Chicago Business Litigation Lawyer Blog
Patrick Austermuehle of our firm filed an Amicus Brief on behalf of the Illinois Trial Lawyers Association and the National Association of Consumer Advocates on a important access to justice issue for consumers who have been defrauded including consumers who have been scammed by used car dealers.
Who Are ITLA and NACA?
The National Association of Consumer Advocates (“NACA”) is a nonprofit corporation whose members are lawyers, law professors, and students practicing or studying consumer-protection law. NACA’s mission is to promote justice for consumers through information sharing among consumer advocates and to serve as a voice for its members and consumers in the struggle to curb unfair and oppressive business practices.
The Illinois Trial Lawyers Association (“ITLA”) is a statewide organization whose members focus their practices in representing injured consumers and workers. Founded in 1952, the organization
has more than 2,000 members. ITLA’s principles and mission are simple: to achieve and maintain high standards of professional ethics, competency and demeanor in the bench and bar; to uphold the Constitutions of the United States of America and the State of Illinois; to secure and protect the rights of those injured in their persons or civil rights; to defend trial by jury and the
adversarial system of justice; to promote fair, prompt and efficient administration of justice; and to educate and train in the art of advocacy.
The Importance of Fee Shifting Under the Consumer Fraud Act For AutoFraud and Other Individual Consumer Fraud Cases.
Our clients, ITLA and NACA, in the brief Lubin Austermuehle drafted, are urging the Illinois Appellate Court to reverse the Circuit Court’s improper fee award to Plaintiff’s counsel— where the Court arbitrarily slashed the fee awarded to Plaintiff’s counsel, whose client had prevailed in a used car consumer fraud case, based on “eyeballing” and “proportionality”—and issue an opinion which formally adopts the framework set out by the Supreme Court in Hensley v. Eckerhart, 461 U.S. 424 (1983), and which recognizes the importance of fee-shifting in individual consumer claims.
Automobiles are often consumers most substantial purchase, and it is very difficult to attract competent counsel if courts routinely treat these cases as if they are small claims matters where
counsel cannot be assured of being paid fairly for the efforts taken on a contingency basis with substantial financial risk. As to individual (non-class action) consumer fraud claims, only a
relatively small number of lawyers practice in this area, given the complexity of the cases and the limited actual damages available in a typical individual consumer fraud matter. It will be
difficult to attract more “private attorneys general” to assist individual consumers to vindicate their rights, or to encourage the lawyers, who do practice in this area, to continue to do so, if
courts routinely slash fee awards without analysis or explanation. Counsel practicing in this area have found this to occur all too often.
A. Vindication of Illinois’ Consumers Rights Hinges on Trial Courts Awarding Attorney’s Fees Under the Illinois Consumer Fraud Act’s Fee- Shifting Provision The Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ICLS 505/1 et seq. (the “Consumer Fraud Act”), is a “regulatory and remedial statute intended to protect consumers against
fraud, unfair methods of competition, and other unfair and deceptive business practices.” Cripe v. Leiter, 184 Ill.2d 185, 190-91 (1998). The Consumer Fraud Act should be “liberally construed to
effectuate its purpose”. Id. at 191 (citing Connick v. Suzuki Motor Co., Ltd., 174 Ill.2d 482, 503 (1996)). Section 10a(c) of the Consumer Fraud Act authorizes a private right of action for “[a]ny
person who suffers actual damages as a result of a violation of [the] Act.” 815 ILCS 505/10a(a) (West 2018); Krautsack v. Anderson, 223 Ill.2d 541, 553 (2006). Accordingly, one of the express
purposes of the Consumer Fraud Act’s fee- shifting provision is to provide consumers with access to legal assistance in the pursuit of their legal remedies under the statute. Id. at 557. The
fee-shifting provision in the Consumer Fraud Act is particularly important because it “allows defrauded consumers, whose claims are frequently small, to obtain counsel and seek redress under
the Act.” Allen v. Woodfield Chevrolet, Inc., 208 Ill.2d 12, 30–31 (2003). “Compromising a consumer’s ability to recover legal fees renders the protections of the Act illusory.” Id.
