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Elder v. Coronet Insurance Company – Other Consumer Issues

KERRY ELDER, on Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellant

v.

CORONET INSURANCE COMPANY et al., Defendants-Appellees

Nos. 1-89-0893, 1-89-1116 cons.

Appellate Court of Illinois, First District, Sixth Division

201 Ill. App. 3d 733; 558 N.E.2d 1312; 1990 Ill. App. LEXIS 1106; 146 Ill. Dec. 978

July 27, 1990, Filed

SUBSEQUENT HISTORY: [***1]

As Corrected March 6, 1991.

PRIOR HISTORY: Appeal from the Circuit Court of Cook County; the Hon. R.J. Sklodowski, Judge, presiding.

DISPOSITION: Judgment affirmed in part; reversed in part and remanded.

COUNSEL: Daniel A. Edelman, of Chicago, for appellant.

Beerman, Swerdlove, Woloshin & Barezky, of Chicago (Alvin R. Becker and Timothy M. Kelly, of counsel), for appellees.

JUDGES: Justice Egan delivered the opinion of the court. LaPorta, P.J., and McNamara, J., concur.

OPINIONBY: EGAN

OPINION: [*739]

[**1313] JUSTICE EGAN delivered the opinion of the court:

This case involves the propriety of an insurance company denying the claim of its insured based on the result of a polygraph examination. The plaintiff, Kerry Elder, filed a three-count complaint on behalf of himself and all others similarly situated against the defendants, Coronet Insurance Company (Coronet) and Elston Claim Service, Inc. (Elston). The first count alleged unfair practices in violation of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1987, ch. 121 1/2, pars. 261 to 272) (Act or Consumer Fraud Act). The second count alleged that Coronet also committed a deceptive practice in violation of the Act. The third count alleged that Coronet breached its contract [***2] with the plaintiff. All three counts included substantially [**1314] similar sections entitled “Class Action Allegations.”

The judge dismissed count I on the ground that it did not allege an unfair practice under the Act; he dismissed count II on the ground that it did not allege a deceptive practice under the Act; he struck part of count III on the ground that it did not allege a basis for class action. He certified the following question as to count III under Supreme Court Rule 308 (107 Ill. 2d

R. 308): “Whether count III, judged in light of the standards of a @ 2 — 615 motion to dismiss sufficiently alleges the prerequisites needed to maintain a class action under @ 2 — 801 of the Illinois Code of Civil Procedure?” We granted leave to appeal the Rule 308 order and consolidated that appeal with the Rule 304(a) appeal of the dismissal of counts I and II.

Because this appeal presents a question as to the sufficiency of the complaint, a review of the allegations of the complaint is appropriate. The factual allegations must be taken as true.

Effective July 9, 1987, Coronet issued an automobile insurance policy to the plaintiff, which covered, among other things, loss from theft. Coronet [***3] did not inform the plaintiff when he purchased the insurance of any policy or practice employed by Coronet regarding polygraph tests. On June 11, 1988, the plaintiff’s car was stolen from a parking lot in Chicago, Illinois. The plaintiff had paid the premiums on the automobile insurance policy and had otherwise complied with the conditions [*740] of the policy, and, thus, the insurance policy was in full force and effect. The plaintiff promptly reported the theft to the police and to Coronet and filed a claim for a theft loss with Coronet.

Elston, acting on Coronet’s behalf, sent the plaintiff a letter asking him to take a polygraph test. The body of the letter stated in full as follows:

“In order to speed up investigation and settlement of your claim, we request that you submit to a polygraph test.

If you do not submit to a polygraph test, you will be required to appear and give a statement under oath, in the presence of a court reporter.

Your cooperation is required under the terms of your policy.

Please contact this office to set up an appointment as soon as possible.

Your cooperation in this matter would be most appreciated and certainly helpful.” The defendants have [***4] a policy and practice of requesting insureds to submit to polygraph tests and denying claims based on the results of such tests, without significant other investigation. Polygraph tests, however, are not reliable.

Elston, on Coronet’s behalf, denied the plaintiff’s claim on the alleged basis of the results of the polygraph examination. The letter informing the plaintiff of this denial stated, in part, “We have tried to evaluate fairly and properly all the information and reports available to us about this accident. The results of our investigation indicate that the loss did not occur as you reported. We therefore regret that we will be unable to pay your claim.” The defendants did not provide the plaintiff with any further information as to why the claim was denied. Despite the letter’s indication to the contrary, the plaintiff alleged that “Elston and Coronet made no other significant effort besides the polygraph examination to determine what had happened to Elder’s [automobile].” The defendants showed no interest in interviewing a witness, whom the plaintiff had produced, and who had contacted Elston. The authorities recovered the plaintiff’s car in a stripped and seriously [***5] damaged condition, but Coronet continued to refuse to pay the plaintiff’s claim.

In count I of the complaint, the plaintiff incorporated the above allegations and alleged that both Coronet and Elston engaged in unfair practices in violation of section 2 of the Consumer Fraud Act (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 262). Section 2 states that “unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, [*741] false promise, misrepresentation [**1315] or the concealment, suppression or omission ofany material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, * * * in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby.” The plaintiff alleged that each defendant committed an unfair practice that was contrary to public policy in denying insurance claims on the basis of polygraph test results. Moreover, the plaintiff alleged that denial of “a claim which is properly payable on its face [without] reliable, competent evidence that the claim is materially false or improper * [***6] * * is unreasonable and vexatious * * * [and forces] the insured to resort to the courts to collect his or her claim.” Finally, the plaintiff asserted that the defendants engaged in this unfair practice in connection with the conduct of trade and commerce, thereby damaging the plaintiff.

The plaintiff sought to bring this unfair practice claim on behalf of the class of persons (1) who were insured by Coronet, (2) who made a claim on their policy, (3) who were requested to take a polygraph test, and (4) who were denied recovery on the basis of the polygraph test results. The plaintiff alleged that the class satisfied the numerosity requirement based on the defendants’ use of form letters in processing the plaintiff’s claim. The complaint alleged that common questions of law or fact predominated over individual questions, the principal issue being whether reliance on polygraph tests to deny insurance claims constitutes an unfair trade practice.

Based on the allegations in count I, the plaintiff requested the court to enter judgment in favor of the plaintiff and the class, as follows: declare the denial of insurance claims on the basis of polygraph tests to be an unfair trade practice; [***7] award compensatory and punitive damages, attorney fees, expenses and costs; and order such other and further relief as the court deemed appropriate.

In count II of the complaint, the plaintiff further alleged that Coronet also engaged in deceptive practices in violation of section 2 of the Consumer Fraud Act, the same section upon which count I is based. (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 262.) The plaintiff asserted that Coronet committed a deceptive practice by selling the plaintiff an insurance policy without disclosing that the insurer has a policy and practice of denying claims on the basis of unreliable polygraph examinations.

The plaintiff also included in count II allegations to support a class action that were substantially similar to those in count I, except that the principal issue underlying count II’s class-action allegations was [*742] whether Coronet’s failure to disclose its practice of denying claims on the basis of polygraph examinations constituted a deceptive trade practice. Count II also included a request for damages and other relief similar to those requested in count I.

Count III set forth a breach of contract claim alleging that Coronet breached [***8] its contract with the plaintiff in denying his claim and that Coronet acted unreasonably and vexatiously in relying on a polygraph test to deny his claim. Count III also included class allegations substantially similar to those in counts I and II. The complaint alleged that common questions of law and fact predominated under count III giving rise to the following principal issues: (1) whether the denial of an insurance claim solely on the basis of a polygraph test is a breach of the insurance policy; and (2) whether the denial of an insurance claim solely on the basis of a polygraph test is vexatious and unreasonable in violation of the Insurance Code (Ill. Rev. Stat. 1987, ch. 73, par. 767). Except for the omission of a request for punitive damages, count III prayed for relief similar to that requested in counts I and II.

I

The plaintiff contends that the trial judge erroneously dismissed count I of the complaint against Coronet because Coronet’s primary reliance on a polygraph test, an [**1316] inherently unreliable test, constitutes an unfair practice under the Act.

Whether sole reliance on polygraph tests in denying insurance claims constitutes an unfair trade practice is a question [***9] of first impression in Illinois. In any event, Illinois courts have stated that the determination of whether a certain practice is “unfair” under the Act requires a case-by-case determination. Scott v. Association for Childbirth at Home, International (1981), 88 Ill. 2d 279, 290, 430 N.E.2d 1012, 1018.

Section 2 of the Act (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 262) states, in part, that “[i]n construing this section consideration shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to Section 5(a) of the Federal Trade Commission Act.”

Section 5(a) of the Federal Trade Commission Act (15 U.S.C. @ 45(a)(1) (1982)) (FTCA) states: “Unfair methods of competition in or affecting commerce, are declared unlawful.” In interpreting section 5(a), the Supreme Court has set forth the criteria used to decide whether a practice is “unfair”;

“The Commission has described the factors it considers in determining whether a practice that is neither in violation of the [*743] antitrust laws nor deceptive is nonetheless unfair:

‘(1) whether the practice, without necessarily having been previously considered unlawful, [***10] offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of fairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).'” Federal Trade Comm’n v. Sperry & Hutchinson Co. (1972), 405 U.S. 233, 244-45 n.5, 31 L. Ed. 2d 170, 179 n.5, 92 S. Ct. 898, 905 n.5, quoting 29 Fed. Reg. 8355 (1964).

