enterprise's affairs through a pattern of racketeering activity." In Reves v. Ernst & Young, 507 U.S. 170, 122 L. Ed. 2d 525, 113 S. Ct. 1163 (1993), the Supreme Court held that in order to be liable under § 1962(c), the defendant must have "participated in the operation or management of the enterprise itself," Id. at 193, and must have played " some part in directing the enterprise's affairs." Id. at 179 (emphasis in original). These stringent requirements have been interpreted by the Seventh Circuit as only applying to "outsider" defendants, like the accounting firm at issue in Reves. MCM Partners v. Andrews-Bartlett & Assocs., 62 F.3d 967, 978-79 (7th Cir. 1995). In contrast, where the defendant is alleged to be "lower-rung participant in the enterprise ... under the direction of upper management," the absence of any authority or power to control the conduct of the enterprise will not bar application of § 1962(c). MCM Partners, 62 F.3d at 978.
Here, plaintiff alleges that Ford "is an 'enterprise' as defined in 18 U.S.C. § 1961(4)" (Am.Cplt. P33), and that Highland, as an independent automobile dealership which does not act under the direction of Ford's upper management, is a distinct RICO "person." Plaintiff argues that Highland, as an "outsider" to the RICO enterprise, was "associated with" Ford and liable under RICO by virtue of its participation in the conduct of Ford's affairs. Plaintiff's claim will stand only if he can show that Highland exercised the requisite influence over Ford's affairs; in other words, that it participated in the operation or management of the enterprise itself. Reves, 507 U.S. at 185. Specifically, for an "outsider" to be liable it must "exert control over" the enterprise through, for example, bribery. Reves, 507 U.S. at 184.
Plaintiff argues that "any 'person' who has some degree of direction over some portion of the activities of the 'enterprise' is subject to § 1642(c) liability" (Pl.Resp. at 5). Plaintiff asserts he has sufficiently alleged that Highland possessed such control over the activities of Ford with respect to the fraudulent scheme. In support of this assertion, plaintiff basically argues that Highland's "agency" relationship with Ford conferred the degree of control over Ford's affairs necessary to give rise to RICO liability. Specifically, he states that Highland, pursuant to a formal agreement with Ford, sold Ford's ESPs, informed plaintiff and other consumers of the inspection fee, collected the inspection fee on behalf of Ford, and then performed the repairs covered by the plan. This, plaintiff claims, demonstrates that Highland exerted control over Ford's affairs with respect to the fulfillment of the service plans.
We find that plaintiff's allegations are inadequate. The fact that Highland was associated with Ford as a sales representative for Ford automobiles and ESPs does not invest it with the requisite degree of control to establish RICO liability. Stone v. Kirk, 8 F.3d 1079, 1092 (6th Cir. 1993). Plaintiff rejoins that Highland is not merely Ford's representative for the sale of ESPs, it is also Ford's agent for the purpose of providing ESP-covered service and repairs. Based on this fact, plaintiff attempts to distinguish Stone, where the the Sixth Circuit held that a record company's sales representative who solicited investors to lease the rights to master recordings "was not a participant in the operation or management of the [record company], and had no part in directing its affairs ...." Id. at 1092. Plaintiff asserts that this case is qualitatively different since Highland not only represented Ford in the sale of the ESPs, but also exerted control over Ford by demanding inspection fees from covered owners and performing the required repair work.
However, the fact that Highland processed plaintiff's application, charged the inspection fee, and would have conducted the repair work on his vehicle if it had gone forward does not constitute the requisite "participation" in the affairs of Ford to warrant imposing RICO liability. See Matter of Lake States Commodities, Inc., 936 F. Supp. 1461, 1476-77 (N.D. Ill. 1996) (holding that a commodity salesman who assisted enterprise's owner in soliciting fraudulent investments did not direct the affairs of the RICO purposes and therefore could not be held liable under § 1962(c)). At most, it shows that Highland carried out its ESP obligations pursuant to written agreements with Ford, indicating a relationship of control flowing from Ford to Highland, rather than the other way around. Furthermore, Highland's unilateral decision to charge plaintiff an inspection fee prior to assessing the extent of repair costs does not constitute "participation" in Ford's affairs. "Liability depends on showing that the defendants conducted or participated in the conduct of the ' enterprise's affairs," not just their own affairs." Reves, 507 at 185. Plaintiff has made no allegation that the inspection fee was imposed at the behest of anyone but Highland. This case is therefore like Stone and Reves, where the defendants were "outsiders" to the RICO enterprise and yet did not exert sufficient control over its affairs to give rise to RICO liability. Moreover, the cases plaintiff cites in support of its position are inapplicable since they deal with the liability of "insiders" to the RICO enterprise. See MCM Partners, 62 F.3d 967; United States v. Oreto, 37 F.3d 739 (1st Cir. 1994), cert. denied, 513 U.S. 1177, 130 L. Ed. 2d 1116, 115 S. Ct. 1161; LaSalle Bank Lake View v. Seguban, 937 F. Supp. 1309, 1996 U.S. Dist. LEXIS 12510 (N.D.Ill. 1996). Highland had no part in directing the affairs of Ford and therefore cannot be held liable under § 1962(c). Defendant Highland's motion to dismiss Count I is granted.
