In Re: Aqua Dots Products Liability Litigation

REPLY

N.D. Ill.August 29, 2008

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS IN RE AQUA DOTS PRODUCTS LIABILITY LITIGATION THIS DOCUMENT RELATES TO: ALL ACTIONS MDL No. 1940 Case No. 08 cv 2364 Judge David H. Coar Magistrate Susan E. Cox SPIN MASTER LTD., SPIN MASTER, INC., TARGET CORPORATION, WAL-MART STORES, INC. AND TOYS-“R”-US DELAWARE, INC.’S REPLY IN SUPPORT OF MOTION TO DISMISS Plaintiffs must allege “facts to state a claim to relief that is plausible on its face,” or their claims will be dismissed. Limestone Dep. Corp. v. Vill. of Lemont, Illinois, 520 F.3d 797, 803 (7th Cir. 2008) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007)). Yet the arguments asserted in Plaintiffs’ Opposition Brief (“Opp.”) are unsupported by facts pled in their Consolidated Complaint. Plaintiffs do not allege any of them ingested Aqua Dots. They claim they are entitled to redress for exposure to GHB, yet do not allege any of them were exposed and indeed concede “they have not plead a personal injury case.” (Opp. at 4.) They argue warranties were breached, yet allege neither a specific warranty nor that any of them relied on a warranty. They argue Defendants violated a federal law covering certain noisemaking toys, yet do not allege Aqua Dots was such a toy. They argue fraud, yet plead only conclusions, not the required facts. They argue their tort counts should withstand the economic loss doctrine because of a fraudulent misrepresentation exception, yet do not plead fraudulent misrepresentation. Plaintiffs’ Consolidated Complaint should be dismissed in its entirety.1 1 Plaintiffs incorrectly argue that applying Illinois’ choice-of law rules leads to using Illinois law. (Opp. at 3-4.) To the contrary, the Illinois choice-of-law rules are applied to each Plaintiff’s claims to determine which state’s laws govern the particular Plaintiff’s claims. See, e.g., In re Trans Union Corp. Privacy Litig., 211 F.R.D. 328, 342-44 (N.D. Ill. 2002); Lantz v. Am. Honda Motor Co., Inc., No. 06 C 5932, 2007 WL 1424614, *6 (N.D. Ill. May 14, 2007). On August 22, 2008, Plaintiffs filed a notice that Plaintiffs Donald Erbach and Stephanie Streett (Arkansas) and Michael Burgess (Missouri) have withdrawn as class representatives. Arguments pertaining to those states will therefore not be addressed in this Reply. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 1 of 16 2 ARGUMENT I. Plaintiffs Have Not Suffered Injury. Plaintiffs agree that they do “not plead a personal injury.” (Opp. at 4.) They limit their argument on injury to economic damages, specifically “the cost of the toy and/or any out-of- pocket expenses associated with diagnostic testing.” (Opp. at 5.) Neither constitutes injury here. A. “Cost of the Toy” Plaintiffs argue that some portion of the purchase price of their Aqua Dots constitutes injury because they did not receive the “benefit of the bargain,” relying on Cole v. GMC, 484 F.3d 717 (5th Cir. 2007).2 (Opp. at 6.) In Cole, however, the plaintiffs alleged that the defendant made specific representations—that their vehicle would be equipped with side impact airbags that would deploy only under certain conditions, and that any defect would be repaired timely; that both of these were part of the basis of their bargain; and that defendant breached the bargain by not providing either of them. Cole, 484 F.3d at 722. Here, Plaintiffs do not claim that Defendants represented that Aqua Dots could be ingested, nor that the ability to ingest Aqua Dots was part of what they purchased. Indeed, the plaintiffs in Briehl, Rivera and Simplicity, cited in Defendants’ Memorandum, also claimed economic injury based on benefit of the bargain, just as Plaintiffs do now, and in each case the court rejected that argument. See Briehl v. GMC, 172 F.3d 623, 628 (8th Cir. 1999); Riviera v. Wyeth – Ayerst Labs., 283 F.3d 315, 319-20 (5th Cir. 2002); O’Neil v. Simplicity, Inc., 553 F. Supp. 2d 1110, 1115 (D. Minn. 2008). Plaintiffs also ask this Court to ignore Briehl because in that case the plaintiffs had not lost the use of their vehicle, whereas Plaintiffs are not using their Aqua Dots. The Briehl court did not draw this distinction, but rather held that even though each vehicle was alleged to contain the “defect” at the time of purchase, the plaintiffs suffered no injury because the defect did not manifest itself in the plaintiffs’ vehicles. Briehl, 172 F.3d at 628. Indeed, Plaintiffs’ argument regarding loss of use was precisely what the Simplicity court rejected when it held that the plaintiffs there suffered no injury because no defect had manifested in their cribs, despite the plaintiffs’ claim that the unmanifested defect made their cribs unsafe to use. Simplicity, 553 F. 2 Cole held that “[t]he vast majority of the members of this class never experienced any manifestation of the alleged defect,” and denied class certification on that ground, among others, because “many jurisdictions” would not entertain such an action where there was no manifest defect. 