TRI-PLEX TECHNICAL SERVICES, LTD., Plaintiff-Appellant, v. JON-DON, LLC; LEGEND BRANDS, INC.; CHEMICAL TECHNOLOGIES INTERNATIONAL, INC.; BRIDGEPOINT SYSTEMS; GROOM SOLUTIONS; and HYDRAMASTER, LLC., Defendants-Appellees.
No. 5-21-0210
Appellate Court of Illinois, Fifth District
November 4, 2022
2022 IL App (5th) 210210-U
Honorable Heinz M. Rudolf, Judge, presiding.
Appeal from the Circuit Court of St. Clair County. No. 20-L-237. JUSTICE CATES delivered the judgment of the court. Justices Welch and Barberis concurred in the judgment.
¶ 1 Held: The trial court erred in dismissing the second amended complaint with prejudice where the plaintiff alleged sufficient facts to state claims under the Illinois Consumer Fraud Act and the Uniform Deceptive Trade Practices Act, and for civil conspiracy. The judgment dismissing the second amended complaint with prejudice is reversed, and the cause is remanded for further proceedings.
¶ 2 The plaintiff, Tri-Plex Technical Services, Ltd., appeals from the trial court’s judgment, dismissing the plaintiff’s claims against the defendants, Jon-Don, LLC,
I. BACKGROUND
¶ 3 ¶ 4 The plaintiff is an Illinois corporation in the business of developing, manufacturing, distributing, and selling commercial grade carpet cleaning products to carpet care professionals in Illinois. The defendants are plaintiffs’ competitors. They also manufacture, distribute, and/or sell commercial grade carpet cleaning products to carpet care professionals in Illinois.
¶ 5 On March 25, 2020, the plaintiff brought this action against the defendants, under the Consumer Fraud and Deceptive Business Practices Act (ICFA)1 (
¶ 6 In the general allegations pertaining tо all counts of the complaint, the plaintiff initially noted that Illinois regulates the amount of phosphorous and volatile organic materials (VOMs) in cleaning products because phosphorous and VOMs are harmful to the environment and human health. The Regulation of Phosphorous in Detergents Act
¶ 7 According to the more specific allegations under the UDTPA, each defendant omitted from its labeling, and otherwise failed to notify consumers in the marketplace, that its cleaning products contain more than 0.5% phosphorous by weight and do not comply with the Detergents Act. In addition, defendants Jon-Don and Legend Brands omitted from their labeling and otherwise failed to notify consumers that their cleaning products contain more than 0.1% VOMs by weight and do not comply with Illinois EPA regulations limiting VOMs. The plaintiff further alleged that consumers in the marketplace purchased the defendants’ products and refused to purchase plaintiff’s products because the defendants’ phosphorus-laden products and VOM-laden products
¶ 8 The plaintiff alleged that the defendants’ deceptive practices created and continued to create unfair competition in the marketplace. The plaintiff further alleged that the defendants willfully engaged in these practices. The plaintiff asserted that as a direct result of the defendants’ practices, it “suffered and continues to suffer a loss of ability to compete in the marketplace and a loss of sales.” The plaintiff sought a finding that each defendant willfully engaged in deceptive trade practices, an order enjoining each defendant from distributing or selling the subject products in Illinois, and an award of reasonable attorney fees and costs.
¶ 9 In the specific allegations under the ICFA, the plaintiff initially incorporated all of the preceding allegations. According to the allegations, each defendant employed “deception, fraud, and false pretenses” to conceal the fact that its products contained excessive quantities of phosphorous and/or VOMs, and did not comply with Illinois laws.
¶ 10 The plaintiff asserted that the defendants’ acts constituted unfair methods of competition and unfair and deceptive acts or practices. In addition, the defendants’ unfair practices offended Illinois public policy because the subject products did not comply with Illinois environmental laws, and because Illinois consumers have an interest in purchasing products that do not harm the environment. These practices also offended the public’s expectation that it would be told the truth about products sold in the marketplace.
