Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Car purchasers fail to state claim for consumer fraud against Toyota, (Feb 17, 2016)

By Michael Menzhuber, J.D., LL.M.

An action brought by car purchasers against Toyota Motor Corporation under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) was dismissed by the federal district court in Chicago. The court determined that the action was not “ripe” and the car purchasers failed to allege sufficient facts in support of the ICFA claim (Strama v. Toyota Motor Sales, U.S.A., Inc., February 12, 2016, Der-Yeghiayan, S.).

Maria C. Strama and Jan Strama made repeated trips to a Toyota dealership to fix their new Toyota RAV 4’s (vehicle) problem of excessive oil consumption. The problem was never fixed and the plaintiffs contended that the vehicle had a design defect that caused it to consume oil at an excessively high rate and that Toyota failed to notify consumers or its dealers of this defect.

The plaintiffs brought an action against Toyota which alleged a violation of the ICFA, as well as a breach of the duty of good faith and fair dealing. Toyota responded by filing a motion to dismiss.

Toyota argued that there was no case or controversy and that the court lacked subject matter jurisdiction. It contended that, to the extent that the plaintiffs feared what costs Toyota might not cover, their action was not ripe. The court agreed, noting that a claim is not ripe if it is based on “uncertain or contingent events that may not occur as anticipated, or not at all.” Under Toyota’s special policy adjustment (SPA), the plaintiffs could obtain both prospective relief and compensatory relief for out-of-pocket costs incurred prior to the SPA, and the plaintiffs did not point to any terms in the SPA that would preclude a full reimbursement to them.

The plaintiffs argued that it would be unfair to make them wait long periods for a repair if Toyota did not have the necessary parts replacement available. However, because they presented no evidence to support this argument, the court determined that this argument was merely speculation.

The plaintiffs also argued that Toyota was attempting to make an offer of judgment and that jurisdiction is not lost simply because a defendant tries to provide a warranty after being sued. The court, however, noted that the SPA was provided to the consumers several months before the plaintiffs brought their action.

The court determined that, even if it had subject matter jurisdiction, the plaintiffs failed to allege sufficient facts to state a valid ICFA claim. Despite the plaintiffs’ arguments to the contrary, their claim relating to Toyota’s alleged deception sounded in fraud. As such, their claim was required to be pleaded with particularity. The court determined that the plaintiffs failed to do so because they did not: (1) specifically allege who made what exact misrepresentations or omissions concerning the vehicle and when the alleged misconduct occurred; (2) allege specific communications in which misstatements were made or which contained material omissions; and (3) make clear what precise practices Toyota employed to engage in the alleged fraud.

The case is No. 15 C 9927.

Attorneys: Kenneth M. Ducduong (KMD Law Office) for Maria and Jan Strama. Michael L. Mallow (Sidley Austin LLP) for Toyota Motor Sales, U.S.A., Inc. and Toyota Motor Corporation.

Companies: Toyota Motor Sales, U.S.A., Inc.; Toyota Motor Corporation

Cases: StateUnfairTradePractices IllinoisNews