*1 ity оmits discussion of Peterson and the way that unique state, collateral source rule has, is treated in this instead, general relied on treatise hornbook quota- tions, to the general speak which treatment of the col- rule, lateral source rather than way to the it unique has in Illinois. developed sum,
In unlike the I majority, would address the ques- presented tion by appeal, this which an involves examina- Peterson and the conflict tion of this opinion court’s between the principles compensatory damages and the collateral source rule. In avoiding important issues squarely appeal, presented majority creates new evidentiary procedure represents major change in practice, trial and which be appears to unwork- reasons, respectfully able. For these I dissent.
(No. 91494. al., MICHAEL E. AVERY et v. STATE Appellees, FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant. 18,
Opinion August Rehearing denied filed 2005. September 2005. *5 THOMAS, J., part. took no FREEMAN, J., joined by KILBRIDE, J., concurring part dissenting part. Odorizzi,
Michele Bradley J. Andreozzi and Allan *6 Erbsen, Brown, of Mayer, Maw, Quin- Rowe & R. William Quinlan lan, Carroll, Ltd., of & Marti A. Eisenstein and Schiff, Aphrodite Kokolis, Waite, of Hardin & and Gino DiVito, Tabet, L. of Rothstein, L.L.C., DiVito & all of Skadden, Slate, Chicago, Arps, Meagher (Wayne & Flom Whalen, W Edward M. Crane Gregory Bailey, and S. of and L. Chicago, Sheila and Douglas Birnbaum W Dun- ham, York, York, counsel), of New New of and Robert H. Shultz, Jr., Heyl, Royster, Allen, of Voelker & of Edwards- ville, appellant. for Hyman,
Michael B. William H. London and Melinda Morales, Much, Shelist, Freed, J. of Ament & Denenberg, Rubenstein, EC., and Robert Clifford Robert A. and P. Sheridan, of all of Offices, Clifford Law Patricia Chicago, Marion, Kionka, Carbondale, of Murphy, Edward J. of Cabraser, and Elizabeth A. Morris A. Ratner and Scott E Lieff, Cabraser, Bernstein, L.L.E, of & Nealey, Heimann Francisco, California, of San for appellees. Record, Jr., Corn,
Richard F. and of Stephen Craig L. Mattoon, amici curiae & of for Craig, of Department et al. Insurance of the State of North Carolina Jr., H. C. of Green- King, Coberly, Robert Steven for amicus curiae Alliance EC., Chicago, of Traurig, berg American Insurers. of and Brett J. Lennard, L. Fenton
Jeffrey E Richard Rosenthal, Chicago, Sonnenschein, & of Hart, Nath of curiae Allstate Insurance for amicus Company. & Shefsky S. of Spratt, L. Crowe and Eatricia
Brian Conrad, S. of Froelich, Ltd., Chicago, of and Robin curiae Chamber of Com- for amicus D.C., Washington, America. merce of the United States of VanAusdal, L.L.C., Huber, & Iwan, Cray, Horstman (Elaine Vorberg, S. Michael D. Huber Chicago of for amicus curiae Horstman, counsel), James K. of Economy Citizens a Sound Foundation. (Tribler, & Orpett, Chicago Orpett
Mitchell A. for amicus curiae Crone, EC., counsel), J. Lee Coving- II, of Insur- Superintendent Department ton of the Ohio ance. Isserles, O’Melveny
John H. Beisner and Marc E. D.C., for amici curiae L.L.E, Myers, Washington, & Corporation Company. General Motors and Ford Motor *7 Brown, Jr., Lucco, J. Lucco and R. of Joseph William Gersch, Edwardsville, David E of Ar- Mudge, Brown & of Forter, D.C., Carmody, and Sheila Washington, nold & of amici curiae Wilmer, Fhoenix, Arizona, of Snell & of for al. et Company Insurance Employees Government Molo, Beck R. Steven F. Norman K. Thompson, James Strawn, Kramer, Chicago, & of for and Jon J. of Winston amicus curiae Illinois Chamber of Commerce. Enoex,
Robert N. of Springfield, for amicus curiae Il- Department linois of Insurance. Bennett,
David E. James A. Spizzo Thomas A. Baker, Vedder, Price, of Kammholz, Kaufman & of Chicago, for amicus curiae Illinois Manufacturers’ As- sociation. Jr.,
Richard Hodyl, Williams, of Montgomery John, & Ltd., of Chicago, for amici curiae National Association of Independent Insurers et al. Bauer,
John W. City, Missouri, of Kansas for amicus curiae National Association of Insurance Commissioners. Hardies,
Richard J. of Rappaport, Chicago, Ross & of Citizen, for amici curiae Public Inc. and The Center for Safety. Auto
John Lingner, of Kakacek & of Lingner, Chicago, and Daniel J. and Richard Popeo Samp, A. of Washington, D.C., for amicus curiae Washington Legal Foundation. Timothy Shea,
J. Eaton and Kevin E of & Ungaretti Harris, Chicago, of for amici curiae National Conference Legislators of Insurance and The Legislative American Exchange Council. Feofanov, Dixon,
Dmitry Bland, Jr., and F. Faul Washington, D.C., amici Lawyers curiae Trial for Fublic Justice et al. EC.,
Jerome F. Crotty, Crotty, Chicago, Rieck & for amici curiae Alliance of Automotive Service Providers National et al. Association Harte, Ltd., EC., Joseph Tighe,
William J. E. and Soti- *8 Il- curiae Mannix, Ltd., Chicago, for amicus all of ras & Trial Association. Lawyers linois Ander- Fischer, Eugene and Chicago, S. Lawrence Olick, York, Anderson, Kill & son, York, New of New California, for amicus EC., Bach, Valley, of Mill Amy Policyholders. United curiae the opinion McMORROW delivered
CHIEF JUSTICE of the court: brought a Avery plaintiffs and other named
Michael County in the circuit court of Williamson class action Insur- defendant, Farm Mutual Automobile against Farm). (State nearly a Representing Company ance plaintiffs Farm policyholders, nationwide class of State statu- sounding in breach of contract and alleged claims fraud, seeking in addition to a claim tory consumer declaratory injunctive relief. the class. The breach of
The circuit court certified jury, remaining contract claim was tried before a and the trial. The jury claims received a simultaneous bench returned a verdict in on the breach of plaintiffs favor of claim, judgment contract and the circuit court entered favor of on the consumer fraud claim. plaintiffs With count, to the third the circuit court regard granted relief but relief. declaratory grant injunctive declined totaled damages The awarded $1,186,180,000. one appellate judgment,
The court affirmed exception. appellate portion court reversed $1,056,180,000. lowering the total award to damages, petition 321 Ill. 3d 269. We State Farm’s App. allowed 315(a). appeal. leave to 177 Ill. 2d R. repair
Plaintiffs’ suit centers on certain automobile categories have been identified the record part which and to refer our discussion. “Crash throughout which we components refers to automobile that are used to parts” replace crash, parts damaged rather than parts mechanically. have failed They primarily are sheet metal *9 and plastic parts that are attached to the outer of shell the car. parts Crash consist of two categories. The first category comprised of new made parts by or on behalf of original the automobile’s parts manufacturer. These commonly are referred to as “Original Equipment Manufacturer” parts, or “OEM” crash parts. second class parts includes aftermarket made by companies not original affiliated with equipment manufacturers. These parts are referred to as “non-OEM” crash parts.1
A general succinct overview of plaintiffs’ theory of may the case be found in “Plaintiffs Memorandum in Support Application of of Illinois Law to the Claims of Class Members Under Illinois Choice of Law Doctrine”: case, plaintiffs placed
“In this have propriety at issue the practice of State uniform specifying Farm’s the use of repair policyholders’ car[s] crash its every instance in cheaper parts which such are available. *** policy Plaintiffs contend that this breaches State Farm’s standard designed contract because it is not policyholders’ pre-loss restore cars their condition us- ing parts quality. of like kind and Plaintiffs further contend practice this violates Illinois’ consumer law because practice itself and its economic ramifications constitute statutes, a violation prohibit[ ] of Illinois consumer which ‘standard, misrepresentations quality, grade’ as to the (1) 1The non-OEM crash involved this case are: fend (2) (3) (4) (5) (6) ers; hoods; doors; lids; luggage panels; deck lid (7) (8) (9) quarter panels; panels; panels; rear outer front-end (11) (10) (12) shells; panels; panels; pickup header filler door truck (13) beds, sides, tailgates; radiator/grill support panels; box and (14) (15) grilles; headlamp mounting panels/brackets/housings/ (16) lenses/doors; mounting taillight panels/brackets/housings/ (17) (18) lenses; body moldings; body moldings; outer door side (19) (20) (21) opening moldings; moldings; front wheel side front (22) fascias; panel brackets, mounting supports, and rear outer (23) (24) surrounds; bumpers (excluding bumpers); and chrome (25) bars; bumper bumper brackets/supports. and covers/face goods provided poli- and services under State Farm’s trial, jury [Citation.] cies. At the Court and must resolve Farm, question hy requiring the classwide of whether State parts, through the uniform use of non-OEM crash and designed import course of conduct it to conceal the true practice policyholders, from breached its contractual obligations and committed consumer fraud.” opinion This is divided into principal two sections: “Breach of Contract” and “Consumer Fraud.” In a third section, plaintiffs’ we deal with claims for declaratory injunctive and relief. These sections are further subdi- vided, issues, as required by arguments the various as follows:
I. Breach of Contract Propriety A. the Nationwide Contract Class May B. Whether the Respect Verdict Be Affirmed
to Subclasses “Assigned
1. The Massachusetts Risk” Poli- cies *10 The Agree”
2. “You Policies The Quality” 3. “Like Kind and Policies Damages 4. Specification Damages
a. Damages b. Installation II. Consumer Fraud Act
A. Consumer Fraud Claim Plaintiffs’ 1. Plaintiffs’ May Consumer Fraud Claim Not
Be Based on a Breach of a Promise Contained in Their Insurance Policies
2. This Case Is Specification Not About the Defective Parts Representations
3. The Which Form the Basis of Plaintiffs’ Cause of Action for Consumer Fraud Do Not Include the Statement That Non-OEM Parts Are as Good as OEM Parts
4. Describing “Quality a'Non-OEM Part as a Replacement and, Hence, Puffing Part” Is Not Actionable by
5. The Guarantee Provided Can- State Farm not Form a Basis for Plaintiffs’ Consumer Fraud Claim Consumer Fraud
6. The Crux of Plaintiffs’ Farm to Disclose the Claim Is a Failure State During Categorical Inferiority of Parts Non-OEM the Claims Process Propriety Fraud B. the Nationwide Consumer Class Scope of Fraud Act
1. the Consumer Applies Act 2. Whether the Consumer Fraud at Issue in This Case the Transactions Propriety Judgment: C. Named Plaintiff 1. Burden of Proof Deceptive Practice
2. The Act or Damage 3. Actual Deception 4. Proximate Cause —Actual D. Other Issues Declaratory Relief Equitable
III. count. breach of contract begin plaintiffs’ We I. Breach of Contract complaint, class action which was original Plaintiffs’ trial, 1997, amended several times. July filed was plaintiffs’ predicated upon place which took (breach Count I complaint. third amended class action contract) alleged that complaint of the third amended contract” Farm breached its “uniform insurance State that, alleged under policyholders. with its Plaintiffs contract, “to restore promised terms of this using parts to their condition plaintiffs’ pre-loss vehicles According plaintiffs, kind and quality.” of like in this promise, “like kind and as stated quality,” term However, to OEM quality parts.” meant “like kind and the non-OEM at issue alleged also inferior to their OEM categorically were this case view, *11 parts counterparts. plaintiffs’ Under quality” “like kind and satisfy State Farm’s could never matter, alleged: practical “As a Plaintiffs obligation. only by requiring be met obligation could [State Farm’s] or OEM factory-authorized, in repairs the exclusive use added.) (Emphases parts.”
In claim as a ac- urging the certification of their class tion, alleged Farm’s contractual that State uniform agreement policyholders “Policy,” with its was a singular, general in the “the same or common with argued, contrary, terms.” State Farm to the there policy no uniform State Farm automobile insurance nationwide, and individual issues therefore would claims, rendering dominate contract classwide 801(2) impossible. determinations See 735 ILCS 5/2 — (West 1998). According Farm, to some of its policies State included a to vehicle promise pay repair to with quality,” “like kind policies and but other did not that, this provision. many contain State Farm added states, policies explicitly for the provided specification of non-OEM sufficient to restore the vehicle to its “pre-loss condition.” Still other Farm State automobile insurance policies contained neither “like kind “pre-loss nor quality” language. condition” pointed, Farm example, to its Massachusetts policies, promised simply pay which to “the actual cash value” of “parts at the time collision.” Another group of policies that contained neither “like kind and qual- ity” nor the “pre-loss language condition” were the majority contracts, of State Farm’s “assigned risk” which written were for the “residual market” of high-risk consumers required whom states insurers to Ac- cover. Farm, cording to State assigned most of these risk poli- promised cies simply pay to necessary “[a]mount repair or replace property.” argued
State Farm also were there substantive states, conflicts of law between Illinois and other it be improper therefore would Illinois apply law to the contract claims class members nationwide. State contended, addition, that Illinois lacked signifi- cant contacts the claims of class members other states and the law with imposition regard Illinois
114
Phill-
rights.
their
violate
claims would
constitutional
See
Shutts,
Co. v.
ips Petroleum
U.S.
86 L. Ed.
(1985).
628,
“With by the are no conflicts of law raised finds there true specific require claims or facts at issue this case which application any Il- law state other than Illinois. possesses applica- linois sufficient contacts such that tion of Illinois law to the breach of contract claims arbitrary case neither comports nor unfair and with due process. Application of Illinois law to the breach of contract jurisdic- implicate any claims does not the interests of other application Finally, tion and of its law these claims. standards, application of Illinois breach of contract which *13 jurisdictions, are identical to those in other does not any legislative legal interfere with state’s choices.” Based on its finding class members had a “com- mon interest” in determining whether Statе Farm’s “uniform” practice non-OEM specifying breached State Farm’s contractual obligation, and that Illinois law could be to class applied members’ claims nationwide, the circuit court certified the following class: persons States,
“All in the except United residing those Tennessee, who, in 28, 1987, Arkansas and July between (1) 24, February 1998, and by were insured a vehicle casualty policy insurance issued Defendant State Farm (2) and made a claim for repairs pursuant vehicle to their policy and non-factory had authorized and/or Manufacturer) (Original Equipment parts’ ‘crash installed on their monetary vehicles or else received compensation determined in relation parts. to the cost of such Excluded from the class are employees Farm, of Defendant State its officers, directors, subsidiaries, its or its affiliates. addition,
In the following persons are excluded from the (1) persons class: who garaged resided or their vehicles in Illinois and policies whose Illinois insurance were issued/ (2) prior April 16, 1994, executed to persons and who resided in policies California and whose were issued/ prior executed September 1996.” Following entry of the circuit court’s order certifying class, State Farm sought from this court a writ of mandamus directing the circuit court to reverse the order. State Farm suggested the alternative that court reverse the circuit court’s pursu- certification order ant to our supervisory authority. State Farm also moved stay proceedings. consolidation, transfer,
for took “no ac- entered an order which we This court requests because there Farm’s various tion” on State deny. or to votes either to allow were insufficient subsequently moved court, State Farm In the circuit summary judgment claims and for on the class these The circuit court denied of the class. decertification summary judgment Farm also moved for motions. State plaintiffs. against motion was named This each of the denied as well. parties number of mo- trial, tendered a
Prior to sought plaintiffs’ to bar in limine. One of motions tions jury presenting to the from evidence State Farm regulation state, state to varied from of insurance any sought prohibit plaintiffs’ motions another policies the class members’ of the states where disclosure sought plaintiffs’ motions filed. Still another were regarding preclude differ- evidence the introduction of obligations to class Farm’s contractual ences in State argued, opposing motions, these members. In opposing certification, that there were class as it had significant obligations to the in its contractual variances *14 resulted, at class, the and these variances members of differing regulations part, in the insurance in from least Farm asserted: various states. State claim of a contract “[N]othing more basic in the trial *** parties to a rights and duties of the ] the than thatf plaintiffs contract. But by specific are defined contract [t]he contract of very starting point[,] exclude that ask to *** members, varies contract which individual class the in Farm’s differences State depending on troublesome The contractual the class. members of obligations toward Honor, vary, class, do Your rights of the members only relevant but fundamen- variances are and those tal.” plaintiffs’ granted in motions several barring The circuit court (1) including from Farm limine, those policies disclosing members’ the class states where the (2) introducing regarding variances filed, were evidence (3) introducing regulations, and the states’ insurance regarding contrac- evidence differences State Farm’s obligations tual to members of the class. began August previously
The trial on 1999. As indicated, tried the breach of contract claim was before remaining jury, and the claims were tried before the jury day. court after the had left for the At the start of objection Farm, trial, and over the of State the circuit gave preliminary jury In instructions. these instruc- jury tions, the court told the that State Farm’s contrac- obligation “exactly same, tual whether State promised pay parts like kind and for crash quality promised pay parts crash which restore pre-loss that, a vehicle to its condition.” The court added policies, company under State Farm’s was allowed to specify parts parts, long either OEM or non-OEM “so parts quality the crash are of like kind and which restore damaged pre-loss According vehicle to its condition.” court, to the circuit crash kind were of like and quality “only they pre-loss restore[d] if a vehicle to its condition,” which the court defined as “the condition of immediately prior damaged.” the vehicle to the time it is unnecessary It is to recount detail the evidence presented at trial. We note that the trial lasted several days, testimony and involved hundreds of exhibits and testimony dozens of witnesses. Much of the dealt with categorically whether non-OEM were inferior to parts. presented testimony experts OEM Each side body-shop support respective witnesses in of their positions. point, only testimony At this we summarize plaintiffs, testimony plaintiffs’ of the named dam- ages expert, that of State Farm claims consultant. analysis Other facts relevant to our will be introduced as they pertinent. become Avery,
Five named at testified trial. Michael Louisiana, testified The remain- deposition. video in ing testimony Covington, four their Mark gave person: DeFrank, in Il- a resident of Sam who lived Mississippi; linois; Vickers, Pennsylvania; and Carly resident of Shadle, in living Todd who was Massachusetts when his accident occurred. Shadle, witnesses, Avery did not have
Two on their vehicles. Both testified parts non-OEM installed accidents, that before their their cars were respective condition, very they would not consider non- good Accordingly, parts OEM both had OEM installed parts. vehicles, parts speci- on their rather than the non-OEM estimate, paid in the and both the difference cost. fied $45, Shadle, Avery was about and for For the difference it about was $155. DeFrank and Vickers did have non-OEM
Covington, All dis- expressed installed on their vehicles. three that, Vickers testified follow- parts. satisfaction with suit, her car was gave the collision that rise to her ing and was involved in a more serious accident subsequent, admitted that State Farm declared a total loss. Vickers that, far her value” for the car. She added so paid “book knew, any did her car less as she State Farm not value that had been used because of the non-OEM that, months after his DeFrank testified several repair. his brother-in- truck he sold the vehicle to repaired, “Blue Book” slightly an that was below law for amount that, though the However, asserted even value. DeFrank did not he repaired parts, truck had been on this fact. DeFrank price discount the sale based of the truck to his brother-in-law characterized the sale transaction.” length as an “arm’s Mathur, testified expert, Iqbal Dr. damages Plaintiffs’ being sought types damages were two there breach, Mathur termed The first was what of contract. damages. According “direct,” “specification,” *16 damages when State incurred were Mathur, these repair part Under estimate. specified on the non-OEM eligible everyone to receive theory, class was in the this damages. specification acknowledged that cross-examination, Mathur
On specification dam- plaintiff to receive be entitled would preloss ages condition. restored to if his car were even damages specification would Mathur also conceded part repaired or apply an OEM with if the car were even quality part as an the same that was of a non-OEM with part. OEM damages, type Mathur which of contract
The second “consequential,” “installation,” dam- as described calculating replacing by ages, the cost was determined parts parts member’s on a class OEM with actually Only had non- class members who those vehicle. eligible to were on their vehicles installed OEM damages. installation receive acknowledged that, cross-examination, Mathur On necessary damages, regard it was to installation part on a was installed a non-OEM determine whether However, conceded vehicle. Mathur class member’s making way Mathur determination. this he had no opinion” acknowledged as to how he had “no also many installed on had non-OEM class members market value for later received fair their vehicles but instal- as to that his calculations them. Mathur admitted damages might much as bil- incorrect as $1 be lation lion.
Among appearing defendant was the witnesses property in auto Porter, a State Farm consultant Don general testimony primarily directed claims. Porter’s handling philosophy” auto dam- to State Farm’s “basic obliga- any specific age claims, than contractual rather repeat- describing philosophy,Porter testified In tion. pay goal edly restore a was to that State Farm’s policyholder’s car to its preloss condition. According to Porter, State Farm “always has had a commitment restoring the vehicle to its pre-loss condition.” Porter also testified that parts specified “must be good as the part that was on prior the car to the loss.” Porter never mentioned the Massachusetts or assigned risk poli- cies, and never stated that all the State Farm policy forms at issue in this case were uniform.
Following the evidence, close of court, the circuit conferring with parties, reiterated the view that State Farm’s contractual obligation was the same for each member of the class. In describing this uniform obliga- *17 tion, the circuit court pointed to Porter’s testimony. Ac- cording court, to the Porter testified that State Farm’s promise “always was that when the car was repaired, the parts would be of like kind and quality which restores [the vehicle] to its pre-loss condition.” The court ruled that this uniform interpretation of the contractual obliga- tion would to apply all of State policies, Farm’s including the “assigned risk” policies and the Massachusetts poli- (neither cies of which contained the “like kind and qual- ity” or the “pre-loss condition” language).
During the jury instructions, conference on State Farm objected to the use of the term “contract” in the instructions.2 State Farm argued: “Reference to a singular contract factually inaccurate. There were numerous contracts.” Counsel for State Farm informed that, the circuit court with regard to the court’s interpre- tation of the contractual obligation uniform, State Farm wanted to preserve its “objections as to variations essentially
2State objection, Farm made writing, same in in its Regarding Jury Referring “Memorandum Instructions.” to plaintiffs’ instructions,” proposed “substantive contract “[tjhese Farm noted speak single instructions of a State Farm ” argued, however, ‘contract’ with the ‘class.’ State Farm “there is no one ‘contract’ with the class.” differing policy on either terms based in contract regulations.” Counsel stated: differing state language part going understand of this to be “We that’s merely preserve appellate that for trial. want to So we purposes.” and subse- objection,
The court noted circuit regarding The instructions jury. instructed the quently essentially repeated obligation contractual State Farm’s in instructions. given preliminary had its what instructions obligation these contractual The essence of obligation was was that State Farm’s contractual class every same member.
The form the circuit court given verdict stated, “Do pertinent part: It general and classwide. to its perform find defendant State Farm failed you and its contract obligations under contract breached The circuit court denied State plaintiff class?” addition, individual request give, Farm’s verdict forms for each named plaintiff. jury found that “defendant State failed obligations under the contract breached
perform damages its contract with class.” Contract plaintiff $456,180,000, awarded class totaled which plaintiff $243,740,000 in specification damages consisted of $212,440,000 in installation The circuit court damages. judgment jury’s entered on the verdict favor also on the contract claim. The court entered *18 on consumer fraud judgment plaintiffs’ in favor the claim, had, by practices, Farm its finding State Fraud The court awarded violated the Consumer Act. in “disgorgement” an additional million $130 resulting damages punitive damages, and million in $600 $1,186,180,000 in of all claims. a total award on that, argued regard On State Farm appeal, claim, questions breach of individual plaintiffs’ contract questions, over common predominated any purported and the claim for breach of contract therefore should been as have certified a class action. 735 ILCS 5/2— 801(2) (West 1998). In court, its the appellate brief that, State Farm contended contrary the conclusion the court, circuit the operative contractual in language was not susceptible State policies Farm’s of uniform interpretation. While acknowledging most of its auto insurance contracts contained “like kind the and qual- ity” or the “pre-loss language, condition” State Farm insisted that significant policies “a number did not.” State Farm pointed, example, policies to its in Mas- sachusetts, Alaska, as assigned policies as well its risk Illinois, Indiana, Minnesota, which State Farm averred “did not use either kind and Tike or quality’ ‘pre-loss language.” condition’ In its brief to the appel- court, late State Farm asserted:
“Neither of these [the formulations Massachusetts policy provision ‘assigned or policy provision] risk’ expressly imposes any part fact, standard of In quality. assigned policies deliberately risk ‘like quality’ delete the kind and and ‘pre-loss condition’ language appears in other policies.” (Emphases original.) Focusing interpretation on the circuit court’s uniform, contractual obligation State Farm told the appellate court: trying policy
“Rather than to deal with the variations language laws, governing [state] circuit court ignore completely. chose to them The court instructed the jury form, only that there policy though one even there are up a number of different Then the forms. court made form, its own interpretation policy citing of that without any support Finally, law to it. in order to enforce the uniformity created, artificial it had barred State telling jury any Farm from about different contract language differing governing specification state laws parts.
