Hamilton County, IL et al v. Trinity Industries Inc. et al

Filing 83

ORDER denying 46 Motion to Dismiss for Failure to State a Claim. Signed by Judge David R. Herndon on 2/18/16. (klh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ST. CLAIR COUNTY, ILLINOIS AND
MACON COUNTY, ILLINOIS, INDIVIDUALLY
AND ON BEHALF OF ALL OTHER COUNTIES
IN THE STATE OF ILLINOIS,
Plaintiffs,
v.

No. 14-1320-DRH

TRINITY INDUSTRIES, INC., AND
TRINITY HIGHWAY PRODUCTS, LLC,
Defendants.

MEMORANDUM and ORDER

HERNDON, District Judge:
Introduction and Background
Pending before the Court is defendants’ motion to dismiss plaintiffs’
purported first amended class action complaint (Doc. 46). Naturally, plaintiffs
oppose the motion (Doc. 59). Based on the record and the applicable law, the
Court DENIES the motion.
On February 5, 2015, plaintiffs, St. Clair County, Illinois and Macon County,
Illinois, filed a first amended class action complaint against Trinity Industries, Inc.
and Trinity Highway Products, LLC., for breach of implied warranties of
merchantability and fitness for a particular purpose (Count I); violations of the
uniform deceptive trade practices act (Count II); unjust enrichment (Count III) and

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injunctive relief (Count IV) (Doc. 34). 1

Plaintiffs bring this action “to redress

economic harm to Plaintiffs, St. Clair County, Illinois and Macon County, Illinois
(“the Counties”) and all other counties in the State of Illinois caused by Trinity
relating to the sale of an unsafe and unapproved guardrail end treatment that has
been sold and installed as a safety device on the roads and highways of the counties
in the State of Illinois.” (Doc. 34, ¶ 1).
The amended complaint alleges the following. Defendants manufacture the
ET-Plus guardrail end terminal (“ET-Plus”).

It was developed by Texas A&M

University and produced by defendants under license. The ET-Plus is commonly
referred to as a “head” and is used in connection with the standard “W beam” style
guardrail to absorb and dissipate the energy of vehicular impact. It was originally
approved by the Federal Highway Administration (“FHWA”) in January 2000, and
was built according to designs approved by the FHWA. Upon impact, the guardrail
is guided away from the vehicle in a flat ribbon, absorbing the energy of the vehicle.
Plaintiffs maintain that defendants secretly modified the dimensions of the ET-Plus
between the years 2002 and 2005. Plaintiffs further allege that despite FHWA
requirements, defendants never sought approval for the secretly redesigned
ET-Plus or provided scaled drawings of the modified unit to FHWA. Plaintiffs
allege that with the 2005 modified ET-Plus the guardrail does not feed properly
through the chute due to reduced area/dimensions of the feeder chute itself.
1 The original complaint was filed on November 26, 2014 (Doc. 2). Plaintiffs seek to represent
“themselves and … all the other counties of the State of Illinois which were harmed by Defendants’
wrongful and improper conducted….” (Doc. 34; p. 16, ¶ 49).

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Plaintiffs assert that defendants modified the feeder channels of the standard
extruder throat to 4 inches wide, as opposed to the previously approved and
functional ET-Plus that was equipped with 5-inch wide feeder channels. Plaintiffs
allege this smaller 4-inch design prevents the ET-Plus from traveling along the
guardrail upon impact, and instead impales vehicles or causes the guardrails to
double over on itself.
Defendants move for dismissal based on the following: (1) plaintiffs’
amended complaint fails to state a claim upon which relief can be granted because
defendants cannot be liable for the manufacture and sale the ET-Plus that has
received continued approval from the FHWA under the applicable federal crash
testing criteria; (2) plaintiffs’ breach of warranty and unjust enrichment claims
should be dismissed for failure to state a claim; and (3) plaintiffs’ time-barred
claims should be dismissed. 2 Plaintiffs responded (Doc. 59). As the motion is
ripe, the Court addresses the merits.
Motion to Dismiss Standard
A motion under

