Mrs. Palmquist gave birth to a son after a healthy and uneventful pregnancy. During the first two years of his life, he met or exceeded developmental milestones. During this time, Ethan almost exclusively consumed Hain’s Earth’s Best Organic Products, purchased from Whole Foods. Some physicians attributed most, if not all, of Ethan’s symptoms to autism spectrum disorder or major neurocognitive disorder. Some physicians also diagnosed Ethan with heavy-metal poisoning. In 2021 — several years after the heavy metal toxicity diagnosis — the House Oversight and Reform Committee released a report demonstrating that certain baby foods, including Hain’s, contained elevated levels of toxic heavy metals, including arsenic, lead, cadmium, and mercury. The Palmquists sued both Hain and Whole Foods in Texas state court in 2021, alleging strict-products-liability and negligence claims against Hain and breach-of-warranties and negligence claims against Whole Foods. Hain removed the case to Federal Court, contending that Whole Foods, a multinational supermarket chain headquartered in Austin, Texas, was improperly joined to defeat diversity jurisdiction. After removal, the Palmquists filed an amended complaint that purportedly “clarified their allegations against Whole Foods under the federal pleading standard.” In their second amended complaint, the Palmquists sought to clarify that their breach-of-warranties cause of action included claims that Whole Foods expressly represented to the public and to the Palmquists that Hain’s baby food was safe. The Palmquists also added a negligent-undertaking claim.  The District Court determined that any new claims could not be considered because jurisdiction is resolved by looking at the complaint at the time the petition for removal is filed. The District Court concluded that the Palmquists added a new breach of express warranty claim in the second amended complaint, (in addition to their new negligent-undertaking claim). Nonetheless, even considering the purportedly new claim, the District Court concluded that, under the Texas Civil Practice & Remedies Code §82.003(a), retail sellers such as Whole Foods are generally not liable for the harm caused by the products they sell. Hence, the Palmquists had improperly joined Whole Foods, which was dismissed from the suit. During trial on the merits against Hain, after the Palmquists had rested, the District Court granted Hain’s Motion for Judgment as a Matter of Law, finding that the Palmquists had presented no evidence of general causation.

Finding no jurisdiction, the U.S. Fifth Circuit reversed:

First, the Court of Appeal determined that “the language in the as-removed complaint was broad enough to encompass both breach of express and implied warranties’ claims. The paragraph was entitled ‘Breach of Warranties’, which could include both express and implied claims.  Although the language in the as-removed complaint generally discussed Whole Foods’ implied warranties, it also discussed Whole Foods’ express representations regarding Hain’s products. We therefore hold that the district court erred in concluding that the Palmquists added a new breach of express warranty claim in their second amended complaint.”

Then the Court addressed the viability of such claims under Texas Law: “Hain, Whole Foods, and the district court all relied on decisions from federal courts for the proposition that alleged misrepresentations may be too general to be actionable. This is a problem, however, because federal courts sitting in diversity apply state substantive law. Although there are few Texas cases interpreting Section 82.003(a)(5), the few that the Palmquists point to have found fairly generalized statements adequate enough to support a claim against a nonmanufacturing seller. The Palmquists alleged that Whole Foods represents that it ‘carefully vets its products to make sure they meet high standards by researching ingredients, reading labels and auditing sourcing practices.’ Accepting these facts as true, and interpreting ambiguities of state law in favor of the Palmquists, we hold that the district court erred in determining that there was no possibility of recovery under Section 82.003(a)(5). In particular, we note that Whole Foods purports to have special knowledge about the ingredients in Hain’s baby food that is not available to customers. As the Palmquists argue, the Whole Foods business model depends on this reputation and customers’ willingness to a pay a premium for products that Whole Foods advertises as healthy and high quality. Therefore, the district court erred in concluding that Whole Foods was improperly joined and in denying the Palmquists’ motion to remand.”


Palmquist v. Hain Celestial Group, No.23-40197, 2024 WL 2720460 (May 28, 2024).