Schiffner v. Motorola, Inc.

SIXTH DIVISION
June 30, 1998












No. 1-97-2456

FRANK J. SCHIFFNER, on Behalf of ) Appeal from the
Himself and All Other Persons ) Circuit Court of
Similarly Situated, ) Cook County
)
Plaintiff-Appellant, )
)
V. ) No. 95 CH 01879
)
MOTOROLA, INC., ) Honorable
) Stephen A. Schiller,
Defendant-Appellee. ) Judge Presiding.

JUSTICE GREIMAN delivered the opinion of the court:

Plaintiff Frank J. Schiffner appeals the dismissal of his
fourth amended complaint against defendant Motorola, Inc., based
on defendant's marketing and sale of cellular telephones. The
circuit court granted defendant's section 2-615 motion to dismiss
(735 ILCS 5/2-615 (West 1996)), finding that federal law
preempted plaintiff's state law causes of action pursuant to the
decision in Verb v. Motorola, Inc., 284 Ill. App. 3d 460 (1996),
appeal denied, 172 Ill. 2d 568 (1997).
The issue on appeal is whether plaintiff's causes of action
under state law are preempted by federal law, i.e., the
Electronic Product Radiation Control Act (Act) (21 U.S.C.A.
360hh through 360ss (West Supp. 1998)). The Verb court held
that the Act preempted the same causes of action advanced by the
instant plaintiff in his fourth amended complaint. We find the
Verb case persuasive and dispositive of this issue. Thus, we
affirm the dismissal of plaintiff's complaint.
In addition, however, plaintiff contends that his complaint,
unlike the Verb complaint, sufficiently stated a compensable
injury by alleging the diminished value of a product due to
defects associated with the product. We agree with plaintiff
that such an allegation states a compensable injury.
The procedural background of this case tracks the path of
the Verb complaint through the appellate decision in Verb, which
was first filed in March 1996 and then, upon the denial of a
petition for rehearing, was issued as a modified opinion in
November 1996.
In August 1993, the circuit court dismissed the Verb
complaint, holding that its subject matter was preempted by
federal law and ruling that the Verb plaintiffs had not alleged a
compensable injury. The circuit court's ruling was appealed.
In June 1995, the present plaintiff filed a second amended
complaint. Defendant filed a motion to dismiss based on the
circuit court's previous dismissal of the Verb complaint, which
was then pending on appeal.
In March 1996, the appellate court filed its opinion in Verb
and affirmed the dismissal of the Verb complaint. The Verb
plaintiffs filed a petition for rehearing with the appellate
court.
In response to the March 1996 Verb decision, the present
plaintiff sought and received leave to file another amended
complaint in June 1996. In September 1996, defendant filed
another section 2-615 motion to dismiss plaintiff's third amended
complaint or, in the alternative, a stay pending the appellate
court's ruling the rehearing petition on Verb. The circuit court
granted a stay. In November 1996, the appellate court denied the
Verb rehearing petition and filed a modified opinion.
In response to the Verb modified opinion, the circuit court
lifted the stay in the present case in February 1997. On
February 5, 1997, the circuit court, finding that the Verb
opinion was dispositive on the preemption issue and binding on
it, dismissed plaintiff's third amended complaint and allowed
plaintiff to amend again.
With this background and direct link to Verb, plaintiff then
filed his fourth amended complaint, which is at issue in the
present appeal. Plaintiff's fourth amended complaint arises out
of the marketing and sale of cellular portable telephones by
defendant. Plaintiff alleged three causes of action: (1) breach
of implied warranty of merchantability under the Uniform
Commercial Code (810 ILCS 5/2-103 et seq. (West 1992)); (2)
consumer fraud; and (3) violation of the Magnuson-Moss Warranty
Act (15 U.S.C. 2301 et seq. (1994)). In addition, plaintiff
sought certain injunctive relief to stop defendant from
continuing its alleged illegal acts and conduct on an ongoing
basis as alleged in the complaint.
