O'Keefe v. Walgreens Boots Alliance, Inc.

2020 IL App (5th) 190448

Opinion

Rule 23 order filed May 4, 2020. 2020 IL App (5th) 190448 Modified upon denial of rehearing and motion to NO. 5-19-0448 publish granted August 31, 2020. IN THE

APPELLATE COURT OF ILLINOIS

FIFTH DISTRICT ______________________________________________________________________________

BRIAN O’KEEFE, Individually and on Behalf of All) Appeal from the Others Similarly Situated, ) Circuit Court of ) St. Clair County. Plaintiff-Appellant, ) ) v. ) No. 19-L-209 ) WALGREENS BOOTS ALLIANCE, INC., ) Honorable ) Stephen P. McGlynn, Defendant-Appellee. ) Judge, presiding. ______________________________________________________________________________

JUSTICE MOORE delivered the judgment of the court, with opinion. Justices Overstreet and Wharton concurred in the judgment and opinion.

OPINION

¶1 The plaintiff, Brian O’Keefe, individually and on behalf of all others similarly situated,

appeals the September 26, 2019, order of the circuit court of St. Clair County, which granted the

motion of the defendant, Walgreens Boots Alliance, Inc., to dismiss his complaint. For the

following reasons, we affirm.

¶2 I. BACKGROUND

¶3 The plaintiff filed a class action complaint against the defendant on March 13, 2019. The

complaint alleges that the defendant intentionally misrepresented and/or made material omissions

regarding the storage capacity of USB flash drives in its method of advertising, marketing, and/or

packaging them. The complaint alleges the following facts by way of background. The average

consumer understands digital storage capacity and file size to be measured using the “base-2” or 1 “binary” counting system. In the “binary” counting system, 1 gigabyte, or GB, is equivalent to

1024 megabytes, which is equivalent to 1,073,741,824 bytes. In accord with the binary system,

several dictionaries define the term gigabyte as equaling 1024 megabytes. Furthermore, all

computers and digital processors, including Microsoft Windows, Linux, and Apple (except Mac

OS X version 10.6 and later) and all other operating systems, as well as PDAs, digital cameras,

cell phones, and gaming systems, use the binary system to display file sizes and data storage

capacity.

¶4 The complaint alleges that, in the “base-10” or “decimal” counting system, 1 gigabyte (GB)

is equivalent to 1000 megabytes, which is equivalent to 1 billion bytes. So, 1 GB in the decimal

system contains fewer bytes than 1 GB in the binary system. The defendant calculates the GBs in

its products using the decimal system. The plaintiff purchased a Walgreens Infinitive brand USB

flash drive that was advertised and packaged to represent that its storage capacity was 32 GB. The

complaint alleges that, in purchasing the drive, the plaintiff believed that he was receiving 32

binary GBs, but instead he received 32 decimal GBs, which is 6.7% less storage capacity than he

was expecting to receive.

¶5 The complaint alleges that the defendant does not disclose to the consumer the discrepancy

between the defendant’s decimal-GB offering and the expected binary-GB offering. On the front

of the defendant’s packaging, the defendant represents in font that is larger and in a different color

than surrounding text and separate and apart from other words, the number of GBs the USB flash

drive contains. The complaint alleges that the defendant does not meaningfully, adequately, or

conspicuously disclose that the defendant’s product contains less storage than it represents on the

front of the packaging. According to the complaint, “[a]ll Defendant does is place an asterisk on

2 the number of GBs advertised and extremely fine print on the back of its packaging that arbitrarily

defines GB as one billion bytes.”

¶6 Count I of the complaint alleges a cause of action for breach of contract. Count II alleges

a breach of the covenant of good faith and fair dealing. Count III alleges the defendant violated

the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act). 815 ILCS 505/1

et seq. (West 2018). Count IV alleges the defendant violated the Uniform Deceptive Trade

Practices Act. 815 ILCS 510/1 et seq. (West 2018). Count V requests a “declaration that

Defendant’s acts and practices are deceptive and misleading, and preliminary and permanent

injunctive relief to enjoin Defendants from continuing to engage in these deceptive, false and

misleading acts and practices.”

