Hall v. TuneUp Corporation

Filing 40

MEMORANDUM Opinion signed by the Honorable Samuel Der-Yeghiayan on 8/6/2013: Status hearing held and continued to 08/13/13 at 9:00 a.m. Counsel to file joint status report with proposed dates by 08/09/13. For the reasons stated in the Court's memorandum opinion, Defendant's motion to dismiss 30 is denied. Mailed notice(mw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAROLE GRANT HALL,

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Plaintiff,
v.
TUNE UP CORPORATION,
Defendant.

No. 13 C 1804

MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendant TuneUp Corporation’s
(TuneUp) motion to dismiss. For the reasons stated below, the motion to dismiss is
denied.

BACKGROUND
Plaintiff Carole Grant Hall (Hall) alleges that TuneUp developed a software
called TuneUp Utilities (Software) for use on personal computers (PC). TuneUp
allegedly advertised that the Software was capable of increasing start up speeds,
optimizing performance, and removing harmful computer errors on a PC. Hall
alleges that in approximately April 2012, she saw TuneUp’s advertisement regarding
the Software while she was browsing the Internet. The advertisement Hall saw

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allegedly warned her that her PC may contain hundreds of harmful errors, and
allegedly informed her that the Software could “accurately identify, report, and repair
a variety of computer errors and other problems,” thereby speeding up the
performance of her PC. (A Compl. Par. 38). In addition, the advertisement allegedly
encouraged Hall to download a free trial version of the Software through TuneUp’s
website, which Hall allegedly did.
Upon downloading the Software, Hall allegedly performed a diagnostic scan
of her PC (Scan). After completing the Scan, the Software allegedly indicated to
Hall that her PC needed to be repaired due to the presence of hundreds of errors that
were causing “strong system interference.” (A Compl. Par. 39). Hall allegedly
performed a “fix” using the Software. (A Compl. Par. 40). Hall alleges that each
time she ran the Software on her PC, the Software reported that there were harmful
errors on her computer that needed to be fixed. Hall alleges that thereafter she
agreed to pay $29.95 to purchase and register the full verison of the Software based
on TuneUp’s representations regarding “the functionality and utility” of the
Software, and based on the Software’s representations regarding the problems that
existed on Hall’s computer. According to Hall, the Software exaggerated the errors
in her PC and fraudulently indicated that such errors were causing damage when in
fact they were not. Hall alleges that after she began using the Software, the speed
and performance of her PC actually declined significantly.
Hall allegedly commissioned a computer forensics expert (Expert) to examine
the Software. The Expert’s findings allegedly show that the Software “detect[s] non2

errors as harmful computer problems, and mischaracterizes the overall status of a
user’s computer–all without real, credible diagnosis of the user’s system.” (A
Compl. Par. 24). Hall alleges that regardless of the actual condition of a user’s PC, it
will always appear that the Software is detecting and fixing problems with the PC.
Hall includes in her amended complaint a claim for violation of the Illinois
Consumer Fraud and Deceptive Practices Act (Consumer Fraud Act), 815 ILCS
505/1 et seq. (Count I), a claim for fraudulent inducement (Count II), a claim for
breach of contract (Count III), and a claim for unjust enrichment (Count IV), pled in
the alternative to the breach of contract claim. TuneUp now moves to dismiss all
claims.

LEGAL STANDARD
In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil
Procedure 12(b)(6) (Rule 12(b)(6)), the court must draw all reasonable inferences
that favor the plaintiff, construe the allegations of the complaint in the light most
favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in
the complaint. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th
Cir. 2012); Thompson v. Ill. Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir.
2002). A plaintiff is required to include allegations in the complaint that “plausibly
suggest that the plaintiff has a right to relief, raising that possibility above a
‘speculative level’” and “if they do not, the plaintiff pleads itself out of court.”
E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir.
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2007)(quoting in part Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007));
see also Morgan Stanley Dean Witter, Inc., 673 F.3d at 622 (stating that “[t]o survive
a motion to dismiss, the complaint “must contain sufficient factual matter, accepted
as true, to state a claim to relief that is plausible on its face,” and that “[a] claim has
facial plausibility when the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for the misconduct
alleged”)(quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009))(internal quotations
omitted).

DISCUSSION
TuneUp contends that the claims brought in the instant action should be
dismissed.