The circuit court’s decision to force this case into the by single mold of fabricating a class action contract and single interpretation is law of an error of constitutional requires dimension that this Court.” reversal
123 of the certification court affirmed appellate The The as a class action. breach of contract claim plaintiffs’ court, concluded, had the circuit court as appellate the for each promise was same State Farm’s contractual The court stated: appellate member of the class. plaintiffs presented “The reсord demonstrates promise made the to that State Farm same evidence show (i.e., quality’ and to restore pay parts to for ‘of like kind condition’) throughout the policyholders to its ‘pre-loss witness, Porter, claims country. own Don State Farm’s consultant, acknowledged Farm had a uniform that State obligation policyholders. promise to was nationwide This so as quality parts of like kind to OEM specify and added.) Ill. (Emphasis 321 preloss to restore condition.” 3d at App. 280. the appellate
The court also affirmed circuit court’s contract finding applied that Illinois law could be of all the class nationwide and that claims members dif- presented Illinois law no constitutional imposition ficulties. regard merits, appellate upheld
With to the court judgment the circuit court’s that State breached class. obligation appellate contractual The plaintiff stated: court by parts specified
“Plaintiffs claimed that the non-OEM and categorically State Farm were inferior failed to restore ‘pre-loss their The was the vehicles to condition.’ claim expert testimony, from could be supported with which it inferred, true, non- reasonably accepted if lot of in terms parts specified OEM State Farm was inferior fit, function, quality, durability, appearance, App. Ill. at 280. performance.” 321 damages also most of the appellate upheld court affirming In the award awarded breach contract. explicitly damages, appellate specification (1) an damages even applied concluded that these where estimate, but on the part specified inferior non-OEM at body part an OEM no additional shop provided (2) member, were to the cost class used repair, vehicle’s but class member subsequently sold the vehicle for fair market value with no diminution in value because of the use of non-OEM parts. Ill. 3d at App. appellate 287-88. The court also *20 upheld the award of damages, installation rejecting State Farm’s criticism that these damages speculative. were Ill. App. 321 3d at 288-90.
However, appellate the court concluded that the $130 million disgorgement damages constituted an imper- missible recovery, double and the appellate court there- result, fore reversed this award. As a plaintiffs’ total award was reduced to $1,056,180,000.
State Farm from appeals those portions judg- ment of the appellate affirming the of judgment granted the circuit We court.3 State Farm’s petition for 315(a). leave to appeal. Ill. 2d 177 R. the Propriety Nationwide Contract Class
A. of court, Before this State Farm as it argues, did before circuit appellate courts, and the class should not have been certified. State Farm contends that individual granted following agencies organizations
3We to the leave and file support to amicus briefs in curiae of State Farm: of Alliance Insurers, American Company, Allstate of Insurance Chamber States, Economy of Commerce the United Citizens a Sound Foundation, Department al., North Carolina of Insurance et al., Corporation Employees General Motors et Government Insur al., Company Commerce, et of ance Illinois Chamber Illinois Insurance, Department Association, of Illinois Manufacturers’ al., Independent National Association of Insurers et As National Commissioners, sociation of of Insurance National Conference al., Legislators Superintendent Insurance et of the Ohio Department Insurance, Inc., al., Citizen, Washing of Public et and Legal granted following agen ton Foundation. We also to the leave organizations and support cies to file amicus briefs in of curiae plaintiffs: Alliance Automotive Providers Service National As al., Association, Lawyers Lawyers sociation et Trial Illinois Trial al., Policyholders. for Public Justice et United See 155 Ill. 2d R. 345.
125 any questions predominate questions common to over ap- been not have Illinois law should and that class plied members nationwide. claims class to the contract argues regard merits, With plaintiffs Farm’s of State establish a breach failed to obligation to establish failed contractual damages. they We first State entitled to turn were have should not been contention that class Farm’s certified. governed by 2—801 of is section certification
Class (West (735 ILCS of Civil Procedure Code 5/2—801 1998)), patterned the Federal after Rule 23 of which Chicago, City 86 See v. Rules of Civil Procedure. Getto (1981); Forde, K. Illinois’s New Class Ac- Ill. 2d (1977). 120, 122-24 Statute, 59 B. Rec. Given tion Chi. provisions, relationship these two federal between persuasive authority interpreting Rule are decisions regard questions certification Illinois. class *21 (1981) Schlessinger e.g., 314, See, Olsen, v. 86 Ill. 2d 320 analyzing (citing Fed. R. P 23 case in class certifica- Civ. issue); Forde, tion see K. Illinois’s New Class Action (1977); 120, Statute, 59 Chi. B. Rec. 122-24 Southwestern (Tex. 2000). Refining 425, Bernal, 22 Co. v. S.W.3d 433 only may 801, Under be if section a class certified 2— proponent prerequisites the four set forth in establishes (1) (“[t]he numerosity so numerous statute: class is (2) joinder impracticable”); аll members com- of is monality questions (“[t]here are of fact or law common predominate questions class, to which common over (3) only members”); any questions affecting individual representative parties adequacy representation (“[t]he fairly adequately protect will and the interest of the (“[t]he (4) class”); appropriateness action an class adjudication appropriate method for the fair and efficient (West1998). controversy”). 735 ILCS 5/2—801 regarding within the Decisions class certification are 126
sound discretion of the trial court should be over- only turned clearly where the court abused its discretion or applied impermissible v. McCabe Bur- legal criteria. gess, 464 (1979); Eshaghi 457, 75 Ill. 2d Hanley v. Daw- Co., son (1991). Cadillac 995, 214 Ill. App. 1001 However, trial deciding “[a] court’s discretion in whether to a class certify action is not unlimited and is bounded by and must be exercised within the framework of the civil procedure rule governing class actions.” 4 A. Conte & Newberg, Newberg 13:62, H. on § Class Actions at 475 (4th v. 2002); ed. Broussard Meineke Discount see also (4th Inc., 1998) Shops, F.3d Cir. Muffler that, (noting while a trial court has broad discretion in deciding certify class, whether this discretion must 23). he exercised within the of Fed. framework R. Civ. E bar, In argues the case at State Farm it was an abuse of discretion certify argu- the class. State Farm’s ment focuses commonality on the and predominance requirement According Farm, section 2—801. to State it was error for the lower courts conclude that com- mon questions predominated questions over affecting only individual class members. regard
With to the class that was certified claim, common plaintiffs’ contract question identified by the circuit in its certification order was whether State practice specifying Farm’s on repair estimates constituted a breach of Farm’s obligations. According court, contractual to the circuit this question interpretation” predomi- “contractual reaching conclusion, other In nated over issues. acknowledged circuit court State Farm’s argument took varying insurance contracts forms and there was *22 interpreted. thus no standard form to be contract However, in view, the court’s of specific the form the individual insurance policies long was immaterial so in “the contractual contained each operative language interpretation.” susceptible [of] policy [was] uniform question the vari- of whether that this concluded court interpreta- given language policies’ uniform could be ous at the class trial, at rather than decided tion should be stage. certification by
Notwithstanding court, is- the the this assertion interpretation was never of contractual sue uniform previously prior noted, to trial As decided the merits. on plaintiffs’ granted in limine motions the circuit court barring regarding of differ- introduction evidence obligations and contractual ences in State Farm’s any prohibiting class of states where the mention rulings, policies these filed. As a result of members’ were hearing regarding jury prevented from evidence obligations any in to began, State Farm’s contractual variations the trial Moreover, the time the class members. court had decided issue whether the circuit itself language policies in State Farm’s various the contractual susceptible interpretation. prelimi- of uniform In its was nary jury, to the the court stated: “The
instructions obligation policies contractual of State Farm under its or exactly same, insurance contracts is whether State promised pay like crash kind quality promised pay for crash which restore added.) pre-loss (Emphasis a vehicle to its condition.” Following jury trial, in the close of evidence expressed interpre- uniform circuit contractual ruling applied terms, it to all tation even broader policies,including assigned poli- of State Farm’s risk (neither policies cies and the Massachusetts which quality” “pre-loss the “like kind and or the contained language). condition” view,
In our the circuit court was incorrect conclud- ing, question instance, the first that the uniform interpretation decided trial contractual should be at Apparently stage. rather than at the class certification *23 128
the circuit court came to this realization as well (although
belatedly),
as is evinced
the court’s deciding the
uniform interpretation
prior
issue
trial.
to
The reason
why
question
should have been
during
resolved
the
that,
certification
had
stage
the court answered the
question
negative
in
affirmative,
the
rather
than the
class could not have been certified. In order
satisfy
(a
requirement
second
of section 2—801
ques-
common
tion of fact or
predominates
law
over other questions af-
only
fecting
members),
individual class
it must be shown
that
adjudication
“successful
of the purported
class
representatives’
individual claims
right
will establish a
recovery in other class members.” Goetz v. Village of
Estates,
(1978);
62 Ill.
3d
App.
233, 236
accord
Hoffman
Dulman,
St.
Society
Francis v.
16,
Ill. App.
98
18
(1981); Hagerty
v. General Motors Corp., 59 Ill. 2d
59
Mace
v. Van Ru Credit
(1974); see
Corp.,
also
F.3d
(7th
1997)
338, 341
Cir.
(noting
typicality
that
commonality requirements
Fed.
Civ.
R.
E 23 “ensure
only
that
those
or defendants who can advance
the same factual and legal arguments may
grouped
be
class”).
together
bar,
as a
In the case
if
at
the circuit
court had concluded
the operative
contractual
in
was language
policies
State Farm’s various
susceptible
interpretation,
uniform
this would have
possibility
raised the
there was a breach of contract
with some class members but not with others. See Brous-
sard,
situation,
“The cost of upon is based one of following:
ijt tji % an3. estimate written upon prevailing based *** competitive price. We will include in the estimate parts sufficient pre-loss restore the vehicle to its agree parts may condition. You us such parts include either by furnished the vehicle’s manufac- or parts turer from other including sources non- original equipment (Emphasis manufacturers.” original.) policy view, In our these two forms are not the same. noted, contains, As second one in addition to the “pre-loss promise, explicit agreement condition” an policyholder regarding between State Farm and the parts: agree use parts may “You with us that such include either furnished the vehicle’s including manufacturer or from other sources non- original equipment (Emphasis in manufacturers.” original.) points court, In its brief Farm State particular language, explaining “expressly to this that it provided [the preloss could meet condi- *25 obligation specifying parts.” tion] In non-OEM policy contrast, above, the first form forth set which quality” promise, contains the “like kind and makes no parts, expressly mention of OEM or non-OEM nor it does specification parts. allow for the of If, plaintiffs specification claim, the of non-OEM obliga- constitutes of breach State Farm’s contractual plaintiffs policies tion, who were insured under contain- ing quality” promise the “like kind and be in a would position regarding non-OEM-parts different this claim containing policies “you than would with the agree” language. Class members with a “like kind and stronger quality” policy would case have a for breach policies expressly al- contract than would those whose alleged practice breach. to constitute the that is the lowed adjudication of the claims It that the successful follows quality” “like kind and the members with class right necessarily language establish would agree” language. “you recovery See with the those App. Hagerty, 236; 59; Goetz, 62 Ill. 3d at 2d 59 Ill. at App. at 341. 18; Mace, at 109 F.3d Dulman, Ill. policies the between a material difference There is thus containing “you provision agree” and those that do the language.4 not contain this quality” “like kind and between the
This difference “pre-loss policies, hand, the condition” on one containing “you agree” provision, policies on the only dif- of material other, instance in case is not the language. putative policy class also ferences policies that contain Farm insureds with includes State “pre-loss quality” the “like kind and nor neither policies, promise. State Farm’s Massachusetts condition” example, simply pay promise “the cash actual “parts at time of the collision.” The same value” of “assigned policies, risk” of most of State Farm’s true high-risk market” of which are used the “residual required to cover. Just as consumers that insurers are policies, majority of the “as- the Massachusetts signed policies “like kind and risk” contain neither the language. quality” “pre-loss Instead, condition” nor promise pay “[a]mount “assigned policies an risk” necessary repair replace property.” points formula- out, neither of these
As State policy provision or the “as- Massachusetts tions—the signed imposes any policy provision expressly risk” — plaintiff quality. part It class follows that standard policies either of these members who were insured under position kind than “like he in a different their would “you agree” language in mention of the 4PIaintiffs make no to this court. their brief
quality” “pre-loss and condition” counterparts regarding claim that specification non-OEM parts a constituted breach of their insurance contract. The adjudication successful of the claim of a “like kind and quality” policyholder, example, necessarily would not a to right recovery establish in a class member with either a Massachusetts “assigned an risk” policy. See Goetz, 236; Dulman, 62 Ill. 3d at App. at App. Ill. 3d 18.
Notwithstanding the foregoing, court, the circuit fol- lowing trial, the close in of evidence the jury reiterated pretrial its conclusion that State Farm’s contractual obligation was the same for each member of the class. The circuit court determined all of that State Farm’s policies, including the policies Massachusetts and the “assigned risk” policies, conveyed the same contractual promise. court stated: having testimony,
“After heard all and I wrote down particular done, when it testimony was Mr. Porter’s agreement, State Farm’s promise, you however choose to it, always characterize repaired, when the car was be of kind quality would like which restores pre-loss [it] to its condition.” The appellate court also referred to specifically Porter’s testimony concluding that State Farm’s contractual uniform: obligation was witness, “State Farm’s own Don Porter, consultant, a claims acknowledged that State obligation policyhold- Farm had uniform nationwide 321 Ill. App. ers.” at 280. Plaintiffs this same take testimony position, pointing contending Porter’s obligations policy- State Farm’s contractual to its disagree. holders were uniform. We First, testimony Porter’s about State Farm’s “com- to restoring mitment condi- pre-loss vehicle to tion” referred philosophy” goal “basic of the company, rather than a contractual Porter obligation. never all policy testified that forms at issue *27 Second, extent that his to the case were uniform. referring testimony Farm’s as to State could be read contracts, can said about this the most that be insurance testimony referring policy to individual
is Porter was that policy Viewed rather than all of the relevant terms forms. plaintiffs, light Porter’s testi- most to the favorable may supporting position mony that the read the be as quality” “pre-loss kind and and the condition” “like phrases thing: promised mean the same Farm to policyholder’s preloss pay vehicle to its to restore the using parts good the were on condition as that However, the there is noth- the vehicle at the time of loss. testimony any ing encompasses indicate that Porter’s to language. policy other example policyprovision that falls outside the
An “you scope testimony agree” language, Porter’s is the expressly specification for of non-OEM which allows parts. “you Porter made brief of the While mention agree” language testimony, in his he discussed this language only example as an of the notice that State provided policyholders regarding to non-OEM- parts practices. testimony Porter did not state in his containing expressly policy language a specification allows
of non-OEM is the contractual equivalent policy language. of a that omits this His testimony regard simply contains no comment with respect Accordingly, this to State al- matter. Farm’s obligation, legedly contractual Porter’s testi- uniform only supports mony “like kind the view that the and phrase quality” phrase “pre-loss condition” thing: obligation Farm’s mean the same that State preloss pay policyholder’s vehicle to its restore testimony posi- support condition. Porter’s does not pres- plaintiffs, courts, and tion of the lower “you agree” language ence of the makes no difference cоnvey policies containing language and that promise policies it. as do that omit same contractual Equally important, testimony Porter’s does not encompass policies State Farm’s Massachusetts or its “assigned policies, risk” neither of which contain the quality” “pre-loss “like kind and or the condition” language. carefully Wehave examined the more than 200 pages transcript testimony. of Porter’s findWe no men- policies “assigned tion of either the Massachusetts or the policies. risk” The assertion that Porter’s “uniform obligation” testimony encompasses policies these simply supported by Accordingly, the evidence. testimony support position Porter’s does not plaintiffs, policies courts, lower that State Farm quality” “pre-loss which omit the “like kind and and the *28 language promise condition” state the same contractual policies language. as that include this
Moreover, there is no other record evidence that can policy sustain the conclusion that material differences— “you agree” language “assigned i.e., the and the risk” language difference, no all and that of State —make policy Farm’s various formulations are the same. Plain- point testimony, tiffs do to evidencein addition to Porter’s essentially but this other evidence consists of statements equivalent that are to assertions Porter’s or reflect them. nothing support “you There is the conclusion that the agree” language, example, for or the Massachusetts or “assigned policies risk” are irrelevant and that all of policy susceptible State Farm’s variations therefore are interpretation. of the same Indeed, contractual State argued beginning Farm has from of the this case that they preclude such variances relevant and are that class certification. simply evidentiary support sum,
In there no for the lower courts’ conclusionthat all of State Farm’s vari- policies putative are ous uniform. a class includes Where policies members who are insured are under that materi- ally commonality predominance different, the
135 requirement met. ILCS be section 2—801 cannot of 1998). 801(2) (West Hagerty, 59; Ill. 2d at See 5/2 — App. App. at 236; Dulman, 98 Ill. 3d at Goetz, 62 Ill. Accordingly, of it was an abuse Mace, at 341. 18; 109 F.3d certify plaintiffs’ breach for the circuit court discretion Broussard, 155 a action. See claim as class of contract (“[Pjlaintiffs single simply cannot advance at 340 F.3d the action on basis breach contract collective multiple contracts”). the We therefore reverse different class. contract certification of nationwide May Be B. Verdict Whether Affirmed Respect to With Subclasses Having determined that certification reversed, note should we nationwide contract class be jury’s question breach there remains whether any regard may affirmed of contract verdict be comprised policyholders insured who were subclass any policy For individual forms. under relevant question in below, forth the reasons set we answer negative. questions initially there We note are serious may upheld to whether the breach of contract verdict be any group form of class members. Under verdict jury given court, the circuit found “defendant obligations perform Farm failed to under the plaintiff and breached its contract with the contract added.) (Emphases This form followed class.” verdict *29 naturally jury instructions, the which stated that from single at there was a contract issue with a uniform obligation. contractual concluded, law,
However, have a matter of we as single Rather, There this was error. no contract. was multiple policy materi- there were forms which differed ally. improper. face, It therefore, On the verdict is finding, example, that State Farm included no containing “you agree” policy the the breached form which allowed language, practice plaintiffs claim Indeed, constituted the breach. there have could not been such The finding. jury a never was instructed as to the agree” “you provision. any finding Nor there in the verdict that State Farm breached its obliga- contractual tion in the policies Massachusetts or the “assigned risk” policies. Once again, jury was not instructed to stated, these The verdict policies. simply incorrectly, contract with the State Farm a single plaintiff breached class.
Accordingly, the breach contract verdict cannot be respect with upheld any of policyholders subclass any insured under of the individual at policy forms issue. However, we do not decide this case ground on this alone. Instead, we also look at the individual relevant policy and forms consider whether established breach of any of them. We also consider whether plaintiffs damages. below, established set For the reasons forth we these questions negative. answer 1. The Massachusetts and Risk” “Assigned Policies to the regard policies With Massachusetts risk” “assigned policies, we conclude that there was no policy breach. Neither of these forms contained the “like kind and or the quality” “pre-loss language. condition” policies promised pay The Massachusetts actual “the collision,” cash at time “parts value” “assigned risk” policies promised pay an necessary to repair replace property.” “[a]mount noted, As has neither of these formulations— policy provision the Massachusetts or the risk” “assigned policy provision expressly imposed any part standard of — quality. specification of non-OEM would as, long constitute breach of these contracts. So with regard policies, paid to the State Farm Massachusetts “parts “the actual cash value” of at the time of the colli- as, sion,” regard and so risk” long “assigned to the *30 necessary to “[almount an paid policies, obliga- the contractual property,” or the repair replace parts It matter whether the met. would not tion would be Thus, non-OEM, OEM, type. some other or were specified affirmed not be may of contract verdict jury’s the breach consisting policyholders of to a subclass with respect provisions. these insured under Agree” The “You Policies 2. the containing “pre-loss policies next the
We turn noted, As these “you agree” language. the condition” and provisions state: upon repair replacement based one of cost of
“The following: the
[*] [*] v prevailing upon an estimate based 3. written *** price. will include in the competitive We estimate to its parts pre-loss restore the vehicle sufficient to parts may us such agree You condition. parts by vehicle’s include either furnished manufac- parts including non- turer or from other sources equipment (Emphasis manufacturers.” in original original.) respect affirm the verdict with to a jury’s
We cannot subclass who were insured under these policyholders First, provisions. pursuant “you agree” language, i.e., expressly agrees parts,” parts insured “such condition, restore to its preloss sufficient a vehicle *** *** “may non-original equipment include from words, agrees In manufacturers.” other the insured by condition” be met “pre-loss promise may specify- court, ing parts. In their brief to this non-OEM in any containing do not how a contract explain, way, permits “you agree” language, expressly which may non-OEM be breached specification parts, have Plaintiffs estab- specification parts. claim, lished, that non-OEM support their specified by State Farm class members’ estimates. were However, “you in view of the agree” language, specification of non-OEM parts, by itself, cannot consti- tute a breach of the “pre-loss condition” promise.
Second, *31 order to establish a breach of the “pre-loss condition” promise, plaintiffs would to have show that the parts or specified Farm, used State whether OEM parts, did not restore the vehicle to its pre- loss A necessary condition. first step making this show- ing would tobe examine each class member’s vehicle to preloss determine its condition. At trial, Timothy Ryles Griglio, plaintiffs’ Paul witnesses, two of expert conceded necessity for such determination. The fol- lowing colloquy took place between Farm’s State counsel and Ryles:
“Q. Ryles. point, Dr. To Good determine whether a particular car condition, has been restored to pre-loss you’d pre-loss to have know what the of condition that car was; right? isn’t to, yes.”
A. need You Griglio made similar exchange concession this counsel: Farm’s “Q. sir, Similarly, know to whether or not a car was pre-loss condition, you restored need would to know pre-loss was, what you? condition of that car wouldn’t Yes, you A. would.” bar,
In the
at
of
preloss
case
the determination
condition of each subclass member’s vehicle would
require
individual
examination
of hundreds
thousands,
millions,
if not
Undoubtedly,
of vehicles.
these
any
examinations would
question
overwhelm
common to
subclass,
it
rendering
impossible
questions
for such
noted,
As
predominate.
class certification is improper
questions predominate
any
unless “common
ques
over
affecting
tions
only individual members.” 735 ILCS 5/2—
801(2) (West 1998).
reason,
For
for
this
a claim
breach of
the preloss
promise
condition
cannot be maintained as a
Augustus Progressive Corp.,
v.
class action. See
2003 Ohio
Casualty
USAA
Schwendeman v.
Insurance
296, ¶25;
(2003);
App.
1,
v.
9, 22-23,
3.
remaining policy
containing the
form is the one
analyzing
quality” promise.
“like kind and
Before
provision,
appears
include the
note that the record
we
policies only
plaintiffs,
of the named
DeFrank and
two
Covington’s policies
Covington.
DeFrank’s and
Both
“pre-loss
“you agree”
contain the
condition”
although
language.
addition,
find a
In
we were unable to
Avery’spolicy
copy
record,
in the
testimonial evidence
Avery’spolicy
“рre-loss
indicates that
also contained the
“you agree” language.
condition” and
regard
remaining
plaintiffs—
With
to the
two named
*32
appear
Shadle and Vickers—the record does not
policies.
record, therefore,
include their
On this
it is
any
plaintiffs
unclear that the contracts
of the named
quality” language.
the
contained
“like kind and
If none
plaintiffs’ policies
of the named
the
kind
contained
“like
quality” language,
State Farm could not have
provision
any
plaintiffs’
breached this
in
of the named
policies. Accordingly, plaintiffs’ claim for breach of the
quality” promise
proof.
“like kind and
fails for lack of
uphold
policy
We cannot
a subclass based on this
form.
“It is
settled that
well
a class cannot be certified unless
plaintiffs
Spring
the named
have a cause of action.”
Mill
Services, Inc.,
Townhomes Ass’n v. Osla Financial
124
(1983),
App.
citing
774,
Ill.
