Illinois Court Limits Consumer Fraud Claims in Business Disputes – Classic Business Corporation v. Equilon Enterprises, LLC.

In Classic Business Corporation v. Equilon Enterprises, LLC., the District Court for the Northern District of Illinois explains that while the state’s consumer fraud and deceptive business practice law is an important weapon in combating shady business operations, it is intended to protect private consumers rather than business entities.

Plaintiffs, gas station operators in the Chicagoland area, brought the action against Shell claiming that the company violated both its contracts with Plaintiffs and a duty of good faith by unilaterally changing its pricing methodology. Plaintiffs are considered “open dealers” because they own the real property on which their gas businesses are located rather than leasing it from Shell. Pursuant to a Retail Sales Agreement (“RSA”), Plaintiffs buy gas from Shell at the price in effect “at the time loading commences at the Plant for the place of delivery” and, in turn, are free to set the retail price at which they later sell the gas.

Plaintiffs claim that after agreeing to the RSA terms, Shell changed the way in which it sells gas – using wholesalers rather than selling directly to retailers – as well as its pricing method. As a result, according to Plaintiffs, Shell now sells the same gas to wholesalers and non-open dealers at a lower price than it sells to Plaintiffs and other open dealers in an attempt to drive them out of the business. In their complaint, Plaintiffs alleged the following counts: 1) federal price discrimination; 2) breach of contract and the Illinois Commercial Code based on the unilateral fuel price increase; 3) breach of contract for invoicing Plaintiffs for more fuel than was actually delivered; 4) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/2 et seq. (the “CFDBPA”); and 5) a claim for declaratory relief pursuant to the Illinois Declaratory Judgment Act.

The court granted Shell’s motion to dismiss the CFDBPA count (as well as the declaratory relief claim). In so doing, it noted that the proper test in reviewing a CFDBPA claim involving two businesses who are not consumers is “whether the alleged conduct involves trade practices addressed to the market generally or otherwise implicates consumer protection concerns.” In this case, the court found that Shell’s alleged practice of selling gas to the “relatively few” open dealers in the area at a higher rate than that charged to wholsesalers and other retailers “is not equivalent to a trade practice addressed to the market generally,” despite the fact that it may ultimately result in higher prices for Plaintiffs’ customers. Finally, the court quoted the Illinois Supreme Court’s decision in Avery v. State Farm in ruling that “[a] breach of contractual promise, without more, is not actionable under the [Illinois] Consumer Fraud Act.”

Despite the ruling, litigation continues on the prices discrimination and breach of contract claims. Although such claims often arise in the course of business dispute, they can be resolved prior to the filing of a formal complaint through negotiations. The Chicago business dispute attorneys at Lubin Austermuehle draw on courtroom skills and negotiation ability to represent clients in complex business disputes. If your company is involved in a business dispute and you need experienced legal representation, our attorneys are pleased to offer a free consultation to discuss your case.

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