In People ex rel. Fahner v. Hedrich (1982), 108 Ill. App. 3d 83, 438 N.E.2d 924, the second district of this court adopted the criteria outlined in Sperry & Hutchinson in considering alleged violations of the Consumer Fraud Act. Although Sperry & Hutchinson concerned the elements of an “unfair” practice that was not also a “deceptive” practice, after analyzing these elements, the Hedrich court considered the defendant’s failure to disclose an “unfair or deceptive practice” (Hedrich, 108 Ill. App. 3d at 90), [***11] thereby somewhat blurring the distinction between the two bases for liability. Nevertheless, an application of the Sperry & Hutchinson analysis to the present case reveals that count I of the plaintiff’s complaint stated a cause of action for unfair trade practices against Coronet.

A

Coronet’s exclusive reliance on the results of a polygraph examination, “[although not] having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise.” (Sperry & Hutchinson, 405 U.S. 233, 244 n.5, 31 L. Ed. 2d 170, 179 n.5, 92 S. Ct. 898, 905 n.5.) A public policy against such reliance is suggested by the statutory prohibition against requiring a party to submit to a polygraph test in a civil trial or a pretrial proceeding (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 1104) and the similar prohibition against requiring, requesting or suggesting submission to a polygraph test by a criminal defendant (Ill. Rev. Stat. 1987, ch. 38, par. 155 — 11).

Coronet argues that its request that the plaintiff submit to a polygraph test offended no established public policy in effect at the time relevant [***12] to this case, citing legislation providing for the licensing and regulating of polygraph examiners. (Ill. Rev. Stat. 1987, ch. 111, par. 2401 et seq.) This legislation specifically prohibits polygraphic inquiry [*744] into certain areas during preemployment or periodic employment examinations, such as inquiries into religious, racial, political, [**1317] or sexual beliefs,but does not address, specifically or otherwise, inquiries in the insurance context. Thus, Coronet argues, “the articulated public policy of Illinois approves the request for a polygraph examination, and permits consideration of the results of a voluntary polygraph in the course of an insurance investigation.” At this point it is important to note that Coronet treats as one two separate aspects of its argument: a request for a polygraph examination and the use of the results of the examination. Whether Coronet is empowered to request a polygraph examination is not the issue in this case. The issue is whether Coronet may use the results of that examination as a basis for denying a claim.

The defendant’s argument misconstrues the licensing statute. Although conducting a polygraph test is not, in itself, [***13] an unlawful or criminal act, the mere existence of certain statutory licensing requirements does not constitute an “articulated public policy” justifying the use of polygraph test results in any context not specifically prohibited in that statute. The legislature specifically states in the licensing statute that “[t]he practice of the detection of deception in the State of Illinois is declared to affect the public health, safety and welfare and is subject to regulation and control in the public interest.” Ill. Rev. Stat. 1987, ch. 111, par. 2402.

Following enactment of the licensing statute in 1963, Illinois courts, although recognizing certain beneficial uses of polygraph examinations, have not hesitated to restrict the use of polygraph test results when such use would affect the substantive rights of litigants. Judicial decisions have barred polygraph test results from criminal trials, even when the parties stipulate to admissibility (People v. Baynes (1981), 88 Ill. 2d 225, 430 N.E.2d 1070), from sentencing hearings in capital cases (People v. Szabo (1983), 94 Ill. 2d 327, 447 N.E.2d 193), from hearings on post-trial [***14] motions (People v. Yarbrough (1982), 93 Ill. 2d 421, 444 N.E.2d 493), from post-conviction proceedings (People v. Hilliard (1982), 109 Ill. App. 3d 797, 441 N.E.2d 135), and from administrative proceedings (Kaske v. City of Rockford (1983), 96 Ill. 2d 298, 450 N.E.2d 314).

In Kaske, the court agreed that “a polygraph examination is an instrument of some investigatory utility and value” (96 Ill. 2d at 310), but, nevertheless, determined that such test results were not admissible in an administrative proceeding before the board of police and fire commissioners. The court stated: “There is a real danger that the board of fire and police commissioners will find the results of the polygraph examination completely [*745] determinative of guilt or innocence. * * * Polygraph evidence is not reliable enough to be used as substantive evidence in an administrative proceeding before the board. The findings before a board of fire and police commissioners must be based upon facts proved by competent evidence.” (Emphasis added.) (96 Ill. 2d at 309.) [***15] Thus, the public policy of the State as established by case law allows for the investigatory use of consensual polygraph examinations, in certain circumstances, but rejects reliance on such examinations in decision making.

The plaintiff has alleged that Coronet “denied [the plaintiff’s] claim on the alleged basis of the results of the polygraph test” and that “Coronet made no other significant effort besides the polygraph examination to determine what had happened to [the plaintiff’s car].” Those allegations are admitted by Coronet. Thus, Coronet’s actions, as alleged in the complaint, embody the dangers foreseen by the Kaske court: reliance by a decision maker on the results of a polygraph examination. The State, all agree, has an extensive interest in the practices of insurance companies. This practice, in our judgment, offends the public policy of the State.

Finally, other indicators of a public policy against reliance on polygraphs to determine insurance claims include the Federal [**1318] Employee Polygraph Protection Act of 1988 (29 U.S.C.A. @ 2001 et seq. (1990 Supp.)), which makes it unlawful for any employer engaged in or affecting interstate commerce “to require, [***16] request, suggest, or cause any employee or prospective employee to take or submit to any lie detector test,” and regulations promulgated by the Illinois Department of Insurance. See 50 Ill. Adm. Code @ 919.60(d) (1985) (preventing an insurer from requiring an insured to submit to a polygraph as a condition precedent to payment of a claim); 50 Ill. Adm. Code @ 919.60(d) (1985), as amended at 13 Ill. Reg. 1204, 1217 (eff. Jan. 11, 1989) (preventing an insurer from requesting or requiring an insured to submit to a polygraph examination).

Although we have already expressed the view that Coronet’s right to request a polygraph examination is not the issue, we deem it appropriate to address the question in view of subsequent litigation involving the Director of Insurance.

Coronet points out that the insurance regulation in effect at the time relevant to the plaintiff’s complaint prohibited an insurer only from requiring an insured to submit to a polygraph (50 Ill. Adm. Code @ 919.60 (1985)) and that the recently promulgated version of the regulation which prohibits both the requiring and the requesting of polygraph [*746] examinations was not effective when Coronet asked the [***17] plaintiff to submit to an examination. However, the fact that the insurance regulations in effect at the time did not expressly prohibit Coronet from requesting a polygraph examination is not relevant insofar as a practice can be unfair “without necessarily having been previously considered unlawful.” Sperry & Hutchinson, 405 U.S. at 244 n.5, 31 L. Ed. 2d at 179 n.5, 92 S. Ct. at 905 n.5.

After oral argument was heard in this case, the second division of this court reversed the circuit court’s injunction order (Coronet Insurance Co. v. Washburn (1990), 201 Ill. App. 3d 633) and upheld the determination of the Director of Insurance that an insurer’s request of an insured to submit to a polygraph examination was an improper claims practice.

B

Coronet’s alleged exclusive reliance on polygraph test results is oppressive under the second prong of the Sperry & Hutchinson analysis in that Coronet forces its insureds to file suit or to forego recovery although Coronet possesses no admissible evidence that would create a triable issue in court. Coronet counters that, although polygraph results are not admissible substantively, [***18] they are admissible to show an insurer’s good faith in denying a claim, citing Moskos v. National Ben Franklin Insurance Co. (1978), 60 Ill. App. 3d 130, 376 N.E.2d 388. Moskos may be authority for admissibility of the polygraph results in the plaintiff’s claim under count III for vexatious refusal to pay. But the evidence is not admissible, let alone conclusive, in the claims under counts I and II. (See Lynch v. Mid-America Fire & Marine Insurance Co. (1981), 94 Ill. App. 3d 21, 418 N.E.2d 421.) Moreover, even if the evidence is admissible under the vexatious-refusal-to-pay claim in count III (and we have strong reservations about the holding in Moskos), the evidence is just that — admissible; it is not conclusive.

C

The plaintiff also argues correctly that Coronet’s reliance on polygraph test results causes substantial injury to consumers. This injury results from the limited choices facing the insured: file suit or forego redress. The plaintiff asserts, without contradiction by Coronet, that many claimants are deprived of redress because of the modest size of the claims and the unsophistication of Coronet’s [***19] insureds.

Coronet contends that the plaintiff’s complaint failed to state a cause of action because the plaintiff consented to take the [**1319] polygraph[*747] examination rather than give a sworn statement. The defendants assert that the plaintiff “admitted the consent form, stating that he voluntarily took the test and consented to disclosure of the results.” The basis of that statement is a consent form allegedly signed by the plaintiff which was made part of the record as a response to a request to admit. The plaintiff makes no point of the propriety of our considering the form even though the motion was brought under section 2 — 615 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 615). Consequently, neither will we.

However, we must again point out that the issue is the use of the results of the polygraph examination in denying a claim. The issue is not whether the plaintiff consented to take the test and consented to the disclosure of the results. He did not consent to a denial of his claim based on the results of the test.

In sum, the plaintiff has alleged the elements necessary under Sperry & Hutchinson and Hedrich to state a cause of action [***20] for unfair trade practices against Coronet. Moreover, even if the plaintiff did consent to submit to the examination, such consent is irrelevant to his claim of unfair trade practices. For these reasons, the trial judge erred in dismissing count I of the plaintiff’s complaint against Coronet. The order dismissing count I is reversed.

II

The plaintiff also argues that count I of his complaint sufficiently stated a cause of action against Elston for unfair trade practices under the Consumer Fraud Act. The plaintiff anchors his argument on Elston’s actions, as agent for Coronet, in denying the plaintiff’s automobile-theft claim based solely on the results of the polygraph examination. Elston asserts that the complaint failed to state a cause of action against it for any unfair practice because the Act does not apply to the processing of insurance claims, because the plaintiff lacks standing as a “consumer” as to Elston, and because Elston’s tangential relationship to any consumer transaction between the plaintiff and Coronet provides an insufficient nexus to support a cause of action against Elston.

