Zekman v. Direct American Marketers, Inc.

THEODORE ZEKMAN,                       )    APPEAL FROM
                                            )    THE CIRCUIT COURT
         Plaintiff-Appellant,               )    COOK COUNTY.
                                            )
                                            )
         v.                                 )    No. 92 CH 4950
                                            )                
DIRECT AMERICAN MARKETERS, INC.,       )    
AMERICAN TELEPHONE AND TELEGRAPH       )    
COMPANY, AMERICAN TELEPHONE AND        )         
TELEGRAPH COMPANY OF ILLINOIS, AT&T    )
COMMUNICATIONS, INC., AT&T             )    
COMMUNICATIONS OF ILLINOIS, INC.,      )    THE HONORABLE,
ILLINOIS BELL TELEPHONE COMPANY, AND   )    MICHAEL B. GETTY,
UNKNOWN DOE DEFENDANTS,                )    JUDGE PRESIDING.
                                            )
         Defendants-Appellees.              )    

         PRESIDING JUSTICE COUSINS delivered the opinion of the court:
         Plaintiff, Dr. Theodore Zekman, both individually and also as
a class representative, asserted a claim for damages against
defendant Direct American Marketers, Inc. (Direct American) based
upon three alleged violations of the Illinois Consumer Fraud and
Deceptive Business Practices Act (Consumer Fraud Act) 815 ILCS
505/1 et seq. (West 1992), and one violation of the Illinois Pay-
Per-Call Services Consumer Protection Act, 815 ILCS 520/1 et seq.
(West 1992), in connection with a mail sweepstakes promotion. 
Plaintiff also asserted claims against American Telephone and
Telegraph Company of Illinois (now AT&T Corp.), American Telephone
and Telegraph Company of Illinois, AT&T Communications, Inc., and
AT&T Communications of Illinois, Inc. (collectively, 'AT&T') for
common law fraud, knowingly accepting the benefits of a fraud, and
violating the Consumer Fraud Act.  
         Plaintiff appeals from the trial court s decision granting
defendants  motion for summary judgment and from an earlier order
in which the trial court dismissed plaintiff's counts against
AT&T, holding that the Consumer Fraud Act does not permit claims
for knowingly accepting the benefits of fraud. On appeal,
plaintiff contends that (1) the trial court erred in granting
summary judgment when genuine issues of material fact existed as
to the causal relationship between the defendants  deceptive acts
and the harm suffered by plaintiff, and (2) the trial court
erroneously held that the Consumer Fraud Act does not apply to a
wrongdoer who knowingly accepts the benefits of the fraud.
BACKGROUND
         This suit arises out of a series of separate mailings that
plaintiff received from Direct American during the fall of 1991
and early 1992.  The mailings were addressed specifically to
plaintiff.  Each mailing displayed a "900" number one could call
to claim an award.  Plaintiff claimed that the mailings were
deceptive and led him to incur charges for "900" number calls he
made pursuant to the instructions on the mailings.  A "900" number
is a 10-digit toll telephone number that a caller is billed for
calling.  AT&T billed and collected from Zekman for the "900"
calls and, therefore, derived benefit from the calls.  AT&T
managers received and reviewed drafts of planned mailings for
accuracy and fairness, and monitored Direct American's programs to
determine whether Direct American's usage of the "900" numbers
complied with regulatory rules, AT&T guidelines, and state laws. 
Zekman never won a cash award as a result of calling the "900"
numbers.  He did, however, receive discount coupons, which he
threw away.  
         Early in the case, plaintiff alleged, in counts V and VI of
the amended complaint, that AT&T knowingly accepted the benefits
of Direct American's alleged fraud by recovering fees for the
"900" number phone calls and therefore violated section 2, section
2P or, in addition thereto, section 9 of the Consumer Fraud Act. 
The trial court found that plaintiff's argument ignored the fact
that AT&T's service fee is separate from the benefit derived from
Direct American's conduct.  The court stated in pertinent part:
              "There is nothing in the plain language of the Consumer
         Fraud Act nor in its legislative history nor in the myriad of
         case law to support such a vicarious liability theory. 
