Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 1 of 25 PageID #:303
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
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`Case No. 1:20-cv-04306
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`Hon. Sharon J. Coleman
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`BRIANA SIEGAL, individually and on
`behalf of all others similarly situated,
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`Plaintiff,
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`v.
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`GEICO CASUALTY COMPANY,
`GEICO INDEMNITY COMPANY, and
`GEICO GENERAL INSURANCE
`COMPANY,
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`Defendants.
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`GEICO’S MEMORANDUM IN SUPPORT OF ITS
`MOTION TO DISMISS PLAINTIFF’S FIRST AMENDED COMPLAINT
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`Lisa T. Scruggs (#6256650)
`Ronald M. Lepinskas (#6216428)
`DUANE MORRIS LLP
`190 South LaSalle, Suite 3600
`Chicago, IL 60603
`ltscruggs@duanemorris.com
`rmlepinskas@duanemorris.com
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`
`Damon N. Vocke
`DUANE MORRIS LLP
`1540 Broadway
`New York, NY 10036-4086
`dnvocke@duanemorris.com
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`DM1\11320782.10
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 2 of 25 PageID #:304
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`TABLE OF CONTENTS
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`Page
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`Introduction ......................................................................................................................................1
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`The Complaint’s Allegations ...........................................................................................................3
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`Argument .........................................................................................................................................6
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`I.
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`The Claim for Breach of Contract Should Be Dismissed. ...................................................6
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`A.
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`B.
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`The “Changes” Section Imposes a Duty on Plaintiff, Not on GEICO. ................... 7
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`Plaintiff Does Not Allege That Her Representations in Applying for
`Insurance Were Incorrect or Changed. ................................................................... 8
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`C.
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`Plaintiff’s Hindsight Perspective Is Unfair on Its Face. ......................................... 9
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`II.
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`The “Frustration of Purpose” Claim Should Be Dismissed. ..............................................10
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`III.
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`The ICFA Claim for Deception Should Be Dismissed. .....................................................11
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`A.
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`B.
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`C.
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`D.
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`There Was No False or Deceptive Statement. ...................................................... 12
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`A Reasonable Policyholder Would Expect The Advertised 15% Discount. ........ 13
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`Plaintiff Does Not Allege Materiality. .................................................................. 14
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`Plaintiff Does Not Allege Damage. ...................................................................... 15
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`IV.
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`The ICFA Unfairness Claim Should Also Be Dismissed. .................................................16
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`A.
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`B.
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`C.
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`There Was No Deceptive or False Statement. ...................................................... 16
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`No Statute or Law Was Allegedly Violated. ........................................................ 16
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`Plaintiff Has Had a Ready Alternative. ................................................................. 17
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`V.
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`The Unjust Enrichment Claim Should Also Be Dismissed. ..............................................18
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`A.
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`B.
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`It Falls Along With the ICFA Claims. .................................................................. 18
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`The Insurance Policy Preempts the Unjust Enrichment Claim. ............................ 18
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`VI. GEICO Indemnity and GEICO General Insurance Should Be Dismissed…....................19
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`Conclusion .....................................................................................................................................20
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 3 of 25 PageID #:305
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`
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`Federal Cases
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`TABLE OF AUTHORITIES
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`7-Eleven, Inc. v. Shakti Chicago, Inc., 2019 WL 3387001 (N.D. Ill. July 26, 2019) ......................8
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`Abramov v. Home Depot, Inc., 2018 WL 1252105 (N.D. Ill. March 12, 2018) ......................14, 18
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`Batson v. Live Nation Entertainment, Inc., 746 F.3d 827 (7th Cir. 2014) .....................................17
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`Bauer v. Travelers Home & Marine Ins. Co., No. 3:15-CV-348-CLS, 2017 WL
`264460 (N.D. Ala. Jan. 20, 2017) ..............................................................................................7
