United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION & ORDER
JOAN B. GOTTSCHALL, District Judge.
G&G Closed Circuit Events, LLC ("G&G") filed a complaint on March 25, 2014 against Jaime Castillo ("Jaime"), Maria Castillo ("Maria") and El Bajio Enterprises, Inc. ("El Bajio") doing business as La Pena Restaurante ("La Pena") (collectively, the "Defendants"). G&G alleges violations of 47 U.S.C. §§ 553 (the "Cable Act") and 605 (the "Communications Act"), contending that Defendants unlawfully televised a boxing match in their establishment despite G&G's exclusive television distribution rights for the match. Defendants answered the complaint and filed counterclaims against G&G for common law fraud and statutory fraud under Illinois law. G&G now seeks to dismiss these counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons below, the motion is granted in part and denied in part.
G&G is a corporation that obtained the exclusive nationwide television distribution rights for the "Austin Trout v. Saul Alvarez Fight Program, " (the "Program") which took place on April 20, 2013. G&G then entered into sublicensing agreements with commercial entities throughout North America, which allowed establishments to broadcast the fight in exchange for a fee paid to G&G. Defendants never entered into an agreement with G&G. According to G&G, Defendants unlawfully exhibited the program at their establishment, La Pena Restaurante.
On May 29, 2013, Defendants received a letter from the Law Offices of Thomas P. Riley ("Riley"), which represented G&G. The letter alleged that Defendants had violated the Communications Act "and or" the Cable Act. Defendants claim that Jaime then phoned Riley's office and "someone took his information" and told Jaime that, "someone would get back to him." (Defs.' Answer at 9, ECF No. 15.) However, no one from Riley's office contacted Defendants until Defendants received "another threatening letter" from Riley's office in July 2013. Jaime called again and was given an appointment to speak with "an attorney." (Id. )
Jaime subsequently spoke with "the attorney, " who told Jaime that "she knew he [Jaime] was guilty and that he should settle." (Id. ) Defendants allege that "the attorney never explained the basis for their [sic] demand or the legal standing for their [sic] claims and... tried to convince [Jaime] that his only option was to settle, and demanded a minimum of $20, 000." (Id. ) Jaime informed the attorney that "he did not have that kind of money" and that "they would have to take him to court." (Id. )
Defendants allege they received "at least two more threatening letters from Riley between August 2013 and January 2014" before G&G's counsel filed suit against Defendants. In their answer to G&G's complaint, Defendants filed a two-count counterclaim alleging common law fraud (Count I) and violation of the Illinois Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/1 et. seq. ("ICFA") (Count II).
II. LEGAL STANDARD
"A motion under 12(b)(6) tests whether the complaint states a claim on which relief may be granted." Richards v. Mitcheff, 696 F.3d 635, 635 (7th Cir. 2012). A complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The short and plain statement must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). To survive a 12(b)(6) motion to dismiss, "a counterclaim must state a claim to relief that is plausible on its face." Sarkis' Cafe, Inc. v. Sarks in the Park, LLC, No. 12-C-9686, 2014 WL 3018002 (N.D. Ill. 2014) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).) In addition, on a motion to dismiss, a court must "accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citations omitted). In ruling on a motion to dismiss "for failure to state a claim, the court must... draw all reasonable inferences in favor of the pleader." Villareal v. El Chile, Inc., 601 F.Supp.2d 1011, 1014 (N.D. Ill. 2009).
A. The Common Law Fraud Counterclaim
In Count I of Defendants' counterclaims, Defendants allege that G&G committed common law fraud. G&G makes two arguments in support of its motion to dismiss Count I. It argues that (1) Defendants fail to meet the heightened pleading standard that applies to fraud claims under Fed.R.Civ.P. 9(b), and (2) even assuming arguendo that the counterclaims were pled with the requisite particularity, Counter-Plaintiffs fail properly to allege several elements of a common law fraud claim.
1. Common Law Fraud
The elements of common-law fraud are: "1) a false statement of material fact; 2) knowledge or belief by the maker that the statement was false; 3) an intent to induce reliance on the statement; 4) reasonable reliance upon the truth of the statement; and 5) damages resulting from that reliance." Coexist Foundation, ...