CHARLES ALLEN et al., Appellees, v. WOODFIELD CHEVROLET, INC., Appellant.
No. 94814
Supreme Court of Illinois
October 17, 2003
Christopher V. Langone and Craig R. Frisch, of Chicago, for appellee Charles Allen.
Ira M. Levin and Jay S. Dobrutsky, of Burke, Warren, MacKay & Serritella, P.C., of Chicago, for amici curiae Illinois Automobile Dealers Association and The Chicago Automobile Trade Association.
JUSTICE FITZGERALD delivered the opinion of the court:
At issue in this appeal is whether certain amendments to the Consumer Fraud and Deceptive Business Practices Act (Act) (
BACKGROUND
In April 1996, plaintiff, Charles Allen, purchased a used vehicle from defendant, Woodfield Chevrolet, Inc. In November 1998, plaintiff filed an action against defendant in the circuit court of Cook County in connection with that purchase. In count I, plaintiff sought monetary damages under the Act for false and misleading conduct. Plaintiff alleged that defendant “advertised one price and then charged a different price for the same car.” In count II, plaintiff sought a declaration that certain amendments to section 10a of the Act constitute special
Plaintiff moved for judgment on the pleadings as to count II, arguing that the amendments “treat car dealers more favorably than other similarly-situated consumer-fraud defendants and treat consumers who have claims against car dealers differently than consumers having claims against non-car dealers.” Plaintiff maintained that the “car-dealer classification,” created by the amendments, is not rationally related to a legitimate state interest. The trial court rejected plaintiff‘s argument: “[T]he classification is properly related to the problem sought to be remedied by the amendments, which is to encourage settlement between consumers and automobile dealers as well as avoid unnecessary litigation and limit attorney‘s fees.” The trial court thus denied plaintiff‘s motion, entered judgment in favor of defendant on count II, and dismissed count I based on plaintiff‘s failure to provide defendant with the statutorily required presuit notice. Plaintiff appealed.
The appellate court reversed, holding that the subject amendments violate the constitutional prohibition against special legislation. 332 Ill. App. 3d 605. The appellate court stated, in relevant part:
“Assuming that the state has a legitimate interest in the settling of disputes and in discouraging lawsuits brought merely to generate attorney fees, there is nothing
more unique about a fraud case brought against a car dealer than one brought against any other person or entity subject to the Act. Moreover, the effect of the legislation in this case is to penalize the consumer and not the attorneys who, according to the legislative history, are the ones the legislators deemed responsible for filing lawsuits merely to generate fees for themselves.” 332 Ill. App. 3d at 614.
The appellate court did not consider plaintiff‘s equal protection challenge. 332 Ill. App. 3d at 617.
We allowed defendant‘s petition for leave to appeal, and allowed the Illinois Automobile Dealers Association and the Chicago Automobile Trade Association to file a joint amicus curiae brief in support of defendant. See 155 Ill. 2d R. 345. For the reasons discussed below, we now affirm the judgment of the appellate court.
ANALYSIS
I. Amendments to the Consumer Fraud Act
The Act, originally adopted in 1961 (see 1961 Ill. Laws 1867), declares unlawful unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.
Prior to the adoption of the subject amendments, section 10a did not distinguish among consumer fraud litigants or claims. Generally, any “person,” as that term is defined in the Act (
The subject amendments, effective in 1993 and 1996, added provisions to section 10a that changed the substantive and procedural requirements for consumer fraud claims against a single group of defendants, namely, new and used vehicle dealers. The amendments also affected the remedies available to consumer fraud plaintiffs in actions against vehicle dealers.
The 1993 amendment added subsections (f) and (g) which contain offer-of-judgment provisions. At any time more than 30 days prior to trial, a consumer fraud plaintiff or the defendant vehicle dealer may make an offer to allow judgment to be taken against the dealer. Under subsection (f), if the plaintiff rejects the dealer‘s offer of judgment and later fails to obtain a judgment greater than the offer, the plaintiff forfeits attorney fees and costs from the date of the offer. Under subsection (g), if the dealer rejects the plaintiff‘s offer and the plaintiff later obtains a judgment equal to or greater than the offer, the dealer must pay interest at the statutory rate from the date of the offer to the date the judgment is paid. See Pub. Act 87-1140, eff. January 1, 1993.