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`Baxter Healthcare Corp. v. OR Concepts, Inc., 69 F.3d 785 (7th Cir. 1995) .................................7
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`Bell Atlantic Corp., et al. v. Twombly, et al., 550 U.S. 544 (2007) .................................................9
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`Bober v. Glaxo Wellcome PLC, 246 F.3d 934 (7th Cir. 2001) ......................................................12
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`Davis v. G.N. Mortg. Corp., 396 F.3d 869 (7th Cir. 2005)............................................................12
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`Fair Isaac Corporation v. Trans Union, 2019 WL 1436018 (N.D. Ill. March 30,
`2019) ..........................................................................................................................................8
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`Galanis v. Starbucks Corporation, 2016 WL 6037962 (N.D. Il. Oct. 14 2016) ...........................14
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`Killeen v. McDonald’s Corporation, 317 F. Supp. 3d 1012 (N.D. Ill. 2018) ................................13
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`Kim v. Carter’s Inc., 598 F.3d 362 (7th Cir. 2010) .......................................................................15
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`Marchetti v. Chicago Title Insurance Co., 2015 WL 196222 (N.D. Ill. Jan. 14,
`2015) ........................................................................................................................................17
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`Orgone Capital III, LLC v. Daubenspeck, 912 F.3d 1039 (7th Cir. 2019) ................................6, 11
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`Siegel v. Shell Oil Co, 612 F.3d 932 (7th Cir. 2010) .....................................................................16
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`Springfield Oil Drilling Corp. v. Weiss, 2003 WL 22025006 (N.D. Ill. Aug. 28,
`2003) ........................................................................................................................................11
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`Toulon v. Continental Casualty, 877 F.3d 725 (7th Cir. 2017) .........................................12, 15, 19
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`U.S. v. Southwestern Elec. Co-op., Inc., 869 F.2d 310 (7th Cir. 1989) .........................................10
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`Ware v. Samsung Electronics America Inc., 2019 WL 2341399 (N.D. Ill. June 3,
`2019) .................................................................................................................................. 16-17
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`Washington v. Hyatt Hotels Corp., 2020 WL 3058118 (N.D. Ill. June 9, 2020)..................... 16-18
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 4 of 25 PageID #:306
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`State Cases
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`Corbin v. Allstate Corp., 140 N.E.3d 810 (5th Dist. 2019) .......................................................3, 10
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`DOD Techs. v. Mesirow Ins. Servs., Inc., 381 Ill. App. 3d 1042 (1st App. 2008) ........................15
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`Greer ex rel Peterson v. Naklicki, 877 A.3d 298 (N.J. App. Div. 2005) .........................................7
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`Stoffel v. United Farm Family Mut. Ins. Co., 900 N.E.2d 828 (Ind. Ct. App. 2009) ......................7
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`State Statutes
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`Illinois Consumer Fraud and Deceptive Business Practices Act § 505/2 ......................................11
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`Rules
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`Fed. R. Civ. P. 12(b)(6)....................................................................................................................1
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 5 of 25 PageID #:307
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`Defendants GEICO Casualty Company, GEICO Indemnity Company and GEICO General
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`Insurance Company (collectively, “GEICO”), by and through its attorneys Duane Morris LLP,
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`respectfully moves this Honorable Court, pursuant to Federal Rule of Civil Procedure 12(b)(6),
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`for dismissal of Plaintiff’s First Amended Complaint with prejudice and, in support thereof, state
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`as follows:
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`INTRODUCTION
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`Plaintiff has auto insurance through GEICO Casualty Company. During the pandemic,
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`GEICO advised that it would give its policyholders a “15% discount on new and renewal policies.”
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`(Cmplnt, ¶ 4.) Plaintiff renewed her policy with GEICO in the midst of the pandemic for the
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`period beginning June 1, 2020, and received this discount. Plaintiff has not alleged that GEICO
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`violated any statutory mandate. Instead, Plaintiff now contends that a 15% discount over a six-
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`month period, which continues for policies issued or renewed through Oct. 7, 2020, is inadequate.
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`Plaintiff argues that the purported inadequacy breached her insurance policy (Count I), frustrated
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`the purpose of her policy (Count II), violated the Illinois Consumer Fraud Act (Counts III and IV),
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`and unjustly enriched GEICO (Count V). Plaintiff also seeks to certify a class of GEICO
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`policyholders for the same claims.
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`The Complaint should be dismissed because it fails to state a claim as a matter of law.
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`GEICO did not breach any term of the insurance policy, and it provided full transparency to
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`Plaintiff on her discount. GEICO voluntarily provided this discount to its policyholders for future
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`policy periods, and was not obliged to provide the discount for prior policy periods. GEICO was
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`under no contractual, statutory, or regulatory duty to make any “giveback” at all.