The gravamen of plaintiff's complaint is that defendant
manufactured and sold cellular portable telephones that were
defective because of the uncertain safety of the product and
defendant's failure to disclose potential health risks and
potential hazards associated with the use of the product.
Cellular portable phones operate with a transmission antenna that
emits the phone's electromagnetic radio waves into the phone
unit. Plaintiff further alleges that defendant did not complete
studies to definitively and accurately ascertain the safety of
the use of the phones and defendant failed to advise plaintiff
that the phones had not been proven safe. Plaintiff also alleged
that defendant failed to adequately package or label the phones;
failed to provide adequate information about the health risks;
failed to provide adequate guards to shield the user from
electromagnetic field (EMF) radiation; failed to provide adequate
instructions on how to use the phone; and failed to adequately
design the phone.
Defendant again filed a section 2-615 motion to dismiss
plaintiff's complaint. The circuit court dismissed plaintiff's
fourth amended complaint and, relying on the Verb decision,
stated that the grounds for dismissal were preemption and "a lack
of cognizable injury."
As a threshold matter, defendant asserts that the principles
of stare decisis require this panel, the sixth division of the
first district, to follow the precedent established by the second
division of the first district in Verb. Defendant's assertion
fails for two reasons. First, the doctrine of stare decisis
requires courts to follow the decisions of higher courts, but
does not bind courts to follow decisions of equal or inferior
courts. Village of Northbrook v. Cannon, 61 Ill. App. 3d 315,
322 (1978). Second, "[s]tare decisis is a policy of the courts
to stand by precedent and leave settled points of law
undisturbed." Charles v. Seigfried, 165 Ill. 2d 482, 492 (1995).
The point of law at issue in the instant case is hardly settled
law because, to date, the Verb opinion is the sole decision in
the country on federal preemption under the Act. Moreover, a
split in authority between the divisions of the first district is
not unprecedented and has led to an ultimate resolution by the
supreme court. See, e.g., Moore v. Jackson Park Hospital, 95 Ill. 2d 223 (1983) (resolving contrary decisions between the
fourth division of the first district (Muller v. Health &
Hospital Governing Comm'n, 106 Ill. App. 3d 383 (1982)) and the
first division of the first district (Isaacs v. Michael Reese
Hospital & Medical Center, 101 Ill. App. 3d 876 (1981))).[fn1]
Thus, we decline defendant's invitation to apply stare decisis to
the instant appeal.
We review de novo the dismissal of a complaint under section
2-615 for failure to state a cause of action upon which relief
can be granted. Vernon v. Schuster, 179 Ill. 2d 338, 344 (1997);
Douglas Theater Corp. v. Chicago Title & Trust Co., 288 Ill. App.
3d 880, 883 (1997).
On appeal, plaintiff essentially asserts that the Verb case
was wrongly decided and that the Verb opinion failed to address
plaintiff's arguments. We disagree.
The principles of federal preemption are well established.
The doctrine of preemption is based on the supremacy clause of
the United States Constitution, which mandates that "'the Laws of
the United States *** shall be the supreme Law of the Land; and
the Judges in every State shall be bound thereby, any Thing in
the Constitution or Laws of any State to the Contrary
notwithstanding.'" Orman v. Charles Schwab & Co., 179 Ill. 2d 282, 285 (1997) (applied federal preemption), quoting U.S.
Const., art. VI, cl. 2; Stern v. Norwest Mortgage, Inc., 179 Ill. 2d 160, 166 (1997) (rejected federal preemption).
Congressional intent determines whether a federal statute
preempts state law. Scholtens v. Schneider, 173 Ill. 2d 375, 379
(1996) (no preemption); Busch v. Graphic Color Corp., 169 Ill. 2d 325, 334 (1996) (and cases cited therein) (preemption applies).
"An act of Congress or regulatory law promulgated thereunder may
supersede the statutory, regulatory or common law of any state
where such '[is] the clear and manifest purpose of Congress.'"