3d
779
Landesman v. General
(1978);
Corp.,
e.g.,
accord,
Motors
“We the or the owner property following ways: of the in one of the pay repair replace property part 2. or or with like quality. repair replacement kind and If the or results quality you pay better than like kind and must for the (Emphases original.) amount of the betterment ***.” (and According to the appellate plaintiffs), “like kind quality,” as stated in this meant “like promise, kind and quality parts.” App. to OEM 321 Ill. 3d at 280. throughout Plaintiffs’ contention this case has been that parts the non-OEM that were at issue categorically were that, counterparts. inferior to their OEM It follows under theory, State Farm’s specification parts could never satisfy obligation pay of “like quality.” kind and In their third amended complaint, matter, plaintiffs alleged: practical [State Farm’s] “As a only by the exclusive obligation could be met requiring use or OEM in repairs factory-authorized parts.” added.) (Emphases view,
In our there are several difficulties with this theory that the “like kind and quality” promise neces- sarily specification parts. breached of non-OEM First, language promise itself contradicts may obligation view that State meet contractual only by specifying OEM If parts. purpose of State “to or promise repair replace property part Farm’s added) quality” (emphasis with like kind and were to parts, of OEM then there is no require specification “like kind and why phrasing quality” reason the indirect provision simply have been used. The could have would be promised specified. Implicit that OEM would *33 likeness or quality” “like kind and is the phrase of one to another. Common sense thing similarity quality” indicates that an item that is of “like kind and item, something but rather very to another is not that of “like kind and to it. quality” “like kind and position contradicting
Also language is the contract ac- parts means OEM quality” In the quality” promise. “like kind and companying above, forth “like kind and as set quality” provision kind immediately following qual- the “like and sentence results ity” repair replacement states: “If the or promise added], than like kind and quality [emphasis better you pay [emphasis must for the amount of the betterment an original] policy language, requires ***.” This which insured to results pay “repair replacement [which] added), in better than like kind and quality” (emphasis a standard of is “better than like presumes quality However, plaintiffs’ reasoning, kind and under quality.” than “like kind and nothing quality.” there is better position by plaintiffs. According Recall the taken all the non-OEM at issue in this case are plaintiffs, parts means, inferior to OEM This of neces- categorically parts. sity, that OEM parts represent highest possible addition, standard of In quality. according plaintiffs, because non-OEM are parts categorically inferior to OEM the “like kind and can parts, quality” promise only be Thus, met OEM specifying parts. because OEM are the best “like kind possible parts, and because the and quality” promise parts, plaintiffs means OEM also necessarily take the kind position that the term “like quality” highest refers to the standard of possible quality.
But this reasoning cannot be correct. State Farm’s policy referring cannot be to OEM it uses when term “like kind and quality” policy because the itself says that quality there is standard of which is better than “like kind and are quality” parts. clearly Plaintiffs incorrect in equating quality” “like kind and with OEM parts. indicated, previously
As State Farm defines “like kind (and quality” differently from appel- *34 142 court). view,
late In State Farm’s kind “like and quality” means “sufficient to pre-loss restore a vehicle to its condition.”5 There is substantial for State legal support Farm’s view. jurisdictions
Courts in other a adopted have similar “like kind interpretation quality.” term and In Co., v. Consumers Siegle Progressive Insurance 819 So. (Fla. 2002), whether, 2d 732 the issue was under “like kind and quality” policy language similar to that in the bar, case at an insurer was to obligated only complete “a repair first-rate which returns the vehicle to its pre- function,” accident level of pеrformance, appearance, and but also to compensate money any the insured diminution market value that resulted from the Siegle, repaired vehicle’s status a as wrecked car. 819 So. 2d at 733. The court ruled that there was no such dual obligation on the of the insurer. The court part explained that, issue, policy language under the at the insurer had a reimbursing through choice of either the insured a money payment paying repair replace to or automobile kind property quality. with other of like and If, court, op- as in the case that was before the the repair chosen, tion liability “the insurer’s was limited to monetary necessary repair amount the car’s func- point 5Plaintiffs to a 1986 version an internal State (GCM which, document, #430), Memo #430 ac General Claims cording plaintiffs, position “like contradicts State Farm’s pre quality” kind and “sufficient to restore vehicle to its means However, Don loss condition.” as State Farm claims consultant trial, at GCM #430 is not contained within the four Porter stated any #430 is corners of State Farm insurance contract. GCM meaning to the of the “like kind therefore extrinsic evidence as finding “like quality” promise. Absent a that the contractual promise ambiguous, is quality” kind and such extrinsic evidence meaning provision. of this contractual See Grz irrelevant to the Co., 216, 2d 223-24 v. Illinois Farmers Insurance 168 Ill. eszczak Co., (1995); Dempsey & Accident Insurance 404 Ill. v. National Life (1949). 423, finding ambiguity. no such 426 We make
143 appearance, with tion commensurate the condition of added.) prior (Emphasis Siegle, the auto to the loss.” 819 promise Thus, view, So. 2d at 739. the court’s repair damaged property quality like kind and obligated meant that the insurer was to restore the preloss Ray vehicle to its condition. See also v. Farmers Exchange, App. 1411, 1418, Insurance 200 Cal. (1988)(“To Rptr. plaintiffs] [that Cal. the extent repaired pre-accident safe, automobile was to its mechani- *35 obligation [defendant’s] cal, condition, and cosmetic policy repair under the of insurance to to ‘like kind and quality’ discharged” (emphasis added)); Berry was v. State Co., Farm Mutual Automobile Insurance 9 S.W.3d (Tex. 2000) (under App. interpre- 884, 894-95 Ct. court’s part Code, tation of the Texas Insurance whether a is of quality” depends age “like kind and on “the or condition prior accident”); of the covered vehicle to the Schwende- Casualty App. man v. Co., USAA Insurance 9, 116 Wash. (2003) (under policy 22-23, 1, 65 E3d the insurance at replacement part issue, “whether is of ‘like kind and quality’ part replaces necessarily requires to the it ascertaining the condition of the vehicle before the ac- age, mileage, physical cident in terms of its condi- quality replacement part”); tion, and the the of Snell v. (Md. Corp., slip op. 202160, Geico No. Civ. at 6 Cir. Ct. 2001) August (preloss condition of each individual vehicle must be established in order to determine quality” promise whether insurer’s “like kind and breached). “pre-loss State Farm maintains that condition” is quality,” what defines “like kind and rather than the way other around. For State Farm it is irrelevant whether parts quality non-OEM are of kind like to OEM parts. parts speci- The determinative issue is whether the preloss fied are sufficient to the restore vehicle to its shortly condition, i.e., the condition of the vehicle before qual- of “like kind and Under this definition the accident. not neces- parts of non-OEM would ity,” specification kind and quality” promise. breach the “like sarily “like kind and Farm. The term agree We with State meant “suf- policies, in the relevant as used quality,” condition.” We pre-loss vehicle to its ficient to restore a of non-OEM specification therefore conclude a breach of the necessarily constitute parts would Thus, affirm we cannot quality” promise. “like kind and to a respect verdict with breach of contract jury’s insured under policyholders consisting subclass provision. may not sum, breach of contract verdict jury’s
In policyholders any comprised subclass upheld be forms. policy of the individual relevant any insured under did not Farm’s specification or the policies the Massachusetts constitute a breach of expressly neither of which policies, risk” “assigned did the quality. Nor any part standard imposed a breach of constitute of non-OEM specification “you and the condition” containing “pre-loss policies language, “you agree” Under agree” provisions. may promise condition” “pre-loss that the agrees insured *36 Further, parts. by specifying met non-OEM be establish a breach needed to proof individualized the com- destroy would promise condition” “pre-loss Finally, plaintiffs’ of a class action. monality required quality” promise kind and the “like claim for breach of fails for First, the claim number of reasons. fails for a Farm’s addition, specification In lack of proof. poli- a breach of did constitute parts quality” provision. kind and the “like containing cies in the relevant as used quality,” kind and The term “like pre- to its restore a vehicle to meant “sufficient policies, long so is satisfied оbligation, This which condition.” loss to its the vehicle to restore are sufficient parts as the preaccident necessarily by condition, is not breached specification parts. Moreover, of non-OEM as noted proof required above, the individualized to establish “pre-loss promise breach of the condition” would any questions overwhelm subclass, common to the thus prohibiting certification of the claim as a class action. Damages
4. why There is an additional reason the breach of may upheld regard any contract verdict not be damages. subclass. Plaintiffs have failed to establish SpecificationDamages a. types damages plaintiff
Two were awarded to the (1) “specification,” class for breach of direct, contract: (2) damages, consequential, or “installation,” dam- ages. type damages, The first which is based on plaintiffs’ theory that the contract was breached specification parts, of non-OEM was calculated as the cost difference between the OEM specified claimed should have been and the non-OEM repair that State Farm listed on the estimate. Ac- cording plaintiffs, figure constituted the amount by specifyingcheaper that State [non-OEM] Farm “saved parts.” damages expert, Iqbal Plaintiffs’ Dr. Mathur, specification damages calculated that for the class as a plaintiffs’ theory, whole $243,700,000. would total Under everyone eligible specification in the class was to receive damages. plaintiffs’ theory “specification view,
In our dam- ages” theory, has no basis in the law. Under this loss oc- part specified curs when a non-OEM on the estimate part rather than when the is installed on the vehicle. damages expert, Plaintiffs’ Mathur, Dr. conceded at trial specification damages apply any class member repair specified part, whose regard- estimate a non-OEM part repair less of whether a non-OEM was used in the *37 quoted had been Thus, who policyholder of the vehicle. specifica- estimate could receive on his part a non-OEM (1) with an repaired was if his vehicle damages tion even (2) to its condi- preloss car was restored his part, OEM damages specification reasoning, this same By tion. on the was part specified a non-OEM apply would where the policyholder in the but repair, and was used estimate If it value. for fair market sold his vehicle subsequently in a part of the non-OEM simple specification is the irrelevant, damage, it that inflicts estimate repair afterwards, even happens theory, what plaintiffs’ under damage. no actual ultimately suffers if the policyholder that, focus on given this be noted It should installation, of non-OEM than the rather specification, in theory stands specification-damages parts, plaintiffs’ as well complaint, third amended to their contrast by the as certified class plaintiff the definition plaintiffs complaint, amended In their third circuit court. in terms of contract alleged Farm’s breach describe in repairs parts non-OEM Farm’s use of of State parts: of such alia, receipt in result, plaintiffs’ inter using practice common Farm’s “Defendant State a breach inferior, parts repairs in constitutes imitation parts such either received insureds who obligation to all price between pay the difference obligated or were actually installed.” parts and the OEM imitation added.) (Emphases class, court, defining plaintiff
Similarly, the circuit on installed non-OEM who had refers on of plaintiffs in favor In the judgment their vehicles. claim, class plaintiff of contract their breach part, as: defined, in pertinent residing States, except those United persons “All 28, 1987, Tennessee, who, July between and in Arkansas (1) vehicle 1998, were insured February State Farm by Defendant policy issued casualty insurance (2) to their repairs pursuant vehicle a claim for made non-factory authorized had and/or policy and *38 Manufacturer) (Original Equipment parts’ ‘crash installed monetary on their vehicles or else received compensation determined in parts.” (Emphasis relation to the cost of such added.)
Given contrast between the focus of the specification-damages theory on the listing estimate’s hand, parts, non-OEM on the one and the references in complaint and the class definition to the use or instal- other, lation of non-OEM parts, on the a question arises why as to plaintiffs devised their specification-damages theory the first instance. The in plaintiffs’ answer lies belated they realization that would be unable to establish damages and still maintain the commonality required of If, class action. in keeping with complaint and the definition, class loss did not occur until parts installed, were plaintiffs would need to show which class members’ vehicles had actually been repaired with non- OEM parts, as well as which class members still owned vehicles that had been repaired with non-OEM parts. However, State Farm’s records did not contain this infor- mation.6 Accordingly, any dеterminations as to which plaintiffs were eligible damages would require examination of each individual class member’s vehicle and repair. Such an however, undertaking, would mean that questions affecting individual class members would predominate over common questions, destroying the com- monality required for a class action. See 735 ILCS 5/2— affirming 6In class, certification of the ap nationwide pellate “[T]hrough court stated: its own records State Farm is capable identifying class parts members who have had non-OEM installed on their App. vehicles.” However, 321 Ill. 3d at 283. in its appellate court, brief to the flatly State Farm contradicted this as sertion: “State Farm’s records do not show which class members’ actually vehicles had repaired been parts, with non-OEM let alone which class members still owned such appellate vehicles.” The explained court never discrepancy between its statement and State Farm’s.
148 801(2) (West Inc., 1998); Toyota, Continental Magro v. (1977). Ill. dilemma, created their
Faced with alleged under which the theory, specification-damages damages occurred resulting of contract and the breach estimates, in repair were parts specified when non-OEM If installed. parts the non-OEM were rather than when specified, were occurred when non-OEM damage individual as to inquiry no need for there would be in the of a actually repair used such were whether owned vehicle, the claimant still or whether particular plaintiffs’ specification- Under question. the vehicle the non-OEM damage occurred when damages theory, the matter estimate, and it did not on the was listed part *39 in the actually repair used part whether owned the vehicle. policyholder still whether theory damages ap- specification plaintiffs’ While necessary for a class commonality peared preserve denoting of action, goal expense this at the it achieved any injury that sense dictates damages. real Common inflicted, by would be parts resulting from estimate, but in an of such the mere specification pos- of a vehicle. No repair in the the use of the because simply to a policyholder could come damage sible Only estimate. repair on his was listed part a non-OEM if it installed, only were actually part if the were to its the vehicle failed to restore part shown that that condition, be said possibly could it preloss damage. suffered policyholder Mathur, Dr. damages expert, Indeed, own plaintiffs’ theory specifica- of that plaintiffs’ at trial acknowledged cross- During sense. no economic made damages tion place took between colloquy examination, following Mathur: and Dr. counsel State Farm’s all that which is So, perspective, “Q. from an economic about, to tell us you would have testify qualified to you are your theory damages of direct doesn’t make economic true, sense; isn’t that sir?
A. That is correct. economist,
Q. you. So, you, according Thank as an lawyer, using plaintiffs’ lawyers and not as a theories that give you, policyholder damages have tried to is a entitled merely quoted part because State Farm a non-OEM on estimate, long their as State Farm did restore the car to pre-loss condition? added.) (Emphasis A. No.” agree plaintiffs’ damages expert plain- We theory specification damages tiffs’ of makes no sense. In view, plaintiffs’ our notion specification damages theory contravenes the basic for breach of damages contract, under which the claimant must establish an actual loss damages resulting or measurable from the breach in order to See, recover. Fire & e.g., Economy Services, Co. v. GAB Casualty Inc., Business 155 Ill. App. (1987). law, reject, We as a matter of plaintiffs’ theory of specification damages.
b. Installation Damages type second of contract damages awarded was installation damages. Unlike “specification” damages, “installation” damages were derived from a theory based However, on an actual loss. below, as explained evidence offered in support plaintiffs’ dam- installation ages was so speculative and uncertain awarding damages based on this evidence arbitrary constituted an deprivation property violation of State Farm’s due *40 process rights. See State Farm Mutual Automobile Insur- 416, ance Co. v. Campbell, 408, 538 U.S. 155 L. Ed. 2d (2003) (due 585, 600, 123 S. Ct. 1519-20 process clause of the fourteenth prohibits imposition amendment of arbitrary punishments). damages
Installation consisted of the additional costs to by plaintiffs be incurred in non-OEM removing parts from their vehicles and them OEM replacing parts. with in damages
Included these was an amount to cover two days car parts being rental while the non-OEM were those replaced. Only actually class members who had installed their parts eligible non-OEM on vehicles were damages. expert, to receive installation Plaintiffs’ Dr. Mathur, that, reasons, explained variety many for a had plaintiffs parts speсified who non-OEM on their not, fact, repair estimates did have non-OEM parts installed on their vehicles. These plaintiffs were Thus, for installation eligible damages. order to damages calculate the amount of installation for the class, it estimate necessary nationwide number of for such plaintiffs eligible damages. who were that, Mathur estimated of the total number of quoted parts, percentage who were non-OEM whose were, fact, repaired parts vehicles with non-OEM words, although from In other each ranged 50% to 92%. non- estimate, definition, specified class member’s OEM OEM actually were installed on the parts, class members’ cars as often as of the time. Mathur 50% that, view, figure repairs testified in his the actual for us- was closer to 92% than 50%. ing parts probably that, He calculated if 50% of class members received non- for the as a whole parts, damages OEM installation class $658,450,000. If, hand, would total on the other cor- 92%, damages installation would total figure rect were billion. $1.2 that, cross-examination, acknowledged Mathur
On necessary it was regard damages, to installation installed part determine whether a non-OEM had been However, Mathur conceded on a class member’s vehicle. this determination. Mathur way making that he had no opinion” that he had “no how acknowledged also had non-OEM installed on many class members later received fair market value their vehicles but as to instal- them. Mathur admitted that his calculations
151 as bil- by as much damages might $1 be incorrect lation lion. counsel between following exchange place took
The and Mathur. for State Farm simply no perspective, there is
“Q. economic From an are members of the class identify which way you for right? damages; isn’t entitled data, really I cannot Well, and so I don’t have the A. identify members are. who the class identify is Therefore, way you to who
Q. there is no for right, damages; isn’t that sir? is not entitled to and who A. That is correct.”7 $212,440,000 in installa- jury awarded less than damages. This was about billion $1 tion estimate. high-end Mathur’s infer- to use statistical acceptable it has become
While in a class action damages in determining aggregate ence Newberg on Class Newberg, 3 A. Conte & H. (e.g., suit (4th 2002)), it also is understood 10:2, § Actions at 478 ed. an approach of error involved such possibility that the See, e.g., Bell v. Farm- may exceed constitutional bounds. 715, 746-57, App. 115 Cal. 4th Exchange, ers Insurance (2004). Bell, 544, example, Cal. 571-80 In Rptr. rejected aggregate damages, a determination inaccuracy of the estimate of noting possible that “the an issue of unpaid compensation presents double-time Bell, 756, App. constitutional dimension.” 115 Cal. 4th at Inc., U.S.A., In 9 Cal. at 579. See also re Chevron Rptr. (5th 1997) (“a procedure 109 F.3d 1020-21 Cir. *** inherently rights unfair when the substantive lacks the defendant are resolved in a manner reliability of its level of confidence requisite result”). Werner, director in State Farm’s research
7John an assistant division, that, company’s computer system could testified while the estimate, tell part specified on an it could not tell what kind of was non-OEM, actually part, what kind of whether OEM or was policyholder’s on a vehicle. installed range high- In bar, the case at between Mathur’s damages end and low-end estimates for installation previously half a Moreover, billion dollars. indicated, Mathur concededthat his estimates could be incorrect process clearly as much as A billion. due $1 violation is *42 determining damages established where the method for potential aggregate has the to increase a defendant’s li- ability by as much as billion $1 over what is warranted. App. Rptr. Bell, See 115 Cal. 4th 751-53, at 9 Cal. at 575- (9th 76; Hilao v. Marcos, 767, Estate 103 F.3d Cir. of 1996). Notwithstanding foregoing, appellate the the court danger below concluded that there was “little that ineligible class members will receive a share of this award [installation damages].” App. sup- 321 Ill. 3d at 290. In port appellate pointed, view, of this the alia, inter jury’s installation-damages to the size of the award, “approximately which was billion $1 less than the expert’s App. estimate.” 321 Ill. 3d at 289. Unlike the appellate court, find we little comfort in the size of the jury’s installation-damages view, award. In our it is troubling, reassuring, rather than that Mathur’s half- range damages billion-dollar by for installation was found jury the narrow, to be too another half-billion dol- jury In words, lars. other the had so little confidence in damages even the lowest estimate for installation jury necessary figure by found it to reduce $500 suggests jury’s aggregate million. This that the award of damages expert based, installation was not on Mathur’s testimony, pure speculation conjecture. but on potential inaccuracy for in Mathur’s installation- damages great simply support estimates is too an damages. App. Bell, 751-56, award of See 115 Cal. 4th at Rptr. expert testimony sup- 9 Cal. 3d at 575-79.While port damages may prob- be awards couched terms of possibilities, abilities or there is a need for reasonable certainty testimony. degree v. See Brown in such Transportation Chicago Co., 162 Ill. & North Western (1987). given App. Here, fact that 937-38 margin estimate conceded of error his Mathur damages dol- a billion amount of installation was certainty requisite degree lack- lars, of reasonable upholding ing. view, In no valid basis for our there is damages class installation for the nationwide award of awarding damages with and, thus, no valid such basis regard ato subclass. jury contract sum,
In on the breach of verdict incorrectly jury cannot be affirmed. The claim language operative Farm’s that the in State instructed interpreta- given policy forms a uniform various could be any Further, be cannot affirmed for tion. verdict comprised policyholders insured who were subclass any policy forms. The of the relevant individual under plaintiffs’ fails is that claim for breach of contract reason specification on the merits. of non-OEM State Farm’s *43 any of the relevant did not constitute a breach of policies policy the forms, whether at issue were individual containing quality” promise, kind and those the “like containing “you “pre-loss and the those condition” policies agree” language, or at issue were whether “assigned policies. Moreover, risk” the Massachusetts or plaintiffs damages. With have failed establish contract to damages, regard specification in the to there is no basis theory. addition, this In while the installation law for damages an actual from a model based on were derived support too loss, the evidence in of them was offered support speculative of dam- and to an award uncertain Accordingly, jury’s ages. verdict that we reverse obligations. of our In view Farm breached contractual plaintiffs’ disposition claim, reach need not contract we arguments regard other to breach State Farm’s contract.