484 F.3d at 729 (collecting cases). Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 2 of 16 3 Supp. 2d at 1115. Further, Plaintiffs admit they have been offered replacement beads under the recall, thus they do not plead loss of use. B. “Any Out-of-Pocket Expenses Associated with Diagnostic Testing” No Plaintiff alleges that he or she has incurred any costs for diagnostic screening. Rather, Plaintiffs argue injury only generally as “the cost of the toy and/or any out-of-pocket expenses associated with diagnostic testing.” (Opp. at 5 (emphasis added).) Plaintiffs who did not incur such costs (perhaps all of them) simply have no such injury. As no Plaintiff alleges that he or she has incurred such costs, none of them plead injury in this regard. Second, Plaintiffs’ “out-of-pocket expenses associated with diagnostic testing due to the exposure to the toxic substance” does not establish injury for Plaintiffs because none of them plead they were injured from “exposure.” (Opp. at 5.) The Consolidated Complaint defines the potential injury from Aqua Dots as ingestion of 1,4 butanediol: “When children played with the beads, which were designed to be sprayed with water, it was foreseeable that children would ingest the poison by licking or sucking their hands, or inadvertently swallowing the beads.” (Opp. at 7; Compl. ¶ 49.) Yet Plaintiffs do not allege that any of them swallowed the beads, or even licked or sucked their fingers while playing with them.3 Because they suffered no injury, Plaintiffs’ claims should be dismissed in their entirety. II. Plaintiffs Have No Viable Claim Under the CPSA. A claim may not be stated under the CPSA unless a “rule” is violated. (Mem. at 8-9.)4 Plaintiffs do not dispute this and they fail to identify any such rule here. Plaintiffs agree that Defendants could not have violated 15 U.S.C. § 1261, the CPSA’s definition provision. (Opp. at 11.) And they cannot reconcile their admission that “[t]he issue [here] is not whether Plaintiffs choked on the toys” (Opp. at 11), with their argument that Defendants violated the CPSC 3 This case is unlike Carlough v. Amchem Products, Inc., 834 F. Supp. 1437 (E.D. Pa. 1993), where plaintiffs alleged they inhaled asbestos. Plaintiffs do not allege that merely handling Aqua Dots, or breathing while near Aqua Dots, results in “exposure” or any other injury. Indeed, the Consolidated Complaint shows why Plaintiffs do not make such a claim, as 1,4 butanediol is widely used in household products. (See Compl. ¶ 46, citing to article stating that 1,4 butanediol is “used in cleaners and plastics”). 4 Citations to “Mem.” refer to Defendants Spin Master Ltd., Spin Master, Inc. and Target Corporation’s Memorandum in Support of their Motion to Dismiss, to which Wal-Mart and Toys “R” Us joined July 3, 2008. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 3 of 16 4 regulation governing reporting of choking incidents. See 16 C.F.R. § 1117.4(a) (“[a] subject firm must report . . . an incident . . . in which a child . . . choked on a . . . small part”).5 Plaintiffs also have no claim under 16 C.F.R. § 1500.18(a)(2), which bans certain noisemaking toys, because they do not allege that Aqua Dots have noisemaking components or attachments. 16 C.F.R. § 1500.18(a)(2) (“[a]ny toy having noisemaking components or attachments capable of being dislodged . . . .”) (emphasis added). Disregarding the “noisemaking” requirement, Plaintiffs assert the Aqua Dots beads are “attachments” because “[t]he attachments consist of the fused together . . . beads attached to the plastic tray, and they are capable of being dislodged . . . from the tray once the design becomes fixed.” (Opp. at 10.) But the Complaint does not say that. Rather, it says the beads become attached to each other. (Compl. ¶ 40 (“[o]nce sprayed with water, the beads . . . fuse together on a plastic tray. Once the design becomes fixed, it can be removed from the tray”).) Because Plaintiffs do not allege that Aqua Dots contains any noisemaking components or attachments capable of being dislodged, 16 C.F.R. § 1500.18(a)(2) is inapplicable to this action. III. Plaintiffs’ Complaint that They Should Receive a Cash Refund of the Purchase Price, Rather than the Replacement Beads Provided Under the Recall, Is Preempted Under Geier. Plaintiffs argue in the first paragraph of the Opposition that “Defendants’ offer of replacement toys” is insufficient, and that they rather should receive “a refund.” Plaintiffs’ preference for cash rather than replacement beads cannot provide the basis for a claim because it is preempted by the CPSA under ordinary conflict preemption principles and Geier v. American Honda Motor Co., 529 U.S. 861 (2000).6 (Mem. at 11-13.) Under the CPSA’s plain terms, the CPSC “must allow the regulated entity to choose from a menu of three remedies—repair, replacement, or refunds,” yet Plaintiffs’ claim would deprive Defendants of that federal right. 