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Price v. Philip Morris12/15/2005
both the TILA and Illinois statutes apply. Lanier, 114 Ill. 2d at 17. Thus, this court held:
"Because the [Truth in Lending] Act is a law administered by the Federal Reserve Board, we find that, under section 10b(1) of the Consumer Fraud Act, the defendant's compliance with the disclosure requirements of the Truth in Lending Act is a defense to liability under the Illinois Consumer Fraud Act in the present case." Lanier, 114 Ill. 2d at 18.
PMUSA argues that Lanier and the policy recognized therein against imposing disclosure requirements beyond those mandated by applicable federal law require the application of the bar of section 10b(1) to plaintiffs' claim. Plaintiffs respond that PMUSA's reliance on Lanier is misplaced because the basis of their claim of fraud is not PMUSA's failure to make additional disclosures. Their claim is based on allegations of "active and direct" misrepresentation.
Our decisions since Lanier make it clear that mere compliance with applicable federal regulations is not necessarily a shield against liability under the Consumer Fraud Act. For example, in Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33 (1994), this court held that a broker's failure to reveal certain information in its disclosure statement was not authorized by the Commodity Futures Trading Commission (CFTC) or its regulations and, therefore, could be the basis for liability under the Consumer Fraud Act. The defendant did not fail to accurately disclose the amount of fees it charged investors for processing commodity options contracts. Rather, defendant failed to reveal the true nature of the fees being charged. Specifically, Heinold failed to reveal that the "foreign service fee" it was charging was instead a commission from which it would derive a share and that the fee was not authorized by the CFTC. Martin, 163 Ill. 2d at 40-42. Citing Lanier, Heinold argued that its literal compliance with the disclosure requirements of the CFTC was a complete defense to liability under the Consumer Fraud Act. Martin, 163 Ill. 2d at 49. This court concluded that the deception was "neither specifically authorized by the Commission, nor in compliance with the Commission's regulations." Martin, 163 Ill. 2d at 50. In addition, this court commented that the CFTC itself had noted that "literal compliance" with its disclosure requirements would not "necessarily ensure that a violation of the Commission's regulations has not occurred." Martin, 163 Ill. 2d at 50. The CFTC was on record as stating that " `a customer may be deceived about [material facts] despite receipt of the information required by [the Commission's regulations.]' " Martin, 163 Ill. 2d at 50, quoting Hammond v. Smith Barney, Harris Upham & Co. [1987-1990 Transfer Binder] Comm. Fut. L. Rep. (CCH) par. 24,617 (C.F.T.C. 1990).
In Jackson, this court again considered whether a defendant's compliance with its obligations under the TILA provided a defense to a claim under the Consumer Fraud Act. The specific issue was whether the car dealership and Chrysler Financial Corporation, the assignee of the car sales contract, could be held liable when the dealership failed to reveal in the contract that it would retain a substantial portion of the amount charged for an extended warranty rather than transmit the entire amount to the manufacturer. Jackson, 197 Ill. 2d at 41-42. The trial court dismissed the complaint and the appellate court affirmed, relying on Lanier. Jackson, 197 Ill. 2d at 43. This court affirmed, following the rule established in Lanier and holding that "compliance with the disclosure requirements of TILA is a defense to the Consumer Fraud Act claim against Chrysler [Financial] in this case." Jackson, 197 Ill. 2d at 50.
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