Rench v. T D Bank, N.A.
3:13-cv-00922
S.D. Ill.Jan 2, 2018Background
- HMI Industries manufactured and sold FilterQueen vacuums and air filters exclusively via in-home demonstrations; it used promotional mailed scratch-off cards to induce consumers to request a prize hotline and allow sales visits.
- HMI contracted with TD Bank in 2010 to use TD’s Renovate Card Program to finance consumer purchases; A-1 Allergy Relief (A-1) was an HMI distributor that sold products and used TD financing for many consumers.
- Plaintiff Sabra Rench received a scratch card in 2012, called the winners hotline, was told she had to agree to an in-home demonstration to receive the prize, and was later charged on a TD Renovate account after lengthy in-home sales presentations despite not receiving proper finance disclosures.
- Rench sued HMI (and originally TD and A-1), alleging RICO mail fraud, violations of the Illinois Prizes and Gifts Act (IPGA), and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA); TD was previously dismissed and A-1 is in default.
- Rench moved to certify three classes (national RICO class; Illinois IPGA and ICFA subclasses) of consumers who received the scratch cards and purchased or were charged for FilterQueen products via Renovate accounts.
- The court granted class certification under Fed. R. Civ. P. 23(a) and 23(b)(3), appointing Rench as class representative and counsel, finding numerosity, commonality, typicality, adequacy, predominance, and superiority satisfied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Class certification under Rule 23(a) (numerosity, commonality, typicality, adequacy) | Rench: class members share common facts and legal claims arising from identical mailed scratch cards and HMI conduct; sufficient size and adequate counsel | HMI: did not dispute Rule 23(a) in briefing (generally contended individualized issues from phone/sales presentations) | Court: Rule 23(a) satisfied — class is numerous; common questions exist; claims are typical; representative and counsel are adequate |
| Predominance for RICO class (mail fraud, proximate cause) | Rench: liability turns on whether HMI’s mailed scratch cards were deceptive; common proof will resolve class claims | HMI: asserted proximate cause and reliance require individualized proof about phone calls and in-home statements | Court: common questions predominate; RICO liability focuses on defendant’s mailing scheme and whether cards were misleading, suitable for class adjudication |
| Predominance for IPGA and ICFA subclasses (failure to disclose inducement to call) | Rench: written scratch cards failed to disclose that calls would lead to sales solicitations; IPGA/ICFA liability depends on card content, not individual calls | HMI: argued resolution depends on individualized phone-call evidence | Court: predominance met because liability hinges on the content of the mailed cards, a common issue across class members |
| Superiority (Rule 23(b)(3)) | Rench: class action is superior given large number of similar small claims and common legal issues | HMI: implicit argument that individual adjudication required by individualized proof | Court: class action is superior — promotes efficiency, prevents inconsistent results, and is appropriate here |
Key Cases Cited
- Oshana v. Coca–Cola Co., 472 F.3d 506 (7th Cir. 2006) (ascertainability and class-definition principles)
- Messner v. Northshore Univ. HealthSystem, 669 F.3d 802 (7th Cir. 2012) (Rule 23(b)(3) predominance standard)
- Keele v. Wexler, 149 F.3d 589 (7th Cir. 1998) (common nucleus of operative fact satisfies commonality)
- Spano v. The Boeing Co., 633 F.3d 574 (7th Cir. 2011) (commonality tolerates factual variation when common answers exist)
- Bridge v. Phoenix Bond & Indem. Co., 533 U.S. 639 (U.S. 2008) (mailings incidental to a scheme can constitute mail fraud)
- Suchanek v. Sturm Foods, Inc., 764 F.3d 750 (7th Cir. 2014) (mailings incident to an essential part of a fraudulent scheme)
- Haroco Inc. v. Am. Nat'l Bank & Trust Co., 747 F.2d 384 (7th Cir. 1984) (RICO proximate cause requirement)
- Mullins v. Direct Digital, LLC, 795 F.3d 654 (7th Cir. 2015) (whether representations are false or misleading is a common question suitable for class treatment)