¶ 11 The plaintiff claimed that the defendants acted willfully and with the intent to economically harm the plaintiff; that the defendants profited by selling illegal products to unwary consumers in Illinois, at the expense of the plaintiff and consumers alike; and that the plaintiff was and is unable to fairly compete in the markets where the subject products are sold. The plaintiff requested a finding that each defendant willfully violated the ICFA, and an order enjoining each defendant from distributing or selling the subject products in Illinois. The plaintiff also requested actual damages; punitive damages for
¶ 12 In the sole count for civil conspiracy, the plaintiff incorporated all of its preceding factual allegations. The plaintiff then alleged that Jon-Don and Legend Brands, acting in concert, intentionally and knowingly marketed, distributed, sold, and/or delivered illegal Legend Brands’ phosphorous-laden and VOM-laden products to unwary customers in Illinois in open violation of Illinois envirоnmental laws. The plaintiff further alleged that these defendants conspired to rebrand and sell certain Legend Brands products as Jon Don products to Illinois customers in open violation of Illinois environmental laws. The plaintiff claimed that Jon-Don and Legend Brands engaged in a civil conspiracy to deprive the plaintiff of sales and profits, and that it suffered and continues to suffer a significant loss of sales and profits as a result of this conspiracy. The plaintiff requested a finding that Jon-Don and Legend Brands engaged in a civil conspiracy, and a judgment awarding the plaintiff an amount to be determined at trial, equal to its lost profits, incidental and consequential damages, punitive damages, and reasonable attorney fees and costs.
¶ 13 The defendants filed separate motions to dismiss the second amended complaint. They also adopted the arguments made in their codefendants’ motions. The defendants moved to dismiss the complaint for failure to state a cause of action under section 2-615 of the Code of Civil Procedure (Code) (
¶ 14 On May 6, 2021, the trial court heard arguments on the defendants’ motions and took the matter under advisement. On June 8, 2021, the court dismissed all counts in the second amended complaint with prejudice. In its order, the court noted the pending motions included overlapping arguments and some unique arguments. The court addressed all of the arguments collectively because each defendant adopted the arguments of its codefendants.
¶ 15 Initially, the trial court found that the alleged violations of environmental statutes and regulations could not form the basis for claims under the ICFA and the UDTPA. The court reasoned that the Illinois Pollution Control Board has the exclusive authority to enforce the provisions of the Detergents Act and environmental laws and regulations governing emissions, and that the plaintiff could not use its UDTPA and ICFA claims as a means to enforce those laws and regulations.
¶ 16 The trial court also found that those claims that were based upon a failure to adequately label the subject products were barred “due to compliance with federal regulations.” The court found that the content of a product label “falls within the scope of the federal regulations requiring the disclosure of certain information, including the presence of hazardous chemicals,” citing
¶ 17 Next, the trial court found that the plaintiff had failed to adequately allege facts that established a “likelihood of confusion” under the UDPTA. Applying the meaning of “likelihood of confusion,” as used in trademark infringement cases, the court stated that a “likelihood of confusion” only existed when a defendant’s use of a deceptive trade name, trademark, or other distinctive symbol was likely to confuse or mislead consumers “as to the source or origin of the product or service.” The court concluded that the plaintiff did not allege the type of marketplace confusion prohibited by the UDPTA.
¶ 18 Turning to the ICFA claims, the trial court found that the plaintiff failed to establish standing because it was not a consumer and could not satisfy the “consumer nexus” test. The court also found that the ICFA claims were deficient because the plaintiff alleged an omission of law, rather than an omission of fact, and because the plaintiff did not adequately allege that it suffered damages proximately caused by the defendants’ conduct.
¶ 19 Finally, the court concluded that the civil conspiracy claim failed as a matter of law. The court found that the conspiracy claim was dependent on the existence of a viable cause of action under the ICFA or the UDTPA, and that the plaintiff failed to state a cause of action under either statute.
¶ 20 ¶ 21 On appeal, the plaintiff claims that the trial court erred in dismissing its second amended complaint with prejudice. The trial court set forth five main grounds for dismissal, and the plaintiff challenges each one.
¶ 22 A motion to dismiss under section 2-615 of the Code (
¶ 23 A motion to dismiss under section 2-619 of the Code (
Claims Premised on Violations of Environmental Law
¶ 24 ¶ 25 In its order, the trial court found that the alleged violations of the Detergents Act and the environmental regulations governing emissions could not form the bases for claims under the ICFA and the UDTPA.3 The court reasoned that the Illinois Pollution Control Board has the exclusive authority to enforce those environmental laws and regulations, and that the plaintiff could not use the ICFA and UDTPA as a means to enforce those laws and regulations.
¶ 26 The regulation of phosphorous in detergents is an exclusive power of the State of Illinois.
