Elward v. Electrolux Home Prods., Inc.
| Citation | 214 F.Supp.3d 701 |
| Decision Date | 04 October 2016 |
| Docket Number | 15 C 9882 |
| Parties | Teresa ELWARD, individually and on behalf of all others similarly situated, Plaintiffs, v. ELECTROLUX HOME PRODUCTS, INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Arthur Stock, Shanon J. Carson, Berger & Montague, P.C., Philadelphia, PA, Edward A. Wallace, Adam Michael Prom, Amy Elisabeth Keller, Wexler Wallace LLP, Chicago, IL, Gregory F. Coleman, Lisa Anne White, Greg Coleman Law PC, Knoxville, TN, for Plaintiffs.
James W. Ozog, Jennifer L. Rediehs, Goldberg Segalla, LLP, Chicago, IL, Thomas J. O'Grady, Goldbergsegalla, Daniel I. Mee, David S. Osterman, Goldberg Segalla, Princeton, NJ, for Defendant.
In this putative class action, Illinois consumers bought dishwashers designed and manufactured by Electrolux that unexpectedly overheated, causing fires and flooding. Teresa Elward, on behalf of herself and others similarly situated, has sued Electrolux pursuant to Illinois law for breach of implied warranty, strict liability, negligence, fraud, and statutes relating to consumer fraud and deceptive practices. Electrolux has moved to dismiss the First Amended Complaint for failure to state a claim and for failure to plead the fraud claims with particularity. For the reasons provided below, the Court grants in part and denies in part the motion.
Electrolux is the world's second-largest appliance maker by units sold. 1st Am. Compl. ¶ 11. Electrolux designs and manufactures dishwashers and sells them under its own brand name, as well as other brand names, such as Frigidaire. Id. ¶¶ 11–13.
Elward alleges that she and other consumers purchased Electrolux dishwashers through Electrolux's agents. Id. ¶ 55. Further, she alleges that Electrolux had direct communications with her and other putative class members via advertisements, the internet, warranty forms, registration cards, and other documents. Id. According to Elward, based on the direct dealings of customers with Electrolux and its agents, Electrolux was aware that Elward and other Illinois consumers required dishwashers that were safe to use in their homes and that would last as long as dishwashers typically do, which is around nine to thirteen years. Id. ¶ 29.
Elward asserts that Electrolux dishwashers are defective because the electrical system overheats, causing its electrical components to catch on fire and melt the tub that contains the water. Id. ¶ 16. Electrolux began receiving complaints about its dishwashers catching on fire in 2007. Id. ¶¶ 21, 24 (citing examples of fires). Fires occurred even when a dishwasher was not operating. Id. ¶ 21. According to examples cited in the complaint, the length of ownership before the dishwashers caught fire ranged from nine months to five years. Id. The resulting property damage consisted of smoke damage, flooding, as well as the loss of a consumer's house and all of her possessions. Id. Due to its concerns that its dishwashers were spontaneously igniting, Electrolux recalled several models of its dishwashers in the United Kingdom and Australia, but to this day, Electrolux has not issued a similar recall in the United States. Id. ¶ 22.
Even after customers complained to Electrolux that its dishwashers posed serious safety risks, Electrolux intentionally concealed those risks and continued to manufacture and sell the dishwashers at issue. Id. ¶¶ 22, 116, 134, 148–51. Furthermore, Electrolux did not warn owners that they should replace their dishwashers to avoid those risks. Id. ¶ 134. To add insult to injury, Elward alleges, when class members called Electrolux to make warranty claims, Electrolux routinely charged them a fee to inspect their dishwashers, knowing that the dishwasher could not be repaired and that Electrolux would not be offering a replacement. Id. ¶ 154.
Based on these facts, Elward and the putative class assert the following claims: (1) breach of implied warranty of merchantability (Count I); (2) strict liability based on design defect (Count II); (3) strict liability based on failure to warn (Count III); (4) negligence (Count IV); (5) negligent failure to warn (Count V); (6) injunctive and declaratory relief (Count VI); (7) unjust enrichment (Count VII); (8) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Count VIII); (9) violation of the Illinois Uniform Deceptive Trade Practices Act (Count IX); and (10) fraudulent concealment (Count X).
A motion under Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the complaint. Christensen v. Cty. of Boone, Ill. , 483 F.3d 454, 457 (7th Cir. 2007). Under federal notice pleading standards, "a plaintiff's complaint need only provide a short and plain statement of the claim showing that the pleader is entitled to relief, sufficient to provide the defendant with fair notice of the claim and its basis." Tamayo , 526 F.3d at 1081 ; see Fed. R. Civ. P. 8(a)(2). When considering a motion to dismiss under Rule 12(b)(6), the Court must "accept[ ] as true all well-pleaded facts alleged, and draw[ ] all possible inferences in [the plaintiff's] favor." Tamayo , 526 F.3d at 1081.
A complaint, however, must also allege "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). For a claim to have facial plausibility, a plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Plausibility, however, "does not imply that the district court should decide whose version to believe, or which version is more likely than not." Swanson v. Citibank, N.A. , 614 F.3d 400, 404 (7th Cir. 2010).