I. Legal Relationship Between Hall and TuneUp
TuneUp argues that all of the claims brought in the instant action should be
dismissed because Hall has no legal relationship with TuneUp. In support of its
argument, TuneUp has pointed to a Licensing Agreement (Licensing Agreement)
that TuneUp claims Hall entered into with TuneUp Distribution GmbH (TuneUp
Distribution), a distributor of the Software. TuneUp contends that in ruling on the
instant motion, the court may consider the Licensing Agreement, which TuneUp has
attached to its motion to dismiss, under the familiar doctrine of incorporation by
reference. Under this doctrine, the court is permitted to consider documents
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submitted to the court if they are “documents to which the Complaint ha[s] referred,
that [are] concededly authentic, and that [are] central to [a plaintiff’s] claim.” Hecker
v. Deere & Co., 556 F.3d 575, 582 (7th Cir. 2009)(citing Tierney v. Vahle, 304 F.3d
734, 738 (7th Cir. 2002)). In the instant action, Hall disputes the authenticity of the
Licensing Agreement, contending that such agreement was not posted on TuneUp’s
website or presented to Hall in any other manner when Hall downloaded and
purchased the Software. Hall has also presented information to the court indicating
that she did not enter into a Licensing Agreement with TuneUp Distribution, and
instead received the Software through another reseller. Since Hall disputes the
authenticity of the Licensing Agreement, TuneUp’s reliance on the incorporation by
reference doctrine is misplaced. Taking Hall’s allegations as true, as the court must
do at this juncture, Hall’s allegations plausibly suggest a legal relationship between
Hall and TuneUp. In addition, the court notes that even if the court were to consider
the Licensing Agreement presented by TuneUp, the Licensing Agreement would not
necessarily defeat all of the claims that Hall has brought against TuneUp.

II. Counts I and II

A. Rule 9(b) Pleading Requirements
TuneUp argues that the Consumer Fraud Act claim pled in Count I and the
claim for fraudulent inducement pled in Count II should be dismissed because Hall
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has not pled such claims with the particularity required under Federal Rule of Civil
Procedure 9(b) (Rule 9(b)). Rule 9(b) requires a plaintiff alleging fraud to “state
with particularity the circumstances constituting fraud,” which “ordinarily requires
describing the ‘who, what, when, where, and how’ of the fraud.” AnchorBank, FSB
v. Hofer, 649 F.3d 610, 615 (7th Cir. 2011)(citations omitted); see also Fed. R. Civ.
P. 9(b)(stating that “[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake”). In the instant action,
Hall alleges that she saw TuneUp’s online advertisement in April of 2012. (A
Compl. Par. 36). Hall also alleges that the advertisement warned her that her PC
might be afflicted with a significant number of harmful errors, and that the Software
would diagnose and repair problems with Hall’s PC. (A Compl. Par. 36). In
addition, Hall alleges that the advertisement directed Hall to TuneUp’s website. (A
Compl. Par. 37). TuneUp allegedly represented on its website that the Software
would “accurately identify, report and repair a variety of computer errors and other
problems, enhance the performance and speed of [Hall’s] computer, and perform
[other] beneficial tasks.” (A Compl. Par 38). Hall also alleges that after she
downloaded the Software, the Software fraudulently reported that Hall’s PC “was
afflicted with hundreds of errors, which were causing ‘strong system interference’
and that her computer needed to be repaired.” (A Compl. Par. 39). Such allegations
are sufficient to satisfy the heightened pleading standards of Rule 9(b).

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B. Allegations of Deception
Tune up argues that the Consumer Fraud Act claim pled in Count I and the
claim for fraudulent inducement pled in Count II should be dismissed because Hall
did not adequately allege that she was deceived by TuneUp’s advertising, which is a
required element of such claims. To state a claim under the Consumer Fraud Act, a
plaintiff must allege facts to plausibly suggest: “(1) a deceptive or unfair act or
practice by the defendant; (2) the defendant’s intent that the plaintiff rely on the
deceptive or unfair practice; [ ](3) the unfair or deceptive practice occurred during a
course of conduct involving trade or commerce[;]” and (4) “that the defendant’s
conduct is the proximate cause of the injury.” Wigod v. Wells Fargo Bank, N.A., 673
F.3d 547, 574 (7th Cir. 2012)(citations omitted). The Seventh Circuit has observed
that the Consumer Fraud Act “protects consumers against ‘unfair or deceptive acts or
practices,’” and that the Consumer Fraud Act is “liberally construed to effectuate its
purpose.” Id. Similarly, under Illinois law, “fraudulent inducement requires proof of
five elements: ‘(1) a false statement of material fact; (2) known or believed to be
false by the person making it; (3) an 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 such reliance.’” Hoseman v. Weinschneider, 322 F.3d
468, 476 (7th Cir. 2003)(citations omitted).
In the instant action, Hall alleges that TuneUp fraudulently advertised to Hall
that the Software could accurately detect and repair problems with her PC and that
the free trial version of the Software fraudulently reported errors on Hall’s PC to
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induce her to purchase the full version of the Software. Hall also alleges that, in
deciding to purchase the Software for $29.99, Hall relied upon both the initial
advertisements regarding the Software’s functionality and the Software’s report that
Hall’s PC was plagued with hundreds of problems. (A Compl. Par. 38, 40-41, 43).
Hall also alleges that after she began using the Software, the performance of her PC
seriously declined. In the instant action, Hall’s allegations are sufficient to state a
claim under the Consumer Fraud Act and to state a claim for fraudulent inducement.

