Rickher v. Home Depot, Inc.

• Decision Date: 28 July 2008
• Docket Number: No. 07-2850.,07-2850.
• Citation: 535 F.3d 661
• Parties: John M. RICKHER, Plaintiff-Appellant, v. HOME DEPOT, INC., a Delaware Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

535 F.3d 661

John M. RICKHER, Plaintiff-Appellant, v. HOME DEPOT, INC., a Delaware Corporation, Defendant-Appellee.

No. 07-2850.

United States Court of Appeals, Seventh Circuit.

Argued March 31, 2008.

Decided July 28, 2008.

Jonah Orlofsky (argued), Chicago, IL, for Plaintiff-Appellant.

George R. Dougherty, Grippo & Elden, Chicago, IL, Dwight J. Davis (argued), King & Spalding, Atlanta, GA, for Defendant-Appellee.

Before KANNE, EVANS, and SYKES, Circuit Judges.

KANNE, Circuit Judge.

John Rickher brought a class-action lawsuit against Home Depot, arguing that Home Depot's sale of a "Damage Waiver" in connection with tool rentals violated the Illinois Consumer Fraud and Deceptive Business Practices Act ("CFA"), see 815 Ill. Comp. Stat. 505/2. Rickher claims that the waiver is a worthless product because it does not provide any value or protection to the customer beyond what is already provided in the basic "Rental Agreement." In Rickher's view, the sale of the worthless Damage Waiver is both deceptive and unfair under the CFA. The district court rejected Rickher's argument and denied his motion for class certification. Because we agree with the district court that the Damage Waiver has value, we affirm the judgment.

I. HISTORY

This appeal deals with a question that many consumers face on a regular basis— should I buy the extra protection being offered with this purchase or rental? John Rickher faced this question on over a dozen occasions over the past few years when he rented tools and equipment from Chicago-area Home Depot stores. On each occasion, Rickher entered into a three-page contract—the Rental Agreement—with Home Depot. The first page is Home Depot's copy of the agreement. It outlines the description and price of the rental, with itemized charges; one line item is labeled "Damage Waiver." The first page also contains a "Special Terms and Conditions" section, which includes the following statement: "I accept the benefits of the damage waiver (if applicable) described in paragraph 11 in the terms and conditions of this rental agreement." The customer signs the first page of the agreement, underneath this statement of acceptance. The second page is the customer's copy of the agreement, and it also describes the rented item and the itemized charges. It looks very much like the first page (Home Depot's copy), but does not contain the Special Terms and Conditions that are identified on the front page.

The third page details the specific terms and conditions of the agreement. Four provisions are relevant to Rickher's appeal. According to the "Risk of Loss" provision (¶ 3), a rental customer is liable for all "damage or destruction, partial or complete" to the equipment. A different provision (¶ 5) explains that the customer is not liable for "reasonable wear and tear resulting from proper use." Then, according to the "Repair or Replacement" provision (¶ 6), in the event a tool or piece of equipment becomes unsafe or in a state of disrepair, Home Depot has the "option" to fix the equipment, provide the customer with a comparable item, or adjust the rental charge. The Repair or Replacement provision goes on to explain that if the equipment is damaged or in disrepair because of the customer's improper use or maintenance, the customer will bear the cost of the replacement or repair. Finally, there is the Damage Waiver provision (¶ 11), which relieves the customer of liability for damage to the equipment that does not result from the customer's improper use of the equipment, provided the customer pays an additional fee.

The precise language of the baseline Risk of Loss provision (¶ 3) states:

... I [the customer] assume all risks of loss, theft, damage or destruction, partial or complete, of the Equipment from any and every cause whatsoever.

The second relevant condition, which Rickher characterizes as the "Wear and Tear" provision (¶ 5), specifically provides:

I acknowledge that I have examined the Equipment, seen it in operation (if appropriate) and that its condition is acceptable. I agree to surrender the Equipment to you upon termination hereof, in as good order and condition as when received, except for reasonable wear and tear resulting from proper use, and if returned unclean, I may be charged a reasonable cleaning fee. I agree to keep and maintain the Equipment in good condition, use it in a careful and proper manner (including without limitation maintenance of proper fuel, oil and lubricant levels, if applicable) and comply with all applicable laws and regulations.