5 Moreover, even if Plaintiffs had alleged a failure to report a choking incident, their claim would be foreclosed by the Seventh Circuit’s decision “denying the existence of a private cause of action for violations of CPSA reporting requirements.” Zepik v. Tidewater Midwest, Inc., 856 F.2d 936, 941 (7th Cir. 1988). Plaintiffs’ statement that Zepik was a “summary judgment decision in which there were no facts to support the cause of action” (Opp. at 13) is irrelevant—the import of Zepik here is legal. (Cf. Opp. 13 fn. 13) (citing decisions from Minnesota and District of Maryland). 6 Plaintiffs’ saving clause arguments are beside the point—Defendants are asserting conflict preemption, and savings clauses “do[] not bar the ordinary working of conflict pre-emption principles.” Geier, 529 U.S. at 869. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 4 of 16 5 (Mem. at 10-12.) Plaintiffs respond that the statute “provides that the Commission ‘may’ order the manufacturer to elect either a repair, recall, or refund” and that the election is in the “discretion” of the Commission. (Opp. at 15. fn. 15 (emphasis in original).) The statute, however, reads otherwise: “[i]f the Commission determines . . . that a product . . . presents a substantial product hazard . . . it may order the manufacturer or any distributor . . . to take whichever of the following actions the person to whom the order is directed elects.” 15 U.S.C. § 2064(d) (emphasis added). True, the Commission has a choice concerning whether to issue an order. But if it does, the persons providing the remedy get to “elect” any of the three remedies. Plaintiffs’ claim would override this discretion even where, as here, the CPSC affirmatively blessed the recalling party’s chosen remedy. This is the sole benefit of the CPSC’s “fast track” program, which Plaintiffs do not dispute: The recalling party “implements with CPSC a . . . voluntary recall that is satisfactory to the staff,” thus “reduc[ing] any disincentive to companies that want to report.” (Mem. at 10-11 (quoting CPSC “Recall Handbook,” Federal Register rule).) Plaintiffs do not dispute that allowing courts in state law actions to second-guess decisions satisfactory to the CPSC would “upset” this “careful regulatory scheme.” Geier, 529 U.S. at 870. Instead, Plaintiffs rely on Leipart v. Guardian Industries, Inc., 234 F.3d 1063 (9th Cir. 2000), in which the CPSC rule at issue—setting shower glass safety standards—”created only a floor, i.e., a minimum safety standard, above which state common law requirements were permitted to impose further duties.” Id. at 1070. But there, the regulatory standards at issue could be exceeded by state tort duties without conflicting with the goals of Congress and the CPSC—namely, safe shower glass. Here, Congress’ goal is not just safety; it is using recall options as an incentive to get regulated parties to the recall table. A state tort rule requiring refunds would deny this legislatively guaranteed option. Unlike the higher state safety standards in Leipart, that would frustrate Congress’ purpose. See Geier, 529 U.S. at 874. IV. Plaintiffs’ Negligence and Strict Liability Claims Must Be Dismissed Pursuant to the Economic Loss Doctrine. Plaintiffs’ tort claims cannot be saved by the fraudulent misrepresentation exception to the economic loss doctrine because Plaintiffs do not allege fraudulent misrepresentation—they allege negligence and strict liability. See e.g., Outboard Marine Corp. v. Babcock Indus., Inc., No. 91 C 7247, 1994 WL 468596, *13 (N.D. Ill. Aug. 26, 1994) (dismissing negligence and strict liability counts as barred under economic loss doctrine but dismissing fraudulent Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 5 of 16 6 misrepresentation count for failure to plead fraud with particularity); Peter J. Hartmann Co. v. Capital Bank & Trust Co., 694 N.E.2d 1108, 230 Ill. Dec. 830 (Ill. App. 1st Dist. 1998) (negligent misrepresentation claim barred by economic loss doctrine; fraudulent misrepresentation claim survived because it stated fraud with particularity). Plaintiffs’ argument that they are pleading more than economic loss because they allege “exposure” also fails. Not only have they expressly clarified in their Opposition that they do not plead personal injury, but Plaintiffs do not allege in the Consolidated Complaint that they themselves were “exposed” to a “chemical . . . creating a risk of serious health problems.” (Opp. at 20.) No Plaintiff pleads personal injury, thus the economic loss doctrine applies here. V. Plaintiffs Have No Viable Warranty Claims. A. Plaintiffs’ Warranty Claims Fail for Lack Of Notice. Notice under the UCC in an action for breach of express and implied warranty is required unless one of two exceptions is met. (Mem. at 14-15.) First, in an action for personal injury, the filing of the complaint is deemed to notify the seller. Connick v. Suzuki Motor Co., Ltd., 675 N.E.2d 584, 590, 221 