Action Auto Glass v. Auto Glass Specialists, 1:00-CV-756.

• Decision Date: 15 March 2001
• Docket Number: No. 1:00-CV-756.,1:00-CV-756.
• Citation: 134 F.Supp.2d 897
• Parties: ACTION AUTO GLASS and Visions Auto Glass, Plaintiffs, v. AUTO GLASS SPECIALISTS, Defendant.
• Court: U.S. District Court — Western District of Michigan

134 F.Supp.2d 897

ACTION AUTO GLASS and Visions Auto Glass, Plaintiffs, v. AUTO GLASS SPECIALISTS, Defendant.

No. 1:00-CV-756.

United States District Court, W.D. Michigan, Southern Division.

March 15, 2001.

Jon J. Schrotenboer, Nelson, Krueger & Schrotenboer, PC, Hudsonville, MI, for Action Auto Glass, Visions Auto Glass.

Mark H. Verwys, Plunkett & Cooney, PC, Grand Rapids, MI, for Auto Glass Specialists.

Stephen R. Drew, Drew, Cooper & Anding, Grand Rapids, MI, for VFM.

OPINION

QUIST, District Judge.

Plaintiffs, Action Auto Glass and Visions Auto Glass, filed this action against Defendant, Auto Glass Specialists, in Kent County Circuit Court on or about September 26, 2000, alleging various state law claims arising out of certain advertisements by Defendant implying that Plaintiffs' practice of waiving the insurance deductible from customers for automobile windshield replacements is fraudulent or otherwise unlawful. Defendant removed the case to this Court on October 6, 2000, based upon diversity of citizenship. Defendant has now moved to dismiss Counts II and III of the complaint, which allege claims under the Michigan Consumer Protection Act ("MCPA"), M.C.L. §§ 445.901 to .922.

Overview

Plaintiffs and Defendant are competitors in the business of replacing windshields and other glass components in automobiles and other heavy equipment throughout the West Michigan area. (Compl. ¶ 7.) Plaintiffs advertise their business by offering customers coupons which customers can use to offset all or part of an insurance deductible when having a windshield replaced. (Id. ¶ 8.) Plaintiffs enter into contracts each year with various insurance companies which establish the prices the insurance companies agree to pay Plaintiffs to replace windshields in various makes and models of automobiles. (Id. ¶ 11.) Plaintiffs allege that Defendant engaged in an advertising campaign which, although not expressly mentioning Plaintiffs by name, was targeted directly at Plaintiffs. According to Plaintiffs, the advertisement, which ran in the Grand Rapids Press on September 4, 2000, stated, "If the glass company is to make a profit on a couponed job it must do one of three things: 1) Inflate the price to cover the coupon amount, 2) Cut corners on materials & installation, or 3) Overbill the insurance company (also known as fraud)." (Id. ¶¶ 18, 21 (emphasis in original).) Plaintiffs contend that Defendant's advertisement is false and misleading because it implies that Plaintiffs' coupon practices are fraudulent.

In Count II of their complaint, Plaintiffs allege that Defendant violated the MCPA by making false and misleading statements in their business advertisement suggesting that Plaintiffs engage in insurance fraud by offering coupons to offset the cost of the deductible. In Count III, Plaintiffs allege that Defendant violated the MCPA when it published an advertisement in the Grand Rapids Press on September 2, 2000, which suggested that Plaintiffs purchased two shipments of defective windshields that Defendant rejected. Defendant contends that both of these claims must be dismissed because the MCPA is intended to protect individual consumers rather than businesses and because Plaintiffs have not alleged that Defendant provided any goods, property, or services to Plaintiffs or that Plaintiffs provided any goods, property, or services to Defendant.

Standard for Dismissal

An action may be dismissed if the complaint fails to state a claim upon which relief can be granted. Fed. R.Civ.P. 12(b)(6). The moving party has the burden of proving that no claim exists. Although a complaint is to be liberally construed, it is still necessary that the complaint contain more than bare assertions of legal conclusions. In re DeLorean Motor Co. (Allard v. Weitzman), 991 F.2d 1236, 1240 (6th Cir.1993) (citing Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir.1988)). All factual allegations in the complaint must be presumed to be true, and reasonable inferences must be made in favor of the non-moving party. 2A James W. Moore, Moore's Federal Practice, ¶ 12.34[1][b] (3d ed.1997). The Court need not, however, accept unwarranted factual inferences. Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987). Dismissal is proper "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)).

