Blankenship et al v. Pushpin Holdings LLC et al

Filing 68

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 10/6/2015:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RONALD W. BLANKENSHIP,
and GARY BRASSFIELD,
on behalf of themselves
and all others similarly situated,
Plaintiffs,
v.
PUSHPIN HOLDINGS, LLC,
LEASE FINANCE GROUP LLC, and
JAY COHEN,
Defendants.

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No. 14 C 6636

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
Before the Court is Defendants Pushpin Holdings, LLC’s (“Pushpin’s”), Lease Finance
Group LLC’s (“Lease Finance’s”), and Jay Cohen’s (“Cohen’s”) (collectively, “Defendants’”)
Motion to Dismiss Plaintiffs’ First Amended Class Action Complaint or in the Alternative, to
Strike Scandalous and Class Allegations Therefrom. (R.53.)
On July 28, 2014, Plaintiffs Ronald W. Blankenship (“Blankenship”) and Gary Brassfield
(“Brassfield”), filed this action, individually and on behalf of a putative class of similarly
situated plaintiffs, in the Circuit Court of Cook County, Illinois, against Defendants. (See R.1,
Notice of Removal, ¶ 1.) Plaintiffs allege that Defendants filed suits against them and obtained
ex parte judgments—against Blankenship for $2,497.65 plus costs and against Brassfield for
$2,753.00 plus costs. (R.45, Am. Compl., ¶¶ 3, 32, 41.) According to the Cook County Small
Claims Court complaint, Pushpin originally acquired the claims against Plaintiffs based on “a

commercial equipment finance lease agreement and accompanying Personal Guaranty
Agreement” between Plaintiff Blankenship and Pushpin and between Plaintiff Brassfield and
Lease Finance Group. (R.45-4, at 12, Pushpin Holdings LLC v. Blankenship, Case No 13-M1155481, Circuit Court of Cook County, Illinois, Verified Complt., ¶ 4, attached as Ex. 4 to Am.
Compl; R.45-5, at 4, Lease Finance Grp. v. Brassfield, Case No. 13-M1-152732, Circuit Court
of Cook County, Illinois, Verified Complt., ¶ 5, attached as Ex. 5 to Am. Compl.) Defendants
removed the case pursuant to 28 U.S.C. §§ 1446 and 1453, premising federal jurisdiction on the
Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). Plaintiffs have since filed their First
Amended Class Action Complaint (“Amended Complaint”) alleging a claim for violation of the
Illinois Consumer Fraud and Deceptive Practice Act (“ICFA”), 815 ILCS 505/1 et seq. (R.45,
¶¶ 58-66 (Count I)) and a breach of contract claim (id., ¶¶ 67-68 (Count II)). Defendants’
motion seeks dismissal of both counts. For the reasons set forth below, the Court grants in part
and denies in part Defendants’ motion.
BACKGROUND
Viewing the allegations in the light most favorable to Plaintiffs, Plaintiffs allege the
following:
I.

The Parties
Plaintiff Blankenship operates a shoe repair business doing business as “Grand Shoe

Repair” in Bessemer, Alabama. (See R.45, ¶ 9.) Plaintiff Brassfield operates an oil lube shop in
Greenwood, Arkansas. (See id., ¶ 10.) Defendant Pushpin is a limited liability company with
three (3) members—themselves limited liability companies with individuals as sole members.
(See R.1, ¶¶ 4-7; R.45, ¶ 11; R.54, Baranello Decl., ¶ 3; R.54-2, Ex. B., at 2 (Pushpin Holdings
LLC Details from Delaware Department of State website).) Defendant Lease Finance Group is a

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limited liability company with a single listed member—Defendant Cohen.1 (R.45, ¶ 13; see also
R.54, Baranello Decl., ¶ 2; R.54-2, at 3 (Lease Finance Group LLC Details from Delaware
Department of State website).) Defendant Cohen is a citizen of New York who, according to
Plaintiffs, owns and operates numerous shell entities that sell equipment leases, buy debts, and
collect debts acquired through purchase of leases. (R.1, ¶ 9; R.45, ¶ 14.) Defendant Cohen’s
alleged shell entities include Defendants Pushpin and Lease Finance. (R.45, ¶ 14.) Plaintiffs
further allege that Defendant Cohen is also the managing member of and controls the operations
for GCN Holdings, LLC—a corporation that acquires debts and subsequently assigns them to
Defendant Pushpin. (Id., ¶ 15.) As “President” of Pushpin and managing member of GCN
Holdings, LLC, Defendant Cohen is on both sides of the alleged assignment. (Id.) Plaintiffs
allege that Defendant Cohen controls each of Defendants Pushpin and Lease Finance, as well as
GCN Holdings, LLC and assigns and transfers claims by and between them “as he sees fit.” (Id.)
II.

Plaintiff Blankenship - Lease Agreement & Assignment
Blankenship is a 71-year old sole proprietor operating a shoe repair store in Bessemer,

Alabama under the name “Grand Shoe Repair.” (R.45, ¶ 17.) Blankenship has been in the shoe
repair business for 45 years. (Id., ¶ 18.) In 2002—when Blankenship’s shoe repair store was
located at 102 W. 3rd Street in Sheffield, Alabama—a representative of Retriever Payment
Systems marketed a credit card swiping machine to Blankenship’s assistant and then left a
machine at the store a few days later. (Id., ¶ 19.) Blankenship was not present at his store on the
day Retriever Payment Systems marketed the machine to his assistant. (Id.) Blankenship’s

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In their Notice of Removal, Defendants assert that Lease Finance is a limited liability company
whose sole member is another limited liability company, LF Platform, LLC. (See R.1, ¶ 8.) Although
contradictory to Plaintiffs’ allegations, for the purposes of the present motion and the Court’s requirement
to take facts in the light most favorable to Plaintiffs, the Court relies on the allegations in Plaintiffs’
Amended Complaint.

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machine never worked properly—credit cards did not swipe correctly and it may not have
processed some transactions. (Id., ¶ 27.) In addition, the lessor did not directly deposit
payments from credit card customers into Blankenship’s bank account within 48 hours. (Id.,
¶¶ 29, 30.) Blankenship’s numerous calls complaining that the machine did not work were never
addressed and the machine was never fixed. (Id.) Although the machine did not work properly,
a monthly base payment of $39.95 was deducted from Blankenship’s bank account for a period
of months. (Id., ¶ 28.) After seven or eight months, he turned in the machine. (Id. ¶ 27.) Lease
Finance took a deduction of $500 out of his bank account after Blankenship turned in the
machine. (Id., ¶ 31.)
A Non-Cancellable Lease, dated November 25, 2002, bears a signature for “Ronald
Blankenship” as Lessee and “Lease Finance Group, a Division of CIT Financial USA, Inc.” as
Lessor. (R.45, ¶ 20; id., ¶ 32 (citing R.45-4, Non-Cancellable Lease, attached to the Am. Compl.
as Ex. 4, at 8 (“Blankenship Lease”)).) Blankenship alleges his signature on the Blankenship
Lease is forged. (R.45, ¶¶ 20-24.) The Blankenship Lease lists “Retriever Payment Systems” as
the “Rep Code” and indicates the equipment as a “Hypercom”, Model/License Agreement
“T7P”. (R.45-4, at 8; R.45, ¶ 24.) The schedule of payments is listed as $39.95 per month for a
term of 48 months, and there is a provision authorizing automatic withdrawal of payments from
an account at Compass Bank. (R.45-4, at 8.) The Blankenship Lease contains various
provisions, including a Personal Guaranty “[t]o induce Lessor to enter into this Lease” which
also bears a signature for “Ronald Blankenship” as Guarantor and states that “the undersigned
unconditionally guarantees to Lessor the prompt payment when due of all of Lessee’s obligations
to Lessor under [] Lease …” (Id.) Relevant to the dispute here, the Blankenship Lease also has
a “Choice of Law; Arbitration” provision which states:

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CHOICE OF LAW; ARBITRATION: Any claim or controversy, including any
contract or tort claim, between or among us, you or any Guarantor related to this
Lease, shall be determined by binding arbitration in accordance with Title 9 of the
U.S. Code and the Commercial Arbitration rules of the American Arbitration
Association.
(R.45, ¶ 23; R45-4, at 9.)
Defendant Pushpin filed a claim against Plaintiff Blankenship in Cook County Small
Claims Court on October 8, 2013 and obtained an ex parte judgment for $2,497.65 plus costs on
January 6, 2014. (R.45, ¶ 32; R.45-4, at 2; id., at 4-12, Pushpin Holdings LLC v. Blankenship,
Case No 13-M1-155481, Circuit Court of Cook County, Illinois, Verified Complt., ¶ 4.) Along
with the Blankenship Lease, Defendant Pushpin attached two additional agreements to its
complaint in the Small Claims Court related to assignment. First, Pushpin attached an
“Instrument of Assignment”, dated November 30, 2005, that lists CIT Financial USA, Inc., a
Delaware Corporation as “Seller” and GCN Holding LLC, a Delaware limited liability company
as “Buyer” and indicates “Seller does hereby sell, assign, transfer, convey and deliver unto
Buyer, its successors and assigns each and all of the US Purchased Assets (as such term is
defined in the Agreement) …”. (R.45-4, at 12 (“Instrument of Assignment”).) The Instrument
of Assignment does not contain an explicit reference to the Blankenship Lease. (Id.) Second,
Pushpin attached an “Assignment and Assumption Agreement”, dated March 1, 2010, that lists
GCN HOLDING LLC, a Delaware limited liability company, and GCN HOLDING (CANADA)
ULC, a Canadian unlimited liability company” as “Seller” and “PUSHPIN HOLDINGS LLC, a
Delaware limited liability company” as “Buyer” and indicates “Seller … does hereby transfer
and assign to Buyer, its successors and assignees, all of the Receivables as of the Closing Date”.
(R.45-4, at 10-11 (“Assignment and Assumption Agreement”).) Defendant Cohen, as President
of Pushpin Holdings, LLC, signed the Assignment and Assumption Agreement. (Id.) The

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Assignment and Assumption Agreement does not contain an explicit reference to the
Blankenship Lease. (Id.)
III.

