SPRINGFIELD - Supreme Court Justices reversed Fifth District appellate judges who found Tri-Plex Technical Services of Freeburg could rely on environmental law to pursue a fraud claim against its competitors.
In a May 23 decision all seven Justices found Tri-Plex, a manufacturer of carpet cleaning products, should have sought relief from the state’s pollution control board.
The Justices reinstated the judgment of St. Clair County Circuit Judge Heinz Rudolf, who dismissed all claims in 2021.
Justice Joy Cunningham found the attorney general or a state’s attorney can file for an injunction in a circuit court for environmental violations.
She found no such authorization for private parties.
She found the state’s environmental protection law dictates that a plaintiff seeking relief must first pursue an administrative remedy before the pollution control board.
She found the law bars complaints from private parties until the board has ruled.
“That did not happen here,” she wrote.
She found Tri-Plex counsel indicated at oral argument that Tri-Plex did not seek or pursue administrative relief.
Attorney Robert King of St. Louis argued for Tri-Plex with David Nelson of Belleville at the table.
The Justices also seized an opportunity to clarify when a business can file a consumer fraud suit against a business whose products it didn’t buy.
“A business plaintiff must meet the same requirements and allege the same elements as any other plaintiff when bringing a claim under the Consumer Fraud Act,” Cunningham wrote.
Tri-Plex alleged fraud and deception against Jon-Don, Legend Brands, Chemical Technologies International, Bridgepoint Systems, Groom Solutions and Hydramaster in 2020.
Nelson claimed defendants omitted from their labels and failed to disclose that their products contained excessive amounts of phosphorus in violation of the state’s detergent law.
He claimed their amounts of volatile organic material also violated a regulation.
He claimed carpet cleaning companies preferred the defendants because their products contained phosphorus and cleaned better.
Within the complaint he alleged a civil conspiracy between Jon-Don and Legend Brands that caused Tri-Plex to suffer a significant loss of sales.
Defendants moved to dismiss and they adopted each other’s arguments at a hearing.
Rudolf granted the motions, finding the state maintained exclusive enforcement authority over environmental laws.
He found Tri-Plex couldn’t use consumer fraud and deceptive practice laws as a back door method to bring an otherwise impermissible private action for environmental violations.
He also found Tri-Plex lacked standing as a consumer because defendants directed their conduct at commercial cleaners and not consumers generally.
King and Nelson appealed and both spoke at oral argument before Justices Judy Cates, Thomas Welch and John Barberis.
Cates delivered an opinion for Tri-Plex in 2022, stating the practices it sought to remedy were separate and distinct from the pollution control board’s decisions and enforcement actions.
“We do not agree that the plaintiff used the Illinois Consumer Fraud Act and Uniform Deceptive Trade Practices Act as a means to bring a private right of action to enforce the Detergents Act or environmental laws governing emissions," Cates wrote.
“Rather, these statutes and regulations simply offer a quantum of proof regarding the deceptive actions.”
She found that even if labels comply with applicable federal regulations, consumers might nonetheless be deceived about the quality and safety of a product.
She found Rudolf erred in dismissing consumer fraud claims for lack of standing.
She found that when a dispute involves two businesses who are not consumers of each other’s products or services, the test for standing is whether the conduct involves the market generally or otherwise implicates consumer protection concerns.
She found the alleged conduct sufficiently implicated consumer protection concerns to establish standing.
She found Tri-Plex adequately alleged conduct that offended public policies underlying the Detergents Act and other Illinois environmental laws.
She found Tri-Plex alleged substantial injury to consumers in that defendants charged a premium for their products and profited at the expense of unwary consumers.
Supreme Court Justices reversed the decision but fixed a flaw in Rudolf’s reasoning.
Cunningham found the state does not have exclusive authority to enforce environmental laws.
She quoted statute that any person adversely affected by a violation of law or regulations may sue for injunctive relief.
“Significantly though, this statement comes with an important qualification," Cunningham wrote.
She quoted statute that no action shall be brought until after the plaintiff has been denied relief by the board.
She found Tri-Plex noted that it sought to stop defendants from selling their products to prevent a loss of customers and not to protect the public.
She found the fact remained that an injunction based on violation of environmental laws was indistinguishable from what the board would consider.
She also faulted the Fifth District for excusing Tri-Plex from pleading proximate cause.
She found a plaintiff must establish proximate cause by proving actual deception.
She found a plaintiff who neither saw nor heard a deceptive statement cannot have relied on it and consequently cannot prove it was the proximate cause of the injury.
She found Tri-Plex failed to allege that defendants intended for it to rely on misrepresentations on their labels.
She found Tri-Plex alleged that defendants intended for the carpet cleaning companies to rely on the misrepresentations.
Joel Bertocchi of St. Louis County represented Jon-Don.
Donald Flack of St. Louis represented Legend Brands.
Daniel Hasenstab of Belleville represented Chemical Technologies International.
Gregory Fouts of Chicago represented Bridgepoint Systems and Groom Solutions.
Charles Pierce of Belleville represented Hydramaster.