                                    ***
              AT&T has allowed their service to be used; but AT&T has
         not, as required by Section 2, used or employed any
         deception, fraud, false pretense, or concealment, nor could
         intention to rely ever be imputed from such involvement by
         the message carrier." 
The court later amended its order and allowed plaintiff to file
second, third, and fourth amended complaints in which plaintiff
alleged additional information regarding AT&T's role in the
mailing program.  Plaintiff alleged, inter alia, information
regarding AT&T's separate "900" number promotion unit, Multiquest,
AT&T's agreement with Direct American, and AT&T's internal
policies regarding customers who complained about the "900"
numbers.
         Zekman was eventually deposed.  His deposition testimony
provides in pertinent part:
              "Q. Well, was there a time when you were getting cards
         but you were not responding, you were simply throwing them
         away?
              A.  No.  I responded to -- my name was on them.  And I
         thought that my name being on them meant something.
                                    ***
              Q.  Is it your testimony that each and every time you
         placed a call to a 900 number, you believe that you won a
         cash award?
              A.  Every time I placed a call, I was doing so in
         response to instructions.
              Q.  Were you being compelled to respond?
              A.  I wasn't compelled.
              Q.  It was your own decision?
              A.  Yes.
              Q.  And you were being given information in the mailing
         pieces, correct?
              A.  I was responding to the fact that I have been given
         a mailing that had my name on it with a certain amount of
         money that I had won as an award.
              Q.  You said money --
              A.  Or a claim.
                                    ***
              Q.  Dr. Zekman, does that [referring to an exhibit of a
         mailing] disclose to you that there are six different types
         of awards?  Do you see in the box where it says awards are?
              A.  Yes.  But I did not carefully read what all the
         awards were.  I was only interested in whether I won an
         award.
              Q.  Right.  And is it your testimony that you believed
         after you read this that you had won a cash award?
              A.  I did not know whether I had won an award, a cash
         award.  I was responding to instructions in the hope that I
         did win a cash award."
         The defendants moved for summary judgment on the ground that
Zekman admitted in his deposition testimony that he had not been
deceived by anything that he had read in the received mailings.
The trial court entered summary judgment in favor of Direct
American and AT&T and against plaintiff on all counts in his
fourth amended complaint.  The trial court held that plaintiff
could not establish a material issue of fact with respect to
proximate causation because his admissions precluded him from
establishing that the practices of which he complained were the
proximate cause of any injury to him.  The court stated in
pertinent part:
              "Accordingly, to establish proximate cause, Zekman must
         show that, by preparing the Solicitations to create false and
         misleading impressions, defendants caused him to incur
         charges for calls made in response to those impressions.  The
         Court finds that Zekman's own deposition testimony
         demonstrates that his alleged injury did not result from the
         alleged false and misleading impressions created by the
         Solicitations.
              Contrary to the allegations in the Complaint that the
         Solicitations led him to believe that he won a major cash
         prize or other valuable award, Zekman testified that he knew
         that he had not necessarily won any particular award.  
                                    ***
              The Court also rejects Zekman's argument that his
         deposition testimony raises a genuine issue of material fact
         concerning whether he had won a cash prize prior to placing
         the '900' number calls.  Contrary to Zekman's assertion, the
         Court finds that viewing his deposition testimony as a whole,
         [Citations.] it is conclusive and without contradiction that
         he did not know whether or not he had won a cash award."
         We disagree and reverse. 
ANALYSIS
                                     I

         Plaintiff first contends that the trial court erred in
granting summary judgment when it found that Zekman's alleged
injury did not result from the alleged false and misleading
impressions caused by the solicitation because his deposition
testimony demonstrated that he knew that he had not necessarily
won an award.