The 1996 amendment added language to existing
Following the adoption of these amendments, section 10a read, in relevant part:
Ҥ 10a. Action for actual damages. (a) Any person who suffers actual damage as a result of a violation of this Act committed by any other person may bring an action against such person. The court, in its discretion may award actual economic damages or any other relief which the court deems proper; provided, however, that no award of punitive damages may be assessed under this Section against a party defendant who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code, unless the conduct engaged in was willful or intentional and done with evil motive or reckless indifference to the rights of others. Proof of a public injury, a pattern, or an effect on consumers and the public interest generally shall be required in order to state a cause of action under this Section against a party defendant who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code. Proof of such public injury may be shown by any one of the following factors:
(1) Violation of a statute that has a public interest impact.
(2) Repeated acts prior to the act involving the plaintiff.
(3) Potential for repetition. ***
(c) Except as provided in subsections (f), (g), and (h) of this Section, in any action brought by a person under this Section, the Court may grant injunctive relief where appropriate and may award, in addition to the relief provided in this Section, reasonable attorney‘s fees and costs to the prevailing party.
***
(f) At any time more than 30 days before the commencement of trial, a party, who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code and who is defending a claim under this Act, may serve upon the party seeking relief under this Act an offer to allow judgment to be taken against the defending party to the effect specified in the offer with costs then accrued. If within 10 days after service of the offer, the offeree serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service of the notice; the court shall then enter judgment. An offer not accepted shall be deemed withdrawn and evidence of the offer is not admissible except in a proceeding to determine costs. When a party seeking relief under this Act does not accept an offer filed with the clerk and served upon the attorney for that party more than 30 days before the commencement of trial and when that party fails to obtain a judgment in an amount more than the total offer of settlement, that party shall forfeit and the court may not award any compensation for attorney‘s fees and costs incurred after the date of the offer.
(g) At any time more than 30 days before the commencement of trial, a party who is seeking relief under this Act from a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code may serve the dealer an offer to allow judgment to be taken against the dealer to the effect specified in the offer with costs then accrued. If within 10 days after service of the offer, the offeree serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service of the notice; the court shall
then enter judgment. An offer not accepted shall be deemed withdrawn and evidence of the offer is not admissible except in a proceeding to determine costs. When a dealer does not accept an offer filed with the clerk and served upon the attorney for the dealer more than 30 days before the commencement of trial and if the party seeking relief against a dealer obtains a judgment in an amount equal to or in excess of the offer amount, the party seeking relief shall be paid interest on the offer amount at the rate as provided in Section 2-1303 of the Code of Civil Procedure from the date of the offer until the judgment is paid. (h) At least 30 days prior to the filing of an action under this Section, a party who is seeking relief shall serve a written notice of the nature of the alleged violation and demand for relief upon the prospective party, who is a new vehicle dealer or used vehicle dealer within the meaning of Chapter 5 of the Illinois Vehicle Code, against whom such action will be commenced. Any person receiving such a demand for relief may, within 30 days of service of the demand for relief, submit a written offer of settlement, which offer is to be exclusive of attorney‘s fees, to the party serving the notice and demand. The party who is seeking relief must certify in any cause of action that the notice and demand was served upon the named defendants and the substance of their response, if any. If the offer of settlement is rejected in writing by the party who is seeking relief, then, in any subsequent action, the court shall deny any award of attorney‘s fees and costs requested by the party seeking relief under this Act incurred after the rejection of the written offer of settlement, if the judgment is less than the amount contained within the offer of settlement. All written offers of settlement under this subsection shall be presumed to be offered without prejudice in compromise of a disputed matter.”