Allegations of fraud must be pleaded in conformance to federal pleading standards specified in Rule 9(b). Borsellino v. Goldman Sachs Group, Inc. , 477 F.3d 502, 507 (7th Cir. 2007). Under Rule 9(b), in "averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Id. The "circumstances constituting fraud" include the identity of the person who committed the fraud, the time, place, and content of the fraud, and the method by which the fraud was communicated to the plaintiff. See Vicom, Inc. v. Harbridge Merch. Servs., Inc. , 20 F.3d 771, 777 (7th Cir. 1994). This is also known as the "who, what, when, where and how" standard. DiLeo v. Ernst & Young , 901 F.2d 624, 626 (7th Cir. 1990). This requirement ensures that defendants have fair notice of plaintiffs' claims and grounds, providing defendants an opportunity to frame their answers and defenses. Reshal Assocs., Inc. v. Long Grove Trading Co. , 754 F.Supp. 1226, 1230 (N.D. Ill. 1990).
Electrolux first asserts that the breach of implied warranty claim (Count I) for economic damages must be dismissed due to lack of vertical privity. Elward concedes that vertical privity is lacking, see 1st Am. Compl. ¶ 32, but she argues that she has plausibly alleged that two exceptions to the privity requirement apply.2
A claim for breach of implied warranty of merchantability is governed by the Uniform Commercial Code, 810 Ill. Comp. Stat. 5/2–314. As a general rule, unless personal injury is alleged, "implied warranties give a buyer of goods a potential cause of action only against his immediate seller." Rothe v. Maloney Cadillac, Inc. , 119 Ill.2d 288, 116 Ill.Dec. 207, 518 N.E.2d 1028, 1029 (1988); see Bd. of Educ. of City of Chi. v. A, C & S, Inc. , 131 Ill.2d 428, 137 Ill.Dec. 635, 546 N.E.2d 580, 595 (1989).
Illinois recognizes various exceptions to the privity requirement, however. Frank's Maintenance & Eng'g, Inc. v. C.A. Roberts Co. , 86 Ill.App.3d 980, 42 Ill.Dec. 25, 408 N.E.2d 403, 412 (1980). Given "the fact-intensive nature" of the privity inquiry, see In re L & S Indus., Inc. , 989 F.2d 929, 932 (7th Cir. 1993), a determination as to whether privity exists is often "not appropriate at the motion-to-dismiss stage," Apex Mgmt. Corp. v. WSR Corp. , 225 B.R. 640, 646 (N.D. Ill. 1998).
Elward first argues that the allegations of the complaint satisfy the "direct relationship" exception, which applies when there are direct dealings between the manufacturer and the remote customer. See id. In Abco Metals Corp. v. J.W. Imports Co., Inc. , a manufacturer sold a wire chopping machine to its distributor, who sold it to an equipment leasing company, who then leased it to the plaintiff, the remote customer. 560 F.Supp. 125, 127 (N.D. Ill. 1982). The plaintiff alleged that the manufacturer's agent had met with plaintiff to discuss the machine and had promised that the machine would meet the plaintiff's requirements. Id. at 128. When the machine did not operate as expected, the plaintiff notified one of manufacturer's agents, but all attempts to fix the machine failed. Id. Because the plaintiff alleged that it had direct dealings with the manufacturer's agents, the Abco court held that the complaint sufficiently pleaded that the direct relationship exception and denied the manufacturer's motion to dismiss for lack of privity. Id.
In In re Rust–Oleum Restore Marketing, Sales Practices & Products Liability Litigation , remote customers alleged that they had relied on the manufacturer's misrepresentations in brochures and advertisements prior to purchasing a deck resurfacing product and that they had direct dealings with the manufacturer's agents. 155 F.Supp.3d 772, 806–07 (N.D. Ill. 2016). The Rust–Oleum court held that such allegations were sufficient to allege that the...
To continue reading
Request your trial
-
Melnick v. Tamko Bldg. Prods., Inc.
...argues that it may fall within an exception to this requirement of privity, as discussed in Elward v. Electrolux Home Products, Inc. , 214 F. Supp. 3d 701 (N.D. Ill. 2016). In Elward , the court discussed two such exceptions: (1) the "direct relationship" exception, "which applies when ther......
- Napleton's Arlington Heights Motors, Inc. v. FCA US LLC
-
Guajardo v. Skechers USA, Inc.
...Sheeley v. Wilson Sporting Goods Co. , No. 17-cv-3076, 2017 WL 5517352 (N.D. Ill. Nov. 17, 2017), Elward v. Electrolux Home Prod., Inc. , 214 F. Supp. 3d 701, 706 (N.D. Ill. 2016), and In Re Rust-Oleum Restore Mktg., Sales Practices & Prod. Liab. Litig. , 155 F. Supp. 3d 772, 806–07 (N.D. I......
-
Cohen v. Subaru of Am., Inc.
...that damages only itself cannot be the subject of a suit for damages” under Illinois law. Elward v. Electrolux Home Prod., Inc., 214 F.Supp.3d 701, 706 (N.D. Ill. 2016) (quoting Mars, Inc. v. Heritage Builders of Effingham, Inc., 763 N.E.2d 428, 436 (Ill. Ct. App. 2002)). “Absent injury to ......