¶7 On June 10, 2019, the defendant filed a motion to dismiss the complaint. The defendant

attached several exhibits to its motion to dismiss. First, the defendant attached actual size

photographs of the packaging for the USB flash drive at issue. The back of the package contains

the following words, in small print: “1 GIGABYTE (GB) = 1 BILLION BYTES. SOME

CAPACITY NOT AVAILABLE FOR DATA STORAGE.”

¶8 Second, the defendant attached a copy of Volume 63, No. 144 of the Federal Register,

dated July 28, 1998, which contains a notice from the Department of Commerce’s National

Institute of Standards and Technology (NIST) entitled “Metric System of Measurement:

Interpretation of the International System of Units for the United States.” 63 Fed. Reg. 40334 (July

28, 1998). In the notice, NIST declares that the International System of Units (SI) is the preferred

system of weights and measures for the United States trade and commerce. Id. The notice lists

“giga” or “G” as an SI prefix and states that these prefixes “strictly represent powers of 10,” and

3 that it is “inappropriate to use them to represent powers of 2.” The notice states, as an example,

that one kilobit equals 1000 bit, and not 1024 bits.

¶9 Third, the defendant attached NIST Special Publication 811, 2008 Edition, entitled “Guide

for the Use of International System of Units (SI)” to its motion to dismiss. The publication

reiterates that SI prefixes, such as “giga” or kilo,” refer strictly to powers of 10 and should not be

used to indicate powers of 2. The publication explains that the prefixes for binary powers that were

adopted by the International Electrotechnical Commission (IEC) should be used in the field of

information technology to indicate binary powers to “avoid the incorrect usage of the SI prefixes.”

Thus, according to this publication, instead of “giga,” the prefix “gibi” should be used to denote

1,073,741,824 bytes. The defendant asked that the circuit court take judicial notice of the NIST

standards.

¶ 10 After further briefing and oral argument, the circuit court entered an order on September

26, 2019, granting the motion to dismiss. On October 25, 2019, the plaintiff filed a notice of appeal.

On May 4, 2020, this court issued an order that affirmed the circuit court’s order dismissing the

plaintiff’s complaint. On May 26, 2020, the plaintiff filed a petition for rehearing in this court. On

June 5, 2020, this court entered an order requiring that the defendant file a response to the petition

for rehearing and establishing a deadline for the plaintiff’s reply. On June 26, 2020, the defendant

filed an answer to the petition for rehearing. The plaintiff did not file a reply. After reviewing the

arguments on rehearing, we now issue this modified opinion upon denial of rehearing. 1

1 The defendant filed a motion to publish this court’s original order, which was filed pursuant to Illinois Supreme Court Rule 23(b) (eff. Apr. 1, 2018). This court entered an order holding the motion to publish in abeyance pending disposition of the plaintiff’s petition for rehearing. This court has entered a separate order granting the motion to publish. 4 ¶ 11 II. ANALYSIS

¶ 12 At the outset we note that the plaintiff’s brief on appeal only presents argument as to why

the circuit court erred in dismissing count III of the complaint, which alleges the defendant violated

the Consumer Fraud Act. As such, the plaintiff has forfeited any issues as to the propriety of the

circuit court’s dismissal of all other counts of the complaint. See Reynolds v. Jimmy John’s

Enterprises, LLC, 2013 IL App (4th) 120139, ¶ 55 (citing Ill. S. Ct. R. 341(h) (eff. July 1, 2008)).

Accordingly, we limit our analysis to count III of the plaintiff’s complaint.