The plaintiff complains of Elston’s actions as Coronet’s agent in denying his automobile-theft [***21] claim. Because those actions alleged in count I sufficiently stated a cause of action against Coronet, as indicated above, the propriety of the dismissal of Elston depends on the validity of Elston’s arguments against imposing liability under the Consumer Fraud Act for claim-processing activities. The resolution of this issue requires an examination of the statute governing an unfair [*748] practice claim.

Section 10a of the Consumer Fraud Act (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 270a (as amended by Pub. Act 85 — 869, @ 1, eff. Jan. 1, 1988)) provides the basis for a private right of action as follows:

“Any person who suffers damage as a result of a violation of Section[ ] 2 * * * of this Act committed by any other person may bring an action against such person. The court, in its discretion[,] may award actual damages or any other relief which the court deems proper.” Section 2 of the Act (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 262) declares unlawful “unfair * * * practices * * * in the conduct of any trade or commerce.” Section 1 of the Act (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 261) defines “trade” and “commerce” to include the “sale[] or distribution of any services.” [***22] Finally, section 11a (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 271a) states that “[t]his Act shall be liberally construed to effect the purposes thereof.”

Thus, the plain language of the Act establishes that any person who suffers damage as a result of any other person’s unfair practice or deception in the sale or distribution of any services may bring an action for actual damages or for any other relief which the court deems proper. This statutory language is extremely broad, and the supreme court has stated that “[t]his broad language evidences an intent that the Act have a correspondingly broad applicability.” Scott v. Association for Childbirth at Home, International (1981), 88 Ill. 2d 279, 284, 430 N.E.2d 1012, 1015.

[**1320] In opposition to a reading of the Act that would include Elston’sactivities in the Act’s coverage, the defendants cite Exchange National Bank v. Farm Bureau Life Insurance Co. (1982), 108 Ill. App. 3d 212, 438 N.E.2d 1247, and Frahm v. Urkovich (1983), 113 Ill. App. 3d 580, 447 N.E.2d 1007. These cases are distinguishable. The court in Exchange National Bank held [***23] that the plaintiffs failed to state a cause of action against the defendant mortgage lenders under the Act, because the plaintiffs failed to allege that the assertedly unfair and deceptive practices were “part of a pattern of defendants’ lending activities.” (108 Ill. App. 3d at 216.) In contrast, the plaintiff here has alleged that “Elston and Coronet have a policy and practice of denying claims on the basis of results of polygraph * * * tests, without engaging in significant other investigation.” (Emphasis added.)

In Frahm the court held that the plaintiffs failed to state a cause of action against their former attorney under the Act, because attorney services were not services provided in the conduct of any trade or commerce. The court found that “[t]he interpretation urged by plaintiffs [*749] * * * would necessarily equate the practice of law with an ordinary commercial enterprise, a proposition [with] no support in case law or public policy.” (113 Ill. App. 3d at 584.) In contrast, the sale of insurance is a “trade or commerce” under the Act. Fox v. Industrial Casualty Insurance Co. (1981), 98 Ill. App. 3d 543, 546, 424 N.E.2d 839, 842. [***24]

Although the decision is not binding precedent, we find persuasive the holding of the Federal district court in Barr Co. v. Safeco Insurance Co. (N.D. Ill. 1984), 583 F. Supp. 248. The court held that the plaintiff had stated a cause of action against the defendant insurer, who allegedly “engaged in a practice of not paying promptly and completely claims * * * which Safeco knew were due and owing” in an effort to negotiate settlements at less than a full and fair value and who “concealed and omitted to disclose its practice.” (583 F. Supp. at 257.) The court reasoned that the “plaintiff alleges a series of misrepresentations made to a series of insureds. Plaintiff is not alleging an isolated incident. In any event, insurance contracts are matters of public policy [citations] and misrepresentations made with regard to such contracts would be the type covered by the Act.” (583 F. Supp. at 258.) Likewise, the plaintiff here has alleged a series of unfair acts by Elston and Coronet against the plaintiff and other insureds. Elston and Coronet are incorrect in asserting that the processing of insurance claims is not covered by the [***25] Act.

The defendants cite McCarter v. State Farm Mutual Automobile Insurance Co. (1985), 130 Ill. App. 3d 97, 473 N.E.2d 1015, as “specifically [holding] that the Act was not intended to reach the insurance claim adjustment process.” However, McCarter concerned an allegation that the defendant-insurer committed an unfair or deceptive act in settling the plaintiff-beneficiary’s third-party claim against an insured. In affirming the dismissal of the plaintiff’s

Consumer Fraud Act claim, the court reasoned that “the transaction complained of in the present case does not involve a sale of insurance. In fact, the plaintiff is not even a consumer under these circumstances. Since the Consumer Fraud Act applies only to consumers [citation], we affirm the trial court’s dismissal of count I.” (130 Ill. App. 3d at 101.) The McCarter plaintiff was a third-party beneficiary under an insured’s policy, not a consumer (i.e., an insured who had purchased insurance). McCarter does not hold that the Act was not intended to reach the insurance claim adjustment process where the claimant is the insured. The same reasoning distinguishes [***26] Steinberg v. Chicago Medical School (1977), 69 Ill. 2d 320, 328, 371 N.E.2d 634, 638, in which the supreme court held that the plaintiff, who did not purchase or contract to purchase anything, [*750] but merely applied for admission to medical school, was not a “consumer” under the Act.

[**1321] Moreover, as indicated above, section 10a of the Act (Ill. Rev.Stat. 1987, ch. 121 1/2, par. 270a) establishes a broad standard for standing to bring a private cause of action: to bring an action against any person who commits an unfair practice in violation of section 2 of the Act, a plaintiff need only “suffer[] damage as a result of [that] violation.” (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 270a.) A consumer is defined as “any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household.” (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 261(e).) Nowhere does the definition require that privity exist between the purchaser and the provider of the merchandise. The present plaintiff purchased insurance from Coronet and contracted for a good-faith settlement [***27] of claims. Thus, the plaintiff is a consumer under the Act and has standing under section 10a to bring an action against Elston for damage suffered as a result of Elston’s allegedly unfair practices in adjusting the plaintiff’s claim.

Finally, section 10a provides that a plaintiff may bring an action against any “person” who violates section 2 of the Act. “The term ‘person’ includes any natural person or his legal representative, partnership, corporation (domestic or foreign), company, trust, business entity or association, and any agent [or] employee * * * thereof.” (Emphasis added.) (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 261(c).) The plaintiff has alleged that “Elston, acting on behalf of Coronet, denied [the plaintiff’s] claim on the alleged basis of the results of the polygraph test.” (Emphasis added.) Thus, the plaintiff properly stated a cause of action against Elston, who was Coronet’s agent and a “person” who performed the allegedly unfair acts.

III

Plaintiff next asserts as error the trial judge’s dismissal of count II of the complaint, which alleged that Coronet engaged in a deceptive practice by failing, when it sold the insurance policy, to disclose its [***28] practice of denying automobile-theft claims on the basis of polygraph examinations. Section 2 of the Act provides a nonexclusive list of deceptive practices, which includes “the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact.” (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 262.) To establish a deceptive practice claim, a plaintiff “must show (1) a deceptive act or practice, (2) an intent by defendants that he rely on the deception, and (3) the deception [*751] occurred in the course of conduct involving a trade or commerce.” (Crowder v. Bob Oberling Enterprises, Inc. (1986), 148 Ill. App. 3d 313, 316, 499 N.E.2d 115, 117.) Moreover, in affirmative misrepresentation or omission cases under the Act, a plaintiff “must allege the misrepresentation of a material fact.” Heastie v. Community Bank (N.D. Ill. 1988), 690 F. Supp. 716, 718-19.

Courts have employed various standards to determine what constitutes a “deceptive act or practice,” the first element set forth in Crowder. Some courts have applied the unfair practice standard [***29] enunciated in Sperry & Hutchinson, previously discussed. (E.g., People ex rel. Hartigan v. All American Aluminum & Construction Co. (1988), 171 Ill. App. 3d 27, 524 N.E.2d 1067; People ex rel. Fahner v. Hedrich (1982), 108 Ill. App. 3d 83, 438 N.E.2d 924.) This court has recognized that, under section 5(a) of the FTCA, “an advertisement has been held to be deceptive on its face if it creates ‘the likelihood of deception or [has] the capacity to deceive’.” (Williams v. Bruno Appliance & Furniture Mart, Inc. (1978), 62 Ill. App. 3d 219, 222, 379 N.E.2d 52, 54, quoting Montgomery Ward & Co. v. Federal Trade Comm’n (7th Cir. 1967), 379 F.2d 666, 670.) In Crowder the court held that allegations that the defendant car salesman failed to inform the plaintiff of a used car’s salvage history sufficiently alleged deceptive conduct, stating that “under the Act the omission of any material fact is deceptive conduct.” 148 Ill. App. 3d at 316-17.

