United Consumers Club, Inc. v. Attorney General
Decision Date | 08 November 1983 |
Docket Number | No. 82-969,82-969 |
Citation | 119 Ill.App.3d 701,456 N.E.2d 856,75 Ill.Dec. 35 |
Parties | , 75 Ill.Dec. 35 UNITED CONSUMERS CLUB, INC., Plaintiff-Appellant, v. ATTORNEY GENERAL of the State of Illinois, Defendant-Appellee. |
Court | United States Appellate Court of Illinois |
Gilbert, Shapiro & Richman, Chicago (Howard E. Gilbert and Michael D. Richman, Chicago, of counsel), for plaintiff-appellant.
Neil F. Hartigan, Atty. Gen., of Illinois , for defendant-appellee.
On August 28, 1980 defendant, the Attorney General of Illinois, adopted comprehensive rules regulating the operation of buyers clubs 1 within Illinois. (Ill.Reg.Vol. 4, No. 37, pp. 567-96.) The Attorney General based his authority to issue these rules on section 4 of the Consumer Fraud and Deceptive Business Practices Act (the Act) which provides:
"To accomplish the objectives and to carry out the duties prescribed by this Act, the Attorney General, in addition to other powers conferred upon him by this Act, may issue subpoenas to any person, administer an oath or affirmation to any person, conduct hearings in aid of any investigation or inquiry, prescribe such forms and promulgate such rules and regulations as may be necessary, which rules and regulations shall have the force of law." Ill.Rev.Stat.1981, ch. 121 1/2, par. 264.
A violation of the Buyers Club Rules "constitutes an unfair method of competition and an unfair or deceptive act or practice within the meaning of Section 2 of the * * * Act [Ill.Rev.Stat.1981, ch. 121 1/2, par. 262] subject to the penalties contained therein." Rule 108, Ill.Reg.Vol. 4, No. 37, pp. 572-73.
The Rules were made effective October 1, 1980. (Ill.Reg.Vol. 4, No. 37, p. 554.) On the same date, plaintiff, United Consumers Club, Inc., a corporation which derives its principal source of income from the sale of memberships in buyers clubs, filed an action in the circuit court seeking declaratory and injunctive relief against the Rules. Plaintiff claimed, inter alia, that the Attorney General has no power to issue binding substantive rules and regulations under section 4 of the Act, that the Rules unconstitutionally impair the obligation of contracts and that the Act unlawfully delegates legislative authority to the Attorney General. The parties thereafter filed cross motions for summary judgment on these issues.
In a final judgment order entered on March 26, 1982, the circuit court found that the Attorney General has authority under section 4 of the Act to promulgate binding substantive rules and regulations, that the Rules do not on their face unconstitutionally impair the obligation of contracts and that the Act contains a lawful delegation of legislative authority. Consistent with these findings, the court denied plaintiff's motion for summary judgment and granted defendant's motion for summary judgment. The court reserved ruling on the other issues presented in plaintiff's complaint, including the question as to whether the Attorney General exceeded his statutory authority in promulgating individual Buyers Club Rules. Plaintiff has appealed. Pursuant to an agreed order, the enforcement of the Rules has been stayed pending disposition of the appeal.
Plaintiff initially contends that section 4 of the Consumer Fraud and Deceptive Business Practices Act does not confer upon the Attorney General authority to promulgate binding substantive rules and regulations. In considering this contention, it is essential to recognize the fundamental distinction Professor Davis has articulated between legislative and interpretative rules: (2 K. Davis, Administrative Law Treatise, sec. 7:8 at 36 (2d ed. 1979).) In Joseph v. United States Civil Service Commission (D.C.Cir.1977), 554 F.2d 1140, the court elaborated upon this distinction:
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Section 4 of the Consumer Fraud and Deceptive Business Practices Act provides in pertinent part that "[t]o accomplish the objectives and to carry out the duties prescribed by this Act, the Attorney General * * * may * * * promulgate such rules and regulations as may be necessary, which rules and regulations shall have the force of law." (Emphasis added.) (Ill.Rev.Stat.1981, ch. 121 1/2, par. 264.) In light of this explicit statutory language, it is clear that rules and regulations promulgated by the Attorney General under section 4 are legislative and thus are binding on the courts. See General Electric Co. v. Gilbert (1976), 429 U.S. 125, 141, 97 S.Ct. 401, 410-11, 50 L.Ed.2d 343, where the Supreme Court stated that administrative regulations which Congress has declared shall have the force of law are legally binding.
Plaintiff, however, points out that the Attorney General's authority to adopt rules and regulations having the force of law appears in a section of the Act which also confers authority to issue subpoenas, administer an oath or affirmation, conduct investigations and inquiries, hold hearings and prescribe forms. It is plaintiff's position that the Attorney General's rulemaking authority under section 4 is limited to the promulgation of procedural rules implementing his investigatory and subpoena powers. We cannot agree.
Whether section 4 invests the Attorney General with substantive rulemaking authority presents an issue of first impression in Illinois. We note, however, that five states have statutory provisions virtually identical to section 4 of the Illinois Act. (Iowa Code Ann. sec. 714.16 (West 1979); N.J.Rev.Stat. sec. 56:8-4 (1964); N.D.Cent.Code sec. 51-15-05 (1982); S.C.Code Ann. sec. 39-5-80 (Law Co-op.1977); S.D. Codified Laws Ann. sec. 37-24-14 (1977).) Our research discloses that in only one of these jurisdictions, New Jersey, has the state attorney general promulgated substantive rules and regulations. His authority to adopt such rules was sustained by the New Jersey Supreme Court in Fenwick v. Kay American Jeep, Inc. (1977), 72 N.J. 372, 371 A.2d 13. 3
In Fenwick, an advertising agency challenged the validity of an administrative regulation which makes it an unlawful motor vehicle advertising practice to fail to disclose the bona fide odometer reading in an advertisement for the sale of a used automobile. The practice is deemed unlawful without regard to the intent of the advertiser. In reviewing this regulation, the Supreme Court of New Jersey, noting that the Consumer Fraud Act was passed in response to widespread complaints about selling practices which victimized consumers, stated:
"The purpose of the Act was to prevent deception, fraud or falsity, whether by acts of commission or omission, in connection with the sale and advertisement of merchandise and real estate. To accomplish the objectives of the Act, the Attorney General is empowered to promulgate such rules and regulations as might be necessary. N.J.S.A. 56:8-4.[ 4
The administrative regulations adopted pursuant to the Act spell out numerous selling or advertising practices in particular areas of consumer sales that are either required or prohibited. [Citation.] With regard to motor vehicle advertising practices, one of the proscribed practices is the failure in a price advertisement of a used motor vehicle to disclose the bona fide odometer reading thereof." Fenwick at 376-77, 371 A.2d at 15.
The court rejected the advertising agency's argument that the failure to include the mileage in each sales advertisement was at most the omission of a material fact and would not be an unlawful practice unless knowledge and intent were shown:
Fenwick at 378, 371 A.2d at 16. See also Levin v. Lewis (1981), 179 N.J.Super. 193, 431 A.2d 157, where the New Jersey Superior Court, Appellate Division, held that "[t]he Consumer Fraud Act should be construed liberally in favor of protecting consumers as well as construed to confer upon the Attorney General the broadest kind of power to act in the interest of the consumer public." 179 N.J.Super. at 200, 431 A.2d at 161.
We agree with the reasoning of the New Jersey Supreme Court and find that the same considerations which led that court...
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