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Munch v. Sears Roebuck and Co.

August 27, 2007

SUSAN MUNCH, LARRY BUTLER, JOSEPH LEONARD, KEVIN BARNES AND VICTOR MATOS, INDIVIDUALLY AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED, CONSOLIDATED WITH PLAINTIFFS,
v.
SEARS ROEBUCK AND CO., DEFENDANT.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM OPINION AND ORDER

Plaintiffs Susan Munch, Larry Butler, Joseph Leonard, Kevin Barnes, and Victor Matos (collectively, "the Munch plaintiffs"),*fn1 alleged owners of Kenmore Elite(r)-brand HE3t and HE4t washing machines, have filed suit against defendant, Sears Roebuck and Co. ("Sears"), on behalf of all purchasers of Kenmore Elite(r) HE3, HE3t, HE4 and HE4t model washing machines ("HE washers"), alleging claims for violation of their respective home states' consumer protection statutes, common law fraud, breach of implied warranty of merchantability, unjust enrichment, and declaratory relief. Before the court is Sears's motion to dismiss plaintiffs' complaint or, in the alternative, for a more definite statement of plaintiffs' claims, as well as Sears's motion to strike plaintiffs' class allegations. For the reasons stated below, Sears's motion to dismiss is granted in part and denied in part.

ALLEGATIONS OF THE COMPLAINT

Plaintiffs allege that they bought HE washers from Sears between December 2004 and May 2005, and that their HE washers subsequently experienced mechanical problems, causing the machines to "stop running, break down or otherwise fail to operate." Plaintiffs contend that they and other HE washer owners complained to Sears about premature and repeated mechanical failure; electronic control panel failure; the appearance of error codes such as F11 and FDL on the electronic control panel; clothes not being cleaned properly, including clothes being stained; mold and mildew growing in the machines; and the machines otherwise not performing as a durable and dependable washing machines. Plaintiffs contend that the high number of complaints Sears received regarding the HE washers put it on notice that the HE washers were defective and obligated it to disclose that fact to owners and potential purchasers of the machines. Instead of disclosing the problems, plaintiffs further contend, Sears actively concealed that the HE washers were defective by blaming the "mechanical failures on soap, water issues or other conduct" by the owners of the machines, and tried to profit from the machines' defects by selling extended warranties.

Plaintiffs allege that they have suffered actual damages "in that their Kenmore HE Series Washing Machines have not operated as represented by Sears," because they paid "too high a price for a washing machine that is defective and not fit for use," and because they paid for costs associated with service calls, replacement parts, and extended warranties.

STANDARD

A motion to dismiss under 12(b)(6), Fed. R. Civ. P., challenges the legal sufficiency of the complaint for failure to state a claim upon which relief may be granted. Gen. Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, ibid.; Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994), a plaintiff's obligation to provide the "grounds" of his "entitle[ment] to relief" requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do, see Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed. 2d 209 (1986) (on a motion to dismiss, courts "are not bound to accept as true a legal conclusion couched as a factual allegation"). Factual allegations must be enough to raise a right to relief above the speculative level, see 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004) (hereinafter Wright & Miller) ("[T]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action"), on the assumption that all the allegations in the complaint are true (even if doubtful in fact), see, e.g., Swierkiewicz v. Sorema N. A., 534 U.S. 506, 508, n. 1, 122 S.Ct. 992, 152 L.Ed. 2d 1 (2002); Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 104 L.Ed. 2d 338 (1989) ("Rule 12(b)(6) does not countenance ... dismissals based on a judge's disbelief of a complaint's factual allegations"); Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed. 2d 90 (1974) (a well-pleaded complaint may proceed even if it appears "that a recovery is very remote and unlikely").

DISCUSSION

I. Statutory Fraud Claims

A. Illinois Consumer Fraud and Deceptive Business Practices Act

Plaintiffs allege that Sears violated section 2 of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 Ill. Comp. Stat. § 505/2 ("Illinois Consumer Fraud Act"). The Illinois Consumer Fraud Act prohibits any "concealment, suppression or omission of any material fact, with intent that others rely upon the concealment in the conduct of any trade or commerce." 815 Ill. Comp. Stat. 505/2. To state a claim under the Illinois Consumer Fraud Act, a complaint must set forth specific facts that show (1) a deceptive act or practice by the defendant; (2) the defendant's intent that the plaintiff rely on the deception; (3) the deception occurred in the course of conduct involving a trade or commerce; and (4) the consumer fraud proximately caused the plaintiff's injury. Connick v. Suzuki Motor Co., 675 N.E.2d 584, 594, 174 Ill.2d 482, 221 Ill. Dec. 389 (Ill. 1996). Furthermore, a complaint alleging a violation of consumer fraud must be pled with the same particularity and specificity as that required under common law fraud. People ex rel. Hartigan v. E & E Hauling, Inc., 607 N.E.2d 165, 174-75, 153 Ill.2d 473, 180 Ill. Dec. 271 (1992).*fn2

Sears argues that plaintiffs' Illinois Consumer Fraud Act claim should be dismissed because their allegations that the HE washers would "stop running, break down, or otherwise fail to operate" and had a "substantial risk of mechanical failure" lacks the particularity required by Rule 9(b), Fed. R. Civ. P., which provides that "all averments of fraud or mistake shall be stated with particularity." In response, plaintiffs cite two problems with their HE washers that they identified in their complaint - the failure of the electronic control panel and the growth of mold and mildew in the machines - as their specific allegations of the washers' defects.

To the extent that plainiffs regard these two problems as the HE washers' defects, they have failed to plead them with sufficient particularity. Plaintiffs fail to give a technical description of the problems or to quantify the number of other HE washers that have experienced them.*fn3 Plaintiffs instead seek relief on behalf of all HE washer owners based solely on the allegation that their particular machines required a single repair. Since it is understood that some percentage of all mass-produced complex machines will fail, their allegation is insufficient to state a claim.

It seems more likely, though, that plaintiffs regard the particular problems experienced by their HE washers merely as manifestations of some larger defect, whether caused by poor design, inferior materials or incompetent or inconsistent production. If that is the case, then plaintiffs really just allege that the HE washers must necessarily be defective because their repair and replacement rate is unreasonably high. The alleged defect that underlies that allegation likely cannot be stated at this stage with any greater particularity, as plaintiffs cannot uncover it, as they can in the case of specific defect, merely by examining their particular machines. As a consequence, plaintiffs' attempt to plead their claim by reference to the number ...


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