Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Consumer claims proceed against treadmill manufacturer, (Nov 14, 2014)

By Linda O’Brien, J.D., LL.M.

Two consumers alleged sufficient facts to pursue claims against a treadmill manufacturer for engaging in unfair and deceptive practices by misrepresenting that the heart rate monitoring system included on its products provided accurate heart rate readings, the federal district court in Chicago has decided (Mednick v. Precor, Inc., November 13, 2014, Leinenweber, H.).

Consumers Gary Mednick and Steven Bayer purchased treadmills manufactured by Precor that included a “Touch Sensor Heart Rate” system that measured heart rate when a user gripped handle sensors. The sensors were made by Precor vendors and were included on 18 other Precor products. Precor represented on its website, in brochures, and through advertisements that the sensors provided accurate heart rate readings.

Mednick and Bayer discovered that the sensors on the treadmills were defective and failed to provide accurate heart rate readings. Although Mednick was offered a full refund of the treadmill’s purchase price, Mednick and Bayer separately filed putative class action complaints against Precor, asserting claims for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and the Magnuson-Moss Warranty Act, among other claims. Precor moved for dismissal of both complaints.

Standing. The court determined the plaintiffs had standing to pursue their claims. Precor’s argument that Mednick’s claims were moot because he was offered a full refund was rejected. The court noted that Mednick was offered a refund by a customer support manager four months before Mednick filed his complaint against Precor. Since Precor was not a defendant or responding to a demand at the time of the offer, the unsolicited refund offer did not moot his claims.

Precor’s contention that both plaintiffs lacked standing to assert claims related to any products they did not buy was also rejected. According to the court, the plaintiffs’ claims relied on the same misrepresentation that the touch sensors were accurate and the sensors filled the same function and were used in the same manner on every Precor machine. Although the sensors were made by different vendors, Precor failed to show that any variation in the accuracy of the sensor was anything more than minor.

Consumer fraud claims. The plaintiffs sufficiently alleged a claim under the ICFA. In rejecting Precor’s argument that the plaintiffs did not allege any single affirmative statement by Precor regarding the efficacy of the sensor system, the court noted that the plaintiffs alleged: (1) the product brochure invited consumers to maximize their workout results with the heart rate monitoring and (2) touted the benefits of heart rate training zones on its website and in the owner’s manual. Moreover, the plaintiffs’ alleged that Precor’s misrepresentations were deceptive, misleading, and fraudulent since they continued to make the touch sensor representations after learning the statements were false.

Magnuson-Moss claims. Both Mednick and Bayer stated a claim under the Magnuson-Moss Act, according to the court. The plaintiffs alleged in their complaint that Precor made an express written warranty on its website, in its product brochure, and in the owner’s manual that its products would be free from defects in materials and manufacture during the warranty period. Although a plaintiff pursuing a breach of warranty claim must generally provide the seller with notice and a reasonable opportunity to cure, notice is not required when the seller has actual knowledge of the product defect. In this case, the plaintiffs alleged that Precor products included the heart rate monitoring system had contained design flaws and Precor was aware of these flaws. Accepting the allegations as true, the court concluded that the complaints sufficiently alleged that Precor had actual knowledge of the defect.

The cases are No. 14 C 3624 and 14 C 4231.

Attorneys: Katrina Carroll (Lite DePalma Greenberg LLC) for Gary Mednick. Michael R. Levinson (Seyfarth Shaw LLP) for Precor Inc.

Companies: Precor, Inc.

Cases: StateUnfairTradePractices IllinoisNews