Ill. Dec. 389, 395 (Ill. 1996). Plaintiffs explicitly maintain that they do “not plead a personal injury case.” (Opp. at 4.) Rather, Plaintiffs invoke the second exception, which requires that the seller have “actual knowledge of the defect of the particular product.” See Connick, 675 N.E.2d at 589, 221 Ill. Dec. at 394 (emphasis added). Plaintiffs contend that actual knowledge exists in this case because “Spin Master issued a voluntary recall” offering “to replace the toxic beads.” (Opp. at 16.) In Perona v. Volkswagen of American Inc., 684 N.E.2d 859, 225 Ill. Dec. 868 (Ill. App. 1st Dist. 1997), however, the court considered and rejected this very argument.7 Plaintiffs’ attempt to distinguish Perona on the grounds that “plaintiffs there did not allege actual knowledge” (Opp. at fn. 19), is belied by the court’s finding that “plaintiffs alleged that defendants had actual knowledge of the defect,” which they, like Plaintiffs here, claimed to be demonstrated by a recall and other public statements issued by the defendant. Id. at 863, 225 Ill. Dec. at 872 (emphasis added). The court held that the plaintiffs did not sufficiently allege notice because they did not “specifically allege that Audi had actual knowledge of the alleged breach of the particular automobiles purchased by the named plaintiffs in this lawsuit.” Id. Similarly, in this case, the named Plaintiffs have 7 Plaintiffs’ reliance on Stella v. LVMH Perfumes and Cosmetics ISA, Inc., No 07 C 6509, 2008 WL 2669662 (N.D. Ill. July 8, 2008), is misplaced because Stella is a personal injury case in which the plaintiff claimed lead was ingested, and the district court did not consider Perona. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 6 of 16 7 neither alleged nor argued that Defendants had notice of the alleged breach of warranty regarding the particular Aqua Dots products purchased by them. Accordingly, Plaintiffs have failed to satisfy the notice requirement under the UCC.8 B. The Warranty Claims Fail Because Aqua Dots Were Fit for Their Ordinary Purpose And Intended Use. Plaintiffs’ warranty claims fail for the additional reason that the scope of any warranty is limited to the product’s ordinary purpose and intended use. (Mem. at 16-17.) As the court in Brazier explained, where a toy “does not include a warranty that the product is fit for safe insertion into a child’s mouth,” the plaintiff cannot “maintain a cause of action for breach of implied warranty based on the contention that the ball was not minimally safe for this purpose.” Brazier v. Hasbro, Inc., No. 99 Civ. 11258 (MBM), 2004 WL 515536, *4 (S.D.N.Y. March 16, 2004).9 Plaintiffs’ reliance on Wheeler v. Sunbelt Tool Co. Inc., 537 N.E.2d 1332, 1342, 130 Ill. Dec. 863, 873 (Ill. App. 4th Dist. 1989) is misplaced. Wheeler did not hold that warranties extend to reasonably foreseeable misuses, but rather held that, “[i]n a breach of warranty action, the seller is entitled to have his instructions for use followed.” Id. at 1343, 130 Ill. Dec. at 874. Further, for “a defect to cause redressable damages in a breach of the implied warranty of merchantability action, it must cause the product not to function adequately in the performance of its ordinary function for the plaintiff.” Everett v. TK-Taito, L.L.C., 178 S.W.3d 844, 854 (Tex. Ct. App. 2005). Plaintiffs do not and cannot plead that ingesting Aqua Dots was an ordinary function or intended use of the product. C. Plaintiffs’ Express Warranty Claims Fail Because Plaintiffs Do Not Identify Any Express Warranty. Plaintiffs’ express warranty claims fail because Plaintiffs do not specify the “particular affirmation, promise, description or sample that formed part of the basis of his bargain with Defendant.” Heisner v. Genzyme Corp., No. 08-C-593, 2008 WL 2940811, *9 (N.D. Ill. July 25, 8 Plaintiffs’ secondary argument that notice is not required “in many states” is not supported by the authority Plaintiffs cite. (Opp. at fn. 18.) Moreover, the cases Plaintiffs cite in support of their contention that the notice inquiry is a question of fact involve some allegation of pre-suit notice that a particular transaction was troublesome. Id. (collecting cases). In this case, however, Plaintiffs have not alleged that they notified any of Defendants prior to filing suit. 9 Kelly v. Hanscom Bros., Inc., 331 A.2d 737 (Pa. Sup. Ct. 1975), is an action by a retailer against a wholesaler seeking indemnity following a personal injury award against it, and therefore is not relevant. Further, the toy at issue in Kelly was a choking hazard that was sold to infants, who are prone to put things in their mouths, whereas Plaintiffs admit that Aqua Dots were only for children “4 and over.” (Compl. ¶ 42.) Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 7 of 16 8 2008) (Coar, J.). “[A] formulaic recitation of the elements required to prevail on a claim” will not suffice. Id. (citing Twombly, 127 S.Ct. at 1964).) “Under an express warranty, the language of the warranty itself dictates the obligations of the parties.” Id. at 8. Plaintiffs contend that the “Manufacturer Defendants” (they do not specify between Moose and the Spin Master Defendants, itself a fatal flaw in the pleading) expressly warranted that the Aqua Dots were “safe” by placing images of children playing with the toys on the packaging and making statements concerning the age appropriateness of the toys. (Opp. at 18; Compl. ¶ 133.) Not only are the terms of these “warranties” unclear, but Plaintiffs fail to allege that the toys cannot be played with as shown in the images or that the toys are not appropriate for children of recommended age. (Opp. at 18; Compl. ¶ 79.) Plaintiffs next contend that Defendants made express warranties because “the packaging states compliance with ASTM standards.” (Opp. at 18.) Plaintiffs claim that compliance with ASTM F963 is a representation that the Aqua Dots “[1] have been tested and [2] are free from banned toxic substances.” (Compl. ¶ 88.) As a matter of law, this standard requires only the first—that Aqua Dots “meet the requirements for toxicological review by a U.S. board-certified toxicologist.” ASTM F963-03 § 4.30.1. The Consolidated Complaint contains no allegation that Defendants failed to meet the requirements for toxicological review by a U.S. board-certified toxicologist. Plaintiffs also claim an express warranty was embodied in ASTM 4236, which governs labeling standards for art material causing chronic health hazards. Plaintiffs do not allege that the ingestion of Aqua Dots causes any chronic health hazard, or that Defendants have failed to satisfy the requirements of ASTM 4236. D. Plaintiffs Do Not Plead the Reliance Required for Breach of Express Warranties. Even if Plaintiffs were able to allege an express warranty that was untrue, they still must plead reliance on such a warranty. At a minimum, Plaintiffs must plead that they read, heard, or saw a particular affirmation made by a particular Defendant such that that statement became part of the basis of the bargain. (Mem. at 19-20.) The cases cited by Plaintiffs for the contention that “reliance is not required in most states” all involve the breach of bargained-for warranties in asset purchase agreements. (Opp. at 19, fn. 24 (collecting cases).) Indeed, the Seventh Circuit authority Plaintiffs rely upon explicitly distinguishes contractual provisions from the express warranties created under the UCC “if the buyer relies upon the seller’s representations in Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 8 of 16 9 purchasing the goods.” See Wikoff v. Vanderveld, 897 F.2d 232, 240-41 (7th Cir. 1990) (emphasis added). E. Plaintiffs Have Not Satisfied Florida, Illinois, Kentucky, and New York Privity Requirements. Privity is required in order to state a claim for breach of express warranty under the laws of Florida and Kentucky, and for breach of implied warranty under the laws of Florida, Illinois, Kentucky, and New York. (Mem. at 21.) Plaintiffs cite Manheim v. Ford Motor Co., 201 So.2d 440 (Fla. 1967), for the proposition that privity is not required to recover for breach of warranty under Florida law. Yet subsequent decisions, following the adoption of Florida’s Uniform Commercial Code and strict liability in tort, have effectively overruled Manheim and require privity for breach of warranty. See Kramer v. Piper Aircraft Corp., 520 So.2d 37, 38 (Fla. 1988); Powers v. Lazy Days RV Center, Inc., No. 8:05-CV-1542T17EAJ, 2006 WL 373011, *2 (M.D. Fla. Feb. 16, 2006). Further, Plaintiffs have defeated their own argument that “more than mere economic damages are alleged” (Opp. at 19), by disavowing the existence of a personal injury in this case. Finally, although Plaintiffs claim that “Spin Master’s own actions have brought the company into privity with consumers” by “warranting the Aqua Dots toys to them directly” ( Compl. ¶ 121), they cite no facts or authority in support of this claim. VI. Plaintiffs’ Statutory Consumer Fraud Claims Must Be Dismissed. A. Rule 9(b) Applies to Plaintiffs’ Fraud-Based Claims. Because the statutory violations predicated on Defendants’ alleged deception sound in fraud, they must be pled with particularity. (See Compl. ¶¶ 100-101, 103, 109, 113.) (Mem. at 24.) Plaintiffs’ reliance on Windy City Metal Fabricators & Supply Inc. v. CIT Technical Fin., --- F.3d ---, No. 07-1567, 2008 WL 2941171 (7th Cir. Aug. 1, 2008), yields the same result. The plaintiffs there argued that “a claim under the [Illinois] Consumer Fraud Act may allege either deceptive practices, which sound in fraud, or unfair practices, which do not.” Id. at *3. The Seventh Circuit agreed, holding Rule 8(a) provides the pleading standard for “a cause of action for unfair practices under the Consumer Fraud Act.” Id. at *4. (emphasis added). Plaintiffs here have not alleged a cause of action for unfair practices under the Illinois Act or any other. Accordingly, Rule 9(b) applies. B. Plaintiffs Have Not Satisfied