Automobiles represent “one of the most important and expensive items purchased by consumers.” Totz v. Cont’l Du Page Acura, 236 Ill.App.3d 891, 911 (2d Dist. 1992). However, even in
Consumer Fraud Act cases involving the purchase of an automobile, a consumer’s actual damages will often pale in comparison to the cost of litigation required to litigate a successful claim under
the Act. See e.g. Id. at 910-11 ($19,674.60 in costs and fees vs. $407.50 in compensatory damages and $5,000 in punitive damages); Majcher v. Laurel Motors, Inc., 287 Ill.App.3d 719, 723
(2d Dist. 1997) ($77,683.82 in costs and fees vs. approximately $20,000.00 in actual damages). If Illinois courts are arbitrary in their attorney’s fee awards under the Consumer Fraud Act and
cut fees without analysis, consumer plaintiffs will be unable to obtain competent counsel to litigate claims that are often “complex with respect to the factual and legal issues presented.”
Totz, 236 Ill.App.3d at 910; see also Keefe v.Allied Home Mortg., 393 Ill.App.3d 226, 235 (5th Dist. 2009) (under the Consumer Fraud Act, “the average consumer will not be able to successfully arbitrate or litigate a claim without the assistance of an attorney.”).
Unreasoned or Arbitrary Reductions in Attorney’s Fees Awarded Under the Consumer Fraud Act Threaten Consumers’ Access to Justice
In order to promote uniformity and fairness across the State and to increase access to justice for Illinois’ consumers, the Third District should join its four sister Districts and formally adopt the statutory fee-shifting framework arising out of the United States Supreme Court’s decision in Hensley v. Eckerhart, 461 U.S. 424 (1983). Under this approach, a court “begin[s] by calculating the lodestar by multiplying the attorney’s reasonable hourly rate by the number of hours reasonably expended.” Schlacher v. Law Offices of Phillip J. Rotche & Associates, P.C., 574 F.3d 852, 856 (7th Cir. 2009). There is a strong presumption that the lodestar represents a reasonable fee. Id. If a party seeks an adjustment to the lodestar, that party bears the burden of demonstrating that the “adjustment is necessary to the determination of a reasonable fee.” City of Burlington v. Dague, 505 U.S. 557, 562 (1992) (quoting Blum v. Stenson, 465 U.S. 886, 898 (1984)).
The court can then consider the following factors in determining whether an enhanced fee is appropriate: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. Hensley, 461 U.S. at 430 n.3.
By adopting an objective and normative framework for calculating fee awards under the Consumer Fraud Act (and other similar fee-shifting statutory schemes), the Court would eliminate the common issues of circuit courts applying an unreasoned “proportionality” test, or worse, simply “eyeballing” a fee request and arbitrarily determining it is excessive. See e.g. Millea v. Metro-North R. Co., 658 F.3d 154, 169 (2d Cir. 2011) (“The whole purpose of fee-shifting statutes is to generate attorneys’ fees that are disproportionate to the plaintiff’s recovery.”) (emphasis added); People Who Care v. Rockford Bd. of Educ., 90 F.3d 1307, 1314 (7th Cir. 1996) (“The court will not, however, ‘eyeball’ the fee request and cut it down by an arbitrary percentage, even if the request seems excessive, in the absence of objections stated with particularity and clarity.”). By formally adopting Helmsley, the Third District would ensure that fee awards under the Consumer Fraud Act are rendered in a fair, objective, and standardized manner, and thereby promote access to justice for Illinois consumers by ensuring they can obtain competent counsel to aid in their pursuit of claims under the Consumer Fraud Act.
ITLA and NACA have a keen interest in expanding access to justice by providing injured consumers with the ability to retain competent lawyers who will be fairly compensated for their efforts in the successful prosecution of their clients’ claims under the Consumer Fraud Act. The statute gives a remedy for lawyers’ fees and costs because it is obvious that many “small” meritorious claims would otherwise not see the inside of a courtroom.