154
One point by response. raised the dissent merits dissent states that has this court over backwards” “ben[t] (216 (Free- to in State rule Farm’s favor Ill. 2d at man, J., in and concurring part part, joined in dissenting Kilbride, by J.)), that we have “humili- “vilifi[ed]” and (216 (Free- ated” plaintiffs’ counsel Ill. 2d at man, J., concurring in and part dissenting part, joined in J.)) (216 Kilbride, by and “demeaned” the courts below J., Ill. (Freeman, 2d at 238 concurring in and dis- part part, in senting joined by Kilbride, J.)), and that result in this case has not been an arrived at even- law, handed application of the but court because this has “a developed new to hostility” class actions wishes to a message” “send[ ] that “different will standards” be applied to cases arising out Fifth District of our (216 appellate (Freeman, 2d J., Ill. at 237-38 in part and concurring dissenting by Kil- part, joined J.)).8 bride, In words, other according dissent, to the court’s decision to plaintiffs’ reverse verdict on breach contract count is the of bias and result extralegal This is emphatically considerations. not true. This has appeal been decided pursuant to same standards that are applied every brought case that Moreover, before this court. we any have not fashioned changes legal actions, governing rules class let alone ones are “hostile” to this device. procedural In plaintiffs’ deciding breach contract claim we have but, instead, not acted with bias or favoritism have ap- plied the objectively law facts of record with no agrees
8The dissent the verdict in favor of on entirety. the consumer fraud count must be reversed in its 216 Ill. (Freeman, J., concurring part dissenting at 234-35 J.). part, by Kilbride, Thus, joined the dissent’s statement that this *44 employing court is now “different standards” to class action cases (216 (Freeman, J., arising the Fifth Ill. out of District 2d at 238 Kilbride, J.)), concurring part dissenting part, joined by only apply alleging to must those cases breach of contract. dissent’s result. The just a to reach other than purpose and inappropri- are unfounded contrary assertions ate. Act Fraud
II. Consumer regarding arguments raises several State Farm violated that State judgment circuit court’s Act Practices Business Deceptive Fraud and Consumer (West (815 Act) (Consumer ILCS Fraud Act or 505/2 examine 1998)). we addressing arguments, these Before fraud consumer background plaintiffs’ the factual in detail. count action. fraud as a consumer begin did not
This case action complaint class originally pled, plaintiffs’ As of contract. for breach single count only contained alleged that II, they in which added count Plaintiffs Act, in their “Second Fraud the Consumer Farm violated (A).” Complaint Class Action Amended was subse- complaint their class action Although amended, plaintiffs’ portion the relevant quently In their unchanged. fraud count remained consumer count, following: alleged fraud plaintiffs consumer engaged practices that defendant “Among the unlawful parts in installing non-OEM crash practice inferior, parts, that were substandard its insureds’ vehicles obligated to and was promised Farm had when State using only parts of damaged vehicles repairs on undertake to their as to restore the vehicles quality, like kind and so pre-loss condition. *** acts, or way deceptive pretenses, By of false or they plaintiffs defendant did not disclose practices, а) inferior, parts that diminished using imitation were: b) cheaper vehicles; paying the cost of value of their and/or refusing pay for OEM parts when available imitation repair their thereby members parts, causing class and/or difference.” to absorb the cost shops count, fraud their consumer After added duplicate simply that it was argued State Farm and, therefore, be should count breach of contract *45 156
dismissed. Farm pointed particular State in to the language in plaintiffs’ complaint which asserts that State Farm violated the by installing Consumer Fraud Act inferior parts despite having “promised” to of use “like language, kind and This quality.”9 according to Farm, nothing State a was more than restatement Farm plaintiffs State had breached a contractual And, promise. argued, under decisions such Co., as DeLeon v. Construction 55 F. Supp. Beneficial Gatlin, (N.D. Petri v. 819, 1999), 826 Ill. Supp. F. (N.D. 1997), 967-68 Ill. of a breach contractual promise cannot serve as the for statutory basis consumer fraud action. argument
Confronted with the its consumer fraud count simply was a redressed version of its breach count, of contract plaintiffs retreated somewhat from the language complaint. in their the During hearing on State decertify Farm’s motion to the class and motions for sum- mary judgment, to the plaintiffs clarified circuit court the consumer fraud count premised was not on “the
9Plaintiffs in filings made similar statements in various other example, circuit in Reply the court. For “Class Plaintiffs’ to State Farm’s Informational Memorandum of on Plaintiffs’ Law Causes Action,” plaintiffs following: wrote the “State Farm contends only vaguely any specific misrepre that ‘Plaintiffs have alluded to sentation or See Def. 13. This omission.’ Mem. at contention repeatedly ludicrous. Plaintiffs have that State stated Farm’s practice promising policies to Plaintiffs’ restore Plaintiffs’ pre-loss by using parts to qual vehicles condition like kind and ity, using but nonetheless inferior crash which quality not of like kind and and which did not were restore pre-loss Plaintiffs’ their vehicles to condition violated the CFA Similarly, opposition Act].” [Consumer Fraud in their written to summary judgment on State Farm’s motions class claims and against plaintiffs, plaintiffs named identified fraudulent misrepresentation promis[e] policy “State to Farm’s pre-loss by using parts to restore Plaintiffs’ vehicles condition quality.” kind like interpretation”
drafting, aof or sale or even the according plaintiffs, the consumer Instead, contract. representations and actions, on count based fraud was process, during i.e., claims which occurred omissions brought policyholder her to an his or car after the repair. body shop adjuster an estimate and receive By focusing emphasis significant. on This shift in during claims which statements and actions occurred promises process, contract, contained rather than persuade circuit that the were able *46 independent truly was from the consumer fraud count noted, circuit Thus, of count. as the breach contract “say jury contract, but that could there’s breach of the necessarily Fraud.” mean there’s been Consumer doesn’t argument support made In their that of during representations the and omissions fraudulent process, plaintiffs The claims on four documents. relied given the estimate to each of the first document was plaintiffs his or had been named after her car examined adjuster. a State Farm claims Each these estimates computer-generated printout listed consisted of a that parts put along car, that were to be on the prices parts. give with of the The estimates also part. parts type source or of each listed as Non-OEM are “Quality Replacement parts Parts,” while OEM are listed along Although name. the manufacturer’s plaintiffs’ named estimates because of the indi- varied repairs, vidual nature of the each estimate used the term part.” example, “quality replacement Thus, on for plaintiff Type” estimate, Sam DeFrank’s the “Part “Quality the various on the estimate is listed as Replacement Part,” “GM or “Order From Dealer.” Part” alleged class, Plaintiffs that each like De- member Frank, an included the term received estimate replacement part.” “quality copyA of DeFrank’s estimate opinion Appendix A. is attached to this as Stamped on DeFrank’s estimate left- upper hand page words, corner of the first are the “Read the Attached Regarding Quality Information Replacement Parts Not Made The By Original Equipment Manufac- document, turer.” This statement refers to a known as a sheet,” “half which was to repair attached estimates included parts. On half sheet is a states, which in part, disclosure “THIS ESTIMATE HAS BEEN PREPARED BASED [sic] ON THE USE OF AFTERMARKET CRASH SUPPLIED BY A PARTS SOURCE OTHER THAN THE MANUFACTURER OF YOUR MOTOR VEHICLE.” A sheet copy the half is attached to this as opinion Appendix B. second by plaintiffs item relied was a upon produced by Replace-
brochure State Farm “Quality titled allegedly ment Parts.” This brochure given each class, member the consumer fraud usually at time brochure, the insured received his or her estimate. In this replace- State Farm refers to non-OEM “quality “[o]nly ment and states that those parts” parts which very high acceptable.” meet criteria are performance our Also included in the guarantee brochure is a which states policyholder if the with the “fit and unsatisfied corrosion resistance qualities” replacement parts, *47 then Farm repair replace State will or the at no parts cost to the A the is policyholder. copy of brochure at- tached to this C. opinion Appendix brochure,
Unlike the estimates and the the third by fourth items identified in a plaintiffs — articles magazine given and a to the newsletter —were Instead, the policyholders during process. claims these promotional items materials were informational by used materials produced State Farm. Plaintiffs these marketing to State Farm’s and use of the term illustrate parts.” “quality replacement the is plaintiffs upon
The newsletter which relied Neighbor “Fall 1993.” and is dated News” titled “Good of a in the form is of record is The newsletter which mailing agent Farm of a State a return address and has mailing Michigan. on the newslet- address The based “Policyholder Policyholder generically, Name; ter states high discussing price of the A brief article Address.” page appears parts of the newsletter. on the third OEM “High quote: there is this In middle of article why major prices parts it costs so much is a reason for why damaged. repair that’s a been And car that’s replacement ‘quality big call is a fan of we Farm what parts parts.’ are to—or better than —the These identical parts, original equipment a lot but cost manufacturers’ less.” by plaintiffs is
The and final item identified fourth magazine April called 1990 issue of a an article from publication circulated to State “Reflector,” a State Farm “Quality Replace- agents. issue, The article at titled gives general a of State Farm’s Parts,” ment overview parts. title to the article use of non-OEM Underneath the bumpers appears caption: on the cover “One of by original produced equipment of this Reflector quality replacement part The manufacturer. other is produced by company. another The same true pairs [of shown]. are identical other thing except price.” for one —the plaintiffs’ the actions taken noted, As focus on during process possible it the claims made State Farm pursue plaintiffs separate for count consumer for objective possible important It made a second fraud. also certification. Because consumer —class representations the uniform fraud claim was based on contained in State Farm’s written claims documents myriad representa- example, not, oral on the different during sales the class members’ tions that occurred policies, plaintiffs the circuit court were able convince
that there was a common question predomi- of fact which nated over the In class. its order certifying the nationwide (in consumer fraud class language taken verbatim from plaintiffs’ filing certification), of support the circuit uniformity court stressed the representations of the made process: during claims
“As allegations, to the consumer fraud pre the facts hearing sented at the certification on State Farm’s methods disclosing policyholders of its use of non-OEM also demonstrates course of all conduct common to class estimate, members. When such are on an used given policyholder Farm discussing is State brochure of parts. 24; use non-OEM Defendant’s Exhibit Certifica at Hearing tion stamped 0124-25. estimate is then indicating the use of parts. non-OEM Defendant’s Exhibit State promoted 27. Farm has also use of ‘qual the term ity replacement parts’ promote nationwide in an effort to parts. its substitution non-OEM for OEM Plaintiffs’ 116.[10] Exhibits 115 and The Court finds evidence introduced at the hearing certification demonstrate essentially ‘a series of transactions,’ Miner, 19, identical 87 Ill. at 428 N.E.2d insureds, at between State Farm and its which routinely parts.” transactions in the result use order, In its certification the circuit court also determined could, Fraud Act Consumer as a statutory matter of interpretation, applied be to members plaintiff class who did not reside in Illinois. The court further applying concluded that the Consumer Fraud Act to entire presented class no choice-of-law problems. constitutional In subsequent its “Order Regarding be Applied Claims,” Law to to Class Members’ the circuit explained reasoning: respect
“With to the claims under the Illinois Consumer 10Plaintiffs’exhibits 115 and 116 are internal two replacement parts.” “quality memoranda which the term discuss allegation There no these memoranda were ever seen any member the class. no true conflicts Act, finds there are the court
Fraud
*49
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Based Act be nated, ap- and that Fraud could Consumer residents, the certified a plied to out-of-state circuit court consisting class nationwide States, except residing persons in the those
“[a]ll United 28, Tennessee, who, 1994, July between in Arkansas and (1) 24, February by insured a vehicle and were casualty policy by issued State Farm insurance Defendant (2) pursuant repairs made a claim for vehicle their and non-factory and policy had authorized non-OEM and/or *** parts’ ‘crash installed on their vehicles or else received monetary compensation determined in relation to the cost parts.” of such trial, plaintiffs five to the
At named testified representations made actions taken State Farm and during proceedings. plaintiff each their claims Each estimate, car-repair stated that he or she had received a they “Qual- and received the all but one stated that had in the ity point repair Parts” brochure. The Replacement process brochure, at which the received they it, whether read varied from plaintiff to plaintiff. Shadle, example, testified that he his received estimate and “Quality Replacement Parts” brochure adjuster when the claims car, first looked at his but that did he not read the Avery brochure. stated that he received his estimate and brochure mail after tak- his car an ing adjuster, brochure, that he read the he “extremely concerned” about what said. it Vickers first saw her written estimate when she went pick up her car after it was repaired, although body her told shop early process her in the repair were did going say to be used. She whether she Vickers, received read the brochure. Like Covington started, did not see his prior repairs estimate to the being *50 although body shop his informed him that non-OEM being were Covington used. received and read his brochure after the repairs were finished. DeFrank testi- fied that he received his and estimate brochure from the adjuster prior claims the to of his truck. repair pickup read He the brochure and became “very upset.” Notably, none of the five plaintiffs they saw, testified that read Neighbor were aware of the articles the “Good News” magazine. newsletter or the “Reflector” trial, At the conclusion of the circuit found that Farm had State violated the Consumer Fraud Act with plaintiffs to the five named and the as a respect class order, In judgment whole. circuit the court noted the could violation of Consumer Fraud Act not be proven by showing a simply breach of contractual promise: evidence, court, finds,
“The after considering all the as did jury, that State did breach its contract with plaintiffs, parts’ specified the non-OEM ‘crash and by quality’ used State Farm were not of ‘like kind and and plaintiffs’ pre-loss did not to condi- restore vehicles their required by tion as the insurance contract between State not findings do on their plaintiffs. These Farm and the now The court must a violation of the Act. own establish the ele- also establishes the evidence consider whether ments, prove a viola- above, required which are forth set Act.” Fraud tion the Consumer forth it set what above, the circuit court stating After State by acts deceptive perpetrated were the concluded court stated: Farm. The circuit III of II and Count allege, under Count plaintiffs “The Complaint, Action that State the Third Amended Class [’] Fraud Act. Plaintiffs Farm violated Consumer include, limitation, that State Farm allegations without on the parts’ plaintiffs’ ‘crash inferior non-OEM installed policies its insurance obligated it was under vehicles when of ‘like kind and parts’ ‘crash plaintiffs with the to use plaintiffs’ their quality’ vehicles to which would restore failed to disclose ‘pre-loss condition’ and that State Farm using cheaper, paying it and plaintiffs parts’ repair plaintiffs’ vehicles. inferior non-OEM ‘crash considering evidence admit- testimony and After all trial, proven have ted at the court finds that the Consumer Fraud Act and that that State Farm violated the plaintiffs’ Farm bar none of the defenses asserted State right Act or reduce the amount to recover under the recovery. plaintiffs’ Farm, prior during period class for the
State to and Fraud that the non-OEM plaintiffs, Consumer Act knew parts’ specifying policyholders’ repair ‘сrash it was on its quality’ kind not estimates were of ‘like would ‘pre-loss policyholders’ restore their vehicles to condition.’ knowledge inferiority of the non-OEM State Farm’s testimony clearly ‘crash of wit- parts’ [sic] shown documents, docu- nesses, Farm’s internal CAPA own *51 (State in the of ments Farm was instrumental creation certify quality to non- purpose CAPA. CAPA’s stated manage- Farm officers and parts’ OEM ‘crash and State class prior during on to and the ment served CAPA’sboard plaintiffs) of which period Fraud Act State for Consumer documents, knowledge, all of which Farm had and other the court into and in trial appear were admitted evidence telling policyholders of the known record. Rather than its problems with the parts,’ including pos- non-OEM ‘crash safety concerns, sible Farm to adopt State chose and use on Parts,’ misleading ‘Quality its estimates the term Replacement policyholders,
and to tell its in various written docu- evidence, ments which were into admitted that the than, good, Further, were as parts. better OEM writ- the ten on stamped repair disclosures or attached to the estimates or which repair were delivered with the esti- mates, nothing policyholder did to the advise State Farm of inferiority parts. Finally, the of the State Farm’s ‘Guaran- unfairly tee’ and improperly placed the burden securing of quality repair policyholder, on the not State Farm. State is a company oper- Farm mutual insurance which for policyholders. ates cupies the benefit of oc- its State Farm position policyholders, pay trust with its who premiums required are all entitled receive promises benefits provide its insurance contract with them. State Farm violated this trust. Farm, light knowledge court finds that State of its inferiority parts,’ of non-OEM ‘crash misrepresented, concealed, suppressed or concerning omitted material facts parts,’ the non-OEM ‘crash the intent policyholders rely upon deceptions, [sic] on these in viola- tion Act.” Consumer Fraud In fashion, succinct the circuit also court held deceptive State Farm’s had proximately acts caused the named plaintiffs the class as a actual damages whole and that the actual same damages were defined they terms as under were the breach of contract count: “The proximate court further that as a direct and finds result of State Farm’s Consumer Fraud violation Act, injured plaintiffs were and incurred dam- actual ages; namely specification/direct damages and installa- which damages during period tion occurred the class plaintiffs.” Consumer Fraud Act Because the consumer fraud were identical damages court damages, to the breach contract circuit damages reasoned that an award of actual for consumer recovery. fraud would constitute a double The circuit therefore declined award “actual
165 2002)) 505/10a(a) (West (815 ILCS damages” economic did, The circuit court Fraud Act. the Consumer under in “disgorgement” million however, $130 award damages. million in punitive and damages $600 circuit affirmed the court appeal, appellate On the class consumer a for certification of nationwide court’s held court court, appellate the As the circuit fraud. for the predominated of fact question that common practice specify- uniform State Farm’s upon class based providing insureds with ing parts non-OEM Parts” “Quality Replacement and a written estimate brochure: claim, record
“In the regard to consumer-fraud ongoing engaged that in an contained evidence State Farm nationwide, specified it inferior course of in which conduct parts cheaper and parts whenever those were inferior, available, parts Farm State knew those were policyholders did not inform its that State Farm af- problems parts, those and that by firmatively misrepresented condition of those damage assuring estimates and policyholders the—on specified only ‘quality replacement it brochures —that guaranteed it at parts’ and that no additional App. cost.” 321 Ill. 3d at 280-81. court,
Like the also held appellate circuit court applied that the Fraud be consum- Consumer Act could residing ers out-of-state. Martin v. Com- Citing Heinhold modities, (1987), 2d Inc., 117 Ill. appellate determined that consumers are “permitted non-Illinois pursue against an action under the Act a resident deceptive practices [are] defendant acts and where 3d at App. ap- in Illinois.” 321 Ill. 281. perpetrated pellate court then concluded: “The evidence demon- in Il- deceptive practices strates claims occurred It practices linois. was in Illinois that the claims were and procedures implementation pre- devised were 3d App. for dissemination other states.” 321 Ill. pared circuit Finally, appellate at 282. court affirmed the finding court’s there were “no true conflicts” between the Consumer Fraud Act and other states’ consumer fraud significant laws that “Illinois has contacts to the claims аsserted each class member.” App. this, 321 Ill. 282. at From the appellate court concluded that there was no constitutional barrier to ap- *53 plying the Consumer Fraud Act to the plaintiffs claims of who resided 321 3d App. out-of-state. Ill. at 282-83. respect claim,
With to the merits of State Farm its repeated argument appellate to the court that plaintiffs’ consumer fraud claim more nothing was than a restatement of the breach of Citing contract claim. several decisions the appellate support from court of including Queen this argument, Zankle v. Landscap- Anne 308, (2000), 311 Ill. 312 ing, App. 3d State Farm argued that the trial finding court’s liability under Consumer Fraud should appellate Act be reversed. The rejected court contention, finding this that “[t]he evidence of State Farm’s deceptive practices claims moves beyond this mere case a contract breach.” 321 Ill. App. (quote 3d portion opinion 269 contained of the 23). unpublished Supreme under Rule Court Farm argued appellate also to the that it court was liable Fraud for the not under the Consumer Act af- representations firmative it made to because therefore, were representations merely and, those puffing appellate rejected argu- actionable. The court this ment, stating: view, representations
“In our assigned [State Farm’s] parts they possess. ‘virtues’ to non-OEM that did not See Acura, 891, Page App. Totz v. Continental Du 236 Ill. 3d (1992); Corp., Countrywide Funding 905 v. 287 Rumford (1997). 330, They representations 3d are App. Ill. 336 policyholder interpreted would have as fact.” reasonable App. (quote portion in a 321 Ill. 3d 269 contained 23). opinion unpublished Supreme under Court Rule Finally, argued appellate State Farm court that
167 the ac- to establish insufficient the evidence dur- occurred which or omissions tions, representations any injury caused proximately process claims ing rejected The appellate the class members. too: argument non-OEM evidence that presented “Plaintiffs inferior, that categorically specified were Farm
which State to be that it knew specified non-OEM State inferior, policyholders not inform Farm did that State inferior, specified were parts it that the non-OEM estimates, in its on its represented knowingly State Farm brochures, through its Part[s]’ ‘Quality Replacement equal quality parts were that these non-OEM estimators evidence that State parts. There is than OEM or better class led numerous misrepresentations Farm’s material parts specified blindly accept the members to of those inferior condition (i.e., knowledge of the without 68-69; Johnston v. Perona, App. Ill. 3d at parts). See Maintenance, App. 250 Ill. Organization Health Anchor (1993). overwhelming evidence There is in a policyholders of its deception calculated State Farm’s promises disregard express of its written deliberate was deliberate policies in the issued. The deceit contained *54 obtaining purpose universally employed and for an ill- unearned, monetary gain. This was illegitimate trusted gain, expense persons that gotten acquired at honest, fair treatment. upon relied State Farm and support the trial There an abundance of evidence injuries members’ were finding that the class court’s by deceptive Farm’s conduct.” proximately caused State portion App. (quote contained 321 Ill. 3d 269 23). Rule unpublished Supreme under Court opinion court affirmed reasoning, appellate Based on holding that State of the circuit court judgment The appellate Fraud Act. had the Consumer violated puni- million affirmed the circuit court’s $600 court also However, the court reversed appellate damage tive award. holding that damages, in disgorgement million $130 recovery. double impermissible it an constituted Farm then appealed.
On appeal, State Farm contests the circuit court’s certification of a nationwide class, consumer fraud well as the circuit court’s judgment favor of on the examine, merits. We first however, the nature of plaintiffs’ consumer fraud claim.
A. Consumer Fraud Claim Plaintiffs’ Surprisingly, although plaintiffs’ allegation of con- sumer fraud has been in litigation for years, several a statutory consumer fraud claim must pled be (Connick v. specificity Co., Suzuki Motor 174 Ill. 2d (1996)), there is still some confusion —as evinced plaintiffs’ arguments before this court —as to exactly what conduct of State Farm is at issue under consumer fraud clarify claim. To issue, what is at it will be helpful identify that conduct which can readily we conclude does not support plaintiffs’ consumer fraud claim.
1. Plaintiffs’ Consumer Fraud Claim May Not Be Based on a Breach of a Promise Contained
in Their Insurance Policies court, Before the circuit plaintiffs maintained their consumer fraud count was not based on “the draft- ing, or the sale or even the interpretation” of any class member’s policy. insurance Yet in their brief before this court, plaintiffs repeatedly point to State Farm’s contrac- promises tual to define the consumer fraud. Plaintiffs state, for exаmple, that State Farm disregarded “the express promises written policies,” there was “no evidence that Plaintiffs knew, or the class expected or understood that State Farm specify parts would failed to fulfill its contractual obligations,” and that law implies “[t]he and recognizes the expectation, understanding belief that State Farm would fulfill *55 its contractual obligation.” Similarly, although both the circuit court and appellate court plaintiffs’ stated that
169 of a a breach not based on count was fraud consumer promise, State Farm’s referenced each court contractual analysis obligations policy in its failure to fulfill appellate in plaintiffs’ claim. The fraud consumer upholding particular, court’s consumer the circuit pointedly judgment, Farm’s “delib- relied on State fraud promises express disregard contained of its written erate (quote App. policies 3d 269 321 Ill. in the issued.” unpublished opinion portion under of the contained Supreme 23). repeated references to These Court Rule support promises simple breaches of contractual in error. fraud count are consumer promise, more, is not without A of contractual breach Fraud Act. American under the Consumer actionable 219, 233, L. Ed. 2d Airlines, Wolens,513 U.S. 130 Inc. v. (1995), quoting 817, 715, 728, Ct. 826 Golem- 115 S. Agency, App. Hallberg Inc., 262 Ill. Insurance biewski v. (1994). appellate 1082, court has ex- 3d 1093 As our plained: ‘deception’ is calls ‘consumer fraud’ or plaintiff
“What obliga- their contractual simply defendants’ failure to fulfill plaintiffs assertion that accept our courts to tions. Were actionable under go unfulfilled are promises Act, could convert Fraud consumer Consumer into a consumer fraud ac- any suit for breach of contract However, it the Consumer Fraud Act tion. is settled every dispute apply not intended to contract or to supplement every of contract claim with a redun- breach remedy. Stogsdill See Law William J. v. dant Offices of 433, Savings, App. 268 Ill. 3d Cragin Federal Bank for (1995); Agency, Hallberg v. Insurance 437-38 Golembiewski (1994). Inc., 1082, that a App. 262 Ill. 3d 1093 We believe practice’ involves more than the mere fact ‘deceptive act or promised something a defendant and then failed to do every type ‘misrepresentation’ That occurs time a it. Queen a contract.” Zankle v. Anne defendant breaches (2000). 308, Landscaping, App. 3d 312 Ill. e.g., Jorgensen, App. Accord, 328 Ill. Kleczekv. (2002); County Grading Libertyville, Co. Lake *56 170
Inc. v. Contractors, Advance Mechanical Inc., 275 Ill. Exchange National Bank v. App. 452, (1995); 3d 460 Farm Bureau Insurance Co. Michigan, 108 Ill. Life of 212, DeLeon v. App. (1982); Construc 3d 216 Beneficial Co., tion (N.D. Petri v. 55 F. Supp. 1999); Ill. Gatlin, (N.D. 1997). Supp. 956, 997 F. 967-68 Ill.
Both the circuit court and the appellate recognized this principle but both courts failed apply to it consistently. law, As a matter of plaintiffs’ consumer fraud claim may not be based on the assertion that State Farm promise breached its to restore plaintiffs’ vehicles “pre-loss to their condition” or that State Farm breached promise to repair plaintiffs’ using parts vehicles of “like kind and quality.”
2. This Case Is Not About Specification of
Defective Parts court, Before this do not claim to have proven any of the non-OEM parts specified by State its repair estimates were defective. This is in with plaintiffs’ position at trial. Plaintiffs keeping deliberately avoided any theory relating to defective parts at trial because such a theory would have significantly increased their burden proof. Such a theory would also have rendered class certification far likely, less since the question common of fact necessary or law for certifica- tion would have been more difficult to establish if plaintiffs had been prove forced to that each individual non-OEM part, grouping parts, Thus, was defective. court, before the circuit plaintiffs’ very counsel made it were not clear that they trying prove any of the non-OEM parts defective, at issue were at point say- one ing: “[A]s we’ve stated this is not a defect case. areWe proving we are not required prove parts are defective.”
What plaintiffs do claim to have at trial established is a proposition general far more than any whether parts specified Plaintiffs claim were defective. proven parts, whole, as a are not to have that non-OEM terminology, good parts. plaintiffs’ Or, use as as OEM “categorically inferior” to OEM that non-OEM are thing parts. “categorically inferior” is not the same But “categorically point important. as defective.” This opinions, the circuit court and
In their written both specification appellate court refer to State Farm’s “categorically specifying if the inferior” act of parts, by appellate itself, nondefective is fraudulent. The *57 example, describing allegedly court, for State Farm’s deceptive “[p]laintiffs presented acts, notes that evidence parts specified that the non-OEM which State Farm were categorically specified [and] inferior, Farm that State parts App. non-OEM that it knew to be inferior.” 321 Ill. (quote portion opinion 3d 269 contained in a of the 23). unpublished Supreme However, under Court Rule it specify is no more fraudulent —in and itself—to non- parts knowing they good OEM while that are not as parts OEM than it is to sell automobiles Chevrolet while knowing they good are not as as Cadillacs.Whether product automobiles, the consumer toasters or some- thing always else, there will be some brands of that product good “categori- as, that are not as or which are cally product. to, inferior” other brands of the same The economy grinding state’s would if come to halt the sale anything single, every less than the best brand of good consumer were considered fraudulent. specification What makes the nondefective, of the part potentially non-OEM fraudulent are the statements product. made, made, which are or not about the It is the representations omissions State Farm made about parts simply specifying non-OEM act non- —not parts plaintiffs’ OEM must form basis of —that consumer fraud action. Representations
3. The Which Form the Basis of Plaintiffs’ Cause of Action for Consumer Fraud Do Not Include the Statement That Parts Non-OEM
Are as Good as OEM Parts court based its that State appellate holding Act, violated the Consumer Fraud on its part, findings knowingly represented that “State Farm on its estimates ‘Quality in its Parts’ brochures” Replacement [and] equal “were of or better than parts quality OEM 321 Ill. 3d 269 contained in a parts.” App. (quote under portion opinion unpublished Supreme Court 23). however, Rule These are incorrect. Neither findings, the written nor the “Quality Replacement estimates plaintiffs Parts” brochures which named received from State Farm contain the statement that non-OEM equal quality parts.” are “of to or better than OEM Appendix Appendix See A and C. noted,
As
of the State Farm documents
previously
two
case,
upon by plaintiffs
Neighbor
relied
in this
the “Good
“Reflector”
do
magazine,
News” newsletter
and the
good
contain the statement
that non-OEM
are as
as,
than,
However,
OEM parts.
or better
there is no
read,
of the named
ever
any
evidence
saw
of these documents. This is
any way
were
aware
The “Good
News” newsletter
surprising.
