Mar. 15, 2002) (“‘it is not clear [that] Illinois courts require a consumer nexus where the plaintiff
is actually a business consumer of defendant’s merchandise”).

AGFA argues that Wagner is a not a “consumer” of its products and must therefore show
a “connection between the alleged deceptive business practices of AGFA and how it directly or
indirectly affects consumers.” Pl. Mem., p. 8. The Court disagrees. Wagner purchases film,
plates and proofing from AGFA for use in the ordinary course of running its printing operations.
Wagner does not resell these items to customers in any form. Cf CTS Corp. v. Raytheon Co.,
No. 92 C 3878, 1993 WL 157464, at *1, 3 (N.D. Ill. May 12, 1993) (company that incorporated
transistors into oscillators which were then sold to customers was not a consumer of those
transistors). The mere fact that the paper Wagner purchases from AGFA ultimately reaches
Wagner’s customers does not negate Wagner’s status as a consumer of the other products. On
these facts, Wagner is not required to allege an impact on consumers generally. See Skyline
International Development, 302 Ill. App. 3d at 85, 706 N.E.2d at 946; Lefebvre, 946 F. Supp. at
1369; Petri v. Gatlin, 997 F. Supp. 956, 968-69 (N.D. Il]. 1997) (“the consumer nexus test is
inapplicable because the dispute at hand does not involve ‘two businesses that are not
consumers”).

Nevertheless, the ICFA “was not intended to cover all commercial transactions regardless
of the relationship between the parties.” Lake County Grading, 275 Tl. App. 3d at 457, 654
N.E.2d at 1114. To the extent Wagner’s allegations are, at their core, a claim for breach of
contract, then relief is not warranted under the Act. Hartmarx, 2002 WL 406973, at *7; Nilsson

y. NBD Bank of Ilinois, 313 I. App. 34 751, 765, 731 N.E.2d 774, 785 (1999). Wagner first

claims that AGFA surreptitiously added a new liquidated damages provision to the Consumable


causation and damages. See Chandler, 768 N.E.2d at 70 (“[a]ctual dollars lost by the [plaintiff]
is a matter of proof, not pleading”).
CONCLUSION
For the reasons stated above, AGFA’s motion to dismiss [docket item 11-1] is granted
with respect to Wagner’s claim that AGFA surreptitiously inserted a liquidated damages
provision into their contract, and granted with leave to amend with respect to Wagner’s claim
regarding the quality of AGFA’s plates. Wagner has leave to file an amended counterclaim in

this regard on or before July 26, 2002.

MATTHEW F. KENNELLY
United States District Judge
Date: July 10, 2002


B. Elements of an ICFA Claim

To state a claim under the ICFA, Wagner must allege (1) a deceptive act, such as a
misrepresentation or concealment of material fact; (2) AGFA’s intent to induce Wagner’s
reliance on the deception; (3) a deception that involves trade or commerce; and (4) actual
damages to the plaintiff (5) proximately caused by the deception. Oliveira v. Amoco Oil Co.,__
N.E.2d __, 2002 WL 1340895, at *7 (Ill. June 20, 2002); Adler v. William Blair & Co., 271 Ill.
App. 3d 117, 128, 648 N.E.2d 226, 233 (1995); Thacker v. Menard, Inc., 105 F.3d 382, 386 (7"
Cir. 1997). AGFA argues that Wagner failed to set forth the necessary facts to support a claim
under the Act.

a. Sufficiency of the Fraud Allegations
Under the liberal notice pleading requirements of the federal rules, all that a plaintiff

must do to state a claim is to provide a “short statement, in plain (that is, ordinary, nonlegalistic)
English, of the legal claim.” Kirksey v. RJ. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7" Cir.
1999). To state a claim for fraud, however, “the circumstances constituting the fraud or mistake
shall be stated with particularity.” Fed. R. Civ. P. 9(b). The circumstances of fraud include “the
identity of the person who made the misrepresentation, the time, place, and content of the
misrepresentation, and the method by which the misrepresentation was communicated to the
plaintiff.” General Electric Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1078 (7"
Cir. 1997) (quotations and citations omitted). In other words, “the who, what, when, where and
how” of the fraud must be alleged. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7" Cir. 1990).

