Quality Management And Consulting Services, Inc. v. SAR Orland Food Inc. et al

Filing 47

MEMORANDUM Opinion and Order Signed by the Honorable Edmond E. Chang on 6/11/2012. Mailed notice by judge's staff. (srb,)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
QUALITY MANAGEMENT
AND CONSULTING SERVICES, INC.

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Plaintiff,
v.
SAR ORLAND FOOD INC., and
SAR MARKETPLACE FOOD INC,
Defendants.

No. 11 CV 06791
Judge Edmond E. Chang

MEMORANDUM OPINION AND ORDER
On behalf of itself and similarly-situated persons, Quality Management and
Consulting Services brings this suit against SAR Orland Food Inc. and SAR
Marketplace Food (collectively, SAR), alleging that the defendants sent unsolicited fax
advertisements in violation of the Telephone Consumer Protection Act, 47 U.S.C. § 227,
et. seq., and the Illinois Consumer Fraud and Deceptive Business Practices Act, 815
ILCS § 505/2, et seq. R. 5.1 Quality Management also attempts to state a claim for the
common law tort of conversion. Id. SAR moves to dismiss the conversion (Count 2) and
Fraud Act (Count 3) claims pursuant to Federal Rule of Civil Procedure 12(b)(6). R. 9.
The Court grants the motion, as explained below.
I.
In evaluating the motion to dismiss, we accept Quality Management's
allegations as true and draw reasonable inferences in its favor. Ashcroft v. al-Kidd, –

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This Court has federal question jurisdiction over the Telephone Consumer Protection
Act, and supplemental jurisdiction over the related state law claims.

U.S. –, 131 S. Ct. 2074, 2079 (2011). In June and July 2011, Quality Management
received three unsolicited faxes from SAR marketing SAR’s goods or services. R. 1 ¶¶
11-14. Quality Management alleges, on information and belief, that SAR sent the same
or similar unsolicited faxes to more than thirty-nine other recipients. Id. ¶ 16. None
of these faxes displayed the proper opt-out notice required by the Telephone Consumer
Protection Act. Id. ¶ 17.
II.
Under Federal Rule of Civil Procedure 8(a)(2), a complaint generally need only
include “a short and plain statement of the claim showing that the pleader is entitled
to relief.” Fed. R. Civ. P. 8(a)(2). This short and plain statement must “give the
defendant fair notice of what the claim is and the grounds upon which it rests.” Bell
Atl. v. Twombly, 550 U.S. 544, 555 (2007).
“A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state
a claim upon which relief may be granted.” Hallinan v. Fraternal Order of Police
Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). “[W]hen ruling on a defendant's
motion to dismiss, a judge must accept as true all of the factual allegations contained
in the complaint.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). A “complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
550 U.S. at 570). These allegations “must be enough to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555. And the allegations that are entitled to