815 ILCS 505/10a (West 1996).
Section 10a, as amended, clearly divides consumer fraud plaintiffs into two groups: consumers defrauded by new and used vehicle dealers, who are subject to the statutory amendments, and all other defrauded consumers who are not subject to the amendments. The statute likewise divides consumer fraud defendants into two
II. Special Legislation Challenge
We begin our analysis with the presumption that the Act, as amended by Public Act 87-1140, effective January 1, 1993, and Public Act 89-144, effective January 1, 1996, is constitutional. See In re Estate of Jolliff, 199 Ill. 2d 510, 517 (2002); Best v. Taylor Machine Works, 179 Ill. 2d 367, 377 (1997). This presumption means that we must uphold the statute‘s validity if reasonably possible. See Beaubien v. Ryan, 198 Ill. 2d 294, 298 (2001). This presumption also requires that plaintiff, as the party challenging the statute in this case, bear the burden of clearly establishing the statute‘s constitutional infirmity. See Jolliff, 199 Ill. 2d at 517; Beaubien, 198 Ill. 2d at 298. Because the constitutionality of a statute is an issue of law, we review de novo the appellate court‘s decision invalidating the statutory amendments. See Jolliff, 199 Ill. 2d at 517; In re R.C., 195 Ill. 2d 291, 296 (2001).
The special legislation clause of the Illinois Constitution provides:
“The General Assembly shall pass no special or local law when a general law is or can be made applicable. Whether a general law is or can be made applicable shall be a matter for judicial determination.”
Ill. Const. 1970, art. IV, § 13 .
The special legislation clause expressly prohibits the General Assembly from conferring a special privilege or benefit upon a person or group of persons while excluding others similarly situated. Best, 179 Ill. 2d at 391. Although the legislature enjoys broad discretion in making statutory classifications, the legislature is prohibited,
Turning to the first inquiry—whether the statutory amendments discriminate in favor of a select group—we conclude that the amendments plainly favor new and used vehicle dealers. The amendments discourage consumers defrauded by vehicle dealers from pursuing claims under section 10a by making it more burdensome for consumers to do so. For example, a consumer defrauded by a vehicle dealer must provide the dealer with a 30-day presuit notice.
Our conclusion that the amendments discriminate in favor of vehicle dealers is, of course, not dispositive of whether the amendments constitute special legislation. We must further determine, under the second part of our dual inquiry, whether the classification effected by the amendments is arbitrary. See Jolliff, 199 Ill. 2d at 519. If this court can reasonably conceive of circumstances that justify distinguishing the class that the statute benefits from the class outside its scope, the classification will be deemed constitutional. Unzicker, 203 Ill. 2d at 86; Jolliff, 199 Ill. 2d at 520.
The appellate court could conceive of no such circumstance: “[T]here is nothing more unique about a fraud case brought against a car dealer than one brought against any other person or entity subject to the Act.” 332 Ill. App. 3d at 614. Thus, the appellate court concluded that the classification was arbitrary and violated the prohibition against special legislation. Defendant, as appellant, urges us to reverse the appellate court. Defendant argues that the different treatment accorded to vehicle dealers under the amendments is consistent with other legislation regulating the activity of selling automobiles. Defendant also argues that the legislature perceived a problem specific to vehicle dealers which separates them from all other retailers, thus justifying different treatment under the Act.
In support of its first argument, defendant cites the
In Fireside, we considered a special legislation challenge to a Sunday-closing law applicable only to vehicle dealers. Although we had 20 years earlier struck down a nearly identical Sunday-closing law as special legislation (Courtesy Motor Sales v. Ward, 24 Ill. 2d 82 (1962)), we recognized that recent legislation (including the three statutes to which defendant here cites) “demonstrate[s] a legislative purpose to regulate certain aspects of the business of selling automobiles in a manner different from other retail enterprises.” Fireside, 102 Ill. 2d at 6. We held that the Sunday-closing law was part of that regulatory scheme. Fireside, 102 Ill. 2d at 6-7.
