The Frain Group, Inc. v. Steve's Frozen Chillers, Inc.
MEMORANDUM Opinion and Order: The Court denies the Motions for Summary Judgment filed by The Frain Group, Inc. 86 and by Steve's Frozen Chillers, Inc. 89 . Status hearing set for 9/19/2017 at 9:00 AM. Signed by the Honorable Virginia M. Kendall on 9/14/2017. Mailed notice(vcf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
THE FRAIN GROUP, INC.,
STEVE’S FROZEN CHILLERS, INC.,
No. 14 C 7097
Judge Virginia M. Kendall
MEMORANDUM OPINION AND ORDER
The Frain Group, Inc. (“Frain”) filed suit against Steve’s Frozen Chillers, Inc. (“Steve’s”)
seeking a declaratory judgment that the contract entered into by the parties for the purchase and
maintenance of a liquid packaging machine was valid and enforceable. Frain also alleged
common law claims of defamation and tortious interference with business. (Dkt. 1, ¶¶ 30-35, 3638.)1 Steve’s responded by filing a Counterclaim against Frain alleging a number of violations
of which only the breach of contract (Count I) and the violation of the Illinois Consumer Fraud
and Deceptive Business Practices Act (“ICFA”) (Count II) remain. (Dkt. 14, ¶¶ 27-39.)2 Both
parties move for summary judgment on the remaining counterclaims: Frain for the breach of
contract and the ICFA claims (Dkt. 86, 1-3) and Steve’s on the ICFA claim (Dkt. 89, 1-3).
For the reasons set forth below, the Court denies both parties’ motions for summary
judgment. (Dkt. 86; Dkt. 89.)
The following facts are undisputed unless otherwise indicated.
None of the claims raised in Frain’s original Complaint remain. The Court dismissed Count III (Dkt. 35) and the
parties stipulated to dismissal of Counts I and II (Dkt. 45).
The Court dismissed Count II (Dkt. 35).
Steve’s, a Florida corporation, produces frozen beverage mixes. (Pl. SOF ¶5.)3 Frain, an
Illinois corporation, “retool[s], sell[s], and service[s] pre-owned packaging equipment
throughout the United States.” (Pl. SOF ¶¶ 1–2.)
In March 2014, Frain presented Steve’s with a “Proposal for Engineered Services”
(“Proposal”) providing that Frain would sell Steve’s a quality “Prodo-Pak Form & Fill”
packaging machine (“Machine”).4 (Def. SOF ¶ 7.) The Proposal also provided that Frain would
service the Machine. (Id.) Specifically, the Proposal stated:
With every Engineered Services product, the Frain Group sets your
machine to size and places your machine in Good Working Condition by:
a. Thoroughly inspecting your equipment mechanically, electronically
b. Repairing and replacing worn, damaged, or missing components;
c. Improving appearance by cleaning, painting and repolishing;
d. Engineering, designing and fabricating the appropriate change parts to
run your specific product;
e. Adjust [sic] our machine to your specific requirements . . .
(Id. ¶ 10.) The Proposal also informed Steve’s that Frain would provide training for operators at
Steve’s facility. (Pl. SOAF ¶ 2.) Additionally, the Proposal provided specifications regarding
the Machine’s components (without specifying that they are “Prodo-Pak components”) (see Dkt.
93-1 at 5),5 and indicated that the Machine will fill and seal 180 to 210 pouches with 3.6 ounces
of fruit juice per minute. (Id. at 6.)
The Court uses the following abbreviations to refer to the parties’ filings in the Facts section: “Pl. SOF” refers to
Dkt. 87, Frain’s Local Rule 56.1 Statement of Facts; “Pl. Resp.” refers to Dkt. 93, Frain’s response to Steve’s
Statement of Facts; “Pl. SOAF” refers to Dkt. 93, Frain’s Statement of Additional Facts; “Def. SOF” refers to Dkt.
90, Steve’s Statement of Facts; “Def. Resp.” refers to Dkt. 95, Steve’s response to Frain’s Statement of Facts.
Steve’s CEO specifically sought out a Prodo-Pak Machine because he believed Prodo-Pak made high quality
products. (Def. SOF ¶ 6.)