Plaintiff Brassfield - Lease Agreement & Bill of Sale
Plaintiff Brassfield operates an auto lube shop in Arkansas. (R.45, ¶¶ 1, 35.) Brassfield

also received a credit card swiping machine from Lease Finance that broke down and after
unsuccessful efforts to have Lease Finance fix the machine, he tendered the machine to Lease
Finance—which never came to retrieve it. (Id., ¶¶ 35, 38, 39.)2 Lease Finance took payments
for the defective machine from Brassfield’s bank account. (Id., ¶ 44.)
A Non-Cancellable Lease, dated March 15, 2010, bears a purported signature for “Gary
Brassfield” as Lessee and “RPSI, Inc. d/b/a Retriever Payment Systems” as Lessor. (R.45-5,
Non-Cancellable Lease, attached to the Am. Compl. as Ex. 5, at 8 (“Brassfield Lease”)).) Like
Blankenship, Brassfield alleges that his signature on the Brassfield Lease is forged. (R.45, ¶¶ 36,
41.) The Brassfield Lease indicates the equipment manufacturer as “Omni 3730”. (R.45-5, at 8.)
The schedule of payments is listed as $89.00 per month for a term of 48 months, and a provision
authorizes automatic withdrawal of payments from a bank account. (Id.) Like the Blankenship
Lease, the Brassfield Lease contains various provisions, including a Personal Guaranty “[t]o
induce Lessor to enter into this Lease” which also bears a signature for “Gary Brassfield” as
Guarantor and states that “the undersigned unconditionally guarantees to Lessor the prompt
payment when due of all of Lessee’s obligations to Lessor under [] Lease …” (R.45-5, at 8.)

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In their allegations related to Plaintiff Brassfield’s claim, Plaintiffs’ Amended Complaint refers
to “Blankenship”, stating “Timothy George, the sales person, left a credit card swiping machine at
Blankenship’s business, but said nothing about Blankenship signing any Lease.” (R.45, ¶ 35.) The Court
reasonably infers from the surrounding allegations involving Brassfield, that Plaintiffs’ seemingly
erroneous reference includes Lease Finance leaving a credit card swiping machine at Plaintiff Brassfield’s
business.

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The Brassfield Lease also contains the same “Choice of Law; Arbitration” provision as the
Blankenship Lease which states:
CHOICE OF LAW; ARBITRATION: Any unsettled claim or controversy,
including any contract or tort claim, between or among us, you or any Guarantor
related to this Lease, shall be determined by binding arbitration in accordance under
the Commercial Arbitration Rules of American Arbitration Association, or if you
choose, the Rules of Arbitration (Binding) of the Better Business Bureau. All
statutes otherwise applicable shall apply. Judgment upon the arbitration award may
be entered in any court having jurisdiction. In event you or Guarantor Defaults,
these provisions regarding arbitration shall not apply to our right to reposess the
Equipment. This Lease is made in interstate commerce. Any arbitration shall take
place in Chicago, Illinois
(R.45, ¶ 40; R45-5, at 11.)
Defendant Lease Finance filed a claim against Plaintiff Brassfield in Cook County Small
Claims Court on September 25, 2013 and obtained an ex parte judgment for $2,753.00 plus costs
on January 28, 2014. (R.45, ¶ 41.) Along with the Brassfield Lease, Defendant Lease Finance
attached an additional agreement to its complaint in the Small Claims Court related to a
purported assignment. Specifically, Lease Finance attached a “Bill of Sale” between
“NATIONAL PROCESSING COMPANY, F/K/A RPSI, Inc., D/B/A/ RETRIEVER PAYMENT
SYSTEMS, a Nebraska Corporation” as “Seller” and “LEASE FINANCE GROUP, LLC, a
Delaware limited liability company” as “Purchaser”. (R.45-5, at 12 (“Bill of Sale”).) The Bill of
Sale refers to—but does not include a copy of—an “Assignment Agreement”, dated January 1,
2006, that provides for “the sale and assignment by Seller to Purchaser of the Contract
Documents and the related Equipment under this Bill of Sale”. (Id.) The Bill of Sale does not
contain an explicit reference to the Brassfield Lease. (Id.)
On March 19, 2014—after Lease Finance obtained the judgment against Brassfield on
January 28, 2014 for $2,753.00—Lease Finance mailed a “Pre-Judgment Notice” to Brassfield
indicating that it would attempt to obtain a judgment against Brassfield for $4,476.93,
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demanding payment of the same within ten (10) days, and threatening liens on Brassfield’s
property and bank account as well as wage garnishment proceedings. (R.45, ¶ 43; R.45-5, at 13
(“Judgment Notice Letter”); id., at 14 (“Pre-Judgment Notice Letter”).)
IV.

General Allegations
Plaintiffs allege that Defendants are engaged in a scheme—taking money out of customer

bank accounts on an unauthorized basis, and then obtaining ex parte default judgments in
violation of mandatory arbitration clauses if the customer takes action to stop the unauthorized
withdrawals. (Id., ¶ 8.) Plaintiffs allege that Pushpin and Lease Finance have filed hundreds of
small claims cases in Cook County, Illinois—filing over 150 small claims cases in the first two
weeks of July 2014 alone. (Id., ¶¶ 2, 4, 50; R.45-2, attached as Ex. 2 to Am. Compl.; R.45-3,
attached as Ex. 3 to Am. Compl.) Defendants base many of these small claims cases on forged
signatures and they initiated them in violation of mandatory arbitration clauses. (R.45, ¶¶ 5, 50.)
The amount in controversy in each case is usually less than $5,000.00—relatively small amounts
that render the cases non-economical for out of state defendants to hire lawyers to contest the
small claims suits and appear in Chicago, Illinois to file pro se court appearances. (Id., ¶ 47.)
Retriever Payment Systems is the Rep Code on the Blankenship Lease signed by Lease
Finance and the signatory of the Brassfield Lease purportedly assigned to Lease Finance. (Id.,
¶¶ 24, 37.) Plaintiffs allege that although the Retriever Payment Systems website deceptively
promises the “finest merchant services support team in the industry”, the opposite is true. (Id.,
¶ 25.) Plaintiffs rely on a website, www.cardpaymentoptions.com, and allege it further links
Retriever Payment Systems to Lease Finance, stating: “[t]here are multiple complaints online
that claim that Retriever Payment Systems signs merchants up for 48-month, non-cancellable
leases through [Lease Finance], a DBA of Northern Leasing Systems. Aside from the poor

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contract terms, Northern Leasing is notorious for poor service, deceptive advertising, and costly
equipment.” (Id., ¶ 26.)
LEGAL STANDARD
Defendants move to dismiss Plaintiffs’ Amended Complaint under Federal Rule of Civil
Procedure 12(b)(6). “A motion under Rule 12(b)(6) tests whether the complaint states a claim on
which relief may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under
Rule 12(b)(6), a plaintiff’s “[f]actual allegations must be enough to raise a right to relief above
the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Put
differently, 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). A district court’s analysis under Rule 12(b)(6) “rests on the
complaint, and [the court] construe[s] it in the light most favorable to the plaintiffs, accepting as
true all well-pleaded facts alleged and drawing all permissible inferences in their favor.” Fortres
Grand Corp. v. Warner Bros. Entm’t Inc., 763 F.3d 696, 700 (7th Cir. 2014); see also Teamsters
Local Union No. 705 v. Burlington N. Santa Fe, LLC, 741 F.3d 819, 823 (7th Cir. 2014); Alam v.
Miller Brewing Co., 709 F.3d 662, 665–66 (7th Cir. 2013). “[T]he complaint must supply
‘enough fact[s] to raise a reasonable expectation that discovery will reveal evidence’ supporting
the plaintiff’s allegations.” Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935
(7th Cir. 2012) (quoting Twombly, 550 U.S. at 556). “A claim must be plausible rather than
merely conceivable or speculative, meaning that the plaintiff must include ‘enough details about
the subject-matter of the case to present a story that holds together.’” Carlson v. CSX Transp.,
Inc., 758 F.3d 819, 826-27 (7th Cir. 2014) (citations omitted).

