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Zekman v. Direct American Marketers Inc.

May 21, 1998

THEODORE ZEKMAN, APPELLEE, V. DIRECT AMERICAN MARKETERS, INC. (AMERICAN TELEPHONE AND TELEGRAPH COMPANY ET AL., APPELLANTS


The opinion of the court was delivered by: Justice Miller delivered the opinion of the court:

Plaintiff, Theodore Zekman, brought this action in the circuit court of Cook County against American Telephone and Telegraph Company, American Telephone and Telegraph Company of Illinois, AT&T Communications, Inc., and AT&T Communications of Illinois, Inc. (collectively, AT&T), seeking damages under statutory and common law theories of recovery. The circuit court dismissed some of these claims and granted AT&T summary judgment on others. The appellate court reversed. 286 Ill. App. 3d 462, 471. We allowed AT&T's petition for leave to appeal (166 Ill. 2d R. 315) and now reverse the judgment of the appellate court and affirm the judgments of the circuit court.

BACKGROUND

The procedural history of this case may be stated briefly. Patricia Rick filed a class action in the circuit court of Cook County on May 20, 1992, against Direct American Marketers, Inc. (Direct American), AT&T, and Illinois Bell Telephone Company. Plaintiff was substituted as the named plaintiff and class representative and filed an amended class action complaint (first amended complaint). Count V of the first amended complaint alleged that AT&T violated sections 2 and 2P of the Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/2, 2P (West 1992)) by knowingly receiving the benefits of Direct American's fraud. Plaintiff also alleged, in count VI, that AT&T acquired moneys by means of a deceptive practice in violation of section 9 of the Act (815 ILCS 505/9 (West 1992)). The trial Judge granted AT&T's motion to dismiss these claims. Plaintiff later filed second and third amended class action complaints, which he withdrew in response to AT&T's dismissal motions. Plaintiff then filed a fourth amended class action complaint (fourth amended complaint), which alleged violations of section 2 of the Act by AT&T. These allegations differed from those allegations in the first amended complaint in that plaintiff now alleged direct conduct by AT&T in violation of the Act. Plaintiff also alleged that AT&T committed common law fraud and knowingly accepted the benefits of fraud in violation of the common law. The trial Judge granted AT&T's and Direct American's motions for summary judgment.

Plaintiff appealed both the decision to dismiss plaintiff's claims against AT&T in counts V and VI of the first amended complaint and the grant of summary judgment on the fourth amended complaint. The appellate court reversed and remanded the cause to the circuit court. 286 Ill. App. 3d at 471. First, the appellate court found that summary judgment was improper on the fourth amended complaint because there was a genuine issue of fact as to whether Direct American's mailings caused plaintiff to believe that he had won an award. 286 Ill. App. 3d at 469. Next, the appellate court reversed the trial court's ruling dismissing counts V and VI of the first amended complaint. 286 Ill. App. 3d at 471.

Both AT&T and Direct American filed petitions for leave to appeal in this court. We denied Direct American's petition (173 Ill. 2d 549) but allowed AT&T's petition (166 Ill. 2d R. 315). We granted leave to the American Association of Retired Persons to file a brief as an amicus curiae. 155 Ill. 2d R. 345. As the question of class action status has not yet been reached, it is not at issue here.

FACTS

On review of an order granting a motion to dismiss, all well-pleaded facts in the complaint are accepted as true. Ziemba v. Mierzwa, 142 Ill. 2d 42, 47 (1991). The following general facts are relevant to our inquiry, and additional facts are supplied as needed. Plaintiff received a series of separate mailings from Direct American. The mailings generally did not solicit plaintiff to purchase any product or service. Instead, the mailings indicated that plaintiff had won a prize. Prizes listed on each mailing included large cash awards, as well as discount coupons for various products or services. While it was possible to respond by use of the mail, the mailings urged recipients to call a "900" number in order to immediately claim their prize. By calling the "900" number, recipients incurred charges, usually between $8 and $10 for the call. In addition to stating the charge that applied to the call, the mailings informed the recipient of the procedure for responding by mail and gave the odds of winning the prizes. This information usually was in less conspicuous type. The mailings often listed plaintiff's name next to the largest cash award. Plaintiff made numerous calls to various different "900" numbers. Each time plaintiff called, he won only discount coupons, and never a cash award. AT&T billed plaintiff for the charges and retained a percentage of the charge for itself; the majority of the charge went to Direct American.

AT&T can provide billing services for companies soliciting "900" number calls so that the charge appears on the caller's long-distance bill. AT&T has guidelines that impose minimum standards on those companies that use its services. AT&T reviewed Direct American's mailings for the purpose of ensuring that they complied with the AT&T guidelines and state and federal laws prohibiting false, deceptive, and misleading advertising and trade practices. At times, AT&T determined that Direct American's proposed mailings were misleading and required Direct American to make changes before they were sent. Sometimes AT&T did not determine a mailing to be misleading until after it was already sent to customers and the customers had made and been billed for calls to the "900" number. It was AT&T's policy to provide refunds for customers who contested charges for their calls to Direct American.

Plaintiff was 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. All right. When you received the mail piece, did you read it?

A. In a cursory fashion.

Q. Approximately how much time did you spend reading it?

A. Enough time to see if my name was on it and if there was a cash award on it. But I did not read the card carefully in any other way.

Q. And you made a telephone call?

A. Yes.

Q. Were you aware that you could have also found out whether or not you won by mailing in and asking?

A. Yes. I had determined that from previous mailings when I began getting them. However, I chose not to mail them in because it was emphasized that it would take three or four weeks before it would even be acted upon. And in that period of time, you wouldn't know.

Q. All right. Did you have any-strike that. You also, knew, did you not, that there would be a charge from the telephone company associated with the call to the 900 number?

A. Yes.

Q. And when you called, did you hear a message that told you that you could hang up and not get ...


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