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`Furthermore, GEICO never made a false or deceptive statement about the Giveback
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`Program. It offered and gave a 15% discount, and provided a “Giveback Estimator” for
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 6 of 25 PageID #:308
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`policyholders to view their discounts to the dollar. No reasonable policyholder would have
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`understood the discount to be anything other than 15% for future policy periods. The unjust
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`enrichment claim fails too because it is premised on GEICO’s statements that were, in fact, true
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`and honored. And, finally, there is no actual damage from the discount. Instead, Plaintiff benefited
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`from the discount and renewed her policy in the midst of the pandemic with full access to the
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`amount of premium being charged (which dropped from $945.57 to $900.66 on renewal, and was
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`reduced further by the 15% discount to $765.56, as alleged in the Complaint at ¶ 32).
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`At root, Plaintiff is asking the Court to allow a jury trial to retroactively reform clear and
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`unambiguous policy terms, and to change the auto insurance premiums of thousands of Illinois
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`policyholders. Yet, there is no legal basis to reform the contract, and to recalculate the premium.
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`This is especially so where Plaintiff could have canceled her auto insurance policy at any time,
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`received a pro rata refund, and signed up with another insurer for a different deal.
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`Plaintiff offers an unfairly one-sided perspective. Plaintiff considers only unexpectedly
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`lesser auto damage losses. But in the realm of insurance, unexpected events can run in both
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`directions. In the next year, or even during the remainder of Plaintiff’s current policy period, there
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`may be unexpectedly greater auto damage losses due to floods, wildfires, hail storms, or
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`sophisticated auto-theft enterprises, to name just some of the fortuities of insurance risk. If there
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`are unexpectedly greater auto damage losses, one can be sure that there will be no class-action
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`complaints seeking to retroactively increase auto-insurance premiums because GEICO had to pay
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`more than it had expected to pay. Plaintiff’s car could be wrecked or stolen tomorrow, and GEICO
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`could not (and would not) then seek to retroactively increase her premium on that basis.
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`Regulatory issues about premiums and rating are for the state legislature. And, here, the
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`state legislature has decided that “open competition in auto insurance rates is workable and
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 7 of 25 PageID #:309
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`beneficial.” Corbin v. Allstate Corp., 140 N.E.3d 810, 813 (5th Dist. 2019). The General Assembly
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`could have chosen to enact statutes that would allow lawsuits for retroactive changes to auto-
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`insurance premiums. The default rule, as in any commercial transaction, however, is that the
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`purchase price does not later change unless there is a term in the contract that dictates that result.
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`THE COMPLAINT’S ALLEGATIONS
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`Plaintiff is a Chicago resident who has had two GEICO auto insurance policies. (Cmplnt,
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`¶ 9). Plaintiff does not allege that GEICO violated a single insurance statute or regulation. Instead,
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`Plaintiff’s complaint is that GEICO’s 15% discount for six months was not large enough.
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`Plaintiff alleges nothing about her own driving history. She does not allege what
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`information she provided to GEICO in applying for, and then renewing, her insurance policy – let
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`alone, whether this information to her file was incorrect, incomplete or changed. Nonetheless,
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`Plaintiff invokes the provision in her policy that allows GEICO to adjust her premium during the
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`policy term “if any of this information [that Ms. Siegal submitted] on which the premiums are
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`based is incorrect, incomplete or changed.” (Id., ¶ 33)
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`The Complaint details the spread of COVID-19 and the Illinois Governor’s stay-at-home
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`orders. (Id., ¶¶ 10-17). Third parties reported decreased driving during the pandemic. (Id., ¶¶ 18-
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`21). GEICO allegedly collected “excessive premiums” which “led to a substantial windfall in
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`profits.” (Id., ¶ 22). A third party allegedly estimated that “at least a 30% minimum average
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`premium refund to consumers would be required to correct the unfair windfall” for roughly six
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`weeks. (Id., ¶ 25).
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`Plaintiff then complains about the “GEICO Giveback” during the pandemic, which covers
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`six months. (Id., ¶ 27). Under the “GEICO Giveback,” GEICO advised policyholders that it will
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 8 of 25 PageID #:310
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`provide a 15% discount on new and renewal policies for a six-month period. (Id.) GEICO’s
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`website explained:
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`How much is the credit?
