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Price v. Philip Morris12/15/2005
In addition, this result was based on an exemption clause in the TILA that exempts assignees from liability under federal law unless the creditor's violation of the TILA is "apparent on the face of the disclosure statement." 15 U.S.C. ยง1641(a) (2000). Thus, we held that "an assignee is not responsible for the misrepresentations made by the dealer to the consumer outside of reviewing the face of the assigned document for apparent defects." Jackson, 197 Ill. 2d at 50. In effect, we held that the assignee was "specifically authorized" (815 ILCS 505/10b(1) (West 2000)) to do no more than meet its obligations under section 1641(a) of the TILA.
It is significant that in both Lanier and Jackson, the holding was limited to the facts of the particular case. Lanier, 114 Ill. 2d at 18 ("in the present case"); Jackson, 197 Ill. 2d at 50 ("in this case"). As we noted in Jackson, Lanier did "not confer a blanket immunization" from Consumer Fraud Act liability. If the alleged fraud were "active and direct," such as a scheme to make false statements on the financing statement, liability under the Consumer Fraud Act could be imposed. Jackson, 197 Ill. 2d at 51-52. As Justice Kilbride noted in his special concurrence, mere compliance with applicable law does not necessarily bar Consumer Fraud Act liability. Instead, the conduct at issue must be specifically authorized. Jackson, 197 Ill. 2d at 59 (Kilbride, J., specially concurring, joined by Harrison, C.J.).
In Lanier and Jackson, this court held that full compliance with applicable disclosure requirements is a defense, under section 10b(1), to a claim of fraud based on the failure to make additional disclosures. In the present case, however, the plaintiffs' claim is not based on an alleged failure to disclose and, thus, compliance with disclosure requirements cannot constitute a defense.
Consider, for example, if the alleged fraud was the practice of a cigarette manufacturer to put only 19 cigarettes instead of 20 in every fifth pack of cigarettes. Such a scheme would increase profits by 1% by selling 99 cigarettes instead of the 100 promised on the labels. Without a doubt, the manufacturer would be liable under the Consumer Fraud Act for the fraud, notwithstanding scrupulous compliance with all applicable rules and regulations of the FTC. Such a fraud would be "active and direct." See Jackson, 197 Ill. 2d at 51-52. See also Hill v. St. Paul Federal Bank for Savings, 329 Ill. App. 3d 705, 713 (2002) (rejecting argument that defendant's failure to disclose posting order of checks in its fee schedule was deceptive, even if in compliance with federal law, because the Consumer Fraud Act does not require more extensive disclosure than that required by the TILA).
Plaintiffs' claim in the present case is that the use of the terms "lights" and "lowered tar and nicotine" on PMUSA's packaging and in its advertising is every bit as false as the package label that promises 20 cigarettes but delivers only 19. Plaintiffs argue that Martin should control the result in this case because the use of these terms has not been specifically authorized by the FTC and was not done in compliance with FTC rules. We conclude that Martin does not provide the answer; it merely helps us formulate the dispositive question. Unless the use of these terms has been specifically authorized by the FTC, section 10b(1) of the Consumer Fraud Act does not exempt PMUSA from liability.
The circuit court, in rejecting PMUSA's section 10b(1) defense, relied on Aurora Firefighter's Credit Union v. Harvey, 163 Ill. App. 3d 915 (1987). After the credit union brought a collection action against the guarantor of a loan, he raised affirmative defenses and filed counterclaim
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