¶ 13 The defendant’s motion to dismiss does not specify which section of the Code of Civil

Procedure (Code) the motion is based upon. However, in the briefs, both parties state that the

circuit court dismissed the complaint pursuant to section 2-615 of the Code. 735 ILCS 5/2-615

(West 2018). A motion to dismiss pursuant to section 2-615 of the Code presents the question of

whether the facts alleged in the complaint, viewed in the light most favorable to the plaintiff, are

sufficient to state a cause of action upon which relief may be granted. Doe-3 v. McLean County

Unit District No. 5 Board of Directors, 2012 IL 112479, ¶ 16. In ruling on a section 2-615 motion,

the court only considers (1) those facts apparent from the face of the pleadings, (2) matters subject

to judicial notice, and (3) judicial admissions on record. Gillen v. State Farm Mutual Automobile

Insurance Co., 215 Ill. 2d 381, 385 (2005). Our standard of review is de novo. Doe-3, 2012 IL

112479, ¶ 15.

¶ 14 To state a claim under the Consumer Fraud Act, a plaintiff must show (1) a deceptive act

or practice by the defendant, (2) the defendant’s intent that the plaintiff rely on the deception,

(3) the deception occurred in the course of trade or commerce, and (4) the consumer fraud

proximately caused the plaintiff’s injury. Avon Hardware Co. v. Ace Hardware Corp., 2013 IL

App (1st) 130750, ¶ 23. However, notwithstanding the existence of these elements, the “safe

5 harbor” provision of the Consumer Fraud Act provides that the Consumer Fraud Act shall not

apply to actions “specifically authorized by laws administered by any regulatory body or officer

acting under statutory authority of this State or the United States.” 815 ILCS 505/10b(1) (West

2018). 2 Accordingly, if a regulatory body acting under specific statutory authority authorizes the

use of a term in labeling and advertising, a defendant may not be held liable under the Consumer

Fraud Act even if the term might be deemed false, deceptive, or misleading. Price v. Philip Morris,

Inc., 219 Ill. 2d 182, 244 (2005).

¶ 15 Here, the complaint alleges that the defendant violated the Consumer Fraud Act in its

labeling and advertising by representing the storage capacity of its flash drives in terms of the

decimal definition of “gigabyte” rather than the binary definition. However, even if this practice

might be deemed false, deceptive, or misleading, it falls within the “safe harbor” provision of the

Consumer Fraud Act if a regulatory body acting under specific statutory authority authorized the

use of the decimal definition of “gigabyte” in labeling and advertising. For the following reasons,

we find this to be the case with the defendant’s use of the term “gigabyte.”

¶ 16 The general objective of the Weights and Measures Act (Act) is to promote accuracy in the

determination and representation of quantity in commercial transactions. 225 ILCS 470/11 (West

2018). Section 3 of the Act provides that “[t]he definitions of basic units of weight and measure,

the tables of weight and measure, and weights and measures equivalents, as published by the

National Institute of Standards and Technology, are recognized and shall govern weighing and

measuring equipment and transactions in this State.” Id. § 3. NIST is a division of the U.S.

2 On rehearing, the plaintiff argues that to come under the safe harbor provision, an agency with regulatory authority must require that the defendant use the binary definition of gigabyte. This is incorrect. Section 10b(1) of the Consumer Fraud Act clearly states that there can be no claim under the Consumer Fraud Act for an act that is “specifically authorized” by an agency with regulatory authority. 815 ILCS 505/10b(1) (West 2018). 6 Department of Commerce, which clearly qualifies as a “regulatory body.” Accordingly, if the

Department of Commerce, through NIST, authorizes the use of the decimal representation of

“gigabyte” when describing the storage capacity of flash drives, then the plaintiff’s Consumer

Fraud Act claim is barred by section 10b of the Consumer Fraud Act.

¶ 17 The circuit court properly took judicial notice of information published in the Federal

Register. See People v. Pollution Control Board, 103 Ill. 2d 441, 447 (1984) (materials published

in Federal Register are matters of public record of which courts make take judicial notice). These

materials make clear that NIST recognizes the SI system as the preferred system of weights and

measures for United States trade and commerce. Metric System of Measurement: Interpretation of

the International System of Units for the United States, 63 Fed. Reg. 40334, 40338 (July 28, 1998).