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II.

Federal Rules of Civil Procedure 8(a) and 9(b)
Under Rule 8(a)(2), a complaint must include “a short and plain statement of the claim

showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain
statement under Rule 8(a)(2) must “give the defendant fair notice of what the claim is and the
grounds upon which it rests.” Twombly, 550 U.S. at 555 (citation omitted). “[T]he complaint
must supply ‘enough fact[s] to raise a reasonable expectation that discovery will reveal evidence’
supporting the plaintiff’s allegations.” Indep. Trust Corp., 665 F.3d at 935 (quoting Twombly,
550 U.S. at 556). “A claim must be plausible rather than merely conceivable or speculative,
meaning that the plaintiff must include ‘enough details about the subject-matter of the case to
present a story that holds together.’” Carlson, 758 F.3d at 826-27 (citations omitted). A
plaintiff’s pleading burden “should be commensurate with the amount of information available”
to him. Olson v. Champaign Cnty., Ill., 784 F.3d 1093, 1100 (7th Cir. 2015).
Under Rule 9(b), a party pleading fraud must “state with particularity the circumstances
constituting fraud.” Fed. R. Civ. P. 9(b). Moreover, in pleading fraud in federal court, Rule 9(b)
imposes a higher pleading standard than that required under Rule 8(a)(2). See Bank of America,
N.A. v. Knight, 725 F.3d 815, 818 (7th Cir. 2013); Pirelli Armstrong Tire Corp. Retiree Med.
Benefits Trust v. Walgreen Co., 631 F.3d 436, 446 (7th Cir. 2011). Thus, “[t]he requirement of
pleading fraud with particularity includes pleading facts that make the allegation of fraud
plausible.” U.S. ex rel. Grenadyor v. Ukrainian Vill. Pharmacy, Inc., 772 F.3d 1102, 1106 (7th
Cir. 2014). Specifically, Rule 9(b) requires a pleading to state with particularity: “the identity of
the person making the misrepresentation, the time, place, and content of the misrepresentation,
and the method by which the misrepresentation was communicated to the plaintiff.” Id.

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(citations omitted). “[T]he particularity requirement of Rule 9(b) is designed to discourage a
‘sue first, ask questions later’ philosophy.” Pirelli, 631 F.3d at 441 (citation omitted).
ANALYSIS
I.

Jurisdiction
Although not raised by the parties, “Federal Courts are obligated to inquire into the

existence of jurisdiction sua sponte.” Evergreen Square of Cudahy v. Wis. Hous. & Econ. Dev.
Auth., 776 F.3d 463, 465 (7th Cir. 2015). The Court has original jurisdiction over this action
pursuant to the Class Action Fairness Act (“CAFA”) which states “district courts shall have
original jurisdiction of any civil action in which the matter in controversy exceeds the sum or
value of $5,000,000 exclusive of interest and costs, and is a class action in which—(A) any
member of a class of plaintiffs is a citizen of a State different from any defendant”. See 28
U.S.C. § 1332(d)(2)(A). “Another provision of the [CAFA] forbids a district court from
exercising jurisdiction if the plaintiff class numbers less than one hundred.” Jackson v. Payday
Fin., LLC, 764 F.3d 765, 772 (citing 28 U.S.C. § 1332(d)(5)).
Plaintiff Blankenship is a citizen of Alabama. (See R.1, ¶¶ 2, 23;3 R.45, ¶ 9.) Plaintiff
Brassfield is a citizen of Arkansas. (See R.1, ¶¶ 3, 23; R.45, ¶ 10.) Defendant Cohen is a citizen
of New York. (See R.1 ¶ 23; R.45, ¶ 14.) Regardless of the citizenship of Defendants Pushpin
and Lease Finance—both of which are limited liability companies and share citizenship with
their respective members—the parties have minimal diversity. See Eubank v. Pella Corp., 753

3

The Court considers the Notice of Removal and original complaint attached to it in order to
determine whether this case is properly before the Court. See Apex Digital, Inc. v. Sears, Roebuck & Co.,
572 F.3d 440, 444 (7th Cir. 2009) (explaining that district courts may consider evidence outside the
pleadings to make the necessary factual determinations to resolve their own jurisdiction); see also Hay v.
Ind. State Bd. of Tax Comm’rs, 312 F.3d 876, 879 (7th Cir. 2002) (“[T]he district court had not only the
right, but the duty to look beyond the allegations of the complaint to determine that it had jurisdiction to
hear the [plaintiff’s] claim”).

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F.3d 718, 721 (7th Cir. 2014) (finding federal jurisdiction existed under the CAFA’s grant due to
“at least minimal (as distinct from complete) diversity of citizenship”); IP of A West 86th Street
1, LLC v. Morgan Stanley Mortg.. Capital Holdings, LLC, 686 F.3d 361, 363 (7th Cir. 2012)
(“[A] limited liability company shares the citizenship of its members …”). Furthermore, the
putative class members allegedly exceed 100 members and the alleged amount in controversy
exceeds $5,000,000.4 (R.1, ¶¶ 24, 25, 27; R.45, ¶¶ 2, 4, 5, 16.) See Dart Cherokee Basin
Operating Co., LLC v. Owens, ___ U.S. ___, 135 S.Ct. 547, 554, 190 L.Ed.2d 495 (2014) (“a
defendant’s notice of removal need include only a plausible allegation that the amount in
controversy exceeds the jurisdictional threshold”).
II.

ICFA Count (Count I)
The ICFA provides a remedy for “unfair methods of competition and unfair or deceptive

acts or practices” in specified “commercial transactions.” Greenberger v. GEICO Gen. Ins. Co.,
631 F.3d 392, 399 (7th Cir. 2011) (quoting 815 ILCS 505/2). Specifically, the ICFA, 815 ILCS
505/1, et seq., prohibits:
…unfair methods of competition and unfair or deceptive acts or practices, including
but not limited to the use or employment of any deception, fraud, false pretense,
false promise, misrepresentation, or the concealment, suppression, or omission of
any material fact … in the conduct of trade or commerce … whether any person
has in fact been misled, deceived or damages thereby.
815 ILCS 505/2. In addition, Section 505/10a provides that “[a]ny person who suffers actual
damages as a result of a violation of this Act, committed by any other person may bring an action
against such person.” 815 ILCS 505/10a.

4

Plaintiffs do not dispute Defendants’ allegations of citizenship, putative class member number,
or amount in controversy in the Notice of Removal (R.1).

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To state a claim under the ICFA, Plaintiffs must allege five elements: (1) a deceptive act
or unfair practice occurred, (2) the defendant intended for plaintiff to rely on the deception, (3)
the deception occurred in the course of conduct involving trade or commerce, (4) the plaintiff
sustained actual damages, and (5) the damages were proximately caused by the defendant’s
deception. See Armbrister v. Pushpin Holdings, LLC, 896 F.Supp.2d 746, 754 (N.D. Ill. 2012)
(citing Hardaway v. CIT Group/Consumer Fin. Inc., 836 F.Supp.2d 677, 685 (N.D. Ill. 2011);
Martis v. Pekin Mem’l Hosp. Inc., 395 Ill. App. 3d 943, 334 Ill. Dec. 772, 917 N.E.2d 598, 603
(Ill. App. Ct. 2009). The pleading standard applicable to allegations of deceptive practices in
violation of the ICFA requires sufficient particularity under Rule 9(b) because such allegations
sound in fraud, whereas allegations of unfair practices need only meet the notice pleading
standards of Rule 8(a). See Fed. R. Civ. P. 8(a); Fed. R. Civ. P. 9(b); Windy City Metal
Fabricators & Supply, Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 670 (7th Cir. 2008);
McKenney-Becker v. Safeguard Properties, LLC, et al., No. 14-cv-4514, 2015 WL 175020, at *9
(N.D. Ill. Jan. 13, 2015).
Defendants argue several grounds for dismissal of Plaintiffs’ ICFA claim. First,
Defendants argue that Plaintiffs’ ICFA claim is implausible, does not meet the heightened
pleading standards required under Rule 9(b), and is improperly asserted against them.
Defendants further argue that Plaintiffs have failed to sufficiently state a claim for relief under
the ICFA because Defendants committed no deceptive or unfair acts and because Plaintiffs failed
to allege reliance, are not “consumers”, do not assert allegations that involve “trade” or
“commerce”, and fail to allege actual damages that Defendants proximately caused. The Court
addresses each argument in turn.

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A.