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`The credit will be 15% of your posted new business or renewal
`amount that are not issued through a required ceded or AIP
`insurance plan. See “What is a ceded or AIP insurance plan for
`ceded policies”? Current policyholders do not need to do anything
`to receive this credit.
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`***
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`How will I get the credit?
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`You don’t need to do anything. It will be automatically applied to
`your next renewal, or if you purchase a new policy, to your second
`payment. We encourage you to monitor your policy on the GEICO
`Mobile app or geico.com. Once the credit has been applied, you will
`be able to verify it online.
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`Exhibit 1, at *2, *3 (GEICO website FAQs on the Giveback).
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`GEICO also provided the “GEICO Giveback Credit Estimator” on its website:
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`The GEICO Giveback Credit Estimator
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`GEICO is providing a 15% credit to our GEICO Auto, Motorcycle,
`and RV policyholders. Existing policyholders who qualify for the
`credit can use this tool to determine the date and approximate credit
`amount you'll receive.
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`What is the length of your policy?
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`6 months
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`12 months
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`Current Policy Effective Date?
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`How much is your total premium?
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`$
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`Calculate
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 9 of 25 PageID #:311
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`Exhibit 1, at last page (GEICO website).
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`Plaintiff received the 15% discount. (Id., ¶ 35) (“GEICO only gave Plaintiff an inadequate
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`15% credit”). Plaintiff alleges that GEICO’s “refund program was inadequate.” (Id., ¶ 29). In
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`support, Plaintiff alleges that the Consumer Federation of America found that GEICO should give
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`at least a 30% refund for the six-week period of mid-March to the end of April. (Id., ¶ 25). Even
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`though Plaintiff is comparing the CFA’s six-week “calculation” to GEICO’s six-month discount,
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`Plaintiff alleges her premiums were “unconscionably excessive.” (Id., ¶ 9).
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`Plaintiff alleges one purportedly false statement by GEICO from its website:
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`[S]helter in place laws have reduced driving, and we are passing
`these savings on to our auto, motorcycle, and RV customers.
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`(Id., ¶ 29). See also Exhibit 1, at *1 (GEICO website). Plaintiff does not explain why or how this
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`statement is purportedly false, and does not specify what this statement should have said instead.
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`At any time, Plaintiff has had the right under her auto insurance policy to cancel her auto
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`insurance policy, and receive a pro rata refund. Her policy states:
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`6. CANCELLATION BY THE INSURED
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`You may cancel this policy by providing notice to us stating when,
`after the notice, cancellation will be effective. If this policy is
`cancelled, you may be entitled to a premium refund. The premium
`refund, if any, will be pro-rated.
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`See Exhibit 2 at page 34 of 40 (see bottom right for pagination).
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`Finally, Plaintiff alleges the presence of thousands of similarly-situated policyholders in
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`Illinois. (Id., ¶ 36). Plaintiff seeks the certification of a class based on purportedly common
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`questions of law and fact involving the “full refund” of “excessive auto premiums” to these other
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`GEICO policyholders. (Id., ¶ 41(f)).
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`ARGUMENT
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`A motion to dismiss considers the legal sufficiency of claims in the light of allegations
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`accepted as true in the Complaint. Materials incorporated by reference may also be considered.
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`Orgone Capital III, LLC v. Daubenspeck, 912 F.3d 1039, 1044 (7th Cir. 2019). Here, they include
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`Plaintiff’s auto insurance policy and GEICO’s website explanation of its Giveback Program.
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`I.
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`THE CLAIM FOR BREACH OF CONTRACT SHOULD BE DISMISSED.
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`Count I is for “Breach of Contract – Violation of the Covenant of Fair Dealing and Good
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`Faith.” Plaintiff asks the Court to refund her premium on the basis of the following “Changes”
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`section in her policy:
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`The premium for each auto is based on the information we have in
`your file. You agree:
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`(a) That we may adjust your policy premiums during the policy term
`if any of this information on which the premiums are based in
`incorrect, incomplete or changed.
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`(b) That you will cooperate with us in determining if this
`information is correct and complete.
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`(c) That you will notify us of any changes in the information.
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`(d) That we may adjust your policy premium during the term or at
`renewal if any person who is an insured becomes an additional
`driver during the policy term or at renewal.
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`(Cmplnt, ¶ 33). See also Exhibit 2 at page 34 of 40 (see bottom right for pagination).
