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Oliveira v. Amoco Oil Company

February 09, 2000

MARK OLIVEIRA, PLAINTIFF-APPELLANT,
v.
AMOCO OIL COMPANY, A CORPORATION, DEFENDANT-APPELLEE.



Appeal from Circuit Court of Champaign County No. 96L325 Honorable George S. Miller, Judge Presiding.

The opinion of the court was delivered by: Justice Knecht

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Plaintiff, Mark Oliveira, appeals the dismissal of his complaint based on the Illinois Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 1996)) against defendant, Amoco Oil Company, and also appeals from the denial of class certification. Plaintiff contends (1) the trial court erred in dismissing his complaint because it failed to state a cause of action by finding he failed to allege proximate cause under the Act; and (2) the trial court erred and abused its discretion in denying class certification to his cause of action by ruling the Act did not apply to consumers outside Illinois, by not finding Illinois law applied, and failing to find common issues of fact or law predominated. We affirm in part and reverse in part.

I. BACKGROUND

Plaintiff is an Illinois consumer who first brought a complaint against defendant in November 1996 seeking certification as a class action on behalf of a nationwide class of all purchases of "Amoco Silver and/or Amoco Ultimate gasoline" (Amoco premium gasolines). This complaint alleged defendant's advertisements for its premium gasolines were false and plaintiff and others had purchased those premium brands because of the ads. Defendant asserted four causes of action: (1) breach of express warranty; (2) breach of implied warranty; (3) fraudulent misrepresentation; and (4) a violation of the Act.

At an evidentiary hearing in March 1997, the trial court denied class certification because, whether Illinois' or another state's law was applicable, the cause of action based upon reliance on advertisements required separate factual findings as to each class member's reasons for purchasing gasoline.

Plaintiff filed an amended complaint in May 1997, in which he dropped all claims except consumer fraud under the Act. The amended complaint alleges plaintiff and the class he claims to represent have a claim under the Act and were damaged simply by purchasing Amoco premium gasolines regardless of whether they saw the advertisements plaintiff alleges were misrepresentations. Plaintiff requested certification of a class he defined as "[a]ll retail purchasers in the United States who purchased Amoco Ultimate and/or Amoco Silver gasoline during the class period, November 6, 1991, through January 2, 1996."

The amended complaint alleged defendant began a multi-state advertising campaign on November 6, 1991, which falsely represented:

"(A) Amoco Ultimate gasoline is superior to all other brands of premium gasoline with respect to engine performance or environmental benefits because it is refined more than all other such brands;

(B) The clear color of Amoco Ultimate gasoline demonstrates the superior engine per- formance and environmental benefits Amoco Ultimate provides compared to other premium brands of gasolines that are not clear in color;

(C) A single tankful of Amoco Silver or Ultimate gasoline will make dirty or clogged fuel injectors clean;

(D) Amoco Silver or Ultimate gasoline provides superior fuel injector cleaning compared to other brands of gasoline; and

(E) Automobiles driven more than 15,000 miles with regular gasoline generally suffer from lost engine power or acceleration which will be restored by the higher octane of Amoco Silver gasoline."

The complaint alleges defendant knew these statements were untrue. While not included as an allegation in the complaint, the end date chosen for the class period, January 2, 1996, was the effective date of a consent decree between defendant and the Federal Trade Commission (FTC) as a result of which defendant stopped its advertising. The consent decree settled an action filed against defendant by the FTC based upon the same alleged deceptive advertising campaign.

Plaintiff alleges the result of defendant's deceptive advertising campaign was to increase demand for its premium gasoline thereby enabling it to command an inflated and otherwise unsustainable price for the premium gasolines that all consumers of the gasoline paid whether or not they had relied upon or seen the advertising campaign. Thus, plaintiff argues all consumers who purchased defendant's premium gasolines during the class period were damaged by defendant's misrepresentations in its advertising campaign.

In support of his motion to certify a class action, plaintiff submitted the affidavit of Dr. William R. Latham III, professor of economics at the University of Delaware, and Dr. James E. Haefner, professor of advertising at the University of Illinois. Dr. Haefner's affidavit had to do with the effects of advertising on consumer demand.

In Dr. Latham's initial and second affidavit, he assumed (1) defendant's premium gasoline did not provide the benefits touted by its advertising campaign and (2) the ad campaign had an effect on consumers and influenced their choices. He then stated, due to the increased demand created by the advertising, defendant was able to charge a higher rate for its premium gasolines than without the advertising. This higher rate was paid by all consumers and not just those who heard and relied upon defendant's advertising. Dr. Latham stated it can be determined, using econometric analysis, the precise extent of the inflated price attributable to defendant's advertising.

Defendant filed a motion to strike the affidavits of both Latham and Haefner. Defendant argued Latham's opinions were premised on assumptions contrary to undisputed facts; his theory of liability was novel and contrary to Illinois law; and his opinions were speculative, unsupported by evidence and lacking foundation for admissibility. Defendant provided affidavits from experts of its own that criticized Latham's theories as not supported by the facts, which showed that during the class period demand for defendant's premium gasolines actually decreased, as did prices charged. Defendant argued Latham's theory did not comply with the requirements of the Act and was both (1) too speculative and (2) an example of "fraud on the market" theory, which has been adopted only in securities fraud cases and not in cases of consumer fraud.

As Dr. Latham's second affidavit pointed out, however, he was not contending demand for defendant's premium gasoline actually increased as compared to previous time periods nor that the prices it charged increased from previous periods. Instead, Latham's contention is defendant's apparently deceptive advertising kept demand and prices higher during the class period than they would have been otherwise. He does not disagree other factors also influence demand and prices charged but maintains an econometric analysis can ...


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