[**1322] Under Crowder’s standard, the plaintiff’s assertion that Coronet failed to disclose its claims [***30] adjustment practices sufficiently alleged a deceptive act or practice. “A misrepresentation is material if ‘it relates to a matter upon which the plaintiff could be expected to rely in determining to engage in the conduct in question.'” (Heastie, 690 F. Supp. at 718-19, quoting Mother Earth, Ltd. v. Strawberry Camel, Ltd. (1979), 72 Ill. App. 3d 37, 49, 390 N.E.2d 393, 404.) In making a judgment whether to purchase insurance from Coronet, the plaintiff could reasonably have been expected to rely on the information that Coronet engaged in a practice of denying insurance claims on the basis of polygraph tests without significant other investigation. Common sense dictates that any prospective purchaser of insurance would be less likely to purchase insurance from a carrier that, as a matter of policy and general practice, would hire a polygraph operator to examine a claimant and justifiably deny the claim because the polygraph operator, paid by the carrier, opined that the insured had not told the truth. Consequently, the undisclosed practice was material, and Coronet’s alleged failure to disclose constituted deceptive conduct. Compare [***31] Robacki v. Allstate Insurance Co. (1984), 127 Ill. App. 3d 294, 300, [*752] 468 N.E.2d 1251, 1255 (The court affirmed summary judgment for the defendant on a Consumer Fraud Act claim, stating that “there [was] no element of deception in the dealings between [the] parties * * * [because] defendant provided plaintiff with a complete explanation pamphlet * * * [which] eliminate[d] any possibility of confusion or misunderstanding”).

The second element required under Crowder for a deceptive-practice claim concerns the defendant’s intent that the plaintiff rely on the deception. However, “a defendant need not be motivated by an intent to deceive. [Citation.] * * * [A] violator’s good or bad faith is not important. [Citation.] Even innocent misrepresentations may be actionable. [Citation.] By its own terms, the statute requires only that a violator intend for a purchaser to rely on his acts or omissions. A party is considered to intend the necessary consequences of his own acts or conduct.” (Emphasis in original.) (Warren v. LeMay (1986), 142 Ill. App. 3d 550, 566, 491 N.E.2d 464, 474.) Thus, Coronet is considered [***32] to have intended that the plaintiff purchase its automobile-theft insurance under the belief that Coronet would not refuse to pay otherwise facially valid claims simply on the basis of polygraph test results. Contrary to the assertions of the defendants, the plaintiff had no duty to inquire as to the insurer’s claims processing method. (Beard v. Gress (1980), 90 Ill. App. 3d 622, 627-28, 413 N.E.2d 448, 452 (“[N]either the mental state of the person making a misrepresentation nor the diligence of the party injured to check as to the accuracy of the misrepresentation [is] material to the existence of a cause of action for that misrepresentation under section 2 [of the Act].”).) The plaintiff’s claim thus established the requisite intent.

The final element to a deception claim under Crowder requires that the deception occurred in the course of conduct involving a trade or commerce. We repeat that the sale of insurance is a trade or commerce under the Act. (Fox v. Industrial Casualty Insurance Co. (1981), 98 Ill. App. 3d 543, 424 N.E.2d 839.) Thus, the plaintiff’s claim for deceptive practices has satisfied the third [***33] element as well.

The defendants rely heavily on Marcial v. Coronet Insurance Co. (N.D. Ill. 1988), 122 F.R.D. 529, aff’d (7th Cir. 1989), 880 F.2d 954. Marcial does not support the defendants’ position. There, the district court denied class certification of a claim against Coronet which alleged that Coronet and Elston violated the Federal RICO statutes (18 U.S.C. @@ 1961 through 1965 (1982)) by using polygraph tests as a means for denying insurance claims. Essential to the complaint was [*753] proof that the defendants had committed wire or mail fraud. In affirming, the court of appeals held that the plaintiffs had to prove that the defendants “knowingly schemed to defraud plaintiffs [**1323] of their property and used the mail or wire services in furtherance of the scheme” (880 F.2d at 958) and that the plaintiffs had failed to so prove. As we have already expressed, an intent to deceive is not an element to be proved under the Consumer Fraud Act. Significantly, the court noted that the “plaintiffs have presented strong arguments as to why the use of a polygraph test is unfair, and possibly illegal under state law.” 880 F.2d at 958. [***34]

As the plaintiff’s claim for deceptive practices has alleged satisfactorily the requisite elements for such a claim, the order dismissing count II of the complaint is reversed.

IV

The plaintiff’s last contention is that the judge erred in dismissing his class claim from count III. Count III alleges that Coronet breached its contract of insurance by refusing to pay the plaintiff’s claim on the basis of a lie detector test, that Elder was damaged by the breach, and that it is unreasonable and vexatious for an insurer to deny claims on the basis of lie detector results. The count further alleged that the class consists of all persons who satisfy the following criteria: (a) they were insured by Coronet; (b) they made a claim under their policy; (c) they were requested to take a polygraph or “lie detector” test; and (d) their claim was denied on the basis of the results of the polygraph or “lie detector” test.

The plaintiff contended that there were questions of law and fact common to the class which predominated over any questions affecting only individual members. He identified the issues as: (a) whether the denial of an insurance claim on the basis of a lie detector test is a breach [***35] of the insurance policy; and (b) whether the denial of an insurance claim on the basis of a lie detector test is vexatious and unreasonable in violation of the Insurance Code. The relief prayed for was a declaration “that it is an unfair trade practice to deny insurance claims on the basis of lie detector tests and for appropriate compensatory damages and for costs of suit, including the additional amounts prescribed by section 157 [sic] of the insurance code and for such other and further relief as the Court deems appropriate.” (The plaintiff must have been referring to section 155 of the Code. (Ill. Rev. Stat. 1987, ch. 73, par. 767.) Section 157 is not applicable.)

Section 2 — 801 of the Code of Civil Procedure (Ill. Rev. Stat. 1987, ch. 110, par. 2 — 801) establishes the elements necessary to maintain [*754] a class action:

“An action may be maintained as a class action in any court of this State and a party may sue or be sued as a representative party of the class only if the court finds:

(1) The class is so numerous that joinder of all members is impracticable.

(2) There are questions of fact or law common to the class, which common questions predominate over any [***36] questions affecting only individual members.

(3) The representative parties will fairly and adequately protect the interest of the class.

(4) The class action is an appropriate method for the fair and efficient adjudication of the controversy.”

The defendants claim that class certification was properly denied because the trial judge found that many issues would still be unresolved even if the judge eventually held that the defendants had breached the contract with the plaintiff. We agree. Under count III, the plaintiff must prove that his car was stolen and the amount of his damages. Every other member of the class must prove the same. The defendants would be entitled to a jury trial on the claims of the plaintiff and all the other members of the class. Similarly, the plaintiff must convince the court that the refusal to pay was vexatious; so must every other member of the class. It is true that there is one question of fact common to the class — all claims were denied on the basis of the results of polygraph examinations. But we do not believe that that common question predominates over any other questions affecting only individual members to the extent that substantial [***37] differences between the individual claimants do not exist. [**1324] On this aspect of the case we believe Marcial v.Coronet Insurance Co. (7th Cir. 1989), 880 F.2d 954, is persuasive.

The decision whether to certify a class is a matter committed to the sound discretion of the trial court and will be reversed only upon a clear abuse of discretion or the application of impermissible legal criteria. (Schlenz v. Castle (1981), 84 Ill. 2d 196, 417 N.E.2d 1336.) A reversal of a trial court’s decision whether to certify a class action is not justified simply because a reviewing court concludes that the trial court’s discretion was not “wisely exercised.” (McCabe v. Burgess (1979), 75 Ill. 2d 457, 389 N.E.2d 565.) We cannot say that the trial judge in this case abused his discretion in denying certification under the pleading before him.

The plaintiff has shifted positions from the relief sought in his complaint in what we judge to be an attempt to avoid the argument that [*755] the other issues must be resolved. He tells us that he asked the trial court for “a declaration that the denial of insurance claims [***38] on the basis of lie detector tests was unlawful, and to direct defendants to reprocess of all claims denied on the basis of ‘lie detector’ tests without use of such tests.” He bases that request on the catch-all part of his prayer which asks “for such other and further relief that the court deems appropriate.” In our view the relief he now requests may not be based on count III. Reprocessing of all claims is inconsistent with a claim for breach of contract and compensatory damages. Since this case is being remanded, the plaintiff may wish to amend his complaint.

The plaintiff relies principally on Van Vactor v. Blue Cross Association (1977), 50 Ill. App. 3d 709, 365 N.E.2d 638, and Carrao v. Health Care Service Corp. (1983), 118 Ill. App. 3d 417, 454 N.E.2d 781. In Van Vactor, which involved a complaint for declaratory judgment, the court expressly noted that, unlike this case, there was no claim for damages. In Carrao, the court held that a presumption existed that a physician had made a determination of medical necessity in hospitalizing a patient in good faith. The court further held that if the defendant, [***39] Blue Cross, was able to produce “clear and convincing evidence” of fraud, duress or bad faith in any of the claims, the court would deal appropriately with each claim. The trial court, we judge, concluded that the number of such instances of bad faith would be small. The Carrao court also noted pointedly that the “trial court was well within its discretion in determining that the issue of contract construction predominated over any questions affecting only individual members.” (118 Ill. App. 3d at 428.) Van Vactor also was an affirmance of the trial court’s exercise of discretion. Neither case is such authority that compels the substitution of our judgment for that of the trial judge. Therefore, we answer in the negative the certified question whether count III sufficiently alleged the prerequisites needed to maintain a class action under section 2 — 801 of the Code of Civil Procedure. The trial judge properly struck that part of count III purporting to plead a cause of action under section 2 — 801. The order striking that part of count III is affirmed.

Judgment affirmed in part; reversed in part and remanded.

BOARD OF EDUC. OF CHICAGO v. NATIONAL UNION FIRE INS. CO.