Many consumer fraud cases involve used car fraud. These cases are very complicated as they require expert testimony as to the diminished value of the vehicles and as to a used car dealer’s knowledge regarding the poor and dangerous condition of the vehicle when sold. Kim v. Mercedes-Benz, U.S.A., Inc., 353 Ill.App.3d 444, 457 (1st Dist. 2004), opinion modified on reh’g (Oct. 21, 2004). Lawyers will not take on these risky and complex cases involving technical issues regarding complex products if courts routinely slash lawyers’ fees without analysis or justification. Protecting consumers means ensuring that lawyers are willing to take on consumer fraud matters that can set precedent that protect consumers from widespread and unfortunately all too common fraudulent practices such as: (a) major car makers falsely certifying rebuilt wrecks as like new and then refusing to take responsibility (see Twilight Transport, Inc. v. General Motors LLC, 19-cv-1253 (N.D. Ill. June 26, 2019); (b) used car dealers putting dangerous rebuilt wrecks into commerce that impair the safety of drivers, passengers and bystanders. Twyman v. S&M Auto Brokers, 16 C 4182, 2016 WL 6082357, at *4 (N.D. Ill. Oct. 18, 2016) (“Significantly, in a recently released opinion, a Cook County Circuit Court found that S&M Auto Brokers, one of the defendants here, violated the Illinois Consumer Fraud Act by failing to disclose that a vehicle it sold had been in a prior accident and had frame damage, noting that the vehicle’s bent frame imperiled the plaintiff’s safety and finding that punitive damages were appropriate.”)
Effective access to justice in Illinois for consumers with meritorious Consumer Fraud Act claims hinges on the ability of consumers to reliably recover appropriate attorney’s fees under Section
10(c) of the Consumer Fraud Act. If Illinois courts are permitted to reduce the award of attorney’s fees to a successful consumer plaintiff—whether through an opaque or unreasoned methodology, or by improperly applying an ad hoc test of “proportionality”—access to justice for Illinois consumers will be substantially reduced, and the purpose of the Illinois Consumer Fraud Act will
be thwarted.
You can read the entire amicus brief here.
With offices in Chicago, Elmhurst and Wilmette, we’re proud to offer more than thirty five years of experience in a vast range of important consumer rights cases and especially in the area of class action disputes and autofraud. Lubin Austermuehle’s track record includes the fact that the firm’s lawyers obtained a $40 million settlement in the Erikson v. Ameritech class action suit listed by Crain’s Chicago Busines as the second largest settlement in Illinois for the year. With offices in Chicago, Elmhurst and Wilmette, we’re close to you. Take advantage of our FREE consultation to tell us your legal needs and we can discuss whether our firm is a good fit for you. Call us at 630-333-0333 or via our website by clicking here. We look forward to speaking with you.
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Allied Home Mortg., 393 Ill.App.3d 226, 235 (5th Dist. 2009) (under the Consumer Fraud Act, “the
average consumer will not be able to successfully arbitrate or litigate a claim without the
assistance of an attorney.”).
B. Unreasoned or Arbitrary Reductions in Attorney’s Fees Awarded Under the Consumer Fraud
Act Threaten Consumers’ Access to Justice
In order to promote uniformity and fairness across the State and to increase access to justice for
Illinois’ consumers, the Third District should join its four sister Districts and formally adopt
the statutory fee-shifting framework arising out of the United States Supreme Court’s decision in
Hensley v. Eckerhart, 461 U.S. 424 (1983). Under this approach, a court “begin[s] by calculating
the lodestar by multiplying the attorney’s reasonable hourly rate by the number of hours reasonably
expended.” Schlacher v. Law Offices of Phillip J. Rotche & Associates, P.C., 574 F.3d 852, 856 (7th
Cir. 2009). There is a strong presumption that the lodestar represents a reasonable fee. Id. If a
party seeks an adjustment to the lodestar, that party bears the burden of demonstrating that the
“adjustment is necessary to the determination of a reasonable fee.” City of Burlington v. Dague,
505 U.S. 557, 562 (1992) (quoting Blum v. Stenson, 465 U.S. 886, 898 (1984)).
The court can then consider the following factors in determining whether an enhanced fee is
appropriate: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3)
the skill requisite to perform the legal service properly;
(4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary
fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the
circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation,
and ability of the attorneys; (10) the
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undesirability of the case; (11) the nature and length of the professional relationship with the
client; and (12) awards in similar cases. Hensley, 461 U.S. at 430 n.3.