Consistent with our dismissal of Wagner’s claim based on the insertion of the liquidated


Agreements. This is essentially a dispute about the terms and conditions of the contracts
between the parties; i.e, AGFA’s potential remedy in the event of a breach by Wagner. Such
disputes are not covered by the ICFA. See, e.g., Bankier v. First Federal Savings & Loan
Association of Champaign, 225 Ill. App. 3d 864, 874, 588 N.E.2d 391, 398 (1992) (ICFA “was
not intended to extend to every transaction between contracting parties”). Wagner does not
allege that AGFA’s insertion of the liquidated damages provision is part of a pattern of deceptive
sales activities. Nilsson, 313 Ill. App. 3d at 765, 731 N.E.2d at 785 (ICFA claim failed in part
because there was “[no] evidence that the insertion of a demand feature is part of some deceptive
lending practice by the bank”). Thus, the portion of Wagner’s ICFA claim relating to the
insertion of the liquidated damages clause is dismissed.

On the other hand, Wagner’s allegations regarding the quality of AGFA’s plates do
support an ICFA claim. Wagner asserts that AGFA misrepresented the quality of its products to
induce Wagner to purchase them, which is exactly the type of fraudulent activity the Act is
designed to redress. Hartmarx, 2002 WL 406973, at *7 (“[b]y challenging the veracity of the
representations made by JBA to induce Hartmarx to enter into the software contract, Hartmarx
states a fraudulent misrepresentation claim”); Lefebvre, 946 F. Supp. at 1369 (plaintiff stated a
claim under the ICFA by alleging that “it was a consumer of Sanden’s, and that Sanden engaged
in deceptive practices to entice [plaintiff] to buy Sanden’s product”). Construing the statute and
the pleadings liberally as we must on a motion to dismiss, Wagner has stated a claim for
violation of the ICFA. See Kirkruffv. Wisegarver, 297 Ill. App. 3d 826, 838, 697 N.E.2d 406,
415-16 (1998) (“courts should liberally construe and broadly apply the Act to eradicate all forms

of deceptive and unfair business practices”).


1292 (7" Cir. 1989) (“basic contract law establishes a duty to read the contract; it is no defense to
say, ‘I did not read what I was signing”); Connick v. Suzuki Motor Co., 174 Ill.2d 482, 505, 675
N.E.2d 584, 595 (1996) (“[a] material fact exists where a buyer would have acted differently
knowing the information, or if it concerned the type of information upon which a buyer would be
expected to rely in making a decision whether to purchase”).
c. Sufficiency of the Damages Allegations

To state a claim under the ICFA, Wagner must allege that AGFA’s deception has caused
it to sustain damages. Priebe v. Autobarn, Lid., 240 F.3d 584, 588 (7" Cir. 2001). However,
“(t]he required allegation of proximate causation is minimal, because that determination is best
left to the trier of fact.” Chandler v. American General Finance, Inc., 329 Ill. App. 3d 729, 768
N.E.2d 60, 70 (2002) (citing Connick, 174 Il1.2d at 504, 675 N.E.2d at 595). AGFA contends
that Wagner’s claim for damages is vague and cursory and that there is no showing that AGFA’s
alleged fraudulent conduct is the proximate cause of Wagner’s losses. Pl. Mem., pp. 10-11; Pl.
Reply, p. 7. Wagner identifies the following damages: (1) costs associated with transferring
equipment and processes to use AGFA consumable products; (2) costs associated with
troubleshooting the problems with the plates AGFA initially provided to Wagner, and with the
equipment that AGFA selected to process its plates; and (3) higher prices for the plates necessary
for Wagner’s operations. Aff. Def. 944; Ctrclm. 4951-53. In sum, Wagner claims that as a result
of AGFA’s deception, it changed equipment to accommodate AGFA products; both the products
and the equipment turned out to be defective; and Wagner incurred costs to remedy the problems.