95 C 5360

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

1996 U.S. Dist. LEXIS 570

January 18, 1996, Dated January 19, 1996, DOCKETED

OPINION:

… [*7] Dec. 113, 635 N.E.2d 452, 460 (Ill.App.Ct. 1994), citing Bankier v. First Federal Sav. & Loan Ass’n of Champaign, 225 Ill. App. 3d 864, 588 N.E.2d 391, 167 Ill. Dec. 750 (Ill.App.Ct. 1992). Because we believe that this case is simply about failure to indemnify and the interpretation of the insurance contracts, we do not believe that the Complaint adequately asserts a violation of public policy.

We also do not believe that the Complaint adequately alleges immoral, unethical, oppressive, or unscrupulous business practices. The Complaint simply asserts that National Union decided not to indemnify because of perceived exclusions in the policies. We do not believe that Plaintiffs have shown that such actions are violative of the Act, which is designed primarily to deal with consumer fraud and not insurance indemnification. While we acknowledge that there are times when the Consumer Fraud Act applies in the insurance context, we do not believe that it is appropriate here.

The case which Plaintiff principally relies upon, Elder v. Coronet Ins. Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312, 146 Ill. Dec. 978 (Ill.App.Ct. 1990), is distinguishable [*8] from the one at hand. In Elder, the Illinois Appellate Court held that the denial of coverage solely on the basis of polygraph tests to be an unfair trade practice and violative of the act of the Consumer Fraud Act. However, in the instant case, the Board does not adequately allege an unfair practice or conduct which justifies the application of the Consumer Fraud Act. Plaintiff simply alleges that National Union refused to indemnify and defend.

Furthermore, even if we had found Defendant’s conduct to be violative of the Act, the Illinois Insurance Code preempts claims made under the Consumer Fraud Act if the “predicate acts or conduct” which the plaintiff alleges are within the scope of Section 155. Parrillo v. Commercial Union Insurance Co. 1995 U.S. Dist. LEXIS 17332, *7, 1995 WL 692021, 3 (N.D.Ill 1995), citing Kush v. American States Ins. Co., 853 F.2d 1380, 1385 ( …

LEVEL 1 – 2 OF 16 CASES

DICKSON v. CHICAGO ALLIED WAREHOUSES, INC.

No. 90 C 6161

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

1993 U.S. Dist. LEXIS 12914

September 15, 1993, Decided September 16, 1993, Docketed

OPINION:

… [*24] 1993). Despite some factual variation in those plaintiffs’ claims, Rosario found that a beauty school’s scheme to defraud and deceive prospective students presented a common question. Id. at 1017-1018. Heastie also certified a class under the Act, noting the presence of a common question where bank documents omitted pertinent disclosures. See Heastie, 125 F.R.D. at 678. Courts interpreting the Act conclude that common questions predominate, as actual confusion or misunderstanding is not an element of a claim under [*25] the Act. See Eshaghi v. Hanley Dawson Cadillac Co., 214 Ill.App.3d 995, 574 N.E.2d 760, 764-766, 158 Ill. Dec. 647 (1st Dist. 1991); Brooks v. Midas-Int’l Corp., 47 Ill.App.3d 266, 361 N.E.2d 815, 818-820, 5 Ill. Dec. 492 (1st Dist. 1977). But see Elder v. Coronet Ins. Co., 201 Ill.App.3d 733, 558 N.E.2d 1312, 1323-1324, 146 Ill. Dec. 978 (1st Dist. 1990).

Having considered these authorities and the arguments made by the parties, this court concludes that Count VI should be certified. Accordingly, the motion for class certification is granted as to Counts IV to VI of the complaint.

MOTION TO DISMISS

In its October 26, 1992 ruling on defendants’ motion to dismiss plaintiffs’ amended complaint, this court deferred consideration of defendants’ challenges to Counts IV-VII of the complaint until after the decision on class certification. The decision on certification having been made, the court looks to the remaining arguments made in the motion to dismiss. Those arguments address only plaintiffs’ class claims. In ruling on the motion to dismiss, the court accepts all well-pleaded facts in the complaint [*26] as true and draws all reasonable inferences in plaintiffs’ favor. Crane v. Logli, 992 F.2d 136, 138 (7th Cir.), petition for cert. filed, July 19, 1993; Dimmig v. …

LEVEL 1 – 3 OF 16 CASES

JOHNSON v. STEVEN SIMS SUBARU, INC.

Case No. 92 C 6355

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

1993 U.S. Dist. LEXIS 11694

August 20, 1993, Decided August 20, 1993, Docketed

OPINION:

… [*39] 89-90, 780 63 Ill. Dec. 782, 786-87, 438 N.E.2d 924, 928-29 (1st Dist. 1982)). Under the FTC Act, unfair conduct is defined as any practice which “offends public policy,” is “immoral, unethical, oppressive, or unscrupulous,” or causes “substantial injury to consumers (or competitors or other businessmen).” FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244 n.5, 31 L. Ed. 2d 170, 92 S. Ct. 898 (1972).

Ms. Johnson insists that, despite Laughlin, the ICFA still encompasses unfair [*40] conduct for three reasons: first, the plain language of the statute prohibits “unfair or deceptive” conduct; second, Illinois appellate courts continue to find “unfair” conduct actionable under the ICFA; and third, the reference to “overreaching” practices in Laughlin indicates that unfair conduct remains actionable under ICFA. Plaintiff’s Response, pp. 41-42 (citing Elder v. Coronet Insurance Co., 201 Ill. App. 3d 733, 146 Ill. Dec. 978, 982, 558 N.E.2d 1312, 1316 (1st Dist. 1990); People ex rel. Hartigan v. Knecht Services, Inc., 216 Ill. App. 3d 843, 159 Ill. Dec. 318, 326-27, 575 N.E.2d 1378, 1386-87 (2d Dist. 1991); Ekl v. Knecht, 223 Ill. App. 3d 234, 165 Ill. Dec. 760, 767, 585 N.E.2d 156, 163 (2d Dist. 1991)).

Laughlin provides slight insight into its statutory interpretation that merely “unfair” practices are no longer actionable under ICFA. However, none of the appellate cases cited by Ms. Johnson distinguish Laughlin. As Judge Shadur indicated in Kedziora v. Citicorp National Services, Inc., 780 F. Supp. at 533: [*41] “It is hard to know which is more puzzling: Laughlin’s reading of the statute, or Knecht’s and Elder’s disregard of Laughlin.” n6 …

LEVEL 1 – 4 OF 16 CASES

ELLIOTT v. ITT CORP.

No. 90 C 1841

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

150 F.R.D. 569; 1992 U.S. Dist. LEXIS 17340

November 10, 1992, Decided November 12, 1992, Docketed

DISPOSITION: [**1] This court recommends that plaintiff’s motion for class certification be denied. The court further recommends that plaintiff’s motion to file an amended complaint be denied.

OPINION:

… [*578] [**26] unlawful, offends public policy as it has been established by statutes, the common law, or otherwise–whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).'”

People v. Knecht Services, Inc., 216 Ill. App. 3d 843, 575 N.E.2d 1378, 1385, 159 Ill. Dec. 318 (2d Dist. 1991) (quoting Federal Trade Comm’n v. Sperry and Hutchinson Co., 405 U.S. 233, 244-245, 31 L. Ed. 2d 170, 92 S. Ct. 898 n.5 (1972). Although Illinois courts look to the Federal Trade Commission [**27] Act for guidance in determining whether a practice is “unfair,” the inquiry under the Consumer Fraud Act also requires a case-by-case determination of unfairness. See Elder v. Coronet Ins. Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312, 1316, 146 Ill. Dec. 978 (1st Dist. 1990). To establish that a practice is “deceptive” within the meaning of the statute, a plaintiff must show (1) a deceptive act or practice, (2) an intent by the defendant that he rely on the deception, and (3) that the deception occurred in the course of conduct involving a trade or business. Knecht Services, 575 N.E.2d at 1387. In affirmative misrepresentation or omission cases, a plaintiff must also allege the misrepresentation of a material fact. Id.

– – – – – – – – – – – – – – – – – -Footnotes- – – – – – – – – – – – – – – – – –

n5 In the briefs on class certification, plaintiff has alternatively taken the position that defendants’ practices violate the unfair and deceptive acts and practices (“UDAP”) statute of Minnesota. This contention is made as part of plaintiff’s response to defendants’ allegation that differences in state consumer fraud statutes preclude a finding that there are common issues of law in this litigation. Given the court’s conclusion that differences in state laws are not in themselves …

… [*581] [**37] a contract, and oral misrepresentations. Rosario v. Livaditis, No. 87 C 1224, 1988 U.S. Dist. LEXIS 11240 at 2-3 (N.D. Ill. Oct. 4, 1988), aff’d, 963 F.2d 1013 (7th Cir. 1992). n9 Thus, a common question may be present even if oral communications are part of a defendant’s message to the public. Alternatively, construing the question here as a failure to tell consumers the truth, a common fact question might still be presented. See Eshaghi v. Hanley Dawson Cadillac Co., Inc., 214 Ill. App. 3d 995, 574 N.E.2d 760, 158 Ill. Dec. 647 (1st Dist. 1991) (commenting that class action could be based on car dealer’s failure to inform customers of surcharge for materials even though some customers might have learned of surcharge during the course of individual negotiations for work on their cars). But see Elder v. Coronet Ins. Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312, 1321-1323, 146 Ill. Dec. 978 (1st Dist. 1990) [**38] (finding that uniform omission gave rise to deceptive practices claim, but denying certification because of individual questions bearing on existence of injury).

– – – – – – – – – – – – – – – – – -Footnotes- – – – – – – – – – – – – – – – – –

n9 While the finding of a common scheme to defraud and deceive prospective students was upheld in the Seventh Circuit’s opinion in Rosario, the parties did not challenge the lower court’s finding under Rule 23(b)(3) that common issues predominated over individual issues. See 963 F.2d at 1017.

