Imperial Apparel, Ltd. v. Cosmo's Designer Direct, Inc.

THIRD DIVISION
FILED: July 31, 2006
No. 1-05-2744
IMPERIAL APPAREL, LTD., CYRIL ) APPEAL FROM THE
ROSENGARTEN, and PAUL ROSENGARTEN, ) CIRCUIT COURT OF
) COOK COUNTY
Plaintiffs-Appellants, )
)
v. )
)
COSMO'S DESIGNER DIRECT, INC., an )
Illinois Corporation, and CHICAGO )
SUN-TIMES, INC., a Delaware Corporation,) HONORABLE
) JEFFREY LAWRENCE,
Defendants-Appellees. ) JUDGE PRESIDING.
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
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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 cen-
ter, 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 del-
uge your 'flea market style
warehouse.'
Thankfully most readers, like
thousands of our customers,
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1-05-2744
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 substi-
tutes for the heritage of the
land of Columbus, DaVinci
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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=
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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, 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, 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
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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, 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, 111 L.Ed.2d 1, 110 S.Ct. 2695 (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, 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, quoting Hustler Magazine v. Fawell, 485 U.S. 46, 50, 99
L.Ed.2d 41, 108 S.Ct. 876 (1988); see also Kolegas, 154 Ill. 2d at
14-15. Whether a particular statement is one of fact or opinion is
a question of law. Doherty v. Kahn, 289 Ill. App. 3d 544, 557, 682
N.E.2d 163 (1997).
In determining whether statements are fact or opinion, two
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approaches have been employed. The Restatement (Second) of Torts
sets forth the principal 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, 814 N.E.2d 951 (2004);
Moriarty v. Greene, 315 Ill. App. 3d 225, 235, 732 N.E.2d 730(2000). Although this test considers the context in which the
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statement appears, its emphasis is on whether the statement
contains objectively verifiable assertions. Milkovich, 497 U.S. at
19-21. 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, 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.
The threshold question is whether a reasonable reader would
interpret Cosmo's ad as stating actual facts about the plaintiffs.
Milkovich, 497 U.S. at 20; Bryson v. New America Publications, 174
Ill. 2d 77, 100, 672 N.E.2d 1207 (1996). Referring to the
plaintiffs as the "shameless owners of Empire rags" and their
business establishment as a "flea market style warehouse,"
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certainly amounts to vituperative name-calling, but the comments
hardly qualify as statements of objectively verifiable fact. See
Pease v. International Union of Operating Engineers Local 150, 208
Ill. App. 3d 863, 870, 567 N.E.2d 614 (1991). Likening the quality
comparison of the plaintiffs= goods and Cosmo=s goods to the
difference between dried cream cheese and "real Parmigano" might
well be considered by some as a veiled ethnic slur, but again it is
not capable of objective verification. However, the statements
contained in the third paragraph of the ad present a more difficult
question.
In the third paragraph, the individual plaintiffs' integrity
is compared to that of the "Iraq Information Minister." The charge
is related to Imperial's "3 for 1" sale which the ad states is an
attempt to pull "polyester" over the eyes of the public. Finally,
the paragraph asserts that the plaintiffs inflate the price of
their clothing and compromise the quality. The statements
specifically refer to the "3 for 1" sale and implicitly accuse the
plaintiffs of deceiving the public as to the quality of Imperial's
clothing, all under the heading of "Beware of Cheap Imitations Up
North." We believe that the statements contained in the third
paragraph are not pure opinion. They address both the conduct and
character of the individual plaintiffs and appear to be based on
facts concerning the quality of Imperial's goods which have not
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been stated. Whether Imperial was selling imitation goods of
inferior quality is certainly capable of objective verification.
Although the statements were made in the context of a competitor's
advertisement, certainly not a setting which would lead a reader to
infer that the statements are factual in nature, we nevertheless
believe that a reasonable reader could very well interpret Cosmo's
ad as stating actual facts about the plaintiffs and the originality
and quality of Imperial's goods.
