The opinion of the court was delivered by: Justice McMORROW
Docket Nos. 89497, 89511 cons.-Agenda 19-May 2001.
The plaintiff, Mark Oliveira, filed a one count, amended class action complaint against the defendant, Amoco Oil Company, in the circuit court of Champaign County. The complaint alleged that defendant violated the Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 1996)) by falsely representing in a series of advertisements that the use of its premium gasolines would improve engine performance and benefit the environment. The complaint further alleged that defendant's advertisements increased consumer demand for the premium gasolines. This, in turn, allegedly permitted defendant to "command an inflated and otherwise unsustainable price for its premium gasolines," thereby proximately causing actual damage to all purchasers of the gasolines, regardless of whether they were aware of the ads at the time of purchase. The complaint sought certification of a nationwide class of consumers who had purchased defendant's premium gasolines.
Defendant filed a motion to dismiss plaintiff's complaint pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1996)). The circuit court granted defendant's motion on the basis that plaintiff's "proximate causation pleading [was] inadequate to state a cause of action under the Illinois Consumer Fraud Act." At the same time, the circuit court also denied plaintiff's request for class certification, finding that there were no predominating common issues of fact or law with respect to plaintiff's proposed class. On appeal, the appellate court reversed the circuit court's dismissal of plaintiff's cause of action and affirmed the circuit court's denial of class certification. 311 Ill. App. 3d 886. Plaintiff and defendant filed petitions for leave to appeal from the appellate court's decision. 177 Ill. 2d R. 315. We granted both petitions and consolidated the appeals for review.
Plaintiff filed his amended class action complaint in the circuit court of Champaign County on May 5, 1997. The single count contained in the complaint alleged that defendant violated section 2 of the Act (815 ILCS 505/2 (West 1996)) by conducting a deceptive advertising campaign over a period of several years. Section 2 of the Act provides, in pertinent part, that "deceptive acts or practices *** or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact *** in the conduct of any trade or commerce are hereby declared unlawful ***." 815 ILCS 505/2 (West 1996).
According to plaintiff's complaint, defendant ran a series of television, radio and print advertisements for its premium gasolines, including "Amoco Ultimate and/or Amoco Silver," which touted the gasolines' environmental benefits and high performance qualities. The advertisements allegedly represented that:
"(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 performance 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."
Plaintiff's complaint alleged that defendant's advertisements omitted material facts and were "false and misleading." According to plaintiff's complaint, the representations in defendant's ads were "made without any competent and/or scientific substantiation" and defendant's premium gasolines were in fact "no better for the performance of [consumers'] motor vehicles than [nonpremium] gasolines." The complaint also alleged that defendant's advertisements were made in the course of trade or commerce and that defendant intended "that consumers would rely on these advertisements in making their purchase decisions." Therefore, according to plaintiff's complaint, defendant's advertisements violated section 2 of the Act.
Plaintiff also alleged in his amended complaint that defendant's advertisements proximately caused him actual damage. Proximate causation was a necessary element of plaintiff's complaint because his claim for consumer fraud was brought under section 10a(a) of the Act (815 ILCS 505/10a(a) (West 1996)), the provision of the Act which establishes the right to pursue a private cause of action for consumer fraud. Section 10a(a) states, in part, that "[a]ny person who suffers actual damage as a result of a violation of [the] Act" may bring a cause of action against that person for consumer fraud. 815 ILCS 505/10a(a) (West 1996). The "as a result of" language in section 10a(a) imposes an obligation upon a private individual seeking actual damages under the Act to "demonstrate that the fraud complained of proximately caused" those damages in order to recover for his injury. Zekman v. Direct American Marketers, Inc., 182 Ill. 2d 359, 373 (1998).
