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S37 Management, Inc., D/B/A Mt. Prospect Place v. Advance Refrigeration Company

November 4, 2011

S37 MANAGEMENT, INC., D/B/A MT. PROSPECT PLACE APARTMENTS, ON BEHALF OF ITSELF AND ALL ) OTHERS SIMILARLY SITUATED,
PLAINTIFF-APPELLEE,
v.
ADVANCE REFRIGERATION COMPANY, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. No. 06 CH 20999 The Honorable Sophia H. Hall, ) Judge Presiding.

The opinion of the court was delivered by: Justice Garcia

JUSTICE GARCIA delivered the judgment of the court, with opinion.

Presiding Justice R. E. Gordon and Justice Cahill concurred in the judgment and opinion.

OPINION

¶ 1 Plaintiff S37 Management, Inc., filed a class action alleging breach of contract and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2008)) against defendant Advance Refrigeration stemming from the defendant's practice of adding to its invoice a "Gov't Processing Req." (GPR) charge against each customer. The plaintiff moved to certify as a class the defendant's customers that paid the GPR charge from December 11, 2001, to the present, which the trial court granted. The defendant contends the class certification must be reversed because the issues of injury and causation are individualized and predominate over any common issues of law and fact among the class members. We affirm. The trial court did not abuse its discretion in concluding that a class action was an appropriate method to resolve this controversy.

¶ 2 BACKGROUND

¶ 3 In 2001, the plaintiff, an apartment management company, began purchasing appliances from the defendant, a company in the business of distributing and servicing appliances to commercial entities. The terms of the defendant's standard contract are memorialized in invoices; there are no written contracts between the defendant and its customers. The defendant generated and mailed to the plaintiff an invoice for each relevant transaction. The standard customer invoice has a line item titled, "Gov't Processing Req." The GPR is listed after the subtotal in the sales tax section of the invoice.

¶ 4 The GPR charge was instituted by the defendant as part of its invoicing to all of its customers on September 2, 1998. According to the defendant, the GPR was a means of offsetting the administrative costs of complying with the reporting requirements of the federal, state, and local governments. From December 11, 2001, through June 28, 2002, the GPR was invoiced at $2 per transaction. Beginning July 11, 2002, the GPR increased to $3.

¶ 5 The plaintiff filed a two-count, second amended complaint alleging, on behalf of itself and other members of the class, breach of contract and a claim under the Consumer Fraud Act against the defendant based on the GPR charge in each of its invoices. The class members included:

"All persons and entities who were customers of Advance Refrigeration who paid the Gov't Fee to Advance Refrigeration as part of a purchase during the period December 11, 2001 to the present."

¶ 6 In its complaint, the plaintiff alleged that by labeling the line item charge as a "Gov't Processing" fee, the defendant falsely represented that the invoiced charge was mandated by a governmental agency. The plaintiff contended the defendant sought to recover the fee "under the guise of a 'Gov't Processing Req'd,' that is designed solely to generate profits, not recoup government fees as falsely represented in each invoice." As a fee intended to generate profits, the inclusion of the charge in each invoice constituted a breach of contract and a consumer fraud violation. The plaintiff contended that by "misrepresenting the basis and reasons for the Gov't fee," the defendant charged the plaintiff and the putative class members $2 or $3 over the contracted price "without the permission or consent" of the plaintiff or other class members. The plaintiff alleged the GPR is an improper profit-generating device and because the same billing practice is applied to all of the defendant's customers, the claims are suitable to a class action. The plaintiff asserted the questions of law and fact grounded on the GPR charge predominate over other issues that might differ among individual members of the class.

¶ 7 In response to the defendant's notice of deposition of a corporate representative, the plaintiff produced Jean Liataud. In her deposition, Ms. Liataud stated she worked for the plaintiff as a maintenance supervisor until September 2009, when she became an inspector for the company. As a maintenance supervisor, Ms. Liataud's responsibilities included ordering supplies from its contractors. Ms. Liataud estimated that during the relevant time frame, she worked with 10 to 20 suppliers. Between 2001 and 2005, the defendant was the only supplier of appliances for the plaintiff. Ms. Liataud testified the plaintiff stopped using the defendant as its appliance supplier in 2005 because of the GPR charge. According to Ms. Liataud, after the president of her corporate employer contacted her about the defendant's GPR charge on its invoices, she discussed the nature of the GPR charge with Fred Hinkle, an employee of the defendant, by telephone. Ms. Liataud testified Mr. Hinkle told her the GPR was "a government fee." Mr. Hinkle denied making any such statement. During the same telephone conversation, Ms. Liataud asked Mr. Hinkle to send her "a letter from the government on why we were being charged this fee." After additional telephonic communications, Ms. Liataud received a letter by fax transmittal explaining the charge. After reading the letter, Ms. Liataud faxed to Mr. Hinkle the same letter with some handwritten questions. Ms. Liataud received no response to the questions she sent by return fax. At some point thereafter, Ms. Liataud was told by her employer to look for another appliance supplier.

¶ 8 The letter Ms. Liataud received from Mr. Hinkle by fax regarding the GPR states:

"The $3.00 fee being assessed on your customer invoice as either 'Gov't Processing Req.' or 'Service Gov't Processing Req.' is to recover the costs of required Federal, State, and Municipal governmental processing requirements. As we all know, the cost of doing business is constantly being impacted by regulatory information and tax requirements. This charge is necessary to offset those demanding requirements. If you are as frustrated as we are at the increasing demands, ...


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