The Proposal included the following product specifications (punctuation errors taken from the Proposal):
Prodo Pak Model PV215-60-CSW-10, automatic, 6 up, 4-sided, stainless steel, vertical
form fill and seal machine rated from 10 to 50 [cycles per minute] with number of
pouches – depending on materials.
Package size: up to 19” in Width and up to 18” in Length. Fill range: from ounces to
gallons with proper charge parts.
Between March and May 2014, the parties negotiated the purchase of the Machine (id. ¶
11) and, on May 23, 2014, Steve Schoenberg from Steve’s signed a contract (“the Agreement”)
to purchase the Machine. (Dkt. 93-2.) Steve’s purchased the Machine for $254,204, which
included an expediting fee of $20,000. (Id. ¶ 12; Dkt. 91 at 11.) The Agreement indicated that
the Machine is a “Prodo Pak  Form & Fill” and that Frain would conduct a “reconditioning and
retooling project” on the Machine before delivery. (Dkt. 93-2 at 2.) The Agreement also
included a warranty, which stated in part:
Seller hereby warrants any components refurbished by Seller will be free
from material defects for a period of 180 days from the date of machine
acceptance at the Seller’s facility (the “Warranty Period”). In the event of
a valid warranty claim, Seller shall have the option either to repair the
defective component or provide Buyer with a replacement component as
(Dkt. 93-2 at 9.) The Agreement in bold print disclaimed all other warranties (id.) and declared
that any descriptions made “pertaining to machine capabilities contained on [Frain’s] invoice,
website or in any other manner except as contained in Seller’s Project Acceptance Letter are
descriptive only and are not a warranty or guaranty of performance by [Frain.]”6 (Id.) The
Agreement also included a 14-day unconditional right of return (id.) and declared that Frain
“shall not be liable for, and [Steve’s] waives any claim for, incidental or consequential
damages...” (Id. at 10.) Similar to the Proposal, the Agreement stipulated that the Machine “will
Equipped with dual stainless steel product hoppers, both have lift off covers, level
2) sets of (3) 6” L x 1/2" ID pistons, 48” long side film rollers with 43” maximum web
width and 20” maximum OD on 3” ID core with film registration,
19-1/2" horizontal hot knife seal jaw with tear notch and 6” vertical side seal jaws, static
brush bar, slitter knives, stripper assay and discharge chute.
Control panel has touch screen with swing arm and hand held controller with start, stop,
jog and pump switches, front / rear vertical / horizontal heat
3/60/220V, 40 Amps, Air: 80 Psi
(Dkt.87-3 at 4.)
The Project Acceptance Letter is a part of the Agreement. (Dkt. 93-2 at 11.) Thus, the Court refers to the Project
Acceptance Letter as the Agreement.
be set up to automatically form 6 pouches, fill 3.6 oz. of fruit juice per pouch and seal at 30
cycles per minute.” (Id. at 3.)
On June 27, 2014, Steve’s president, David Schoenberg, completed and signed a
“Packaging Equipment Check-Out Sheet” on which he indicated that the Machine ran to his
satisfaction at the Factory Acceptance Test, that he would like a service technician to assist with
start-up and training, and that he accepted the Machine and released it for shipment. (Pl. SOF ¶
25; Dkt. 87-7 at 1.) On June 30, the Machine arrived, as designated, at the Lancaster Fine Foods
(“LFF”) facility in Lancaster, Pennsylvania.7 (Def. SOF ¶ 18.)
Upon the Machine’s arrival at the LFF facility, agents or employees of Steve’s and LFF
unpacked and set up most of the Machine. (Def. Resp. ¶ 28.) Then, a Frain technician, Jadran
Radujkovic (“Radujkovic”), arrived to complete the installation and set-up, and to train LFF
employees on how to use the Machine. (Id. ¶ 29.) When the employees at LFF began using the
Machine independently, they could not get it to run consistently for “long periods of time.”