Rule

12(b)(6)

challenges

the

sufficiency

of

the

complaint. Christensen v. Cty. of Boone, Ill., 483 F.3d 454, 457 (7th Cir. 2007).
Under the federal notice pleading standards, “a plaintiff's complaint need only
provide a short and plain statement of the claim showing that the pleader is entitled
2 Also in this motion, defendants alternatively moved to stay the action pending the outcome of
United States ex rel. Joshua Harman v. Trinity Indus. Inc., 2:12-cv-0089-JRG (E.D. TX). Harmon
is a qui tam action under the False Claims Act (“FCA”) based on similar allegations to the case at bar.
The Court granted the motion to stay (Doc. 67). However, on September 30, 2015, the Court
granted plaintiff’s motion to lift the stay (Doc. 74).

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to relief, sufficient to provide the defendant with fair notice of the claim and its
basis.” Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008); see also Fed.
R. Civ. P. 8(a)(2). When considering a motion to dismiss under Rule 12(b)(6), the
Court must “accept [ ] as true all well-pleaded facts alleged, and draw [ ] all possible
inferences in [the plaintiff's] favor.” Tamayo, 526 F.3d at 1081.
A complaint, however, must also allege “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) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). For a claim to have facial plausibility, a plaintiff must plead “factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a
defendant has acted unlawfully.” Id. Plausibility, however, “does not imply that the
district court should decide whose version to believe, or which version is more
likely than not.” Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).
In addition to the complaint itself, the Court may consider “documents
attached to the complaint, documents that are critical to the complaint and referred
to in it, and information that is subject to proper judicial notice.” Geinosky v. City

of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). When, however, matters
outside the pleadings are presented to a Court deciding a motion to dismiss,
that

Court

must

either

convert

the motion to

dismiss into

for summary judgment or exclude the additional matters.
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one

12(d); Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998). The Court notes
that while defendants did file extraneous matters in support of the motion, the
Court is not converting the motion to dismiss as one for summary judgment at this
early stage of the litigation.
Analysis
First, defendants move to dismiss plaintiffs’ claims arguing that the allegedly
false, fraudulent or deceptive statements made by defendants underlying each of
plaintiffs’ claims are true as a matter of law. Specifically, defendants maintain that
FHWA has continuously and repeatedly affirmed that the ET-Plus meets crash
testing criteria and that an “unbroken chain of eligibility” has existed for the
ET-Plus since 2005. Plaintiffs counter that their amended complaint is not as
simplistic as defendants maintain. Plaintiffs contend that because of defendants’
significant changes to the ET-Plus, the end terminal that was ultimately approved
by the FHWA in 2005 was vastly dissimilar to the unit that had been tested. Thus,
plaintiffs contend that every time defendants sold the ET-Plus after the secret
modifications, it provided a false certification that the ET-Plus conformed to the
unit that had been approved by the FHWA. After reviewing the pleadings and the
documents, the Court finds that plaintiffs have stated a plausible cause of action
against defendants at this stage of the litigation. The first amended complaint is
based upon defendants’ alleged fraudulent certifications and faulty warranties that
occurred after 2005. Clearly, these disputes of fact need to be addressed at the

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summary judgment stage after the benefit of discovery. Thus, the Court denies the
motion based on this argument.
Next, defendants argue that the breach of implied warranty claims must be
dismissed because plaintiffs lack direct privity with defendants and fail to
sufficiently allege third-party beneficiary status. Defendants argue that plaintiffs
do not allege that they directly entered into any contracts to purchase ET-Plus
united from defendants. Thus, according to defendants, plaintiffs lack the direct
buyer-seller relationship that is required.

