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Saltzman v. Enhanced Services Billing

July 29, 2003


Appeal from the Circuit Court of Cook County 98 CH 2278 Honorable Julia M. Nowicki, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice McBRIDE


Plaintiff-appellant, Dr. Leonard Saltzman, appeals from summary judgment entered in favor of defendants-appellees, Enhanced Services Billing, Inc. (ESBI), and Infodex, Inc. (Infodex), *fn1 on plaintiff's second amended complaint (complaint). The complaint, filed as a class action, alleged in count I that ESBI violated section 2 of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/2 (West 2000)). Count II was a claim for restitution that was dismissed by the trial court on August 25, 2000. On October 5, 2001, the trial court granted summary judgment in favor of ESBI on the ground that knowingly receiving benefits from someone else's fraud was not covered under section 2 of the Consumer Fraud Act. Plaintiff appeals from that order.

The sole issue on review is whether summary judgment in favor of ESBI was proper. "Summary judgment is proper 'where the pleadings, affidavits, depositions, admissions, and exhibits on file, when viewed in the light most favorable to the non-movant, reveal that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.' [Citation.]" Zekman v. Direct American Marketers, Inc., 182 Ill. 2d 359, 374, 695 N.E.2d 853 (1998). "Although use of the summary judgment procedure can be an efficient means for disposing of certain lawsuits, it is a drastic measure that should be employed only when the right of the moving party is clear and free from doubt. [Citation.]" O'Banner v. McDonald's Corp., 173 Ill. 2d 208, 211-12, 670 N.E.2d 632 (1996). On a summary judgment motion, our standard of review is de novo. Zekman, 182 Ill. 2d at 374. We state the following background facts.

Infodex was a telecommunications information service provider that furnished information when a consumer phoned a certain "900" number. Specifically, the complaint alleged that Infodex provided "services such as sports and weather information when consumers telephone a particular phone number with a '900' prefix." A consumer's "900" number activity was recorded on a magnetic tape or was electronically transmitted by Infodex to billing clearing houses for the collection of fees. ESBI is an enhanced billing clearing house that bills consumers directly, or through local telephone companies, for services provided from other businesses within the telecommunications industry. ESBI and Infodex had a contract in which ESBI would process the magnetic tapes and electronic transmissions from Infodex. ESBI would then send the billing information to the local exchange carriers, such as Ameritech, for inclusion on the customer's telephone bill.

Plaintiff alleged that, during 1997, he received a series of telephone bills from Ameritech, his local telephone service provider, that included a charge for an "Infodex Net Listing" service from ESBI. Plaintiff paid these charges without realizing what they were for. He alleged that he never authorized these "Infodex" or "Net Listing" services that were charged from ESBI.

After receiving a phone bill from Ameritech dated July 10, 1997, which contained another ESBI charge in the amount of $5.86, plaintiff telephoned Ameritech and ESBI and sought to determine who authorized the ESBI charges that had been appearing on his phone bill. Plaintiff alleged that neither Ameritech nor ESBI could provide any information on who authorized the charge or what Infodex was. He further alleged that he received nothing for these Infodex listing services.

On September 10, 1997, plaintiff claimed that he received another telephone bill containing charges from ESBI. He was able to have this charge cancelled but he could not cancel the earlier charges for which he had already paid.

In paragraph 25 of the complaint, plaintiff specifically alleged:

"It is the practice of ESBI to receive billing information from Infodex, and without any reasonable evidence of authorization, and knowing that ESBI could not provide any reasonable evidence of authorization, to place the bogus charge on the victim's telephone bill. The placing of the bogus charge on a victim's phone bill is a representation that the victim actually owes the bogus charge."

In paragraph 27 of the complaint, plaintiff alleged:

"The placement of a bogus charge on a phone bill is misleading and deceptive, in that victims are led to believe that the charges on the utility bill are legitimate by its very inclusion on the amount owed to the telephone company. Moreover, withholding the amount due from the phone bill subjects the victim to late fees and credit problems with the phone company, so the victim pays regardless of whether he thinks it is actually owed."

In paragraph 28, the complaint alleged, in relevant part:

"When the telephone company obtains payment of the bogus charges, the money is relayed to [ESBI]. [ESBI] then subtracts the amount of their fees off the top, and forwards the remaining money to Infodex."

As a result of the above conduct, the complaint alleged that ESBI engaged in unfair and deceptive acts and practices by adding charges to customer's telephone bills for which it could not produce any contract or authorization. Such conduct, according to plaintiff, amounted to a violation of section 2 of the Consumer Fraud Act.

On June 5, 2001, ESBI moved for summary judgment on the ground that that ESBI did not violate section 2 of the Consumer Fraud Act. In an affidavit, Jeanne Jackson, vice president of customer service for ESBI, testified that ESBI had a contract with Infodex where ESBI processed the magnetic tapes and/or electronic transmissions provided by Infodex. Once ESBI received the charges from its customers and performed a data processing function, ESBI then sent the billing information to Ameritech for inclusion on the customer's telephone bill. In short, Jackson explained that ESBI acted "as a middleman in transferring the funds between the local exchange carrier [Ameritech] and its customers, including Infodex." Because ESBI was simply performing a data processing function, Jackson claimed that ESBI had no way of knowing whether a given charge was erroneous.

She also stated that, if a telephone customer complained about an error on his or her bill, either ESBI, its client, or Ameritech would investigate the claim. If a charge was made in error, ESBI would forward an electronic credit to Ameritech in order to credit the customer's account for the amount erroneously billed. Jackson said that she examined plaintiff's account records regarding the Infodex bills. Those records demonstrated that Infodex charges appeared on plaintiff's phone bill five times during the period between April and August 1997, amounting to $27.15. She further said that plaintiff telephoned ESBI on September 8, 1997, and registered a complaint regarding the Infodex charges that appeared on his bill. ESBI registered plaintiff's complaint and arranged two credits for Infodex charges at that time. ESBI then reviewed plaintiff's records and issued him credits for the remaining three Infodex charges. According to Jackson, therefore, plaintiff received a full refund for all the Infodex charges that appeared on his telephone bill.

In her deposition, Jackson, without any explanation, stated that ESBI relied upon the contract between it and Infodex to ensure the Infodex charges to customers were legitimate. She also said that ESBI did not individually contact customers to make sure the charges were authorized and that ESBI presumed the charges were legitimate. As a billing clearinghouse, Jackson said, ESBI was not in a position to determine whether the Infodex charges on a customer's bill were authorized. She stated that no Infodex letters of authorization from customers existed in the ESBI database and that, to her knowledge, ESBI got paid its fee from Infodex regardless of whether the charge was authorized by the customer.

Jackson also testified that it was ESBI's general practice to remove charges for customers who called in and stated that the charges were not authorized. She further stated that it was more than likely that ESBI would issue credit to 100% of the customers who called ESBI and complained that the charges were unauthorized. However, she also said that, if customers did not call ...

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