(Dkt. 90-4 at 20:22–24.) The Machine ran for various lengths of time. The service report from
Radujkovic’s July 10 visit to the LFF facility indicated that the Machine only ran for a few
minutes in the morning before the hopper overflowed. (Dkt. 93-11 at 21.) Later that day, it ran
for about an hour until the facility ran out of product. (Id.) The same day, the Machine had a
“massive overflow” after running for a short period while Radujkovic was on a break. (Id.) On
Dale Hammersmith’s (“Hammersmith”) service visit, he arrived to find “signs of hopper
overflow” and “product film everywhere.” (Id. at 23.) His service report indicated that he
needed to instruct the day shift mechanic at the site because the mechanic “did not know how to
put film thru [sic] Machine.” (Id.) The report also indicated, however, that Hammersmith
Steve’s and LFF had an agreement that made LFF a co-packer of Steve’s product using the Machine at LFF’s
facility. (Def. SOF ¶ 19.)
needed to replace “bad” parts, including “O-rings” and “slitter knives.”
however, need replacing frequently (Dkt. 93-9 at 51: 2–13), so the fact that those parts went bad
is not necessarily indicative of a poorly made Machine.
At Steve’s request, Frain sent three different technicians on several occasions in July
2014 to inspect and service the Machine.8 (Pl. Resp. ¶ 21.) The Machine was never consistently
operational. (Def. SOF ¶ 21.) Frain claims, however, that the Machine was always capable of
operating properly, but that operator error on the part of Steve’s and LFF’s employees caused the
Machine to stop functioning. (Id. ¶ 23.) Affidavits, service reports, and deposition testimony
from Frain technicians support the notion that the Machine’s problems were at least partly due to
operator error and inexperience. (See Dkt. 93-8; Dkt. 93-9 at 32–47; Dkt. 93-11.)9 The CEO of
Steve’s stated in his deposition that the Machine repeatedly overflowed and that Frain’s
technicians consistently blamed that problem on inexperienced operators. (Dkt. 87-14 at 38:13–
After the last Frain technician left on July 17, 2014, Frain refused to send further
technicians free of charge because it determined that there was nothing wrong with the Machine.
(Pl. Resp. ¶ 22.) Instead, Frain offered to send a technician to do additional training for a fee.
(Id.) On July 30, Steve’s threatened legal action, leading Frain to file this lawsuit. (Dkt. 93-13
Steve’s has since hired third parties, including technicians from Prodo-Pak, to examine
and repair the Machine. (Pl. SOF ¶ 46.) Prior to that examination, Steve’s CEO believed his
Radujkovic came on July 3, July 10, and July 17 (Dkt. 93-11 at 7, 32), Hammersmith came from July 9 to July 11
(id. at 23), and Larry Peters (“Peters”) came from July 10 to July 11 and on July 17. (Id. at 19, 33.)
For example, Radujkovic explained in his deposition that Machine operators at LFF had in place a system whereby
they would yell to each other from opposite sides of the Machine regarding how much product to feed into the
Machine. Radujkovic believes that this system was ineffective and caused overflow problems. (Dkt. 93-9 at 39–
40.) Larry Peters confirms that this system led to product overflow and that Steve’s did not follow Frain’s
recommendation to install an overflow-prevention mechanism. (Dkt. 93-8 at 5.)
company purchased a “used refurbished working, Prodo Pak machine.” (Dkt. 87-14 at 19:18–
19.) Steve’s later learned from the Prodo-Pak technicians and the President of Prodo-Pak, who
inspected the Machine, that Frain did not use original Prodo-Pak parts for several component
parts of the Machine. (Def. SOF ¶ 27.) Frain, itself, fashioned at least some of the components.
(Pl. Resp. ¶ 27.) According to Steve’s and the President of Prodo-Pak, Frain manufactured lowquality components, which caused the Machine to malfunction. (Def. SOF ¶ 29; Dkt. 90-1, Ex.
A.) According to Frain and its shop manager, all Frain-manufactured components functioned as
intended and were of equal or better quality than any Prodo-Pak component. (Pl. Resp. ¶ 29.)
Before the Factory Acceptance Test, Frain placed a Prodo-Pak sticker on the Machine, but the
sticker was not from Prodo-Pak. (Id. ¶ 28.) The President of Prodo-Pak indicated that the sticker
is “not even real” (Dkt. 87-14 at 40:13–14), while also acknowledging that the Machine had
some Prodo-Pak components. (Dkt. 95-1 at 2.)