Discussion

The MCPA prohibits certain "[u]nfair, unconscionable, or deceptive methods, acts or practices in the conduct of trade or commerce." M.C.L. § 445.903(1). Plaintiffs allege that Defendant's conduct violated §§ 3(1)(f), (i), and (s) of the MCPA by "[d]isparaging the goods, services, business, or reputation of another by false or misleading representation of fact," by "[m]aking false or misleading statements of fact concerning the reasons for, existence of, or amounts of, price reductions," and by "[f]ailing to reveal a material fact, the omission of which tends to mislead or deceive the consumer, and which fact could not reasonably be known by the consumer." M.C.L. §§ 445.903(1)(f), (i), and (s). "Trade or commerce" is defined as:

the conduct of a business providing goods, property, or service primarily for personal, family, or household purposes and includes the advertising, solicitation, offering for sale or rent, sale, lease, or distribution of a service or property, tangible or intangible, real, personal, or mixed, or any other article, or a business opportunity.

M.C.L. § 445.902(d). The intent of the MCPA is "to protect consumers in their purchases of goods which are primarily used for personal, family or household purposes." Noggles v. Battle Creek Wrecking, Inc., 153 Mich.App. 363, 367, 395 N.W.2d 322, 324 (1986). Defendant's motion presents two issues under the MCPA: (1) whether Plaintiffs' complaint contains allegations that meet the "trade or commerce" requirement; and (2) whether Plaintiffs, as businesses, have standing to assert claims under the MCPA.

Defendant contends that Plaintiffs' claims do not satisfy the "trade or commerce" requirement because there is no allegation that Plaintiffs and Defendant engaged in trade or commerce with each other by providing or receiving "goods, property, or service primarily for personal, family, or household purposes." In support of its argument, Defendant cites Cosmetic Dermatology and Vein Centers of Downriver, P.C. v. New Faces Skin Care Centers, Ltd., 91 F.Supp.2d 1045 (E.D.Mich.2000). In that case, the plaintiff, Cosmetic Dermatology and Vein Centers of Downriver, P.C., sued a competitor, Skin Care Specialists, P.C., and others, alleging claims of trademark infringement and violation of the MCPA. The court granted the defendants' motion for summary judgment on the MCPA claim because the plaintiff and the defendants never engaged in trade or commerce with each other, i.e., there was no "purchase or transaction" involving goods or property "`primarily for personal, family, or household purposes.'" Id. at 1060 (quoting MCPA § 2(d)). The court noted that John Labatt Ltd. v. Molson Breweries, 853 F.Supp. 965 (E.D.Mich.1994), had allowed an MCPA action between competitors to go forward, but declined to follow that case because, as noted by another court in Robertson v. State Farm Fire and Casualty Co., 890 F.Supp. 671 (E.D.Mich.1995), the Labatt court failed to analyze whether the plaintiff satisfied the "trade or commerce" requirement. See Cosmetic Dermatology & Vein Ctrs., 91 F.Supp.2d at 1060. The court held, "[b]ecause Plaintiffs did not buy goods or services from the Defendants within the meaning of the Act, they did not engage in `trade or commerce.'" Id.

Robertson did not involve a claim between competitors. Rather, the plaintiffs in that case alleged that their insurance company violated the MCPA based upon representations by the insurer's agent that certain insurance policies would cover the plaintiffs' farming operations. In addressing the insurer's argument that the MCPA did not apply because the insurance policies were purchased for business rather than personal, family or household purposes, the court acknowledged that Labatt allowed a claim by a business under the MCPA but distinguished Labatt because Labatt involved the issue of whether a competitor had standing to sue and thus had no application because the plaintiff farmers and the insurance company were not competitors. See Robertson, 890 F.Supp. at 678. However, the court stated that it would reject Labatt even if that case did apply because the Labatt court failed to consider the "trade or commerce" requirement apart from the issue of standing. See id. at 678-79. The court reasoned:

The court believes that the reason for such tunneled vision may have been that it is highly unlikely that a competitor would be purchasing goods for "personal, family, or household purposes." This may explain in part why courts have held that the MCPA does not apply to businesses; it would be rare indeed (if even possible) for a corporation to purchase goods for "personal, family or household purposes." The only scenario the court can envision is one wherein a corporation would buy its employees products as a holiday bonus, e.g., televisions, stereos, etc., which will be used by the employees in their respective homes. In such a scenario, it is arguable that the corporation is buying goods for personal, family, or household purposes. Of course, it is also arguable that the corporation bought the goods for the business purpose of passing out a holiday bonus and that the ultimate use by the employees is not relevant to the corporation's purpose. Regardless, ignoring the clause requiring the goods purchased (or services procured) to be for "personal, family, or household purposes" is, in ...