Chicago Business Litigation Lawyer Blog
The complaint arrives about six months after the sale, and it is never really about the car. It is about the fee petition. A customer who bought a nine-year-old vehicle with ninety thousand miles on it, signed a buyer’s order marked as is, and drove it for five months now says the dealership committed consumer fraud. The pleading recites a repair the buyer paid for, attaches nothing, and demands actual damages, punitive damages, and attorney’s fees under the Illinois Consumer Fraud and Deceptive Business Practices Act. Plaintiff’s counsel knows that the fees are the leverage and that the cost of defending a four-thousand-dollar dispute is what usually produces a settlement.
What the complaint rarely contains is the thing the statute actually requires, which is a deception that reached this buyer and caused this loss. The Consumer Fraud Act is a powerful remedial statute, and dealers that shade disclosures or bury charges deserve what it does to them. But the Act is not a warranty statute, it is not a substitute for a breach of contract claim, and it does not make a dealership the insurer of a used car. A defense built on those distinctions, early, resolves a large share of these cases before the fees that drive them have a chance to accumulate.
What the Illinois Consumer Fraud Act actually requires
Begin with the elements. Under Connick v. Suzuki Motor Co., a Consumer Fraud Act claim requires a deceptive act or practice, the defendant’s intent that the plaintiff rely on the deception, and that the deception occurred in the course of trade or commerce. A private plaintiff must also prove actual damage proximately caused by the deception. That last requirement is where most used car claims quietly fail, because the buyer has to have been deceived in fact. In Zekman v. Direct American Marketers, Inc., the Illinois Supreme Court dismissed the claim of a plaintiff whose own testimony showed he understood the terms he was complaining about, holding that conduct the plaintiff was not deceived by cannot be the proximate cause of his damages. The Court went further in De Bouse v. Bayer AG, holding that the plaintiff must actually be deceived by a statement or omission made by the defendant, and rejecting the theory that a plaintiff who never saw any of the defendant’s communications could recover because deception in the market affected the price he paid. Applied to a dealership, that means the deposition question that decides the case is simple. What did someone at the dealership tell you that was false, when, and what did you do because of it?
A broken promise is a contract claim, not fraud
The second line of defense is the boundary between contract and fraud. A dealership that fails to deliver a second key, delays a title, or does not honor a we-owe slip has a contract problem, not a consumer fraud problem. The Illinois Supreme Court said so in Avery v. State Farm Mutual Automobile Insurance Co., holding that a claim under the Act may not rest on a breach of a promise contained in the parties’ contract, and the appellate court put it more bluntly in Zankle v. Queen Anne Landscaping, where the court refused to let a naked breach of contract claim be repackaged as statutory fraud. If every unkept promise were consumer fraud, every contract case in Illinois would carry a fee-shifting count. Illinois law does not allow that, and the motion that says so is usually worth filing.
The unfairness count is harder to plead than it looks
The unfairness count deserves separate attention, because plaintiffs plead it when they cannot plead deception. In Robinson v. Toyota Motor Credit Corp., the Illinois Supreme Court adopted the federal standard and identified three considerations: whether the practice offends public policy, whether it is immoral, unethical, oppressive, or unscrupulous, and whether it causes substantial injury to consumers. All three need not be present, which makes the count sound easier to plead than it is. The result in Robinson is the part worth remembering. The Court held the plaintiffs had failed to plead facts showing unfair or deceptive conduct and the Consumer Fraud Act count was dismissed. An unfairness count built on nothing but the price of the car and the buyer’s disappointment usually meets the same end.
The Act reaches only what happened in Illinois
Territory matters too. Under Avery, the Act does not reach a transaction unless the circumstances relating to it occurred primarily and substantially in Illinois. A dealership that sells to out-of-state buyers, or that is named in a class complaint sweeping in purchasers from four states, should be measuring every claim against that limit before it measures anything else.
Does an “as is” sticker really disclaim the warranties?
The warranty questions are separate, and this is where dealers get into trouble by assuming too much. Under section 2-316 of the Illinois Uniform Commercial Code, an as is or with all faults disclaimer does exclude implied warranties, and a written disclaimer of the implied warranty of fitness and a conspicuous disclaimer mentioning merchantability will generally do their work. But an as is sticker does not disclaim an express warranty the salesperson created with his mouth, and it does not survive the federal Magnuson-Moss Warranty Act, which provides at 15 U.S.C. section 2308 that a supplier who gives a written warranty, or who sells a service contract within ninety days of the sale, may not disclaim or modify implied warranties, and that a disclaimer made in violation of that rule is ineffective under both federal and state law. The dealership that sells a thirty-day powertrain warranty or a third-party service contract at the desk and then relies on the as is box has usually disclaimed nothing. The Federal Trade Commission’s Used Motor Vehicle Trade Regulation Rule, 16 C.F.R. part 455, controls the window form that has to be posted and delivered, and a Buyers Guide that contradicts the buyer’s order is an exhibit the plaintiff will enjoy.
