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Bettua v. Sears

January 30, 2008

JOHN BETTUA, GIUSEPPINA P. DONIA, DERRAL HOWARD, DENISE MILLER, CHARLES NAPOLI, VIC PFEFER, CHRISTINA RAMER, JEFFREY A. AND SANDRA K. ROBINSON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
SEARS, ROEBUCK AND CO., DEFENDANT.



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

MEMORANDUM OPINION AND ORDER

Plaintiffs brought this 30-count putative class action for violation of the Magnuson-Moss Warranty Act ("MMWA") (Counts I and II), violation of their respective home states' consumer protection statutes (Count III--IX), breach of written warranties (Counts X--XVI), breach of implied warranties (Counts XVII--XXIII), and unjust enrichment (Counts XXIV--XXX). Before the court is Sears's motion under Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure to dismiss, or in the alternative for a more definite statement, as to all of the claims in the Bettua complaint. For following reasons, the motion [#34] will be granted in part and denied in part.

The claims alleged in this case ("Bettua") are similar to those alleged in Munch v. Sears Roebuck & Co. ("Munch"), No. 06 C 7023, and Seratt v. Sears Roebuck & Co. ("Seratt"), No. 07 C 0412. All three cases are putative class actions arising from alleged defects in certain Kenmore-brand front-loading washing machines. On January 6, 2009, the court consolidated this case with Munch and Seratt for purposes of discovery and pretrial proceedings. The court also granted plaintiffs leave to file a consolidated amended complaint for the three cases.

The Munch and Seratt complaints were the subject of a motion to dismiss that the court granted in part and denied in part on September 30, 2008, dismissing the plaintiffs' claims under their respective home states' consumer fraud statutes, their common law fraud claim, and their unjust enrichment claim and denying the motion as to certain declaratory relief.*fn1 See Munch, No. 06 C 7023, Dkt. No. 120 (Sept. 30, 2008). Because of the extensive similarities among the cases and the pending consolidation of the three complaints, the court will refer here to its earlier analysis in the September 30, 2008 memorandum opinion and assume the reader's familiarity with that decision.

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) challenges the complaint for failure to state a claim upon which relief may be granted. General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). In ruling on a motion to dismiss, the court accepts as true all well-pleaded facts alleged in the complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Dixon v. Page, 291 F.3d 485, 486 (7th Cir. 2002). In order to survive a motion under Rule 12(b)(6), the complaint must provide the defendant with "fair notice of what the . . . claim is and the grounds upon which it rests." EEOC v. Concentra Health Servs., Inc.,496 F.3d 773, 776--77 (7th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964, 167 L.E.2d 929 (2007)). The allegations in the complaint must also be "enough to raise a right to relief above a speculative level." Twombly, 127 S.Ct. at 1965.

DISCUSSION

I. The Consumer Fraud Claims (Counts III-IX)

Much like the plaintiffs in Munch and Seratt, the Bettua plaintiffs have alleged that their Kenmore HE series washers suffer from a defect that prevents adequate water drainage and causes the machines to accumulate mold and mildew and to produce a corresponding odor that permeates both the clothes washed in the machine and the home of the machine's owner. Whereas the Munch plaintiffs alleged violations of the consumer fraud statutes of Illinois, California, Kentucky, Minnesota, Michigan, New Jersey, New York, Washington, and Indiana, the Bettua plaintiffs have alleged violations of the analogous statutes of Arizona, Colorado, Florida, Ohio, Pennsylvania, Wisconsin, and Oklahoma. As in Munch, plaintiffs' theories of consumer fraud liability are based on their contentions that Sears (1) knew about the defect and had a duty to disclose such knowledge to customers, but deliberately failed to do so in order to sell more machines, and (2) marketed the machines as providing superior quality despite their knowledge of the defect.