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the assumption of truth are those that are factual, rather than mere legal conclusions.
Iqbal, 556 U.S. at 679.
III.
Quality Management argues that SAR improperly converted Quality
Management’s own (and, if the case is certified as a class, other class members’) fax
machines, toner, paper, and employees’ time by sending unsolicited faxes,
appropriating these resources for SAR’s own gain. R. 1 at 9. To state a claim for
common law conversion in Illinois, a plaintiff must allege that “(1) he has a right to the
property; (2) he has an absolute and unconditional right to the immediate possession
of the property; (3) he made a demand for possession; and (4) the defendant wrongfully
and without authorization assumed control, dominion, or ownership over the property.”
Cirrincione v. Johnson, 703 N.E.2d 67, 70 (Ill. 1998). In support of their motion to
dismiss, SAR argues that this conversion claim is not actionable because the alleged
damages are de minimis, that is, the damages are just too small to warrant treatment
in the judicial system. R. 9 at 4. The Court agrees.
There is a split in this District over whether the damages arising from receiving
a small number of unsolicited faxes is sufficient to overcome the doctrine of de minimis
non curat lex, or “the law does not concern itself with trifles.” Old Town Pizza of
Lombard, Inc. v. Corfu-Tasty Gyro’s Inc., Case No. 11-cv-6959, 2012 WL 638765, at
*2-3 (N.D. Ill. Feb. 23, 2012). There is currently no controlling Seventh Circuit
precedent on this question, id. at *2, but this Court finds persuasive the reasoning of
cases that have barred similar claims because of the de minimis damages.
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The facts in this case are identical to those in Old Town Pizza of Lombard, Inc.
v. Corfu-Tasty Gyro’s Inc., this District’s most recent decision on this question, except
Old Town Pizza involved only one alleged fax. Id. at *1. The Court agrees with Old
Town Pizza’s conclusion that “[t]he severity of the interference, the inconvenience, and
the expense Plaintiff alleges to have suffered is trivial and insufficient to support a
conversion claim.” Id. at *3. The result is the same even though Quality Management
received two additional faxes: even taken together, the loss of ink, paper, and toner
remains minuscule.
To be sure, there are cases in this District that reject applying the de minimis
doctrine to bar similar claims. The Court disagrees with those cases for two reasons.
First, some cases aggregate the potential damages by considering class-wide damages.
E.g., Brodsky v. HumanaDental Ins. Co., No. 10-C-3233, 2011 WL 529302, at *7 (N.D.
Ill. Feb. 8, 2011); Centerline Equipment Corp. v. Banner Personnel Service, Inc., 545
F. Supp. 2d 768, 782 (N.D. Ill. 2008). But that puts the cart before the horse. If a claim
is legally insufficient due to de minimis damages, then aggregating that claim as a
class should have no effect on the threshold question of the legal sufficiency of the
claim. To illustrate this point, imagine that an Illinois law created a statutory cause
of action for converting fax paper, but the statute required that the ‘victim’ of the junk
fax suffer at least $10 in damages in order to bring suit. Could ten victims who each
suffered only $1 in damages file a lawsuit as a class action and successfully state a
claim because, in the aggregate, they suffered $10? The answer should be no: if each
putative plaintiff does not state a claim alone, then they do not state a claim as a class.
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In other words, a class action is a procedural vehicle for litigating the claims of many
persons, not a vehicle for substantively modifying the merits of the claims themselves.
So it is a mistake to consider the alleged damages of the proposed class in the
aggregate when determining whether the conversion claim fails in light of de minimis
damages. Stonecrafters, Inc. v. Foxfire Printing and Packaging, 633 F. Supp.2d 610,
614 (N.D. Ill. 2009) (citing Chambers v. Am. Trans Air, Inc., 17 F.3d 998, 1006 (7th
Cir.1994)). Therefore, the Court is limited to considering Quality Management’s own
damages at this stage and concludes that whatever damages it may have experienced
from receiving three faxes against its will are too trivial to support a cause of action.
Courts that reject application of the de minimis bar also cite the availability of
nominal damages for conversion claims. Centerline, 545 F. Supp. 2d at 782. But this
view seems to mistakenly conflate de minimis damages with nominal damages. As
explained by Stonecrafters, nominal damages and de minimis damages are two distinct
concepts. 633 F. Supp.2d at 614. Nominal damages are available when there is a
violation of sufficient gravity, but significant damages cannot be proved with sufficient
specificity. Id. For example, nominal damages may be awarded if a defendant
converted a plaintiff’s antique coin collection and later returned it: although the
plaintiff may not be able to show any actual damages from the time when the collection
was missing, there was sufficient injury to warrant a judgment against the defendant.
Id. The de minimis doctrine, on the other hand, applies to “claims in which the plaintiff
has suffered no more than negligible damages from the beginning.” Id. In other words,
it is not the case that there is any particular difficulty in quantifying the damages
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caused by unsolicited faxes, such that one must turn to nominal damages; it is possible
to quantify the cost of 3 sheets of paper, a little bit of toner, and the few seconds of
employee time expended in discarding the unwanted faxes. What applies here are de
minimis damages, not nominal damages. Because the alleged receipt of three
unwanted faxes caused only de minimis damages, Count 2 is dismissed.2
IV.
SAR also argues that Quality Management’s Fraud Act claim should be
dismissed because their conduct does not amount to an unfair practice. R. 9 at 6-7. The
Fraud Act prohibits “[u]nfair methods of competition and unfair or deceptive acts or
practices . . . in the conduct of any trade or commerce . . . .” 815 ILCS § 505/2. Quality
Management only alleges that SAR’s sending of three unsolicited faxes was unfair, not
that it was deceptive. R. 1 ¶¶ 45, 49-50.
Courts consider three factors in determining whether conduct is unfair under
the Fraud Act: “(1) whether the practice offends public policy; (2) whether it is
immoral, unethical, oppressive, or unscrupulous; [and] (3) whether it causes
substantial injury to consumers.” Robinson v. Toyota Motor Credit Corp., 775 N.E.2d

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It is worth noting that SAR also argues, without much development, that ink, toner,
paper, and employee time do not qualify as “specific chattels” necessary to state a claim for
conversion. R. 9 at 4 n. 5. To the contrary, ink, toner, and paper can be the subjects of
conversion claims even if defendants do not take actual possession of them. G.M. Sign, Inc. v.
Stergo, 681 F. Supp.2d 929, 932 (N.D. Ill. 2009). Only employee time cannot be the subject of
a conversion claim. Id.; see also Stonecrafters, 633 F. Supp.2d at 613; Brodsky, 2011 WL
529302, at *7.