Deceptive and Unfair Practices

Plaintiffs allege Defendants engaged in both deceptive and unfair practices. (R.45,
¶ 61-62.) Specifically, Plaintiffs allege that Defendants’ acts of filing suits against persons
whose signatures were forged on Non-Cancellable Leases are unfair and deceptive. (Id., ¶ 61.)
Plaintiffs allege that “Retriever Payments Systems” caused [Blankenship’s] signature to be
forged” and that someone by the name of “Timothy George” left a credit card swiping machine
at Brassfield’s business and that his Lease Agreement was a forgery. (R.45, ¶¶ 20, 35, 36.)
To determine whether a practice is unfair under the ICFA, the Court considers whether
the practice offends public policy, whether it is immoral, unethical, oppressive, or unscrupulous,
and whether it causes substantial injury to consumers. See In re Michaels Stores Pin Pad Litig.,
830 F.Supp.2d at 525 (citing Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403, 266 Ill.
Dec. 879, 775 N.E.2d 951, 961 (2002)). A plaintiff does not need to satisfy all three criteria to
support a finding of unfairness. Id. 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. A practice is
deceptive if it “creates a likelihood of deception or has the capacity to deceive.” Aliano v.
Louisville Distilling Co., LLC, No. 15 C 00794, 2015 WL 4429202, at *5 (N.D. Ill. July 20,
2015) (citing Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 938 (7th Cir. 2001). Plaintiffs must
allege facts suggesting a deceptive practice with particularity. See id. To satisfy the heightened
pleading standard of Rule 9(b), “the circumstances [of the alleged misrepresentation] must be
pleaded in detail. The who, what, when, where, and how: the first paragraph of any newspaper
story.” O'Brien v. Landers, No. 1:10-CV-02765, 2011 WL 221865, at *4 (N.D. Ill. Jan. 24,
2011) (citing DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990)).

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Defendants contend that Plaintiffs’ allegations of deceptive and unfair acts are limited to
Defendants’ actions in filing suits in small claims courts. This narrow reading, however, ignores
other facts alleged as deceptive and unfair, e.g., the forged leases, misleading collection demand
letters, faulty assignments that do not refer to either the Blankenship Lease or the Brassfield
Lease, and filing small claims court actions premised on the forged leases. Plaintiffs allege that
Defendants are engaged in a scheme—making unauthorized withdrawals from customer bank
accounts and then obtaining ex parte default judgments in violation of mandatory arbitration
clauses if the customer stops the unauthorized withdrawals. (Id. ¶ 8.) Regarding the class
allegations, Plaintiffs assert that “many of the hundreds of cases filed by Pushpin and Lease
Finance are based on forged signatures and initiated in violation of mandatory arbitration
clauses.” (Id., ¶ 5.) Specifically, Plaintiff Blankenship alleges that the credit card machine was
brought to his business on a day when he was absent and Blankenship first saw a lease,
purportedly bearing his signature, when Lease Finance started sending collection demand letters
to him and making collection demands. (R.45, ¶ 20.) Similarly, Plaintiff Brassfield alleges that
the credit card machine was left at his business without any discussion of a lease. (Id., ¶ 35.)
Brassfield further alleges that no one ever told him about a lease or asked him to sign one and he
only learned about his signature on the lease when Lease Finance started making collection
demands. (Id., ¶ 36.) In addition, Plaintiffs allege that after the small claims had already entered
judgment against Brassfield, Defendant Lease Finance sent misleading letters demanding a
payment totaling $2,000 more than the default judgment. (See id., ¶ 43; R.45-5, at 13-14.)
Plaintiff Blankenship further alleges that the deceptive actions took place in 2002, the NonCancellable Lease was dated in 2002, that over a period of seven to eight months Defendants
automatically deducted money from his account and did not process his credit card transactions,

15

and that Defendants sent misleading collection demands. (See e.g., id., ¶¶ 19, 20, 27-29.)
Plaintiff Brassfield alleges that the deceptive actions took place related to a Non-Cancellable
Lease dated March 2010 and that over a period of time Defendants automatically deducted
money from his account for a defective machine and sent deceptive and misleading collection
notices in an attempt to collect on an alleged debt, even after entry of default judgment. (See
e.g., id., ¶¶ 35, 38, 39, 42-44.) These allegations identify the misleading conduct, who conducted
it, when it occurred, and how Plaintiffs were deceived.
Plaintiffs further allege that Defendant Cohen owns, controls and operates numerous shell
entities—including Pushpin and Lease Finance—which sell equipment leases, buy debts, and
collect debts acquired through purchase of leases. (R.45, ¶ 14.) Indeed, Defendant Cohen
signed—as President of Pushpin Holdings, LLC—Blankenship’s Assignment and Assumption
Agreement and Defendant Lease Finance signed Brassfield’s Bill of Sale. (See id., ¶ 15; R.45-4,
at 10-11; R.45-5, at 12.) These assignments form a basis for Plaintiffs’ allegations that
Defendants’ misrepresentations deceived Plaintiffs as part of the scheme to collect on Plaintiffs’
debt allegedly owed under the Non-Cancellable Leases. Practices surrounding debt collection
can form the basis for an ICFA claim, if the plaintiff disputes the underlying debt or the
defendants’ right to collect on the debt. See Maldanado v. Freedman Anselmo Lindberg, LLC,
No. 14 C 10176, 2015 WL 2330213, at *4 (N.D. Ill. May 14, 2015). Indeed, “debt collection
practices are embraced by the [ICFA]”. See Johnson v. Pushpin Holdings LLC, No. 13 C 7468,
2015 WL 1345768, at * 9 (N.D. Ill. Mar. 23, 2015) (citing People ex rel. Daley v. Datacom Sys.
Corp, 146 Ill. 2d 1, 31, 165 Ill. Dec. 655, 668, 585 N.E.2d 51, 64 (1991) (“Daley”)); see also
Maldonado, 2015 WL 2330213, at *4 (citing Grant–Hall v. Cavalry Portfolio Servs., LLC, 856

16

F.Supp.2d 929, 945 (N.D. Ill. 2012)) (“debt collectors may violate the ICFA if they fabricate the
debt or lie about their right to collect on a debt”).
Based on Plaintiffs’ allegations of forgery on leases they only first saw when they
received collection notices, letters misrepresenting judgments owed under the Non-Cancellable
Leases, assertion of rights to collect on a debt based on faulty assignments, and Defendants’
similar conduct in hundreds of cases filed in Illinois involving other business owners, Plaintiffs
have sufficiently alleged a claim of deceptive practices and unfair practices under the ICFA. See
e.g., Grant-Hall v. Cavalry Portfolio Servs., LLC, 856 F.Supp.2d 929, 942 (N.D. Ill. 2012)
(finding a deceptive practices claim adequately pled where the plaintiff alleged the defendant
“[m]isrepresent[ed] to consumers and courts that it had the right to file suit” and defendants
intended the plaintiff to rely on that deceptive practice); see Jackson v. Payday Fin. LLC, 79
F.Supp.3d 779, 788 (N.D. Ill. 2015) (finding an unfair practices claim adequately pled where the
plaintiff alleged a practice of contracting for and collecting finance charges, interest, and fees,
from Illinois residents, in excess of the amounts permitted by law).
B.

“Reliance”

Defendants assert that Plaintiffs fail to plead that Defendants intended them to rely on
any deceptive or unfair practice. The Court disagrees. Plaintiffs allege that Defendants deceived
them by producing the Non-Cancellable Leases at a time when they were ready to collect on
their alleged debt. Plaintiffs do not allege that they had knowledge of the Non-Cancellable
Leases prior to that time and Defendants concealment of the leases from Plaintiffs constitutes
concealment of information upon which it can be expected that Plaintiffs would rely in deciding
to enter into an agreement for leasing equipment with a lessor. See Lateef v. Pharmavite LLC,
No. 12 C 5611, 2013 WL 1499029, at *3 (N.D. Ill. Apr. 10, 2013) (citing Wigod v. Wells Fargo

17

Bank, N.A., 673 F.3d 547, 575 n. 13 (7th Cir. 2012) (collecting cases)) (“[o]missions are also
actionable under the ICFA if they are intended to induce the plaintiff’s reliance”); see also
Haymer v. Countrywide Bank, FSB, 2011 WL 2790172, at *4 (N.D. Ill. July 15, 2011) (finding
the plaintiffs allegations sufficient to show reliance under the ICFA where the defendants were
shown to have omitted or concealed a material fact in the loan application process); Capiccioni v.
Brennan Naperville, Inc., 339 Ill. App. 3d 927, 274 Ill. Dec. 461, 791 N.E.2d 553, 558 (Ill. App.
Ct. 2003) (“A defendant need not have intended to deceive the plaintiff; innocent
misrepresentations or omissions intended to induce the plaintiff's reliance are actionable under
[the ICFA]”). Indeed, as alleged, Defendants intended Plaintiffs to rely on the absence of any
formal agreement to induce them to agree to continue using the machines—feeling that they
were under no obligations. Plaintiffs suffered actual damages (see infra,Analysis II.E) from
unauthorized withdrawals and default judgments due to Defendants’ alleged deceptive acts.
These allegations sufficiently plead reliance under the ICFA.
C.