At this stage of the case, these allegations satisfy the minimal requirements for pleading


<z Miaute Order Form (0697)

United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Matthew F. Kennelly than Assigned Judge
CASE NUMBER 02 C 2400 DATE 7/10/2002
CASE AGFA vs. Wagner Printing Co.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) a Brief in support of motion due
(3) im Answer brief to motion due. . Reply to answer briefdue__.
(4) a Ruling/Hearing on set for at
6) O Status hearing[held/continued to] [set for/re-set for] on set for at
(6). Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at .
(7) oO Trial[set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
CIFRCP4(m) Ci General Rule 21 CIFRCP41(a)\(1) COFRCP41(a)(2).
ao) [Other docket entry] For the reasons set forth on the attached Memorandum Opinion and Order,
AGFA’s motion to dismiss (11-1) is granted with respect to Wagner’s claim that AGFA surreptitiously
inserted a liquidated damages provision into their contract, and granted with leave to amend with respect
to Wagner’s claim regarding the quality of AGFA’s plates. Wagner has leave to file an amended
counterclaim in this regard on or before 7/26/02.
(1) off {For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. number of notices

Document

Number

Notices mailed by judge’s staff.

iL 1.6 2002

WUL 20sec

Notified counsel by telephone.

v | Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom date mailed notice

deputy’s
initials

OR

aepaceahs

mailing deputy initials

\/



damages clause, our analysis in this regard addresses only Wagner’s claim regarding the quality
of AGFA’s plates and other materials.

AGFA argues that Wagner has not adequately set forth the facts necessary to state a claim
for fraud. Wagner alleges the following facts: (1) Wagner began dealing with AGFA “because
AGFA represented to Wagner that AGFA could provide plates of equal quality to those that
Wagner had been using, at a lower price”; (2) Wagner switched certain of its machines in order
to accommodate the use of AGFA plates and products; (3) AGFA’s representations of equal
quality were false; and (4) AGFA intended that Wagner rely on the false representations. Aff.
Def. 42-46. These allegations are insufficient to meet the heightened requirements of Rule
9(b). Wagner has not identified who at AGFA made the representations regarding plate quality,
when those representations were made and to whom, or how the representations were
communicated. See, e.g., Jiang v. Allstate Insurance Co., 199 F.R.D. 267, 272 (N.D. Ill. 2001)
(dismissing ICFA claim that failed to identify the when, where and how of the alleged fraud).
Wagner’s claim of fraud based on the quality of AGFA’s plates is therefore dismissed with leave
to amend.

b. Material Misrepresentation

AGFA’s arguments disputing the materiality of its alleged misrepresentations relate
solely to the allegedly surreptitious inclusion of the liquidated damages provision. The Court has
already found that portion of Wagner’s claim to be deficient, but additionally questions here
whether adding an express and unambiguous term in a two-page written contract between
sophisticated parties with a history of doing business is the type of material misrepresentation

contemplated by the ICFA. See Heller Financial, Inc. v. Midwhey Powder Co., 883 F.2d 1286,


DISCUSSION

A motion to dismiss a complaint under Fed. R. Civ. P. 12(b)(6) does not test whether the
plaintiff will ultimately prevail on the merits. Dismissal is proper only if it is clear that the
plaintiff can prove no set of facts consistent with the complaint that would entitle it to relief. See
Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