Based upon the foregoing analysis, we conclude that Cosmo's ad
is not entitled to First Amendment protection. We find, therefore,
that the circuit court erred in concluding that the ad constituted
"non-actionable opinion" and in dismissing the claims set forth in
the plaintiffs' complaint on that ground.
Although we have rejected the basis upon which the trial court
dismissed the plaintiffs' complaint, the defendants argue that
other grounds supporting the dismissal of each count exist.
Because we may affirm the trial court's judgment upon any ground
warranted by the record, regardless of whether that ground was
relied upon by the trial court (Material Service Corp. v.
Department of Revenue, 98 Ill. 2d 382, 387, 457 N.E.2d 9 (1983)),
we will address each of the defendants' other arguments in support
of affirmance.
The Sun-Times argues that the plaintiffs are limited purpose
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public figures with respect to their merchandising endeavors and,
as such, in order to recover, they were required to plead and prove
that the Sun-Times published Cosmo's ad with actual malice. See
Kessler v. Zekman, 250 Ill. App. 3d 172, 179-85, 620 N.E.2d 1249(1993). The underlying basis for the Sun-Time=s assertion that the
plaintiffs are limited purpose public figures is the fact that they
advertised their goods for sale. See Steaks Unlimited , Inc. v.
Deaner, 623 F.2d 264, 271-74 (3rd Cir. 1980). The Sun-Times
contends that, because the plaintiffs only alleged negligence on
its part, and not actual malice, their complaint failed to state
any cause of action against it.
In addition to the fact that there are no allegations in the
complaint supporting the proposition that the individual plaintiffs
ever advertised any goods for sale, the plaintiffs argue that the
mere fact that Imperial advertised its merchandise does not,
without more, establish it as a limited purpose public figure. We
agree.
The complaint alleges that Imperial advertised its merchandise
prior to the publication of Cosmo's ad. However, there are no
allegations in the complaint which would support the notion that,
in doing so, Imperial thrust itself to the forefront of any
particular public controversy. See Gertz v. Robert Welch, Inc.,
418 U.S. 323, 345, 41 L.Ed.2d 789, 94 S.Ct. 2997 (1974).
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Consequently, the facts pled in the complaint do not establish
Imperial=s status as a limited purpose public figure, and therefore
the plaintiffs failure to plead actual malice on the part of the
Sun-Time does not render the complaint deficient. A defendant
cannot by its defamation make a plaintiff a limited purpose public
figure for First Amendment purposes; rather, the plaintiff must be
a limited purpose public figure prior to the alleged defamation.
Rety v. Green, 546 So.2d 410, 425 (Fla.App.3 Dist. 1989); see also
Waldbaum v. Fairchild Publications, Inc., 627 F.2d 1287, 1293 n. 12
(D.C.Cir 1980), cert. denied, 449 U.S. 898, 66 L.Ed.2d 128, 101
S.Ct. 266 (1980).
Cosmo having failed to advance any additional arguments in
support of the dismissal of the plaintiffs= claim for false light
invasion of privacy, we reverse the dismissal of count III of the
complaint. However, we continue our analysis of the defendants=
arguments in support of the dismissal of the remaining four counts.
Count I of the plaintiffs' complaint charged that Cosmo's ad
is defamatory per se. Under Illinois law, five categories of
statements are considered actionable per se, giving rise to an
action for defamation without a showing of special damages. They
are words that: 1) impute the commission of a criminal offense; 2)
impute infection with a loathsome communicable disease; 3) impute
an inability to perform or want of integrity in the discharge of
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one=s duties of office or employment; 4) prejudice a party, or
impute lack of ability, in his or her trade, profession or
business; and 5) impute fornication or adultery. Bryson, 174 Ill.
2d at 88-89. In this case, the plaintiffs' charged that the ad
imputes a want of integrity on their part in the discharge of their
employment duties and prejudices them in their business.
The defendants argue that Cosmo's ad may be innocently
interpreted and, therefore, is not actionable per se. See Chapski
v. Copely Press, 92 Ill. 2d 344, 352, 442 N.E.2d 195 (1982).
