and officers' liability policies of the corporation have no standing to bring a Consumer Fraud claim because they are only beneficiaries of the policy, not purchasers who would have standing as consumers. The holdings of McCarter and National Union are based on the premise that standing under the Consumer Fraud Act is limited to consumers.
The Act provides that "any person who suffers damage as a result of a violation of this Act committed by any other person may bring an action against such person." Ill. Rev. Stat. ch. 121 1/2, para. 270a(a). A "person" is defined as including "any natural person or his legal representative, partnership, corporation (domestic and foreign), company, trust, business entity or association, and any agent, employee, partner, officer, director, member stockholder, associate, trustee or cestui que trust thereof." Id. para. 261(c). The general definition of unlawful practices under the Act also makes no reference to defrauding or deceiving consumers.
See id. para. 262. Since business entities are defined as persons and since para. 270a(a) provides that "any person" damaged by a violation of the Act may bring an action pursuant to the Act, there does not appear to be any requirement that a person bringing a claim under the Act be a consumer.
In Steinberg v. Chicago Medical School, 69 Ill. 2d 320, 371 N.E.2d 634, 13 Ill. Dec. 699 (1977), a rejected applicant to the Chicago Medical School brought a putative class action alleging fraud and breach of contract in that the school relied on unpublished criteria to evaluate applicants. The Illinois Supreme Court rejected the Consumer Fraud claim stating the following:
That the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1973, ch. 121 1/2, par. 261 et seq.) is inapplicable is patent from the title of the Act: "An Act to protect consumers and borrowers and businessmen against fraud, unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce * * *." A "consumer" is "any person who purchases or contracts for the purchase of merchandise * * *." (Ill. Rev. Stat. 1973, ch. 121 1/1, par. 261(e).) Obviously, plaintiff and those whom he represents were not consumers.
Id. at 638.
Although this passage does not expressly limit Consumer Fraud claims to being brought by consumers,
Steinberg has subsequently been cited for that proposition. See, e.g., Brown v. Veile, 198 Ill. App. 3d 513, 555 N.E.2d 1227, 1231, 144 Ill. Dec. 708 (5th Dist. 1990); McCarter, 473 N.E.2d at 1018; National Union, 652 F. Supp. at 861. See also First Comics, Inc. v. World Color Press, Inc., 884 F.2d 1033, 1040 (7th Cir. 1989), cert. denied, 493 U.S. 1075, 107 L. Ed. 2d 1030, 110 S. Ct. 1123 (1990). By 1989, a number of cases had held that the Consumer Fraud Act was limited to consumers or situations involving competitive injury or a general effect on consumers. A minority of cases had held otherwise. See id. at 1039 (collecting cases). None of these cases, however, were Illinois Supreme Court cases. In 1989, the Seventh Circuit held that a claim under the Act required proof that "misconduct injured consumers generally." Id. at 1040. Effective January 1, 1990, and applicable to the present case which involves conduct occurring in 1990, the General Assembly amended the Act to specifically provide: "Proof of a public injury, a pattern, or an effect on consumers generally shall not be required." Ill. Rev. Stat. ch. 121 1/2, para. 270a(a). While that amendment clearly eliminates any requirement of proving an effect on consumers generally, it does not expressly overrule any requirement that the person bringing suit be a consumer. A recent decision of the Illinois Supreme Court, while involving a claim brought by the Cook County State's Attorney for which different standing rules apply, contains discussion indicating that the Illinois Supreme Court intends to read the Consumer Fraud Act broadly and not limit standing to consumers. See People ex rel. Daley v. Datacom Systems Corp., 146 Ill. 2d 1, 585 N.E.2d 51, 165 Ill. Dec. 655 (Ill. 1991). Also a recent Illinois Appellate Court case expressly holds that standing under the Act is not limited to consumers. Sullivan's Wholesale Drug Co. v. Faryl's Pharmacy, Inc., 214 Ill. App. 3d 1073, 573 N.E.2d 1370, 1376, 158 Ill. Dec. 185 (5th Dist.), appeal denied, 141 Ill. 2d 561, 580 N.E.2d 136 (1991). Accord Uniroyal Goodrich Tire Co. v. Mutual Trading Corp., 749 F. Supp. 869, 877-78 (N.D. Ill. 1990). Contra Brown, 555 N.E.2d at 1231; Storck USA, L.P. v. Levy, 1991 WL 60562 at *3-4 (N.D. Ill. April 15, 1991). Compare Elder, 558 N.E.2d at 1320-21 (ambiguous as to whether standing limited to consumer, but expressly holding defendant need not be person from whom products were purchased). It is found that, if given the opportunity, the Illinois Supreme Court would hold that standing under the Consumer Fraud Act is not limited to consumers.
The motion to dismiss the Count III claim against Principal Mutual will be denied.
IT IS THEREFORE ORDERED that defendant Principal Mutual's motion to dismiss is denied. Principal Mutual shall answer the complaint within two weeks of the date of this order. Status hearing will be held on January 30, 1992 at 9:15 a.m.
William T. Hart
UNITED STATES DISTRICT JUDGE
Dated: JANUARY 15, 1992