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Publications International Limited v. Mindtree Limited

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

July 24, 2014

PUBLICATIONS INTERNATIONAL LIMITED, Plaintiff,
v.
MINDTREE LIMITED, Defendant.

MEMORANDUM OPINION AND ORDER

EDMOND E. CHANG, District Judge.

Plaintiff Publications International Limited has brought this suit against Mindtree Limited, alleging breach of contract (Count One), breach of express warranty (Count Two), negligence (Count Three), willful and wanton misconduct (Count Four), and fraudulent concealment (Count Five).[1] R. 43, Am. Compl. Mindtree has moved to dismiss Counts Two through Five and to partially dismiss Count One under Federal Rule of Civil Procedure 12(b)(6). R. 44. For the reasons stated below, Mindtree's motion is granted.

I. Background

In evaluating Mindtree's motion to dismiss, the Court accepts as true the factual allegations in the complaint and draws reasonable inferences in Publications's favor. Ashcroft v. al-Kidd, 131 S.Ct. 2074, 2079 (2011). Publications publishes reviews of consumer products, including (until recently) consumer automotive information that appeared on its Consumer Guide Automotive website. Am. Compl. ¶¶ 6-7. Mindtree is an India-based company that provides information-technology services, including software and hardware design and development, website-infrastructure management, and technical support. See id. ¶¶ 2, 10-13. In October 2012, Publications hired Mindtree to develop, host, and manage Publications's Consumer Guide Automotive website. Id. ¶¶ 7-8. Publications and Mindtree executed a Master Consulting Agreement on October 31, 2012, that set out the overarching details of the parties' relationship. Id. ¶ 15; R. 45-1, Master Agreement. The two companies also agreed that the specific details of each project would be spelled out in separate "Statements of Work" that would then be incorporated into the Master Agreement. Am. Compl. ¶ 15; Master Agreement § 1. If a dispute arose between the parties about the quality of Mindtree's work, the Master Agreement specified that "MindTree's maximum liability regarding or relating to this Agreement or for breach of same shall be limited to amounts paid by [Publications] under the specific [Statement of Work] from which the liability is claimed to have arisen." Master Agreement § 15. The Master Agreement made clear that, aside from the Statements of Work, the Master Agreement was "the entire agreement" between Publications and Mindtree, that it "supersedes any prior understandings relating to the subject matter hereof, " and that the Agreement "may be amended or supplemented only in a written agreement signed by MindTree and [Publications]." Id. § 16.

The website, which was launched in March 2013, ultimately did not live up to Publications's expectations, leading to this lawsuit. Am. Compl. ¶ 27. In the first four counts of its complaint, Publications alleges that Mindtree has breached several parts of the Master Agreement. According to Publications, the website that Mindtree built is not functioning as specified in the Master Agreement and the various Statements of Work. See, e.g., id. ¶¶ 17, 20-38. Publications brought these technical errors to Mindtree's attention, but Mindtree was allegedly not able to quickly correct the problems. Id. ¶ 17. Publications claims that these breaches have caused significant damage to Publications's business by negatively impacting Publications's Internet search rankings, the amount of traffic to its website, and its revenue and profits. Id. ¶ 16.

In the last count of its complaint, Publications raises a fraudulent-concealment claim. Publications alleges that Mindtree deliberately withheld information about Mindtree's problems implementing third-party software that Publications purchased from Magnolia Americas, Inc. to use with the website. Id. ¶¶ 74, 87. According to the complaint, Mindtree only "partially" followed Magnolia's recommendations for how to improve issues with "data import and activation performance" involved with the software. Id. ¶¶ 75-76. And "in or about June of 2013, " Mindtree allegedly failed to properly use the Magnolia software to re-size and upload images to the website. Id. ¶¶ 78-80.

Ultimately, Publications believes that Mindtree was incapable of providing the services that Mindtree agreed to provide under the Master Agreement. Id. ¶ 17. Publications asserts that the website's problems demonstrate that Mindtree either purposefully misrepresented its ability to do the work on the website or handled the work negligently or with wanton and reckless disregard for the normal standard of care. Id. ¶ 18. In response, Mindtree has filed this motion to dismiss certain claims.

II. Legal Standard

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). "[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). These allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. The allegations that are entitled to the assumption of truth are those that are factual, rather than mere legal conclusions. Iqbal, 556 U.S. at 678-79.

Ordinarily, under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). This short and plain statement must "give the defendant fair notice of what the... claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (alteration in original) (internal quotation marks and citation omitted). The Seventh Circuit has explained that this rule "reflects a liberal notice pleading regime, which is intended to focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578 F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)).

But claims alleging fraud must also satisfy the heightened pleading requirement of Federal Rule of Civil Procedure Rule 9(b), which requires that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b) (emphasis added). Thus, Rule 9(b) "require[s] the plaintiff to state the identity of the person making the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff." Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 923 (7th Cir. 1992) (internal quotation marks and citation omitted). Put differently, the complaint "must describe the who, what, when, where, and how of the fraud." Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir. 2011) (internal quotation marks and citation omitted).

III. Analysis

A. Breach of Express Warranty (Count Two)

In its claim for breach of express warranty, Publications alleges that Mindtree breached an "express warranty to use a level of care of an experienced and knowledgeable IT Company." Am. Compl. ¶ 47. Under Illinois law, [2] because "express warranties are contractual in nature, the language of the warranty itself is what controls and dictates the obligations and rights of the various parties." Oggi Trattoria & Caffe, Ltd. v. Isuzu Motors Am., Inc., 865 N.E.2d 334, 340 (Ill.App.Ct. 2007) (internal quotation marks and citation omitted); see also Collins Co. v. Carboline Co., 532 N.E.2d 834, 838 (Ill. 1988) ("[T]he warrantor is the master of the express warranty. The ...


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