Fireside does not support defendant‘s argument that different treatment of vehicle dealers is justified in this case. Unlike the Sunday-closing law, and the other statutes defendant cites, the statutory amendments at issue here cannot reasonably be deemed part of the legislative scheme for regulating the business of selling automobiles. The “Consumer Fraud and Deceptive Business Practices Act” (
We next consider defendant‘s argument that the legislature perceived a problem specific to vehicle dealers that separates them from all other retailers. In support, defendant directs our attention to the legislative history of the statutory amendments. This court will consider legislative history in ascertaining the intent of the General Assembly if the resolution of an issue so requires. Best, 179 Ill. 2d at 382; see, e.g., Unzicker, 203 Ill. 2d at 86-88 (where this court undertook a comprehensive review of legislative history because the reason for the classification was not apparent from the face of the statute); Jolliff, 199 Ill. 2d at 521-22 (where this court considered legislative history in determining whether statutory classification was arbitrary). In this case, the reason for the classification is not apparent from the language of the statute itself. Accordingly, we turn to the legislative history of Public Acts 87-1140 and 89-144.
Public Act 87-1140 was first introduced in the House of Representatives as House Bill 3410. The bill was passed in the House and referred to the Senate as a “shell” bill, i.e., a bill with a name but no text. 87th Ill. Gen. Assem., House Proceedings, May 5, 1992, at 27-28; 87th Ill. Gen. Assem., House Proceedings, May 6, 1992, at 92. In the Senate, the bill was amended first to add what is now section 10a(f), which, as set forth above, permits vehicle dealers who are defending a consumer fraud claim to make an offer of judgment prior to trial.
The Senate also adopted a second amendment to House Bill 3410 that added what is now section 10a(g), permitting a consumer fraud plaintiff to make an offer of judgment before trial in a suit against a vehicle dealer. The purpose of this amendment was to “balance the scales” and “even up what [the Senate] did with Amendment No. 1.” 87th Ill. Gen. Assem., Senate Proceedings, June 23, 1992, at 162 (statements of Senator Hawkinson).
Public Act 89-144 began life as Senate Bill 317. This bill changed the pleading requirements for a cause of action against a vehicle dealer by adding a “public injury” element, and attempted to raise the bar for an award of punitive damages against a vehicle dealer. It also established a presuit notice requirement, and set forth procedures for presuit settlement offers from vehicle dealers. According to one of its sponsors, Senate Bill 317 was intended to address the problem posed by an “aggressive group of plaintiffs’ attorneys” who “churn”
In the House of Representatives, Senate Bill 317 was described as an attempt to provide vehicle dealers protection from abuses of section 10a and to clean up confusion stemming from judicial misinterpretation of the Act that purportedly resulted in excessive punitive damage awards against vehicle dealers. 89th Ill. Gen. Assem., House Proceedings, May 22, 1995, at 268-71, 276 (statements of Representatives Cross and Brunsvold). The bill was also described as a measure to promote settlement, keep cases out of court and, in turn, “keep attorney‘s fees down.” 89th Ill. Gen. Assem., House Proceedings, May 22, 1995, at 275-76 (statements of Representatives Cross and Brunsvold). The amendatory language, applicable only to vehicle dealers, was reported to be the product of negotiation and agreement between the Trial Lawyers Association and the office of the Attorney General. 89th Ill. Gen. Assem., House Proceedings, May 22, 1995, at 273, 276-77, 290 (statements of Representatives Cross and Brunsvold); see also 89th Ill. Gen. Assem., Senate Proceedings, April 26, 1995, at 30 (statements of Senator Cronin). Representatives opposed to Senate Bill 317
The history of Public Acts 87-1140 and 89-144 demonstrates that they were enacted in response to a perceived problem: abuses of the Act by certain members of the plaintiffs’ bar who purportedly pursue consumer fraud cases against vehicle dealers simply to generate legal fees recoverable under the Act. Because the General Assembly is not required to convince this court of the correctness of its judgment, we will not second-guess its conclusion that this problem, of whatever magnitude, exists. See Best, 179 Ill. 2d at 377, 389-90 (declining to consider, for purposes of constitutional challenge to Civil Justice Reform Amendments of 1995, whether the legislature‘s judgment that the civil justice system needs reform was correct); Bernier v. Burris, 113 Ill. 2d 219, 230 (1986) (stating that existence of medical malpractice crisis identified by the legislature was at least debatable for purposes of special legislation challenge); Grace v. Howlett, 51 Ill. 2d 478, 485 (1972) (assuming, for purposes of special legislation challenge, that problems described by proponents of the legislation do exist). Our task is not to determine whether the statutory amendments are wise; our task is to determine whether they are constitutional. See Best, 179 Ill. 2d at 390.