By adopting an objective and normative framework for calculating fee awards under the Consumer
Fraud Act (and other similar fee-shifting statutory schemes), the Court would eliminate the common
issues of circuit courts applying an unreasoned “proportionality” test, or worse, simply
“eyeballing” a fee request and arbitrarily determining it is excessive. See e.g. Millea v.
Metro-North R. Co., 658 F.3d 154, 169 (2d Cir. 2011) (“The whole purpose of fee-shifting statutes
is to generate attorneys’ fees that are disproportionate to the plaintiff’s recovery.”) (emphasis
added); People Who Care v. Rockford Bd. of Educ., 90 F.3d 1307, 1314 (7th Cir. 1996) (“The court
will not, however, ‘eyeball’ the fee request and cut it down by an arbitrary percentage, even if
the request seems excessive, in the absence of objections stated with particularity and clarity.”).
By formally adopting Helmsley, the Third District would ensure that fee awards under the Consumer
Fraud Act are rendered in a fair, objective, and standardized manner, and thereby promote access to
justice for Illinois consumers by ensuring they can obtain competent counsel to aid in their
pursuit of claims under the Consumer Fraud Act.
C. Conclusion
The amici have a keen interest in expanding access to justice by providing injured consumers with
the ability to retain competent lawyers who will be fairly compensated for their efforts in the
successful prosecution of their clients’ claims under the Consumer Fraud Act. The statute gives a
remedy for lawyers’ fees and
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costs because it is obvious that many “small” meritorious claims would otherwise not see the inside
of a courtroom.
Many consumer fraud cases involve used car fraud. These cases are very complicated as they require
expert testimony as to the diminished value of the vehicles and as to a used car dealer’s knowledge
regarding the poor and dangerous condition of the vehicle when sold. Kim v. Mercedes-Benz, U.S.A.,
Inc., 353 Ill.App.3d 444, 457 (1st Dist. 2004), opinion modified on reh’g (Oct. 21, 2004).
Lawyers will not take on these risky and complex cases involving technical issues regarding complex
products if courts routinely slash lawyers’ fees without analysis or justification. Protecting
consumers means ensuring that lawyers are willing to take on consumer fraud matters that can set
precedent that protect consumers from widespread and unfortunately all too common fraudulent
practices such as: (a) major car makers falsely certifying rebuilt wrecks as like new and then
refusing to take responsibility (see Twilight Transport, Inc. v. General Motors LLC, 19-cv-1253
(N.D. Ill. June 26, 2019), attached hereto as Exhibit A); (b) used car
dealers putting dangerous rebuilt wrecks into commerce that impair the safety of drivers,
passengers and bystanders. Twyman v. S&M Auto Brokers, 16 C 4182, 2016 WL 6082357, at *4 (N.D. Ill.
Oct. 18, 2016) (“Significantly, in a recently released opinion, a Cook County Circuit Court found
that S&M Auto Brokers, one of the defendants here, violated the Illinois Consumer Fraud Act by
failing to disclose that a vehicle it sold had been in a prior accident and had frame damage,
noting that the vehicle’s bent frame imperiled the plaintiff’s safety and finding that punitive
damages were appropriate.”)
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Effective access to justice in Illinois for consumers with meritorious Consumer Fraud Act claims
hinges on the ability of consumers to reliably recover appropriate attorney’s fees under Section
10(c) of the Consumer Fraud Act. If Illinois courts are permitted to reduce the award of attorney’s
fees to a successful consumer plaintiff—whether through an opaque or unreasoned methodology, or by
improperly applying an ad hoc test of “proportionality”—access to justice for Illinois consumers
will be substantially reduced, and the purpose of the Illinois Consumer Fraud Act will
be thwarted.