Illegality of Contract Not a Bar to Illinois Consumer Protection Act Claim

This posting was written by Jody Coultas, Editor of CCH State Unfair Trade Practices Law.

A group of Mexican citizens living in the United States could bring an Illinois Consumer Fraud and Deceptive Business Practices Act (CFA) claim, despite a trial court finding that the claim was barred by the doctrine of illegality of contract and the statute of limitations, according to an Illinois appellate court.

The Mexican citizens alleged that the defendants falsely promised citizenship documents and adjustment to legal permanent residency status in exchange for $15,000. The trial court agreed with the defendants that the claims must be dismissed because the agreement between the parties was illegal and could not be enforced by the courts.

Immigration Services

The CFA, however, contains provisions created to deter abuses of people seeking immigration services. The statute requires a person offering such services to register with the Illinois Attorney General, provide written contracts, and post fees and other information in the primary language of the customer.
While the agreement was clearly illegal, the plaintiffs were not seeking to enforce the contract; they were attempting to recover money lost as a result of the CFA violation.

Allowing the claim to proceed would not be equivalent to enforcing an illegal contract, the court ruled. The defendants argued that the very actions the CFA prohibits could be used as a defense to CFA claims. Thus, the CFA claim was remanded for further proceedings.

Statute of Limitations

Claims under the CFA are subject to a three-year statute of limitations. Claims begin to accrue when the plaintiff knows or reasonably should know of his injury and also knows or reasonably should know that it was wrongfully caused.

Because the Mexican citizens were not reasonably aware of the injury until 2007—and the claim was filed in 2009—the claim was not barred.

The decision is Gamboa v. Alvarado, CCH State Unfair Trade Practices Law ¶32,195.

Further information about CCH State Unfair Trade Practices Law appears here.

Baseball Rooftop Club Promoter Faces Suit Over Internet Ads

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

The proprietor of a “rooftop club” for viewing Chicago Cubs baseball games (Wrigley Done Right) stated Lanham Act claims of false advertising and false designation of origin against a promoter of competing venues (Ivy League Club and Wrigley Rooftop Club), the federal district court in Chicago has ruled.

False Advertising

An Internet advertisement that promoted the availability of services at the Ivy League club when it was under construction and not operating could constitute false advertising, the court held. From January 2008 until some time in 2009, the promoter allegedly advertised the availability of services at the Ivy League Club on its website, despite the fact that the facility was closed for renovation through the 2009 baseball season and lacked a license required for hosting patrons.

The promoter allegedly deceived consumers into booking reservations for inferior services by accepting reservations and later providing tickets at other facilities with less favorable viewing locations than the Ivy League Club’s.

The Ivy League Club allegedly booked a significant number of reservations as a result of these misleading advertisements, and the diversion of sales allegedly injured Wrigley Done Right’s business.

The promoter contended that construction delays did not amount to fraud and that website disclaimers were posted. However, the advertising and selling of seats at a nonoperating venue for a more than a year and a half went beyond mere “construction delay,” according to the court.

False Designation of Origin

The promoter’s advertising for the Wrigley Rooftop Club could constitute a false designation of origin, the court ruled.

The promoter and the Wrigley Rooftop Club allegedly sponsored an advertisement on the website ballparkrooftops.com featuring a photo of Wrigley Done Right’s building next to a link to the Wrigley Rooftop Club’s website. Wrigley Done Right allegedly was injured as a result of the misrepresentation because sales were diverted to the Wrigley Rooftop Club.

State Law

Claims under the Illinois Deceptive Trade Practices Act and Illinois Consumer Fraud Act would stand or fall based on the outcome of Lanham Act claims of false designation of origin and false advertising, the court added.

The July 12 opinion in Bluestar Management LLC v. Annex Club, LLC will be reported at CCH Advertising Law Guide ¶63,916

Further information about CCH Advertising Law Guide appears here on the CCH Online Store.