Summary judgment is appropriate when there is no genuine dispute of material fact and
the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Black Earth
Meat Market v. Village of Black Earth, 834 F.3d 841, 847 (7th Cir. 2016.) An issue of material
fact is “genuine” if “a reasonable jury could return a verdict for the nonmoving party on the
evidence presented.” Life Plans, Inc. v. Sec. Life of Denver Ins. Co., 800 F.3d 343, 349 (7th Cir.
2015.) On cross-motions for summary judgment, the Court construes all facts and draws all
reasonable inferences in favor of the party against which the motion under consideration was
brought. Nat’l Am. Ins. Co. v. Artisan and Truckers Cas. Co., 796 F.3d 717, 723 (7th Cir. 2015).
The Court has jurisdiction pursuant to 28 U.S.C. § 1332 because the parties are diverse
and the amount in controversy exceeds $75,000. Illinois law applies in this case because this
Court sits in Illinois and because the parties agree that Illinois law applies. See Mass. Bay Ins.
Co. v. Vic Koenig Leasing, Inc., 136 F.3d 1116, 1120 (7th Cir. 1998) (quoting Wood v. MidValley, Inc., 942 F.2d 425, 426–27 (7th Cir. 1991) (“‘the federal court simply applies the law of
the state in which the federal court sits . . . Courts do not worry about conflict of laws unless the
parties disagree on which state’s law applies’”); Moser v. Universal Eng’g Corp., 11 F.3d 720,
724 n.6 (7th Cir. 1993) (“A federal court hearing a case under diversity jurisdiction will apply
the substantive law of the state in which it sits.”). Moreover, the Agreement specifies that the
“Terms and Conditions of Sale . . . shall be construed in accordance with the laws of the State of
Illinois.” (Dkt. 93-2, at 10.)
Frain moves for summary judgment on the breach of contract claim, arguing that Steve’s
cannot point to any provision in the Agreement that Frain violated, and that Steve’s failed to
exhaust its exclusive remedies under the Agreement. Steve’s moves for summary judgment on
the ICFA claim, arguing that Frain violated the ICFA by deceptively providing Steve’s with a
Machine labeled as a Prodo-Pak machine when it was in fact a low-quality aftermarket machine
and that Frain intended Steve’s to rely on that deception so Steve’s would purchase the Machine.
Frain cross-moves for summary judgment on the ICFA claim, arguing that the Machine was of
equal or better quality than any Prodo-Pak machine and that Frain was clear that it was providing
Steve’s a refurbished machine, such that no deception was possible.
As outlined below, there remains a genuine dispute of material fact that prevents the
Court from entering summary judgment on either count.
A. Breach of Contract
To establish a claim for breach of contract under Illinois law, a plaintiff must demonstrate
the existence of a valid and enforceable contract, performance of the contract by the plaintiff,
breach of the contract by the defendant, and a resulting injury to the plaintiff. D’Attomo v.
Baumbeck, 2015 IL App (2d) 140865, 36 N.E.3d 892, 910–11 (Ill. App. Ct. 2015). In the instant
action, it is undisputed that the parties had a valid and enforceable contract and that Steve’s fully
performed its obligation under the contract—namely, to pay for the Machine. Thus, the only
remaining question is whether Frain breached the Agreement, and if so, whether that breach
resulted in an injury to Steve’s.
The failure to perform fully a contractual duty when it is due is a breach of contract.
Restatement (Second) of Contracts § 235 (Am. Law Inst. 1981); see, e.g., Mydlach v.
DaimlerChrysler Corp., 226 Ill.2d 307, 322, 875 N.E.2d 1047, 1059 (2007) (claim for breach of
an express warranty actionable not upon tender of product, but only once warranty-related issues
occur). In a two-party contract situation, when a promisor's duty to perform is absolute, the
promisee's breach will not excuse performance of that duty, and the promisor has an independent
claim against the promisee in damages. Lewis v. Benedict Coal Corp., 361 U.S. 459, 467 (1960).
As with all cases at the summary judgment stage, courts construing contracts in the context of
sales between merchants decline to enter summary judgment where there are disputes of material
fact as to whether a party actually breached. See, e.g. Koursa, Inc. v. manroland, Inc., 971
F.Supp.2d 765 (N.D. Ill. 2013) (denying summary judgment where there was a genuine dispute
of fact about the state in which a printing press arrived at the buyer’s factory and where the
contract for the sale of said printing press indicated the state in which the seller was meant to
deliver it); S.A.M. Elec., Inc. v. Osaraprasop, 39 F.Supp.2d 1074 (N.D. Ill. 1999) (denying
summary judgment on a breach of contract count where there was a dispute of fact about whether
the buyer seasonably informed the seller of defective goods received within the timeframe set
forth in the contract).
