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Perlman v. Time





APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND K. BERG, Judge, presiding.


Stuart D. Perlman appeals from the entry of summary judgment in favor of Time, Inc. (Time), on a four-count complaint which charged Time with common law fraud, unjust enrichment, violation of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 261 et seq.) and breach of contract. On appeal Perlman contends that the trial court erred in (1) granting summary judgment to Time, and (2) denying his own motion for summary judgment.

The following facts pertinent to the disposition of this appeal appear in the record.

In September 1972 Perlman renewed a subscription to LIFE magazine, contracting for delivery of 78 issues and paying in advance a total charge of $11.95, or $.1532 per issue. Time, the publisher of LIFE, subsequently decided on December 7, 1972, to suspend the publication of LIFE due to irreversible financial losses incurred in publishing the magazine. Publication was thereafter suspended, the final issue bearing the cover date of December 29, 1972. Perlman had received 18 of the 78 issues of LIFE for which he had contracted and paid.

Following the suspension, Time offered Perlman his choice of a cash refund for the unfulfilled portion of his LIFE subscription or a substitute subscription to any one of 33 different magazines published both by Time and by other publishers. These choices were explained in a letter which Perlman received from Garry Valk, publisher of LIFE, subsequent to the suspension. After confirming the suspension, thanking Perlman for his support of LIFE, and announcing that "We still have a commitment to you," the letter stated in pertinent part:

"Naturally we hope that you might want to use the credit remaining in your subscription to enjoy one of our other Time Incorporated publications — TIME, SPORTS ILLUSTRATED, FORTUNE or MONEY (our new monthly magazine of family economics and money management.) Needless to say, we would like to keep you in our family of readers — and so to continue serving you with information and rewarding reading.

You will also find many fine magazines from other publishers on this list of alternatives so that you may have an even greater range of selectivity. If you prefer a refund in cash rather than in kind, we will send it to you promptly. The choice, of course is yours.

Each choice carries a reference number. Simply indicate your preference in the box on the enclosed postpaid reply card. Since there are limited quantities available of some of the alternatives we've listed, I would be grateful if you would mark three choices so that we can send you one of them promptly. All choices, of course, offer you full value for the remaining portion of your LIFE subscription."

Enclosed with this letter was a "selection list," containing 33 different magazines and a cash refund alternative, from which Perlman was asked to select his "three choices — in order of preference — to fulfill the remaining portion of my LIFE subscription." Each magazine choice was briefly described. Perlman, responding to this solicitation, selected TIME magazine, another Time publication, as his first choice, another magazine as his second choice and a cash refund as his final alternative. It was stipulated that had Perlman decided to select a cash refund instead of TIME, he would have been entitled to $9.19, the value of his 60 remaining LIFE issues multiplied by the $.1532 which he had paid for each issue.

Perlman received a total of 43 issues of TIME as a substitute for the 60 issues of LIFE, the TIME subscription commencing in August 1973 and ceasing in June 1974. Perlman wrote to Time on November 18, 1974, contending that "I believe I am entitled to the remaining issues under my original subscription [to LIFE] which, if I am not mistaken, had about 8 months to go." Time replied that the 43 issues of TIME which he had received "represents the full credit for the unfulfilled portion of your LIFE subscription."

After Perlman again claimed that he had not received full credit, Time informed him on February 13, 1975, that the number of TIME issues due in lieu of the LIFE subscription was determined by use of a "basic to basic" conversion formula promulgated by the Audit Bureau of Circulations (ABC). The ABC is a private nonprofit organization which periodically audits and certifies the circulation of magazines. Time explained to Perlman that the number of issues of TIME which he received had been calculated:

"By dividing the sum of money still due the subscriber at the basic annual subscription price of the discontinued publication by the price per copy of the surviving publication, said per-copy to be a pro rata of the basic annual subscription price of the surviving publication.


Audit Bureau of Circulation 1972-1973 Bylaws and Rules Chapter B, Article 7, Section 7, Paragraph (d), Sub-Paragraph 1."

The "basic annual subscription price" referred to in the above formula was an amount assigned to the magazine by the publisher. Both TIME and LIFE actually sold at various subscription prices and the "basic" rate was actually the highest price at which subscriptions were sold. The basic annual subscription rate for LIFE was $10 per year or $.192 per issue, while the basic annual subscription price for TIME was $14 per year or $.269 per issue. Using the ABC formula, Time assigned a value of $11.52 to Perlman's remaining 60 issues of LIFE, multiplying the 60 issues by the basic per issue price of $.192. This total credit of $11.52 was then divided by $.269, the basic per issue price assigned to TIME, in order to arrive at the number of substitute issues due. As a result of this computation, it was determined that Perlman was entitled to 43 issues of TIME in fulfillment of the remaining portion of his LIFE subscription.

Perlman thereafter brought an action against Time on his own behalf and on behalf of all others similarly situated, claiming that the solicitation letter was deceitful and that "full value" was not given as promised. The amended complaint alleges common law fraud in count I, unjust enrichment in count II, a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 262) in count III and breach of contract in count IV. Questions pertaining to the propriety of the suit as a class action were not decided by the trial court and are not before us now. Time moved to dismiss the amended complaint and alternatively for the summary judgment. Perlman thereafter filed his motion for summary judgment on the issue of liability. After briefing and ...

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