Best Buy “Price Match” Refusal Would Be Consumer Fraud

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A Best Buy customer stated plausible claims that the retailer violated the Illinois Consumer Fraud Act and engaged in unjust enrichment by failing to honor its advertised “price match guarantee,” the federal district court in Chicago has ruled.

In a class action complaint, the customer alleged that he purchased a 42-inch wide-screen high definition Samsung television at a Best Buy store in Niles, Illinois. The customer stated that he “considered and relied upon Best Buy’s price match guarantee in making this shopping decision.”

Within the applicable time period, he discovered that a Circuit City store located in the same market area offered a lower price on the same television, which was in stock and available.

The customer stated that he returned to the Niles Best Buy with Circuit City’s print advertisement showing the lower price, and requested the benefit of Best Buy’s price match guarantee—refund of the price difference, plus an additional 10% of that difference. Best Buy refused to honor the request.

Internal Policy

According to the complaint, Best Buy maintains an undisclosed internal policy under which it discourages and denies customers’ proper price match requests. For example, Best Buy allegedly provides weekly bonuses to its salespeople based, in part, on their denying proper price match requests.

Pleading Fraud with Particularity

Best Buy argued that the customer did not adequately plead his Consumer Fraud Act claim because he failed to allege sufficient facts to establish that he was entitled to the price matches he requested. The parties agreed that the case was governed by the heightened standards for pleading fraud under Rule 9(b) of the Federal Rules of Civil Procedure.

The court did not find Best Buy’s argument persuasive. The customer alleged that Circuit City offered a lower price on “an available in-stock product of the same brand and model” as the 42-inch wide-screen high definition Samsung television purchased from Best Buy; that Circuit City was a retail store located in the same market area as the Best Buy store where the customer bought the Samsung television; and that the customer, armed with a print advertisement verifying the lower price, returned to the Best Buy store within the applicable 30-day time period and requested a price match.

The customer sufficiently alleged the elements of the Consumer Fraud Act claim, as well as the common law claim that Best Buy received an unjust benefit from its denial of the price match request, the court determined.

Diversity Jurisdiction

The court observed that the customer failed to plead federal diversity jurisdiction and ordered that an amended complaint be filed.

The June 3 opinion in Laff v. Best Buy Stores, L.P. will be reported at CCH Advertising Law Guide ¶63,874.

Marketing of “Original Formula” Classic Coke Was Not Unfair or Deceptive

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

Coca-Cola’s marketing of “Classic,” “Original Formula” Coke with high fructose corn syrup (HFCS) substituted for sucrose was not an unfair practice under the Illinois Consumer Fraud Act, the federal district court in East St. Louis, Illinois has ruled.

Claims that the marketing was a deceptive practice failed for either lack of causation of injury or time limitations, the court held.

Three factors are to be considered in determining whether a trade practice is unfair:

(1) whether the practice offends public policy;

(2) whether it is immoral, unethical, oppressive, or unscrupulous; and

(3) whether it causes substantial injury to consumers.

No public policy of Illinois proscribed the used of HFCS. Because a purchaser was unaware of Coca-Cola’s use of “Original Formula” to market the product, he was not oppressed by the practice. Finally, there was no substantial injury because the purchaser or any other consumer could have drunk a different beverage, according to the court.

Causation

Because the purchaser never saw the words “Original Formula” on containers of Classic Coke, his deceptive practices claim necessarily foundered on the issue of causation, according to the court. An unjust enrichment claim based on the deceptive practices theory also failed.

Time Limitations

Another purchaser’s claims were time-barred because she reasonably knew or could have known in the 1990s of her alleged injury from Coca-Cola’s marketing but failed to bring suit until well into the next decade. The consumer fraud statute of limitations was three years, and the limitation for unjust enrichment was five years.

The April 27 opinion in Kremers v. Coca-Cola Co. is reported at CCH Advertising Law Guide ¶63,835 and CCH State Unfair Trade Practices Law ¶32,051.