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`As more fully set forth below, there are several fatal defects with Plaintiff’s invocation of
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`the “Changes” section of her policy. First, the purpose of the “Changes” section is to require
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`policyholders to submit accurate data in applying for policies and to keep their information up to
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`date. The section does not impose a duty on GEICO to retroactively reduce premium. Second,
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`Plaintiff does not allege that any representation by her was incorrect or changed. Third, Plaintiff
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 11 of 25 PageID #:313
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`is unfairly judging an insurance product after the insurable period has run its course. If Plaintiff
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`wanted a different type of auto policy that would have charged her “per mile,” she had other
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`options in the market.
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`A.
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`THE “CHANGES” SECTION IMPOSES A DUTY ON PLAINTIFF, NOT ON GEICO.
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`Plaintiff is missing the purpose of the “Changes” section of her policy. The section requires
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`her to provide accurate information to GEICO, and makes plain that her premium is based on her
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`representations.1 Her obligation is mandatory and continuing (“you will notify us of any changes
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`in this information”) (emphasis added). By contrast, GEICO has a permissive right to change her
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`premium upon different reported information (“we may adjust your policy premiums … if any of
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`this information … is incorrect, incomplete or changed”) (emphasis added). The covenant of good
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`faith and fair dealing may not be used to “imply additional obligations that were not bargained
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`for.” Baxter Healthcare Corp. v. OR Concepts, Inc., 69 F.3d 785, 792 (7th Cir. 1995) (affirming
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`12(b)(6) dismissal of good faith claim).
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`The “Changes” section of the policy does not obligate GEICO to continually adjust –
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`upwards and downwards – the premium for an individual policyholder for a current policy term.
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`The policy language is not mandatory upon GEICO. It does not say “we will raise or lower your
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`1
`See, e.g., Greer ex rel Peterson v. Naklicki, 877 A.3d 298, 303 (N.J. App. Div.
`2005) (“The policy elicits the agreement of the insured, which is implied in any event, to cooperate
`with the insurer in determining if the information it relies upon is correct and complete. The policy
`indicates the agreement of the insured that if the information changes or is incorrect or incomplete,
`the coverage or the premium may be adjusted accordingly…. The policy does purport to impose
`upon the insured responsibility to notify the insurer of any changes, but that responsibility is neither
`onerous nor unfair.”); Bauer v. Travelers Home & Marine Ins. Co., No. 3:15-CV-348-CLS, 2017
`WL 264460, at **8, 12 (N.D. Ala. Jan. 20, 2017) (construing similar wording to impose obligation
`on policyholder to update her residency information); Stoffel v. United Farm Family Mut. Ins. Co.,
`900 N.E.2d 828, *2 (Ind. Ct. App. 2009) (“The language [the policyholder] cites on appeal merely
`represents [the insurer’s] reserving the right to charge a higher premium if there are changes made
`to the declarations.”).
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 12 of 25 PageID #:314
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`premium retroactively if you drive more or less than expected.” Whether the policyholder goes
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`on a multi-state roadtrip, or leaves her car in her garage, GEICO is not required to recalculate her
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`premium.
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`The insurance market includes options for consumers who want to buy insurance “by the
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`mile.” This is known as “usage-based insurance.” Such consumers receive wireless telematic
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`devices for their cars to record how many miles they drive, and they are then charged by their
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`insurer for the actual miles driven. This was not the option chosen by Plaintiff. At any point, she
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`could have cancelled her policy with GEICO, received a pro rata refund, and then purchased
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`usage-based insurance.
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`As Plaintiff misreads her policy to create an obligation upon GEICO where none exists,
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`her claim should be dismissed. “[A] party must demonstrate that ‘the contract vested the opposing
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`party with discretion in performing an obligation under the contract and the opposing party
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`exercised that discretion in bad faith….” Fair Isaac Corporation v. Trans Union, 2019 WL
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`1436018, at *3 (N.D. Ill. March 30, 2019) (Coleman) (citation omitted) (St. Eve)) (dismissal for
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`failure to state a claim). “It is settled law in Illinois … that a breach of good faith and fair dealing
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`cannot be an independent cause of action.” 7-Eleven, Inc. v. Shakti Chicago, Inc., 2019 WL
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`3387001, at *3 (N.D. Ill. July 26, 2019) (Coleman) (same).