According to the Sun Times, the ad may reasonably be interpreted as
"conveying Cosmo's objection to Imperial's admitted copying of
Cosmo's signature 3 for 1 sale." Cosmo asserts that the ad should
be construed "as confronting Plaintiffs' admitted attempts to
capitalize on Cosmo's established '3 for 1' sale." The plaintiffs
argue that, when read in context, Cosmo's entire ad "can only be
reasonably construed as accusing [p]laintiffs of being commercial
courtesans, who entice customers in only to cheat them."
Under the innocent construction rule, statements which fall
within one of the categories of words which are actionable per se
are, nevertheless, non-actionable if they are reasonably capable of
an innocent construction. Bryson, 174 Ill. 2d at 90. In applying
the innocent construction rule, courts are required to consider the
statement in context, giving the words, and their implications,
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their natural and obvious meaning. Bryson, 174 Ill. 2d at 90. If
so construed, a statement may be innocently interpreted, it cannot
be actionable per se. Chapski, 92 Ill. 2d at 352. However,
"[o]nly reasonable innocent construction will remove an allegedly
defamatory statement from the per se category." (Emphasis in
original.) Bryson, 174 Ill. 2d at 90. In Bryson, our supreme court
held that:
"The innocent construction rule does not apply, however,
simply because allegedly defamatory words are 'capable'
of an innocent construction. See Chapski, 92 Ill. 2d at
351-52 (modifying the innocent construction rule
announced in John v. Tribune Co., 24 Ill. 2d 437, 442
(1962)). In applying the innocent construction rule,
courts must give the allegedly defamatory words their
natural and obvious meaning. Chapski, 92 Ill. 2d at
351-52; 33A Ill L. & Prac. Slander & Libel '12 (1970).
Courts must therefore interpret the allegedly defamatory
words as they appeared to have been used and according to
the idea they were intended to convey to the reasonable
reader. 33A Ill L. & Prac. Slander & Libel '12 at 25
(1970). When a defamatory meaning was clearly intended
and conveyed, this court will not strain to interpret
allegedly defamatory words in their mildest and most
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inoffensive sense in order to hold them nonlibellous
under the innocent construction rule." 174 Ill. 2d at
93.
Whether a statement can be innocently interpreted is a question of
law for the court to decide. Chapski, 92 Ill. 2d at 352.
In this case, when we consider Cosmo's ad in its entirety,
giving the words and implications their natural and obvious
meaning, it is clear that the ad conveys much more that a mere
objection to Imperial's copying of Cosmo's "3 for 1" sale. The ad
warns the reader against imitation products and accuses the
plaintiffs of deceiving the public as to the quality of Imperial's
clothing and inflating prices. The innocent construction rule does
not require a court to strain to find an innocent meaning for words
when, as in this case, the defamatory meaning is far more
reasonable. Bryson, 174 Ill. 2d at 94. For this reason, we reject
the defendants' argument that Cosmo's ad can be reasonably
innocently construed.
The defendants also argue that the dismissal of count I should
be affirmed because Cosmo's ad may be construed as not referring to
the plaintiffs. They contend that a publication which does not
mention the plaintiff by name cannot be defamatory per se. See
Barry Harlem Corp. v. Kraff, 273 Ill. App. 3d 388, 391, 652 N.E.2d
1077 (1995). The plaintiffs argue that, although the ad does not
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name Imperial or use the last names of the individual plaintiffs,
it is nonetheless actionable per se as third parties reasonably
understood the statements contained therein to refer to the
plaintiffs.
In Chapski, our supreme court held that, if a statement may
"reasonably be interpreted as referring to someone other than the
plaintiff[,] it cannot be actionable per se." Chapski, 92 Ill. 2d
at 352. However, in Bryson, the supreme court declined to dismiss
an action involving an article which used only the plaintiff's last
name, stating that it was unable to "find, as a matter of law, that
no reasonable person would believe that the article was about the
plaintiff." Bryson, 174 Ill. 2d at 97. The standards articulated
by the supreme court in these two cases are entirely different. It
is one thing to say that a statement might reasonably be
interpreted as referring to someone other than the plaintiff (see
Chapski, 92 Ill. 2d at 352) and quite another thing to say that no
reasonable person would believe that the statement was about the
plaintiff (see Bryson, 174 Ill. 2d at 97).