– – – – – – – – – – – – – – – – -End Footnotes- – – – – – – – – – – – – – – – –

This court concludes that a common question of fact is presented here, although it has some reservations concerning the temporal and geographical scope of the proposed class. First, there is evidence that ITT responded to governmental actions against it by taking steps to improve compliance with consumer fraud laws. For instance, after 1989, many loan closings were apparently recorded on audio tape. Governmental actions against …

P.I.A. MICHIGAN CITY, INC. v. NATIONAL PORGES RADIATOR CORP.

No. 91 C 4039

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

789 F. Supp. 1421; 1992 U.S. Dist. LEXIS 482

January 15, 1992, Decided

OPINION:

… [*1426] [**13] 1018, 85 Ill. Dec. 416 (3d Dist. 1985), Principal Mutual argues that the Consumer Fraud Act applies only to sales of insurance, not to claims related to the adjustment of insurance claims. Principal Mutual, however, misreads McCarter. McCarter was a claim against an insurance company by a third party who was injured by the insured; it did not involve a claim against the insurance company by the insured himself. Since the Consumer Fraud claim was not a claim by the purchaser of the insurance, it was held that McCarter did not have standing to bring a Consumer Fraud claim because he was not a consumer vis-a-vis the insurer. A more recent Illinois Appellate Court case so reads McCarter and specifically holds that an insured may bring a claim against his or her insurer based on deception in the adjustment of a claim and that, under such circumstances, the insured is a consumer with standing under the Consumer Fraud Act. Elder v. Coronet Insurance Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312, 1320-21, 146 Ill. Dec. 978 (1st Dist. 1990), appeal [**14] withdrawn, 139Ill. 2d 594, 575 N.E.2d 913 (1991). Principal Mutual’s argument that the Consumer Fraud Act does not apply to the adjustment of insurance claims is without merit.

– – – – – – – – – – – – – – – – – -Footnotes- – – – – – – – – – – – – – – – – –

n5 The court assumes, as do the parties, that plaintiff has adequately alleged an unfair or deceptive practice.

– – – – – – – – – – – – – – – – -End Footnotes- – – – – – – – – – – – – – – – –

Principal Mutual also argues, however, that, as a third party beneficiary of the insurance contract between Wilson and Principal Mutual, PIA lacks standing to bring a Consumer Fraud claim. This argument is supported by McCarter’s holding that a third party seeking payment from an insurance company lacks standing because not a consumer. Principal Mutual’s position is also supported by National Union Fire Insurance Co. of Pittsburgh v. Continental Illinois Corp., 652 F. Supp. 858, 860-61 (N.D. Ill. 1986), which holds that corporate employees …

LEVEL 1 – 6 OF 16 CASES

KEDZIORA v. CITICORP NATL. SERVS.

No. 91 C 3428

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

780 F. Supp. 516; 1991 U.S. Dist. LEXIS 17128

November 19, 1991, Decided November 21, 1991, Docketed

OPINION:

… [*533] [**53] defrauds or deceives consumers or others” (Laughlin v. Evanston Hospital, 133 Ill.2d 374, 390, 550 N.E.2d 986, 993 (1990)). Conduct that is both unfair and deceptive remains actionable, so that the Sperry & Hutchinson factors appear to retain some force in Illinois, but only insofar as they serve to make deceptive conduct seem even worse.

Kedzioras ask this Court to read Laughlin quite narrowly. They argue that Laughlin, which dealt with what was essentially an antitrust claim, merely excluded price discrimination from the scope of CFA. In support of that view they note two Illinois Appellate Court decisions that postdate Laughlin and appear to hold that unfair practices that are not deceptive remain actionable under CFA (People ex rel. Hartigan v. Knecht Services, Inc., 216 Ill. App. 3d 843, 575 N.E.2d 1378, 1385-87, 159 Ill. Dec. 318 (Ill.App.2d Dist. 1991); [**54] Elder v. Coronet Ins. Co., 201 Ill.App.3d 733, 743, 558 N.E.2d 1312, 1316, 146 Ill. Dec. 978 (1st Dist. 1990)).

It is certainly true that CFA plainly encompasses “unfair methods” and “unfair or deceptive acts or practices” (emphasis added). In Laughlin the court leapt past not only that language but also a long history of interpretation consistent with federal law to hold that the legislature intended only to target “fraud” (133 Ill.2d at 390, 550 N.E.2d at 993). Nonetheless Knecht and Elder have since endorsed the notion that a CFA plaintiff may state a claim for “unfair” conduct.

It is hard to know which is more puzzling: Laughlin’s reading of the statute or Knecht’s and Elder’s disregard of Laughlin. Those two Appellate District cases do not distinguish Laughlin. Instead they plainly ignore it, looking instead to the Sperry & Hutchinson analysis under the federal statute. That being so, they cannot control this Court’s decision on a point of Illinois law.

Laughlin’s …

LEVEL 1 – 7 OF 16 CASES

LINCOLN NATL. LIFE INS. CO. v. A. DAVID SILVER & ADS

No. 86 C 7175

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

1991 U.S. Dist. LEXIS 13857

September 30, 1991 October 1, 1991, Docketed

SUBSEQUENT HISTORY: Adopting Order of October 30, 1991, Reported at 1991 U.S. Dist. LEXIS 15758.

OPINION:

… [*30] Dec. 416, 419, 473 N.E. 2d 1015, 1018 (3d Dist. 1985) (same). The First District Appellate Court stated as an alternative rationale for its decision in Allcare, Inc. v. Bork, 176 Ill. App. 3d 993, 126 Ill. Dec. 406, 412-13, 531 N.E. 2d 1022, 39-40 (1st Dist. 1988), that “the [Consumer Fraud Act] was intended to provide redress only to consumers generally, not to businesses injured by other businesses when they are not consumers of each other’s goods or services.” In Re Estate of Szorek, 194 IlI. App. 3d 750, 141 Ill. Dec. 510, 513, 551 N.E.2d 697, 700 (1st Dist. 1990), cited by Lincoln, did not expressly hold that only consumers could sue under the act; it merely stated that the Act did not apply to banking practices and was intended to protect consumers. Cf. Elder v. Coronet Ins. Co., 201 Ill. App. 3d 733, 146 Ill. Dec. 978, 985, 558 N.E.2d 1312, 1319 (1st Dist. 1990) (noting that language that “any person who suffers damages” may recover is “extremely broad”).

Steinberg [*31] v. Chicago Medical School, 69 Ill. 2d 320, 13 Ill. Dec.699, 371 N.E.2d 634 (1977), on which Brown and McCarter relied, addressed the complaint of a rejected medical school applicant who alleged his application was not evaluated as promised. The court dismissed his Consumer Fraud Act claim stating: “Obviously, plaintiff and those whom he represents were not consumers. The Uniform Deceptive Trade Practices Act (Ill. Rev. Stat. 1973, ch. 121-1/2 par. 311 et seq.) is limited to goods or services. It is not relevant.” Id., 13 Ill. Dec. at 703, 371 N.E.2d at 638. In view of the plain language of the statute, we believe the first sentence should be taken as dictum and the second as the ratio decidendi.

There is …

LEVEL 1 – 8 OF 16 CASES

STORCK USA, L.P. v. LEVY

No. 90 C 5382

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION

1991 U.S. Dist. LEXIS 4947; 18 U.S.P.Q.2D (BNA) 1965

April 12, 1991 April 15, 1991, Docketed

OPINION:

… [*8] unable to cite any authority which limits standing under the Uniform Act to consumers and competitors.

For these reasons, the court finds that OK Labs has standing under the Uniform Deceptive Trade Practices Act as “[a] person likely to be damaged by a deceptive trade practice of another.”

III. COUNTERCLAIM COUNT VI: CONSUMER FRAUD AND DECEPTIVE BUSINESS PRACTICES ACT

Storck contends that OK Labs does not have [*9] standing under the Consumer Fraud and Deceptive Business Practices Act, Ill. Rev. Stat. ch. 121 1/2, paras. 261-272 (Supp. 1990), because OK Labs is not a “consumer.” n4 The statute provides a right of action to “any person who suffers damage as a result of a violation of this Act. . . .” However, Illinois courts have established that only “consumers” have standing to sue under the Act. Steinberg v. Chicago Medical School, 69 Ill.2d 320, 371 N.E.2d 634, 638 (1977); Elder v. Coronet Ins. Co. , 201 Ill.App.3d 733, 558 N.E.2d 1312, 1320 (1st Dist. 1990); Feldstein v. Guinan, 148 Ill.App.3d 610, 499 N.E.2d 535, 538 (1st Dist. 1986); Carter v. Mueller, 120 Ill.App.3d 314, 457 N.E.2d 1335, 1342 (1st Dist. 1983).

– – – – – – – – – – – – – – – – – -Footnotes- – – – – – – – – – – – – – – – – –

n4 OK Labs claim that Rabbi Levy and Eliezer Levy have standing under the Consumer Fraud Act as consumers. However, the allegations of Count VI refer only to OK Labs and make no reference to Rabbi Levy or Eliezer Levy. Thus, the court need not consider whether these two individuals have standing under the Act.

– – – – – – – – – – – – – – – – -End Footnotes- – – – – – – – – – – – – – – – – [*10]

It is clear that OK Labs is not a “consumer” as that term is defined by the Consumer Fraud Act. Under the statute, a consumer is “any person who purchases or contracts for the purchase of merchandise . . . for his use or that of a member of his household.” Ill. Rev. Stat. ch. 121 1/2, para. …

LEVEL 1 – 9 OF 16 CASES

SAUNDERS v. MICHIGAN AVE. NAT’L BANK

No. 1-94-1047

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

1996 Ill. App. LEXIS 121

March 7, 1996, Decided

NOTICE: [*1] THIS DECISION IS NOT FINAL UNTIL EXPIRATION OF THE 21 DAY PETITION FOR REHEARING PERIOD.

THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

DISPOSITION: Affirmed.

OPINION:

… [*10] Estate of Szorek, 194 Ill. App. 3d 750, 551 N.E.2d 697, 141 Ill. Dec. 510 (1990). We find no element of deception between the parties. Therefore, we affirm the trial court’s ruling denying Saunders’ Consumer Fraud Act claim.

Saunders then alleges that the Bank’s conduct is unfair under the Consumer Fraud Act, because: (1) the Bank had an incentive to honor checks, as opposed to returning them NSF; (2) the Bank had sole discretion in determining whether to honor checks; and (3) the fees for overdrafts were excessive. Sanders correctly notes that she may allege that conduct is unfair under the Consumer Fraud Act without alleging that the conduct is deceptive. Federal Trade Comm’n v. Sperry & Hutchinson Co., 405 U.S. 233, 31 L. Ed. 2d 170, 92 S. Ct. 898 (1972).

Illinois courts determine whether conduct is unfair under the Consumer Fraud Act on a case-by-case basis. Elder v. Coronet Insurance Co., 201 Ill. App. 3d 733, 558 N.E.2d 1312, 146 Ill. Dec. 978 (1990). In determining whether conduct is unfair, courts may rely upon interpretations of the Federal Trade Commission Act. 815 ILCS 505/2 (West 1992). In Federal Trade [*11] Comm’n v. Sperry &Hutchinson Co., the Supreme Court set out the requirements for establishing unfair conduct: (1) whether the practice offends public policy; (2) whether it is oppressive; and (3) whether it causes consumers substantial injury. 405 U.S. 233, 31 L. Ed. 2d 170, 92 S. Ct. 898. We find that Saunders fails to satisfy this criterion.

Primarily, we note that charging an unconscionably high price generally is insufficient to establish a claim for unfairness under the Consumer Fraud Act. People ex rel. Hartigan v. Knecht Services, Inc., 216 Ill. App. 3d 843, 575 N.E.2d 1378, 159 Ill. Dec. 318 (1991). Rather, the defendant’s …

LEVEL 1 – 10 OF 16 CASES

GRIFFIN v. UNIVERSAL CAS. CO.

No. 1-94-0654

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SIXTH DIVISION

274 Ill. App. 3d 1056; 654 N.E.2d 694; 1995 Ill. App. LEXIS 656; 211 Ill. Dec. 232

August 25, 1995, Decided, nunc pro tunc July 28, 1995

NOTICE: [**1]

THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

SUBSEQUENT HISTORY: Released for Publication September 25, 1995.

DISPOSITION: Judgment affirmed in part and reversed and remanded in part.

OPINION:

… [*1068] [**25] 4) it may repair the damaged vehicle. All of these options appear right next to each other. There is, therefore, no preferential placement of Option (1) such that, as the plaintiff alleges, an insured is misled into believing that the defendant must reimburse her according to the stated value. Contrary to her argument that the policy is deceptive because “the only settlement option disclosed on the declarations page is the stated value less the deductible” (emphasis in the original), none of the settlement options appears on the declaration page. Instead, the declarations page merely refers to Part V of the policy, which contains all of the settlement options.

Even if, as the plaintiff alleges, the defendant settles 95% of its claims [**26] using Options (2) or (3) of the “Total Loss” section, we do not think this allegation establishes a deceptive practice. The defendant’s practice is not contrary to the policy provisions, as the plaintiff argues. Rather, the policy expressly gives the defendant the option of settling insureds’ claims with a replacement vehicle or with the cost of a replacement vehicle. In this way, the case before us is distinguishable from Elder v. Coronet Ins. Co. (1990), 201 Ill. App. 3d 733, 558 N.E.2d 1312, 146 Ill. Dec. 978, which the plaintiff cites in support of her claim that the defendant violated the Consumer Fraud Act by failing to disclose its practice of settling 95% of its claims through the replacement options. In Elder, the court held that the plaintiff had proved a deceptive practice under the Consumer Fraud Act because the defendant sold him an insurance policy without disclosing its policy of denying automobile-theft claims on the basis of polygraph examinations. (Elder, 201 Ill. App. 3d at 750-53.) Unlike the Elder plaintiff, who did not know that the settlement of his claim might be based on the results of a polygraph examination, the plaintiff here was notified [**27] through express policy language that the defendant could choose to settle her claim with a replacement vehicle or the cost of that vehicle.

The case before us is analogous to Robacki v. Allstate Ins. Co. (1984), 127 Ill. App. 3d 294, 468 N.E.2d 1251, 82 Ill. Dec. …

LEVEL 1 – 11 OF 16 CASES

DWYER v. AMERICAN EXPRESS CO.

1-92-3944

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

273 Ill. App. 3d 742; 652 N.E.2d 1351; 1995 Ill. App. LEXIS 483; 210 Ill. Dec. 375

June 30, 1995, Decided

SUBSEQUENT HISTORY: [***1] Released for Publication August 16, 1995. Petition for Leave to Appeal Denied January 31, 1996.

DISPOSITION: Affirmed.

OPINION:

… [*749] [**1356] [***15] individual names my possess.

Consumer Fraud Act

Plaintiffs’ complaint also includes a claim under the Illinois Consumer Fraud Act. (Ill. Rev. Stat. 1991, ch. 121 1/2, par. 261 et seq. (now 815 ILCS 505/1 et seq. (West 1992)).) To establish a deceptive practice claim, a plaintiff must allege and prove (1) the misrepresentation or concealment of a material fact, (2) an intent by defendant that plaintiff rely on the misrepresentation or concealment, and (3) the deception occurred in the course of conduct involving a trade or commerce. Ill. Rev. Stat. 1991, ch. 121 1/2, par. 262 (now 815 ILCS 505/2 (West 1992)); Siegel v. Levy Organization Development Co. (1992), 153 Ill. 2d 534, 542, 607 N.E.2d 194, 198, 180 Ill. Dec. 300.

In Elder v. Coronet Insurance Co. (1990), 201 Ill. App. 3d 733, 558 N.E.2d 1312, 146 [***16] Ill. Dec. 978, the defendant insurance company failed to inform its customers, at the time of sale of insurance policies, of its practice of denying automobile-theft claims on the basis of polygraph examinations. The court held that the plaintiff’s assertion that the defendant failed to disclose its claims adjustment practices sufficiently alleged a deceptive practice under the Act. (Elder, 201 Ill. App. 3d at 751, 558 N.E.2d at 1321-23.) The court found this misrepresentation to be material because a customer would be expected to rely on this information [*750] when making a decision to buy insurance from the defendant. Elder, 201 [**1357] Ill. App. 3d at 751, 558 N.E.2d at 1322.

According to the plaintiffs, defendants conducted a survey which showed that 80% of Americans do not think companies should release personal information to other companies. Plaintiffs have alleged that defendants did disclose that it would use information provided in the credit card application, but this disclosure did not inform the …

LEVEL 1 – 12 OF 16 CASES

GOLEMBIEWSKI v. HALLBERG INS. AGENCY

Nos. 1-91-4127, 1-92-0261, 1-92-0262 Consolidated

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SIXTH DIVISION

262 Ill. App. 3d 1082; 635 N.E.2d 452; 1994 Ill. App. LEXIS 280; 200 Ill. Dec. 113

March 4, 1994, Decided

NOTICE: [***1]

THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

SUBSEQUENT HISTORY: As Modified on Denial of Rehearing June 10, 1994. Released for Publication July 14, 1994. Petition for Leave to Appeal Denied October 6, 1994. DISPOSITION: Judgment affirmed in part, and reversed in part.

OPINION:

… [*1092] [**459] [***19] agent.

The defendant also claims that there was insufficient evidence to support a directed verdict in favor of the plaintiff on the consumer fraud claim. We agree. In count II of the complaint, the plaintiff alleged that Zintak was an “insurance agent associated with Hallberg Insurance Agency, Inc.”; that Zintak told him that he was bound; that the “acts and representations made by” Zintak were “unfair and deceptive and in violation of” the Consumer Fraud Act. As relief, he requested that he be awarded judgment in an amount equal to Widegren’s recovery, his attorney fees and costs, and any other relief. That is the extent of his allegations for his consumer fraud claim. At trial, the plaintiff did not present any additional evidence on the consumer fraud claim, other than the evidence for the breach of contract claim.

Most recently this court in Jones v. Universal Casualty Co. (1st Dist. December 17, 1993) No. 1-92-0821, slip op. at 20-21, repeated the requirements for a claim premised on an “unfair” practice:

“In Elder v. Coronet Insurance Co. (1990), 201 Ill. App. 3d 733, 558 N.E.2d 1312, 146 Ill. Dec. 978, [***20] this court adhered to the view of the Second District as expressed in People ex rel. Fahner v. Hedrich (1982), 108 Ill. App. 3d 83, 438 N.E.2d 924, 63 Ill. Dec. 782, in which the court adopted the criteria outlined in Federal Trade Commission v. Sperry & Hutchinson Co. (1972), 405 U.S. 233, 31 L. Ed. 2d 170, 92 S. Ct. 898, in considering alleged violations of the Consumer Fraud Act. In order to establish an unfair practice under the [*1093] Consumer Fraud Act the plaintiff was required to prove that the complained of practice offended public policy as it had been established by statutes, the common law or otherwise and that the practice was immoral, unethical, oppressive or unscrupulous; and that it caused substantial [**460] injury to consumers.” (Emphasis in original.)

