Sunday, August 1, 2010

FYI: 7th Cir Upholds Denial of Class Cert in UDAP Case, Due to Individualized Causation Issues

The United States Court of Appeals for the Seventh Circuit recently affirmed a district court’s denial of class certification and grant of summary judgment in favor of an oil company being sued under the Illinois Consumer Fraud and Deceptive Business Practices act (“ICFA”), 815 ILCS 505/2, et seq., and for unjust enrichment.  A copy of the opinion is attached.


Plaintiff brought this action against Shell Oil Company (“Shell”), moving for class certification and seeking individual relief against Shell under the ICFA and on the theory of unjust enrichment.  Plaintiff alleged that Shell and other oil companies’ purported manipulation of the oil supply constituted an unfair practice resulting in artificially high gas prices.


The lower court denied class certification, and granted Shell’s motion for summary judgment as to Plaintiff’s individual ICFA and unjust enrichment claims.  The Seventh Circuit affirmed. 


As you may recall, a “plaintiff is entitled to recovery under the ICFA when there is unfair or deceptive conduct.”  In addition, a “private cause of action brought under the ICFA” requires proximate causation, or “proof of actual damage…and proof that the damage occurred as a result of the deceptive act or practice.”  “[I]n order to establish harm,” a plaintiff must “show that he suffered substantial injury, and that he could not avoid that injury” (citing Cheshire Mortgage Service, Inc. v. Montes, 612 A.2d 1130, 1147 (Conn. 1992)). 


The Court first held that the lower court did not abuse its discretion in denying class certification. The lower court held that common class issues did not predominate as to Plaintiff’s purported ICFA claim “because of the need for individualized proof of causation.”  On appeal, Plaintiff argued that “proximate cause is established merely by asserting plaintiffs suffered a loss as a result of [Shell’s] conduct.”  The Court rejected this argument, relying on Plaintiff’s own testimony that he considered a number of factors when choosing where to purchase his gasoline.  The Court reasoned that Plaintiff “cannot establish that the plaintiffs purchased gasoline for the same reason.”  Moreover, Plaintiff’s testimony that he “purchased gasoline from non-defendants undermines his claim that he had ‘no meaningful opportunity to avoid paying the higher retail price.’”  Thus, “whether or not a class member could have avoided [Shell’s] conduct is an individualized question of fact.”


The Court also affirmed the lower court’s decision as to Plaintiff’s individual claim under the ICFA, holding that Plaintiff failed to “satisfy either prong of proximate causation.”  First, under Montes, Plaintiff “cannot establish harm because he testified that he could (and did) purchase gasoline from stations owned by non-defendants, and that he continued to purchase gasoline from [Shell] even after he brought this lawsuit.”  Second, Plaintiff “cannot show that the [Shell’s] conduct caused him to purchase their gasoline, because many factors contributed to [Plaintiff’s] purchasing decision.” 

Let me know if you have any questions.  Thanks.


Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874


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