Mulligan v. QVC

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Mulligan v. QVC

State: Illinois

Court: 1st District Appellate

Docket No: 1-07-0616 Rel

Case Date: 05/07/2008

Preview:THIRD DIVISION May 7, 2008

No. 1-07-0616

ROSEMARY MULLIGAN, Individually and on Behalf of All Others Similarly Situated, Plaintiff-Appellant, v. QVC, INC., a Corporation, Defendant-Appellee. JUSTICE THEIS delivered the opinion of the court:

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Appeal from the Circuit Court of Cook County.

No. 04 CH 03620

Honorable Dorothy K. Kinnaird, Judge Presiding.

Plaintiff Rosemary Mulligan brought this putative consumer class action lawsuit against defendant QVC, Inc., for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (the Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2004)) and unjust enrichment. Mulligan alleged that QVC's listed "retail value" overstated the prevailing market price for certain products it sold and falsely created the impression that consumers were receiving a bargain by purchasing at lower QVC prices. The circuit court denied Mulligan's motions for class certification, finding that individual issues of law and fact predominated. Thereafter, the circuit court granted QVC's motion for summary judgment on Mulligan's individual claims and denied her cross-motion for summary judgment, ruling that Mulligan failed to create a genuine issue of material fact to support the elements of her consumer fraud

1-07-0616 and unjust enrichment claims. On appeal, Mulligan contends that the circuit court erred in granting summary judgment because she has presented sufficient facts to support each element of her cause of action. Additionally, she maintains that the circuit court abused its discretion in denying class certification because the common issue of QVC's deceptive comparative pricing practice predominates over any individual issues. BACKGROUND QVC sells various consumer products through its nationwide television programming and its Internet web site. In offering its products for sale, it generally uses a comparative pricing system. For 70% of its products, QVC advertises a "retail value" for the product, then offers the product to the consumer at a lower, discounted QVC price or at an even lower "special price." QVC's viewer education spot on television provides a definition for "retail value" as follows: "When you see `retail value' for an item, that figure represents either an actual comparison-shopped price or the price QVC believes that the same or a comparable product would be offered by department stores or other retailers using a customary markup for that product category. The `retail value' does not necessarily represent the prevailing retail price in every community, or the price at which the item was previously sold by QVC." Mulligan purchased over 200 products and several items of jewelry from QVC over the years. Specifically relevant to this cause of action, on April 1, 2003, she purchased an "Ultrafine

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1-07-0616 Cigar Band Ring" for $37.38. QVC listed a retail value for this product of $60. On May 17, 2003, she purchased a "Jade and Gemstone Bypass Ring" for $38.12. QVC listed a retail value for this product of $55. On July 19, 2003, Mulligan purchased a "Geometric Flexible Link Bracelet" for $28.98. QVC listed a retail value for this product of $55. On January 2, 2004, she purchased a "Pave Enamel Flex Bracelet" for $26.75. QVC listed a retail value for this product of $39. Mulligan's jewelry purchasing decisions were based upon many factors, including whether the product was appealing, affordable, an impulse purchase, on sale, and whether she was searching for a particular product. She also considered the host's description of the product. Mulligan watched QVC programming for various reasons, including better prices, the variety of products, and "of course, it was convenient shopping. Everything is right there in front of you." There were particular features of the show that she liked. "When you watched it, they made you feel like, you know, you were part of this family." Mulligan had seen QVC's televison spot which explains the definition of "retail value." At the time she purchased products with a listed retail value, "[s]ometimes [she] thought [the retail value] seemed high ***. It just seemed like that was awfully high--you know, [she'd] see it and think it was high for some item, higher than what [she] would have thought it would have been." However, that knowledge did not prevent her from buying the product because she thought that the price she actually paid was a fair price. She would have purchased the products from QVC even if QVC listed no retail value, but the retail value impacted her purchasing decisions because she believed she was getting a

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1-07-0616 bargain at the QVC prices. If she could have bought the products in a store for the same amount or less than what she paid for it at QVC, she would have gone to the store instead of paying the extra shipping and handling fee to buy it from QVC. Mulligan does not dispute that she continued to purchase products from QVC even after filing this lawsuit, and acknowledges that a consumer could not legitimately claim to be actually deceived by QVC's listed retail values if the consumer continued to purchase the products after suing QVC. On February 27, 2004, Mulligan filed her class action lawsuit against QVC, seeking damages under the Consumer Fraud Act (815 ILCS 505/1 et seq. (West 2004)) and under a theory of unjust enrichment. Thereafter, she filed a motion for certification of a nationwide class. On June 6, 2005, the trial court denied the motion, finding that individual issues of proximate cause and actual damage predominated. This court denied Mulligan's petition for leave to appeal that ruling. Thereafter, Mulligan filed a second motion for class certification limited to a class of Illinois consumers who purchased specific products sold by QVC. The trial court also denied that motion, again finding that individual issues predominated. Subsequently, QVC filed its motion for summary judgment on Mulligan's individual claims, arguing that Mulligan had adduced no evidence of prices at which other retailers had sold any of the products she had bought from QVC and, therefore, could not prove a deceptive act or practice or resulting damage. Additionally, QVC argued that, because Mulligan purchased products from QVC for a variety of reasons, she could not establish that QVC's alleged deception proximately caused her actual damage.