Plaintiff maintained in his complaint that he suffered actual damage as a result of the allegedly deceptive advertisements when he purchased defendant's premium gasoline. Plaintiff did not allege, however, that defendant's advertisements induced him to buy the gasoline or that he was deceived by the ads. Nor did plaintiff claim that he saw, heard or read any of the allegedly deceptive advertisements. Instead, plaintiff alleged that he was damaged by defendant's advertisements because the ads created an "artificially inflated" price for the gasoline he purchased. In support of this allegation, plaintiff advanced a "market theory" of causation. *fn1 According to plaintiff's complaint, defendant's allegedly deceptive advertising scheme increased demand for defendant's premium gasolines. Because of this increase in demand, defendant "was able to command an inflated and otherwise unsustainable price for its premium gasolines." Therefore, "all purchasers of Amoco's premium gasolines were injured irrespective of whether they did or did not see or hear the specific advertisements and marketing materials in question." In other words, according to plaintiff's complaint, all consumers who purchased defendant's premium gasolines during the time the advertisements were running were damaged when they made the purchase because they paid a higher price for the gasoline then they would have paid in the absence of the ads.
In the prayer for relief, plaintiff's complaint requested an order from the circuit court certifying his action as a class action. See 735 ILCS 5/2-801 et seq. (West 1996). Plaintiff's proposed class was defined as "[a]ll retail purchasers in the United States who purchased Amoco Ultimate and/or Amoco Silver gasoline" during the time the various advertisements ran, from approximately November 6, 1991, through January 2, 1996. *fn2 In support of his request for class certification, plaintiff submitted the affidavit of Dr. William R. Latham III, a professor of economics at the University of Delaware. Taking as a given that defendant's advertisements were misleading and that they had an effect on consumers, Latham opined that "there exists a strong economic likelihood that a substantial part of the price differential between Ultimate and/or Silver and the other grades of Amoco gasoline was the result of the greater demand for Ultimate and/or Silver gasoline caused by the misleading advertisements for the premium gasolines. A necessary result of the fact that the misleading advertising led some consumers to demand Amoco premium gasolines was an increase in demand that permitted Amoco to maintain a higher price for its premium gasolines." According to Latham, all individuals who purchased defendant's premium gasolines paid an increased price because of the allegedly deceptive ads, regardless of whether they saw or relied upon the advertisements at issue. Latham also stated that the extent of the "inflated" price-the difference between the price of the gasoline with the ads and the price of the gasoline without the ads-could be determined by "using the basic techniques of econometric analysis."
Defendant filed a motion to dismiss plaintiff's complaint pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 1996)). Defendant also contested plaintiff's request for class certification. On February 24, 1998, in a ruling issued from the bench, the circuit court concluded that plaintiff's "marketing theory" of causation was "not a correct statement of proximate cause under the Illinois Consumer Fraud Act." Accordingly, the circuit court granted defendant's motion to dismiss "on the basis that the proximate causation pleading is inadequate to state a cause of action under the Illinois Consumer Fraud Act."
Although the circuit court dismissed plaintiff's complaint, the court nevertheless went on to consider plaintiff's request for an order certifying a nationwide class of consumers who had purchased defendant's premium gasolines. On this issue, the circuit court concluded that there were "so many variables" that might influence a consumer's decision to buy a particular gasoline, including, for example, the location of the gas station or other services available at the station, that the court could not "find that questions of fact would be common to the class or that the common questions would predominate over any questions affecting only individual members." The circuit court also found that no common questions of law existed because the Act "would not extend to persons who were not Illinois consumers." Consequently, because there was "a lack of commonality of questions of law or fact" with respect to plaintiff's proposed class, the circuit court denied plaintiff's request for class certification.
On appeal, the appellate court first considered the propriety of the circuit court's dismissal of plaintiff's complaint and, in particular, the circuit court's conclusion that plaintiff had failed to adequately plead proximate causation as required under section 10a(a) of the Act. As set forth by the appellate court, the parties' arguments on this issue focused primarily on this court's holding in Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33 (1994).
In Martin, this court considered a private cause of action brought under the Act in which it was alleged that a brokerage firm misrepresented the nature of a certain securities fee. This court addressed, among other issues, what type of causation the plaintiff had to prove to recover damages for the defendant's misrepresentation. Relying on federal case law, this court adopted a causation analysis found in federal decisions interpreting Rule 10(b)-5 of the Securities and Exchange Act of 1934. We explained:
"In order for a plaintiff to recover for a violation of Rule 10(b)-5, the great majority of Federal courts require plaintiffs to show two types of causation: (1) transaction causation; and (2) loss causation. [Citation.] Transaction causation has been defined as meaning that `the investor would not have engaged in the transaction had the other party made truthful statements at the time required.' [Citation.] Loss causation, on the other hand, has been ...