“Trade” or “Commerce”

The ICFA defines “trade” and “commerce” to mean “the advertising, offering for sale,
sale, or distribution of any services and any property, tangible or intangible, real, personal or
mixed, and any other article, commodity, or thing of value wherever situated, and shall include
any trade or commerce directly or indirectly affecting the people of [Illinois].” 815 ILCS
505/1(f). Additionally, the ICFA provides that it “shall be liberally construed to effect the
purposes thereof.” 815 ILCS 505/11a.
Defendants argue that Plaintiffs fail to allege that Defendants advertise or sell any
product or service. Defendants cite to Daley, (see supra, Analysis, II.A)—in which the Illinois
Supreme Court explicitly states “debt collection practices are embraced by the [ICFA]”—and

18

attempt to distinguish their actions with the simple assertion that “Pushpin and LFG LLC do not
collect debt for anyone. No one has hired them to do so.” (R.53, at 12; see also R.64, Defs’
Reply, at 10.) See Johnson, 2015 WL 1345768, at * 9 (citing Daley, 146 Ill. 2d at 31). Taking
the facts in the light most favorable to Plaintiffs, however, Pushpin “has no other business other
than debt collection” and Pushpin and Lease Finance are shell entities for Defendant Cohen who
“buys debts, and collect[s] debts acquired through purchase of leases.” (R.45, ¶¶ 11, 14.)
Accordingly, Plaintiffs have sufficiently alleged “trade” or “commerce” under the ICFA.
D.

“Consumers”

A “consumer” under the ICFA is defined as “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); see also McKenney-Becker,
2015 WL 170520, at *8. Specifically, Defendants contend that the dispute concerns leases, not
the purchase or contract to purchase anything, and because Plaintiffs are businesspeople who
contest the authenticity of their signatures on the Non-Cancellable Leases, they cannot also argue
they are purchasers of merchandise. Plaintiffs do not directly assert that they are not consumers
under the ICFA, but rely on cases where non-consumers were found to have standing under the
ICFA because their claims involved trade or commerce and implicated consumer protection
concerns. Indeed, a right of action under the ICFA is not limited to “consumers” as “[a]ny
person who suffers actual damage as a result of a violation of [the ICFA] committed by another
person may bring an action against such person.” 815 ILCS 505/10a(a); Williams Elecs. Games,
Inc. v. Garrity, 366 F.3d 569, 579 (7th Cir. 2004) (noting that section 10(a) of the ICFA “does
not protect just consumers, but any person”); see also 815 ILCS 505/1 et seq., titled as “[a]n Act
to protect consumers and borrowers and businessmen against fraud, unfair methods of

19

competition and unfair or deceptive acts”). “In the context of an ICFA claim based upon a
breach of contract between two businesses, courts have rejected this argument”—that a nonconsumer is precluded from alleging a violation of the ICFA. Frazier v. U.S. Bank Nat’l Ass’n,
11 C 8875, 2013 WL 1385612, at *3 (N.D. Ill. Apr. 4, 2013) (citations omitted). Instead, in
these circumstances, a non-consumer plaintiff may prevail by alleging a consumer nexus with the
alleged conduct. Id. To determine whether Plaintiffs have met the consumer nexus test, the
Court looks to whether Plaintiffs have pled: (1) that [their] actions were akin to a consumer’s
actions to establish a link between [them] and consumers; (2) how defendant’s representations …
concerned consumers other than Plaintiff; (3) how defendant’s particular acts involved consumer
protection concerns; and (4) how the requested relief would serve the interests of consumers.
See Thrasher-Lyon v. Illinois Farmers Ins. Co. 861 F.Supp.2d 898, 912 (N.D. Ill. 2012)
(citations omitted); see also Brody v. Finch Univ. of Health Sciences/The Chicago Med. Sch.,
298 Ill. App. 3d 146, 232 Ill. Dec. 419, 698 N.E.2d 257, 268 (1998). “Put another way, a nonconsumer plaintiff must allege “conduct [that] involves trade practices addressed to the market
generally or otherwise implicates consumer protection concerns.” See Roppo v. Travelers Cos.,
___ F.Supp.3d ___, 2015 WL 1777469, at *8 (N.D. Ill. Apr. 16, 2015) (citing Downers Grove
Volkswagen, Inc. v. Wigglesworth Imports, Inc., 190 Ill. App. 3d 524, 137 Ill. Dec. 409, 546
N.E.2d 33, 41 (1989)).
Here, Plaintiffs allege a series of “Common Allegations” that reference themselves as
typical victims of Defendants’ practices—“sole proprietors or persons operating small
businesses”. (R.45, ¶ 45.) Plaintiffs further allege that the small claims suits filed by Defendants
in Illinois involve proprietors or small business owners—located throughout the country—who
were similarly involved with Non-Cancellable Leases, alleged forgery, and default judgments.

20

(See e.g., id., ¶¶ 5, 8, 12, 45-47, 49, 50.) In addition, Plaintiffs provide a link between Retriever
Payment Systems—the company named on the Blankenship Lease and the Brassfield Lease—
and Lease Finance, alleging that Retriever Payment Systems “deceptively promises the ‘finest
merchant services support team in the industry’” and that “[t]here are multiple complaints online
that claim that Retriever Payment Systems signs merchants up for 48-month, non-cancellable
leases through Lease Finance Group …”. (Id., ¶¶ 25, 26.) Viewing these allegations in the light
most favorable to Plaintiffs, Plaintiffs have sufficiently alleged a consumer nexus to survive a
motion to dismiss. See Frazier, 2013 WL 1385612, at *4 (finding the plaintiffs allegations that
the defendants had an “established” practice of tracking loans and unlawfully ordering property
removal services during periods when the plaintiffs and other loan borrowers’ had a right to
remain in their home sufficient to plead a “consumer nexus” under the ICFA); CustomGuide v.
CareerBuilder, LLC, 813 F.Supp.2d 990, 1001 (N.D. Ill. 2011) (allegations that the defendant
“intended that general consumers and the general public rely on its unfair, unlawful and
deceptive business practices” sufficient). Accordingly, Plaintiffs have sufficiently pled a
“consumer nexus” as non-consumers under the ICFA. See e.g., Bank One Milwaukee v. Sanchez,
336 Ill. App. 3d 319, 324, 270 Ill. Dec. 642, 646-47, 783 N.E.2d 217, 221-22 (Ill. App. Ct. 2003)
(holding that there was a consumer nexus when the plaintiff alleged that “a merchant bound her
to a commercial transaction through a fraudulent act”).
E.

Actual Damages

Only a person who suffers actual damage may bring an action under the ICFA. 815 ILCS
505/10a(a). The plaintiff must allege a purely economic injury, measurable by the plaintiff’s
loss. See In re Michaels Stores Pin Pad Litig., 830 F.Supp.2d 518, 526 (N.D. Ill. 2011) (citing
Morris v. Harvey Cycle & Camper, Inc., 392 Ill. App. 3d 399, 331 Ill. Dec. 819, 911 N.E.2d

21

1049, 1053 (Ill. App. Ct. 2009) and Mulligan v. QVC, Inc., 382 Ill. App. 3d 620, 321 Ill. Dec.
257, 888 N.E.2d 1190, 1197–98 (Ill. App. Ct. 2008) (“If the plaintiff is not materially harmed by
the defendant’s conduct, however flagrant it may have been, there may be no recovery”)).
Plaintiffs maintain that they suffered actual damages of various forms. Both Plaintiffs
Blankenship and Brassfield argue that due to the default judgment entered against them, they
incurred economic harm. (R.45, ¶¶ 3, 23, 41.) Plaintiff Blankenship further alleges that the
machine provided by Defendants did not work properly in that some transactions were not
processed at all and that for other transactions, that were processed, Lessor did not directly
deposit the money into his bank account within 48 hours—both resulting in a loss of income over
a period of time. (Id., ¶¶ 27, 28.) In addition, Plaintiff Blankenship alleges that Defendants
made multiple unauthorized monthly withdrawals for $39.95 for a defective machine and made
an additional $500 withdrawal after Blankenship turned over his machine to Lease Finance. (Id.,
¶ 31.) Plaintiff Brassfield alleges he was “damaged by having payments taken from his bank
account for a defective machine and by having an ex parte judgment entered against him which
will adversely affect his consumer credit report.” (Id., ¶ 44.) Defendants argue that Plaintiffs’
allegations are insufficient because “Plaintiffs do not allege that they have satisfied the
judgments entered against them or that they have incurred actual damages as a result of alleged
misleading letters.” (R.53, at 13.) Defendants further assert that any claims of adverse affects on
their credit reports are “too speculative” to warrant consideration. (Id.) Taking the facts alleged
in the light most favorable to Plaintiffs, however, the allegations suffice to plead actual damage
due to the unprocessed transactions and unauthorized withdrawals, in addition to the fact that the
Court can reasonably infer that—regardless of any alleged future harm from their credit
reports—Plaintiffs suffered economic loss and have not been reimbursed for any of the loss

22

related to the claims asserted here. Accordingly, Plaintiffs sufficiently allege that they suffered
actual damages in the form of economic loss from unauthorized withdrawals and unlawful
default judgments.
F.