Steve’s identifies three ways by which it claims Frain breached. In its Counterclaim,
Steve’s first argues that Frain both breached the contract by delivering a machine that did not fit
the description in the Agreement, and by failing to send qualified technicians to repair the
Machine. (Dkt. 14, ¶¶ 30–31.) Steve’s sets out a third theory for breach of contract in its
response, namely, that Frain breached by refusing to send additional technicians free of charge
after it had already sent three.10 (Dkt. 94, at 4–5.)
Frain now moves for summary judgment arguing that, as a matter of law, it did not
breach the Agreement because the Agreement is unambiguous, Steve’s failed to identify a
contractual provision that it violated, and because Steve’s failed to invoke any of the exclusive
remedies set forth in the Agreement. (Dkt. 89, at 8-10.) Steve’s responds that Frain is not
entitled to judgment as a matter of law because there is a dispute of material fact as to whether
the Machine was of lesser quality or had different specifications than what the Agreement set
forth. (Dkt. 94, at 4.) Steve’s also claims that the Counterclaim, filed within the 180-day
warranty period, constitutes a written claim against the warranty. Because only Frain moved for
summary judgment on this count, the Court views all facts relevant to this claim in the light most
favorable to Steve’s.
With respect to Steve’s first breach theory, there is no genuine dispute that Frain sent
qualified technicians to service the Machine. On three occasions, Frain sent technicians (Peters,
This theory first arose in Steve’s Response to Frain’s Motion for Summary Judgment. Even though Steve’s failed
to set forth this theory in its Counterclaim, the Court will entertain it. See CMFG Life Ins. Co. v. RBS Sec., Inc., 799
F.3d 729, 743 (7th Cir. 2015) (parties are able to refine their theories of liability at the summary judgment stage
based on evidence produced in discovery).
Hammersmith, and Radujkovic), all of whom have experience working with this sort of machine.
(Dkt. 93-8; Dkt. 93-10; Dkt. 93-9.) Steve’s allegation that these technicians were not qualified is
a conclusory allegation that is unsupported by any evidence in the record. (See Dkt. 14, ¶¶ 21-22,
31-32.) In fact, Steve’s briefs on this motion provide only a passing reference about Frain
technicians as they relate to any theory of liability. (See Dkt. 94, at 5-6.) Steve’s failure to
develop this argument serves as a waiver for purpose of this motion. See Weinstein v. Schwartz,
422 F.3d 476, 477 n.1 (7th Cir. 2005) (failure to develop an argument constitutes waiver). Thus,
if Frain breached the contract, it did not do so for failure to send qualified technicians.
Second, as to whether the Machine functioned properly and according to specifications in
the Proposal and the Agreement, each side presents affidavits from individuals that are familiar
with this type of machine, and these individuals reach opposite conclusions. This creates a
genuine dispute of material fact. Steve’s submitted an affidavit by John Mueller (“Mueller”), the
President and CEO of Prodo-Pak, who concluded that the Machine was defective in many ways,
including: 1) improperly sized components fashioned by Frain made from lower quality material;
2) the Machine’s failure to dispense product but for a few minutes before becoming nonoperational; 3) when operating, the Machine’s fill tubes dripped; 4) the Machine lacked
necessary components known as “O-rings;” 5) the pressure regulator controls were mislabeled;
and 6) the Machine used an outdated computer system.
Frain, by contrast,
submitted an affidavit from Technician Peters who concluded the Machine functioned properly,
and that it was refurbished in accordance with all of the original manufacturer’s specifications.
