Imperial Apparel v. Cosmo's Designer Direct

• Decision Date: 31 July 2006
• Docket Number: No. 1-05-2744.,1-05-2744.
• Citation: 853 N.E.2d 770
• Parties: IMPERIAL APPAREL, LTD., Cyril Rosengarten, and Paul Rosengarten, Plaintiffs-Appellants, v. COSMO'S DESIGNER DIRECT, INC., an Illinois Corporation, and Chicago Sun-Times, Inc., a Delaware Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

853 N.E.2d 770

IMPERIAL APPAREL, LTD., Cyril Rosengarten, and Paul Rosengarten, Plaintiffs-Appellants, v. COSMO'S DESIGNER DIRECT, INC., an Illinois Corporation, and Chicago Sun-Times, Inc., a Delaware Corporation, Defendants-Appellees.

No. 1-05-2744.

Appellate Court of Illinois, First District, Third Division.

June 28, 2006.

As Modified Upon Denial of Rehearing July 31, 2006.

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Edward W. Feldman, Jennifer E. Smiley, Miller Shakman & Hamilton, LLP, Chicago, for Appellants.

James M. Wolf, Wolf & Tennant, Chicago, for Appellee Cosmo's Designer Direct, Inc.

Damon E. Dunn, Eric D. Bolander, Funkhouser Vegosen Liebman & Dunn, Ltd., Chicago, for Appellee Chicago Sun-Times, Inc.

Presiding Justice HOFFMAN delivered the modified opinion of the court:

The plaintiffs, Imperial Apparel, Ltd. (Imperial), Cyril Rosengarten and Paul Rosengarten, appeal from an order of the circuit court dismissing their five-count complaint for failure to state a cause of action. For the reasons which follow, we affirm in part, reverse in part, and remand this cause for further proceedings.

The facts necessary to an understanding of our resolution of this appeal are not in dispute and are taken exclusively from the plaintiffs' complaint. Imperial and the defendant Cosmo's Designer Direct, Inc (Cosmo) are competitors engaged in selling discounted men's clothing. As a sales promotion, Cosmo regularly advertised suits and other items of menswear on a "3 for 1" basis. Thereafter, Imperial, in order to compete more effectively, began to advertise its own "3 for 1" sales.

On October 15, 2004, Cosmo ran a full-page advertisement in the Chicago Sun-Times which, in addition to promoting an "8 DAY BLOWOUT SALE," contained the following column of text which gives rise to this litigation:

"WARNING!

Beware of Cheap Imitations Up North ...

We all know, there is only one `America' in the world and only one `3 for 1' in the Midwest ... and in both cases it was the original thinking of an Italian that made them famous. So to the shameless owners of Empire rags center, east Eden and south of quality, we say ... `Start being kosher ... Stop openly copying and coveting your neighbor's concepts or a hail storm of frozen matzo balls shall deluge your `flea market style warehouse.'

Thankfully most readers, like thousands of our customers, possess a taste level that can easily decipher the quality gap between dried cream cheese and real Parmigiano . . . or alas we would be wasting ink.

It is laughable how with all the integrity of the `Iraq Information Minister', they brazenly attempt pulling polyester over your eyes by conjuring up a low rent 3 for imitation that has the transparency of a hookers come on ... but no matter how they inflate prices and compromise quality, much to their dismay, Cy and his son Paul the plagiarist still remain light years away from delivering anything close to our `3 for 1' values.

Remember, things that sound the same might not necessarily be alike.

Finally, it's an undisputed fact that when it comes to fine clothing nothing substitutes for the heritage of the land of Columbus, DaVinci and Armani . . . Hence all that needs to be said is that . . . `They can at best poorly imitate what we create . . . for we are Italian and they are not!'" (Emphasis in original.)

Following the publication of Cosmo's ad, Imperial along with its president, Paul Rosengarten, and Cyril Rosengarten, one of its employees, (collectively referred to as the plaintiffs) filed the instant action against Cosmo and the Chicago Sun-Times, Inc. (Sun-Times). In counts I and II of their complaint, the plaintiffs sought recovery against both defendants on theories of defamation per se and defamation per quod, respectively. Count III was a claim for false light invasion of privacy against Cosmo only. Count IV asserted a cause of action for commercial disparagement against Cosmo and the Sun-Times. Finally, in count V, the plaintiffs sought recovery against Cosmo predicated upon a violation of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2004)).

Both Cosmo and the Sun-Times filed motions to dismiss the plaintiffs' complaint pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2004)), contending that, for a number of reasons, the claims asserted were substantially insufficient at law. The circuit court granted the defendants' motions, finding that Cosmo's ad constituted "non-actionable opinion." This appeal followed.

