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Power Cell LLC v. Springs Window Fashions, LLC

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

April 23, 2018

POWER CELL LLC d/b/a ZEUS BATTERY PRODUCTS, Plaintiff,
v.
SPINGS WINDOW FASHIONS, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          HARRY D. LEINENWEBER, JUDGE UNITED STATES DISTRICT COURT.

         Before the Court is Defendant's Partial Motion to Dismiss Counts I, II, and III pursuant to Fed.R.Civ.P. 12(b)(6) [ECF No. 5]. For the reasons stated herein, the Motion is denied.

         I. BACKGROUND

         The following facts derive from Plaintiff's Complaint and are, for purposes of this Motion, accepted as true with all inferences drawn in Plaintiff's favor. See, Adams v. City of Indianapolis, 742 F.3d 720, 728 (7th Cir. 2015).

         This case concerns a product recall involving the parties' respective products. Power Cell LLC d/b/a/ Zeus Battery Products (“Zeus”) sells a range of battery products, including the AA battery at issue in this suit (the “Subject Battery”). (Compl. ¶ 6, Ex. A to Dkt. 1.) Spring Window Fashions, LLC (“SWF”) sells window shades and coverings in various retail stores across the country. (Id. ¶ 7.) Starting in the fall of 2015, SWF ordered approximately one hundred thousand Subject Batteries from Zeus to power its motorized window shades (the “SWF Product”). (Id. ¶¶ 18-23.)

         Beginning in June 2016, various customers began reporting problems with the SWF Product. (Id. ¶¶ 26-35.) The reports complained that the batteries and/or battery casing burst, caught fire, or melted the surrounding material (hereinafter the “Incidents”). (Id.) Zeus alleges these Incidents were caused by a design defect in the SWF Product; namely, that SWF's product design allowed for improper installation of the Subject Batteries, a condition known in the industry as reverse-polarity. (Id. ¶¶ 37-38.) Reverse-polarity greatly increases the risk of batteries overheating. (Id.) In light of this risk, manufacturers typically design products to be inoperable if the batteries are installed in the reverse-polarity position. (Id.) According to Zeus, SWF did not heed this known, industry-wide advice, resulting in a design flaw in the SWF Product-the reverse-polarity condition-that directly caused the Incidents. (Id.)

         Due to the Incidents, SWF initiated a product recall (the “Recall”) in conjunction with the Consumer Product Safety Commission. (Id. ¶ 48.) SWF recalled the SWF Products that were sold with the Subject Batteries from December 14, 2015 to approximately November 11, 2016. (Id.) SWF published an Important Safety Notice and a Recall Alert regarding the Recall (the Recall Notices). (Id. ¶¶ 48-49, 53-54.)

         The Recall Notices are at the heart of this suit. Zeus alleges that the Recall Notices are false and misleading because they blame the Incidents on Zeus's Subject Battery rather than the design flaw in SWF's Product. (Id. ¶¶ 50-53.) Zeus alleges that the ongoing publication of the Recall Notices (and the absence of a retraction) continue to harm and injure its reputation in the industry. (Id. ¶¶ 68-70.) Zeus brings a four-count Complaint for declaratory judgment related to: indemnification (Count I); violations of the Illinois Uniform Deceptive Trade Practices Act (the “UDTPA”), 815 ILCS 510/2 (Count II); violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 (Count III); and breach of contract (Count IV). SWF moves to dismiss the two statutory claims and the declaratory judgment claim (Counts I - III). The Court will address these three claims below, but out of turn.

         II. ANALYSIS

         A. Zeus States a Claim under Illinois's Uniform Deceptive Trade Practices Act

         SWF argues that two things are fatal to Zeus's UDTPA claims: First, the alleged misrepresentations are either true or mere opinion and thus not actionable, and second, Zeus cannot allege a threat of future harm.

         1. Alleged Misrepresentations

         SWF argues that Zeus's UDTPA claim fails because the alleged misrepresentations are not false or misleading. The UDTPA states in pertinent part:

A person engages in a deceptive trade practice when, in the course of his or her business, vocation, or ...

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