Rule 9(b). Plaintiffs’ allegations fail to specify which Defendants made any particular misrepresentation, and how or when any misrepresentation was communicated, if at all, to any Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 9 of 16 10 particular Plaintiff. (Mem. at 24-25.) Rather than directing the Court to any allegation of “who, what, when, where, and how” of the alleged deception, Plaintiffs simply respond that “[t]he Complaint is replete with detail satisfying these criteria.” (Opp. at 22, fn. 32.) Plaintiffs’ contention that these requirements should be relaxed because they “lack access to all facts necessary to detail their claims” is legally unsupported and disingenuous—a plaintiff does not need discovery to aver that he or she relied on a misrepresentation.10 C. Plaintiffs’ Claims Also Fail Under Their Respective State Fraud Statutes. 1. Illinois Plaintiff Ford has failed to sate a claim under the Illinois Consumer Fraud Act because she does not allege actionable omissions or misrepresentations. (Mem. at 25-26.) Only a knowing omission of material fact is actionable. Rockford Mem’l Hosp. v. Havrilesko, 858 N.E.2d 56, 62-63, 306 Ill. Dec. 611, 617-18 (Ill. App. 2d Dist. 2006). Ford has not alleged Defendants failed to disclose a material fact known to them as of the date of her purchase, September 27, 2007. (See Compl. ¶16, Opp. at 23.) Ford claims that Aqua Dots do not comply with two ASTM standards because they were not tested for toxicity, but nowhere does she allege that Aqua Dots were not tested under the ASTM standards. Id. Ford also does not allege she saw, heard or read those representations. See Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 161- 62, 267 Ill. Dec. 14, 24-25 (Ill. 2002).11 Ford’s claim under the Illinois Deceptive Trade Practices Act (“IDTPA”) fares no better because she fails to allege how any deceptive practice by Defendants might harm her in the future. The sole case Plaintiffs cite in opposition affirms the dismissal of an IDTPA claim where, as here, Plaintiff cannot demonstrate how she will be deceived or confused again “in an individual capacity” and therefore “cannot do so as representative of a class.” See Popp v. Cash Station, Inc., 613 N.E.2d 1150, 1157, 184 Ill. Dec. 558, 565 (Ill. App. 1st Dist. 1992). 10 Corley v. Rosewood Care Ctr., Inc., 142 F.3d 1041, 1051 (7th Cir. 1998), is inapplicable. The plaintiffs in that case, who alleged a pattern of racketeering, claimed that the defendant nursing home denied them access to information that would satisfy the requirements as to other unnamed residents. 11 Brown v. SBC Commc’ns, Inc., No. 05-cv-777, 2007 WL 684133, *5 (S.D. Ill. Mar. 1, 2007), which involved a scheme of unauthorized charges hidden in telephone bills, does not apply. Plaintiffs here base their claims on affirmative misrepresentations and omissions, not “hidden” statements. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 10 of 16 11 2. Florida Plaintiffs Simon and Sarah Bertanowski and White fail to state a claim under the Florida Deceptive and Unfair Trade Practices Act because they have not pled unfair or deceptive conduct, how they were injured, or that they even saw, heard, or read any misleading statements. (Mem. at 28-29.) Although Plaintiffs claim that the Consolidated Complaint “details Defendants’ deceptive conduct,” they cite a single, unrelated paragraph that fails to describe any deception. (Opp. at 25 citing ¶170.) Further, Plaintiffs fail to refute Defendants’ claim that Plaintiffs must allege, at a minimum, their awareness of any misleading statements in order to establish causation. (Mem. at 28.) The unrelated authority Plaintiffs cite, a per curium opinion affirming class certification, does not diminish Plaintiffs’ obligation in this regard. (See Opp. at 25, citing S.D.S. Autos, Inc. v. Chrzanowski, 982 So. 2d 1 (Fla. Dist. Ct. App. 2007).) 3. Kentucky Plaintiff Walker’s claim under the Kentucky Consumer Protection Act fails to allege substantial wrongs or that any misrepresentations were communicated to her, and also fails for lack of privity. (See Mem. at 29; Joinder at 3-4.) Ignoring the authority cited by Defendants and the entirety of their arguments, Walker contends that the privity requirement should be relaxed “where an injury has occurred from an inherently dangerous product.” (Opp. at 28 (emphasis added).) Not only does Walker cite no authority for this argument, but Walker, with the other Plaintiffs, has expressly disavowed any claim of personal injury. 4. New York Plaintiff Cosgrove cannot state a claim under the New York Deceptive Business Acts and Practices statute because she has not alleged a deceptive act or practice causing harm, and she has not alleged that she even was aware of any such act or practice.12 See Andrew Strishak & Assocs. v. Hewlett Packard Co., 752 N.Y.S.2d 400, 401-403 (N.Y. App. Div. 2002). (Mem. at 30-31.) Cosgrove does not refute that dismissal is appropriate under the New York statute where, as here, the defect did not manifest itself to her. See Frank v. DaimlerChrysler Corp., 741 N.Y.S.2d 9, 17 (N.Y. App. Div. 2002). 