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Radaviciute v. S & K Lim Cleaners, Inc.

United States District Court, N.D. Illinois, Eastern Division

May 8, 2014

VICTORIA RADAVICIUTE, individually and on behalf of all others similarly-situated, Plaintiff,
v.
S & K LIM CLEANERS, INC., Defendant/Third-Party Plaintiff,
v.
OMEGA PROCESSING SOLUTIONS, LLC; OMEGA CARD SERVICE, INC.; and PAUL C. KIM, Third-Party Defendants.

MEMORANDUM OPINION AND ORDER

JOHN W. DARRAH, District Judge.

Plaintiff Victoria Radaviciute has brought a class action against Defendant and Third-Party Plaintiff S & K Lim Cleaners, Inc. ("S&K") relating to S&K's printing of credit card and debit card information on receipts, in violation of the Fair and Accurate Credit Transactions Act ("FACTA"), 15 U.S.C. § 1681c(g)(1). S&K, in turn, has filed an Amended Third-Party Complaint against Third-Party Defendants Omega Processing Solutions, LLC ("Omega"); Omega Card Service, Inc. ("OCS"); and Paul Kim (collectively, the "Third-Party Defendants"). The Third-Party Defendants have moved to dismiss the Amended Third-Party Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim. Omega also has moved to dismiss, pursuant to Rule 12(b)(3), for improper venue.

BACKGROUND

The following is taken from the Amended Third-Party Complaint ("TPC"), which is assumed to be true for purposes of a motion to dismiss. See Reger Dev., LLC v. Nat'l City Bank, 592 F.3d 759, 763 (7th Cir. 2010). Omega provides point-of-sale ("POS") processing equipment and services to merchants, including programming and installation of those systems. (TPC ¶ 8.) OCS and Kim provide sales and support of Omega's services in Illinois. ( Id. ¶ 9.)

On or about October 25, 2006, S&K and Omega entered into an oral agreement, which was handled by Kim, to install POS equipment for S&K. ( Id. ¶ 10-11.) Acting on behalf of Omega, Kim represented that the card-processing terminal that he was installing met all the security requirements and all rules and regulations. Kim also orally agreed to defend and indemnify S&K in the case S&K became liable to a third party. ( Id. ¶¶ 12-13.) At the time that Kim installed this POS equipment, FACTA was in effect and required full compliance starting December 6, 2006. However, the POS equipment installed by Kim did not comply with FACTA because it printed receipts that displayed the expiration date of credit or debit cards used by customers. ( Id. ¶¶ 14-16.)

On August 14, 2012, Radaviciute filed this class action against S&K for violating FACTA. On September 23, 2013, S&K filed its Third-Party Complaint, asserting a claim of negligence against Omega, OCS and Kim and a claim of breach of contract against Omega. On January 5, 2014, S&K amended its Complaint to assert a claim of breach of oral contract against Omega and adding a claim for negligent misrepresentations against Omega, OCS and Kim.

LEGAL STANDARD

Rule 12(b)(6) permits a defendant to move to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, a complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). Rather, the complaint must provide a defendant "with fair notice' of the claim and its basis." Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008) (quoting Fed.R.Civ.P. 8(a)(2) and Twombly, 550 U.S. at 555). When ruling on a motion to dismiss under Rule 12(b)(6), the court accepts all well-pleaded factual allegations as true and construes all reasonable inferences in favor of the plaintiff. Tamayo, 526 F.3d at 1081.

Rule 12(b)(3) permits dismissal of a complaint for improper venue. Fed.R.Civ.P. 12(b)(3). When a defendant challenges venue, the plaintiff bears the burden of establishing that venue is proper. Moore v. AT & T Latin America Corp., 177 F.Supp.2d 785, 788 (N.D. Ill. 2001) (citing First Health Group Corp. v. Sanderson Farms, Inc., No. 99 C 2926, 2000 WL 139474, at *2 (N.D. Ill. Jan. 31, 2000)). Factual conflicts are resolved in favor of the plaintiff, and the court may draw reasonable inferences from those facts. Id. A court is also allowed to consider facts outside of the complaint to determine if venue is proper. AGA Shareholders, LLC v. CSK Auto, Inc., 467 F.Supp.2d 834, 842-843 (N.D. Ill. 2006).

ANALYSIS

OCS and Kim's 12(b)(6) Motion

OCS and Kim have moved to dismiss S&K's negligence and negligent misrepresentation claims against them. They first argue that S&K has failed to plead facts that they had a duty of care to S&K, as required to state a claim for negligence and negligent misrepresentation.

To state a claim for negligence under Illinois law, a plaintiff "must allege facts that establish the existence of a duty of care owed by the defendant to the plaintiff, a breach of that duty, and an injury proximately caused by that breach." Marshall v. Burger King Corp., 430, 856 N.E.2d 1048, 1053 (Ill. 2006). To state a claim for negligent misrepresentation, a plaintiff must likewise allege a breach of duty to use care in the context of the defendant communicating accurate information upon which the plaintiff reasonably relied. Cahill v. Eastern Ben. Sys. Inc., 603 N.E.2d 788, 792 (Ill.App.Ct. 1992).[1] A duty exists where "defendant and plaintiff[] stood in such a relationship to each other that the law imposed upon defendant an obligation of reasonable conduct for the benefit of plaintiff[]." Happel v. Wal-Mart Stores, Inc., 766 N.E.2d 1118, 1123 (Ill. 2002). The Illinois Supreme Court has identified the following relevant factors in determining whether a duty exists: "(1) the reasonable foreseeability that the defendant's conduct may injure another, (2) the likelihood of an injury occurring, (3) the magnitude of the burden of guarding against such injury, and (4) the consequences of placing that burden on the defendant." Id. at 1123-24 (internal citations omitted).

OCS and Kim have cited several Illinois cases, involving claims against insurance agents, for their argument that an agent is not liable for injuries to third parties. However, the cases cited by OCS and Kim make clear that, while an agent is not liable for injuries to third parties resulting from the breach of duty that the agent owes his principal, an agent may be liable where he has assumed a separate duty to the third party. See Bovan v. Am. Family Life Ins. Co., 897 N.E.2d 288, 294 (Ill.App.Ct. 2008) ("If an insurance agent acts so as to induce detrimental reliance by the proposed insured, the agent thereby undertakes an individual duty not to betray that reliance by his subsequent acts."); Cahill, 603 N.E.2d at 792; Bellmer v. Charter Sec. Life Ins. Co., 433 N.E.2d 1362, 1366 (Ill.App.Ct. 1982). In the TPC, S&K has alleged that OCS and Kim owed a duty to S&K, not just to Omega, to install POS ...


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