Italia Foods Inc. v. And As the Representative
| Decision Date | 24 February 2010 |
| Docket Number | No. 2-08-1148,2-08-1148 |
| Parties | ITALIA FOODS, INC., Indiv . and as the Representative of a Class of Similarly Situated Persons, Plaintiff-Appellee, v. SUN TOURS, INC., d/b/a Hobbit Travel, and PAUL GROSSO, Defendants-Appellants. |
| Court | United States Appellate Court of Illinois |
Appeal from the Circuit Court of Lake County.
Modified Upon Denial of Rehearing
I. INTRODUCTION
In this interlocutory appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308), we are asked to answer three certified questions:
We answer the first certified question in the negative. Specifically, the Illinois General Assembly need not enact enabling legislation before private TCPA claims can be brought and enforced in Illinois state courts. As to the second certified question, we modify the first two parts of the question and conclude that TCPA claims are remedial and assignable and, alternatively, that (whether or not they are remedial) they are assignable because they do not constitute personal-injury actions. Further, we conclude that we need not answer subsection (b) of the second certified question (concerning the appropriate statute of limitations). Finally, because we conclude that the TCPA claims are assignable, we do not address the third certified question.
II. BACKGROUND
On June 13, 2003, in a class action complaint, Eclipse Manufacturing Company, an Illinois corporation, sued Sun Tours, d/b/a Hobbit Travel, a travel agency, alleging that, in July and August 2002, Hobbit Travel sent Eclipse four unsolicited one-page faxes advertising discounted travel offers. Eclipse further alleged that Hobbit Travel's actions violated the TCPA and the ConsumerFraud and Deceptive Business Practices Act (Fraud Act) (815 ILCS 505/1 et seq. (West 2002)) and constituted common-law conversion. As to the TCPA claim, Eclipse sought statutory and punitive damages, an injunction, and attorney fees. Eclipse subsequently amended its complaint, adding Hobbit Travel's president, Paul Grosso, as a defendant.
On April 5, 2007, Hobbit Travel moved to dismiss Eclipse's amended complaint, arguing, inter alia, that the TCPA claim was not cognizable in Illinois because the operative language of the TCPA--namely, that state court TCPA actions must be "otherwise permitted by the laws or rules of court of a State" (47 U.S.C. §227(b)(3) (2000))--required the Illinois General Assembly to affirmatively opt in to the TCPA's enforcement scheme, which it had not done.2 On July 26, 2007, the trial court denied Hobbit Travel's motion as to the TCPA claim, finding that TCPA claims may be brought in Illinois courts.
On August 30, 2007, Robert Hinman, Eclipse's president and owner, was substituted in for Eclipse as plaintiff by filing a second amended complaint. Hinman alleged that the same four faxes were transmitted to him and not to Eclipse. He further alleged that, on November 30, 2005, several years after receiving Hobbit Travel's faxes, he sold Eclipse's stock to a third party, but expressly retained the right to pursue this TCPA action by virtue of an assignment of that claim (from Eclipse to Hinman).
On October 1, 2007, defendants moved to dismiss the second amended complaint. They challenged Eclipse's assignment of its TCPA claim to Hinman, arguing that the claim was not assignable because it constituted a statutory penalty. Defendants argued that the TCPA's fixed awardof $500 per violation (47 U.S.C. §227(b)(3)(B) (2000)) made the claim a statutory penalty under the test this court set forth in McDonald's Corp. v. Levine, 108 Ill. App. 3d 732, 738 (1982). Defendants thus asserted that Eclipse's assignment of the TCPA claim to Hinman was invalid because the majority rule provides that claims under penal statutes are not assignable. They also argued that Hinman's claims were time-barred because they were brought over five years after each of the four faxes was allegedly received (in July and August 2002).
On January 31, 2008, Italia Foods, Inc., sought leave to substitute in for Hinman and file a third amended complaint, asserting that it had received over 25 faxes from defendants. Over Hobbit Travel's objection, the trial court granted Italia Foods' motion and subsequently allowed Hobbit Travel to file a motion to dismiss the third amended complaint, incorporating its arguments concerning Hinman's invalid assignment from Eclipse.