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`B.
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`PLAINTIFF DOES NOT ALLEGE THAT HER REPRESENTATIONS IN APPLYING FOR
`INSURANCE WERE INCORRECT OR CHANGED.
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`In any event, Plaintiff makes no allegation that any data in her application for her policy
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`was “incorrect, incomplete or changed.” While Plaintiff alleges that her “information changed and
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`became incomplete and incorrect when the COVID-19 pandemic emptied Illinois’s roads” (Cmplt,
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`¶ 53), Plaintiff does not pinpoint a single representation by her that “changed and became
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`incomplete and incorrect.”
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 13 of 25 PageID #:315
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`Per her declarations to GEICO, Plaintiff submitted that she lived in Buffalo Grove, she
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`drove a 2015 Mercedes Benz GLA 250, and that it was financed by Wells Fargo. Exhibit 2 at page
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`7 of 40 (Declarations Page). Plaintiff does not allege that any of this data changed or was incorrect.
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`Nor does Plaintiff allege that any other information she provided to GEICO was incorrect or
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`changed. [If the policyholder gets a different car or moves, then the policyholder should update
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`that information with the insurer, and a different premium could result.]
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`Plaintiff simply wants the Court to assume that a representation by her was incorrect or
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`changed. This is an inexcusable omission. She knows what she represented to GEICO when she
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`applied for, and then renewed, the insurance for her SUV. She chose to allege none of it in her
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`Complaint – let alone, that anything was incorrect or changed.
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`C.
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`PLAINTIFF’S HINDSIGHT PERSPECTIVE IS UNFAIR ON ITS FACE.
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`Plaintiff alleges that GEICO engaged in “opportunistic advantage-taking” and “bad faith”
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`(Cmplnt, ¶ 52), and that GEICO has a “practice of unfairly profiting from the [] pandemic.” (Id.,
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`¶ 1). Plaintiff alleges that “GEICO’s astonishing windfall is a direct result of the fact that its
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`premiums are [] not based on an accurate assessment of risk since the pandemic began, in violation
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`of Illinois public policy.” (Id., ¶ 23).
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`This allegation is upside down, and should be rejected under Bell Atlantic Corp. v.
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`Twombly, 550 U.S. 544 (2007). Premiums are calculated in advance, not after the fact. Insurance
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`rates are calculated by actuaries based on past loss experience,2 and filed with the Illinois
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`Department of Insurance. Insurers then compete on the basis of rates and coverage to sell policies.
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`Corbin v. Allstate Corp., 140 N.E.3d 810, 813 (5th Dist. 2019).
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`2
`They are then applied to rating factors of policyholders, such as accident history
`and vehicle type. “Good driver” discounts – which Plaintiff received – are a contractual way that
`policyholders may receive future benefit for past beneficial loss history.
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 14 of 25 PageID #:316
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`Plaintiff does not allege that GEICO or Plaintiff or anyone else knew what the duration of
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`the pandemic would be at its outset, and what its effect would be on auto damage losses. [Nor can
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`anyone possibly know to this day how long the pandemic will ultimately last, and what aggregate
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`effect it will have on auto damage losses.] The overall decline in auto damage losses in March
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`and April in 2020, as alleged in the Complaint, became known only after the fact.
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`This is in the very nature of insurance. Unexpected events happen. For auto insurance,
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`there could be greater loss activity due to many other perils. Policies do not have their premiums
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`increased after the fact for those events (absent expressly retrospective features). Likewise,
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`policies do not have their premiums refunded if those perils do not happen (again, absent express
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`retrospective features). There are not class actions of life insurance policyholders who survived
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`the year who want their premiums returned, or class actions of homeowner policyholders who
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`went the year without filing a claim. Plaintiff’s “after the fact” perspective should be rejected.
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`For these reasons, the breach of contract claim should be dismissed.
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`II.
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`THE “FRUSTRATION OF PURPOSE” CLAIM SHOULD BE DISMISSED.
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`Count II is for “Frustration of Purpose.” This is not a stand-alone claim under Illinois law.
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`Instead, it is a rarely-invoked affirmative defense to enforcement of a contract:
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`Under Illinois law the defense [of frustration of purpose] is not to be
`applied liberally and the party seeking rescission must show that (1)
`the frustrating event was not reasonably foreseeable and (2) the
`value of counterperformance has been totally destroyed by the
`frustrating event….