¶ 28 In the second amended complaint, the plaintiff alleged that the defendants engaged in unfair or deceptive practiсes under the ICFA, and unfair competition under the UDTPA by manufacturing, distributing, and selling cleaning products that did not comply with Illinois environmental laws, without notifying unwary consumers about the excessive quantities of phosphorous and/or VOMs in those products, and the restrictions on use of those products in Illinois. The plaintiff also alleged that the defendants intentionally mispresented the approvals, permitted uses, and qualities of those products with the intent to profit at the expense of the plaintiff and Illinois consumers. The unfair and deceptive practices that the plaintiff sought to remedy through its ICFA and UDTPA claims were separate and distinct from the regulatory decisions and enforcement actions of the Pollution Control Board. We do not agree that the plaintiff used the ICFA and UDTPA as a means to bring a private right of action to enforce the Detergents Act or
Deceptive Practices & OSHA Regulations
¶ 29 ¶ 30 Next, the trial court determined that plaintiff’s claims based on a failure to adequately label the subject products were barred “due to compliance with federal regulations.” The court stated that compliance with federal regulations was a complete defense to a consumer fraud claim based on the alleged failure to make additional disclosures related to a product. The court found that the content of a product label “falls within the scope of the federal regulations requiring the disclosure of certain information, including the presence of hazardous chemicals,” citing
¶ 31 Section 4 of the UDTPA provides that the Act does not apply to “conduct in compliance with the orders or rules of or a statute administered by a Federal, state or local governmental agency.”
¶ 32 In the second amended complaint, the plaintiff specifically alleged that each defendant “omits from its labeling, and otherwise fails to notify” consumers that its products contain excessive amounts of phosphorous and/or VOMs. The plaintiff further alleged that consumers purchased the subject products, unaware that those products did not comply with environmental laws and regulations and were potentially harmful to the environment and human health. In its order, the trial court did not discuss the plaintiff’s allegations regarding the overall failure to notify consumers about the subject products’ ingredients, restrictions on use, and potential harm to the environment and human health. The trial court limited its consideration to the “omits from its labeling” portion of the allegation, and found that the labeling allegation was barred due to compliance with
¶ 33 At the outset, we note that the subject product labels were not attaсhed or incorporated into the second amended complaint. In addition, the labels were not attached in support of defendants’ arguments that their labeling complied with
¶ 34 In addition, we note that section 1910.1200 contains workplace safety regulations4 implemented under the Occupational Safety and Health Act (OSHA). See
¶ 35 Section 1910.1200 is commonly called the “HazCom Standard.” The stated purpose of the HazCom Standard is to “ensure that the hazards of all chemicals produced or imported are classified, and that information concerning the classified hazards is transmitted to all employers and employees by means of safety data sheets or labels.”
¶ 36 The HazCom Standard pertains to regulations governing employers and employees in the workplace, and “does nоt reach broadly to include common law duties to warn owed by manufacturers and suppliers to end users of their products.” Welding Fume Product Liability Litigation, 364 F. Supp. 2d at 692-93 (citing Medtronic, Inc. v. Lohr, 518 U.S. 470, 488-89 (1996)). The plaintiff’s unfair and deceptive practice claims do not pertain to workplace safety. Additionally, these claims are directed at the manufacturers, distributors, and suppliers of the subject products, not employers. The
¶ 37 Bare assertions that a product label complies with a federal regulation are insufficient to support a motion to dismiss. A defendant must provide legal arguments and supporting documentation so that the trial court can determine whether the federal regulation applies to a particular claim, and whether compliance with that regulation provides a complete defense to the claim. In this case, the defendants have not established that section 1910.1200 would trigger the exemptions in the UDPTA and/or the ICFA. Accordingly, it was error to dismiss the second amended complaint on that basis.
The ICFA Claims
¶ 38 ¶ 39 The trial court also determined that the plaintiff failed to plead actionable claims under the ICFA. The court found that the plaintiff did not establish standing to pursuе its claims. The court also found that the ICFA claims were deficient because the plaintiff alleged an omission of law, rather than an omission of fact, and because the plaintiff did not adequately allege that it suffered damages proximately caused by the unfair or deceptive practices.
¶ 41 Section 2 of the ICFA provides:
“Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception, fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact *** in the сonduct of any trade or
commerce6 are hereby declared unlawful whether any person has in fact been misled, deceived or deceived or damaged thereby.” 815 ILCS 505/2 (West 2020).