Orman, 179 Ill. 2d at 285, quoting Cipollone v. Liggett Group,
Inc., 505 U.S. 504, 516, 120 L. Ed. 2d 407, 422, 112 S. Ct. 2608,
2617 (1992), quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 91 L. Ed 1447, 1459, 67 S. Ct. 1146, 1152 (1947).
The intent of Congress to preempt state law may be
manifested "'by express provision, by implication, or by a
conflict between federal and state law.'" Busch, 169 Ill. 2d at
335, quoting New York State Conference of Blue Cross & Blue
Shield Plans v. Travelers Insurance, Co., 514 U.S. 645, 654, 131 L. Ed. 2d 695, 704, 115 S. Ct. 1671, 1676 (1995); see also Orman,
179 Ill. 2d at 285 ("[a] congressional act can either expressly
or implicitly preempt a state cause of action"), citing
Freightliner Corp. v. Myrick, 514 U.S. 280, 287, 131 L. Ed. 2d 385, 392, 115 S. Ct. 1483, 1487 (1995); see also Scholtens, 173 Ill. 2d at 379 ("Congress' intent to preempt state law may be
explicitly stated in the statute's language or implicitly
contained in its structure and purpose"), citing Shaw v. Delta
Air Lines, Inc., 463 U.S. 85, 95, 77 L. Ed. 2d 490, 500, 103 S. Ct. 2890, 2900 (1983).
Notably, decisions of federal courts interpreting a federal
act are controlling upon Illinois courts so that a federal act
would be given uniform application. Busch, 169 Ill. 2d at 335.
However, since no federal court has yet construed the preemptive
scope of the Act, we can seek no guidance there. In addition,
research has revealed that no other state has addressed the issue
presented here. Thus, the only court to decide the preemptive
effect of the Act is the Verb court.
The Verb court specifically found "that the FDA [Food and
Drug Administration] does preempt a state's power over the issues
in the case at bar because the FDA directly regulates electronic
products that emit radiation with regard to public health."
Verb, 284 Ill. App. 3d at 468. The Verb court quoted the Act as
the empowering statute.
Factually, the Verb case and the instant case are
indistinguishable: (1) the allegations in the complaints are
virtually alike for purposes of the preemption issue, albeit not
identical for purposes of the damage issue; and (2) the causes of
action asserted in the complaints are the same. Regarding the
allegations, the Verb court characterized the Verb complaint as
follows:
"In the present case, plaintiffs' complaint ***
centered on the lack of warnings as to the safety of
and possible health risks caused by cellular telephones
purchased by them which, the parties agree, emit
radiation. More specifically, as stated in plaintiffs'
opening brief on appeal, 'This case arises out [of] the
Defendants' failure to warn the consuming public,
including putative Plaintiffs, of the risks associated
with the use of cellular portable telephones and the
Defendants' false pronouncements of the phones'
"proven" safety, the safety of which has clearly not
been proven.' (Emphasis in original.)" Verb, 284 Ill.
App. 3d at 469.
The instant complaint can aptly be described in the exact same
way. In addition, the causes of action are the same and
plaintiff apparently does not contest that fact. The causes of
action in each case include breach of implied warranty of
merchantability, violation of the Magnuson-Moss Warranty Act and
consumer fraud.
As to the legal issue, plaintiff's arguments on appeal as to
the merits of preemption were addressed by the Verb court.
First, plaintiff observes that the Act does not expressly preempt
state law claims. Indeed, the Verb court did not find that an
express preemption existed in the Act. Rather, the Verb court
correctly observed that "Congress can assert exclusive power
either by explicit statutory language or by regulating a matter
in such detail as to leave no room for state involvement." Verb,
284 Ill. App. 3d at 467; see also Busch, 169 Ill. 2d at 335
(federal preemption can be evidenced "by express provision, by
implication, or by a conflict between federal and state law"
(emphasis added)).