         A trial court should grant summary judgment only when the
pleadings, depositions, admissions and affidavits establish there
is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.  Quality
Lighting, Inc. v. Benjamin, 227 Ill. App. 3d 880, 883, 579 N.E.2d 377 (1992).  The purpose of summary judgment procedure is not to
try an issue of fact but, rather, to determine whether a triable
issue of fact exists.  Quality Lighting, 227 Ill. App. 3d at 883. 
Although the use of summary judgment is encouraged as an aid to
the expeditious disposition of a lawsuit, it is a drastic means of
disposing of litigation and should be allowed only when the right
of the moving party is clear and free from doubt. Purtill v. Hess,
111 Ill. 2d 229, 240, 489 N.E.2d 867 (1986). An appellate court
reviews summary judgment de novo.  Demos v. National Bank, 209
Ill. App. 3d 655, 659-60, 567 N.E.2d 1083 (1991).  The court must
construe the evidence strictly against the movant and liberally in
favor of the opponent.  Quality Lighting, 227 Ill. App. 3d at 884. 
Thus, to resolve the issue in this case, we must determine whether
the trial court correctly found that no genuine issues of material
fact existed and whether summary judgment was correctly entered
for defendants as a matter of law.     
         The purpose of the Consumer Fraud Act is to protect consumers
against fraud and unfair or deceptive acts and practices in the
conduct of trade or commerce.  Johnston v. Anchor Organization for
Health Maintenance, 250 Ill. App. 3d 393, 396, 621 N.E.2d 137
(1993). Section 2 of the Act 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, or the use or employment of any practice
         described in Section 2 of the 'Uniform Deceptive Trade
         Practices Act' approved August 5, 1965, in the conduct of any
         trade or commerce are hereby declared unlawful whether any
         person has in fact been misled, deceived or damaged thereby."
         815 ILCS 505/2 (West 1992).
Section 10a(a) of the Act provides for a private cause of action
in cases only where the plaintiff can show that damages were
proximately caused by the alleged fraud. 815 ILCS 505/10a(a)(West
1992); Stehl v. Brown's Sporting Goods, Inc., 236 Ill. App. 3d
976, 981, 603 N.E.2d 48 (1992); Adler v. William Blair & Co., 271
Ill. App. 3d 117, 128, 648 N.E.2d 226 (1995).  Section 10a(a)
provides:
              "(a) Any person who suffers damage as a result of a
         violation of this Act committed by any other person may bring
         an action against such person.  The court, in its discretion
         may award actual damages or any other relief which the court
         deems proper."  815 ILCS 505/10a(a) (West 1992).
         Defendants cite the following excerpt from plaintiff's
deposition testimony as evidence that plaintiff knew he had not
won an award:
              "Q.  And is it your testimony that you believed after
         you read this that you had won a cash award?
              A.  I did not know whether I had won an award, a cash
         award.  I was responding to instructions in the hope that I
         did win a cash award."
Conversely, plaintiff asserts that he did establish the requisite
causal link between the mailings and his damages because he
reacted reasonably to the mailings in that he acted in the manner
in which defendants intended a recipient of the mailing to act. 
He asserts that even if he had been suspicious of certain
deceptions in the solicitations, such awareness had no bearing on
the causal link between his damages and violations of the Act.  
         Plaintiff's argument can be construed as asserting that
parties are not required under the Act to show that they are
actually deceived.  We disagree.  It is well settled that reliance
is no longer a requirement under the Act.  Martin v. Heinold
Commodities Inc., 163 Ill. 2d 33, 76, 643 N.E.2d 734 (1994).  In
reality, however, the theory of reliance is ambiguously present
within the parameters of the concept of proximate cause, so that
to maintain a private action under the Act, a party must have
relied on the wrong to some extent in order to establish proximate
cause.  Thus, we do not agree with the argument that a party can
make a claim where a party was not deceived.  However, we do agree
with the alternative argument that a party who was deceived by an
unlawful act and suffers damages as a result can make a claim.  In
this case, there are many factual issues relative to the issues of
deception and causation that have not yet been resolved.
