Illinois Supremes Reaffirm That Consumer Fraud Claims Require Reliance and Causation
Plaintiffs in consumer fraud class actions often argue that pleading fraud on the market is sufficient to establish a classwide claim for violation of a state consumer fraud act. But the Illinois Supreme Court recently reiterated that Illinois' Consumer Fraud Act requires individual proof of deception and causation. In DeBouse v. Bayer Ag, 2009 WL 4843362 (Ill. Dec. 17, 2009), plaintiff had sued Bayer in a class action for economic harm allegedly caused by the cholesterol-lowering medicine, Baycol, which was withdrawn from the market in August 2001 after its use was associated with a serious muscle condition.
Bayer had moved for summary judgment, arguing that plaintiff could not establish actual deception and that that deception caused plaintiff's harm, as required under the statute. Plaintiff countered that where the defendant is alleged to have concealed a serious product risk from the medical community and the public at large, individual proof of deception was not required under ICFA. Plaintiff did not suffer personal injuries from taking Baycol, but alleged that the price she paid was inflated because Bayer had not disclosed the risk of the serious muscle condition. The plaintiff had testified that she saw no Baycol advertising and knew nothing about the medicine prior to her doctor prescribing it for her.
The trial court refused to grant summary judgment for the defendant, but certified three questions for interlocutory appeal.
Question 1: Whether an Illinois consumer who purchases a pharmaceutical product, later withdrawn from the market because it was deemed unsafe, can maintain an action under the Illinois Consumer Fraud Act, even though the pharmaceutical company did not engage in direct communication or advertising to the consumer.
The Illinois Supreme Court answered this question in the negative. Reviewing a long line of cases interpreting ICFA, the court observed:
The basic principle in each of the foregoing cases is that to maintain an action under the Act, the plaintiff must actually be deceived by a statement or omission that is made by the defendant. . . .
. . . [W]e have consistently rejected the market theory of causation. . . . [W]e have repeatedly emphasized that in a consumer fraud action, the plaintiff must actually be deceived by a statement or omission. If there has been no communication with the plaintiff, there have been no statements and no omissions. In such a situation, a plaintiff cannot prove proximate cause. We therefore answer the first certified question in the negative. A consumer cannot maintain an action under the Illinois Consumer Fraud Act when the plaintiff does not receive, directly or indirectly, communication or advertising from the defendant.
Id. at *5.
Question 2: Whether the Defendant's offering for sale a product in Illinois is a representation to prospective customers that the product is reasonably safe for its intended purpose such that proof of a defendant's failure to disclose safety risks associated with the product to consumers is a violation of the Illinois Consumer Fraud Act.
The Illinois Supreme Court recognized that the answer to the question might depend on the nature of the product being sold. Accordingly, it limited its response to pharmaceutical products. The court noted that it had adopted Section 402A of the Restatement (Second) of Torts and comment k, which recognizes that prescription drugs are unavoidably unsafe products:
The Restatement approach reflects the reality that even in their intended and ordinary use, prescription drugs may nonetheless cause harmful side effects in some patients. A drug manufacturer cannot say with complete certainty that its product, when used as intended, will be reasonably safe for all patients. As a result, the mere sale of a prescription medication cannot be a representation which serves as the basis for a consumer fraud claim. Consequently, we answer the second certified question in the negative.
Id. at *7.
Question 3: Whether fraudulent statements or omissions made by a defendant to third parties, other than the consumer, with the intent that they (1) reach the plaintiff and (2) influence the plaintiff's action and (3) plaintiff relies upon the statements to his detriment, can support an action under the Illinois Consumer Fraud Act.
The Illinois Supreme Court answered this question in the affirmative; misrepresentations that indirectly reach the plaintiff and are relied upon can support an ICFA action. But the court, reviewing prior decisions, held that this did not mean that a "fraud on the market" theory would support an ICFA claim. Rather, a plaintiff must establish who received the misrepresentations, that they reached the plaintiff or were acted upon, and that they caused plaintiff's damages:
In this case, DeBouse similarly fails to allege that her particular doctor was actually deceived by any of Bayer's advertisements or statements. What she does allege is the general deception of 'consumers, the medical community, the health care insurance industry, and the public.' . . . DeBouse alleges the deception of unspecified persons having no demonstrated connection to her. As such, DeBouse's claim is likewise based on the market theory that this court has consistently rejected. Therefore, we hold that the circuit court erred in denying Bayer's motion for summary judgment.
Id. at *8.
The decision in DeBouse is an important example of courts enforcing the reliance and causation elements of state consumer fraud statutes to ensure that only those who actually were deceived and injured by a defendant's representations may recover damages.