Neighbor
1993,”
year
which is of record is dated “Fall
one
before
*58
and
starting
period
date of the consumer
fraud class
three
before the earliest of the five
approximately
years
named
accidents occurred.
“Reflector”
plaintiffs’
agents,
to
magazine
article was circulated
State
in
some six
published
and was
policyholders,
of the named
accidents
years
plaintiffs’
before the earliest
date of the class
years
starting
period.
and four
before the
fraud
In
order
the nationwide consumer
certifying
Farm has also
class, the circuit court wrote that “State
parts’
‘quality replacement
the use of the term
promoted
promote
effort
its substitution
nationwide
an
sug-
parts.” This
non-OEM for OEM
gest
sentence seems
the circuit court found
newsletter
magazine
policyholders,regardless
articles relevant to all
they
not,
them or
because the articles
whether
saw
helped
parts.
non-OEM
create a nationwide market for
explicitly rejected
theory”
However, we
this “market
Co.,
causation in Oliveira v. Amoco Oil
4. Part as a Non-OEM Replacement Puffing and, Hence, Part” Is
Not Actionable object phrases describing Plaintiffs to two appear plaintiffs’ which the named estimates “Quality Replacement and in the Parts” brochure. The phrase plaintiffs point “quality replacement first to is parts.” phrase appears plaintiffs’ This in both the named entry (see, Type” e.g., estimates, aas line under “Part A), Appendix along and in the brochure received with (see C). Appendix phrase “very estimate The second high performance appears criteria,” which in the bro- “Only chure in this sentence: those which meet very high performance acceptable.” our criteria are See Appendix phrases C. Plaintiffs maintain that both these deceptive are under the Consumer Fraud Act. phrases Farm, however, contends that these are
merely “puffing” and, hence, cannot form a basis for plaintiffs’ agree. “Puffing” consumer fraud claim. We exaggerations reasonably expected denotes the to be of a degree quality product, seller as to the of his or her falsity precisely the truth or of which cannot be deter- *59 174 Proserv, Inc., Inc. e.g., Speakers Sport, v. See,
mined. (7th 1999) 862, (“Puffing 178 F.3d 866 Cir. in the usual no signifies meaningless superlatives sense that reason- take it is not action- person seriously, able would so fraud”). include subjective able as Such statements e.g., Evanston See, descriptions relating quality. (1993) Crane, v. 435, 439, 444 Hospital 254 Ill. 3d App. Homes, Inc., (“high-quality”); Breckenridge Cambridge v. (1993) 810, (“expert workmanship,” 246 Ill. 3d 823 App. Zimmerman v. “perfect”); “custom quality,” Northfield (1986) Estate, Inc., Real 154, 156 Ill. 3d 163 App. v. Sharp “comfortable”); Spiegel (“magnificent,” (1984) Electronics 897, 125 Ill. 902 Corp., App. 3d v. American TV & Ap- see also (“picture perfect”); Madison, Inc., 146 292, 302, pliance 430 N.W2d Wis. (1988) (“A statement that one’s general misrepresenta- are best is not actionable as a products fact”). or as Describing product “quality” tion of types criteria” are the having “high performance have subjective characterizations Illinois courts Thus, mere as a matter of repeatedly puffing. held to be under law, deceptive can be considered phrase neither Fraud Act. the Consumer out that the circuit court point
Plaintiffs nevertheless was phrase “quality replacement parts” found that to, However, did cite the circuit court “misleading.” of the decisions cited above which distinguish, any merely quality statements are subjective hold that any cite Moreover, the circuit court did not puffing. finding phrase support evidence any and never made determination “misleading” decep- stated a replacement parts” the phrase “quality tive fact. court, court, did unlike the circuit appellate
The
“that
representations
that State Farm made
conclude
as fact.”
interpreted
have
policyholder would
reasonable
321 Ill. App.
(quote
3d 269
contained in a portion 23).
opinion unpublished under Supreme Court Rule
*60
appellate court determined that State
“represen-
Farm’s
assigned
tations
‘virtues’ to non-OEM they
did not possess” and,
therefore,
the representations
violated the Act. 321 Ill. App.
(quote
3d 269
contained in
a
portion
opinion unpublished under Supreme
23). However,
Court Rule
the appellate court’s conclu-
sion that State Farm’s “representations
assigned ‘virtues’
to non-OEM parts that
did
they
possess”
not
is based on
a misstatement of the
appellate
facts. The
court found
that State Farm “represented on its estimates” and “in
its Quality Replacement Part[s] brochures” that “non-
OEM parts were of equal quality
better
than OEM
parts.”
There is no basis for concluding, contend, as plaintiffs that the phrases “quality replacement parts” “high performance criteria” are anything other than puffing. Thus, these phrases cannot support plaintiffs’ consumer fraud claim.
5. The Guarantee Provided by State Farm Cannot Form
a Basis for Plaintiffs’ Consumer Fraud Claim The circuit court held that State Farm violated the Consumer Fraud Act by providing a guarantee which states if the policyholder is unsatisfied with the “fit and corrosion qualities” resistance replacement of a part, then State Farm will repair or replace the part at no cost. The circuit court concluded that this guarantee violated the Act because it “improperly and unfairly placed the burden of a securing quality repair on the policyholder, not State Farm.” Plaintiffs point to this support their that State Farm
conclusion contention the Act. violated
It is not clear the circuit court meant when it what guarantee improperly put held that State Farm’s policyholders. Every places guarantee on “burden” on the consumer—the manufacturer or retailer burden problem is a must be notified when there product produced guarantee that is or sold must reason, cannot be invoked. For this the circuit court be guarantee if it meant that is fraudulent correct required policyholders take action. If it because compre- every guarantee, true, no matter how this were inherently generous, be fraudulent. hensive or would put argue, guarantee however, that an Plaintiffs policyholders simply improper it was burden on because According plaintiffs, difficult to use. too attempts guaran- adjusters *61 use the would “brush off to guaran- part getting replacement the tee,” an OEM once days,” “up to to five tee was invoked could take three “[ejven body shop that Farm when a showed State a part fit, crash did State Farm would still non-OEM not parts.” However, several not authorize OEM sometimes including witnesses, on behalf who testified some plaintiffs, guarantee honored the was stated that example, plaintiffs’ witness Dave fashion. For routine body manager shop Beyers, in Williamson the of a problem County, with a non- testified if he had that simply up he “fax a form” to State fender would OEM “[p]ut fender on.” Farm and OEM important, plaintiffs in this More none of the named using guarantee. they problems that had case testified any attempt plaintiffs Indeed, made none of the named Avery non-OEM refused to have invoke it. and Shadle to guarantee parts put them, vehicles, on their so Covington, plaintiffs, named not at issue. The other was guaran- attempt Vickers, to use did DeFrank specifically whether he took tee. DеFrank was asked “advantage guarantee of State Farm’s that had been provided prepared.” [him] to at the time the estimate was Accordingly, He had is no answered he not. there guarantee concluding basis in record for that the unduly plaintiffs, burdensome for the named let alone for the class members as a whole.
Finally, plaintiffs point policyholder out that when a successfully guarantee, paid used the the amount indemnity replace part non-OEM as an was recorded payment part and became of the insured’s claim file. speculate Plaintiffs that the of this inclusion information “possibly rais[e] in the claim file could the insured’s plaintiffs point testimony However, rates.” no other or support Thus, evidence of record to this assertion. we by guarantee conclude offered State Farm can- plaintiffs’ not form a basis for consumer fraud claim. 6. The Crux of Plaintiffs’ Consumer Fraud Claim
aIs Failure State Farm to Disclosethe Categorical Inferiority of Non-OEM Parts
During the Claims Process Having clearly eliminated that which conduct cannot support a claim for fraud, consumer what remains is the allegation plaintiffs’ complaint: way “By core stated in deceptive pretenses, practices, false acts, or defendant a) they using did not disclose were: inferior, imitation ***.” complaint allege Plaintiffs’ does not that State any specific failed to disclose an inferior characteristic of part. expected, to be This is since charac- *62 part always present every of teristics one were not part always apply every other and did not to member of example, the For class. while at trial contended parts parts that some non-OEM were not safe as OEM (a proposition vigorously disputed), which State Farm applied only this contention to some of the non-OEM issue, at member parts bumpers, every such as which not Similarly, plaintiffs’ the received. assertion that of class parts they some non-OEM were inferior because were not to metal not properly galvanized applied only parts, Thus, com- plastic. deceptive the act which was allegedly mon to entire not the every repair class was but, failure disclose a inferior characteristic specific to rather, supposed categorical the failure to disclose the disclose, to ac- inferiority parts. of non-OEM This failure concealment, cording sup- “the plaintiffs, to constitutes (815 fact” ILCS pression any or omission of material (West 1998)) in of Act. violation 505/2 Further, during occurred the failure to disclose process. practice giv- State of claims Recall that Farm’s ing its estimate and a bro- policyholders written non- alleged categorical inferiority chure —in of which the basis on parts precisely OEM disclosed —was found, certifying the circuit court its order which class, fraud Farm’s conduct was consumer State As common to all class members. the circuit court stated: allegations, presented “As to the consumer fraud facts hearing on Farm’s methods of at the certification State disclosing policyholders its of non-OEM also use common all class demonstrates course of conduct estimate, on an When such are used members. given discussing the policyholder is a State Farm brochure 24; parts. Exhibit Certifica- use of non-OEM Defendant’s stamped The is then Hearing tion at 0124-25. estimate parts. use Defendant’s Exhibit indicating the 27.” correctly stated the core court below appellate claim: “Plaintiffs consumer fraud
allegation plaintiffs’ this claims employing claimed that adopting it in that policyholders deceived practice, quality specified them the inferior failed inform It al- App. Ill. at 273. is this replacement parts.” 321 considering mind must when legation keep we
179 remaining by ap- challenges Farm in this raised State peal. Propriety Fraud Class
B. the Nationwide Consumer of court’s State Farm contends that the circuit certifica- improper. tion of a nationwide consumer fraud class was According application Farm, the circuit court’s policyholders the Fraud Act across of Consumer the country by impermissible Act, its own because the apply involving terms, does consumer transactions Moreover, nonresidents that occur outside Illinois. in the of view, State Farm’s certification the nationwide rules, class violated as well as the Illinois’ choice-of-law process clause, clause, full faith and the credit due the commerce A clause federal constitution. by determination this court that Consumer Fraud by apply, Act terms, does not its own to the out-of-state transactions at issue this case render it un- would necessary to address State Farm’s choice-of-law arguments. Accordingly, constitutional scope we consider the e.g., See, of the Consumer Fraud Act first. Beahr- (2003) inger Page, (holding 363, v. Ill. 2d 204 370 questions constitutional will if not be decided case can be grounds). scope decided on other Because the of the Act question statutory interpretation, a of our review is de (1997). Lakin, novo.Lucas v. 175 Ill. 2d Scope 1. of the Consumer Fraud Act provides Section 2 of the Consumer Fraud Act *** “deceptive practices sup- concealment, acts or or the pression any or fact, omission of material with intent rely upon suppression concealment, that others *** any of omission such material fact in the conduct of hereby trade or commerce are declared unlawful ***.” (West 1998). 10a(a) 815 ILCS Section of the Act 505/2 private practices pro- authorizes causes of action 10a(a) pertinent states, scribed 2. section Section “Any who a result part: person damage suffers actual by any a violation Act person [the] of committed other may bring against person.” an action such 815 ILCS 505/ (West 1998). 10a(a) prove private To cause of action 10a(a) Act, section a plaintiff under must establish: (2) (1) defendant, deceptive practice by act or rely decep- defendant’s intent on the plaintiff (3) tion, deception occurrence the course *64 (4) commerce, or and dam- involving conduct trade actual (5) plaintiff proximately decep- to the caused the age by Oliveira, 2d at tion. 201 Ill. 149. noted, that
As State maintains a nonresident of under may pursue consumer not cause action private Act occurs disputed the when the consumer transaction dispute sup- To out-of-state. Plaintiffs this contention. their and Farm note positions, both State port the the plaintiff that a cannot recover under Act unless or com- disputed defendant’s conduct involves “trade (West 1998); Oliveira, 815 201 Ill. merce.” ILCS 505/2 1(f) Act, point at 149. Both then to section of the parties the “trade” the Act which defines terms provision and “commerce”:
“(f)
the adver-
‘trade’ and ‘commerce’ mean
The terms
sale,
tising,
sale,
any
services
offering for
or distribution
real,
or
any
tangible
intangible,
personal
or
property,
and
mixed,
article, commodity,
thing
any other
or
of value
and
situated,
any
and
include
trade or com-
wherever
shall
indirectly affecting
people
of this
directly
merce
or
1998).
505/l(f) (West
State.” 815 ILCS
1(f) “expressly
state that section
initially
Plaintiffs
”
‘wherever situated.’
that
to transactions
applies
*65
“defines
‘trade’ and ‘commerce’
in
geographically
a
limited manner.”
Services,
See also Bettarini v. Citicorp
(N.D.
1992)
Inc., No. 91 C 8390
Ill.
(noting the “geo
graphical scope of the Act” and rejecting a claim under
the Act where the defendant’s “complained of conduct
impacted
[plaintiff]
on
only at his
in London”);
home base
(N.D.
Schaub,
1993).
Swartz v.
Still other scope section limits the have concluded that Some of the residency plaintiff. on the Act based that the Act is this focus have concluded adopting courts benefit Illinois residents.” only “protect intended to and Silver, Co. v. C Lincoln National Insurance No. 86 Life Nichols, (N.D. F. at 1991), Supp. cited in 913 Ill. however, courts, have concluded Other 1139. action, although a cause of may pursue nonresidents the transaction at issue typically hold that these courts adequate an “con- in Illinois or that there be must occur Products v. Gerber e.g., Tylka See, nection” to Illinois. 1998) (N.D. Co., (noting that 573, 576-78 Ill. 182 F.R.D. in are as to whether split this district “[c]ourts who are may apply Fraud to consumers [Consumer Act] the Act could holding and not citizens of Illinois” rise to the action giving “the transactions apply where Roland, Quantum v. MAN Inc. Illinois”); place took 1999) (N.D. 568, 575 Ill. Corp., Color Supp. 57 F. “stand- extends of the Act which (rejecting interpretation Illinois residents” consumers who are ing only to the nonresident apply Act could where holding that an Il- “in Illinois from product purchased consumer Care, Inc., v. Manor corporation”); Rohlfing linois 1997) (even (N.D. cases under those 330, 339 Ill. F.R.D. under a cause of action pursue nonresidents allowing could not residents in this case Act, the non-Illinois “little or no connection their claims had do so because Co., 92 C 1647 v. Northern Trust No. Peters Illinois”); 1999) (N.D. courts based in the district (noting split Ill. fraud consumer holding plaintiffs’ residency on the claims underlying the conduct claim failed because Illinois”). had “no connection 1(f) also exist interpretations section Additional that what has stated One court the district courts. may pursue determining plaintiff whether important
183 1(f) s plaintiff not the section action under a cause of in protect- Illinois’ interest the State of “residency, but (Ivanhoe Financial, Mortgage Inc. v. ing its consumers” (N.D. 2004)), while Essentials, Ill. Inc., 03 C 6887 No. 1(f) imposing to section has referred another court “ (Uniroyal Goodrich requirements” ‘Illinois contact’ 869, F. 878 Supp. 749 Trading Corp., Mutual Tire Co. v. 1990)). in (N.D. be found can permutations Ill. Still other courts; this list is not exhaustive. the district courts, our aрpellate federal district Like the to interpret of how best question also divided over the has 1(f). Co., 3d App. Oil 311 Ill. In Oliveira v. Amoco section 201 (2000), grounds, in & rev’d on other part 886 vacated (2002), appellate the Fourth District our Ill. 2d 134 to out-of-state applied that the Act court declined to hold Oliveira, 898, citing at Scott 311 Ill. 3d App. consumers. International, Home, 88 at Childbirth v. Association for (1981). in court’s decision appellate 2d 288 Ill. District deci- cited a First subsequently Oliveira was App. 332 Ill. 3d Kendig, in Prime Inc. v. Leasing, sion that “the Act (2002), the court stated dicta where consumers.” normally does not to out-of-state apply App. Prime 332 Ill. 3d at 313. Leasing, bar, concluded, In the case at the Fifth District 1(f) discussing statutory language of section without any discussing of the federal district court decisions issue, “permitted that non-Illinois consumers are against an action under the Act a resident pursue [are] acts and deceptive practices defendant where the Ill. 3d at 281. More perpetrated App. Illinois.” 321 App. v. 348 Ill. recently, Bunting Progressive Corp., (2004), appel- the First District elected to follow the rejected court decision in this case and the defen- late argument inapplicable dant’s that “the Act is because 348 Ill. 3d at plaintiff Bunting, App. is a nonresident.” 586.
184 1(f)
It is not clear from the plain language of section which, if any, many interpretations of the noted above accurately captures the meaning of that provision. Indeed, the wealth of competing interpretations of sec- 1(f) tion compelling is a indication of the statute’s ambiguity. See, e.g., City Krohe v. Bloomington, 204 Ill. (2003) (“A 392, 2d 395-96 ambiguous statute is if it is capable being by reasonably understood well-informed persons two or more different ways”). Because the 1(f) language of section is ambiguous, it is appropriate sources, for us to consider other including legislative his- tory, in order to discern See, the statute’s meaning. e.g., (1994). Jameson, 282, v. 162 Ill. 2d People 288 Although there a great legislative is not deal of his- tory 1(f), with respect to section we do find relevant a Sours, statement from Senator sponsor Senate bill which created a private cause of action under the Act 1(f). 904, and which added section See Pub. Act eff. 78— September 21, 1973. Just before the vote in the Senate taken, Senator Sours made the following remarks: Senators, briefly
“Just to conclude Mr. President and just I’d couple excerpts like to read a from this bill and excerpts very ... the are brief to indicate the broad terms of reading page the bill. I’m 7 line on 2: ‘The terms trade and really commerce’ and talking is what we’re about. talking We’re about trade and commercethat is not included concept. advertising within the interstate Means and sale, offering how much of that we see sale or distribu- any any property tangible tion of services and or and real, intangible, article, personal every or mixed and other commodity thing or of value wherever it’s situated commerce, any directly indirectly shall include or trade added.) affecting people of (Emphasis this State.” 78th Assem., 1973, 30, Ill. Proceedings, Gen. Senate June at 268 (statements Sours). of Senator statement, In addition to Senator we note the Sours’ long-standing rule of construction Illinois which holds that a “statute is without extraterritorial effect unless a
185 express from the respect appears intent clear v. Industrial Dur-Ite Co. statute.” provisions (1946); Graham v. General Comm’n, 338, Ill. 350 394 2665, V.F.W., 43 1, (1969); 2d 6 Post No. Ill. U.S. Grant Council, Inc., U.S. v. Haitian Centers 509 also Sale see 2549, 2567 155, 113 188, 128, L. 2d S. Ct. Ed. (1993) (“Acts extrater- normally do not have of Congress clearly an is unless such intent application ritorial (2001). Given Statutes manifested”); § 73 Am. Jur. giv- against rule of Senator Sours the statement do an intent effect unless ing statutes extraterritorial As- the General clearly expressed, we conclude that so *68 apply Fraud Act to sembly did intend the Consumer Il- outside place fraudulent transactions which take linois. extrater- that the Act does not have
Having concluded effect, the in our determine step analysis next is to ritorial place took the transactions at issue this case whether observe, however, it can be Illinois. We first outside identify of a transaction difficult to the situs consumer allege, transaction is when, as in this case than one components that occur in more up made directed courts have often problem, state. To solve this or reason injury deception their focus to site of —the that, until been com- being deceptive statement has plaintiff injury, to a there an municated has been there is no fraudulent transaction and cause of action. no Appeals approach The Court of of New York followed this Co., v. Insurance 314, Goshen Mutual Life 98 N.Y.2d (2002). decision, 1190 774 N.E.2d In that the New York or “hatching court considered whether a scheme” York consti- originating marketing campaign in New actionable act under a fraud deceptive tuted an consumer or commerce statute which limited the definition trade Goshen, at that which occurred in-state. 98 N.Y.2d it did 324, N.E.2d at The court concluded that 774 1195. 186
not. The court explained
origin
“[t]he
of any
advertising or promotional
conduct
is irrelevant
if the
deception
is,
itself —that
the advertisement
or promo-
tional package
not result
in a transaction in which
—did
the consumer
Goshen,
was harmed.”
326,
N.Y.2d at
The position taken by the Goshen is not unreasonable. In a misrepresentation case, there is no fraudulent transaction until the misrepresentation has been communicated. But the Goshen court’s view the situs of a consumer transaction is a narrow one. The place of injury or deception only one of the circum- stances that up make a fraudulent transaction and focus- ing solely on that fact can questionable If, create results. for example, the bulk of the up circumstances that make a fraudulent Illinois, transaction occur within and the only thing that occurs injury out-of-state is the decep- tion, *69 it seems to make little sense to say that fraudulent transaction has occurred outside Illinois. otherwise, Stated we believe that there ais broader alternative the Goshen position to the taken by court, namely, that a fraudulent transaction may be said to take within place a state if the circumstances relating primarily transaction occur and substantially within that state.
The Assembly General has stated that the Consumer Fraud Act “shall liberally be construed to effect” its 1998). (West fact, this purposes. Given ILCS 505/lla Assembly intended the the General we believe understanding noted transaction of an in-state broader may pursue plaintiff Accordingly, hold that a we above. ifAct private Fraud the Consumer action under cause of disputed transaction to the that relate the circumstances adopting substantially primarily In in Illinois. and occur single recognize holding, formula there is no we this determining bright-line a transaction whether test for be Rather, each case must this state. occurs within ques- Accordingly,the critical its facts. decided on own the circumstances whether in this case becomes tion relating disputed plaintiffs’ transactions with substantially primarily in Illinois. Farm occurred Applies Act to the Fraud 2. the Consumer Whether in This Case at Issue Transactions appellate the Con- concluded that court below applied to the out-of-state Fraud Act could be sumer explained: appellate in this case. The deceptive claims demonstrates that “The evidence practices in Illinois that the in Illinois. It was occurred imple- procedures practices claims were devised prepared in other mentation were for dissemination App. states.” 321 Ill. 3d at 282. place agree appellate court that the
We with company policy created or where a form docu- where a is may
ment drafted be a relevant factor to consider determining consumer transaction. the location of a However, case, that because a it does follow practices single relating Farm’s claims factor to State policyholders place Illinois, the claims took just op- practice fact, In itself “occurred in Illinois.” majority overwhelming posite of circum- is true. The relating disputed transactions in this stances to the practices outside of case—State Farm’s claims —occurred plaintiffs. Illinois for the out-of-state *70 188
Plaintiff Michael Avery’s transaction with State Farm during the process claims is representative of the situa- tion of the out-of-state plaintiffs. Avery resides in Louisiana, not Illinois. car His in garaged Louisiana and his accident occurred there as well. Avery’s estimate was written in Louisiana and he received his “Quality Replacement Parts” brochure in Louisiana. The alleged deception in this case —the failure to disclose the inferior- ity of non-OEM parts occurred in Louisiana. The —also repair Avery’s car place took in Louisiana. Damage to Avery, if any, occurred in Moreover, Louisiana. there is no evidence that Avery ever met or talked to a State Farm employee who works Illinois. Avery’s contact with State Farm was through Louisiana agent, Louisiana claims representative, and a adjuster. Louisiana sum, In the overwhelming majority of the circumstances which relate to Avery’s and the other out-of-state plaintiffs’ claims proceedings disputed transactions —the in this case —occurred outside Illinois. conclude, We therefore, the out-of-state plaintiffs this case have cognizable no cause of action under the Consumer Fraud Act.