If we were to apply the Bryson standard, we would reverse the
dismissal of count I because we would be unable to find, as a
matter of law, that no reasonable person would believe that Cosmo's
ad was about the plaintiffs. As the plaintiffs argue, the ad gives
a geographical location of the subject establishment, "east of
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Eden," which corresponds to Imperial's location east of the Edens
expressway. Additionally, as pled in the complaint, on the date
that the ad was published, the individual plaintiffs received phone
calls from people who read the ad and understood it to refer to the
plaintiffs. However, if we apply the standard articulated in
Chapski, we must affirm the dismissal of count I of the plaintiffs'
complaint. Cosmo's ad does not mention Imperial by name and,
although it refers to "Cy and his son Paul," it never mentions
their last names. On its face, the ad could reasonably be
interpreted as referring to some entity named "Empire" owned by two
individuals named Cy and Paul. Extrinsic facts and circumstances
are pled in the plaintiffs' complaint to establish that the
statements in the ad refer to them. See Barry Harlem Corp., 273
Ill. App. 3d at 391-93; Schaffer v. Zekman, 196 Ill. App. 3d 727,
731-733, 554 N.E.2d 988 (1990).
The standard applied in Chapski was recently reaffirmed by the
Supreme Court in Solaia Technology v. Specialty Publishing Co., No.
100555, slip op. at 18 (Ill. June 22, 2006), and, as a consequence,
we are compelled to employ it. Because the statements in Cosmo's
ad do not refer to Imperial by name or give the last names of the
individual plaintiffs, they could reasonably be interpreted as
referring to someone other than the plaintiffs. For this reason,
the statements are not actionable per se, and we affirm the
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dismissal of Count I of the plaintiffs' complaint.
Next, the defendants argue that count II, the plaintiffs'
claim for defamation per quod, was properly dismissed because
special damages were not adequately pled. The plaintiffs argue
that they satisfied their pleading requirement in this regard by
alleging that Imperial's sales decreased from the month preceding
the publication of Cosmo's ad and also as compared to the same
period in the previous year and by alleging that the individual
plaintiffs suffer "substantial pain."
In order to state a cause of action for defamation per quod,
special damages must be alleged with particularity. Barry Harlem
Corp., 273 Ill. App. 3d at 394. General allegations of damage to
one's health or reputation, economic loss, or emotional distress
are insufficient to satisfy the pleading requirement in such an
action. Taradash v. Adelet/Scott-Fetzer Co., 260 Ill. App. 3d 313,
318, 628 N.E.2d 884 (1993).
In this case, the complaint alleged that Cosmo's ad
"humiliated and embarrassed" the individual plaintiffs and "caused
them substantial pain." As to Imperial, the complaint alleged
that:
"The Ad proximately injured Imperial's sales.
During the weekend and the weeks immediately following
the publication of the Ad, Imperial's sales decreased
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from the preceding month and as compared to the same
period during 2003.
***
The immediate decline in Imperial's business
following the publication of the Ad resulted from the
defamation therein."
Nothing further is alleged in the complaint relating to the
injuries suffered or damages sustained by any of the plaintiffs.
Clearly, the allegations as to the injuries suffered by the
individual plaintiffs are general in nature and fail to satisfy
their burden to plead actual damages of a pecuniary nature. Bryson,
174 Ill. 2d at 87-88; Kurczaba v. Pollock, 318 Ill. App. 3d 686,
694-95, 742 N.E.2d 425 (2000). We find, therefore, that count II
of the complaint fails to state a cause of action in favor of the
individual plaintiffs for defamation per quod, and on that basis
affirm the dismissal of count II as to the plaintiffs Cyril
Rosengarten and Paul Rosengarten.
