A Chicago federal appellate court breathed new life into a lawsuit against Volvo, saying an offer by the automaker to pay one customer a full refund doesn’t garage the class action complaint.

Chief Judge Diane Wood wrote the Aug. 22 opinion; Circuit Judges Michael S. Kanne and Ilana Diamond Rovner concurred.

Volvo XC90
Volvo XC90

The original complaint dates to April 21, 2016, when Xavier and Khadija Laurens initiated a class action because they said Volvo’s twin-engine gas-electric Volvo XC90 T8 — for which they paid an extra $20,000 compared to the gas-only model, as well as $2,700 for a charging station — drastically underperformed the advertised 25-mile range on a full battery charge.

On Oct. 13, federal Judge Harry D. Leinenweber granted Volvo’s motion to dismiss because Volvo offered a full refund of the purchase price if the Laurenses returned the T8. After the Laurneses appealed that ruling, the panel heard arguments April 4.

Wood branded Volvo’s tactic an “effort to pretermit a proposed class action by picking off the named plaintiff’s claim,” and further explained “black-letter contract law states that offers do not bind recipients until they are accepted.”

The complaint alleged violations of the Illinois Consumer Fraud Act, common law fraud, breach of express warranty and unjust enrichment. It said Volvo changed its advertising to promote a 17-mile range, but alleged “the only apparent method to even come close to the 17-mile range is to drive the T8 at 40 miles an hour on the highway — with all the safety features disabled.”

Wood noted the key wrinkle in the process: Xavier Laurens had filed the original complaint in his name, then added Khadija once it became clear she was the only one named on the title. Volvo sent a letter offering Khadija a full refund, then the next day moved to dismiss Xavier’s suit because he lacked standing. The Laurenses added Khadija to the complaint before the district court ruled, which prompted Volvo to argue she lacked standing because its letter offered full relief before she filed a complaint.

“The question whether the underlying dispute has been settled is a live one,” Wood wrote, countering Leinenweber’s determination. “Second, the fact that the Laurenses are seeking to serve as class representatives complicates matters.”

In all of its maneuvers to scuttle the claim thus far, Wood noted Volvo has yet to raise a factual challenge to the fraud, warranty breach and unjust enrichment accusations. While the appellate panel was sympathetic to Volvo’s arguments about Xavier’s standing, Wood explained the key question is whether she accepted Volvo’s offer. And since she did not, the matter is clear: “Unaccepted contract offers are nullities; settlement proposals are contract offers; and therefore unaccepted settlement proposals are nullities. Nothing about that logic turns on whether a suit has been filed.”

The Laurenses never asked for a full refund. In their amended complaint they sought only the $20,000 difference. But they also pursued broader relief, like punitive damages and an injunction forcing Volvo to stop advertising a 25-mile range on the T8.

The panel reversed the district court’s ruling and remanded the case for further proceeding.

While Kanne agreed with the other judges, he added a noted to “further emphasize that on remand the district court is free to draw, or not to draw, the conclusion that Khadija has not met her burden to show standing for injunctive relief.”

The Laurens couple is represented in the action by the firm of Siprut P.C., of Chicago.

Volvo is represented by the firm of Reed Smith LLP, of Chicago.

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Reed Smith LLP Siprut P.C. U.S. Court of Appeals for the Seventh Circuit U.S. District Court for the Northern District of Illinois

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