It appears that the crux of the consumer fraud claim is that Zintak’s oral binder, as an …

LEVEL 1 – 13 OF 16 CASES

JONES v. UNIVERSAL CAS. CO.

No. 1-92-0821

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SIXTH DIVISION

257 Ill. App. 3d 842; 630 N.E.2d 94; 1994 Ill. App. LEXIS 115; 196 Ill. Dec. 397

February 4, 1994, Decided

NOTICE: [***1]

THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

SUBSEQUENT HISTORY: Rehearing Denied February 4, 1994. Released for Publication March 18, 1994.

DISPOSITION: Judgment affirmed in part, reversed in part and remanded.

OPINION:

… [*854] [**103] [***27] Act.

Reduced to its essentials, the plaintiffs’ argument is that they need prove only that a practice offended the public policy established by the Insurance Code and nothing more to establish an unfair practice under the Consumer Fraud Act. As noted, the plaintiffs cite no cases to support their argument. In our judgment we would be justified in refusing to consider this argument of the plaintiffs. As was said in In re Estate of Kunz (1972), 7 Ill. App. 3d 760, 763, 288 N.E.2d 520, 523:

“Reviewing courts are entitled to have the issues clearly defined, to be cited pertinent authorities and are not a depository in which an appellant is to dump the entire matter of pleadings, court action, argument and research as it were, upon the court.”

[*855] However, we will address the plaintiffs’ arguments briefly. For the purposes of argument only on this point, we will accept the plaintiffs’ contention [***28] that the definitional notice provision did, in fact, offend the public policy as expressed by the legislature in the Insurance Code.

In Elder v. Coronet Insurance Co. (1990), 201 Ill. App. 3d 733, 558 N.E.2d 1312, this court adhered to the view of the Second District of this court as expressed in People ex rel. Fahner v. Hedrich (1982), 108 Ill. App. 3d 83, 438 N.E.2d 924, in which the court adopted the criteria outlined in Federal Trade Commission v. Sperry & Hutchinson Co. (1972), 405 U.S. 233, 31 L. Ed. 2d 170, 92 S. Ct. 898, in considering alleged violations of the Consumer Fraud Act. We held that in order to establish an unfair practice under the Consumer Fraud Act the plaintiff was required to prove that the complained of practice offended public policy as it had been established by statutes, the common law or otherwise and that the practice was immoral, unethical, oppressive, or unscrupulous; and that it caused substantial injury to consumers (or competitors or other businessmen). The plaintiffs have not argued or made [***29] any attempt to show that the definitional notice contained in Universal’s policies was immoral, unethical, …

LEVEL 1 – 14 OF 16 CASES

TOTZ v. CONTINENTAL DU PAGE ACURA

No. 2-91-0633

Appellate Court of Illinois, Second District

236 Ill. App. 3d 891; 602 N.E.2d 1374; 1992 Ill. App. LEXIS 1759; 177 Ill. Dec. 202

May 12, 1992, Submitted November 3, 1992, Filed

NOTICE: [***1] THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

SUBSEQUENT HISTORY: Released for Publication December 7, 1992.

DISPOSITION: Judgment affirmed.

OPINION:

… [*903] [**1382] [***22] Weinberger, its owner, both testified that, shortly after the instant suit was filed, they inspected the car along with Buonauro. All three could tell that the car had been in an accident; Weinberger stated that he realized this within seconds after the hood was opened. Weinberger [*904] also testified that the Continental mechanic who first inspected the car would probably have known it had been in an accident. Furthermore, Donald Lowe testified that a person who had been in the automobile business for 35 years, as Buonauro had been, would have known that the car had been in an accident.

The above evidence indicates that Continental employees inspected the car before the Totzes bought it and that a cursory inspection would have revealed to one experienced in the automobile business that the Accord had been [***23] extensively damaged in an accident. The trial judge could reasonably have concluded that Buonauro was aware of this fact at the time he and Delvin sold the car to the Totzes despite his denial.

Additionally, D’Aoust testified that people are less likely to buy a used car that has been involved in an accident. An individual is presumed to have intended the necessary consequences of his or her conduct. (Elder v. Coronet Insurance Co. (1990), 201 Ill. App. 3d 733, 750, 146 Ill. Dec. 978, 558 N.E.2d 1312; Warren, 142 Ill. App. 3d at 566.) D’Aoust’s testimony indicates that the necessary consequence of Buonauro’s failure to tell the Totzes about the Accord’s prior accident damage was that the Totzes were more likely to buy the car. Therefore the evidence was sufficient to support a determination that Buonauro deliberately failed to advise the Totzes of a material fact about the Accord with the intent that the Totzes rely upon the omission by deciding to buy the car. Such conduct violates section 2 of the Act.

There was also sufficient evidence to support a conclusion that Continental violated the Act by making misrepresentations about the condition of the [***24] Accord to the Totzes. Section 2 states that the “employment of any * * * misrepresentation” is unlawful. (Ill. Rev. Stat. 1989, ch. 121 1/2, par. 262.) A party may therefore recover under section 2 of the Act for innocent misrepresentations. (Harkala v. Wildwood Realty, [**1383] Inc. (1990), …

AFFRUNTI v. VILLAGE FORD SALES

No. 3-91-0911

APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

232 Ill. App. 3d 704; 597 N.E.2d 1242; 1992 Ill. App. LEXIS 1261; 174 Ill. Dec. 30

August 7, 1992, Filed

NOTICE: [***1]

THE LEXIS PAGINATION OF THIS DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OF THE FINAL PUBLISHED VERSION.

SUBSEQUENT HISTORY: Released for Publication September 8, 1992.

DISPOSITION: Affirmed with fees awarded.

OPINION:

… [*707] [**1244] [***4] inform the plaintiff of the advertised price of the car. Accordingly, it awarded the plaintiff the $ 1,529 difference between the purchase price and the advertised price, as well as costs.

On appeal, the defendant argues that its agents’ acts did not [***5] constitute a deceptive or unfair practice under the Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (Ill. Rev. Stat. 1991, ch. 121 1/2, par. 261 et seq.). We disagree.

Section 2 of the Consumer Fraud Act forbids unfair or deceptive acts or practices, including the use of any deception, fraud, false pretense, false promise, misrepresentation, or the concealment, suppression, or omission of any material fact, in the conduct of any trade or business with the intent that others rely on the deceptive practices. (Ill. Rev. Stat. 1991, ch. 121 1/2, par. 262.) A misrepresentation is material if it relates to a matter upon which the plaintiff could be expected to rely in determining to engage in the conduct in question. Elder v. Coronet Insurance Co. (1990), 201 Ill. App. 3d 733, 558 N.E.2d 1312.

To fall within the purview of the Act, it need only be shown that the defendant is engaged in a trade or commerce and that he has committed unfair or deceptive acts or practices in the conduct of that trade or commerce. (People ex rel. Hartigan v. Knecht Services (1991), 216 Ill. App. 3d 843, 575 N.E.2d 1378.) [***6] The Act incorporates the definition of “deceptive trade practice” set forth in the Uniform Deceptive Trade Practices Act. (Ill. Rev. Stat. 1991, ch. 121 1/2, par. 262.) This definition includes “advertising goods or services with the intent not to sell them as advertised.” Ill. Rev. Stat. 1991, ch. 121 1/2, par. 312(9).

In the instant case, while the defendant’s sales manager testified that the car prices were listed on the cars themselves, the plaintiff stated that no price was listed on the 1986 Celebrity. The plaintiff asked the salesman,

Galaraza, the …

LEVEL 1 – 16 OF 16 CASES

PEOPLE ex rel. HARTIGAN v. KNECHT SERVS.

Nos. 2-90-0697, 2-90-0839 cons.

Appellate Court of Illinois, Second District

216 Ill. App. 3d 843; 575 N.E.2d 1378; 1991 Ill. App. LEXIS 1269; 159 Ill. Dec. 318

July 26, 1991, Filed

NOTICE: [***1] Released for Publication August 27, 1991.

SUBSEQUENT HISTORY: Rehearing Denied August 27, 1991.

DISPOSITION: Affirmed.

OPINION:

… [*853] [**1384] [***1] in order to fall within the purview of section 2, it need only be shown that defendants are engaged in a trade or commerce and in unfair or deceptive acts or practices in the conduct of that trade or commerce. (People [**1385] ex rel. Hartigan v. Stianos (1985), 131 Ill.App. 3d 575, 580.) Clearly, defendants are engaged in trade or commerce. (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 261(f).) Plaintiff argues that defendants’ actions were both unfair and deceptive. Plaintiff notes that a practice may be unfair without being deceptive (see Federal Trade Comm’n v. Sperry & Hutchinson Co. (1972), 405 U.S. 233, 31 L. Ed. 2d 170, 92 S. Ct. 898) and thus presents the two arguments separately.

The determination of whether a certain practice is “unfair” under the Consumer Fraud Act requires a case-by-case determination. (Elder v. Coronet Insurance Co. (1990), 201 Ill. App. 3d 733, 742; People ex rel. Fahner v. Testa (1983), 112 Ill. App. 3d 834, 837.) However, the Illinois legislature has specifically stated that, in construing section 2 of the Act, “consideration shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to Section 5(a) of the Federal Trade Commission [*854] Act.” (Ill. Rev. Stat. 1987, ch. 121 1/2, par. 262.) Section 5(a) of the Federal Trade Commission Act (15 U.S.C. @ 45(a)(1) (1982)) provides that unfair methods of competition in or affecting commerce are declared unlawful. In Federal Trade Comm’n v. Sperry & Hutchinson Co., the Supreme Court set out the standards employed in determining whether a practice is unfair:

“‘(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — whether, in other words, it is …