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951, 961 (Ill. 2002). “A practice may be unfair because of the degree to which it meets
one of the criteria or because to a lesser extent it meets all three.” Id.
Sending unsolicited faxes violates public policy and SAR does not argue
otherwise. R. 9 at 7-8. After all, the practice is illegal under the Telephone Consumer
Protection Act and is even a petty offense under Illinois law. 720 ILCS 5/26-3.
Therefore, the first factor clearly weighs in Quality Management’s favor.
But courts in this District are split as to the second and third factors. Compare
Old Town Pizza, 2012 WL 638765, at *5-6 (holding both factors weighed sufficiently
in the defendant’s favor); Stonecrafters, 633 F. Supp.2d at 616 (same) with Brodsky,
2011 WL 529302, at *9 (holding that the plaintiff sufficiently satisfied all three
factors); Centerline Equipment Corp., 545 F. Supp. 2d at 780-81 (same). This Court
again agrees with the reasoning of Old Town Pizza and Stonecrafters.
On the second factor, sending three unsolicited faxes does not constitute the
required type of immoral, unethical, oppressive, or unscrupulous conduct typically
addressed by the Fraud Act. Conduct qualifies as oppressive under the Fraud Act when
it deprives the plaintiff of meaningful choice. Robinson, 775 N.E.2d at 962. It is true
that these faxes deprived Quality Management of choice to some degree: it was forced
to receive the unsolicited faxes. Old Town Pizza, 2012 WL 638765, at *5 (recognizing
this argument from Centerline, 545 F. Supp. 2d at 780). However, the burden on
Quality Management from receiving three faxes is so minimal, as explained above, that
it was not deprived of a choice in such a way that SAR could be said to have engaged
in oppressive conduct. Id.; see also Stonecrafters, 633 F. Supp. at 616-17. To be sure,
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one can readily imagine a case where a steady stream of unwanted faxes rises to the
level of oppressive conduct. But 3 faxes on 3 separate days spread over 4 weeks is not
that case. Nor do the unwanted faxes rise to a level of immoral, unethical, or
unscrupulous conduct that would otherwise shift the balance of this second factor in
Quality Management’s favor. Therefore, while Quality Management was deprived of
some choice, the second factor tilts slightly in favor of defendants’ argument that their
conduct was not unfair under the ICFA.
The third factor, whether the practice caused substantial injury, is the most
decisive. “A practice causes substantial injury to consumers if it causes significant
harm to the plaintiff and has the potential to cause injury to a large number of
consumers.” Stonecrafters, 633 F. Supp. at 617. The earlier discussion regarding the
applicability of the de minimis doctrine applies equally here. As explained above,
Quality Management has not adequately alleged that the three faxes caused it
significant harm. Even if aggregate damages to the class as a whole can be considered
for this third factor, the actual damages remain insignificant. Quality Management
alleges that 39 or more other class members received the same or similar faxes. R. 1
¶ 16. The harm to each class member, however, arising from three faxes is only
pennies; even in the aggregate it is unlikely that damages total $20. Stonecrafters, 633
F. Supp. at 617. This level of intrusion, spread across over (allegedly) 40 potential
plaintiffs does not cause significant harm. Old Town Pizza, 2012 WL 638765, at *5; see
also Rossario’s Fine Jewelry v. Paddock Publications, Inc., 443 F. Supp. 2d 976, 979
(N.D. Ill. 2006). Therefore, this third factor weighs strongly in favor of the defendants.
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Taking the three factors together, Quality Management has failed to state a claim
under the Fraud Act. Therefore, Count 3 is dismissed.
V.
The Court grants SAR’s motion to dismiss Counts 2 and 3. The Telephone
Consumer Protection Act claim (Count 1) remains in the case, as SAR did not move to
dismiss that claim. The status hearing of August 22, 2012, at 8:30 a.m. remains as
scheduled.

ENTERED:
___________________________
Honorable Edmond E. Chang
United States District Judge
DATE: June 11, 2012

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