(Dkt. 93-8.) According to Peters, the Machine was in perfect working condition during the
Factory Acceptance Test and during his service visit to LFF. (Id.)11 He claims that operator
The following quotes from Peters’ affidavit indicate his complete disagreement with all of Mueller’s conclusions
about the Machine:
error accounted for any and all issues that Steve’s had with the Machine.12 These affiants’
conclusions are both plausible, but they are mutually exclusive. If Peters more accurately
describes the nature of the Machine’s problems, then Frain did not breach the contract by selling
this Machine. If Mueller’s conclusions that low quality parts caused operational issues are more
accurate, then Frain breached because the Agreement specifies that the Machine would be
capable of filling thirty cycles of six pouches every minute, and it frequently did not do that.13 In
either case, determining which affiant is more credible and which most convincingly describes
why Steve’s had issues with the Machine are jury functions. See Whitehead v. Bond, 680 F.3d
919, 925 (7th Cir. 2012) (“the court does not make credibility determinations or weigh the
evidence,” and the court can “disregard testimony only if reasonable persons could not believe it
because it contradicts indisputable physical facts”) (internal quotations omitted).
Similarly, whether Frain’s refusal to send additional technicians free of charge was a
violation of the 180-day warranty also depends on whether the Machine did not meet the
Agreement’s specifications and whether user error affected its operation. If it is the latter, then
Frain’s decision not to send additional technicians did not constitute breach because the
Agreement only warrants that “components refurbished by [Frain] will be free from material
defects.” It logically follows that Steve’s user error cannot qualify as falling within the limited
warranty because employee use is neither a “component refurbished” by Frain, nor is such use
20. No part or component of the Machine was defective.
21. The parts that Frain engineers, designs, and fabricates in its machine shop are
virtually identical to the original Prodo Pak parts and, in some instances, made of
superior materials more suitable for the type of product Steves [sic] was using.
22. None of the parts that were not manufactured by Prodo Pak were inferior in quality to
Prodo Pak parts.
(Dkt. 93-8, at 4.)
“The problem that Steves [sic] and LFF experienced with the Machine resulted from the faulty operation and
maintenance of the Machine…” (Id. at 4.)
The record is void of any reference as to how long, on a daily basis, Steve’s planned on running the Machine.
However based on the fact that they ran out of product after running the Machine for one hour, it is safe to say they
did not plan on running the Machine 24 hours per day. (Dkt. 93-11, at 21.)
within Frain’s ability to control. If it is the former, then Frain’s decision constitutes a failure to
comply with its agreement to cure material defects within 180 days. Due to the disputed evidence
in the record regarding the cause of the Machine’s malfunctioning, the Court cannot conclude
that Frain’s refusal to send additional technicians constitutes breach as a matter of law.
Finally, Frain argues that Steve’s fails to allege a breach of any specific provision of what
they consider an “undisputed and unambiguous” contract. (Dkt. 94, at 8-9.) When the contract
language is unambiguous, the Court will look no further than the document itself to ascertain the
intent of the parties. McElroy v. B.F. Goodrich Co., 73 F.3d 722, 727 (7th Cir. 1996); see also
Lease Mgmt. Equip. Corp. v. DFO Partnership, 392 Ill. App.3d 678, 685, 910 N.E.2d 709, 715
(Ill. App. Ct. 2009) (reaffirming use of the contract itself to interpret an unambiguous contract,
as opposed to extrinsic evidence). Here, a genuine dispute of material fact exists. Steve’s
submits that this Counterclaim, filed within 180 days of the Agreement constitutes a “written
warranty claim.” (Dkt. 94, at 5.) Additionally, they cite to factual disputes over whether
previously-sent written requests to Frain regarding parts of the Machine that were not working
qualify as in-writing warranty claims.
In contrast, Frain argues that the Agreement
specifically required “invoc[ation of] a claim under the 180-day warranty. (See Dkt. 92-2.) As
such, Frain’s claim that Steve’s failed to seek one of the remedies enumerated in the Agreement
(180-day warranty or 14-day right-of-return) is a question of fact that requires a jury
determination. There are numerous examples where Steve’s gave Frain written notice about
issues of service and non-working parts. Furthermore, Steve’s provides ample pursuable breach
issues, for example the warranty section (Dkt. 93-2, at 9), Frain’s statement in the Agreement
that it offers the “highest quality of services available” (id. at 2), and the stipulation regarding
how much output the Machine will produce. (Id. at 3.)