¶ 42 The protections of the ICFA are not limited to consumers. That is made clear by the full title of the Act, “An Act to protect consumers and borrowers and businessmen against fraud, unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce ***.” (Emphasis omitted and internal quotation marks omitted.) Sullivan’s Wholesale Drug Co. v. Faryl’s Pharmacy, Inc., 214 Ill. App. 3d 1073, 1082 (1991). There is “a clear mandate from the Illinois legislature that [Illinois] courts *** utilize the Act to the utmost degree in eradicating all forms of deceptive and unfair business practices and grant appropriate remedies to injured parties.” (Internal quotation marks omitted.) Downers Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 190 Ill. App. 3d 524, 534 (1989). Thus, aggrieved businesses have standing to sue under the ICFA. Sullivan’s Wholesale Drug Co., 214 Ill. App. 3d at 1083; Wigglesworth Imports, 190 Ill. App. 3d at 534.
¶ 43 The plaintiff readily admits it is not a consumer of the defendants’ products. The question is whether the plaintiff has alleged sufficient facts to establish standing under the “consumer nexus” test.
¶ 44 When a dispute involves two businesses who are not consumers of each other’s products or services, the test for standing is whether the deceptive conduct involves trade
¶ 45 Here, the plaintiff alleged that the defendants directed their deceptive practices toward consumers. The defendants allegedly deceived consumers about the ingredients, approved uses, and quality of defendants’ cleaning products, and the harmful impact of those products on the environment and human health. The plaintiff further alleged that the defendants knowingly and willfully charged a premium for their products, as if those products were legal and of a superior quality; and that the defendants profited from the sale of illegal products to unwary Illinois consumers. The plaintiff also asserted that the defendants’ practices created an anticompetitive effect on the plaintiff’s ability to place safe and compliant products into the marketplace and to compete there. Taking these allegations and all reasonable inferences therefrom as true, we find that the alleged conduct sufficiently implicates consumer protection concerns to establish standing. Thus, the trial court erred in dismissing the plaintiff’s ICFA claims based on a lack of standing.
¶ 47 Under the Detergents Act, “no person may use, sell, manufacture, or distribute for sale any cleaning agent containing more than 0.5% phosphorous by weight, *** except as otherwise provided in this Section.”
¶ 48 The trial court also found that the ICFA claims were deficient because the plaintiff alleged an omission of law, rather than an omission of fact. Generally, a deceptive representation of law does not constitute a violation of the ICFA because both parties are presumed to be equally capable of knоwing and interpreting the law. See generally Capiccioni v. Brennan Naperville, Inc., 339 Ill. App. 3d 927, 933 (2003); Randels v. Best Real Estate, Inc., 243 Ill. App. 3d 801, 805 (1993). The test is whether the misrepresentation could have been discovered by merely reviewing the applicable law. Capiccioni, 339 Ill. App. 3d at 934.
¶ 49 Here, the plaintiff alleged that the defendants engaged in unfair and deceptive practices in that defendants failed to notify consumers that the subject products contained quantities of phosphorous and/or VOMs in excess of the amounts permitted under Illinois law; that they had restricted uses; and that they posed potential harm to human health and the environment. These are misrepresentations or omissions of fact that concern the specific ingredients, qualities, and uses of the subject products. In addition, on this record, we cannot conclude that consumers might have learned whether they could safely and lawfully use these products by reviewing provisions of the Detergents Act.
¶ 50 The plaintiff also argues that the trial court failed to consider its allegations under the unfairness prong of its ICFA claim. The statute affords redress not only for deceptive business practices, but also for business practices that, though not deceptive, are unfair. Robinson, 201 Ill. 2d at 417. Factors to be considered when determining whether a course
¶ 51 The plaintiff adequately alleged that the defendants have engaged in conduct that offends the public policies underlying the Detergents Act, and other Illinois environmental laws. The plaintiff also alleged substantial injury to consumers in that the defendants knowingly and willfully charged a premium for their products, as if they were legal and of a superior quality, and thus, profited at the expense of unwary consumers. Additionally, the plaintiff alleged that defendants’ conduct posed substantial harm to human health and the environment. Thus, we find that the plaintiff sufficiently alleged a claim for unfair business practices under the ICFA. Robinson, 201 Ill. 2d at 417-18.