“[T]he hallmark of an unconstitutional classification is its arbitrary application to similarly situated individuals without adequate justification or connection to the
purpose of the statute.” Best, 179 Ill. 2d at 396; see also Grasse v. Dealer‘s Transport Co., 412 Ill. 179, 193-94 (1952) (“it must appear that the particular classification is based upon some real and substantial difference in kind, situation or circumstance in the persons or objects on which the classification rests, and which bears a rational relation to the evil to be remedied and the purpose to be attained by the statute“).
In evaluating a challenged statutory provision under the special legislation clause, we must consider “the natural and reasonable effect of the legislation on the rights affected by the provision.” Best, 179 Ill. 2d at 394. As discussed below, application of these principles in the present case leads us to conclude that the statutory amendments to section 10a of the Act constitute impermissible special legislation.
Under the punitive damage provision added by Public Act 89-144, a court may not award punitive damages where a vehicle dealer defrauds a consumer unless the plaintiff pleads and proves that the dealer‘s conduct was “willful or intentional and done with evil motive or reckless indifference to the rights of others.”
The “public injury” provision suffers from the same infirmity. Under this provision, in order to state a cause
The provisions governing presuit notice and offers of settlement (
Defendant contends, however, that the legislative history demonstrates that the General Assembly “perceived a crisis with respect to lawsuits filed against automobile dealers under the Act, and rationally undertook to reduce the burden on the automobile industry.” According to defendant, vehicle dealers are thus “unique among retailers,” and the classification favoring them does not offend the special legislation clause.
Defendant‘s conclusion that the legislature perceived a “crisis” amounts to unsupported hyperbole. This aside, we disagree with defendant‘s contention that vehicle dealers are “unique among retailers” for purposes of the statutory amendments to section 10a. Rather, as is demonstrated by the following exchange during the House debates on Senate Bill 317, vehicle dealers are indistinguishable from other retailers:
“Currie: *** Could I ask why you want to single out car dealers rather than, for example, yacht dealers or other people who might in some manner defraud a hapless consumer?
***
Cross: Well, Representative, this was language that was agreed upon by ... as I said earlier, the trial lawyers and the Attorney General‘s Office. In talking with them, it was an attempt to compromise, it was an attempt to work out an agreement. As I just said earlier, they are neutral on the Bill. This seems to be one area where there has been an abuse of this statute prior to this proposed Amendment. That‘s the reason for limiting it to that. If you want to broaden the people or the entities or the agencies that have been listed, *** I‘ll be glad to work with you on that. If you
want to include yacht dealers that‘s fine. If you want to include refrigerator dealers that‘s fine, if you want to include air conditioner dealers that‘s fine, motorcycle dealers. I‘d be more than happy to talk to you about it.” (Emphasis added.) 89th Ill. Gen. Assem., House Proceedings, May 22, 1995, at 290-91 (statements of Representatives Currie and Cross).
Despite the “unique” position defendant claims vehicle dealers occupy, they are apparently no more unique than yacht dealers, refrigerator dealers, air conditioner dealers or motorcycle dealers.
