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Price v. Philip Morris12/15/2005
ged in by entities otherwise subject to the Consumer Fraud Act to be exempt from liability under the Consumer Fraud Act and the Deceptive Practices Act, without regard to the possible merits of the asserted claim.
Section 10b(1) reflects a legislative policy of deference to the authority granted by Congress or the General Assembly to federal and state regulatory agencies and a recognition of the need for regulated actors to be able to rely on the directions received from such agencies without risk that such reliance may expose them to tort liability.
Further, section 10b(1), by exempting certain conduct from liability even if the conduct itself is objectionable, serves to channel objections to agency policy and practice into the political process rather than into the courts. See City of Chicago v. Beretta U.S.A. Corp., 213 Ill. 2d 351, 432 (2004) (suggesting that change in law affecting highly regulated industry be left to the legislature and the political process); Charles v. Seigfried, 165 Ill. 2d 482, 493 (1995) (noting that public and social policy should emanate from the legislature). Parties who desire to bring about change in agency policies or rules can take their complaints to the agency itself and can participate in the formal rulemaking process. If their concerns are not addressed by the agency, they may seek assistance from their legislators and may use the political process, including the power of the ballot box, if their voices are not heard.
We conclude that neither the language of section 10b(1) nor the public policy of the State of Illinois , as expressed by the legislature, requires that a regulatory agency engage in formal rulemaking before it can specifically authorize conduct by the entities over which it has regulatory authority.
3. Illinois Case Law
As noted above, both parties rely on this court's decision in Lanier, 114 Ill. 2d 1, as the seminal case regarding application of section 10b(1) of the Consumer Fraud Act. PMUSA argues that, under Lanier, compliance with a federal regulatory scheme is sufficient to trigger the exemption of section 10b(1). Plaintiffs argue that this case is readily distinguishable from Lanier.
In Lanier, the consumer plaintiff alleged that the creditor defendants violated the Consumer Fraud Act and the Deceptive Practices Act by failing to explain the effect of the "Rule of 78s" if she prepaid her loan. Lanier, 114 Ill. 2d at 5. Application of the rule to her loan caused her to have to pay more than $4,600 more than she would have been charged under the actuarial method of calculating interest. She argued that since the rule was understood by few borrowers, the defendants were obliged to explain the rule at the time of making a loan and that failure to do so constituted fraud. Lanier, 114 Ill. 2d at 6. Defendants argued that their full compliance with the requirements of the federal Truth in Lending Act (TILA) (15 U.S.C. ยงยง1601 through 1665 (1982)) was a defense to liability under the Illinois Consumer Fraud Act. Lanier, 114 Ill. 2d at 11.
Relying on a Federal Reserve Board staff interpretation of the applicable regulation (Lanier, 114 Ill. 2d at 12-13), this court determined that the defendant did not violate the TILA by failing to explain the operation of the Rule of 78s. Lanier, 114 Ill. 2d at 14. This court then considered whether compliance with the TILA was a defense to liability under the Consumer Fraud Act and concluded that the Consumer Fraud Act did not create more extensive disclosure requirements than the TILA. Rather, we noted "a consistent policy against extending disclosure requirements under Illinois law beyond those mandated" by federal law, in situations where
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