Second, plaintiff argues that preemption does not apply
because there have been no standards prescribed for the
performance of cellular portable telephones and, therefore, there
can be no conflict between federal and state law. The Verb court
expressly found:
"[I]t is irrelevant whether the FDA has not set any
standards, as plaintiffs allege, because the power to
do so nonetheless resides with the FDA. Any
determination by the trial court as to whether the
cellular telephones are unsafe and what warnings and
labels must be made would require the court to
establish standards of safety and warnings, which would
usurp the FDA's exclusive power to do so with respect
to electronic products that emit radiation." Verb, 284
Ill. App. 3d at 469.
The absence of an affirmative regulation by an agency that is
authorized to make such regulations does not discharge its power
to do so and does not extinguish Congress' intent to relegate the
authority to a federal agency to enact, where appropriate and
approved, uniform national standards. See Ray v. Atlantic
Richfield Co., 435 U.S. 151, 178, 55 L. Ed. 2d 179, 201, 98 S. Ct. 988, 1004 (1978); cf. Freightliner Corp. v. Myrick, 514 U.S. 280, 286, 131 L. Ed. 2d 385, 392, 115 S. Ct. 1483, 1487 (1995)
(the applicable federal agency did not have "all authority over
the regulated area" under a different statute). Moreover, as
previously stated, the United States Supreme Court has recognized
three ways in which preemption of state law may arise: "by
express provision, by implication, or by a conflict between
federal and state law." (Emphasis added.) New York State
Conference of Blue Cross & Blue Shield Plans, 514 U.S. at 654,
131 L. Ed. 2d at 704, 115 S. Ct. at 1676. Therefore, the lack of
an actual conflict between federal and state law does not
necessarily determine whether preemption applies.
Third, plaintiff argues that the Act does not preempt his
state law claims, relying on Medtronic, Inc. v. Lohr, 518 U.S. 470, 135 L. Ed. 2d 700, 116 S. Ct. 2240 (1996). The Verb court
discussed and distinguished the Lohr case. Verb, 284 Ill. App.
3d at 470. The Lohr court held that the plaintiffs' state
claims, which were based on the defendant's manufacture of a
pacemaker that failed and caused injuries to the recipient of the
pacemaker, were not preempted by the federal Medical Device
Amendments of 1976 (MDA) (21 U.S.C. 360 (1994)). The Verb court
held that "Lohr is distinguishable from the present case not only
because it involved a statute different from the one here, but
more important because plaintiffs here did not allege a present
personal injury." Verb, 284 Ill. App. 3d at 470.
Fourth, plaintiff criticizes the Verb court for only
discussing Lohr and not addressing "most of Plaintiff's authority
dealing with construction of similar statutes." The Verb court
correctly noted that "[t]he key inquiry in all preemption cases
is the objective or purpose of Congress in enacting the
particular statute. The doctrine requires courts to examine the
Federal statute in question to determine whether Congress
intended it to supplant State laws on the same subject."
(Emphasis added.) Verb, 284 Ill. App. 3d at 467-68. The Supreme
Court in Lohr emphasized that to analyze preemption, courts must
consider the language of the statute, the statutory framework
surrounding it, the structure and purpose of the statute as a
whole, and "the way in which Congress intended the statute and
its surrounding regulatory scheme to affect business, consumers,
and the law." Lohr, 518 U.S. at 486, 135 L. Ed. 2d at 716, 116 S. Ct. at 2250-51. Obviously different statutes, different
preemption provisions and different regulations will be
interpreted differently. E.g., Orman, 179 Ill. 2d 282 (class
actions alleging state law claims were preempted by the federal
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq. (1994)));
Busch, 169 Ill. 2d 325 (common law claims were preempted by the
Federal Hazardous Substances Act (15 U.S.C. 1261 et seq.
(1988)), cf. Scholtens, 173 Ill. 2d 375 (the federal Employee
Retirement Income Security Act (29 U.S.C. 1144 (1982)) did not
preempt state theory of recovery). Furthermore, even the same
statute can require differing results as to preemption given
different underlying facts. E.g., Lohr, 518 U.S. 470, 135 L. Ed. 2d 700, 116 S. Ct. 2240 (the MDA did not preempt state claims);
cf., R.F. v. Abbott Laboratories, No. A-2050-96T2 (May 7, 1998)
(the MDA did preempt the plaintiffs' state claims due to FDA
involvement). As noted above, the Verb court discussed the Lohr
decision, the case on which plaintiff primarily relies, and
distinguished it on the grounds that it involved a different
statute. This court is not aware of any requirement that its
decisions must include or discuss each and every case cited as
authority by a party on appeal.