III. Unfair and Deceptive Acts and Practices Claim Against Ford
In Count II of his complaint plaintiff alleges that Ford is liable to the class for Highland's failure to disclose that all claims under the ESP were subject to a substantial inspection fee. Although it is nowhere stated in his amended complaint, we assume that plaintiff brings this claim under the Illinois Consumer Fraud Act, 815 ILCS 505/1 et seq., since that is how the issue is framed in the response brief.
The point of contention between the parties focuses on whether Highland's allegedly unfair and deceptive practices occurred in the course of selling the ESP or at the point when plaintiff requested repairs. The parties appear to agree that Ford cannot be held liable under a respondeat superior theory for the actions of Highland, as Ford's authorized dealer, connected to the sale of Ford's vehicles and products. Washington v. Courtesy Motor Sales, Inc., 48 Ill. App. 2d 380, 199 N.E.2d 263, 265 (Ill.App.1st 1964); see also Connick v. Suzuki Motor Co., Ltd., 174 Ill. 2d 482, 675 N.E.2d 584, 592, 221 Ill. Dec. 389 (Ill. 1997) (stating that bare allegations of agency relationship between manufacturer and dealer with respect to sale of products is insufficient to plead agency). However, plaintiff contends that Highland must still be considered Ford's agent for "providing the service and repairs required under the plans" (Resp. at 15). Thus, plaintiff contends that because Highland was Ford's agent for the purpose of making repairs to automobiles covered by the ESPs, see Ventura v. Ford Motor Corp., 180 N.J. Super. 45, 433 A.2d 801, 810-811 (N.J.Super.Ct.App.Div. 1981); Koperski v. Husker Dodge, Inc., 208 Neb. 29, 302 N.W.2d 655, 665 (Neb. 1981), Ford is thereby liable for Highland's misconduct in administering the ESPs.
Ford may well be correct that plaintiff's amended complaint, with its wording changes from the original complaint, does not sufficiently focus on Highland's insistence upon an inspection fee at the time it was asked to make repairs. But we are dealing with notice pleadings and the defect, if it be that, is curable by amendment. We see no good reason for delaying consideration of the underlying issue, but that issue has been deferred in the memoranda in light of the pleading arguments.
The underlying issue is whether or not, under Illinois law, the conduct complained of is attributable to Ford. There appears to be no dispute that Highland decided to impose a fee; it was not directed to do so by Ford. Clearly, also, Highland is an independent contractor. That does not mean, however, that it cannot be Ford's agent for certain purposes. Indeed, invocation of the concept of agency is to some extent tautological. It is the statement of the conclusion that the law imposes derivative liability. See Pinski v. Adelman, 955 F. Supp. 73 (N.D. Ill. 1996); Pinski v. Adelman, 1995 U.S. Dist. LEXIS 16550, No. 94 C 5783 1955 WL 669101 (N.D. Ill. Nov. 7, 1995). We think we need further briefing on this issue before we can resolve the motion to dismiss Count II. Ford is directed to file a brief confined to that issue by August 13, 1997, with plaintiff to respond by August 27, 1997, and Ford to reply by September 10, 1997.
IV. Breach of Service Contract Claims Against Ford
In Count III plaintiff claims on behalf of the class that Ford breached the extended service plan and violated the Magnuson Moss Consumer Warranty Act, 15 U.S.C. § 2310, when its agent, Highland, demanded payment of the inspection fee. The Act permits consumers injured by "the failure of a supplier, warrantor, or service contractor to comply with any obligation under this chapter, or under a written warranty, implied warranty, or service contract" to bring suit in a federal district court. 15 U.S.C. § 2310(d)(1)(B). However, under § 2310(d)(3) of the Act:
No claim shall be cognizable in a suit brought under paragraph (1)(b) of this subsection --