Imperial Apparel v. Cosmo's Designer Direct

• Decision Date: 07 February 2008
• Docket Number: No. 103331.,103331.
• Parties: IMPERIAL APPAREL, LTD., et al., Appellees, v. COSMO'S DESIGNER DIRECT, INC., et al., Appellants.
• Court: Illinois Supreme Court

882 N.E.2d 1011

227 Ill.2d 381

IMPERIAL APPAREL, LTD., et al., Appellees, v. COSMO'S DESIGNER DIRECT, INC., et al., Appellants.

No. 103331.

Supreme Court of Illinois.

February 7, 2008.

James H. Wolf, James M. Wolf, of Wolf & Tennant, Chicago, for appellant Cosmo's Designer Direct, Inc.

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

Edward W. Feldman, Zachary J. Freeman, of Miller Shakman & Beem LLP, Chicago, for appellees.

OPINION

Justice KARMEIER delivered the judgment of the court, with opinion:

Imperial Apparel, Ltd. (Imperial); its owner, Paul Rosengarten; and an Imperial employee named Cyril Rosengarten brought an action in the circuit court of Cook County against Cosmo's Designer Direct, Inc. (Cosmo's), and the Chicago Sun-Times (the Sun-Times) alleging that an advertisement for Cosmo's published by the Sun-Times constituted defamation per se, defamation per quod, false light invasion of privacy and commercial disparagement. Imperial and the Rosengartens further alleged that Cosmo's conduct violated the Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2004)). The Sun-Times filed a motion pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2004)) seeking dismissal of the defamation per se, defamation per quod and commercial disparagement counts. Cosmo's, in turn, filed its own motion under section 2-615 asking that the complaint be dismissed in its entirety. The motions filed by the Chicago Sun-Times and Cosmo's were granted, and the complaint filed by Imperial and the Rosengartens was dismissed with prejudice.

Imperial and the Rosengartens appealed. The appellate court affirmed dismissal of the defamation per se count. It also affirmed dismissal of the defamation per quod count as to the Rosengartens. In all other respects, the judgment of the circuit court was reversed, and the cause was remanded for further proceedings. 367 Ill.App.3d 48, 304 Ill.Dec. 693, 853 N.E.2d 770. We granted Cosmo's petition for leave to appeal. 210 Ill.2d R. 315. For the reasons that follow, the judgment of the appellate court is affirmed in part and reversed in part. The judgment of the circuit court dismissing plaintiff's complaint with prejudice is affirmed.

Our understanding of the relevant facts in this case is defined by the posture in which the matter comes before us. Where, as here, the legal sufficiency of a complaint has been attacked under section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2004)), a court must accept as true all well-pleaded facts contained in the complaint and all reasonable inferences that can be drawn from those facts. The court must also interpret the allegations in the complaint in the light most favorable to the plaintiff. Tuite v. Corbitt, 224 Ill.2d 490, 509-10, 310 Ill.Dec. 303, 866 N.E.2d 114 (2006).

The complaint in this case alleges that Cosmo's and Imperial are rivals in the highly competitive business of discounted men's clothing. Imperial is run by Paul Rosengarten and has a store in Lincolnwood, east of the Edens Expressway, and north of the City of Chicago. Cosmo's, named for its president, Cosmo Laudadio, maintains its business in Villa Park, which is just west of the City. The companies' stores are less than 20 miles apart and were opened within two years of one another in the late 1990s. The Rosengartens are Jewish. Laudadio is of Italian descent.

Cosmo's prides itself on being the "home of the original 3 for 1" promotion. According to Imperial's complaint, that promotion was designed to "create the appearance that [the company] is selling three items of clothing for the regular price of one item." In the particular advertisement that gave rise to this litigation, Cosmo's claimed, for example, that customers could buy three "microtech suits" for $199, three "fine hand tailored wool suits" for $299, or three "super 100's wool Italian suits" for $499. Cosmo's "warehouse" was open to the public four days a week, but offered "1000's upon 1000's of values ... Cash & Credit Cards Only ... No Checks." "Fine leather shoes" were offered for $18 a pair, limit three, while "fully tailored" slacks were only $15 a pair and silk ties were a mere $5 apiece.

Imperial reviewed Cosmo's advertisements and determined that its regular prices for individual suits and other items of menswear were generally lower than the "3 for 1" promotions offered by Cosmo's. Imperial alleged that in order "to compete more effectively, and to educate the public that its prices [were] generally lower" than Cosmo's "3 for 1" promotions, it ran advertisements of its own offering some of its products on a "3 for 1" basis, but at prices lower than those advertised by Cosmo's. In response to Imperial's "3 for 1" ads, Cosmo's took out a full-page ad in the October 15, 2004, edition of the Chicago Sun-Times. Most of the ad was unremarkable. It touted an "8 Day Blowout Sale" in which a "$3,000,000 Inventory Backup Must Be Liquidated" due to a delay in the opening of its Chicago showroom. The store's location and hours were given, along with listings of various clothing items offered for sale, some of which we just described, and promises of "amazing door busters." The text was superimposed on a background photograph showing three tiers of men's tailored suits hanging inside a showroom.

This aspect of Cosmo's ad was uncontroversial. What made Imperial and the Rosengartens decide to sue was companion text set out in columnar form along the right side of the ad under a headline printed in large boldface type reading, "WARNING! Beware of Cheap Imitators Up North...." The text read:

"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 hooker[']s 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.)

This ad was written by Cosmo's, which paid the Sun-Times to print it. Imperial and the Rosengartens claimed, on information and belief, that the paper has a daily circulation in excess of 450,000. The ad appeared on page 13 of the newspaper's October 15 edition. The column of text was not specifically identified as an advertisement, although it is doubtful that anyone would have mistaken it for anything other than that. The day on which the ad appeared was a Friday. According to Imperial's complaint, "Fridays are important for retail advertising. The bulk of retail sales of menswear occurs on the weekend, and Friday ads are an important method used to boost sales."

Although the entity referred to in the ad was identified as "Empire rags center," Imperial and the Rosengartens contended that "[t]he public in general, and menswear consumers in particular, would reasonably understand that the Ad was about Imperial." That is so, according to the complaint, for a number of reasons. Among these are the relationship between the word "empire" and the term "imperial," the reference to "east Eden" when Imperial is located east of the Edens Expressway, and the fact that Paul Rosengarten was mentioned by his actual given name and Cyril was referred to by his nickname, "Cy." As evidence that the ad was understood to refer to Imperial and the Rosengartens, the complaint alleged that on the day the ad was published, Imperial and the Rosengartens "received numerous phone calls from individuals who had read the Ad and understood that the Ad was about * * * them."

Imperial and the Rosengartens asserted that Cosmo's ad damaged the reputations of the company and of the Rosengartens and falsely disparaged the goods they sold. According to Imperial and the Rosengartens, this was done deliberately. In their view, Cosmo's purchased the ad "in order to injure Imperial's business," "to lure customers to Cosmo's under false pretenses," and to deter "past and potential customers from buying menswear from Imperial." Imperial and the Rosengartens alleged that the ad had the intended effect. Specifically, they contended that "during the weekend and weeks immediately following the publication of the Ad, [its] sales decreased from the preceding month as compared to the same period during 2003." Imperial further charged that in a subsequent ad purchased by Cosmo's, Cosmo's boasted that during the period immediately following publication of the October 15 ad, it enjoyed some of the biggest sales in its history.

According to Imperial and the Rosengartens, the ad caused more than financial harm. It humiliated and embarrassed the Rosengartens, who claim to have experienced "substantial pain" by being "publicly vilified by anti-semitic slurs, by...