United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
VIRGINIA M. KENDALL, UNITED STATES DISTRICT JUDGE
Service Corporation International (“SCI”), in its
amended complaint (Dkt. 27), alleges that its subsidiaries
contracted with Defendant Stericycle, Inc. for Stericycle to
provide medical waste disposal services. Despite entering
into a fixed-price agreement, SCI says, Stericycle raised its
prices for reasons not authorized by the contract. SCI now
brings this action against Stericycle for breach of contract,
unjust enrichment, and violation of the Illinois Consumer
Fraud and Deceptive Business Practices Act
has moved to dismiss SCI's amended complaint, both for
lack of prudential standing and failure to state a claim.
(Dkt. 36). Because this Court agrees that SCI has not
sufficiently alleged that it has the right to bring claims
personal to its subsidiaries, the Court grants the motion to
dismiss. The Court also concludes that, even if SCI can show
that it has prudential standing, the complaint, as it stands
now, fails to state a claim on any count.
following factual allegations are taken from SCI's
amended complaint and are assumed true for purposes of this
motion. W. Bend Mut. Ins. Co. v. Schumacher, 844
F.3d 670, 675 (7th Cir. 2016).
operates funeral homes across the United States. (Dkt. 27
¶ 3). Between 2010 and 2016, SCI acquired Keystone
America, Inc., Stewart Enterprises, and Alderwood Group, LLC,
and all of the subsidiaries of each organization
(collectively, “the subsidiaries”). (Id.
at ¶¶ 13-15). SCI alleges that, at some point, it
was assigned the claims of each organization and its
subsidiaries. (Id. at ¶¶ 13-15).
is a medical waste disposal company. (Id. at ¶
3). SCI alleges that Stericycle contracted with the
subsidiaries using a form contract called the
“Steri-Safe Service Agreement.” (Id. at
¶¶ 22, 58). The Steri-Safe Service Agreement
provides for a fixed price for services. (Id. at
¶¶ 22-23). The Agreement includes terms and
conditions, which SCI alleges were often provided in
“illegible” copies with “reduced font
size.” (Id. at ¶ 24). The terms and
conditions provide that “Stericycle reserves the right
to adjust the contract price to account for operational
changes it implements to comply with documented changes in
the law, to cover increases in the cost of fuel, insurance,
residue disposal, or to otherwise address cost
escalation.” (Id. at ¶ 26).
alleges that Stericycle did not, in fact, limit its price
increases to those implemented due to changes in the law or
due to cost escalation. (Id. at ¶ 31). Instead,
SCI says, Stericycle imposed improper “automatic price
increases” or “APIs” not tied to the
reasons for price increases set forth in the Agreement.
(Id. at ¶¶ 31- 33, 36). Stericycle used an
electronic financial reporting system called
“Tower” (later “SteriWorks”) to apply
an unjustified, periodic 18% price increase to the
subsidiaries. (Id. at ¶¶ 34, 38). SCI
alleges that Stericycle targeted the subsidiaries and other
smaller customers for APIs because they were less
sophisticated and had smaller (or no) legal or accounting
departments. (Id. at ¶ 37). When customers
called Stericycle to complain about price increases, its
customer complaints and retention departments provided false
justifications or used other tactics to convince the
customers to accept the increases or pay as much of them as
possible. (Id. at ¶¶ 44-48).
cites a class-action settlement in this district pertaining
to Stericycle's API practice. (Id. at ¶
59). SCI states that Stericycle represented in that
litigation the subsidiaries were members of the class who
contracted with and were overcharged by Stericycle between
March 2003 and October 2017. (Id. at ¶ 59). SCI
states that it did not know, prior to the class settlement in
2017, that the subsidiaries had been overcharged by
Stericycle. (Id. at ¶ 68). The subsidiaries
opted out of the class settlement (Id. at ¶
61), and SCI has now brought this action alleging breach of
contract, unjust enrichment, and violation of the ICFA.
moves to dismiss due to, among other reasons, lack of
prudential standing, which is not jurisdictional and is
assessed pursuant to Federal Rule of Civil Procedure
12(b)(6). See Dunnet Bay Const. Co. v. Borggren, 799
F.3d 676, 689 (7th Cir. 2015); VYSE Gelatin Co. v.
Hicks, No. 17-CV-2937, 2018 WL 3970266, at *2 (N.D. Ill.
Aug. 20, 2018). To survive a motion to dismiss under Rule
12(b)(6), the 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) (internal quotation
marks omitted). A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. The Court is
“not bound to accept as true a legal conclusion couched
as a factual allegation.” Olson v. Champaign Cty.,
Ill., 784 F.3d 1093, 1099 (7th Cir. 2015) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)). “Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do
not suffice.” Toulon v. Cont'l Cas. Co.,
877 F.3d 725, 734 (7th Cir. 2017) (quoting Iqbal,
556 U.S. at 678).
Article III standing, “a litigant must ‘prove
that he has suffered a concrete and particularized injury
that is fairly traceable to the challenged conduct, and is
likely to be redressed by a favorable judicial
decision.'” Remijas v. Neiman Marcus Grp.,
LLC, 794 F.3d 688, 691-92 (7th Cir. 2015) (quoting
Hollingsworth v. Perry, 570 U.S. 693, 704 (2013)).
In addition to this jurisdictional understanding of standing,
there is also the doctrine of prudential standing. Although a
party may allege an injury caused by a particular defendant,
that party lacks prudential standing to bring suit when the
injury arose based on the legal rights of a third party.
See G & S Holdings LLC v. Cont'l Cas. Co.,
697 F.3d 534, 540 (7th Cir. 2012) (“[I]n general, the
plaintiffs must assert their own legal rights and interests,
and cannot rest their claims to relief on the legal rights or
interests of third parties.”). Stericycle argues that
SCI lacks prudential standing to sue because its claims rest
on the legal rights of its subsidiaries, and SCI has not
sufficiently pled an assignment of the right to sue from the
subsidiaries. Were there a valid assignment, SCI would have
both Article III and prudential standing and ...