Fifth, plaintiff contends that state claims are allowed by a
general savings clause in the Act, which declares that "[t]he
remedies provided for in this part shall be in addition to and
not in substitution for any other remedies provided by law." 21
U.S.C.A. 360pp(f) (West Supp. 1998). Although it did not
mention the savings clause, the Verb court relied on two other
provisions in the Act. The Verb court quoted the provision
mandating the FDA secretary to promulgate regulations
"for electronic products to control the emission
of electronic product radiation from such products if
he determines that such standards are necessary for the
protection of the public health and safety. Such
standards may include provisions for the testing of
such products and the measurement of their electronic
product radiation emissions, may require the attachment
of warning signs and labels, and may require the
provision of instructions for the installation,
operation, and use of such products." 21 U.S.C.A.
360kk(a)(1) (West Supp. 1998).
The Act further includes a preemption clause:
"Whenever any standard prescribed pursuant to
section 360kk of this title with respect to an aspect
of performance of an electronic product is in effect,
no State or political subdivision of a State shall have
any authority either to establish, or to continue in
effect, any standard which is applicable to the same
aspect of performance of such product and which is not
identical to the Federal Standard. Nothing in this
part shall be construed to prevent the Federal
Government or the government of any State or political
subdivision thereof from establishing a requirement
with respect to emission of radiation from electronic
products procured for its own use if such requirement
imposes a more restrictive standard than that required
to comply with the otherwise applicable Federal
standard." 21 U.S.C.A. 360ss (West Supp. 1998).
Based on these provisions, the Verb court held that the
plaintiffs' claims were preempted by the FDA. Verb, 284 Ill.
App. 3d at 468-69. Although the Verb court did not discuss the
general savings clause, the Illinois Supreme Court in Orman found
that a general savings clause is not conclusive as to preemption.
Orman, 179 Ill. 2d at 292. The Illinois Supreme Court relied on
the United States Supreme Court's opinion in Freightliner in
explaining that "a statutory preemption clause which preempts
state laws that conflict with the federal law, but which also
preserves nonconflicting state laws, does not foreclose the
possibility of implied preemption." Orman, 179 Ill. 2d at 293,
citing Freightliner, 514 U.S. at 288-89, 131 L. Ed. 2d at 393,
115 S. Ct. at 1488. Accordingly, the general savings clause in
the Act does not necessarily preserve state claims.
We find that the Verb decision was correctly decided and
addressed the legal arguments now presented by plaintiff on the
preemption issue. Accordingly, we affirm the dismissal of
plaintiff's fourth amended complaint because the state claims are
preempted by federal law.
Notwithstanding our agreement with the Verb opinion on the
preemption issue, we would not find the Verb opinion to be
decisive on the damage issue because, unlike the Verb complaint,
the instant complaint sufficiently alleged a compensable injury
based on diminished value of the product due to defects
associated with the product is a compensable injury in consumer
fraud and breach of warranty causes of action. Claims for
diminished value of an allegedly defective product without the
pleading of any damage to the product or person were allowed in
Connick v. Suzuki Motor Co., 174 Ill. 2d 482 (1996), and Perona
v. Volkswagen of America, Inc., 292 Ill. App. 3d 59 (1997).
Moreover, even the Verb court would have accepted such damage
allegations. Most notably for the purposes of the present appeal
the Verb court held that the Verb plaintiffs failed to "allege
that the telephones are defective" and "failed to plead specific
facts *** that the telephones have diminished in value." Verb,
284 Ill. App. 3d at 472.
Paragraph 39 of the instant fourth amended complaint
alleges:
"Defendants['] cellular portable phones were
defective in that they were sold:
a. Without adequate information about the health
risks and the lack of information on the effects of EMF
on human cells;
b. Without adequate guards to shield the user
from the EMF radiation;
c. Without adequate instructions on how to use
the phone including how to hold the phone so as to
reduce exposure from EMF radiation;
d. Without adequate design so as to increase the
distance between the user's head and the antenna of the
phone."