The defendants argue that Imperial's damage allegations are
also general in nature because the complaint fails to allege with
particularity which potential customers were deterred from
purchasing Imperial's merchandise. See Salamone v. Hollinger
International, Inc., 347 Ill. App. 3d 837, 844, 807 N.E.2d 1086(2004). We disagree.
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In Salamone, the plaintiff alleged, on information and belief,
that repeat customers of his grocery store ceased patronizing the
establishment after the defamatory article was published.
Salamone, 347 Ill. App. 3d at 844. In concluding that the
plaintiff failed to adequately allege special damages, the Salamone
Court noted that he failed to allege "actual monetary loss from a
lack of business" and "failed to allege with particularity which
members of the community have ceased *** patronizing his store."
Salamone, 347 Ill. App. 3d at 844. We believe, however, that the
instant case is factually distinguishable from Salamone. Imperial
alleged an actual monetary loss as a consequence of Cosmo's ad. As
for the complaint's failure to allege with particularity which
potential customers were deterred from purchasing Imperial's
merchandise as a result of Cosmo's ad, we do not believe that such
specificity is required.
Where, as in this case, there has been wide dissemination of
the disparaging material to persons unknown and the plaintiff is in
the business of offering goods for sale to the general public, it
is obviously impossible for such a plaintiff to specifically
identify the potential customers who, as a result of the defamatory
material, did not purchase its goods. While we have no quarrel
with the proposition that a plaintiff in a per quod action must
plead special damages with specificity, we nevertheless believe
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that a plaintiff is only obligated to be as specific as it is
reasonable to require. See W. Keeton, Prosser and Keeton on Torts
'128, at 972-73 (5th ed. 1984). In a case such as this where a
plaintiff claims a decline in sales to the general public caused by
defamatory material published in a major newspaper, we believe that
special damages are sufficiently alleged by asserting a decline in
sales as compared to prior periods. Imperial has alleged that its
sales decreased both from the month preceding the publication of
Cosmo's ad and as compared to the same period during the prior
year; and, in our opinion, satisfied its burden of pleading special
damages with specificity. For these reasons, and the reasons
stated earlier, we reverse the dismissal of Imperial's defamation
per quod claim as pled in count II of the complaint.
Next, we address the defendants= argument that commercial
disparagement is not a viable cause of action in this State.
Relying primarily upon the holding in Becker v. Zellner, 292 Ill.
App. 3d 116, 128, 684 N.E.2d 1378 (1997), they assert that no such
common law cause of action exists. We disagree and respectfully
decline to follow Becker on this point.
In arriving at its conclusion that Illinois does not recognize
a cause of action for commercial disparagement, the Becker Court
relied upon its own opinion in Kolengas v. Heftel Broadcasting
Corp., 217 Ill. App. 3d 803, 810, 578 N.E.2d 299 (1991), aff=d in
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part & rev=d in part on other grounds, 154 Ill. 2d 1, 607 N.E.2d 201(1992). In turn, the Kolengas Court relied upon a footnote
appearing in American Pet Motels, Inc. v. Chicago Veterinary
Medical Assn., 106 Ill. App. 3d 626, 633 n. 2, 435 N.E.2d 1297(1982). Kolengas, 217 Ill. App. 3d at 810. The statement
appearing in American Pet Motels to the effect that there is no
Illinois cause of action for commercial disparagement is pure dicta
and rests entirely upon an unsupported and unexplained holding in
National Educational Advertising Services, Inc. v. Cass, 454
F.Supp. 71, 73 (N.D.Ill.1977). However, even the Federal District
Court for the Northern District of Illinois has criticized its own
decision in National Educational Advertising Services, Inc. and
has concluded that commercial disparagement is, in fact, a viable
action in Illinois. See Appraisers Coalition v. Appraisal
Institute, 845 F.Supp. 592, 610 (N.D.Ill.1994); Richard Wolf
Medical Instruments Corp. v. Dory, 723 F.Supp. 37, 42
(N.D.Ill.1989).
