Key Points

  • The Fifth Circuit reversed the Rule 12(b)(1) dismissal of a proposed RICO and Mississippi-law class action against Mary Mahoney's Old French House, its supplier and three individuals, and vacated the denial of leave to amend.
  • The panel held that buying an inferior product that the seller explicitly promised was high quality is a concrete economic injury, limiting Earl v. Boeing and Rivera v. Wyeth-Ayerst to economic injuries based on an unmaterialized risk of physical harm and following Wilson v. Centene.
  • The panel held that allegations of widespread, routine mislabeling, including admitted quantities of 58,750 pounds over about six years and 17,190 pounds in 2018 and 2019, plausibly plead a particularized injury without alleging the proportion of misbranded fish.
  • The manager's September and October 2018 orders of imported perch for sale as snapper, placed shortly after the plaintiff's Aug. 21, 2018, visit, supported an inference that he was served frozen fish that day.

A federal appeals court on Oct. 16 revived a proposed class action accusing a Mississippi seafood restaurant of charging premium prices for local snapper while serving imported frozen fish. The court held that a diner who says he paid for fish he never received has alleged enough harm to sue in federal court.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit reversed a district court ruling that had dismissed the suit brought by Todd McCain against Mary Mahoney's Old French House, its seafood supplier and three individuals. Circuit Judge King wrote the opinion for the panel, which also included Circuit Judges Smith and Ramirez. The panel vacated the lower court's refusal to let McCain amend his complaint and sent the case back for further proceedings.

The decision concerns Article III standing. The panel held that a complaint built on the defendants' criminal admissions about the size of the scheme can plausibly show that the diner was served substituted fish, without alleging what share of the restaurant's fish was mislabeled.

In 2024, the U.S. Attorney for the Southern District of Mississippi charged Mahoney's, its wholesale supplier Quality Poultry & Seafood Inc., Mahoney's co-owner and manager Anthony Cvitanovich, and the supplier's business manager James Gunkel and sales manager Todd Rosetti with conspiring to misbrand imported frozen fish as locally sourced premium fish. Each pled guilty.

Mahoney's admitted that "between December 2013 and November 2019, it and its co-conspirators, fraudulently sold as local premium species, approximately 58,750 pounds (over 29 tons) of fish that was frozen and imported from Africa, India, and South America."

McCain ate at Mahoney's on July 29, 2013, Dec. 28, 2016, and Aug. 21, 2018, and on those occasions bought what he believed was premium local snapper and red snapper. He sued under the Racketeer Influenced and Corrupt Organizations Act, the federal racketeering law, and under Mississippi law, seeking money damages for himself and a class of other diners.

The district court dismissed the complaint under Federal Rule of Civil Procedure 12(b)(1), which governs dismissal for lack of jurisdiction. The court reasoned that because McCain "consumed the meal[s] without complaint or concern," his injury from "paying for fish he would not have otherwise purchased does not constitute" a cognizable injury. The court also found that he had not alleged that the restaurant mislabeled all of its snapper on a date he ate there, and it later denied leave to amend as futile.

The panel first considered whether McCain's injury was concrete. The district court had held that his fraudulent-inducement theory, the claim that the defendants' fraud led him to buy fish he otherwise would not have bought, was foreclosed by Earl v. Boeing Co., a 2022 Fifth Circuit decision. Earl rejected standing for passengers who bought tickets on Boeing MAX 8 planes with alleged safety defects but disclaimed any physical injury.

Judge King wrote that Earl and an earlier painkiller case, Rivera v. Wyeth-Ayerst Laboratories, were akin to "no-injury products liability law suit[s]," a phrase Rivera had quoted from an earlier Fifth Circuit decision. Those decisions apply, the panel held, where a plaintiff "has suffered no physical injury but bases his economic injury on the product's risk of physical harm."

Because McCain's claim involves no such risk, the panel compared him instead to the health insurance buyers in Wilson v. Centene Management Co., a Fifth Circuit decision from earlier this year, whose plan's provider directories were allegedly inaccurate. "The seller in both cases promised a high-quality product, charged the buyer for that high-quality product, and delivered an inferior version of that product," King wrote.

The panel then turned to particularization, the requirement that an injury affect the plaintiff "in a personal and individual way." McCain could meet that requirement, the court said, by plausibly alleging that on at least one of his three visits Mahoney's actually served him imported frozen fish.

The panel found the alleged substitution "routine and systematic." The complaint alleges that the supplier substituted "all snapper" with imported triple tail in January 2018. It also alleges that Cvitanovich ordered imported frozen African perch in September 2018, "which Mary Mahoney's regularly mislabeled and sold to customers as local Mississippi Gulf Coast snapper," and ordered 60 pounds of African perch for sale as snapper in October 2018. Cvitanovich admitted involvement in mislabeling about 17,190 pounds of fish sold at the restaurant in 2018 and 2019.

The district court had drawn on rulings from other circuits. The panel distinguished the Seventh Circuit's 2024 decision in In re Recalled Abbott Infant Formula Products Liability Litigation and the Eighth Circuit's 2014 decision in Wallace v. ConAgra Foods Inc. Unlike the plaintiffs in those cases, the panel wrote, McCain "provided the specific quantities of mislabeled products at various times during the relevant period."

The panel also said the district court "overemphasized" the 89 percent mislabeling figure in the Second Circuit's 2017 decision in John v. Whole Foods Market Group, calling that figure "simply a proxy for whether mislabeling was 'systematic and routine.'" "At the pleading stage, McCain need not allege the proportion of misbranded fish at Mahoney's," King wrote. McCain needed to show only that substitution "was sufficiently widespread so as to plausibly affect any given [fish entrée.]"

The perch orders came shortly after McCain's Aug. 21, 2018, visit, and the panel held that those orders, together with Cvitanovich's admission, "plausibly supports an inference that McCain was served frozen fish on August 21, 2018." The panel cautioned, in language drawn from John, that McCain "may ultimately be unable to show he was injured under the more demanding standards applicable at summary judgment or trial."

The case, No. 25-60663 on appeal, now returns to the U.S. District Court for the Southern District of Mississippi. "Whether an amendment is still requested is a decision for [McCain], and whether to allow it is for the district court to reconsider," the panel wrote, quoting an earlier Fifth Circuit decision.