In the Repair or Replacement provision (¶ 6), the customer agrees:

immediately to discontinue using Equipment that becomes unsafe or in a state of disrepair, and immediately to notify [Home Depot] of such fact. You [Home Depot] have the option to make such Equipment operable within a reasonable time, provide me with a similar piece of Equipment or adjust the rental charge. However, if such Equipment is unsafe or in disrepair because of my improper use or maintenance, I will bear the expense of such replacement or repair or, at your option, be declared in default.

The Damage Waiver provision (¶ 11) explains that, if the customer pays the Damage Waiver charge—a fee equal to ten percent of the cost of the equipment's regular rental charge—Home Depot will "waive" its right to hold the customer liable for damage caused to the product while in the customer's possession-except for damage caused by the customer's misuse or abuse of the equipment (among other exceptions).

If I pay the Damage Waiver charge for any Equipment, this agreement shall be modified to relieve me of liability for accidental damage to it, but not for any losses or damages due to theft, burglary, misuse or abuse, theft by conversion, intentional damage, disappearance or any loss due to my failure to care properly for such Equipment in a prudent manner (including without limitation by using proper fuel, oil and lubricants and not exceeding such Equipment's rated capacity, if applicable).

In the district court, Rickher claimed that Home Depot had violated the CFA in two ways. First, he alleged that Home Depot deceived him into believing the Damage Waiver was a mandatory charge by failing to inform him each time he rented tools that the waiver was optional, and by including it, as a default condition, in each Rental Agreement. Second, he argued that the Damage Waiver is a "worthless" product because it does not provide consumers with any protections above and beyond those already afforded by the regular Rental Agreement. Rickher sought to certify a class consisting of persons who paid the Damage Waiver charge when they rented equipment from Home Depot stores in Illinois during the three-year period before Rickher filed his complaint.

The district court determined that Rickher's evidence could not survive summary judgment on either of his claims. When he rented the tools, Rickher failed to read the Rental Agreement, which clearly described the non-mandatory nature of the Damage Waiver. As for the scope of the Damage Waiver, the district court decided that the waiver had value, so there was nothing deceptive or unfair about Home Depot's sale of the waiver to customers. After granting summary judgment in Home Depot's favor, the district court denied Rickher's motion for class certification as moot.

II. ANALYSIS

Rickher's only challenge on appeal is to the district court's disposition of the cross-motions for summary judgment respecting Count II of his Second Amended Complaint, which alleged that the Damage Waiver is a worthless product. We review de novo the district court's disposition of cross-motions for summary judgment, while construing the evidence and all reasonable inferences in favor of the party against whom the motion under consideration is made. BASF AG v. Great Am. Assurance Co., 522 F.3d 813, 818 (7th Cir. 2008). Summary judgment is proper "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The resolution of the CFA claim in this case depends entirely on the terms of the Rental Agreement contract, and as such, summary judgment is appropriate only if there are no genuine issues of material fact surrounding the interpretation of that contract. See Cherry v. Auburn Gear, Inc., 441 F.3d 476, 481 (7th Cir.2006). Under Illinois law, the interpretation of a contract presents a question of law that is decided by the court.¹ BASF, 522 F.3d at 818-19; Bowers Mfg. Co., Inc. v. Chi. Mach. Tool Co., 117 Ill. App.3d 226, 72 Ill.Dec. 756, 453 N.E.2d 61, 66 (1983). Neither side argues that the contract is ambiguous, nor do we identify an ambiguity that prevents our analysis. The contract is not "`susceptible of different constructions when read in its plain and ordinary meaning,'" see Cromeens, Holloman, Sibert, Inc., v. AB Volvo, 349 F.3d 376, 394 (7th Cir.2003) (quoting Althoff Indus., Inc. v. Elgin Med. Ctr., Inc., 95 Ill.App.3d 517, 51 Ill.Dec. 386, 420 N.E.2d 800, 803 (1981)), so we proceed to the merits of the question raised on appeal: whether the Damage Waiver is "worthless."

Rickher argues that the Damage Waiver is worthless because even without it, the Rental Agreement relieves renters of liability for all damage to a piece of equipment that results from its proper use. In his view, the Damage Waiver offers no additional protection because it excludes from coverage damage resulting from improper use. Thus, Rickher argues that the Damage Waiver is redundant because damage from proper use is already excused by the Rental Agreement, and the Damage Waiver does not excuse the customer of anything other than damage from proper use. In Rickher's opinion, the Damage Waiver is a worthless product, and charging customers a fee for a worthless product is deceptive and unfair under the...