Contrary to the holding in Becker and the cases upon which it
relies, we believe that Illinois recognizes commercial
disparagement as a tort separate and distinct from the tort of
defamation. A defamation action may lie when the integrity of a
business has been impugned; whereas, an action for commercial
disparagement lies when the quality of its goods is demeaned.
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Crinkley v. Dow Jones & Co., 67 Ill. App. 3d 869, 876, 385 N.E.2d
714, (1979). In point of fact, Illinois has long recognized
commercial disparagement as a distinct tort. See Montgomery Ward &
Co. v. Department Store Employees of America, C.I.O., 400 Ill. 38,
50, 79 N.E.2d 46 (1948). Moreover, when, as in this case,
statements impugn the quality of goods and the integrity of a
business, both an action for defamation and an action for
commercial disparagement may lie. Crinkley, 67 Ill. App. 3d at
877.
For the reasons stated, we conclude that the trial court erred
in dismissing count IV of the complaint, Imperial=s action for
commercial disparagement, and we reverse its judgment in that
regard.
Finally, we address Cosmo=s argument that count V, the
consumer fraud claim, fails to state a cause of action because it
contains no allegation that Imperial was in anyway deceived by its
ad. As Cosmo correctly asserts, in Shannon v. Boise Cascade
Corp., 208 Ill. 2d 517, 525, 805 N.E.2d 213 (2004), our supreme
court held that, since the deceptive advertising at issue did not
deceive the plaintiff, no claim under the Consumer Fraud Act could
be maintained. See also Oliveira v. Amoco Oil Co., 201 Ill. 2d
134, 155, 776 N.E.2d 151 (2002). However, the cases upon which
Cosmo relies involved actions by, or on behalf of, consumers
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against an entity that was accused of deceptive advertising.
Shannon, 208 Ill. 2d at 520; Oliveira, 201 Ill. 2d at 137; see also
County of Cook v. Philip Morris, Inc., 353 Ill. App. 3d 55, 57, 817
N.E.2d 1039 (2004). This case is readily distinguishable as it
involves an action by a business whose goods were disparaged.
Section 10a of the Consumer Fraud Act creates a private cause
of action in favor of any natural person or corporation (see 815
ILCS 505/1(c) (West 2004)) who suffers actual damages as a result
of a violation of the act. 815 ILCS 505/10a (West 2004). Section
2 provides that the act is violated by the use of any practice
described in section 2 of the Uniform Deceptive Trade Practices
Act. 815 ILCS 505/2 (West 2004). One of the practices described
in section 2 of the Uniform Deceptive Trade Practices Act is
"disparag[ing] the goods, services, or business of another by false
or misleading representation of fact." 815 ILCS 510/2(8) (West
2004). Imperial alleged such a practice on the part of Cosmo and
damages suffered as a result. As the plaintiffs correctly argue,
nothing in the Consumer Fraud Act requires that a competitor-
plaintiff be deceived by the false representation. Causation
necessary to support an action under the Consumer Fraud Act in such
circumstances is established by pleading and proving that the false
representation was addressed to the market and caused injury to the
competitor-plaintiff. See Empire Home Services, Inc. v. Carpet
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America, Inc., 274 Ill. App. 3d 666, 669-70, 653 N.E.2d 852 (1995);
Downers Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 190
Ill. App. 3d 524, 533-34, 546 N.E.2d 33 (1989). We reject Cosmo=s
argument that, to state a cause of action under the Consumer Fraud
Act, Imperial was required to allege that it relied upon the ad.
For the reasons stated, we reverse the trial court=s dismissal of
count V of the plaintiffs= complaint.
In summary, we: affirm the dismissal of count I; affirm the
dismissal of count II as to the plaintiffs Cyril Rosengarten and
Paul Rosengarten; reverse the dismissal of counts III, IV, and V;
reverse the dismissal of count II as to the plaintiff Imperial; and
remand this cause to the circuit court for further proceedings.
Affirmed in part, reversed in part and remanded.
KARNEZIS and ERICKSON, JJ., concur.
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