A. Wagner’s Consumer Status Under the ICFA

The ICFA is “primarily concerned with protecting consumers.” Web Communications
Group, Inc. v. Gateway 2000, Inc., 889 F. Supp. 316, 323 (N.D. Ill. 1995). The term “consumer”
means “any person who purchases or contracts for the purchase of merchandise not for resale in
the ordinary course of his trade or business but for his use or that of a member of his household.”
815 ILCS 505/1(e). Under the Act, a “person” includes a corporation or other business entity.
815 ILCS 505/1(c). When a dispute under the Act involves two businesses that are not
consumers of each other’s products, there must be some showing that the alleged conduct
“involves trade practices addressed to the market generally or otherwise implicates consumer
protection concerns.” Lefebvre Intergraphics, Inc. v. Sanden Machine Limited, 946 F. Supp.
1358, 1368 (N.D. Ill. 1996) (quoting Lake County Grading Co. of Libertyville, Inc. v. Advance
Mechanical Contractors, Inc., 275 Ill. App. 3d 452, 458, 654 N.E.2d 1109, 1115 (1995)). On the
other hand, “as long as the plaintiff, whether a business entity or a person, is a consumer, it need
only show a personal injury caused by the fraudulent or deceptive acts.” Skyline International
Development v. Citibank, F.S.B., 302 Ill. App. 3d 79, 85, 706 N.E.2d 942, 946 (1998). See also

Hartmarx Corp. v. JBA International, Inc., No. 99 C 4874, 2002 WL 406973, at *6-7 (N.D. Ill.


FACTUAL BACKGROUND

The following facts from the parties’ complaints are taken as true for purposes of this
motion to dismiss. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Sneed v. Rybicki,
146 F.3d 478, 480 (7" Cir. 1998). Wagner is a printing company that has purchased printing
supplies from AGFA since June 30, 1994. The parties have entered into several Consumable
Agreements during that time, all for the purchase of “consumable products, which included
paper, film, plates and proofing.” Cmplt. {{[5, 6; Aff. Def. (28. Sometime prior to April 1, 2001,
Wagner asked AGFA for a new agreement with a different pricing structure. Wagner did not ask
that AGFA make any other changes to their existing agreement. Aff. Def. (30. AGFA
responded to Wagner’s request with two Consumable Agreements dated June 28, 2000. Both
agreements contained a new liquidated damages provision that AGFA had not mentioned and
that the parties had not discussed. Aff. Def. 4931-34.

Prior to executing the second June 28, 2000 Consumable Agreement, Wagner had done
business with AGFA only through Wagner’s Infocomm operations. However, the second
Consumable Agreement with AGFA involved Wagner’s Freeport, Illinois operations. “Wagner
began dealing with AGFA for Wagner’s Freeport operations because AGFA represented to
Wagner that AGFA could provide plates of equal quality to those that Wagner had been using, at
a lower price.” Aff. Def. {]41-42. By switching to AGFA’s plates, Wagner was required to
change some of its machines and to start using certain other AGFA products. Aff. Def. 443.
Wagner alleges that AGFA’s representations about the quality of its plates were false and that

this caused Wagner to sustain damages. Aff. Def. 444; Ctrelm. 51-53.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
AGFA CORPORATION, )
Plaintiff, }
vs. ; Case No. 02 C 2400
WAGNER PRINTING CO. d/b/a }
INFOCOMM, »)
Defendant. }

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, District Judge:

Plaintiff AGFA Corporation filed a complaint against Wagner Printing Co. d/b/a/
Infocomm (“Wagner”) alleging that it breached two Consumable Purchase Agreements
(“Consumable Agreements”) for the purchase of printing supplies. Cmplt. {{[5, 6. Wagner filed
a counterclaim alleging that AGFA violated the Illinois Consumer Fraud and Deceptive Business
Practices Act (“ICFA”), 815 ILCS 505/ 1 et seq., by: (1) “surreptitious[ly]” inserting a liquidated
damages clause into the two Consumable Agreements; and (2) misrepresenting that “AGFA
could provide plates of equal quality to those that Wagner had been using, at a lower price.” Aff.
Def. (134, 35, 42, 44.

AGFA now seeks dismissal of Wagner’s counterclaim pursuant to Fed. R. Civ. P.
12(b)(6). For the reasons stated below, the motion is granted with leave to amend the

counterclaim in part.