         Defendant's argument that plaintiff knew that he had not won
an award essentially relates to whether plaintiff was deceived.  
After reviewing plaintiff's deposition testimony, and the series
of mailings included in the record, it is our view that Zekman's
testimony is not conclusive as to whether he knew that he had not
necessarily won an award.  Our review of the record shows that
plaintiff did not always receive the exact same mailing over the
various months during 1991 and early 1992.  Some of the mailings
state: "Go ahead and claim your award now!"  Other mailings
suggest that the recipient must have a winning claim number: "If
your own and very exclusive award claim number is * * * the number
that has been pre-selected by computer * * *," One mailing in
particular notes:
              "You're confirmed to receive at least one of the
         following awards:  $6,000.00 cash or cashier's check * * *
         [or] $200.00 Discount Certificates.  Remember you are
         CONFIRMED and absolutely will receive an award. The only
         requirement to receive your award is you must communicate
         with the Claim Center."  
         Plaintiff did not say in his deposition that he knew he had
not necessarily won an award.  On the other hand, he did not say
that he believed he had won an award.  Review of plaintiff's
testimony should be juxtaposed to the mailings. When plaintiff
stated that he hoped he had won a cash award, it is unclear
whether he hoped he had won a cash award as opposed to a different
type of award, such as the certificates.  Furthermore, the
deposition testimony is not clear as to which mailings plaintiff
was shown when he was questioned about his beliefs as to what he
thought when he received such mailings.  It is unclear whether
plaintiff responded in the same way to all of the different
mailings, which give different instructions or possibilities.  In
sum, plaintiff's testimony is simply unclear. While we are mindful
that deponents are held to their deposition testimony, we are also
mindful that depositions, particularly those taken by opposing
counsel, tend to limit a deponent's opportunity to explain and
elaborate.
         We also note that Zekman's deposition testimony does not
cover all the issues disputed in this case.  For instance, there
was no interrogation on the mailing's disclosure of the odds of
winning an award.  We do not know whether a more conspicuous
disclosure of the odds would have made any difference in Zekman's
response to the mailings.  We recognize that there are some
unusual aspects about Zekman's actions in this situation. 
However, we believe that an analysis of those actions can only be
resolved by the fact finder.
         Accordingly, we hold that there is a genuine issue of fact as
to whether defendant's mailing caused plaintiff to believe that he
had won an award.  Therefore, summary judgment was improper.
                                    II
         Plaintiff next appeals from an order in which the trial court
granted AT&T's motion to dismiss counts V and VI of the amended
complaint pursuant to section 2-615 of the Illinois Code of Civil
Procedure. 735 ILCS 5/2-615 (West 1992).
         A motion to dismiss under section 2-615 challenges the legal
sufficiency of the complaint.  Urbaitis v. Commonwealth Edison,
143 Ill. 2d 458, 475, 575 N.E.2d 548 (1991).  The relevant inquiry
is whether sufficient facts are contained in the pleadings which,
if proved, would entitle a plaintiff to relief.  Urbaitis, 143 Ill. 2d  at 475.  Upon review of an order granting a section 2-615
motion, all well-pleaded facts are taken as true.  Boyd v.
Travelers Insurance Co., 166 Ill. 2d 188, 652 N.E.2d 267 (1995). 
In reviewing orders on a motion to dismiss, we apply a de novo
standard of review.  Dace International, Inc. v. Apple Computer,
Inc., 275 Ill. App. 3d 234, 655 N.E.2d 974 (1995).  
         Plaintiff requests that this court reinstate the cause of
action against AT&T for knowingly accepting the benefits of a
fraud if this court determines that the Consumer Fraud Act applies
to a wrongdoer who knowingly accepts the benefits of a fraud.   
         Plaintiff cites Armstrong v. Edelson, 718 F. Supp. 1372 (N.D.