C. Content of the Alleged Misrepresentations
Tune up argues that the Consumer Fraud Act claim pled in Count I and claim
for fraudulent inducement pled in Count II should be dismissed because the alleged
representations made by TuneUp in its advertisements constitute mere “puffery”. It
is well-settled that “[p]uffing in the usual sense signifies meaningless superlatives
that no reasonable person would take seriously, and so it is not actionable as fraud.”
Speakers of Sport, Inc. v. ProServ, Inc., 178 F.3d 862, 866 (7th Cir. 1999); see also
United States v. Canty, 499 F.3d 729, 733-34 (7th Cir. 2007)(noting that “‘puffing’
about the quality of one’s wares does not give rise to actionable fraud”)(citations
omitted); Corley v. Rosewood Care Center, Inc. of Peoria, 388 F.3d 990, 1008-09
(7th Cir. 2004)(observing that highly subjective expressions “come[] under the
category of sales puffery upon which no reasonable person could rely in making a
decision”); Williams v. Aztar Indiana Gaming Corp., 351 F.3d 294, 299 (7th Cir.
2003)(identifying certain statements as “sales puffery on which no person of ordinary
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prudence and comprehension would rely”). In the instant action, Hall has not merely
identified subjective phrases used by TuneUp in advertising the Software. Instead,
Hall alleges that TuneUp fraudulently represented both the purpose and ability of the
Software. Further, Hall alleges that the free trial version of the Software fraudulently
identified harmful errors on Hall’s computer to induce Hall to purchase the full
version of the Software. Based upon the above, Hall has stated a claim under the
Consumer Fraud Act and a claim for fraudulent inducement.

III. Count III
TuneUp argues the breach of contract claim should be dismissed because Hall
did not enter into any contract with TuneUp and because Hall failed to allege which
contract provisions were violated with respect to the Licensing Agreement. To state
a breach of contract claim, a plaintiff must allege “(1) offer and acceptance, (2)
consideration, (3) definite and certain terms, (4) performance by the plaintiff of all
required conditions, (5) breach, and (6) damages.” Wigod, 673 F.3d at 560 (citations
omitted). In the instant action, Hall has alleged that TuneUp offered Hall a full
version of the Software, that Hall accepted the offer to purchase the full version of
the Software, that Hall paid $29.99 in consideration for the Software, that TuneUp
represented that the Software was designed to detect, report, and fix computer
problems, that the Software did not perform as warranted, and that Hall sustained
damages as a result. Therefore, Hall has adequately pled a breach of contract claim
against TuneUp.
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The court notes that there is some disagreement between the parties regarding
whether Hall entered into a contractual agreement with another party that would
defeat Hall’s breach of contract claim against TuneUp. At this juncture, it is unclear
what other agreements Hall entered into in connection with the purchase of the
Software, and whether the terms of any such agreements, if they exist, would defeat
Hall’s breach of contract claim against TuneUp. At this stage of the proceedings, the
court accepts the allegations in Hall’s complaint as true. At summary judgment
stage, after the parties have had the opportunity to engage in discovery on the issue,
the parties will have the opportunity to present evidence and arguments to the court
relating to any contractual provisions that effect the relationship between Hall and
TuneUp.

IV. Count IV
TuneUp argues that the unjust enrichment claim should be dismissed because
Hall has not alleged sufficient facts with respect to her own experience to establish
that TuneUp unjustly retained a benefit from her. Under Illinois law, “[t]o state a
cause of action based on a theory of unjust enrichment, a plaintiff must allege that the
defendant has unjustly retained a benefit to the plaintiff’s detriment, and that
defendant’s retention of the benefit violates the fundamental principles of justice,
equity, and good conscience.” Cleary v. Philip Morris Inc., 656 F.3d 511, 516 (7th
Cir. 2011). Although unjust enrichment is an independent cause of action, “if an
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unjust enrichment claim rests on the same improper conduct alleged in another claim,
then the unjust enrichment claim will be tied to this related claim—and, of course,
unjust enrichment will stand or fall with the related claim.” Id. at 517. In the instant
action, Hall’s unjust enrichment claim rests on TuneUp’s allegedly fraudulent
conduct relating to the Software. The court has already found that Hall has
adequately pled the fraud-based claims brought in Counts I and II. The court also
finds at the pleadings stage that Hall has adequately alleged a claim for unjust
enrichment, which the court notes Hall properly pled as an alternative to her breach
of contract claim. Based upon the above, the motion to dismiss is denied.

CONCLUSION
Based upon the foregoing analysis, the motion to dismiss is denied.

___________________________________
Samuel Der-Yeghiayan
United States District Court Judge
Dated: August 6, 2013

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