FEATURE ARTICLE Does T h e Consumer Fraud Ac t Require Proof o f Reliance? by Edward X. Clinton, J r . The Consumer Fraud an d Deceptive Business PracticesAct ("theAct") prohibits mis- leading and deceptive business practices in con- nection with any trade or business.' The legislature's purpose was to help consumers ob- tain remedies against businesses fo r deceptive sales practices.' T he legislature accomplishes its purpose through the Act by eliminating th e re- quirement that th e plaintiff must prove a defen- dant intended to defraud. Additionally, prevail- ing plaintiffs ar e allowed to recover attorney's fees. 3 Some courts hold that consumer s need not show reliance to prevail under the Act; however, other courts disagree. This article explores the split in th e courts an d explains how the Illinois Supreme Court's decision in Martin v. Heinold Commodities 4 has implied a tentative resolution to the debate. I. The Reliance Debate Illinois courts ar e sharply divided over whether proof of reliance is necessary to state a claim under th e Act. Tw o types of claims exist under the Act: a claim based upon a misrepre- sentation and a claim based upon an omission of a material fact. The Act treats each type of claim differently: Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of an y deception, fraud, false pretense, false prom- ise, misrepresentation or th e concealment, suppression or omission of an y material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, or the use or employ- ment of an y practice described in Section 2 of the 'Uniform Deceptive Trade Practices Act,' approved August 5, 1965, in the con- duct of an y trade or commerce ar e hereby declared unlawful whether an y person has in fact been misled, deceived or damaged thereby. 5 This section requires proof of reliance where a plaintiff relies on an omission or con- cealment of a material fact. 6 However, th e sec- tion contains no such requirement for misrepre- sentation cases. Several courts listed he elements of a misrepresentation claim as follows: To recover under the Act, a plaintiff must prove that: (1) a statement by th e seller; (2) of an existing or future material fact; (3) that w as untrue, without regard to defendant's knowledge or lack thereof of Edward X. Clinton, J r . s an associ- ate with Katten, Muchin & Zavis in Chicago, Illinois. 242 e Loyola Consumer La w Reporter Volume 8, number 3
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
8/8/2019 Reliance and the Illinois Consumer Fraud Act
also Ciampi, 63 4 N.E.2d at 46 0 (reliance required); Kleidonv. Rizza Chevrolet, Inc., 527 N.E.2d 374, 376 (Ill. App. IstDist. 1988) (reliance required); Bercoon, Weiner, Glick and
Brook v. Mfrs. Hanover Trust Co., 818 F Supp 1152, 1159
(N.D. Ill. 1993) (reliance required).
Harkala v. Wildwood Realty, Inc., 558 N.E.2d 195, 199 (Ill.App. Ist Dist. 1990); Elder v. Coronet Ins. Co., 558 N.E.2d1312 (1st Dist. 1990) (same).
9 607 N.E.2d 194, 198 (Ill. 1992).
Id. at 198; Washington Courte Condominium v. WashingtonGolf Corp., 643 N.E.2d 199, 222 (Il. App. Ist Dist. 1994);Se e also Edward X. Clinton, Jr., Recent Decision Under TheIllinois Consumer Fraud and Deceptive Business PracticesAct, 7 DEPAUL BUSINESS LAW JOURNAL 351, 354 (1995).
643 N.E.2d 734, 754 (I11. 1994).
Is a plaintiff in a misrepresentation case required to show that
defendant made the statement for the purpose of inducingreliance? Several appellate courts have listed such an ele-ment. See cases citedsupranote 7; Eshaghi v.Hanley Dawson
Cadillac Co., 574 N.E.2d 760, 764 (Ill. App. Ist Dist. 1991).Although neither Siegel, 607 N.E.2d 194, nor Martin, 643N.E.2d 734, addressed this specific issue, it appears that aplaintiff need not prove this element in a misrepresentationcase.
13 612 N.E.2d 9 (II1.App. Ist Dist. 1993).
14 Id. at 12.
'5 614 N.E.2d 1259 (III. App. 3d Dist. 1993); Celex Group, Inc.v. The Executive Gallery, Inc., 877 F Supp. 1114, I128 (N.D.Ill. 1995) (following Zinser and rejecting Elipas as contraryto Siegel, 607 N.E.2d 194; no proof of actual or justifiablereliance required).
16 Supra note 12 at 739, 747.
'7 Supra note 12 at 747 (quoting LHLC Corp. v. Cluett, Peabody
& Co., 842 F.2d 928, 931 (7th Cir. 1988)).
Supra note 12 at 748; see alsoAdler v. William Blair & Co.,648 N.E.2d 226, 234-35 (Ill. App. 1st Dist. 1995), appeal
denied, 163 Ill. 2d 547 (1995) (affirming dismissal of plain-tiffs' complaint where plaintiffs could not demonstrate thatthe alleged misrepresentations had anything to do w ith plain-tiffs' investment losses in certain real estate partnerships).
246 * Loyola ConsumerLaw Reporter Volume 8, number 3