12 Contrary to Plaintiffs’ Opposition, and consistent with the entirety of their Memorandum, Defendants do not admit that Plaintiffs sufficiently allege either deceptive conduct or that any such conduct misled Cosgrove or other Plaintiffs. See Opp. at 27. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 11 of 16 12 5. Pennsylvania Plaintiff Soderstedt fails to state a claim under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) because she does not set forth with specificity the elements of her fraud-based claim. (Mem. at 32.) Soderstedt responds that a “catch-all” provision in the Pennsylvania statute does not require proof of fraud (Opp. at 26), but Plaintiff misses the point—the authority she cites holds that fraud-based claims must satisfy Rule 9(b) under the UTPCPL. See Baker v. Family Credit Counseling Corp., 440 F. Supp. 2d 392, 410-12 (E.D. Pa. 2006). Plaintiff relies on Zwiercan v. Gen. Motors Corp., No. 3235 June Term 1999, 2002 WL 31053838, *2 (Pa. Com. Pl. 2002), but unlike the plaintiff in Zwiercan, Soderstedt has not alleged that Defendants knew of a material defect which they failed to disclose at the time of her October 17, 2007 purchase. (Compl. ¶17; Opp. at 26.)13 6. Texas Plaintiff Bosch fails to state a claim under the Texas Deceptive Trade Practices- Consumer Protection Act because he has not alleged a cognizable injury or proof of causation. (Mem. at 33.) Bosch does not refute that he cannot recover absent an allegation that a defect manifested itself. (Opp. at 26-27.) Moreover, according to the very authority cited by Bosch, he cannot state a claim absent an allegation that the act or omission at issue “was a substantial factor in bringing about injury which would not otherwise have occurred.” Smith v. Hennessey & Assocs. Inc., 103 S.W.3d 567, 569 (Tex. App. 2003). Bosh cannot satisfy that standard where he does not state he “saw, much less relied upon” any misrepresentations. Id. 13 Plaintiffs’ attempt to argue that Spin Master had “constructive knowledge” of the defect in Aqua Dots when Moose had knowledge is unsuccessful. The case Plaintiffs rely on for this proposition, Am. Multi- Cinema, Inc. v. MCL REC, LLC, No. 06 C 0063, 2008 WL 1744426 (N.D. Ill. April 11, 2008), was not a products liability case (but rather dealt with contractual claims) and merely defined what the term constructive knowledge means. Moreover, Plaintiffs have alleged no facts to suggest that Spin Master had constructive knowledge of the defect at the time Moose knew of the defect. Plaintiffs’ attempt to assert Spin Master had knowledge based on an agency theory fares no better. Plaintiffs cite no support for their argument that knowledge can be imputed based on a theory of apparent agency. Plaintiffs also allege no facts to support the existence of an agency relationship between Moose Enterprises and Spin Master. Indeed, the sole case Plaintiffs rely on for their agency argument recognizes that “[t]o plead the existence of an agency relationship, the plaintiff must allege some factual predicate . . . to create the inference of agency.” Azimi v. Ford Motor Co., 977 F. Supp. 847, 851 (N.D. Ill. 1996) (quotations omitted). Plaintiffs also set forth no argument whatsoever as to how knowledge can be imputed to the Retailer Defendants. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 12 of 16 13 VII. Plaintiffs Do Not Plead the Injustice, Inequity or Unconscionability Necessary for Their Unjust Enrichment Claim. Plaintiffs’ unjust enrichment claims fail because they do not plead facts supporting the requisite element of injustice, inequity or unconscionability. (Mem. at 34-36.) Plaintiffs argue that Defendants were unjustly enriched because they provided replacement beads rather than cash refunds. (Opp. at 29.) As explained above, this claim is preempted and equitable principles cannot be relied on to undo legislative action. (See supra at Section III.) Further, Plaintiffs do not plead facts that establish an unconscionable benefit. Plaintiffs plead in this case that after they purchased Aqua Dots, Spin Master discovered that the beads contained 1,4 butanediol and Spin Master provided replacement beads as part of a voluntary recall under the CPSA. To excape this, Plaintiffs argue in their Opposition that the mere fact that the beads were found to contain an undesired substance is per se sufficient to support a finding of inequitable conduct— but this argument is entirely without support and contrary to equity.14 Further, to the extent Plaintiffs’ unjust enrichment claims are tort-based, they must be dismissed because Plaintiffs’ tort claims fail. (Opp. at 30 n. 42; see supra at Section IV.) An unjust enrichment claim based on failed statutory fraud claims must likewise be dismissed. See In re Sears, Roebuck & Co. Tools Mktg. and Sales Prac. Litig. 