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01/15/97 THEODORE ZEKMAN v. DIRECT AMERICAN

January 15, 1997

THEODORE ZEKMAN, PLAINTIFF-APPELLANT,
v.
DIRECT AMERICAN MARKETERS, INC., AMERICAN TELEPHONE AND TELEGRAPH COMPANY, AMERICAN TELEPHONE AND TELEGRAPH COMPANY OF ILLINOIS, AT&T COMMUNICATIONS, INC., AT&T COMMUNICATIONS OF ILLINOIS, INC., ILLINOIS BELL TELEPHONE COMPANY, AND UNKNOWN DOE DEFENDANTS, DEFENDANTS-APPELLEES.



APPEAL FROM THE CIRCUIT COURT COOK COUNTY. No. 92 CH 4950. THE HONORABLE, MICHAEL B. GETTY, JUDGE PRESIDING.

Released for Publication February 28, 1997.

Presiding Justice Cousins delivered the opinion of the court: Leavitt, J., concurs. Gordon, J., dissents.

The opinion of the court was delivered by: Cousins

PRESIDING JUSTICE COUSINS delivered the opinion of the court:

Plaintiff, Dr. Theodore Zekman, both individually and also as a class representative, asserted a claim for damages against defendant Direct American Marketers, Inc. (Direct American) based upon three alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) 815 ILCS 505/1 et seq. (West 1992), and one violation of the Illinois Pay-Per-Call Services Consumer Protection Act, 815 ILCS 520/1 et seq. (West 1992), in connection with a mail sweepstakes promotion. Plaintiff also asserted claims against American Telephone and Telegraph Company of Illinois (now AT&T Corp.), American Telephone and Telegraph Company of Illinois, AT&T Communications, Inc., and AT&T Communications of Illinois, Inc. (collectively, 'AT&T') for common law fraud, knowingly accepting the benefits of a fraud, and violating the Consumer Fraud Act.

Plaintiff appeals from the trial court's decision granting defendants motion for summary judgment and from an earlier order in which the trial court dismissed plaintiff's counts against AT&T, holding that the Consumer Fraud Act does not permit claims for knowingly accepting the benefits of fraud. On appeal, plaintiff contends that (1) the trial court erred in granting summary judgment when genuine issues of material fact existed as to the causal relationship between the defendants deceptive acts and the harm suffered by plaintiff, and (2) the trial court erroneously held that the Consumer Fraud Act does not apply to a wrongdoer who knowingly accepts the benefits of the fraud.

BACKGROUND

This suit arises out of a series of separate mailings that plaintiff received from Direct American during the fall of 1991 and early 1992. The mailings were addressed specifically to plaintiff. Each mailing displayed a "900" number one could call to claim an award. Plaintiff claimed that the mailings were deceptive and led him to incur charges for "900" number calls he made pursuant to the instructions on the mailings. A "900" number is a 10-digit toll telephone number that a caller is billed for calling. AT&T billed and collected from Zekman for the "900" calls and, therefore, derived benefit from the calls. AT&T managers received and reviewed drafts of planned mailings for accuracy and fairness, and monitored Direct American's programs to determine whether Direct American's usage of the "900" numbers complied with regulatory rules, AT&T guidelines, and state laws. Zekman never won a cash award as a result of calling the "900" numbers. He did, however, receive discount coupons, which he threw away.

Early in the case, plaintiff alleged, in counts V and VI of the amended complaint, that AT&T knowingly accepted the benefits of Direct American's alleged fraud by recovering fees for the "900" number phone calls and therefore violated section 2, section 2P or, in addition thereto, section 9 of the Consumer Fraud Act. The trial court found that plaintiff's argument ignored the fact that AT&T's service fee is separate from the benefit derived from Direct American's conduct. The court stated in pertinent part:

"There is nothing in the plain language of the Consumer Fraud Act nor in its legislative history nor in the myriad of case law to support such a vicarious liability theory.

***

AT&T has allowed their service to be used; but AT&T has not, as required by Section 2, used or employed any deception, fraud, false pretense, or concealment, nor could intention to rely ever be imputed from such involvement by the message carrier."

The court later amended its order and allowed plaintiff to file second, third, and fourth amended complaints in which plaintiff alleged additional information regarding AT&T's role in the mailing program. Plaintiff alleged, inter alia, information regarding AT&T's separate "900" number promotion unit, Multiquest, AT&T's agreement with Direct American, and AT&T's internal policies regarding customers who complained about the "900" numbers.

Zekman was eventually deposed. His deposition testimony provides in pertinent part:

"Q. Well, was there a time when you were getting cards but you were not responding, you were simply throwing them away?

A. No. I responded to -- my name was on them. And I thought that my name being on them meant something.

***

Q. Is it your testimony that each and every time you placed a call to a 900 number, you believe that you won a cash award?

A. Every time I placed a call, I was doing so in response to instructions.

Q. Were you being compelled to respond?

A. I wasn't compelled.

Q. It was your own decision?

A. Yes.

Q. And you were being given information in the mailing ...


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