Because this matter was disposed of at the trial level in response to the defendants' section 2-615 motions, the only question before this court is whether the dismissed counts state causes of action upon which relief could be granted. Burdinie v. Village of Glendale Heights, 139 Ill.2d 501, 505, 152 Ill.Dec. 121, 565 N.E.2d 654 (1990). The issue presented is one of law, and our review is de novo. T & S Signs, Inc. v. Village of Wadsworth, 261 Ill.App.3d 1080, 1084, 199 Ill.Dec. 467, 634 N.E.2d 306 (1994).

At the outset of our analysis, we wish to make it quite clear that our function is not to judge the literary merit of Cosmo's ad or the journalistic standards of a newspaper that would publish such obviously offensive material. Our function is solely to determine whether the ad is legally actionable under any of the theories pled.

In urging affirmance of the dismissal of all of the counts in the plaintiffs' complaint, the defendants argue that Cosmo's ad cannot reasonably be interpreted as asserting facts and, as a consequence, is entitled to protection under the First Amendment to the United States Constitution (U.S. Const., amend. I). For their part, the plaintiffs argue that the trial court erred in dismissing their claims as the ad can reasonably be interpreted as stating actual facts which impute a want of integrity in the discharge of their employment duties and prejudiced them in their business.

The fact that statements might reasonably be interpreted as defamatory does not entirely resolve the issue of whether they are actionable. A determination must still be made as to whether the statements constitute protected speech under the First Amendment. Hopewell v. Vitullo, 299 Ill.App.3d 513, 517-18, 233 Ill.Dec. 456, 701 N.E.2d 99 (1998). Statements which do not make factual assertions enjoy First Amendment protection and cannot form the basis of a defamation action. Milkovich v. Lorain Journal Co., 497 U.S. 1, 19, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990). However, "[t]he test to determine whether a defamatory statement is constitutionally protected is a restrictive one." Kolegas v. Heftel Broadcasting Corp., 154 Ill.2d 1, 14, 180 Ill.Dec. 307, 607 N.E.2d 201 (1992). Only statements which "cannot `reasonably [be] interpreted as stating actual facts'" are protected under the First Amendment. Milkovich, 497 U.S. at 20, 110 S.Ct. 2695, quoting Hustler Magazine v. Falwell, 485 U.S. 46, 50, 108 S.Ct. 876, 99 L.Ed.2d 41 (1988); see also Kolegas, 154 Ill.2d at 14-15, 180 Ill.Dec. 307, 607 N.E.2d 201. Whether a particular statement is one of fact or opinion is a question of law. Doherty v. Kahn, 289 Ill.App.3d 544, 557, 224 Ill.Dec. 602, 682 N.E.2d 163 (1997).

In determining whether statements are fact or opinion, two approaches have been employed. The Restatement (Second) of Torts sets forth the principle that statements of fact "usually concern the conduct or character of another." Restatement (Second) of Torts § 565, cmt. a (1977). The Restatement also distinguishes between "pure opinion" which enjoys First Amendment protection and "mixed opinion" which can be actionable. A pure opinion is one in which the maker states the facts upon which the opinion is based. Mixed opinions are those which, while opinion in form or content, are apparently based on facts which have not been stated or are assumed to exist. Restatement (Second) of Torts § 565, cmt. b (1977). In Ollman v. Evans, 750 F.2d 970 (D.C.Cir.1984), the court expanded upon the Restatement's approach and articulated four issues which a court should consider in determining whether a particular statement is one of fact or opinion, namely: (1) whether the statement has a precise core of meaning; (2) whether the statement is objectively verifiable; (3) whether the literary context of the statement implies that it has factual content; and (4) whether the broader social context in which the statement appears implies fact or opinion. Ollman, 750 F.2d at 979. Illinois courts appear to have embraced the Ollman approach. See Brennan v. Kadner, 351 Ill.App.3d 963, 969, 286 Ill.Dec 725, 814 N.E.2d 951 (2004); Moriarty v. Greene, 315 Ill.App.3d 225, 235, 247 Ill. Dec. 675, 732 N.E.2d 730 (2000). Although this test considers the context in which the statement appears, its emphasis is on whether the statement contains objectively verifiable assertions. Milkovich, 497 U.S. at 19-21, 110 S.Ct. 2695. In determining whether a statement is one of fact, we evaluate the totality of the circumstances and consider whether the statement is capable of objective verification. Piersall v. Sports Vision, 230 Ill.App.3d 503, 510, 172 Ill.Dec. 40, 595 N.E.2d 103 (1992).

The Sun-Times argues that the statements in Cosmo's ad are "examples of unvarnished hyperbole" and concludes that, "[e]ven if Imperial might interpret the isolated passage `no matter how they inflate [prices] and compromise quality' as conveying some abstract factual content, the overwhelming presence of slang and non-literal language throughout Cosmo's Ad precludes any reasonable reader from believing that Cosmo's was stating objective facts." In contrast, the plaintiffs argue that a number of the statements in the ad which impute a want of integrity in the discharge of their employment duties are capable of being proven true or false and are, therefore, not entitled to constitutional protection.

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