¶ 52 The trial court also found that the plaintiff failed to adequately allege proximate cause. Proximate cause means any cause which, in nature or probable sequence, produced the alleged injury. Capiccioni, 339 Ill. App. 3d at 937. Proximate cause is a question of fact for the trier of fact. Sullivan’s Wholesale Drug Co., 214 Ill. App. 3d at 1086. Our supreme court has said that the required allegation of proximate harm is “minimal” because thаt determination is best left to the trier of fact. Connick, 174 Ill. 2d at 504. Here, the plaintiff alleged the defendants knowingly and willfully misled consumers into
¶ 53 Taking the allegations under the ICFA as true, and viewing them in a light most favorable to the plaintiff, for purposes of the section 2-615 motions to dismiss, we do not find them to be so non-specific or speculative as to require dismissal. Whether the plaintiff can present evidence to support its allegations is for another day. At this stage of the litigation, we find that the plaintiff’s complaint contains sufficient allegations under the ICFA to survive the defendants’ motions to dismiss.
The UDTPA Claims
¶ 54 ¶ 55 The trial court also found that the plaintiff failed to plead actionable claims under the UDTPA. Applying “likelihood of confusion,” as defined in trademark infringement cases, the сourt concluded that the plaintiff failed to adequately allege the type of marketplace confusion among products and services that is actionable under the UDTPA.
¶ 57 Section 2 of the UDTPA provides in pertinent part:
“(a) A person engages in a deceptive trade practice when, in the court of his or her business, vocation, or occupation, the person:
* * *
(5) represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that he or she does not have;
***
(7) represents that goods or services are of a particular standard, quality, or grade or that goods are a particular style or model, if they are of another;
* * *
(12) engages in any other conduct which similarly creates a likelihood of confusion or misunderstanding. (b) In order to prevail in an action under this Act, a plaintiff need not prove competition between the parties or actual confusion or misunderstanding.”
815 ILCS 510/2 (West 2020).
¶ 58 In this case, the trial court incorrectly concluded that a “likelihood of confusion” under the UDTPA was limited to cases in which a defendant’s use of a trade name, trademark, or other distinctive symbol was likely to confuse or mislead consumers as to the source or origin of the product. “ ‘Unfair competition is a broader concept than trademark infringement and depends upon likelihood of confusion as to the source of plaintiff’s goods when the whole product, rather than just the service mark, is considered.’ ” Chicago’s Pizza, Inc. v. Chicago’s Pizza Franchise Ltd. USA, 384 Ill. App. 3d 849, 865 (2008) (quoting Thompson v. Spring-Green Lawn Care Corp., 126 Ill. App. 3d 99, 113 (1984)); Empire Home Services, 274 Ill. App. 3d at 670. Any conduct that creates a likelihood of consumer confusion or misunderstanding is potentially actionable under subsection 2(a)(12). Phillips, 261 Ill. App. 3d at 81-82.
¶ 59 The plaintiff alleged that the defendants represented their cleaning products to have approvals, uses, and qualities that they did not have. The defendants also allegedly failed to disclose that their products contained excessive quantities of phosphorous and VOMs, and as such, did not comply with Illinois environmental laws and regulations. The plaintiff further alleged that unwary consumers in the marketplace believed that the defendants’ products were legal and complied with Illinois law because those products
¶ 60 Some of the defendants contend that the plаintiff failed to allege sufficient facts to establish willful violations of the UDTPA to support its prayer for attorney fees, and they ask this court to strike that claim. Section 3 of the UDTPA provides that costs and reasonable attorney fees may also be awarded, but only if the court finds that the defendant “willfully engaged” in a deceptive practice.
Civil Conspiracy
¶ 61 ¶ 62 Finally, the trial court found that the plaintiff’s civil conspiracy claim failed as a matter of law. The court reasoned that civil conspiracy is not an independent tort, and that there must be an independent cause of action underlying a plaintiff’s conspiracy claim.
III. CONCLUSION
¶ 63 ¶ 64 Although the plaintiff’s second amended complaint is not a model pleading, it is not so lacking in relevant factual allegations as to warrant a dismissal on the pleadings. Upon proper motion by any party, inaccurate and surplus allegations can be stricken. As we noted early on, the granting of a motion to dismiss for failure to state of cause of action should be affirmed when no set of fаcts can be proved that will entitle the plaintiff to relief. Taking the allegations and reasonable inferences as true, and viewing them in a light most favorable to the plaintiff, we find that the plaintiff has alleged sufficient facts to state claims under the ICFA, the UDTPA, and for civil conspiracy. Accordingly, the trial court’s judgment dismissing the plaintiff’s second amended complaint with prejudice is reversed, and the cause is remanded for further proceedings.
¶ 65 Reversed and remanded.