Civil Litigation FlashPoints July 2009

The Illinois Appellate Court Clarifies the Pleading Requirements Under the Illinois Consumer Fraud and Deceptive Business Practices Act and Reaffirms an Absolute Privilege Under Illinois Defamation Law

In a single case, the Illinois Appellate Court, First District, recently clarified the pleading requirements in two distinct areas of law. In Morris v. Harvey Cycle & Camper, Inc., No. 1-07-3271, 2009 WL 1685137 (1st Dist. June 12, 2009), the appellate court considered two interesting issues: (1) whether a plaintiff can state a cause of action under the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act), 815 ILCS 505/1, et seq., when the damages were only emotional injuries and not actual economic injuries; and (2) whether all reports of alleged criminal activity to law enforcement officials should enjoy an absolute privilege under defamation law.

In Morris, the plaintiff alleged four counts in her complaint but on appeal she challenged only the dismissal of count I for violation of the Consumer Fraud Act, and count IV for defamation per se. In the complaint, the plaintiff alleged that the defendant engaged in deceptive practices in the financing and sale of a car to her brother, Shawn, and in pressuring the plaintiff to cosign a loan after Shawn failed to qualify for financing. The plaintiff claimed Shawn made a down payment on a car at the defendant’s dealership with the sale contingent on financing. Shawn was allowed to use the car while the defendant attempted to arrange financing. After several days, the defendant’s employees called Shawn and asked him to come to the dealership to re-sign some loan papers. The plaintiff accompanied Shawn to the dealership using the car Shawn was trying to buy. After they arrived at the dealership they learned Shawn had not qualified for financing. The plaintiff alleged the defendant’s employees then pressured her to cosign the loan so the deal could go through. When the plaintiff refused, an employee demanded the return of the car. Shawn agreed to return the car in exchange for his down payment. The defendant refused to return the down payment but continued to demand the car.

The situation quickly deteriorated. According to the plaintiff, the defendant’s employees started yelling at the plaintiff and Shawn and blocked the car to prevent them from leaving the dealership. The employees then called the police, reporting the car as stolen. Several squad cars and police officers arrived at the scene. The defendant’s employees told the officers the plaintiff and Shawn had stolen the car. An officer later said the police considered the defendant’s call to be a false report. Moreover, the police officers told the defendant’s employees to stop yelling and trying to intimidate the plaintiff and Shawn. Thereafter, the plaintiff and Shawn left in the car that Shawn had tried to purchase. He returned the car a few days later in exchange for his down payment. The plaintiff alleged that as a result of the ordeal, she suffered severe emotional distress, inconvenience, and aggravation.

The defendant moved to dismiss the plaintiff’s second amended complaint under §2-619.1 of the Code of Civil Procedure (735 ILCS 5/2-619.1), arguing the plaintiff failed to state a cause of action and that the defendant had valid defenses to the plaintiff’s claims. The trial court dismissed count I, finding the plaintiff’s allegations of emotional distress failed to show damages under the Consumer Fraud Act. The trial court also dismissed count IV, defamation per se, finding the defendant’s statements to the police were protected by an absolute privilege.

Emotional Damages Under the Consumer Fraud Act.
The plaintiff first challenged the trial court’s conclusion that she failed to state a private cause of action under the Consumer Fraud Act. The court stated that the Consumer Fraud Act “bars unlawful or unfair methods of competition, unfair or deceptive acts or practices or the use of deception, fraud, false pretense, false promise or misrepresentation.” 2009 WL 1685137 at *2. However, only a person who suffers actual damages as a result of a violation of the Consumer Fraud Act may bring a private action. 815 ILCS 505/10a(a). And the failure to allege specific, actual damages precludes a claim brought under the Consumer Fraud Act.

Here, the plaintiff did not allege actual damages in the form of specific economic injuries. Rather, the plaintiff only alleged emotional distress, inconvenience, and aggravation as her damages. Despite this fact, the plaintiff argued that the trial court erred in dismissing the claim because in Roche v. Fireside Chrysler-Plymouth, Mazda, Inc., 235 Ill.App.3d 70, 600 N.E.2d 1218, 1228, 175 Ill.Dec. 760 (1st Dist. 1992), the appellate court held that nonmonetary damages were compensable under the Consumer Fraud Act. In Roche, the jury awarded the plaintiff $2,405 in compensatory and punitive damages and the trial court awarded plaintiff $750 in damages for aggravation and inconvenience. 600 N.E.2d at 1219 – 1220. The appellate court affirmed the trial court’s award of $750 in damages for the plaintiff’s aggravation and inconvenience.