Plaintiffs counter that they have

specifically alleged a cause of action for breach of implied warranty. The Court
agrees. Plaintiffs allege that they “were a third-party beneficiary of the implied
warranties of merchantability and fitness for a particular purpose because the
manufacturer Defendants knew the identity, purpose, and requirements of
Plaintiffs and members of the Class and manufactured and delivered those goods
specifically to meet those requirements, which was to increase the safety of and
protect those driving on the roads of the particular counties.” (Doc. 34, ¶64).
Plaintiffs have sufficiently alleged a plausible cause of action for breach of implied
warranties. Thus, the Court denies the motion as to this argument.
Also, defendants argue that the unjust enrichment claim must be dismissed
because plaintiffs have failed to sufficiently allege the benefit plaintiffs conferred on
defendants and defendants have not engaged in wrongful or unjust conduct as a
matter of law.

Under Illinois law, to state a claim of unjust enrichment, “a

plaintiff must allege that the defendant has unjustly retained a benefit to the
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plaintiff's detriment, and that defendant's retention of the benefit violates the
fundamental principles of justice, equity, and good conscience.” Gagnon v.

Schickel, 983 N.E.2d 1044, 1052 (Ill. App. 2012).
Plaintiffs allege that they conferred a direct benefit on defendants.
Specifically, plaintiffs allege: “[t]housands of the [ET-Plus] have been paid for, at
least in part, by the [plaintiffs] and other counties in the State of Illinois and
installed on Illinois highways and roads.” (Doc. 34, ¶ 2). Plaintiffs also allege that
the ET-Plus units defendants shipped were significantly different than the unit that
received FHWA approval and without defendants’ false certifications, plaintiffs
would not have bought the ET-Plus. Id. at ¶¶ 24, 42. Further, plaintiffs maintain
that “[b]y their wrongful acts and omissions … Defendants were unjustly enriched
at the expense of the Plaintiffs … as Defendants voluntarily accepted and the
retention of the benefit would be inequitable and injust.” Id. at ¶ 80. Thus, the
Court finds that plaintiffs have pled facts which are sufficient to put defendants on
notice with regard to the unjust enrichment claim. The amended complaint
contains factual allegations which are enough “to raise a right to relief above the
speculative level.” Twombly, 550 U.S. at 555. Moreover, at present there are
“enough facts to raise a reasonable expectation that discovery will reveal evidence”
supporting the plaintiffs’ claims. Id. at 556.
Lastly, defendants argue that the statute of limitations bars plaintiffs’ claims
as plaintiffs fail to identify any time period for which they seek recovery.
Defendants maintain that at a minimum that the breach of warranty claims prior to
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November 26, 2010; the consumer fraud claims prior to November 26, 2011; and
all unjust enrichment claims prior to November 26, 2009 must be dismissed as
expired as a matter of law. Moreover, defendants argue that plaintiffs are not
entitled to equitable estoppel as plaintiffs have failed to allege facts that defendants
engaged in any conduct intended to prevent them from discovering their claims or
that plaintiffs justifiably relied on such representations in failing to timely assert
their causes of action. Plaintiffs counter that the time frame under which plaintiffs
knew or should have known of their injury and that it was wrongfully caused
commenced at the earliest on November 13, 2014. At this stage of the pleadings,
the Court rejects defendants’ arguments.
The statute of limitations is an affirmative defense, see Fed.R.Civ.P. 8(c), and
need not be addressed by plaintiffs in their complaint. See U.S. Gypsum Co. v.