Defendant also contends that the amendments to section 10a further the legislature‘s objectives by promoting the equitable settlement of lawsuits against vehicle dealers and preventing the filing of frivolous suits against vehicle dealers. Defendant states: “There can be no better benefit bestowed upon the consumer who believes he/she has been wronged by an automobile dealer than to resolve the dispute quickly.” Without regard to whether a “better benefit” may be bestowed upon a consumer, we disagree with defendant that the punitive damage provision and public-injury pleading requirement promote settlement or prevent the filing of frivolous suits. To the extent the provisions governing presuit notice, presuit offers of settlement, and pretrial offers of judgment (
We are cognizant that the legislature is not required to choose the single, most effective remedy against a perceived problem. Bernier, 113 Ill. 2d at 252. Here, however, the remedy chosen by the legislature, and the
Our decision today is consistent with prior decisions of this court invalidating legislative classifications that had an artificially narrow focus, designed primarily to confer a benefit on a particular group, rather than to promote the general welfare. See Best, 179 Ill. 2d at 395 (collecting cases). We note, too, that our decision does not leave vehicle dealers, or any other consumer fraud defendant, who may be faced with defending a frivolous suit without recourse. Under the Act, a court may award attorney fees and costs to the “prevailing party.”
CONCLUSION
For the foregoing reasons, we affirm the judgment of the appellate court invalidating Public Acts 87-1140 and 89-144 as violative of the special legislation clause of our state constitution (
Affirmed.
JUSTICE THOMAS, concurring in part and dissenting in part:
Like the majority, I believe that the amendments to section 10a(a) of the Act run afoul of the special legislation clause. Neither the punitive damages limitation nor the public-injury pleading requirement bears a meaningful relation to the abuses identified by the legislature, as neither provision restricts an attorney‘s ability to “ring up” fees in vehicle cases involving only nominal claims. I therefore join in the majority opinion to the extent that it invalidates these two particular amendments.
That said, I am convinced that the remaining amendments to section 10a are perfectly constitutional. The special legislation clause does not prohibit all classifications; rather, its purpose is to prevent only arbitrary legislative classifications. In re Petition of the Village of Vernon Hills, 168 Ill. 2d 117, 122 (1995). Accordingly, if any set of facts can reasonably be conceived to justify distinguishing the class to which the statute applies from the class to which the statute is inapplicable, then the General Assembly may constitutionally classify persons or objects for purpose of legislative regulation or control
According to the majority, the amendments at issue “were enacted in response to a perceived problem: abuses of the Act by certain members of the plaintiffs’ bar who purportedly pursue consumer fraud cases against vehicle dealers simply to generate legal fees recoverable under the Act.” 208 Ill. 2d at 28. According to one of the amendments’ sponsors, “[t]his seems to be one area where there has been an abuse of this statute.” 89th Ill. Gen. Assem., House Proceedings, May 22, 1995, at 290-91 (statement of Representative Cross). That this problem exists must be taken as true, as “[c]ourts are not empowered to ‘adjudicate’ the accuracy of legislative findings.” Best, 179 Ill. 2d at 389.1 Consequently, the only question for this court is whether the amendments at issue were enacted “for reasons totally unrelated” to the problem identified by the legislature. (Emphasis added.) Bilyk, 125 Ill. 2d at 236. If they were not, then they are constitutional and must be enforced.
There is no question that the amendments relating to notice and settlement are directly related to the abuses
No one can seriously contend that the foregoing amendments were enacted for reasons “totally unrelated” to the problem identified by the legislature: namely, the filing and dragging out of nominal vehicular fraud claims for the sole purpose of “ringing up” statutory attorney fees. Sections 10a(f) and 10a(h) give car dealers, who the legislature specifically identified as uniquely subject to the Act‘s abuse, the opportunity to assess a claim, make a settlement offer, and at least attempt to stem the accumulation of superfluous fees. Section 10a(g), in turn, ensures that the risk is spread evenly, as car dealers who improvidently reject a reason-
In sum, I agree with the majority‘s decision to invalidate the amendments to section 10a(a) of the Act. The remaining amendments, however, are constitutional and should be enforced.
JUSTICE GARMAN joins in this partial concurrence and partial dissent.