The court found that the plaintiff’s reliance on Roche was unconvincing. In fact, the court distinguish Roche and found that “damages for aggravation are compensable under the Consumer Fraud Act only when they are part of a total award that includes actual economic damages.” Morris, supra, 2009 WL 1685137 at *3. The court held “[t]here is no cause of action under the Consumer Fraud Act when a plaintiff alleges only aggravation and not actual damages.” Id. Accordingly, the plaintiff failed to state a cause of action under the Consumer Fraud Act because she alleged only emotional injuries and not actual economic injuries.

Absolute Privilege Under Defamation Law.
The plaintiff also brought a claim against the defendant for defamation per se for the statements made to the police officers that she stole the car. To establish a claim for defamation under Illinois law, a plaintiff must show: (1) the defendant made a false statement about the plaintiff; (2) the defendant made an unprivileged publication of that statement to a third party; and (3) the defendant damaged the plaintiff by publishing the statement. Solaia Technology, LLC v. Specialty Publishing Co., 221 Ill.2d 558, 852 N.E.2d 825, 838 – 839, 304 Ill.Dec. 369 (2006). A defamatory statement is “published” when it is communicated to someone other than the plaintiff. Gibson v. Philip Morris, Inc., 292 Ill.App.3d 267, 685 N.E.2d 638, 644 – 645, 226 Ill.Dec. 383 (5th Dist. 1997). A remark that imputes the commission of a crime is per se defamatory. Bryson v. News America Publications, Inc., 174 Ill.2d 77, 672 N.E.2d 1207, 1214, 220 Ill.Dec. 195 (1996). At first blush, it appeared that the plaintiff stated a proper defamation per se claim because the defendant published an alleged false statement about the plaintiff to a third party imputing that the plaintiff engaged in the commission of a crime.

However, defamatory statements that would otherwise be actionable will escape liability when the conduct is to further an interest of social importance such as the investigation of an alleged crime. Thomas v. Petrulis, 125 Ill.App.3d 415, 465 N.E.2d 1059, 1061, 80 Ill.Dec. 713 (2d Dist. 1984), citing W. Prosser, Torts §114, at 776 (4th ed. 1971). Defamatory statements are not actionable if they are protected by an absolute or conditional privilege. Zych v. Tucker, 363 Ill.App.3d 831, 844 N.E.2d 1004, 1007 – 1008, 300 Ill.Dec. 561 (1st Dist. 2006). “It has long been held that statements made to law enforcement officials, for the purpose of instituting legal proceedings, are granted absolute privilege.” Vincent v. Williams, 279 Ill.App.3d 1, 664 N.E.2d 650, 655, 216 Ill.Dec. 13 (1st Dist. 1996). “When absolute privilege attaches, no action for defamation lies, even where malice is alleged.” Id.

The plaintiff argued that absolute privilege should not attach because the defendant’s report of alleged criminal activity by the plaintiff to the police was more than simply a false statement. The plaintiff argued that the defamatory statements were used to intimidate the plaintiff and exert pressure on her to cosign a loan and not for the purposes of instituting a legal proceeding.

The court noted that numerous other jurisdiction have abandoned the absolute privilege for statements made to law enforcement officials in favor of a qualified or conditional privilege when the reporter of an alleged crime had a “bad” motive. The plaintiff urged the court to join those jurisdictions and to afford only a qualified, not absolute, privilege when a person with an ulterior motive reports a “crime” to the police. In response to this entreaty, the appellate court curtly noted: “We decline to do so and reaffirm the long-standing law in Illinois that statements to law enforcement officials are absolutely privileged.” Morris, supra, 2009 WL 1685137 at *6. As a result, the plaintiff’s defamation per se claim failed because the defendant enjoyed an absolute privilege for statements made to law enforcement officials about the commission of a crime.