Indiana Gas Co., Inc., 350 F.3d 623, 626 (7th Cir. 2003); see also United States v.
N. Trust Co., 372 F.3d 886, 888 (7th Cir. 2004) (“[A] complaint states a claim on
which relief may be granted whether or not some defense is potentially available.”).
Therefore, complaints need not anticipate defenses, and the resolution of the
statute of limitations comes after the complaint stage. See N. Trust Co., 372 F.3d at
888 (citing Gomez v. Toledo, 446 U.S. 635, 100 S.Ct. 1920, 64 L.Ed.2d 572
(1980)); Cancer Found., Inc. v. Cerberus Capital Mgmt., LP, 559 F.3d 671, 674
(7th Cir. 2009) (““Dismissing a complaint as untimely at the pleading stage is an
unusual step, since a complaint need not anticipate and overcome affirmative
defenses, such as the statute of limitations.”);
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Partners, 682 F.3d 687, 690 (7th Cir. 2012) (“Further, these defenses typically
turn on facts not before the court at that stage in the proceedings.”).
This general rule is subject to an important exception: the statute of
limitations issue may be resolved definitely on the face of the complaint when the
plaintiff pleads too much and admits definitively that the applicable limitations
period has expired. See id; Gypsum, 350 F.3d at 626 (“A litigant may plead itself
out of court by alleging (and thus admitting) the ingredients of a defense....”);

O'Gorman v. City of Chicago, 777 F.3d 885, 889 (7th Cir. 2015) (“if a plaintiff
alleges facts sufficient to establish a statute of limitations defense, the district
court may dismiss the complaint on that ground.”). However, the Seventh Circuit
has cautioned that this “irregular” approach is appropriate “only where the
allegations of the complaint itself set forth everything necessary to satisfy the
affirmative defense.” Chi. Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d
610, 613–14 (7th Cir. 2014) (quotations omitted); see N. Trust Co., 372 F.3d at
888. As long as there is a conceivable set of facts, consistent with the complaint,
that would defeat a statute-of-limitations defense, questions of timeliness are left
for summary judgment (or ultimately trial), at which point the district court may
determine compliance with the statute of limitations based on a more complete
factual record. See Clark v. City of Braidwood, 318 F.3d 764, 767 (7th Cir.
2003) (reversing dismissal because, “at this stage, the question is only whether
there is any set of facts that if proven would establish a defense to
the statute of limitations, and that possibility exists” (citation omitted));
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Bankers Life & Cas. Co., 959 F.2d 75, 80 (7th Cir. 1992) (“[W]hen a complaint is
dismissed at the pleadings stage the question is not what are the facts, but is there
a set of facts that if proved would show that the case had merit?”).
Based on the following the Court concludes that plaintiffs have not pled
themselves of court based on the allegations in their amended complaint. The Court
notes that the parties do not dispute that the general statute of limitations for
breach of warranty, consumer fraud, and unjust enrichment claims are subject to
four-year, three-year and five-year statute of limitations respectively. 810 ILCS
5/2-725(a); 815 ILCS 505/10a(e); and 735 ILCS 5/13-205.

In the amended

complaint, plaintiffs allege that the existence of the sale of the unapproved version
of the ET-Plus was not brought to the FHWA’s attention until January 2012. (Doc.
34, ¶ ¶ 33, 36).

Further, plaintiffs allege that in a February 2012 meeting

defendants admitted for the first time that they had shrunk the width of the ET-Plus
feeder channels from 5 inches to 4 inches and plaintiffs also allege at this time
defendants failed to inform that they had also shrunk the interior vertical clearance
of the feeder chute and the exit gate.

Id. at ¶ 33. In addition, the amended

complaint alleges that defendants continue to falsely certify that the FHWA has
approved the use of the ET-Plus on highways across the nation. Id. at ¶ ¶ 34, 35, 39
& 41. The amended complaint also alleges that it was not until November 13,
2014 that the Illinois Department of Transportation sent a letter to defendants
advising that the ET-Plus traffic barrier would not be allowed on current or future
contracts. Id. at ¶¶ 42, 43. Based on those allegations, the Court finds that the
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claims are not time-barred. Therefore, dismissal for failure to file a complaint
within the statute of limitations period is not appropriate at this stage in the
proceedings.
Conclusion
Accordingly, the Court DENIES defendants’ motion to dismiss the purported
first amended class action complaint (Doc. 46).
IT IS SO ORDERED.
Signed this 18th day of February, 2016.

Digitally signed
by Judge David R.
Herndon
Date: 2016.02.18
15:47:42 -06'00'

United States District Judge

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