Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Dentists’ claims against crown manufacturers lacked particularity, (Jan 7, 2015)

By Edward L. Puzzo, J.D.

Claims by three dentists against the manufacturers of a defective dental crown product lacked the particularity required for fraudulent misrepresentation claims and claims brought under the Illinois Consumer Fraud and Deceptive Business Practices Act, the federal district court in Chicago has ruled (Matthew Prescott, DDS v. Argen Corporation, January 6, 2015, Shah, M.).

Plaintiff dentists M. Prescott, G. Tambornini and R. Joseph brought putative class action claims against manufacturers and distributors of the Captek Nano dental crown—Precious Chemicals, Argen Corporation and Premium Dental Lab—alleging breach of implied warranty of merchantability, fraudulent misrepresentation, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. The dental crown had been redesigned in 2007 to reduce its gold content and as a result, it was alleged, the product became incapable of withstanding normal chewing forces and tended to fracture, causing dental patients to require additional painful oral surgery. The dentists alleged that, through pamphlet, printed and website materials, manufacturers Precious Chemicals and Argen continued to market and advertise the dental crown product as immune from deterioration over time, despite awareness of the defective and structurally unsound nature of the product.

Defendants Precious Chemicals and Argen Corporation moved to dismiss the fraudulent misrepresentation and state unfair trade practices counts against them. The court agreed and dismissed both counts with prejudice as to those two defendants, leaving in place those counts against defendant Premium Dental Lab, who failed to appear.

Fraudulent misrepresentation. The elements of a fraudulent misrepresentation claim in Illinois, the court explained, were (1) a false statement of material fact; (2) known or believed to be false by the party making it; (3) intent to induce the other party to act; (4) action by the other party in reliance on the truth of the statement; and (5) damage to the other party resulting from that reliance. In addition, Federal Rule of Civil Procedure 9(b) requires that a party state with particularity the circumstances constituting fraud or mistake.

Plaintiffs Prescott and Tambornini failed to plead reliance with sufficient particularity, the court stated. Their allegations referred to advertising materials and representations, but they omitted the particular circumstances of their reliance, such as the specific misstatements upon which they relied. They did provide more particularity with regard to the third defendant, Premium Dental Lab, alleging that it knowingly misrepresented the quality of the dental crown, but failed to name Premium as a defendant in that count. Therefore, they failed to state a fraudulent misrepresentation claim against defendants Precious Chemicals and Argen Corporation.

Illinois Consumer Fraud and Deceptive Business Practices Act. The court first dismissed R. Joseph’s claim under the Illinois Consumer Fraud and Deceptive Business Practices Act. Unlike the other two plaintiffs, who were Illinois residents, Joseph was a Texas citizen. For a non-resident plaintiff to have standing under the Act, the court stated, the circumstances relating to the disputed transaction must have occurred primarily and substantially in Illinois. The defendant corporations were neither headquartered nor incorporated in Illinois, and Joseph failed to allege that the disputed transactions occurred primarily or substantially in Illinois. He therefore lacked standing to bring a claim under the Act, the court ruled.

To state a claim under the Illinois Consumer Fraud and Deceptive Business Practices Act, the court explained, a plaintiff must allege: (1) a deceptive act or practice by the defendant; (2) the defendant’s intent that the plaintiff rely on the deception; (3) that the deception occurred in the course of conduct involving trade or commerce; and (4) actual damage to the plaintiff proximately caused by the deception. The remaining plaintiffs, M. Prescott and G. Tambornini, pleaded neither direct nor indirect deception, stated the court. The complaint contained no particular allegations that either Prescott or Tambornini saw or read any misrepresentation made by Precious Chemicals or Argen. While Prescott and Tambornini did allege that defendant Premium Dental Lab deceived them, the complaint does not claim that Premium was itself deceived by either manufacturer. Therefore the court dismissed the Illinois Consumer Fraud and Deceptive Business Practices Act claim against defendants Precious Chemicals and Argen.

The case is Civil Action No. 13 CV 6147.

Attorneys: Jeffrey G. Mashni (Deratany & Carden) for Matthew Prescott. Colleen Carlton Smith (Latham & Watkins LLP) for Argen Corporation. Erin Bolan Hines (Baker Hostetler LLP) for Precious Chemicals U.S.A., Inc.

Companies: Argen Corporation; Precious Chemicals U.S.A., Inc.; Premium Dental Lab, Inc.

Cases: StateUnfairTradePractices IllinoisNews