Proximate Cause

To prevail under the ICFA, “a plaintiff must demonstrate that the defendant’s conduct is
the proximate cause of the injury.” Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010)
(citing Oliveira v. Amoco Oil Co., 201 Ill.2d 134, 267 Ill. Dec. 14, 776 N.E.2d 151, 160 (2002)).
“Unlike an action brought by the Attorney General under [the ICFA], which does not require that
‘any person has in fact been misled, deceived or damaged[,]’ ... a private cause of action brought
under [ICFA] requires proof of ‘actual damage’ ... [and] proof that the damage occurred ‘as a
result of’ the deceptive act or practice.” Id. (citations omitted)). Plaintiffs must, therefore, set
forth sufficient allegations to find it plausible that “but for” Defendants’ unfair and deceptive
acts, Plaintiffs would not have been damaged, i.e., would not have incurred economic harm from
enforcement of the unlawful Non-Cancellable Leases.
Defendants argue that because Plaintiffs do not allege that any of Defendants forged the
Non-Cancellable Leases or Personal Guaranties, Plaintiffs cannot establish proximate cause for
any alleged damages. Defendants’ argument fails, however, because as discussed above,
Plaintiffs do not so narrowly focus their allegations under the ICFA on the act of forgery, but
rather include the act of forgery, along with the later provision of a forged lease, the filing of an
unlawful small claims action based on a faulty assignment, and misrepresentations in letters
mailed to demand collection of an unlawful debt. Plaintiffs have also alleged that Defendants
were involved at each of these later steps. In particular, Plaintiffs have alleged that (1)
Defendant Lease Finance signed as Lessor on the Blankenship Lease (R.45-4, at 8); (2)

23

Defendant Cohen signed as “President” of Pushpin and “Buyer” on the Assignment and
Assumption Agreement purportedly related to the Blankenship Lease (id., at 11), (3) Pushpin
filed a small claims court action against Blankenship resulting in a default judgment (id., at 2-7);
(4) Lease Finance—Defendant Cohen’s alleged alter ego—signed as “Purchaser” on the Bill of
Sale purportedly related to the Brassfield Lease (id., at 12); (5) Lease Finance mailed Plaintiff
Brassfield a Pre-Judgment Notice Letter on March 19, 2014 and a Judgment Notice Letter on
April 24, 2014 (id., at 13-14); and (6) Lease Finance filed a small claims court action against
Brassfield resulting in a default judgment (id., at 2-7). These allegations specific to Defendants
and linked to the default judgments and actions related to enforcement of the Non-Cancellable
Leases sufficiently plead proximate cause for Plaintiffs’ alleged damages under the ICFA.
In addition, the Illinois Supreme Court has rejected the argument that “deception must
always be direct between the defendant and the plaintiff to satisfy the requirement of proximate
cause under the [ICFA]” in the context of an ICFA claim based upon deceptive advertising. See
Shannon v. Boise Cascade Corp., 208 Ill.2d 517, 525–26, 281 Ill. Dec. 845, 805 N.E.2d 213, 218
(2004) (noting that “traditional privity [is] not a requirement in fraud actions” and that it is
sufficient that “the statements by the defendant be made with the intention that it reach the
plaintiff and influence his action and that it does reach him and that he does rely upon it”)
(citations omitted). Plaintiffs’ allegations provide connections between Defendants and each
stage of the alleged deceptive conduct (1) from the first interactions with Retriever Payment
Systems—alleged to be connected with Defendant Lease Finance (R.45, ¶¶ 25, 26); (2) from the
alleged assignment of the Non-Cancellable Leases by Pushpin, Cohen and Lease Finance (id.,
¶ 15; R.45-4, at 12; R.45-5, at 12); and (3) through to filing of the lawsuits in small claims court
by Pushpin and Lease Finance (R.45-4; R.45-5). These alleged actions sufficiently plead direct

24

and indirect deceptive acts by Defendants linked to Plaintiffs’ actual damages. Accordingly,
Plaintiffs have sufficiently alleged that Defendants deceptive and unfair conduct was the
proximate cause of their actual damages.
III.

Breach of Contract Claim (Count II)
Under Illinois law, a breach of contract claim must allege four elements: (1) the existence

of a valid and enforceable contract; (2) substantial performance by the plaintiff; (3) a breach by
the defendant; and (4) resultant damages.” Goldberg v. 401 N. Wabash Venture LLC, No. 09 C
6455, 2010 WL 1655089, at *11 (N.D. Ill. Apr. 22, 2010). Defendants argue that Plaintiffs have
failed to allege each of the required elements for their breach of contract claim.
A.

The “Valid and Enforceable Contract”

First, Defendants assert that the Court should dismiss Plaintiffs breach of contract claim
as to Defendant Cohen because the Amended Complaint does not contain any allegations related
to a contract with Cohen. Plaintiffs fail to identify factual allegations in the Amended Complaint
to support the elements in a breach of contract claim, but rather assert that the mandatory
arbitration clause in the Lease Agreements applies and the Court should liberally construe it.
Plaintiffs do not identify a factual basis for the validity and enforceability of the Lease
Agreements. Indeed, Plaintiffs’ Amended Complaint is filled with allegations that the Lease
Agreements were forged and entered into without the authorization or knowledge of Plaintiffs
Blankenship and Brassfield. (See e.g., R.45, ¶ 20 (“Blankenship never signed the Lease and did
not even see it until Lease Finance started sending collection letters to him and making collection
demands”); id., ¶ 23 (“The Lease is not enforceable against Blankenship due to the forged
signature”); id., ¶ 36 (“Brassfield’s signature was forged on the Non-Cancellable Lease and the
accompanying Guarantee”); id., ¶ 41 (“The Lease is not enforceable against Brassfield because

25

Brassfield’s signature is forged”)). Although Plaintiffs may plead a breach of contract claim in
the alternative, Plaintiffs do not provide allegations for such a claim. Accordingly, Plaintiffs
have failed to sufficiently allege the Lease Agreements are valid and enforceable contracts in
order to support a breach of contract claim, and the Court dismisses Count II without prejudice.
B.

Substantial Performance

Second, Defendants assert that Plaintiffs fail to allege substantial performance under the
applicable Lease Agreements.5 A “party cannot sue for breach of contract without alleging and
proving that he has himself substantially complied with all the material terms of the agreement.”
Costello v. Grundon, 651 F.3d 614, 640 (7th Cir. 2011) (citation omitted). Again, Plaintiffs
ignore Defendants arguments regarding substantial performance. Plaintiffs do not point the
Court to allegations that support Plaintiffs’ obligations and responsibilities under the Lease
Agreements. Nor do they provide factual allegations that demonstrate Plaintiffs’ actions taken in
line with their obligations under the Lease Agreements, aside from the fact that Plaintiffs each
made initial monthly payments to Defendants—at least until the credit card machines stopped
working properly. (See R.45, ¶¶ 27-30, 38, 39, 44.) Plaintiffs failed to include any allegations
regarding substantial performance, thus they have failed to sufficiently plead a claim for breach
of contract.
C.

Defendants’ Breach

Third, Defendants assert that Plaintiffs have failed to allege that Defendants breached the
Lease Agreements. According to Plaintiffs, Defendants failed to honor the mandatory arbitration

5

Defendants also contend that Plaintiffs did not comply with their obligations as Guarantors
under the Personal Guaranties. This is a factual issue, however, and thus inappropriate for resolution at
the pleading stage. See Cushing v. City of Chicago, 3 F.3d 1156, 1163 (7th Cir. 1993) (holding that
determinations that necessarily involve issues of fact are “inappropriate for resolution in a motion to
dismiss the complaint under Fed. R. Civ. P. 12(b)(6)”).

26

clause resulting in a breach of the contract. Defendants contend that Plaintiffs’ focus on the
mandatory arbitration clause is irrelevant to the dispute here because the Lease Agreements and
the Personal Guaranties are “two separate and distinct contractual agreements” and the
“operative agreement in the state court actions is the Personal Guaranty and the Personal
Guaranty does not contain an arbitration clause.” (R.53, at 15.) Plaintiffs have alleged that
Defendants breached the Lease Agreement and to the extent Defendants argue they are not
parties to those agreements, these are factual issues to be resolved at a later stage. For the
purposes of this motion to dismiss, Plaintiffs have sufficiently alleged breach.
D.