The Lemon Law is not a used car remedy
One statute that frequently appears in these complaints does not belong there. The Illinois New Vehicle Buyer Protection Act, 815 ILCS 380, applies to new vehicles, places the replacement and refund obligation on the manufacturer, and reaches only a nonconformity that substantially impairs the use, market value, or safety of the vehicle within one year or twelve thousand miles. It is not a used car remedy and it is not a claim against a dealer, and a complaint that cites it against a used car dealership has told you something useful about how carefully it was drafted.
What a dealership should do in the first thirty days
Three things matter in the first month. Pull the entire deal jacket immediately, including the buyer’s order, the Buyers Guide, every disclosure the buyer initialed, the service contract, the reconditioning records, and the text messages between the buyer and the salesperson, because the case is decided by documents that exist on day one and by the ones that should exist and do not. Check the buyer’s order for an arbitration provision with a class waiver before answering, because the forum question is usually worth more than any single defense. And say nothing explanatory in writing to the buyer or his counsel, since a well-meant email from a sales manager is the most common source of the admission that turns a defensible file into a settlement.
The bottom line for Illinois dealers
A used car case is usually a contract dispute wearing a statute. The buyer is unhappy, the repair was real, and none of that establishes that anyone deceived him. Dealerships that lose these cases tend to lose them on their own paper, on a disclaimer that federal law had already erased or a Buyers Guide that says something the contract does not. Dealerships that win them make the plaintiff answer the only question the Consumer Fraud Act actually asks, which is what he was told that was false.
Questions Illinois dealers ask after they are sued
Can a dealership be sued for fraud over a car sold “as is”?
Yes. The “as is” box speaks to implied warranties under section 2-316 of the Uniform Commercial Code. It says nothing about whether someone at the dealership made a false statement. Those are two separate questions, and a defense that answers only the warranty question leaves the fraud count standing.
Does the buyer have to prove he was actually deceived?
Yes. That requirement decided both Zekman and De Bouse. A buyer who understood the terms he now complains about, or who never saw the statement he calls deceptive, was not deceived, and a deception that never reached him cannot have caused his loss.
The customer is really complaining about a broken promise. Is that consumer fraud?
No. Avery holds that a claim under the Act may not rest on the breach of a promise contained in the parties’ contract, and Zankle refused to let a contract claim be repleaded as statutory fraud. The same line runs through the class certification defenses that decide the larger cases.
We sold a thirty-day warranty with the car. Does the “as is” disclaimer still work?
Usually not. A supplier who gives a written warranty, or who sells a service contract within ninety days of the sale, may not disclaim implied warranties under 15 U.S.C. section 2308, and a disclaimer made in violation of that rule is ineffective under federal and state law alike.
What if the customer files a class action instead of an individual suit?
Then the forum decision comes before everything else, and it runs on a thirty-day clock. The first moves in a class case shape the rest of it.
Big-firm firepower, with the partners on your case
Peter S. Lubin and James V. DiTommaso are Chicago business litigation lawyers who try cases throughout Illinois. Peter is a University of Chicago Law School graduate who has taught trial practice there for decades and is an Illinois Super Lawyer. He has served as lead counsel in more than one hundred class actions and has handled more than one hundred shareholder, LLC, derivative, breach of fiduciary duty, and fraud matters on both the plaintiff and the defense side. Crain’s Chicago Business credited him with the largest class action settlement of its year, a forty million dollar recovery. The firm has been named DuPage County Law Firm of the Year, and its lawyers have represented companies including McDonald’s, Motorola, and Experian and have litigated against adversaries including AT&T and General Motors. James DiTommaso is a Chicago-Kent College of Law graduate with a certificate in business law who served with the Illinois Appellate Court and argued a case before the Illinois Supreme Court. When you hire this firm, the lawyers whose names are on the door handle your case.
At DiTommaso Lubin, P.C., we defend Illinois and Michigan automobile dealerships against consumer fraud, warranty, and deceptive practices claims, from the first demand through dispositive motions, arbitration, and trial, including the class and multi-plaintiff cases that follow a compliance problem. If a customer has turned a repair bill into a fraud complaint with a fee petition attached, the defense is usually in the paperwork you already have. Call DiTommaso Lubin, P.C. at 630-333-0333 for a free consultation, or contact us online. We can help you separate a contract dispute from a consumer fraud case before the fees become the case. This post is for general information and is not legal advice.