No "Market theory" of Proximate Cause under the Illinois Consumer Fraud Act

Claims under the Illinois Consumer Fraud and Deceptive Business Practices Act must allege that the fraudulent misrepresentation proximately caused damages to the particular plaintiff in the litigation. Shannon v. Boise Cascade Corporation, No. 95854, 2004 Ill. LEXIS 353, __ Ill. 2d __ (Ill. Sup. Ct. February 5, 2004).

Plaintiffs filed a putative class action alleging that Boise Cascade's composite siding was defective and that the company had fraudulently advertised otherwise. But the plaintiffs themselves had not received any of the alleged misrepresentations. The circuit court granted summary judgment finding that the claimed damages were not proximately caused by the deceptive advertising. Although the appellate court reversed, the Illinois Supreme Court reinstated the judgment in favor of the defendant.

The court rejected the analysis of the appellate court, to the effect that "[i]t is sometimes possible to rely on misrepresentations without reading the documents in which such misrepresentations are made . . . Purchasers of homes employ builders, architects, and engineers to examine the product literature for them; and it is a mistake to say that home purchasers do not rely on that product literature."

The Supreme Court treated this as the "market theory" of proximate cause and reiterated its earlier decisions which rejected that theory, holding that deceptive advertising cannot be the proximate cause of damages under the Act unless it actually deceives the plaintiff. Shannon, supra.

This makes class actions under the Consumer Fraud Act unlikely to succeed, since reliance is such a plaintiff-specific factual issue.