Damages

Lastly, Defendants assert that even if they breached the Lease Agreements due to failure
to engage in mandatory arbitration, Plaintiffs have still failed to allege damages. In particular,
Defendants contend that Plaintiffs failed to allege they satisfied state court judgments and that
any additional damages, e.g., deductions of money from Plaintiffs’ checking accounts, do not
stem from Defendants’ alleged breach of a failure to seek arbitration. Plaintiffs simply respond
that the “relief sought by Plaintiffs includes a declaration that the disputes are subject to
mandatory arbitration”. (R.63, Pl. Opp’n, at 15 (citing R.45, at 14).) Taking the facts alleged in
the light most favorable to Plaintiffs, however, the Court can reasonably infer that Plaintiffs
satisfied the default judgments. Accordingly, Plaintiffs have sufficiently pled damages
stemming from Defendants’ alleged breach of the Lease Agreements based on their failure to
engage in mandatory arbitration and instead filing of suits in small claims court.

27

IV.

Defendants’ Request to Strike Class Allegations
Defendants ask the Court to strike Plaintiffs’ class allegations pursuant to Rule 23

because the pleadings are facially defective and establish that a class action cannot be
maintained. (R.53, at 16.)
A.

Legal Standard

Rule 23(c)(1)(A) directs that “[a]t an early practicable time after a person sues or is sued
as a class representative, the court must determine by order whether to certify the action as a
class action.” Fed. R. Civ. P. 23(c)(1)(A). Although “[m]ost often it will not be practicable’ for
the court to do that at the pleadings stage, … sometimes the complaint will make it clear that
class certification is inappropriate.” Hill v. Wells Fargo Bank, N.A., 946 F.Supp.2d 817, 829
(N.D. Ill. 2013) (citing General Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72
L.Ed.2d 740 (1982)); see also Kasalo v. Harris & Harris, Ltd., 656 F.3d 557, 563 (7th Cir. 2011)
(“Consistent with [Rule 23(c)(1)(A)’s] language, a court may deny class certification even before
the plaintiff files a motion requesting certification.”) In those situations, a court may determine
that class certification is inappropriate before the parties conduct class discovery. See Bohn v.
Voiron, Inc., No. 11 C 8704, 2013 WL 3975126, at *5 (N.D. Ill. Aug. 1, 2013).
If the plaintiff’s class allegations are facially and inherently deficient, for example, “a
motion to strike class allegations … can be an appropriate device to determine whether [the] case
will proceed as a class action.” See Bohn, 2013 WL 3975126, at *5; Wolfkiel v. Intersections
Ins. Servs. Inc., No. 10 C 4410, 2010 WL 4962838, at *1 (N.D. Ill. Nov. 30, 2010); Muehlbauer
v. General Motors Corp., 431 F.Supp.2d 847, 870 (N.D. Ill. 2006). If, on the other hand, the
dispute concerning class certification is factual in nature and “discovery is needed to determine
whether a class should be certified,” a motion to strike class allegations at the pleading stage is

28

premature. See Wright, 2010 WL 4962838, at *1; Santiago v. RadioShack Corp., No 11 C 3508,
2012 WL 934524, at *4 (N.D. Ill. Feb. 10, 2012); see also Boatwright v. Walgreen Co., No. 10 C
3902, 2011 WL 843898, at *2 (N.D. Ill. Mar. 4, 2011) (“Because a class determination decision
generally involves considerations that are enmeshed in the factual and legal issues comprising
the plaintiff’s cause of action, … a decision denying class status by striking class allegations at
the pleading stage is inappropriate.”)
To obtain class certification under Rule 23, a plaintiff must satisfy the requirements of
Rule 23(a)—numerosity, commonality, typicality, and adequacy of representation—and one
subsection of Rule 23(b). See Harper v. Sheriff of Cook Cnty., 581 F.3d 511, 513 (7th Cir.
2009); Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006). “Failure to meet any of
[Rule 23’s] requirements precludes class certification.” Harper, 581 F.3d at 513 (quoting
Arreola v. Godinez, 546 F.3d 788, 794 (7th Cir. 2008)).
B.

Defendants’ Challenges to the Putative Classes

In this case, Plaintiffs’ Amended Complaint alleges two putative classes. The first
putative class consists of “all persons who were sued in small claims court in the last ten years in
the Circuit Court of Cook County, Illinois[,] by the Class Action Defendants in violation of the
mandatory arbitration clauses”. (R.45, ¶ 53.) The second putative class consists of “all persons
who were sued in small claims court in the last three years on Leases where their signature was
forged in violation of the [ICFA]”. (Id.) Defendants contend that Plaintiffs’ fraud claims are
“plaintiff-specific” and make it unlikely that Plaintiffs will meet the requirements of
commonality.6 (R.53, at 16.) Defendants argue that Plaintiffs fail to allege the circumstances of

6

Defendants also argue that Plaintiffs claims “are particularly unlikely to meet the predominance
requirement because they are ‘plaintiff-specific’”. (R.53, at 17.) Although the requirements for
predominance are similar to those for commonality, predominance is one of the optional required Rule
23(b) requirements. See Harper, 581 F.3d at 513; see also Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___,

29

their forgery story as common to all putative class members and indeed, fail to allege any facts
that permit an inference that the putative class members are somehow affected by the same
particularized facts. (Id.) Defendants contend that the circumstances of the named Plaintiffs—
Blankenship and Brassfield—demonstrate the fact-intensive nature of the fraud claims and do
not meet the commonality requirements and that any damages claims would also be highly factspecific. (Id., at 17-18.) The Court therefore turns to the Amended Complaint and the Class
Allegations to determine whether they “are facially and inherently deficient” such that they
warrant dismissal. See Bohn, 2013 WL 3975126, at *5.
C.

Commonality and Plaintiffs’ ICFA Claims

Commonality requires a plaintiff to show that “questions of law or fact common to the
class” exist. See Fed. R. Civ. P. 23(a)(2). To establish commonality, a plaintiff must do more
than raise “common questions—even in droves” in that the plaintiff must show that a class-wide
proceeding will “generate common answers apt to drive the resolution of the litigation.” See
Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___, 131 S.Ct. 2541, 2551, 180 L.Ed.2d 374 (2011)
(internal quotations omitted; emphasis in original). “If, to make a prima facie showing on a
given question, the members of a proposed class will need to present evidence that varies from
member to member, then it is an individual question.” Messner v. Northshore Univ.
Healthsystem, 669 F.3d 802, 815 (7th Cir. 2012) (quoting Blades v. Monsanto Co., 400 F.3d 562,
566 (8th Cir. 2005)). If, however, “the same evidence will suffice for each member to make a

131 S.Ct. 2541, 2548, 180 L.Ed.2d 374 (2011). Because Plaintiffs have not yet specified what subsection
of Rule 23(b) the class should be certified under, analysis of Plaintiffs claims for meeting the
predominance requirement is premature. The requirements for predominance, however, are similar to
those for commonality, which is one of the unavoidable requirements for class certification under Rule
23(a) and is further addressed herein. See Wal-Mart Stores, Inc., 131 S.Ct. at 1549-50; Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 624, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997); Messner v. Northshore
Univ. Healthsystem, 669 F.3d 802, 814 (7th Cir. 2012).

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prima facie showing, then it becomes a common question. “Commonality requires the plaintiff
to demonstrate that the class members ‘have suffered the same injury.’” Wal-Mart Stores, Inc.,
131 S.Ct. at 2551 (citations omitted). This does not mean, however, “that they have all suffered
a violation of the same provision of law.” Id.
Having dismissed the breach of contract claim, the Court focuses on the elements of the
ICFA claim. The Court first looks to the unfair practices claim. To determine whether a
business practice is unfair, the Court considers “(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, 266 Ill. Dec. 879, 775 N.E.2d at 960.
Although devoid of detailed facts, Plaintiffs assert the following question of fact and law
as common to the members of the putative class for their ICFA claim:
a. Whether the conduct of the Class Action Defendants was a violation of the [ICFA];
b. Whether the Class Action Defendants regularly file suit in violation of mandatory
arbitration clauses.
(R.45, ¶ 55.)
Unfairness under the ICFA “depends on a case-by-case analysis,” Siegel, 612 F.3d at
935, however, Plaintiffs have alleged a series of Common Allegations that, if proven to be true
by evidence obtained during the discovery process, could meet the commonality requirement for
certification of the class. In particular, Plaintiffs allege common facts surrounding the alleged
forgery and subsequent applicability of the Leases. (R.45, ¶ 45.) Plaintiffs further allege that
“[t]he persons that are the victims of these practices are typically sole proprietors or persons
operating small business.” (Id.) In addition, Plaintiffs allege facts commonly shared between
the Lease Agreements, for example, that they each: (1) have signature lines typically identifying