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1-07-0616 In response, Mulligan presented an expert jewelry appraiser. Heidi Harders testified in her deposition that she determined comparable prices for the products Mulligan purchased from QVC by using a cost and a market approach to valuation. Harders estimated the retail value of the cigar band ring at $25 to $35. With respect to the sterling jade and gemstone ribbed bypass ring, she estimated its retail value at between $30 and $40. With respect to the flexible link bracelet, Harders estimated its retail value at between the $30 to $40 range. With respect to the enamel bracelet, she estimated its retail value at between $20 to $30. In doing her appraisal, Harders did not factor in any applicable sales tax, shipping and handling, or other additional costs. She agreed that the margin of error on her appraisal could be $5 higher than the appraised prices. Harders also acknowledged that there were other factors to consider in determining the retail value, including the retailers' overhead, the quality of the product, and the demand for the product at a given time. In her response, Mulligan also presented the deposition testimony of QVC's retail coordinator to establish several inherent inaccuracies in the process by which QVC obtains its retail values, including: (1) the limited market in which QVC finds its comparable goods despite it being a national advertiser; (2) the limited "category shops" conducted each year; (3) the way QVC treats comparable goods that are on sale; and (4) the small percentage of goods for which they find comparable products. As a result, Mulligan argued that she did not receive the benefit of the bargain QVC claimed she had received and, therefore, calculated her damages as the difference between the actual retail value as expressed by Harders and the value those items would have had if the QVC

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1-07-0616 listed retail value was in fact correct. The following chart summarizes those values. Product Cigar Band Ring Bypass Ring Flexible Link Bracelet Pave Enamel Bracelet QVC Retail Values $60 $55 $55 $39 Purchase Price $37.38 $38.12 $28.98 $26.75 Harders' Retail Values $25-35 $30-40 $30-40 $20-30

In reply, QVC presented a report by jewelry appraiser Lorraine Oakes. Oakes conducted an independent appraisal of the retail value of the four products Mulligan purchased. Her report was critical of Harders' methodology and included evidence of comparable priced items in the Chicago area that were within or higher than QVC's listed retail values. On January 31, 2007, after briefing and oral argument, the circuit court granted QVC's motion for summary judgment and denied Mulligan's cross-motion. The court found that Mulligan failed to create a genuine issue of fact to support evidence of a deceptive practice, proximate cause, or actual damage. Mulligan filed this timely appeal. ANALYSIS Mulligan contends that the circuit court erred in granting summary judgment on her Consumer Fraud Act and unjust enrichment claims because the court improperly resolved disputed issues of fact. Summary judgment is appropriate where the "pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2004). In ruling upon a motion for summary judgment, a court has a duty to construe the evidence strictly against the movant and liberally in favor of the nonmovant. 6

1-07-0616 Chatham Foot Specialists, P.C. v. Health Care Service Corp., 216 Ill. 2d 366, 376, 837 N.E.2d 48, 55 (2005). Nevertheless, "[i]f the plaintiff fails to establish any element of the cause of action, summary judgment for the defendant is proper." Bagent v. Blessing Care Corp., 224 Ill. 2d 154, 163, 862 N.E.2d 985, 991 (2007). We review the grant of summary judgment de novo. Shannon v. Boise Cascade Corp., 208 Ill. 2d 517, 524, 805 N.E.2d 213, 217 (2004). Section 2 of the Consumer Fraud Act provides that "deceptive acts or practices *** or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact *** in the conduct of any trade or commerce are hereby declared unlawful." 815 ILCS 505/2 (West 2004). Section 10a(a) of the Act authorizes private causes of action for practices proscribed by section 2. Section 10a(a) states, in pertinent part: "Any person who suffers actual damage as a result of a violation of [the] Act committed by any other person may bring an action against such person." 815 ILCS 505/10a(a) (West 2004). To prove a private cause of action under section 10a(a) of the Act, a plaintiff must establish the following: "(1) a deceptive act or practice by the defendant, (2) the defendant's intent that the plaintiff rely on the deception, (3) the occurrence of the deception in the course of conduct involving trade or commerce, and (4) actual damage to the plaintiff (5) proximately caused by the deception." Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100, 180, 835 N.E.2d 801, 853 (2005). The Act is to be construed liberally to effect its purposes. 815 ILCS 505/11a (West 2004). Consistent with Mulligan's theory, state and federal regulations recognize the possibility

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1-07-0616 that retail price comparisons can be deceptive and misleading. See, e.g., 14 Ill. Adm. Code

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