstances of the various fraudulent acts and omissions alleged against the defendants. These allegations of fraud must be pleaded with particularlity. The plaintiffs must also plead reliance on Petland and Hunte’s fraudulent misrepresentations, that the defendants’ fraud caused their injuries, the sick and dying puppies and veterinary bills. 

As to Hunte, the plaintiffs may not be able to re-file their claims.  The judge noted that none of the plaintiffs purchased dogs supplied by Hunte and have no standing to sue that company.

For more on this case, read Animal Law Coalition’s original report below. 

Original report: Jodell Martinelli, Stephanie Booth, Melia Perry, Abbigail King, Nicole Kersanty, and Ruth Ross are the named plaintiffs who hope to convince Arizona federal District Court Judge David G. Campbell that their case should be a class action.

They have sued Petland, Inc., the notorious retail pet store, and its broker, the infamous Hunte Corporation which is the leading distributor of puppy mill dogs, along with unnamed suppliers for violations of Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. §1962, ("RICO") and state consumer protection statutes.   

Petland has approximately 140 retail locations in 31 states, either owned or operated as a franchise.

RICO is a statute typically used by federal prosecutors to go after organized crime.

The lawsuit is the next step following the report last November by The Humane Society of the United States that its eight-month confirmed Petland’s practice of selling puppy mill dogs but misrepresenting and concealing the dogs’ origin.  The HSUS investigators "witnessed and documented the deplorable conditions at some of these puppy mills, including puppies living in filthy, barren cages reeking of urine, with inadequate care and socialization. … A review of USDA inspection reports from more than 100 Petland breeders revealed that more than 60% of the inspections found serious violations of basic animal care standards, including sick or dead dogs in their cages, lack of proper veterinary care, inadequate shelter from weather conditions, and dirty, unkempt cages that were too small."

According to the plaintiffs’ Complaint filed in the Arizona federal court, "Petland requires that each of its retail locations purchase puppies from suppliers it has approved, such as Hunte, and nearly everyone is either a puppy mill or a puppy mill broker."  They cite to a definition of puppy mill offered in a Minnesota case:  "a dog breeding operation in which the health of the dogs is disregarded in order to maintain a low overhead and maximize profits." Avenson v. Zegart, 577 F. Supp. 958, 960 (D. Minn. 1984).  Puppy mills are described as like "an assembly line manufacturing process" for dogs:

  "To operate this puppy production line, female dogs are bred at every opportunity without sufficient recovery time between litters. Once these breeding females are physically depleted to the point they lose the ability to reproduce, they are generally destroyed using inhumane methods.

Thus, following a cruel life of breeding litters upon litters of puppies, the sire and dam of that puppy mill puppy is highly unlikely to ever make it out of the mill alive.  While alive and forced to reproduce, the breeding female and her puppies are confined to a wire cage barely large enough to turn around in, sometimes exposed to the elements, twenty-four hours a day, seven days a week and three hundred sixty-five days a year. These cages are frequently stacked upon one another in columns to conserve space so the puppy mill can maximize its number of breeding females, and therefore, its production of puppies. These cages in which the breeding female spends her entire life, and the puppies’ first several weeks of life, are floored with wire mesh to facilitate waste removal and cleanup without regard for the health and wellbeing of either the puppies or their mother.  

The conditions at these puppy mills have degenerated to a point of disregard for the welfare of the dogs leaving them in unsanitary, overcrowded conditions without adequate veterinary care, food, water, exercise or mental stimulation and socialization.  

As a result of these conditions and a disregard for proper canine husbandry practices, puppies whelped at puppy mills are highly prone to debilitating and life threatening conditions".

The Complaint charges that Petland and Hunte have schemed to "defraud consumers by manufacturing a fictitious market for puppy mill puppies….  Because of the increasing awareness of puppy mills, including the inhumane treatment of the breeding dogs and problems associated with the puppies bred there, the demand for puppy mill puppies has virtually been eliminated."

There would be no market for these puppy mill puppies from Petland, according to the Complaint, "given [the dogs’] well-documented health and socialization issues."  

To manufacture a demand for these puppies, Defendants are said to conceal their place of origin. The puppies sold by Petland, say the plaintiffs, "are  misrepresent[ed]… as ‘the finest available’ puppies from ‘professional and hobby breeders who have years of experience in raising quality family pets,’ which are ‘USDA approved’".

The plaintiffs say that "Petland further misleads consumers by exploiting the low standards of the many breed registry companies. Petland deceives consumers into believing that a pet’s registration or ability to be registered at one of these many registry companies reflects the quality of the puppy while further concealing its puppy mill origin. In reality, the registration of a puppy purchased at Petland provides no indication that the puppy is of a better quality than non-registered dogs, is capable of being shown or is healthy and free from congenital or hereditary defects."

"Additionally, Petland relies upon lax government licensure standards and infrequent inspections to dispel consumers’ justifiable concern that their puppy may be whelped in a puppy mill. To instill a false sense of consumer confidence, Petland characterizes its "Approved Suppliers" as "USDA Approved" or as a USDA "licensed breeder," but this does not alter the fact that these breeders are indeed puppy mills. Moreover, a large number of Petland’s puppy mill suppliers are not even USDA ‘licensed breeders.’"

"This scheme ultimately results in a drastically inflated price to the consumer who purchases a puppy mill puppy, where the consumer would not otherwise pay such a high price for a dog of such origin. Additionally, by fraudulently misrepresenting the origin of the puppies Petland offers for sale, consumers are duped into indirectly supporting the deplorable puppy mill industry."

The named plaintiffs, for example, each paid between $800 to $2000 for Petland puppies that turned out to be ill or diseased. The Complaint details the horrific experience of a number of people who purchased Petland/Hunte puppies at exorbitant prices only to find they were seriously ill or diseased and cost them hundreds or thousands of dollars in veterinary care and in some cases, died. A copy of the Complaint is attached to this article and can be downloaded.

Plaintiffs say this "scheme to conceal the origin of these puppy mill puppies from consumers has left thousands of families in its wake suffering from emotional turmoil and significant monetary losses as they grapple with diseased and dying puppies purchased at Petland stores throughout the United States."

The plaintiffs argue, "No consumer seeks to obtain, and/or pay a premium price for a puppy mill puppy, given the emotional turmoil and additional expense associated with these puppies. And most purchasers would be appalled to learn that any portion of their purchase price was used to encourage unsafe and inhumane breeding practices."

Go here and here for information about franchisees that have brought suit in Ohio for what they claim are Petland and Hunte’s sleazy, fraudulent business practices.  

The plaintiffs seek declarations that the defendants have violated RICO by committing mail and wire fraud and that their conduct constitutes unfair, deceptive or unconscionable sales practices; damages including treble damages, costs of litigation and attorneys’ fees.