In support of the appellate court, plaintiffs
rely on
Commodities,
Martin
(1987)
Inc.,
v. Heinold
Martin I help plaintiffs. little In addressing of the class before Martin I considered the propriety it,
189 process due with the comported the class whether only Shutts, v.Co. Phillips Petroleum laid out in principles (1985). 628, Ct. 2965 L. S. Ed. 472 U.S. *71 I 82. Martin not address the I, 117 Ill. did Martin 2d at statu- Act as a matter of Consumer Fraud of the scope presented. not simply that issue was tory interpretation; (“A (1965) Smith, judicial v. 465, 2d 470 See Nix 32 Ill. court, and the issues before the response is a to opinion light in of the others, like must be read opinions, these determination”). the court for that were before issues I here, that Martin is Nevertheless, relevant to the extent distinguishable. it is I, its decision
In Martin based specifically this court (1) containing the contracts the following on the facts: (2) Illinois; in the all executed deceptive statements were (3) Illinois; of business in principal place defendant’s and forum- express the contract contained choice-of-law any litigation clauses would be specifying selection (4) law; complaints conducted in Illinois under Illinois to regarding performance defendant’s were be (5) office; directed to its for the Chicago payments Chicago to be sent office. defendant’s services were to circumstances, these this court that the Given concluded I, the whole class. Martin Ill. apply Act could 117 at 82-83. I, Martin virtually
In contrast there are no disputed circumstances to the claims at relating practices case in issue this which occurred existed Illinois for plaintiffs appel- those who are not Illinois residents. The late court’s conclusion that a scheme to defraud was “dis- from Farm’s insuf- headquarters seminated” Care, Inc., See, e.g., v. Manor Rohlfing ficient. 172 F.R.D. (N.D. 1997) (where & n.10 only Ill. connec- Illinois is defendant or headquarters tion with Illinois, the fact that a “emanated” scheme from apply Consumer Fraud Act “does not the claims of the non-Illinois plaintiffs even under the broad application cases”). by Martin [Act] endorsed and other similar
Based on the foregoing, we conclude that the circuit certifying erred in a nationwide class that included class members whose claims proceedings place took outside Illinois. Because we have propriety decided statutory certification order on interpretation grounds, we need consider whether certification of the nationwide class was unconstitutional or violated choice-of-law rules.
The only putative class that exist in can this case under the Consumer Fraud Act is a class consisting of policyholders whose vehicles were assessed and repaired case, Illinois. Four the five named Vickers, Avery, Shadle and are Covington, not residents Illinois, damage to their did not vehicles occur in Illinois, they did not repair receive their estimates in Il- linois, and did not they repaired have their cars in Il- *72 linois. These individuals have no of action cause under the Act. in only plaintiff The named this case whose and, vehicle was repaired assessed Illinois therefore, only the named who can a plaintiff serve as representative class, for the Illinois plaintiff putative Sam Because a DeFrank. failure of DeFrank’s claim would render of discussion class certification issues moot (see, Co., 134, v. e.g., Oliveira Amoco Oil 201 Ill. 2d (2002)), 156-57 now turn of propriety judg- we to the the ment in favor of DeFrank.
C. Judgment: Named Propriety of Plaintiff a private To succeed in cause of action under the “(1) Act, a plaintiff prove decep- Consumer Fraud must a (2) by defendant, tive the the practice act or defendant’s (3) rely deception, intent that the on the the plaintiff oc- deception currence of the in the of conduct course involv- (4) commerce, ing damage trade or actual to the (5) plaintiff by the proximately deception.” caused general, a court’s Oliveira, 2d at 149. In trial 201 Ill. proven have these been as whether elements decision weight any of the under manifest case is reviewed the App. Wisegarver, Ill. v. evidence standard. Kirkruff (1998). 826, 839 3d plaintiffs, named contends that
State Farm including prove ele- DeFrank, failed to several of the required private cause action. establish a ments circuit held contends that court also wrong proof. plaintiffs We address this to the burden of first. issue
1. Burden of Proof held, law, that The court below as a matter of circuit private prove the elements of a 10a(a) cause must by preponder- a the Act action under section agreed. appellate 321 Ill. ance of evidence. holdings App. 3d at State Farm that these 291. contends proоf proper are and that burden of incorrect convincing case is clear and evidence. ordinary case,
In the civil there are no sound because favoring party party another, reasons for one over persuasion prove his her case burden of must by preponderance proposition proved A a evidence. by preponderance a is one that has been evidence probably found to be than not more true true. Occasion ally, policy require however, considerations a court impose higher proof. case, In such standard of party persuasion prove with the burden of must his or convincing Bazydlo case her clear and evidence. v. Vol (1995); Arrington ant, 207, 164 Ill. 212-13 2d see v. Walter Corp., App. E. Heller International 30 Ill. 639-40 (1975). *73 presumes fraud,
In the context of commonlaw law honest; fair transactions are and fraud is presumed. Accordingly, proved by fraud must be clear convincing Rawlins, and evidence. Fuel Co. v. 377 Racine 192 Dolin, 375, (1941);
Ill. see Gordon v. 379-80 105 Ill. App. (1982) 319, 3d 324 a (observing that in common law fraud action, the plaintiff carries “a heavy responsibility”). Fraud Consumer Act does not expressly provide the standard of proof required to succeed in a private However, cause of noted, action. Act is to be liber- ally construed effect purpose, which is to provide broader protection to an consumers than action for com- mon law Accordingly, fraud. based on the liberal intent of legislature Act, behind and on the based fact that the Act expressly greater does not require a standard of proof, the court appellate has held that the appropriate standard proof claim is statutory preponder- fraud ance of the Cuculich v. Thomson Consumer See evidence. Electronics, Inc., 709, Ill. App. Ma- (2000); 317 3d 717-18 (1993). looley Alice, v. 51, Ill. App. 251 3d 56 In case, this appellate agreed with this reasoning and conclusion. 321 3d App. Ill. at 291. We do likewise and so hold. Cases a clear and requiring convinc- e.g., General Motors Ac- ing (see, standard of proof ceptance Grissom, Corp. v. 62, (1986); 150 Ill. 3d App. Warner, Munjal Inc., v. Baird & App. 138 Ill.
(1985)) are on point. overruled this Deceptive
2. The Act or Practice specified When State Farm part one of its repairs, it disclosed the use of that part policyholder’s See Appendix estimate “half-sheet.” A As noted Appendix previously, gravamen B. plaintiffs’ complaint against State Farm is that disclosure inadequate. According plaintiffs, categorical Farm should have also disclosed the inferior- ity so, of non-OEM Its to do parts. plaintiffs failure contend, deceptive practice constituted a act or under the Act.
There are plaintiffs’ argu- several difficulties with ment. Recall that do not contend that all non- *74 as defective, they are all not only that parts OEM are fact, Farm knew as OEM State good parts. policyholders. to all have disclosed it and should allege, the undoubtedly products sell many businesses But as as other good are not knowledge products those it reasoning, plaintiffs’ on market. Under brands Act, every liability avoid under the that to appear would top not the product a of which is knowing sale of brand “Notice, our carry a disclaimer: would have to brand not, whole, competitor’s.” as our good brand is on would Thus, argument appear adopting plaintiffs’ liability the Act. significant expansion a of under work Further, equal we note that importance, and of required by, and provided by disclosure State Farm with, state law. complied Code provides:
Section of Insurance 155.29 (a) Purpose. “§ The of is to purpose 155.29. this section regulate parts by requiring the use of aftermarket crash any non-original disclosure when use an aftermarket equipment part proposed manufacturer’s crash requiring the manufacturers of such aftermarket parts crash identified. be *** (b) Definitions. * * *
(c) Any supplied part Identification. aftermarket crash by non-original equipment in this manufacturer for use after effective of this Act shall have affixed date logo of its thereto or inscribed thereon the or name logo or name shall be manufacturer. manufacturer’s practicable. visible after installation whenever (d) non- specify the use of Disclosure. No insurer shall parts repair OEM aftermarket crash in the of an insured’s vehicle, any facility or installer use repair motor nor shall repair vehicle un- parts non-OEM aftermarket crash writing. In all is advised that fact less customer after- instances an insurer intends where vehicle, repair market be used in of a motor crash following provide the customer with the the insurer shall information:
(1) a clearly written estimate that identifies each part; non-OEM aftermarket crash (2) a disclosure incorporated settlement into or at- tached to the estimate that reads as follows: ‘This prepared estimate has been based on use of crash parts supplied by a source other than the manufacturer your motor applicable vehicle. Warranties these replаcements parts provided by are the manufacturer distributor these rather than the manufac- ” (West 1998). your turer of vehicle.’ 215 ILCS 5/155.29 *75 State Farm’s compliance with section 155.29 of the important Insurance Code raises an issue. Like most statutes, state consumer fraud the Illinois Consumer Fraud Act from exempts coverage its or practices transac- 10b(l) tions permitted by which are other laws. Section of the provides: Consumer Fraud Act “Nothing in apply any this Act shall to following:
(1) specifically Actions or by transactions authorized by any regulatory body laws administered or officer acting statutory authority under of this or the United 505/10b(l) (West 1998). States.” 815 ILCS Interpreting Illinois have decisions which addressed provision, Seventh Circuit has stated: together, [Illinois]
“Taken cases stand for the proposition [Consumer Act] that the state Fraud will not impose higher requirements parties disclosure on than satisfy regulations. those that are sufficient If federal parties doing something are specifically by authorized 10b(l) law, protect federal section will from liability them hand, [Act]. under the On [Consumer the other Fraud exemption Act] is not that manage available statements regulations, to be in technical compliance federal but deceptive misleading which are so or in context that federal might regard (Emphasis law itself not them as adequate.” omitted.) PLC, 934, Bober v. 246 F.3d Glaxo Wellcome (7th 2001). Cir.
The Insurance Code does not insurance require disclose non-OEM are companies parts “categori- Indeed, contrary to OEM to the cally parts. inferior” below, findings appear of the circuit court it would parts the use of non-OEM allowing regulating and Assembly policy has made Illinois, the General least number of non-OEM determination that at some Otherwise, parts. to OEM are not inferior parts their use makes Assembly’s permit decision to General 202160, slip Corp., little See v. Geico No. Civ. sense. Snell 2001) (Md. (reasoning August at 9 Cir. Ct. op. n.2 that, if commissioners would not sanc- state insurance if, parts, and neverthe- tion the use of non-OEM inferior in some less, parts sanctioned the use of non-OEM they have commissioners must instances, “these insurance categorically are not parts determined universally (emphases original)). inferior” Code, In of section 155.29 of Insurance light 10b(l) Act, a seri- section of the we believe that there is failure to question ous as to whether State Farm’s not disclose that non-OEM are policyholders good deceptive as OEM can considered a act be However, press does not this is- practice. State Farm no explore express need it further. We sue and we 10b(l) as to the of section opinion proper scope *76 decision, Act or of the correctness the Bober whether a act or within deceptive practice State Farm committed Instead, Act. we meaning of the Consumer Fraud he that DeFrank’s claim fails because suffered conclude damage, Act, under required no actual as because causation. proximate he failed to establish Damage Actual 3. claim that striking deficiency
The most DeFrank’s Act is his lack State Farm violated the Consumer Fraud of damage. private In order to sustain a cause of actual Act, that he or plaintiff prove action must under of a violation damage she suffered “actual result 505/10a(a) (West 1996); Oliveira, Act.” 815 ILCS [the] 196 case,
201 Ill. 2d 148-49.11In at this DeFrank did not suf- any fer damage as a result of specification State Farm’s parts. or use
The gave incident that rise to DeFrank’s claim oc- 1997, on 1, curred November when his 1992 Chevrolet pickup truck in an damaged accident. DeFrank testi- fied that State Farm’s repair estimate for truck his parts included non-OEM and that parts these non-OEM repair. were used in the truck’s DeFrank stated that later several months he sold his truck to his brother-in- $11,000, for slightly law below the “blue book” value $11,400, in what DeFrank himself agreed was an “arm’s length” transaction. by plaintiffs’ DeFrank was asked at trial counsel whether the non-OEM on the truck parts awere factor in the sale. His answer was “No.” On cross- examination, point this was made clear:
“Q. [Counsel And Farm] there were no price you your discounts in the that sold the truck for to on brother-in-law account of the fact there non- were car; parts right? OEM on the is that A. Right. [DeFrank]
Q. Is that correct?
A. Yes.” language Fraud Act is A plain. Consumer plaintiff must before she prove damage” “actual he or can recover under the Act. That did not occur here. De- that, Frank’s testimony own establishes when he sold his brother-in-law, truck to his he value received same for the truck he have if OEM only would received repair. had been used in no dif- simply It made ference that non-OEM were on the truck. present 10a(a) by 11Theword “actual” was added to section Public Act 144, 1,1996. January any opinion expressing effective Without 89— significance change, on of this we note DeFrank’s ac and, thus, language. occurred in See cident covered (N.D. (Illinois), Supp. Greisz v. Bank 8 F. Household 1998) language). (discussing change Ill. *77 damage” Clearly, result as a no “actual DeFrank suffered parts specification or use of non-OEM of State Farm’s the Act.12 and, therefore, he cannot recover under explanation appellate how no as to court offered any class, suffered DeFrank, other members of meaning damage” within the Consumer “actual only court offered a brief Act, Fraud circuit while single judg- In a sentence statement the issue. on plaintiffs’ dam- held that order, ment the circuit court ages in the count defined under consumer fraud were they of contract under the breach same manner as were according court, actual dam- Thus, count. to the circuit ages “specification” as and “installation” were defined damages. “specifi- count, of contract As with breach damages Farm cation” specified occurred at moment State repair part policyholder’s in a
a non-OEM damages estimate. “Installation” consisted of the cost of replacing parts parts those non-OEM with OEM on actually parts had had installed. vehicles which non-OEM that DeFrank suf- Neither these theories establishes any damage Consumer fered Fraud Act. under the longer First, truck, DeFrank no his owns which plaintiffs’ Accordingly, sold for fair market own value. damages acknowledged expert, Mathur, trial, Dr. at De- damages. Frank is not entitled to installation damages entirely specification Second, on reliance inappropriate for DeFrank’s consumer fraud As claim. explained plaintiffs’ in our discussion of breach of specification damages count, fact, not, contract are damages way and, hence, real or measurable in no only use plaintiff 12DeFrank was named whom the paid plaintiff made of non-OEM no difference. State Farm Carly her car it was in an Vickers “book value” for after totaled that, testimony, In she accident. her tried Vickers stated as far as knew, any did less not value car because on it. which were *78 constitute “actual damage” within the meaning of the addition, In Act. respect to DeFrank’s consumer claim, specification fraud damages chronological make no plaintiffs’ theory sense. Under of specification damages, the damage done to DeFrank occurred at the moment State specified parts non-OEM its repair However, alleged estimate. the misrepresentations made DeFrank, alleged and the failure to disclose the categorical inferiority of non-OEM occurred parts, after specification, when DeFrank was his handed estimate and damage the brochure. Actual cannot be the result of misrepresentations omissions and which are made after v. the has Connick Suzuki Mo- damage already occurred. Co., (1996). tor 174 Ill. 2d aware of
Perhaps temporal problems the that arise damage when actual is specification defined the mere parts, of non-OEM the court offered an appellate ad- damage which, ditional of explanation at least implicitly, problem. resolves this The appellate court stated: “There misrepresen- is evidence that Farm’s State material blindly tations led members accept numerous class the (i.e., parts specified knowledge non-OEM without of the parts).” inferior condition of App. those 321 Ill. 3d 269 (quote contained in of portion opinion unpublished 23).13 under Supreme Court Rule Notice the appellate what court has here. done this With sentence, it no case longer damage occurred specified. parts Instead, when non-OEM were the dam- accepted. age when parts occurred were This is theory of damages adopted by which was court, theory by plaintiffs. circuit nor is it the advanced theory damages appellate new offered appellate identify 13The court percentage did not what referring class it used the was when it term “numerous.” Nor explain why, did the only court if “numerous class members” were damaged, damages Farm was liable for to the held entire class. chronological making sense has the virtue damage. Ap- deception places it before
because reasoning plying case, DeFrank would to DeFrank’s brochure, have received an estimate first deceived then have in those documents would omissions speci- parts “blindly accepting] the non-OEM him into inferiority.” knowledge categorical of their fied without explain theory DeFrank However,this still does not how actually meaning damaged the Con- within the though above, even DeFrank Fraud Act. As noted sumer accepted placed on his that were the non-OEM damage truck, he no as a result suffered whatsoever acceptance. Accordingly, Farm’s because State specification did De- of non-OEM not cause or use *79 any damage, is fraud claim Frank actual his consumer without merit. Deception
4. Cause—Actual Proximate appellate that Farm’s court’s State conclusion blindly representations “led class members to numerous *** accept parts specified knowl- withоut inferiority” edge categorical apply in De- their cannot of proximate case an reason—lack of Frank’s for additional causation.
In
in
cases,
a series of three
this court
held that
has
misrepresentation
a cause of action for fraudulent
brought
plaintiff
Act, a
under the Consumer Fraud
must
prove
actually
by
that he or she was
deceived
misrepresentation in order to establish the element of
proximate causation. The three cases are Zekman v.
(1998),
Marketers, Inc.,
Direct American
Though entirely not it appears are favor a different arguing definition of causation for those individuals who have contracts with consumer fraud defendant versus who do To the those not. extent plaintiffs’ Further, it. argument, reject we reject importantly, plaintiffs’ attempt more we Zekman and Oliveira. The critical distinguish point Rather, these cases is not that involved they advertising. Zekman, Ol- legal the important principle established in iveira Shannon is that a case alleging deception Act, under the it is possible plaintiff establish proximate plaintiff causation unless the show can was, manner, he or “in she some deceived” Oliveira, Ill. 2d at misrepresentation. 155. Proximate *80 private causation is an element all of action causes Thus, under the Act. DeFrank must that he establish by representations was deceived State Farm’s omis- prove sions in order his claim. judg-
The circuit court did discuss its deception entire analysis proximate ment order the court’s finding contained in a direct and causation is that “as proximate result of State Farm’s violation of the Con- Act, sumer were incurred injured Fraud
201 decep- did address The damages.” appellate actual stated, The court fashion. summary although tion, is overwhelm- that “[t]here explanation, further without of its deception calculated Farm’s of State evidence ing in a contained (quote Ill. App. policyholders.” Court Supreme under unpublished the opinion portion 23). Rule omis- by the deceived DeFrank was notion that and brochure in his estimate representations
sions or by refuted categorically accepting into testi- following trial, gave At DeFrank the record. mony: you this. Did may I have asked
“Q. counsel] [Plaintiffs’ to State Farm? you report the collision Yes. [DeFrank] A.
Q. you report promptly? it Did A. Yes. Sam, you after Q. jury happened, what Okay. Tell the Farm. called State my me to take truck appointment an They A. made airport. center which is out to the claims Q. Okay. day. particular And I did on that
A. which you did that? Q. Okay. on the 5th Was it November Yes, A. sir.
Q. Okay. jury happened what on November Tell the you there. when went out 5th Well, pulled center. I it my I truck to the claims A. took looking it And the fellow there that —he started inside. said, said, Oh, yeah. By way, I I want all And I over. parts on that truck. GM
Q. you bring up? Why happen did know, they say, you Seeing commercials on TV where A. keep your GM car all GM.
Q. Okay. you it? That was all knew about time. A. all I knew about it at the That was Q. you? he What did tell said, A. He will talk about that later. We Q. you did think? anything Did that indicate —what up. figured something I A. *81 Q. Okay. you Did talk to a man named—a claim repre- somebody sentative or named Richard Hill? Yes,
A. sir.
Q. Okay. you When did do that?
A. When?
Q. you Yeah. When did do that? Was that while the truck— A. While this other looking and, fellow was my at truck guess,
I writing that, the estimate on we went into his of- fice.
Q. Richard Hill?
A. Richard Hill’s office.
Q. Okay.And did what give you? [sic] Mr. Hill bit, A. We talked for a little and then he handed me a little brochure from State Farm.
Q. Okay. A. policy. That stated their Q. Okay. Did you it tell policy that —state their about what? they
A. If parts your used non-OEM on vehicle. Q. they That would use non-OEM? they
A. That stand behind it. Yeah. Q. your What was finding reaction to they out that were going to use non-OEM parts your on vehicle? very
A. I upset. was
Q. you complain? Did
A. Did I to Mr. Hill at that time? Yes.
Q. And response you? what was Mr. Hill’s just promised A. He me basically that —or said that there really it, they how do they stand —that’s behind their parts. non-OEM If I any they had trouble would take care of me.”
DeFrank’s testimony abundantly makes it clear that he was not deceived by anything said, State Farm or did say, regarding the quality non-OEM parts. Even before spoke he to the adjuster, State Farm DeFrank believed, mind, in his own parts were not good Otherwise, as OEM parts. he would not have parts insisted that GM be installed on Further, his truck. become, DeFrank would words, not have “very his learning upset” upon were to be that non-OEM believed that non-OEM used on his truck unless he good parts. as OEM were not as appellate nor the circuit court ad- Neither *82 testimony explained light how, in dressed DeFrank’s “blindly” testimony, ac- it can be said that he of that knowledge parts cepted their of the non-OEM “without App. (quote categorical inferiority.” 321 Ill. 3d 269 opinion unpublished portion under in a of the contained Supreme 23). plainly Rule DeFrank was not Court “Quality Replace- by Farm’s estimate or deceived State by he was not deceived ment Parts” brochure. Because proximate Farm, DeFrank failed to establish the necessary causation to recover under the Consumer Fraud Act. light above,
In it is clear that DeFrank suf- damage, fered actual he no and that failed to establish proximate reasons, For DeFrank failed causation. these prove private cause of action under the Consumer representative DeFrank, Fraud Act. Because as the plaintiff, proven fraud, has not claim for his consumer plaintiffs’ there can be no Illinois consumer class e.g., See, Oliveira, 156-57; fraud 201 2d at count. Ill. Enterprises, Charles Hester Inc. v. Illinois Founders (1986). Co., Therefore, Insurance 2d Ill. 294-95 judgments appellate we reverse the of the circuit and plaintiffs courts in favor of on the consumer fraud count.
D. Other Issues light disposition plaintiffs’ In of our of consumer claim, fraud we need not reach other issues raised including claim, State Farm in relation to that propriety punitive damages of the circuit court’s award. Equitable Declaratory
III. Relief complaint, In count III of their third amended plaintiffs sought rights permanent a declaration of and a alia, inter would,
injunction prohibit State Farm representing from “that non-OEM crash are of quality’ parts” ‘like kind and to OEM crash or that non- pre-loss OEM crash can “restore a vehicle to its granted condition.” The circuit court declara- plaintiffs stated, tory relief. The court entered a declaration which essence, obligation that State Farm’s contractual class, the same to each respect member of regardless policy language of variations and state However, regulations. the court declined to award relief, injunctive finding money damages adequate remedy constituted an at law. plaintiffs’
In of our claims for light disposition fraud, statutory consumer we af- breach contract equitable firm the circuit court’s denial of relief. We the circuit court’s relief. granting declaratory reverse
CONCLUSION reasons, foregoing portion For the circuit *83 denied judgment plaintiffs’ request court’s which All relief is affirmed. other of the equitable portions are reversed. Those judgment portions circuit court’s which affirmed the denial appellate judgment court relief and which reversed the circuit court’s equitable are affirmed. All other disgorgement damages award are reversed. portions appellate judgment of the court’s in judgment part court Appellate affirmed in part; and reversed in part circuit court judgment affirmed and reversed in part. in the consideration part JUSTICE THOMAS took no or decision of this case. FREEMAN, in and dis- concurring part
JUSTICE in senting part: some, but colleagues respect
I with agree my my appeal. Apart all, in this from issues raised disagreement legal matters, I on these am troubled today’s opinion. I, therefore, the tone and tenor of write separately explain my views.
I. BREACHOF CONTRACT jury The court reverses the verdict in favor plaintiff outright, class based on several different agree major points. First, I rationales. with two I concur judgment in the that the nationwide class certification disagree analysis, I cannot stand. While with the court’s although I Further, believe its conclusion is correct. rightly “specification” damages concludes that the necessitating law, reversal, have no basis in thus I cannot completely join portion opinion in this of the court’s unnecessary because of some dicta.
Notwithstanding respectfully disagree above, I with the remainder of the court’s conclusions on the claim, breach of contract and dissent I therefrom. As will explain, the court errs in its conclusion that prove any cannot a breach of of the various insurance policies during period. in Moreover, effect the class I do jury engaged improper speculation not believe that the awarding damages, installation such as would neces- stepping overruling jury sitate this court in and verdict.
A. Nationwide Certification The court concludesthat nationwide certification was erroneous because the various contracts State Farm uses interpreted promising in different states cannot all be thing. Although agree the same I with the ultimate result by my colleagues too, reached I, would find that the — certifying circuit disagree court erred class—I nationwide *84 reasoning.
with cоurt’s analysis respect matter, As an initial the court’s plagued example, to this issue is inconsistencies. For 206 that
the court criticizes
the circuit court’s conclusion
noting
there is a
contractual
that
unitary
promise,
language
contain different
and that
various contracts
there
to
the conclusion that
support
is no evidence
is irrelevant
State Farm’s
language
determining
2d
134-35. The
obligations to its insureds. See
Ill.
at
kind and
specifically
quality”
court
holds that
the “like
“pre-loss
form and the
condition” form “are
policy
But
original.)
the same.”
in
216 Ill.
at 130.