Ill. 1989), for the proposition that the Consumer Fraud Act
applies to a wrongdoer who knowingly accepts the benefits of
fraud.  In Armstrong, plaintiffs were victimized by a home repair
fraud perpetrated by two contractors.  718 F. Supp.  at 1373.  The
contractors conned the consumers into signing "cash sales
contracts" with customers.  Armstrong, 718 F. Supp.  at 1373. 
These contracts were misrepresented as estimates for repair work
but actually provided for substantial penalties if the consumer
cancelled the contract more than three days after signing it. 
Armstrong, 718 F. Supp.  at 1373.  After the three-day period, the
contractors presented the customer with previously undisclosed
financing terms and then coerced the customers into agreeing to
the terms by threatening them with loss of their homes or lawsuits
to recover the cancellation penalties.  Armstrong, 718 F. Supp.  at
1373.
         The plaintiff's only allegation implicating a third-party,
Dartmouth, in this situation concerned $16,000 in credit that
Dartmouth extended to the plaintiffs to finance the home
improvements.  Armstrong, 718 F. Supp.  at 1373.  The plaintiffs
had signed a retail installment contract with one of the
contractors that had been prepared on a pre printed Dartmouth
form.  Armstrong, 718 F. Supp.  at 1373.  When the plaintiffs
signed the installment contract they simultaneously mortgaged
their home to provide security for the loan.  Armstrong, 718 F. Supp.  at 1374.  The plaintiffs did not allege that Dartmouth was
directly responsible for the contractor's alleged fraud.
Armstrong, 718 F. Supp.  at 1374.  Instead, they alleged that
Dartmouth was liable because it knew that the contracts initiated
by the contractor were tainted by fraud.  Armstrong, 718 F. Supp. 
at 1374.  Plaintiffs specifically alleged that Dartmouth aided and
abetted the contractors' violations under the Act.  Armstrong, 718 F. Supp.  at 1374.
         Dartmouth moved to dismiss, arguing that plaintiff's
complaint failed to state a claim against Dartmouth because under
section 10a(a) of the Act, a consumer has a cause of action only
against those persons who personally violate the act.  Armstrong,
718 F. Supp.  at 1377.  The district court denied Dartmouth's
motion.  The court stated in pertinent part:
              "This court's research has failed to disclose a case in
         which a court imposed liability under the Consumer Fraud Act
         for aiding and abetting a violation of Section 2.  However,
         this court believes that the plaintiffs have nonetheless
         stated a claim against Dartmouth under the Act.  At common
         law, one who knowingly accepts the benefits of fraudulent
         conduct is also guilty of the fraud. [Citations.] 
         Plaintiffs' allegations that Dartmouth knowingly participated
         in the fraud perpetrated by the other defendants, if taken as
         true as it must be, is sufficient to support a cause of
         action under the Consumer Fraud Act." Armstrong, 718 F. Supp.  at 1377.
The court noted that its conclusion was consistent with the
purposes of the Act in that section 11a of the Act provides for a
liberal construction of the Act to effect its purposes. 
Armstrong, 718 F. Supp.  at 1377.
         We agree with the Armstrong court's interpretation of the Act
and echo its holding that knowing participation or aiding and
abetting in fraud is actionable under the Act.  Plaintiff requests
that this court reinstate those counts that alleged that AT&T
knowingly accepted the benefits of Direct American's fraud.  But
at the same time, plaintiff argues, specifically in his reply
brief, that his case against AT&T involves AT&T's "active,
concerted participation in the scheme."  Thus, it is possible that
AT&T's actions, as Dartmouth's actions in Armstrong, fall within
the purview of the Act.  Taking all well-pleaded facts in
plaintiff's amended complaint as true, we cannot say as a matter
of law that AT&T's actions are not subject to the provisions of
the Act.  Accordingly, we reverse the trial court's January 26,
1993, ruling dismissing counts V and VI of the amended complaint. 
         For the foregoing reasons, the judgments of the trial court
are reversed and the cause is remanded for further proceedings
consistent with this decision.
Reversed and remanded.  
         LEAVITT, J., concurs.
         GORDON, J., dissents.