Sears argues that plaintiffs have failed to allege their consumer fraud claims with sufficient particularity to meet the pleading requirements of Rule 9(b). In response, plaintiffs argue that they have pleaded with particularity the material facts Sears knew and did not disclose.*fn2 As the court explained in the September 30, 2008 memorandum opinion in Munch,

To successfully state a cause of action for fraudulent concealment as a deceptive act or practice, the plaintiff must allege that the defendant omitted or concealed a material fact in the conduct of trade or commerce. See White v. DaimlerChrysler Corp., 856 N.E.2d 542, 547, 368 Ill. App. 3d 278, 305 Ill. Dec. 737 (Ill. App. Ct. 1st Dist. 2006). A fact "is 'material' if the plaintiff would have acted differently had he been aware of it, or if it concerned the type of information upon which he would be expected to rely when making his decision to act." Miller v. William Chevrolet/GEO, Inc., 762 N.E.2d 1, 7, 326 Ill. App. 3d 642, 260 Ill. Dec. 735 (Ill. App. Ct. 1st Dist. 2001) (citing Mackinac v. Arcadia Nat'l Life Ins. Co., 648 N.E.2d 237, 239, 271 Ill. App. 3d 138, 207 Ill. Dec. 781 (Ill. App. Ct. 1st Dist. 1995)). When such a claim is brought in federal court, the particularity requirements of Rule 9(b) of the Federal Rules of Civil Procedure are imposed to ensure that defendants are properly notified of their alleged fraud, so that they can respond adequately. Towers Fin. Corp. v. Solomon, 126 F.R.D. 531, 535 (N.D. Ill. July 10, 1989).

Although plaintiffs are not required to plead all evidentiary facts, they cannot put defendants on notice simply by asserting conclusional allegations. Id. (citing Ambling v. Blackstone Cattle Co., Inc., 658 F. Supp. 1459, 1468 (N.D. Ill. 1987); Rudolph v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 100 F.R.D. 807, 809 n.2 (N.D. Ill. 1984)). At the same time, Rule 9 is to be read in conjunction with Rule 8. Brown v. SBC Communications, Inc., 2007 WL 684133 *6 (S.D. Ill.). This means that a plaintiff is required to plead "only slightly more than is demanded under ordinary notice pleading." Id. (quoting Tomera v. Galt, 511 F.2d 504, 508 (7th Cir. 1975)) (overruled on other grounds by Short v. Belleville Shoe Mfg. Co., 908 F.2d 1385 (7th Cir. 1990)). More specifically, "a plaintiff must plead 'the bare bones' of a fraudulent scheme, by supplying 'a brief sketch of how the fraudulent scheme operated, when and where it occurred, and the participants.' The reason, of course, is that under the liberal discovery provisions of the Federal Rules of Civil Procedure, '[m]ore information can be gathered through discovery.'" Brown at *6 (quoting Tomera, 511 F.2d at 508, 509). See Munch, No. 06 C 7023, Dkt. No. 120, at 5--6 (Sept. 30, 2008).

In Munch, the plaintiffs' alleged that (1) an "unacceptable number" of HE washers manifest defects which the plaintiffs described as electronic control board failure and water drainage failure, (2) the number of complaints Sears received about such problems was "far in excess of the number deemed acceptable by reasonable quality control," and (3) at least 1.5% of HE machine owners had experienced the defect or had mold issues. Id. at 7. The court found that the Munch plaintiffs had failed to allege (a) any relevant standard by which to measure the allegedly "unacceptable" rate of defects and problems, (b) an engineering explanation for the alleged defects, or (c) a specific point at which Sears knew of the defect in its product yet conveyed an opposite message to plaintiffs. Id. at 10. The court thus dismissed the plaintiffs' consumer fraud claims, holding that plaintiffs' allegations were insufficiently specific to show a deceptive practice or permit an inference of materiality. Id.

Here, the plaintiffs cite the following as particular allegations of material facts that Sears knew about but did not disclose: that the Machines had a heightened risk of failure; that the water drainage defects render the Machines ineffective for their intended purpose; that consumer complaints attributable to these defects were significant; that failures were likely to manifest after the expiration of warranty such that consumers were without a remedy; that there was no solution for the ...


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