(Emphasis
argu-
State Farm’s
later,
inexplicably accepts
the court
ment that
‘like kind and
as used
quality,’
“[t]he
term
meant ‘sufficient to restore a vehicle
policies,
the relevant
”
2d at 144. In other
to its
condition.’
216 Ill.
pre-loss
earlier,
words,
ultimately
said
it
despite what
the court
in the two contracts are
promises
concludes
same,
differences
any
If the
are the
then
promises
same.
the forms are irrelevant.
between
the court states
example
inconsistency,
In another
trial on
the circuit court should have ruled before
State Farm’s various contract
forms
the issue of whether
However,
Ill. 2d at 127.
when
unitary promise.
had a
rulings,
the court
reviewing
it comes to
the lower courts’
evidentiary support
simply
holds that “there is
no
unitary promise.
that” there is a
lower courts’ conclusion
added.)
evidentiary
207 testimony of Don Porter— specifically, duced at trial — First, I note that the court scrutiny. cannot withstand property Porter “a State Farm consult- characterizes in 2d at This general ant auto claims.” 216 Ill. 119. description equivalent connotes Porter is the Porter, In reality, level a State Farm employee. lower wit- ness, State worked at the Farm home office Blooming- only ton as one of 19 State Farm “property consultants” trial, in the entire At nation. the time of he had been Farm for 21 Porter employee years. specifically State testified that he “here to what testify we do as an organization and I my what know that comrades do when talkwe about the use of these parts.” testified, admits, Porter as the court State Farm “ had a uniform practice: nationwide ‘restoring the ” to its pre-loss vehicle condition.’ Ill. 2d at 120. The court, however, may ignore determines it testimony because Porter did not refer specifically and every each form contract which State Farm used. I do not believe that respecting is the standard of review. Had Porter testified that he arranged his title, bookshelves alphabetical by order we would not refuse to accord this testimony weight because he did not that he specifically testify placed Dick before Moby Wuth- ering Heights. Porter was no and neophyte, he was testifying to the “as practices organiza- State Farm an His testimony away tion.” cannot be on brushed the basis might that he not have been State talking about Farm as a whole.
The court interprets also Porter’s testimony light least favorable to the result reached the circuit court, stating general testimony that his regarding State practices only Farm’s related “philoso- to State Farm’s words, phy,” obligations. not its contractual In other the court overrules circuit court because although Farm might State have had a nationwide “philosophy,” i.e., might promised have policies its various less— give policy- “philosophy” as a matter of might paid. have they for which holders more than the benefits bite for State a nice sound might it make Although not a advertisements, simply conjecture, this is Farm’s defer We must overruling the circuit court. basis for valid testimony unless it interpretation court’s to the circuit clearly has not been That standard erroneous. clearly is another best, suggesting here. At the court reached testimony at issue interpretation possible *86 is court’s. This the circuit judgment its substituting Porter, testimony, during his court’s role. reviewing not a Farm that State categorical statement made a general, As the court obligation. consistent overarching had an differ- had several that State Farm admits, Porter knew that as if he were unaware it is not ently policies; worded in its language policies use different Farm chose to State that Nevertheless, he testified states. in different same. everywhere the was obligation Porter’s numerous makes much of court also intent was only that State Farm’s statements self-serving condi- “pre-loss to their insureds’ vehicles to restore its than no less phrase this (Indeed, repeated Porter tion.” But testimony.) of his the course during 26 times instance, through. For sometimes, slipped answer another all insureds Farm treated State asked whether when crash non-OEM specifying to respect “equally with do. It we testified, my experience, “In Porter parts,” vehicle, age any make doesn’t difference added.) against cuts This (Emphasis the vehicle.” type of obligation Farm’s that State argument the court’s individual every condition preloss on the depends preloss of its component a age is vehicle, as a vehicle’s asked Farm counsel for State point, At another condition. ‘non-OEM “the term his definition supply Porter to ” responded: He part.’ “Well, part part by made a non-OEM to me is a that’s other original And, know, you than the but it manufacturer. me, you if simply buy part to is from Ford and the Ford by Ford, you buy fender made but can that fender by originally produced that’s —that’s Ford another manufacturing produced firm type that has the same good fender or fenders as as the that was the OEM fender added.) (Emphasis fender.” clearly parts Here Porter that non-OEM had testified good parts. be as OEMas cross-examination,
On Porter was asked about a memorandum, internal confidential titled (GCM) (I General Claims Memorandum #430 will return later). to this document this Porter admitted that docu- required parts ment quality.” be of “must OEM subsequently posed
Plaintiffs’ counsel the fol- lowing question following Porter, and received the response: “Q. Yes, Now, sir. guarantee anywhere there to— general
else other guarantees than claims memo that parts will these be made out of the same construction and have the same integrity parts? structural OEM as the know, sir, that,
A. say yes, You I have would it does says after all it quality replacement because part, and when saywe quality replacement part, we mean those good are as as the that were on the vehicle at the time *87 added.) (Emphases the loss.” of “quality replace- Porter here made clear the that term part,” “parts good ment which meant that are as as the parts that on loss,” were the vehicle at the of time the guarantee quality. was here, of OEM Thus, Porter equated guarantee preloss to restore the vehicle to guarantee OEM-quality replacement condition awith of parts. telling wholly This admission undermines the theory preloss destroys court’s condition commonal- ity, preloss quality, because if condition means OEM then preloss a vehicle cannot he to restored condition with a part quality, which falls short of OEM and thus individual 210 if, as plaintiffs’ necessary
examinations of vehicles is not concluded, jury qual- all non-OEM are of lesser ity than parts.14 OEM
The was to jury entitled believe Porter’s admissions favor term plaintiffs’ repetition over his constant of a Farm, favoring long-term employer. his The court’s State are proffered disregarding testimony reasons Porter’s simply untenable.
The more- testimony, court’s treatment of Porter’s over, by I am is not an isolated event. troubled the court’s lack of appropriately consideration —or more its consider- This ation —of evidence adduced at trial. case comes more before this court on from trial which lasted appeal days elapsed than between opening seven weeks —50 August 16, jury’s and the October statements on trial, testi- verdict. Over course 81 witnesses fied, circuit into well admitting with the court evidence trial, over 200 exhibits. Before the case even went to years there of between pretrial proceedings were over two original complaint class action filing plaintiffs’ of trial. July August beginning 1997 and 30,000 than pages common law record alone runs to more court filings. yet, 81-page opinion, And in an pages devotes less than two to initial its recitation full me, anyone, it concern ought the facts. It concerns to case is to see that the actual evidence adduced this such short shrift. given I at of this separate opinion,
As
stated
the outset
however,
my
I
with
ultimately agree
colleagues
do
accepted
topic
the court
Farm’s
14On
I note that
has
guarantees
to
argument
its
to restore vehicles
contractual
perform
“pre-loss
repairs
their
condition” and
quality” may
defined in terms of each other. See
“like kind
be
fungible,
promises
If
as the
211 Initially, the class cannot stand. I believe that nationwide in applying the circuit court abused its discretion Illinois Farm and law to the contracts between State non-Illinois (Second) residents. Illinois follows the Restatement of choice-of-law decisions. Mor- making Conflict of Laws in Associates, Kitzman, v. Chapman ris B. & Ltd. 193 Ill. 2d (2000). 560, when provides 568 The Restatement law, the have not made an effective choice the parties of possible factors of relevance of in breach to choice law of contract cases are
“(a) place the contracting, of (b) place negotiation contract, the of of the (c) place performance, the of (d) subject contract, the the location of matter of the (e) domicil, residence, nationality, place incorpora- of place parties,” tion and of business of the which to according are be “evaluated to their relative importance to respect particular issue.” Restate- (Second) (1971). ment 188, § of Conflict of Laws at 575 In contracts, of context insurance rights thereby
“[T]he created are determined the lo- cal of the law state parties which the was to understood be principal location of the during insured risk the term policy, respect issue, unless with to the particular *** some other state significant relationship has more parties, transaction and the in which event the local law of the applied.” other state will be Restatement (Second) (1971). of 193, § at Conflict Laws 610 Accord Westchester Fire Insurance Co. v. G. Heileman Co., (2000). Brewing 321 App. 622, Ill. 630-31 With respect contracts, to automobile insurance the “principal location insured risk” is that location in which vehicle to be garaged is most of during the insurance (Second) policy’s term. Restatement Conflict Laws (1971). b, § Comment at factors, Of the above only one which ap- would pear militate in favor of applying Illinois law the Il- is the fact that State Farm an
out-of-state contracts *89 factor, linois resident. The most the location of important the insured risks —the insureds’ vehicles —would cut The against application of Illinois law. contracts would not have been delivered Illinois. The insureds would Illinois. give not domiciled in And the act to rise be last signatures to a contract —either the insureds’ valid in the likely of checks mail —most would not deposit have occurred in Illinois. Consideration of the relevant against to appear strongly apply- factors would militate in this ing Illinois law the entire multistate class case. Moreover, if the fact of State Farm’s Illinois even Illinois law ac- uphold application domicile sufficed to doing so cording principles, to Illinois choice of law would Petroleum Co. Phillips In constitutional muster. pass Shutts, v. 797, 628, 2d Ct. 472 86 L. Ed. 105 S. 2965 U.S. (1985), Court reviewed a class action the Supreme Phillips Petroleum recov- brought against Kansas gas contracts. The ery royalties interest on in oil states. at entered into 10 different contracts issue were entered into Even of the contracts were though most upheld its Kansas, Supreme the Kansas Court outside to the entire trial Kansas law apply court’s decision action. The stated Court Supreme Court reversed. might of law be multiple
even in a case
choices
where
had to comply
possible,
court’s choice
law
forum
Shutts,
due process.
guarantees
with constitutional
822-23,
649,
L.
2d at
105 S. Ct. at
at
86
Ed.
472 U.S.
(“in
may
be free
many situations
a state
2980
But the constitutional
of several choices of law.
apply one
***
even in a nationwide
respected
must be
limitations
action”).
by
the rule formulated
rejected
The Court
class
“
a state court
Court
'Where
Supreme
the Kansas
class ac-
over a nationwide
jurisdiction
determines
it has
of notice and
process guarantees
due
tion
procedural
adequate representation
present,
are
we
believe
law
applied
compelling
of the forum should be
unless
reasons
”
applying
Shutts,
exist for
a different law.’
472 U.S. at
quoting
821,
648,
2979,
86 L. Ed.
at
105 S. Ct. at
Phillips
Co.,
195,
Shutts v.
221-22,
Petroleum
235 Kan.
(1984).
1159,
679 P.2d
The Court also noted that a
by
choice of the forum state’s law—as evinced
having filed the suit there —is of “little relevance.”
Shutts,
648,
The same that caused the Court to find a constitutional violation in Shutts are present in the instant Shutts, case. As in there are significant outcome-determinative differences between regarding the law of and Illinois laws other states the breach of instance, contract action. For our circuit appellate courts determined that State Farm’s promise repairs performed to have “of like quality” quality kind and meant “of like kind and parts,” agree. OEM a conclusion However, with which I jurisdictions as observes, State Farm courts in other have language. e.g., Ray not so See, construed the v. Farmers 214 Exchange, 200 1417, 1411,
Insurance
246
App.
Cal.
3d
***
(“
(1988)
593,
quality’
‘like kind and
596
Rptr.
Cal.
before
[as]
the same condition
‘substantially
means
Pyeatt,
Owens v.
App.
248 Cal.
”),
quoting
accident’
v.
(1967); Schwendeman
100,
840, 849,
Cal.
107
Rptr.
57
Co.,
9, 22-23,
Insurance
Casualty
USAA
App.
116 Wash.
Farm Mutual
Berry
v. State
1,
(2003);
see also
65 E3d
(Tex.
Co.,
884,
Automobile Insurance
894-95
9 S.W.3d
2000).
provided
expressly
Other states have
App.
Civ.
used in
may be
that non-OEM
regulation
statute or
part
on
long
they
equivalent
so
are
repairs
Or.
the accident. See
immediately
prior
the vehicle
746.287(2)
211,
(1999);
tit.
Regs.
Mass.
Code
§
Rev. Stat.
(2003).
133.04(1)
12:095
(2004);
Ky.
Regs.
Admin.
§
change the
laws would
jurisdictions’
these
Application of
of the instant case.
outcome
a sufficient
forum state to have
It is
for a
possible
the claims of out-of-state
in the resolution
interest
the forum state’s
application
as to render the
litigants
despite
unfair
fundamentally
nor
arbitrary
law neither
Shutts, 472 U.S. at
differences.
outcome-determinative
However,
646,
Ct. at 2977-78.
2d at
105 S.
86 L. Ed.
in the
an interest
that Illinois has such
I do not believe
an Illinois
Farm is
It is true that State
instant
action.
have an interest
citizen,
Illinois does
corporate
have
However,
Illinois does not
its conduct.
regulating
protecting
interest
compelling
any particularly
states, especially given
of other
of the citizens
rights
unable or
*91
states are
the other
is no indication
there
within
their citizens
rights
to vindicate
unwilling
laws.
to their own
according
systems,
their own
any non-Illinois
Farm nor
Moreover,
neither
State
reasonable
any
have had
appear
would
policyholder
contrac-
their
govern
would
that Illinois law
expectation
Shutts,
2d at
822, 86 L. Ed.
U.S. at
dispute.
tual
See
(fairness
must
calculus
648-49,
Ct. at 2979-80
105 S.
parties
expectations
the reasonable
take into account
control). Thus, I believe
state’s law would
as to which
class
the entire nationwide
Illinois law to
applying
in
run
certified
this case would
the circuit court
which
Shutts,
out
process
spelled
due
concerns
afoul of the
for
multistate certification
this
and I
reverse the
would
Family Mutual Insur
State ex rel. American
reason. See
2003).
(Mo.
Clark,
483, 486-87
v.
106 S.W.3d
ance Co.
Interpretation
B. Contract
cannot
that the nationwide class
Having determined
may
the verdict
stand, the court next examines whether
Ill. 2d at 135.
any
subclass. 216
respect
be
with
upheld
must be answered
question
The court concludes that the
actually
question
The court
answers
negative.
citation to author-
analysis
with no
paragraphs,
two
Before law, prove failed to breach matter any poli- Farm made in of the various any promise drafted, helpful cies State Farm it is to recall the overar- heart, At complaint. theme of the ching plaintiffs’ complaint promised was that State plaintiffs’ repaired their vehicles would be policyholders State Farm but the non-OEM OEM-quality parts, good not as as OEM repairs simply were specified it. State Farm know- and that State Farm knew parts, plaintiffs the inferior non-OEM ingly specified contentions contended, they cheaper. were These because ad- one considers the evidence ignored, cannot be when numerous jury duced at trial. Plaintiffs to the presented problems that detailed internal State Farm memoranda *92 216
with parts, some of which criticized non-OEM memorandum parts class. One such went so far as to state specifically, contrasting galvanized parts OEM nongalvanized non-OEM parts, that “we may well say it quality, is like kind and but the bottom line is that it is not the same.” Plaintiffs presented also expert testimony to the effect that non-OEM parts were cat- egorically inferior to OEM parts thus were never of like kind and quality. State Farm not challenge does these experts’ review, bona on and thus their conclusions fides must be I accepted. believe it is important note that a reviewing court neither can judgment substitute its for that of trier of fact nor can it set aside verdict simply because the trier of fact could have drawn differ- ent conclusions from conflicting testimony. Doser v. Sav- Sales, (1990). Inc., age & Manufacturing Ill. 2d 176 Although presented witnesses, State Farm its expert own a “battle of the is experts” a situation in which review- ing courts are especially second-guess loathe to the find- ings by Glenville, made the trier of fact. See In re 139 Ill. (1990). 2d 242
The court discussing avoids the evidence presented by plaintiffs by Farm holding promised State never any policyholders repairs parts would utilize of equal quality Thus, to OEM parts. according my colleagues, it does not matter whether knowingly State Farm was repairing its vehicles policyholders’ parts, with inferior promised because State Farm never to use noninferior parts. suggest I that the court perhaps insufficiently has policy implications overturning considered the a bil- lion dollar verdict on the an knowing basis that insurer’s usage of inferior is I am parts “good enough.” not stat- inferior; ing parts by my that non-OEM are definition is that point plaintiffs alleged, jury verdict found, parts that as of now non-OEM are not to the up parts standards of OEM factual conclusion the court —a addressing. quality could of non-OEM avoids change dispute future, does not but the court actually specifying crash counterparts. repairs to their were inferior OEM being policy, bad conclusion In court’s addition analysis of the relevant also on a flawed based *93 regard piece provisions. I of In note a contractual remarkably to the court determined evidence which has president of In State Farm’s vice be irrelevant. penned memorandum, internal claims a confidential (herein- as Claims Memorandum #430” known “General #430). quality Therein, discussed the of after GCM he repairs. parts is, Farm’s the to used in He—that State be distinguished president specifically vice of claims — required parts and between what was of “aftermarket” “salvage” parts. required aid to As an what understanding memorandum, I it is note that synonym is a uncontroverted that “aftermarket” “salvage” “non-OEM,” and it is also uncontroverted that grade parts implies, are, as non- the name a lower than parts. comparing grades parts, State OEM In the two president say: this to Farm’s vice of claims had parts quality, must OEM quality be “Aftermarket guaranteed by suppber; must be Salvage com- parts must be better, equal, quahty or pared parts being to the replaced.” (Emphases original.) specifically required Thus State Farm that non-OEM holding quality parts, only parts equal be of OEM to “salvage” parts equivalence to the lesser standard of parts being replaced. might
One think that this would be the end of expect might matter. A ing reader that a review- reasonable court would affirm the court’s conclusion lower parts quality parts, equal had to be of to OEM by given president of Farm’s vice memorandum State precisely however, court, claims which so stated. ought #430 to be treated does not consider whether GCM binding Farm, as a by court, admission State because the footnote, in a concludes that GCM #430 is irrelevant. See 216 Ill. 2d at Instead, 142 n.5. the court performs its investigation own the policies issue, into at ignoring fact that State Farm has already said that its non-OEM (aftermarket) parts “must be of OEM quality,” op- posed salvage parts, grade, merely a lower which are required equal to be of “to quality parts being replaced.” if the were
Even court correct to so blatantly ignore evidence, analysis of the contracts is logically For faulty. instance, what calls “The ‘You (see Agree’ 2)), Policies” 216 Ill. 2d 137 (heading at Farm promises to restore the insured’s vehicle its “pre- loss particular condition.” This form of the contract also contains what “you agree” language: the court calls the “You agree that such parts may us include either furnished the vehicle’s manufacturer including non-original from other equipment sources (Emphasis manufacturers.” 216 Ill. 2d original.) See *94 at 137. twofold,
The court’s form policy defense this is and by begins focusing “you agree” on the The language. court reasons to this a agreeing language has policyholder implicitly admitted that there must ex- ist at least some parts capable satisfying non-OEM promise. State Farm’s The court construes this admis- (in strictly against policyholder sion the contrast startling court’s in to the treatment of State Farm’s admission quality GCM #430 that non-OEM be of parts equal must parts). 216 to OEM See Ill. 2d at 137-38.
First, one recall this is an must insurance classic contract of adhesion. See Cramer v. policy —a (1996) Exchange Agency, Insurance 513, Ill. 2d 174 533 (“It (Freeman, J., is well specially concurring) established adhesion”); also that an insurance contract is one of see
219 Comm’n, 139 Ill. Scholarship v. Illinois State Williams (1990) (adhesion are those in which contracts and position, disparate bargaining are in a parties the but, agreement in drafting hand one has no party has as the other rather, party must “take it or leave it” drafted). are a ‘boil- “part of Contractual clauses which of adhesion their agreement” a contract have erplate’ of the “significance greatly inequality reduced because Williams, Ill. 2d at power.” parties’ bargaining bargain has to average person ability 72. The no over policy. individual of his or her auto insurance clauses fact, seriously ignores damages The court a credibility analysis by doing of its so. notion that binding, has entered a factual admis- policyholder into an insurance would simply by purchasing policy sion auto merely seriously sug- be if the was not laughable a gesting overturning it as a basis for billion dollar produced by two-month-long verdict a trial in which the evidence that an know- supports conclusion insurer ingly specified inferior of its repairs crash policyholders’ vehicles. however,
More overridingly, ignoring injus- even construing tice of strictly contract adhesion favor drafter, analysis logically the court’s flawed. The “you agree” language is not an admission that there ex- non-OEM parts ist which will restore vehicles to their It is preloss merely agreement condition. an if proposes perform part with a non-OEM repair preloss which is sufficient to restore a to its condi- vehicle tion, object cannot part insured to the because simply if it is non-OEM. But are sufficient condition, restore their preloss vehicles to as the consistently jury by have maintained found, be policyholder verdict cannot not forced *95 it of accept simply “you agree” language. because the The the is fallacy position court’s better viewed when play one examines how it in the would out context of other policies State Farm could Suppose, have issued. for example, that State Farm knew major that all the auto manufacturers considering building plants were in a foreign country that I designate Country shall A. In anticipation plants being the built in order to any complaints forestall by policyholders receiving about A, parts produced in Country State Farm amended its policy provide so as to that agree parts such may parts
“You us that include by manufacturer, including furnished the parts vehicle’s in Country manufactured A.” reasoning in employed by the instant case would that everyone policy hold insured under this has entered into a are binding admission that there General Motors in parts Country manufactured A which are of sufficient to their quality restore vehicles to preloss This is logically condition. fallacious. Recall that policy in language my hypothetical was drafted in ad- vance of in A plant Country being built, and thus at use, into did any time it went there not exist General Country Motors made in A. A plain reading of this rather, language is, by concession insured aif A part Country manufactured suffices to restore his condition, preloss reject vehicle to he may part simply origin Country because of its A. colleagues My might protest hypothetical may far-fetched —and it no so than be —but more court’s reading language tortured a contract of against adhesion innocent in order to avoid policyholders having acknowledge proofs adduced at trial. The the language upon remains that which underlying point the court relies is not an admission an insured that there exist which suffice restore preloss agreement It is merely vehicle to its condition. an parts, may are such the insured not refuse there if they parts. are non-OEM accept simply them because
221 of this stage policy- The the court’s defense second of is to promise the that State Farm’s form focuses on fact its condition.” “pre-loss insured’s to restore the vehicle is unsuited to be policy The that this form court believes determine whether a class action because to the basis of to condition preloss has been restored a vehicle each of the condition of individual requires determination after repair, the loss and vehicle before policyholder’s questions of individual would “over- and this multitude to the 216 Ill. whelm common subclass.” any question at 138. noted, Farm
However, already as I have State witness “quality replacement part,” Porter that the term testified “parts good which meant that are as that loss,” time were on the vehicle at the testimony equates OEM This guarantee quality. of guarantee preloss to restore the vehicle to condition with guarantee replacement parts, which OEM-quality theory the court’s that condition preloss undermines destroys commonality. If means OEM preloss condition testimony reveals, then a can- quality, as Porter’s vehicle preloss part not be restored to condition with a which if, concluded, falls quality. jury short of OEM Thus as the all quality are of lesser than OEM parts, vehicles plaintiffs’ individual examinations are necessary. argue State Farm does not in its to this briefs in determining court that the circuit erred court “like kind and “pre-loss quality” condition” Indeed, are the promises contrary, same. to the Farm affirmatively argues that promises are same, argument majority accepts. an See 216 Ill. 2d at 143-44.