2006 WL 3754823 at *4 (dismissing unjust enrichment claims based on allegedly fraudulent misrepresentations where plaintiffs failed to comply with the pleading requirements of Federal Rule of Civil Procedure 9(b).) So too must a contract-based unjust enrichment claim be dismissed as to those Defendants who had a contractual relation to Plaintiffs (the Retail Defendants); Plaintiffs’ having pled their unjust enrichment claims in the alternative does not save them. (Mem. at 35-36.) VIII. “Innocent Non-Manufacturer” Acts in Select States Separately Preclude the Claims of Plaintiffs Who Reside in Those States. Plaintiffs have not pled that Defendants had knowledge that Aqua Dots were unsafe, so that the innocent non-manufacturer acts of Illinois and Texas would not apply. The conclusory allegation that Defendants “knew, or should have known, that the Aqua Dots were hazardous” 14 Plaintiffs have identified authority for an unjust enrichment claim under Texas law. However, the claim nevertheless fails because Texas law requires a showing of “fraud, duress, or the taking of undue advantage.” See Leal v. Weightman, No. 01-03-01006-CV, 2004 WL 2251570 (Tex. App. Oct. 7, 2004). Plaintiffs do not plead that here. Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 13 of 16 14 (Compl. ¶¶ 67, 161), without any factual allegations of knowledge, is insufficient to allege that Defendants had actual knowledge under the Twombly pleading requirement.15 Regarding Texas, Plaintiffs’ allegations that Spin Master “should have known” (Compl. ¶¶ 67, 161) that Aqua Dots contained 1,4 butanediol are insufficient to fit within the knowledge exception. See Rubin v. DaimlerChrysler Corp., 2005 WL 1214605, at *6 (S.D. Tex. May 20, 2005) (“liability cannot be based on an allegation that a seller should have known of a defect in a product”) (emphasis in original). Regarding Illinois, Plaintiffs’ blanket allegation that they have alleged that Spin Master “is much more than a ‘seller in the stream of commerce’” does not save their claims. (Opp. at 31). Plaintiffs point to paragraphs 21 and 79 in support of their argument, yet the most these paragraphs and the rest of the Consolidated Complaint allege is that Spin Master is a non- manufacturer that markets and distributes Aqua Dots. (See Compl. ¶ 21, “Spin Master, Ltd. distributes, markets, promotes and sells merchandise including Aqua Dots . . . .”). Plaintiffs’ argument that “any financial instability of the manufacturer, any hint at the Plaintiffs’ ability to recover from it, such as a small foreign corporation like Moose” allows their claims to survive is absent from the Illinois statute and unsupported by the case law. Additionally, Plaintiffs have alleged no facts to even suggest that Moose alone would not be able to satisfy a judgment or settlement in this case. CONCLUSION For the foregoing reasons, Plaintiffs’ Consolidated Amended Class Action Complaint should be dismissed in its entirety. 15 The cases Plaintiffs cite in support of their argument are not relevant here. See Goss v. Schering- Plough Corp., No. 6:06:CV-251, 2006 WL 2546494, at *2 (E.D. Tex. Aug. 30, 2006) (the defendants conceded that plaintiffs adequately pled knowledge in the Complaint); Potter v. Electrolux Home Prod., Inc., No. 06 C 4811, 2006 WL 2930972 (N.D. Ill. Oct. 11, 2006) (the court did not make a decision as to a motion to dismiss and the adequacy of the knowledge allegations were not at issue); Engelbecht v. DaimlerChrysler Corp., No. G-06-CV-800, 2007 WL 1040886, at *2 (S.D. Tex. Apr. 2, 2007) (court found the plaintiffs had adequately pled knowledge where they alleged the defendant was aware of the defect because the government was currently investigating the safety of airbags in the defendant’s vans; no such factual allegations are pled herein); Grove v. Manchester Tank & Equip. Co., Nos. 07-1263, 07- 1268, 07-1280, 2008 WL 2626366 (C.D. Ill. June 26, 2008) (court stated in a two-page opinion, without explanation, that it was “unclear” if plaintiffs could prevail in proving knowledge; adequacy of pleadings was not at issue). Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 14 of 16 15 Dated: August 29, 2008. Respectfully submitted, SPIN MASTER LTD., SPIN MASTER, INC., TARGET CORPORATION, WAL-MART STORES, INC., & TOYS “R” US-DELAWARE, INC. By: /s/ Thomas J. Wiegand One of their attorneys Ronald Y. Rothstein Thomas J. Wiegand Bryna J. Dahlin WINSTON & STRAWN LLP 35 West Wacker Drive Chicago, Illinois 60601 Telephone (312) 558-5600 Facsimile (312) 558-5700 Case 1:08-cv-02364 Document 68 Filed 08/29/2008 Page 15 of 16 16 CERTIFICATE OF ELECTRONIC FILING I hereby certify that on August 29, 2008, I filed the above and foregoing with the Court’s ECF system and by doing so served a copy on all the parties. /s/ Thomas J. Wiegand___________________ ATTORNEY FOR SPIN MASTER LTD., SPIN MASTER, INC., TARGET CORPORATION, WAL-MART STORES, INC., & TOYS “R” US- DELAWARE, INC. 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