Accordingly, the Court denies Frain’s Motion for Summary Judgment on the breach of
B. ICFA Claim
Steve’s argues that Frain deceived them into purchasing the Machine by falsely
advertising it as a functioning Prodo-Pak machine made with quality Prodo-Pak parts when it
was in fact “a Machine with low-quality, non-Prodo-Pak parts that never worked properly.”
(Dkt. 91, at 5.) Frain points out that the Agreement expressly bars any claims against Frain
based on Steve’s reliance on statements, such as representations in the Proposal, made outside
the four corners of the Agreement. (Dkt. 88, at 11–13.) Frain further argues that any belief
Steve’s may have had that Frain refurbished machines using solely Prodo-Pak parts is
“unbelievable” given Frain’s express statements in its Proposal and on its website that it is in the
business of reconditioning and retooling used Prodo-Pak machines. (Dkt. 96, at 10.)
In order to make out a claim under the ICFA, Steve’s must demonstrate that Frain
committed a deceptive or unfair act, with the intent that Steve’s rely on that act, and that Frain
committed the act during a course of conduct involving trade or commerce. Siegel v. Shell Oil
Co., 612 F.3d 932, 934 (7th Cir. 2010). While Frain must intend to create Steve’s reliance on a
deceptive representation, Steve’s need not prove that it actually relied on any deceptive
representation in order for Frain to be liable. See Gehrett v. Chrysler Corp., 379 Ill.App.3d 162,
175, 882 N.E.2d 1102, 1115 (Ill. App. Ct. 2008) (“the plaintiff need not prove that he relied on
the deceptive act”) (distinguished on other grounds by Langendorf v. Conseco Senior Health Ins.
Co., 590 F.Supp.2d 1020 (N.D. Ill. 2008); see also Keeling v. Esurance Ins. Co., 660 F.3d 273,
275 (7th Cir. 2011). An unfair or deceptive act is one that both violates public policy, and is so
oppressive that the consumer has little choice but to submit, or that causes substantial injury.
Siegel, 612 F.3d at 934. To prevail under the ICFA, Steve’s must demonstrate that Frain’s
deceptive conduct is the proximate cause of such an injury. Oshana v. Coca-Cola Co., 472 F.3d
506, 514 (7th Cir. 2007); see also Sabo v. Wellpet, LLC, No. 16 C 8550, 2017 WL 1427057, at
*3 (N.D. Ill. 2017) (consumers failed to demonstrate that the defendant’s deceptive placement of
a “Made in America” label on pet food that contained foreign ingredients caused consumers to
pay a premium).
If Steve’s opted not to purchase the Machine but for Frain’s deceptive
representations, then Frain caused substantial injury such that it is liable under the ICFA. See
Rockford Memorial Hosp. v. Havrilesko, 368 Ill.App.3d 115, 121, 858 N.E.2d 56, 62 (Ill. App.
Ct. 2006) (explaining that deception under the ICFA exists where the consumer would have
acted differently had it been aware of a material fact that the seller concealed); see also
Philadelphia Indem. Ins. Co. v. Chicago Title Ins. Co., 771 F.3d 391, 402 (a deceptive act that
proximately causes actual damage is sufficient under ICFA).
Whether the Court can enter summary judgment on the ICFA claim comes down to a
single sticking point.14 Steve’s claims that Frain placed the recreated Prodo-Pak sticker on the
Machine to induce Steve’s into accepting the Machine at the Factory Acceptance Test.15
Analysis of the most relevant case law indicates that placement of this recreated sticker qualifies
Another possible deception is the Agreement’s description of the Machine as a “Prodo-Pak Form & Fill.” This,
however, is clearly not a deceptive act because the Agreement also specifies that Frain would “retool” the Machine,
indicating that Frain would add new parts to a Prodo-Pak machine. Retool means to “equip (a factory) with new or
adapted tools.” Retool, Oxford English Dictionary (2017), https://en.oxforddictionaries.com/definition/retool. All
the evidence indicates that Steve’s received a Machine that had Prodo-Pak components and that Frain did indeed
retool the Machine prior to delivery.