In addition, the SI system uses “powers of 10” (i.e., decimal) and “one kilobit represents 1000

bits.” Id.; see also 2008 Guide for Use of the International System of Units (SI) by National Institute

of Standards and Technology. NIST also states that it is inappropriate to use SI prefixes to

represent powers of 2 (i.e., binary). 63 Fed. Reg. at 40338. 3

¶ 18 We agree with the circuit court that the NIST guidelines include an authorization by a

regulatory agency with specific statutory authority for the use of the term “gigabyte” to denote a

billion bytes. Accordingly, even if the defendant’s use of the term “gigabyte” to represent a billion

3 The plaintiff, for the first time on rehearing, argues that the 1998 Federal Register publication by NIST was superseded by a subsequent 2008 NIST publication in the Federal Register, and that this publication changed NIST’s position as to the authorization of using the term “byte” to represent a power of 10. This is incorrect. The 2008 NIST publication, entitled Interpretation of the International System of Units (the Metric System of Measurement) for the United States, 73 Fed. Reg. 28432 (May 16, 2008), consists of a notice describing modifications to the SI that are enumerated therein and do not include any modification to the use of the SI prefixes to the term “byte.” In addition, the notice announces the publication of the 2008 Guide for Use of the International System of Units (SI) by National Institute of Standards and Technology which clearly notes, on page 74, that SI prefixes, when used in electrical technology as in all other applications, strictly refer to powers of 10, and repeats the example that a kilobit denotes 1000 bits and not 1024 bits. 7 bytes were deceptive, it falls within the “safe harbor” provision of the Consumer Fraud Act and is

not actionable. 815 ILCS 505/10b(1) (West 2018). As such, the circuit court did not err in

dismissing count III of the plaintiff’s complaint. 4

¶ 19 III. CONCLUSION

¶ 20 For the foregoing reasons, we affirm the circuit court’s September 26, 2019, order

dismissing the plaintiff’s complaint.

¶ 21 Affirmed.

4 As explained above, the plaintiff has forfeited any argument that the circuit court erred in dismissing the other counts of the complaint by not presenting argument in his appellant’s brief on those counts. However, forfeiture aside, we note that the Uniform Deceptive Trade Practices Act also contains a “safe harbor” provision that would preclude the plaintiff’s action for the same reasons. See 815 ILCS 510/4(1) (West 2018). 8 2020 IL App (5th) 190448

NO. 5-19-0448

IN THE

FIFTH DISTRICT

BRIAN O’KEEFE, Individually and on Behalf of All) Appeal from the Others Similarly Situated, ) Circuit Court of ) St. Clair County. Plaintiff-Appellant, ) ) v. ) No. 19-L-209 ) WALGREENS BOOTS ALLIANCE, INC., ) Honorable ) Stephen P. McGlynn, Defendant-Appellee. ) Judge, presiding. ______________________________________________________________________________

Rule 23 Order Filed: May 4, 2020 Modified Upon Denial of Rehearing: August 31, 2020 Motion to Publish Granted: August 31, 2020 Opinion Filed: August 31, 2020 ______________________________________________________________________________

Justices: Honorable James R. Moore, J.

Honorable David K. Overstreet, J., and Honorable Milton S. Wharton, J. Concur ______________________________________________________________________________

Attorneys James J. Rosemergy, Carey, Danis & Lowe, 8235 Forsyth Blvd., for Suite 1100, St. Louis, MO 63105; Tiffany M. Yiatras, 308 Hutchinson Appellant Road, Ellisville, MO 63011-2029 ______________________________________________________________________________

Attorneys David B. Sudzus, Faegre, Drinker, Biddle & Reath, LLP, 191 N. Wacker for Drive, Suite 3700, Chicago, IL 60606; Anthony J. Weibell, Wilson, Appellee Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, CA 94304 ______________________________________________________________________________