Regarding damages in its count for breach of implied
warranty of merchantability, paragraph 43 of plaintiff's
complaint states:
"Plaintiff and members of the Class have been
damaged by a reduction in the value of the cellular
portable telephones, limiting the duration of their
calls and usage of the cellular portable telephone, by
modifying the cellular portable telephones or the use
thereof to limit or mitigate their exposure to the
harmful or potentially harmful radio waves, by being
subjected to increased risk of exposure to potentially
harmful radio waves, by failure to receive that which
was bargained for."
Regarding damages in his count for statutory consumer fraud,
paragraph 56 of the complaint states that "Plaintiff and Class
Plaintiffs have been damaged as well by the loss of value of the
phones they have purchased."
In Connick, the plaintiffs filed a class action lawsuit
against car companies that manufactured the Suzuki Samurai after
a consumer organization designated the Samurai as unsafe based on
its excessive risk of rolling over. In their complaint,
plaintiffs alleged that the risk of rollover was due to a defect
in either design or production, and stated claims for implied
warranty and consumer fraud. "Significantly, plaintiffs did not
allege that they had ever suffered a rollover accident in a
Samurai. Rather, they sought compensation for the diminution in
the vehicles' resale value due to the perceived safety risk."
Connick, 174 Ill. 2d at 489.
The breach of warranty claim was dismissed by the supreme
court in Connick, holding that the plaintiffs failed to allege
sufficient notice to satisfy the notice requirement for a breach
of warranty claim. Connick, 174 Ill. 2d at 495. The Connick
court did not discuss the damage allegation for the breach of
warranty claim.
The statutory consumer fraud count was reinstated but the
Connick court did not discuss the damage allegation. Connick,
174 Ill. 2d at 501-05. The supreme court held that "[w]e
reinstate the Illinois consumer fraud count, but only insofar as
it was based on the 1986 Car & Driver article or on Suzuki's
concealment of material facts regarding the Samurai's safety
risk." Connick, 174 Ill. 2d at 505. However, at least by
implication, if the damage allegation had been insufficient the
supreme court would not have reinstated the claim.
In Perona, the plaintiffs filed a class action based on the
alleged unintended acceleration of the Audi 5000 automobiles.
Following the decision in Connick, the Perona court dismissed the
breach of warranty count due to lack of notice and allowed the
statutory consumer fraud count to stand. Perona, 292 Ill. App.
3d at 64, 69. Although the Perona court did not discuss the
damage allegations in the complaint, it noted that the plaintiffs
claimed that their cars lost their resale value and if the
problem were not eventually remedied, their damages would be the
amount of the diminution of the resale value. Perona, 292 Ill.
App. 3d at 62-63. As in the Connick case, at least by
implication, if the complaint had not sufficiently pled damages,
then the Perona court would not have reinstated the consumer
fraud claim.
We believe that the decisions in Connick, Perona, and Verb
allow damage claims based on alleged diminished value of a
product. Thus, unlike the Verb complaint, plaintiff's fourth
amended complaint adequately alleged damages.
For all of the foregoing reasons, we affirm the dismissal of
plaintiff's fourth amended complaint.
Affirmed.
ZWICK and QUINN, JJ., concur.
[fn1]While appellate court panels are bound only by higher
courts, a circuit court may find it confusing to determine by
which appellate court it may be bound. See Aleckson v. Village
of Round Lake Park, 176 Ill. 2d 82, 94 (1997) (Harrison, J.,
specially concurring, joined by Heiple, C.J.) (the majority holds
that a circuit court is bound by the decisions of the appellate
court of the district in which its sits and the special
concurrence observes that since there is only one appellate
court, a decision by any appellate court is binding on all
circuit courts in the state).