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`U.S. v. Southwestern Elec. Co-op., Inc., 869 F.2d 310, 315 (7th Cir. 1989) (upholding dismissal of
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`doctrine’s application as a contractual defense).
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`The doctrine has no place here. Plaintiff could have cancelled her insurance policy if she
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`had believed its “value had been totally destroyed” at any point during the pandemic. Under the
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 15 of 25 PageID #:317
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`terms of her policy (incorporated by reference), she has had the right to cancel, and to receive a
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`pro rata refund. She obviously elected to retain her policy.
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`Equally obvious, her auto remained insured throughout the time period of her initial and
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`renewal policies, whether while parked on the street, garaged, or driven. There is no allegation
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`that she received no value from her insurance. Nor could there plausibly be. She does not allege
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`that she did not drive her car. She alleges nothing about her own recent driving history. None of
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`the shut-down orders recited in the Complaint prohibited her from driving her car anyway.
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`Just because she had no insurance claim during this period does not mean that she received
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`no value. Certainly GEICO had no contractual right to retroactively surcharge her premium if
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`Plaintiff had been in a car accident and suffered collision damage or personal injury. See, e.g.,
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`Springfield Oil Drilling Corp. v. Weiss, 2003 WL 22025006 at *7 (N.D. Ill. Aug. 28, 2003)
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`(Pallmeyer) (rejecting frustration of purpose doctrine “as the event did not totally or almost totally
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`destroy the value of the parties’ performance”).
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`The “frustration of purpose” count should be dismissed.
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`III. THE ICFA CLAIM FOR DECEPTION SHOULD BE DISMISSED.
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`There are two claims under Section 505/2 of the Illinois Consumer Fraud and Deceptive
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`Business Practices Act. The elements of a deception claim (Count IV) under the Illinois Consumer
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`Fraud Act are as follows:
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`(1) the defendant undertook a deceptive act or practice; (2) the
`defendant intended that the plaintiff rely on the deception; (3) the
`deception occurred in the course of trade and commerce; (4) actual
`damage to the plaintiff occurred; and (5) the damage complained of
`was proximately caused by the deception…. [A] complaint made
`pursuant to the ICFA must be pled with the same specificity as that
`required under common law fraud.
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`Case: 1:20-cv-04306 Document #: 23 Filed: 10/15/20 Page 16 of 25 PageID #:318
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`Davis v. G.N. Mortg. Corp., 396 F.3d 869, 883 (7th Cir. 2005) (internal quotation marks and
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`citations omitted). “When analyzing a claim under the ICFA, the allegedly deceptive act must be
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`looked upon in light of the totality of the information made available to the plaintiff.” Id. at 884.
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`A.
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`THERE WAS NO FALSE OR DECEPTIVE STATEMENT.
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`GEICO notified policyholders of a 15% discount upon renewal, for a six-month period,
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`and that is exactly what GEICO delivered to Plaintiff. This was a plain and truthful statement.
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`GEICO’s website stated that “shelter in place laws have reduced driving, and we are
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`passing these savings on to our auto, motorcycle, and RV customers.” (Cmplnt, ¶¶ 29, 82).
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`Plaintiff argues that this statement is false because GEICO has not “fully pass[ed] the savings on”
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`and “GEICO does not disclose the amount of its excessive profits.” (Id.) This is bluster. There
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`is no false statement.
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`The message is plain that policyholders will receive a 15% discount on policies issued or
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`renewed over a six-month period, which continues to run through October 7, 2020. The website
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`announced the genesis of the Giveback Program in the reduced driving resulting from the shelter-
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`in-place orders, and then specified a 15% discount. The website also provided a “GEICO
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`Giveback Estimator” for policyholders to calculate exactly how much of a discount they were due
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`to receive, which would thus enable them to make an informed decision of whether to renew their
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`policy, or cancel and switch to another auto insurer.
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`Courts have routinely considered the context of statements in rejecting allegations of falsity
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`under the ICFA. Toulon v. Continental Casualty, 877 F.3d 725, 735-36 (7th Cir. 2017) (upholding
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`dismissal of ICFA claim on the basis of the full context of the language in the insurance policy);
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`Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 938-39 (7th Cir. 2001) (upholding dismissal of ICFA
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`claim because information available on the w