Accordingly, the has failed to any demonstrate reason be from recovering would barred Agree’ under “The ‘You Policies.” analysis kind and quality” court’s “like policies Here, also falls short. the court examines those policies promises in which State has it written that “pay repair replace property part or with like quality.” language kind and The court construes this way possible the ing ultimately Farm, most favorable for State conclud- unambiguous promise an this is preloss restore the vehicle to its condition—a term which appears nowhere in this form the contract. (see 140) acknowledges
The court 2d at Ill. plaintiffs’ argument quality” that “like kind and means quality parts.” interpreta- of “like kind and OEMto This *97 supported by analysis tion is well State Farm’s own of required parts, the standards of non-OEM in GCM#430: parts be quality, quality must OEM that “Aftermarket of guaranteed by supplier; must he the Salvage parts equal, better, quality must be of or com- pared parts the being replaced.” (Emphases original.) in respectfully suggest ought I that this to be the end of the argue quality” matter. Plaintiffs that “like kind and quality parts”; kind means “like and to OEM State Farm has admitted its internal memoranda that this is рrecisely quality requires the it standard of non-OEM parts; case closed. again ignores
Instead, the court once memoran- the by president dum State Farm’s and vice of claims language the Farm construes State drafted State going favor, far as Farm’s even so to draw inferences advantageous to State See 216 Ill. 2d 140-45.In Farm. at doing, so court our abandons well-established rule ambiguities strictly that contracts be insurance are to against See construed the drafter. Travelers Insurance Eljer Manufacturing, Inc., 278, Co. v. 197 2d Ill. 293 (2001); Koloms, American States Insurance Co. v. 177 Ill. (1997); Corp. Liberty 473, 479 Marine v. Outboard (1992). Co., Mutual Ill. 2d Insurance 154 108-09 quality” clearly ambigu- phrase “like kind and is The language gives no clue whether it ous. The itself as to parts quality to the to OEM immediatelyprior kind means like part on vehicle which existed phrase against construing State this But instead of crash. precedent, the court bends our Farm, as mandated interpretation favors that find an backwards to over if non- instance, court reasons that Farm. State For (as plaintiffs promise parts have this OEM alleged), never satisfied phras- for this “indirect there be no need would ing.” words, finds In the court Ill. 2d 140. at other very vagueness of adhe- Farm’s contract State that the point is a in State Farm’s sion favor. fundamentally obvi- Moreover, the court misses disagreed point Farm that and the ous State quality like kind and to whether non-OEM were parts. Farm, course, has all maintained to OEM State along of like kind and are or can be that non-OEM professed parts. quality belief, there to OEM Given this only us- restrict itself no reason for State Farm to parts. proofs ing trial, however, convinced OEM at Essentially, jury that case. this was promised saying Farm must not have State quality any parts it be of OEM used would plaintiffs argued proved because the promise. defies do not This reason. We never fulfilled interpretation automatically adopt of a a defendant’s *98 proves plaintiff it a breach contract drafted whenever a suggest interpretation is of the To so of its contract. absurd. in of State
The court also draws inferences favor kind and followsthe “like Farm from the sentence which promise: repair replacement quality” results in “If the or you pay quality, for the than like kind and must better Clearly by this of the betterment.” statement amount is to cover Farm in contract of adhesion meant State its unlikely repair left the Farm in the event that State argues policyholder on State off. But the court better very Farm’s behalf that the existence of this statement shows that “like kind quality” cannot mean “like quality did, kind and parts,” to OEM because if it noth- ing could ever run afoul of the “better ‘like than kind ” omitted.) and quality’ language. (Emphasis 216 Ill. 2d First, at 141. reasoning faulty this much same way as the court’s reasoning regarding the “you agree” language: just Farm could as easily provided have the repair replacement that “If your results in vehicle being fly moon, able to to the must you pay for the value of ability.” this That State Farm self-serving included in a language contract adhesion does not constitute an admission its policyholders regarding the hypothetical possibility against sought State Farm which has protect itself.
Moreover, the proofs plaintiffs presented at trial concerned quality parts during the period. claimed, relevant Plaintiffs jury con- cluded, based on documentary evidence and the testimony bona whose experts State Farm does not chal- fides lenge appeal, on that non-OEM were parts equal of OEM parts. This does not the possibility foreclose a master craftsman in Zurich might the future take it himself upon to smith set of General Motors crash out of to such alloy, precise titanium tolerances improvement were indeed an on parts. OEM More realistically, it is possible company the future a could produce mass non-OEM parts which are better than parts. according OEM It could But happen. trial, proofs plaintiffs presented at and the verdict jury favor, in plaintiffs’ yet. returned it has not happened protected State Farm has itself against eventuality this by the which upon sentence the court relies. there is But no basis for the court’s broad inference from this to support sentence baseline interpretation promise State Farm has made in version policy.
225 reasoning Again, is that it is in court’s flaw theory taking plaintiffs’ of the case into account evaluating promises. The State Farm’s contractual reasoning plaintiffs contend, if, as court’s runs follows: parts quality kind and to OEM of like no non-OEM were parts, no for State there have been reason then would policyin Farm the manner which to draft reasoning they problem suggest this is that did. The very dispute much in non-OEM it was whether quality parts. kind OEM State Farm of like to were they consistently and still maintains has maintained equivalent, and State Farm are or can be drafted policy. already observed, the
Moreover, as I have court quality” ultimately that “like kind and means concludes something language of which is nowhere found in the “ argues, policy: just means, it ‘suf- as State pre-loss ”216 ficient restore a to its condition.’ vehicle 2d Ill. at 144. There are a of difficultieswith this number ambiguous First, conclusion. it contravenes the rule that strictly language in an insurance contract is to be against Clearly the insurer. the court finds the construed given quality” language ambiguous, “like kind meaning ultimately finds that it has a contained ambiguous, in the that it nowhere contract. Given question against ought there is no that it to be construed Eljer Manufacturing, 293; State Farm. 197 Ill. at Marine, Koloms, 479; Ill. 154 Ill. 2d 2d at Outboard at 108-09. problem
A with the court’s conclusion is that second ignores it, reach order to the court State Farm’s own qual- “must be of OEM admissions ity.” truly The court’s blindness GCM #430 is willful possible troubling. is, course, It for reasonable minds piece weight particular as to to accord a differ though precise But to on the evidence. act as a document hand, issue penned by at State Farm’s vice president of claims, does not even exist only *100 does a disservice not to parties the but the credibility also to of this court. The suggests court that GCM #430 is irrelevant because it is not the contained within four corners of policy the and explicitly found the court has not that the “like kind and quality” language See ambiguous. is 2d at 142 Ill. n.5. observed, This misses the mark. As I have already meaning the the ultimately court ascribes to the phrase— to a “sufficient restore vehicle to its pre-loss condi- tion” —is not found within the four corners of the itself It document. can further only public’s erode the trust judiciary size, the to a reverse of ignoring verdict relevant evidence precisely point, on because the court beyond claims it is unambiguous clear, any doubt —that — State Farm’s to promise “repair replace or the property part like and quality” part with kind means “with equally part bad to whatever on just the vehicle before the accident” and cannot possibly mean “like kind to quality parts.” OEM There is no defensible basis for this conclusion and there is a host of evidence to the contrary, including only testimony Porter’s and the #430, text of testimony by GCM but also extensive State repairs witnesses that with non-OEM parts would compromise never safety of the vehicle. If State Farm may utilize replacement parts no better than the happened which be on preaccident, to the vehicle or faulty, concludes, however old as the court a vehicle safety could well If the court very repair. have issues after is outside the mean- looking the document to understand is, it ing phrase, of the and there is no that then question is treating phrase ambiguous, regardless my colleagues are to forthright enough whether so admit.
Moreover,
#430 itself
court’s
GCM
shows
analysis
only
phrase
contract
is
is the
wrong —not
it
actually interpreted
the court has
ambiguous, but
contradicts
the court’s
directly
#430
incorrectly. GCM
ambiguous phrase
Farm interpretation
pro-State
the vice
only did
policy.
insurance
Not
in State Farm’s
aftermarket
had
specify
of claims
president
the lesser
specified
he
“of OEM
also
quality,”
be
being replaced”
i.e.,
“the parts
equality
standard
—
only
applicable
standard
condition —was
preloss
square
interpreta-
How the court can
“salvage parts.”
this evidence
quality”
of “like kind and
tion
deafening
given
me.
the court’s
beyond
Apparently,
well.
matter,
it is
the court as
beyond
silence on
construing
ambiguous language
The court errs
Farm, in
kind
terms
“like
in favor
quality”
Doing
only
policy.
in other versions of
which appear
*101
in
ambiguous
rule
terms
insurance
so violates the
that
Indeed,
strictly
against
construed
the drafter.
are
policies
have
today’s majority
of
four
of
three out
the
members
explicitly endorsed this
opinions which have
authored
contracts,
of
long-standing rule
construction
insurance
concurred in an
recently
and the fourth member has
opinion
applied.
Eljer
in which the rule was
See
Manufac-
(Justice
for
McMorrow, writing
2d at 293
turing, 197 Ill.
“if
court,
language
that
the
acknowledging
the
it is
meaning,
is
to more than one
policy
susceptible
strictly
ambiguous
considered
and will be construed
in
who
the
and
favor
against
policy
the insurer
drafted
Home Insur-
insured”);
Light
Central Illinois
Co. v.
the
(2004) (Justice Garman,
141,
Co., 213 Ill. 2d
153
ance
that “if the
court, acknowledging
words
writing
the
reasonably susceptible to more
policy
in the
are
used
be
and will
meaning,
they
ambiguous
are
than one
drafter”);
State
against
construed
the
Gillen v.
strictly
Co., 215 Ill. 2d
Farm Mutual Automobile Insurance
(Justice
(2005)
writing for a unanimous
Fitzgerald,
is
court,
language
policy
“[i]f
that
the
acknowledging
susceptible to more than one
meaning,
reasonable
it is
considered
and
be
ambiguous
against
will
construed
the
insurer”). This construction also
the
contradicts
court’s
own statements
nothing
“There is
to support
[linguistic
conclusion that
are
differences]
irrelevant and
all
of State
policy
Farm’s
variations
therefore
are
(216
susceptible of the
interpretation”
same contractual
134)
Ill.
at
and that
“like
and
kind
quality” policy
form and the “pre-loss
form “are not condition”
same.”
in
(Emphasis
original.)
Because the regarding “like kind and quality” erroneous, form of is contract there no reason could not recover under this form of the contract “pre-loss as well as the condition” form I contract, previously demonstrated. my
Unlike
I
colleagues,
ambigu-
would construe
drafter,
ous terms in
Farm’s policies against
e.g.,
unwavering
See,
accordance with our
precedent.
Koloms,
Eljer
Manufacturing,
293;
C. on damages awarded on to discuss goes The court is claim, so though doing even contract the breach of determined that Having already necessary its decision. to any event faulty there was form was the verdict court’s underlying any policies, no breach of dictum, even damages clearly is decision to address discussion an “ad- damages labels its though outset, at I to As I stated ditional reason” reverse. is no basis for so- agree the court that there with policy- No Farm “specification” damages. State called harmed the isolated act holder was repaired their be with specifying that vehicle Rather, only policyholders those whose part. repaired vehicles were with non-OEM actually OEM can who the difference to have installed paid be been said have harmed.
However,
agree
I do not
court’s unwarranted
requesting specification
on plaintiffs’
attack
counsel for
First,
wholly
legal
it
irrelevant
to the
issues
damages.
their
“why plaintiffs
in this case
devised
involved
theory in the
specification-damages
first instance.” 216
is noth-
question
2d at
The court’s answer to this
Ill.
147.
unintel-
more
an attack on
counsel as
ing
plaintiffs’
than
dishonest,
in that order. The court reasons
ligent and
was,
first, ignorant
would
at
counsel
destroying commonal-
damages
to establish
without
have
and,
invent
ity
then,
enough
deliberately
mendacious
damages
in order to hoodwink the
bogus
category
into
this action
a class ac-
maintaining
circuit court
230
The court’s attack has the of being additional fault inaccurate. The guesses court that plaintiffs invented specification damages them, because without plaintiffs would have been “unable to establish damages still commonality maintain the a required of class action.” 216 2d yet, Ill. at 147. And the court does not hold that category damages other of plaintiffs claimed, installa- tion damages, destroyed commonality. fact, In the court admits that there is nothing wrong “us[ing] with statisti- cal inference in determining damages in a aggregate class (216 151), action suit” Ill. 2d at did plaintiffs as respect damages. installation The court implicitly here could have established installation that plaintiffs admits (the damages without destroying commonality court simply holds that plaintiffs presented evi- insufficient dence to support damage their installation claim case, a conclusion with I I disagree, which as shall discuss). So the “realization” the court attributes entirely false. And thus the attack on plaintiffs’ counsel, along with the impugning their integrity, accurate, unwarranted even if it were is ill- founded well. respect
With to installation I damages, would hold that plaintiffs present uphold did sufficient evidence to their damages installation claim. This court has stressed damages determination the amount of is a function reserved to trier of fact and that a reviewing opinion should not substitute judgment the trial court. Richardson v. rendered Chapman, 175 (1997). 98, Moreover, Ill. 2d 113 “a court a reviewing jury’s damages assessment of should not interfere unless a proven damages element of ignored, the verdict passion prejudice, resulted from or the award bears no suffered.” Snelson v. reasonable loss relationship (2003). Kamm, 1, Therefore, 2d 204 37 Ill. when “the calculations and proportions of the award demonstrate jury’s presented, the evidence relation to strong weight manifest against be cannot determination Chicago Osteopathic Hospital, Jones v. See evidence. (2000) (if jury’s award falls App. 316 Ill. reasonably sup- conclusions range the flexible within stand).” (Emphasis evidence, it must by the ported *104 added.) Snelson, long-standing Ill. at These 204 38-39. today’s opinion. in acknоwledged are nowhere principles anomaly an presents discussion damages The court’s reverse a American in that it would in jurisprudence, I of no rule law being too low. know award for damage conclude, as to the lead a court of review which would plaintiffs if more jury given that the had today, court does deserved, they had plaintiffs proven than it believed the affirm, the was conservative jury it but because would to amount, are entitled no and a low awarded at all. compensation be my view, appears punishing the to the
In Dr. Mathur jury’s damage award. conservatism damages high that be as as billion. testified could $1.2 as by He estimate could be off much also testified his Dr. at jury obviously The took Mathur his billion. $1 accepted estimate Dr. Mathur jury top word. larg- estimate highest but reduced his suggested, clearly est correction he endorsed. These calculations pre- relation to the strong “demonstrate evidence (Snelson, 38), 204 2d at and thus are not sented” Ill. against the of the evidence. I decline to weight manifest bear a join suggestion jury the court’s awards which presented still might to the evidence be strong relation low, impact I being question too and reversed on future awards damage court’s discussion will have And, recalling is entire again, this state. it worth dictum, already as the court has discussion here no relief class is entitled to plaintiff determined that decision to other, on The court’s independent grounds. analysis include this cannot be understood as anything but to decision attack this particular jury verdict on every conceivable front.
D. Disposition In light of the I foregoing, believe that the appropri- ate disposition regard to the breach of contract claim is to remand the cause the circuit court determine any whether there exists subclass of the nationwide class with respect to which the may verdict upheld. be In my colleagues, contrast I believe that proper reason for reversing nationwide class is the Shutts problem: there are dif- outcome-determinative ferences between the laws of and Illinois the laws of other states, and Illinois no compelling has interest in applying its law to states whose laws differ. See supra, 216 Ill. 2d (Freeman, J., at concurring part dissenting J.). Kilbride, part, joined by But the fact that there are outcome determinative differences between Illinois some other states does not mean that there are outcome- between Illinois and all other differences determinative *105 remand, Thus, states. on I would direct the circuit court (if hearing to hold a to determine which of the any) states subject that have been the of in proceed- evidence these ings sufficiently closely is aligned with Illinois law use of Illinois rights the law to determine the contractual of policyholders State Farm’s in that would of- state not fend State process rights. Farm’s due Such result would be within the well circuit court’s inherent man- power to (b) (West class age 802(a), actions. See 735 ILCS 5/2 — 1998). See & Wardrope, also Purcell Chartered v. Hertz (1996) (“ Corp., ‘A class action 16, 279 Ill. App. 3d 20 nevertheless, may, maintained, still be despite these conflicting laws, State differing may the court to the simply choose divide class into subclasses. More- over, if at litigation, some later time the the subclas- court, course, sification unmanageable, becomes the of
233 aside the class certification to set option has the always ”), Wardrope, Purcell & quoting of it’ portion or a 1069, 1075 App. 175 3d v. Hertz Ill. Corp., Chartered (1988). a class ac- requirements all the of Assuming subclass, the respect with to such tion are satisfied subclass, to that respect affirmed with verdict could be damages pro portion rata equal to to the damages installation attributable nationwide those states. policyholders in of the entire Notwithstanding the decertification of has class, a volume evidence nationwide considerable this matter been received in connection with have judicial expended which been considerable resources noted, nearly previously As this trial lasted two thereon. than spanned more pretrial proceedings months and contrary any It be to sense of proper two would years. require a retrial as to the contract is- judicial economy policyholders of subclass of rights any sues for Illinois could applied impacting which law be without due Farm. rights process judicial is interest to be served economy only
Nor by all reasonable efforts the verdict to making uphold valued, actions are a indeed an possible. extent Class society. part judicial system of our and our As integral, Burger, writing Chief Justice for United States Supreme Court, recognized,
“The aggregation of individual claims the context of evolutionary response suit is an to the exist- a classwide injuries regulatory ence unremedied action of government. economically it to obtain Where feasible multiplicity within the of a relief traditional framework damages, aggrieved persons may suits small individual may any they employ without effective redress unless be Guaranty Deposit the class-action device.” National Bank 326, 339, 427, Roper, U.S. 63 L. Ed. Jackson v. (1980). 440, 100 Ct. S. *106 words, In possible other the class action makes it unredressed, to be wrongs, might go which otherwise pursued, righted. and The possibility wrongdoers be might held accountable provides a powerful incentive to engage not in even small-scale wrongdoing, and such an only incentive can benefit society as whole. If there wrong was a found, committed here —as the jury the trial agreed, confirmed, court the appellate court and I would affirm —State Farm be ought to held accountable therefor to the extent that due process will allow.
II. CONSUMER FRAUD I concur analysis in the court’s of the consumer fraud However, issue. the court’s analysis includes an instance dicta. objectionable of Also, as with the breach of contract issue, I find the tone and of tenor the court’s analysis injudicious. I, therefore, be disavow and dissent from of dicta. objectionable those instances hostile rhetoric and agree I with the analysis court’s the consumer fraud issue. Due inconsistencies in the arguments analyses courts, counsel and in the lower the court cor- allegations are rectly discusses what at issue. 216 Ill. 2d at 170-77. This discussion leads to the core allegation that, consumer fraud claim: during process, claims State Farm failed to the categori- disclose inferiority cal of non-OEM 2d parts. 216 Ill. at 177-78.
Turning to propriety the nationwide consumer class, fraud court opinion holds Il- correctly Fraud linois Consumer Act has no out-of-state effect I expressly agree analysis the court’s of this issue. Further, Ill. 2d correctly at 179-90. court that, case, concludes in this ap- Consumer Fraud Act plies only policyholders to those vehicles as- whose were in Illinois. repaired Accordingly, sessed the court DeFrank, focuses its of the Act who application solely on only plaintiff is the named can an Illinois represent who 216 Ill. at class. 191-99. eventually concludes as follows. DeFrank damage
suffered no actual as a result of State Farm’s *107 parts. specification 2d at 195-99. 216 Ill. of non-OEM deci- and Oliveira this court’s Zekman Also, based on testimony, not actu- DeFrank was sions, and DeFrank’s say by anything ally Farm said or did deceived parts. regarding quality 2d at 216 Ill. of non-OEM 199-202. analysis
Although of the I concur in the court’s an instance of issue, fraud I dissent from consumer 11(C)(2) ohjectionable in section dicta. It is found Deceptive opinion, captioned Act or Practice.” “The court reaching 2d at 192-95.Prior to the determinative 216 Ill. respect opinion DeFrank, court to issues with purports identify deceptive practice act or to opinion already pertains However, DeFrank. 2d The clear this claim. 216 Ill. at 175-77. identified purpose regulation discuss the state of this section is to possible basis reversal. of aftermarket crash as a for expressly discussion, At the close of this court unwilling If declines to resolve the issue. the court is issue, resolve this then the court should not raise it. analysis I of the court’s also take issue with the tenor dealing of the consumer fraud claim. Like the section indulges contract, sarcasm, with breach of the court chiding, and in furtherance of needless and innuendo intemperate attacks on the bar and our own examples appellate court. Some follow: deliberately any theory relating to “Plaintiffs avoided theory defective at trial because such a would have significantly proof. theory increased their burden of Such a likely, rendered far would also have class certification less question necessary or law since the common fact if would have been more difficult to establish certification prove each individual plaintiffs had been forced to part, grouping parts, was defective.” 216 Ill. 2d at 170. suggests speculation. majority Also, This is sheer appellate intentionally rephrased or re- that the damages to avoid certain characterized DeFrank’s actual “temporal problems.” 216 Ill. at 198. Assigning such motives to the appellate court constitutes unfair in- nuendo. These impugn statements the integrity of the bench and bar. I expressly disavow them.
CONCLUSION Although I am in agreement my colleagues on a number I legal points, disagree with many conclusions by today. reached them I find the tone taken the court with respect plaintiffs’ trial counsel and the lower courts to be particularly given unwarranted their especially actions were not did egregious. They not flout *108 any of the rules of this court nor did they break with precedent in such a way as to deserve condemnation. Thus, question becomes, from whence does this hostility come? What is not said in anywhere today’s opinion is the fact that this case has been the focus of a great deal of respect national attention with to class ac- tions in general and our Fifth District in In particular. view, my today’s opinion appears my colleagues’ to be point entry of ongoing into the national debate concern- ing class action It litigation. my opinion, is considered however, that while this debate being is conducted in the arena legislative amongst our elected officials in Congress and the Illinois General in Assembly, judiciary we ought carefully. to tread
I am every as troubled as citizen ought be about of abuse of the possibility class action vehicle. And it would further no end to feign ignorance of the fact that allegations some of abuse have been leveled at the courts state, of this the Fifth in District our state However, particular. saying goes, as the should baby 1977, not be thrown out with the In bathwater. acknowledged utility of the class action as a method litigating complex questions brought by of common numerous claimants: procedural
“A potent class action is a vehicle. Under its decided by multiple persons claims can be without terms necessity appearance of each. A vindication of of the single ac- rights persons possible of numerous is be many tion when for reasons individual actions would origins impracticable. [Citations.] of this invention [citation], equity, according go to Professor Chafee back years. purpose has been described as ‘to en- almost 300 Its [equity] proceed it to a decree in suits where the able subject litigation in the number those interested great joinder parties conformity that their to the is so as procedure impracticable.’ [Citation.]” usual rules of is School, Steinberg Chicago v. Medical 69 Ill. 2d 334-35 (1977). years later, Supreme
Several the United States Court sentiments, echoed our noting: designed “The exception class-action device was as ‘an litigation to the usual rule that conducted and on is only.’ parties [Citation.] behalf of the individual named ‘peculiarly relief appropriate’ Class when the ‘issues involved are common to the class a whole’ and when they questions applicable ‘turn on in the law same man- [Citation.] ner to each member of the For in such class.’ cases, ‘the class-action device saves the resources of both parties by permitting potentially the courts and the an issue affecting every litigated [class member] to be in an [Federal Practice] economical fashion under Rule of Civil Telephone [Citation.]” 23.’ General Co. the Southwest v. Falcon, 147, 155, 740, 749, L. Ed. 457 U.S. 102 S. Ct. *109 (1982). 2364, 2369 why long
These observations illustrate class actions have legitimate held a and in the important place judiciary. Both this and the United States Court Supreme approved litigation years. have of this tool for over 100 Statute, Forde, See K. Illinois’s New Action 59 Chi. Class (1977) (explaining background B. Rec. 120 historical actions). haste, In perhaps, class their to take stand on my colleagues seemingly the class action retreat question, from time-honored and show a new principles these form of I feel it is hostility long-recognized litigation. to remind my duty my colleagues the same standards that are in the play review at other four districts of I apply state to the Fifth District. am concerned that we, court, today’s opinion message sends a as a will employ coming different standards for cases out of the Fifth District on which national attention has been My feelings focused in order to reach a desired result. fact that regard overturning stem from the entirety, my colleagues verdict in its in this case have review, ignored plaintiffs’ standard humiliated counsel, and demeaned both trial court and the ap- pellate court. It is sincere the rhetoric my hope employed today’s opinion will not serve to further already incivility coarsen a debate littered with hostility. joins
JUSTICE KILBRIDE in this concurrence partial partial dissent. *110 A Appendix Sam DeFrank’s Estimate *113 B Appendix State Farm's “Half Sheet” *115 C Appendix State Farm’s Parts” Brochure “Quality Replacement notes it do not “wherever situated” This is incorrect. words “any transactions, but to the nouns refer to fraudulent mixed, real, personal or intangible, or property, tangible 815 article, thing or of value.” any commodity, other 1998). (West 505/1(f) “wherever situ- The words ILCS apply of the Act to scope do expand ated” out-of-state. place transactions take consumer Farm, argument, State in its to the points language 1(f), of section which states trade commerce 505/l(f) people must affect “the of this State.” 815 ILCS (West 1998). State,” “this Emphasizing words Farm contends that the Act is limited to transactions Further, place according which take Illinois. to State Farm, the Consumer Fraud Act does not a cause provide of action to nonresidents claims processes whose took place outside of Illinois because those transactions had no people Plaintiffs, effect on the of Illinois. in reply, 1(f) argue that the language broadly worded, of section emphasize only trade or commerce need (815 505/l(f) (West 1998)) “indirectly affect” ILCS people this, of Illinois. From plaintiffs maintain that there is no geographic limit to the “trade or commerce” covered Act. 1(f) The language of section has interpreted by been courts in a variety ways. This divergence interpreta tion is most notable the federal district In courts. one opinions statute, earliest to address the Seaboard (N.D. Co., Seed Co. v. Bemis 632 F. Supp. Ill. 1986), 1(f) the district court concluded that section