Steve’s also alleges that fifteen other features of the Machine are different from, and inferior to, what Frain led it
to expect through the Proposal, the Agreement, and the Factory Acceptance Test. (Dkt. 91, at 7–8.) However,
Steve’s fails to allege which clauses in the Proposal or Agreement led it to expect that the Machine would have
certain specifications or operate in a particular fashion. For example, Steve’s claims that the fact the Machine’s ORings were made with Viton, not silicone rubber, was deceptive because Frain led Steve’s to believe that they would
be made with rubber. (Dkt 91, at 7.) However, Steve’s fails to indicate what representation by Frain led it to expect
that the Machine would have silicone rubber O-Rings. As a second example, Steve’s claims that the “stopper rod
ends were all supposed to be the same diameter in order to produce a consistent product.” (Id.) Steve’s fails to
specify how it came to have that expectation about those components, and the Court has found nothing in the record
indicating how the stopper rods were “supposed” to be made.
as a deceptive act under the ICFA.
See Gehrett, 379 Ill.App.3d 162, 882 N.E.2d 1102
(upholding a jury determination that a car manufacturer deceived lessees under the ICFA by
placing a high-end four-wheel drive symbol on the gear shift when the vehicle was in fact
equipped with a different, less expensive four-wheel drive system); Sabo, 2017 WL 1427057
(N.D. Ill. 2017). Just as the labels in Gehrett and Sabo qualified as deception under the ICFA, so
too does the placement of this Prodo-Pak sticker that did not come from Prodo-Pak.
With respect to the second element, Frain’s intent that Steve’s rely on the placement of
the sticker, it is difficult to imagine that Frain meant this sticker to serve any other purpose.
Common sense indicates that Frain placed this sticker on the Machine to make the Machine look
more authentic, thereby inducing Steve’s to purchase it. And there is no dispute that the third
element is satisfied, as this representation took place in the course of commerce between the two
The final question is whether Steve’s suffered a substantial injury proximately caused by
Frain’s deception. Steve’s claims that Frain’s deception injured Steve’s by inducing it to spend
hundreds of thousands of dollars on a machine that it expected to function and instead had to pay
third parties to fix the Machine. Here, there is evidence that Steve’s sought out a Prodo-Pak
machine because Steve’s believed that Prodo-Pak produced the highest quality machines on the
market. Because Steve’s specifically sought out a Prodo-Pak, it is therefore plausible that the
placement of this sticker assured Steve’s that it was getting the type of Machine it wanted. As
such, Steve’s has sufficiently pled and supported its ICFA claim such that it survives Frain’s
motion for summary judgment. See Wiegel v. Stork Craft Mfg., Inc., 780 F.Supp.2d 691 (N.D.
Ill. 2011) (denying the defendant’s motion for summary judgment on an ICFA claim where the
plaintiff purchased one of the defendant’s cribs after reading the defendant’s deceptive
representations regarding the crib’s safety features). Although Steve’s does not present evidence
that the sticker specifically deceived it into accepting the Machine, it is likely that the sticker
reassured Steve’s at the Factory Acceptance Test that it was getting the product for which it had
bargained. Given the requirement that courts construe the ICFA liberally so as to effectuate its
purpose - protecting those engaged in commerce (see Thrasher-Lyon v. Ill. Farmers Ins. Co., 861
F.Supp.2d 898, 909 (N.D. Ill. 2012)), the Court makes the reasonable assumption that Steve’s
chose to accept this Machine in part due to the placement of this sticker. That being said, while
this is sufficient to establish that Frain’s deception contributed to Steve’s purchase of the
Machine, it is not enough to conclude that Steve’s decision to purchase the Machine actually
caused an injury. Whether the deception actually injured Steve’s brings us back to the discussion
about what caused the Machine to malfunction. Given the factual dispute on that question, the
Court cannot conclude that Frain actually injured Steve’s by placing that sticker on the Machine.
If the Machine functioned just as well as a Prodo-Pak, and the only problem with the Machine
was operator error, then Frain’s deception did not cause any injury. If, however, the Machine
functioned worse than a Prodo-Pak machine would have with same operators, then Steve’s did
suffer an injury such that a reasonable jury could find liability on this count.
Accordingly, the Court denies both motions for summary judgment on the ICFA count.
For the foregoing reasons, the Court denies the cross-motions for summary judgment
(Dkt. 86; Dkt. 89.)
Hon, Virginia M. Kendall
United States District Court Judge
Northern District of Illinois
Date: September 14, 2017
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