In the third amended complaint, dated February 28, 2008, Italia Foods alleged that Hobbit Travel sent it 28 unsolicited one-page faxes from June 24, 2005, through April 17, 2007, advertising discount travel deals. Italia Foods further alleged that Hobbit Travel's actions violated the TCPA and Fraud Act and constituted common-law conversion. As to the TCPA claim, Italia Foods sought $500 in statutory damages for each violation, an injunction, and costs.
Hobbit Travel moved to dismiss (735 ILCS 5/2--615, 2--619 (West 2002)) portions of Italia Foods' complaint, arguing that: (1) TCPA claims are not cognizable in Illinois courts for the reasons set forth in Chair King, Inc. v. GTE Mobilnet of Houston, Inc., 184 S.W.3d 707 (Tex. 2006) (hereinafter Chair King); (2) the limitations period for TCPA claims should be measured from the filing of Italia Foods' third amended complaint on February 28, 2008, and not from Eclipse's original complaint (filed June 13, 2003); (3) the applicable limitations period for TCPA claims is two years(735 ILCS 5/13--202 (West 2002)), as opposed to four years (28 U.S.C. §1658 (2000)) as argued by Italia Foods; and (4) the limitations period was not tolled during the 27-month period from November 30, 2005 (when Eclipse lost standing to bring its claims), to February 28, 2008 (when Italia Foods filed its complaint), as neither Eclipse nor Hinman had standing during this time.
In response, Italia Foods invoked the class tolling rule announced in American Pipe & Construction Co. v. State, 414 U.S. 538, 38 L. Ed. 2d 713, 94 S. Ct. 756 (1974), arguing that it preserved the otherwise stale claims of putative class members back to June 13, 1999, four years before Eclipse's original complaint. Hobbit Travel replied that the putative class's claims could not be tolled under American Pipe due to the time that lapsed before Italia Foods replaced Hinman as the named plaintiff. According to Hobbit Travel, Eclipse could not have validly assigned its TCPA claim to Hinman under Illinois law, because such a claim constituted a statutory penalty; therefore, a 27-month gap (November 30, 2005, when Eclipse purported to assign its claims to Hinman, to February 28, 2008, when Italia Foods replaced Hinman as the named plaintiff) existed during which no named plaintiff with proper standing represented the putative class.
On August 26, 2008, the trial court denied Hobbit Travel's motion to dismiss Italia Foods' TCPA claim. The court rejected Hobbit Travel's Chair King argument that TCPA claims are not cognizable in Illinois state courts. It further found that Eclipse's TCPA claim was assignable to Hinman under Kleinwort Benson North America, Inc. v. Quantum Financial Services, Inc., 181 Ill. 2d 214 (1998), which had allowed a company to assign a punitive damages claim to its shareholders. The court further found that the TCPA is not a penal statute and that TCPA claims are subject to the federal four-year statute of limitations (28 U.S.C. §1658 (2000)). Finally, the court found that the American Pipe tolling doctrine applied and that the class's claims related back to June 13, 1999.
On November 20, 2008, the court granted Hobbit Travel's motion to make Rule 308 findings, and, on December 2, 2008, it entered an order certifying three questions. Hobbit Travel petitioned for leave to appeal to this court, and, on February 25, 2009, we allowed the appeal as to the three certified questions.3
III. ANALYSIS
The first certified question asks: "Does the language and purpose of the federal [TCPA] require that the Illinois General Assembly enact enabling legislation before private TCPA claims can be brought and enforced in Illinois state courts?" Defendants urge us to answer "yes" to this question and order that Italia Foods' TCPA claim be dismissed with prejudice because it is undisputed that the General Assembly never passed legislation authorizing TCPA suits in this state. Before addressing the parties' specific arguments, we first provide an overview of some constitutional considerations and the statute.
The supremacy clause provides: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof *** shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const., art. VI, cl. 2.
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