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the Lessee as an individual, (2) have Personal Guaranty provisions, (3) have mandatory
arbitration agreements which have language of the arbitration clauses including actions relating
to the Guarantees, and (4) that the Lessees as individuals would have benefits from the
arbitration clause, if the signatures were not forged. (Id., ¶ 46.) Plaintiffs also allege the
amounts in controversy are usually less than $5,000 and that these relatively small amounts
present the out of state defendants with a situation where it is not economical to hire lawyers to
contest the small claims suits. (Id., ¶ 47.) The Plaintiffs further allege facts common to the
method of service on the class members in that they are often served at addresses which are no
longer valid and that the documents relied upon by the Defendants in the small claims actions are
also invalid on their face, even apart from the forgeries. (Id., ¶¶ 48, 49.) Defendants’ disputes
with these allegations are highly factual in nature and “discovery is needed to determine whether
a class should be certified,” making it premature to strike class allegations at this stage. See
Wright, 2010 WL 4962838, at *1; Santiago v. RadioShack Corp., No 11 C 3508, 2012 WL
934524, at *4 (N.D. Ill. Feb. 10, 2012); see also Boatwright, 2011 WL 843898, at *2.
The same result is true for Plaintiffs’ deceptive practices claim under the ICFA. A
practice is deceptive if it “creates a likelihood of deception or has the capacity to deceive.”
Aliano v. Louisville Distilling Co., LLC, No. 15 C 00794, 2015 WL 4429202, at *5 (N.D. Ill.
July 20, 2015) (citing Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 938 (7th Cir. 2001)).
Plaintiffs generally rely on the same common allegations to establish deceptive practices as they
do for unfair practices. Plaintiffs allege that Defendants perpetrated a scheme—forging
Non-Cancellable Leases, making unauthorized withdrawals from customer bank accounts,
obtaining ex parte default judgments in small claims court based on violation of mandatory
arbitration clauses of the Leases based on misrepresentations of inadequate and incomplete

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documentation of assignment. (Id., ¶¶ 8, 20-22, 32-33.) Defendants base many of these small
claims cases on forged signatures on the Lease Agreements. (Id., ¶¶ 5, 50.) Each of the
Common Allegations addressed above is also applicable to the deceptive practices claim under
the ICFA and sufficiently plead a class allegation for a claim under the ICFA sounding in fraud.
It would be premature for the Court to strike class allegations on the pleadings without affording
Plaintiffs the opportunity to identify individuals who have been subjected to a common set of
practices that state an ICFA unfairness or deceptive acts claim. See Wright, 2010 WL 4962838,
at *1 (explaining that when a dispute concerning class certification is factual in nature and
“discovery is needed to determine whether a class should be certified,” a motion to strike class
allegations at the pleading stage is premature); Boatwright, 2011 WL 843898, at *2 (“[b]ecause
a class determination decision generally involves considerations that are enmeshed in the factual
and legal issues comprising the plaintiff’s cause of action, … a decision denying class status by
striking class allegations at the pleading stage is inappropriate”); Hill v. Wells Fargo Bank, N.A.,
No. 12 C 7240, 2015 WL 232127, at *16 (N.D. Ill. Jan. 16, 2015) (finding it premature to strike
class allegations at the pleading stage for ICFA unfairness claim); accord. Thrasher-Lyon, 861
F.Supp.2d at 913 (citing Daley, 165 Ill. Dec. 655, 585 N.E.2d at 66) (declining to dismiss the
plaintiff’s complaint regarding whether the letters and notices the defendants sent to the plaintiff
were deceptive as it “is a factual issue which must be decided by the trier of fact”).
Accordingly, at this early stage, Plaintiffs have made a prima facie showing on the
proposed common questions of law and fact for the putative classes, and with the aid of
additional evidence during discovery will be provided the opportunity to certify the class by
motion for class certification, which Defendants can challenge at that time. Thus, the Court
denies Defendants’ motion to strike Plaintiffs’ class allegations without prejudice.

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V.

Scandalous Allegations
Defendants ask the Court to strike the allegations regarding a 2013 settlement between

Northern Leasing Systems Inc. and its affiliates—including Defendant Lease Finance—and the
New York Attorney General referred to in the Amended Complaint as scandalous. Defendants
argue that “there are no facts to support the conclusion that the allegations relate in any way to
consumer fraud in Illinois.” (R.53, at 19.) Plaintiffs respond that the allegations regarding the
New York settlement are relevant to punitive damages because the alleged wrongful conduct “is
part of a policy and practice of unlawfully taking money from small businesses under the guise
of collecting monies supposedly due under business equipment leases.” (R.63, at 16.)
Pursuant to Rule 12(f), the Court can strike “any insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f); Delta Consulting Grp., Inc.
v. R. Randle Constr., Inc., 554 F.3d 1133, 1141 (7th Cir. 2009). A district court may strike an
allegation as scandalous when it “bears no possible relation to the controversy,” or when the
allegations are “devoid of any factual basis.” Talbot v. Robert Matthews Distrib. Co., 961 F.2d
654, 664-65 (7th Cir. 1992); see also Anderson v. Bd. of Educ. Of City of Chicago, 169
F.Supp.2d 864, 867–68 (N.D. Ill. 2001) (“[p]rejudice results when the matter complained of has
the effect of confusing the issues”). Motions to strike are appropriate if they serve to expedite
litigation. See Heller Fin., Inc. v. Midwhey Powder, 883 F.2d 1286, 1294 (7th Cir. 1989).
District courts have considerable discretion under Rule 12(f). See Delta, 554 F.3d at 1141–42.
Plaintiffs characterize the presented New York practices as “not very different” from
Defendants’ practices in Illinois and Defendant argues that intertwining these allegations with
those against Defendants Pushpin, Lease Finance, and Cohen has no purpose other than
confusing the issues. The Court agrees. Plaintiffs allege the New York practices are “part of a

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policy and practice of unlawfully taking money from small businesses under the guise of
collecting monies supposedly due under business equipment leases.” (R.63, at 16.) Yet, the
allegations concerning the New York scheme share only one Defendant with the Illinois
allegations of the present action—Lease Finance. This difference in parties prejudices and
confuses the issues as they relate to Defendants Cohen and Pushpin in the present action. In
addition, Plaintiffs do not allege any factual support for the allegations that the New York
practices and the Illinois practices are a part of a “policy and practice” for Defendants Lease
Finance, Pushpin and Cohen. Although Plaintiffs allege that Defendants’ Illinois scheme is “not
very different” from Northern Leasing Systems, Inc. and its affiliates scheme in New York,
Plaintiffs provide only a cursory factual connection between them in that they both involve credit
card processing equipment. Specifically, Plaintiffs plead that Northern Leasing Systems, Inc.
and its affiliates entered into a settlement regarding the provision of credit card processing
equipment and unauthorized withdrawals from bank accounts. (Id., ¶¶ 6, 7.) On the other hand,
Plaintiffs allege that Defendants Lease Finance, Pushpin, and Cohen engaged in a scheme also
involving lease of credit card swiping machines, but further allege that Plaintiffs entered into
Non-Cancellable Leases by forgery and that Defendants sent misleading collection letters and
obtained ex parte default judgments in Illinois in violation of mandatory arbitration clauses. (See
e.g., R.45, ¶ 8.) Furthermore, Plaintiffs do not allege that Defendants Pushpin and Cohen were
involved with Defendant Lease Finance at the time of the New York action. Plaintiffs’
allegations, therefore, fail to provide a factual connection for a “policy and practice” by
Defendants in the present action with only one party’s involvement linking it to the New York
action. As such, the Court grants Defendants’ motion to strike the allegations regarding the New
York scheme and strikes paragraphs 6 and 7 of Plaintiffs’ Amended Complaint.

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VI.

Dismissal of Claims Against Cohen
Lastly, Defendants argue that the Court should dismiss all claims against Defendant

Cohen because Plaintiffs have failed to allege any specific acts (or resulting damage) attributable
to him. Taking the facts in the light most favorable to Plaintiffs, Plaintiffs allege that Defendant
Cohen is the only listed member of Defendant Lease Finance, an Illinois registered LLC. (R.45,
¶ 13.) Plaintiffs further allege that Defendant Cohen owns, operates and controls numerous shell
entitles—including Pushpin and Lease Finance—which sell equipment leases, buy debts, and
collect debts acquired through purchases of leases. (Id., ¶ 14.) Plaintiffs further allege that
Defendant Cohen is also the managing member of and controls the operations for GCN
Holdings, LLC—a corporation that acquires debts and subsequently assigns them to Defendant
Pushpin. (Id., ¶ 15.) The Instrument of Assignment associated with the Blankenship Lease lists
GCN Holdings, LLC as “Buyer” and the Assignment and Assumption Agreement, also
associated with the Blankenship Lease, is signed by Defendant Cohen, as President of Pushpin
Holdings, LLC as “Buyer” and Pushpin as “Seller”—putting Cohen on both sides of the alleged
assignment. (R.45-4, at 10-11.) Based on these allegations, Plaintiffs have sufficiently alleged
Defendant Cohen’s involvement in various transactions related to Pushpin. Lease Finance, and
GCN Holdings, LLC. Thus, Defendants’ motion to dismiss all claims against Defendant Cohen
is denied.

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CONCLUSION
For the forgoing reasons, the Court grants in part and denies in part Defendants’ Motion
to Dismiss the First Amended Class Action Complaint or, In the Alternative, to Strike
Scandalous and Class Allegations Therefrom.

DATED: October 6, 2015

ENTERED

_________________________________
AMY J. ST. EVE
United States District Court Judge

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