Sanchez v. American Express Travel Related Services Company

SUPREME COURT CASES

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State: Illinois

Court: 1st District Appellate

Docket No: 1-06-0878 Rel

Case Date: 03/29/2007

Preview:FOURTH DIVISION March 29, 2007

1-06-0878 EDWARD SANCHEZ, Individually and on ) behalf of all others similarly situated,) ) Plaintiff-Appellant, ) ) v. ) ) AMERICAN EXPRESS TRAVEL RELATED ) SERVICES COMPANY, INC., ) ) ) Defendant-Appellee. ) Appeal from the Circuit Court of Cook County.

Honorable Anthony L. Young, Judge Presiding.

PRESIDING JUSTICE QUINN delivered the opinion of the court: Plaintiff Edward Sanchez appeals from the circuit court's order granting summary judgment for defendant American Express Travel Related Services, Inc. In this court, Sanchez contends

that a genuine issue of material fact existed and, thus, the circuit court erred in granting summary judgment. reasons that follow, we affirm. BACKGROUND Defendant operates a currency exchange service to consumers in branches across the United States through which defendant converts foreign currency into United States dollars and vice versa. Defendant charges consumers a fee to convert their For the

currency.

1-06-0878 The record discloses that on September 16, 2004, plaintiff entered defendant's office at 55 West Monroe Street in Chicago, Illinois to exchange 1,050 Mexican pesos for U.S. dollars. The

rate displayed on the office electronic board was 0.080936652 United States dollars for each Mexican peso. The board did not

disclose the exchange rate at which defendant exchanged the currency. The financial service representative (FSR) informed

plaintiff as to the exchange rate posted on the board and explained that plaintiff would be charged a $3 service fee for the transaction. service fee. The FSR then processed plaintiff's transaction and provided plaintiff with a receipt of the transaction. The receipt Plaintiff agreed to the exchange rate and the

disclosed that at an exchange rate of 0.080936652 United States dollars per Mexican peso, plaintiff's 1,050 Mexican pesos yielded him $84.98. The receipt further showed that after defendant

subtracted its $3 processing service fee, plaintiff received a total of $81.98. The $3 service fee was listed twice on the Plaintiff

receipt, once as "fee" and once as "total fees."

reviewed this receipt before leaving defendant's office. On December 30, 2004, plaintiff filed a complaint against defendant in which he alleged that defendant operated a "Money Skimming Scheme." The complaint stated:

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1-06-0878 "In addition to profiting by charging each of its customers a 'fee' for the Service, American Express also profits by skimming the difference between the exchange rate it receives and the exchange rate it uses to convert a customer's currency. The

difference between the two exchange rates is a hidden, undisclosed charge it assesses to each of its customers that use the Service (hereafter 'the Money Skimming Scheme')." Plaintiff argued that this alleged practice violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 2004)). Plaintiff further asserted that

"the receipt was designed to conceal the fact that American Express actually received a significantly higher exchange rate for itself than the 0.080936652 United States dollars per Mexican Peso it exchanged [plaintiff's] 1,050 Pesos for." Plaintiff

concluded that defendant received more than the $84.98 United States dollars that it disbursed to plaintiff for his 1,050 Mexican pesos prior to the $3 service fee. Thus, plaintiff

argued that defendant received a hidden fee in addition to the $3 service fee it listed on the receipt. Thereafter, defendant filed a motion to dismiss pursuant to

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1-06-0878 section 2-615 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2004)) and a memorandum of law in support of its motion on March 8, 2004. Relying on In re Mexico Money

Transfer Litigation, 267 F.3d 743 (7th 2001), defendant contended that, as a matter of law, it was not required "to disclose the rates at which it purchases foreign currency or its profits from the 'spread.'" Thus, defendant argued that plaintiff could not

state a claim for fraud under the Act because it could not establish that defendant committed a deceptive practice. In

addition, defendant argued that plaintiff could not adequately plead proximate cause or damages. On April 12, 2005, plaintiff filed a response to defendant's motion to dismiss in which he argued that Covarrubias v. Bancomer, 351 Ill. App. 3d 737 (2004), governed the outcome of the case at bar. His contention was that according to this

court's ruling in Bancomer, defendant's failure to disclose that it received a greater profit than the $3 service transaction fee constituted a deceptive practice under the Act. Plaintiff also

contended that he sufficiently pled proximate cause and damages. On May 13, 2005, the circuit court denied defendant's motion to dismiss. Thereafter, plaintiff filed a motion for class The circuit

certification and defendant filed its response.

court never ruled on this motion, and thus it is not a matter

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1-06-0878 before this court. On November 14, 2005, defendant filed a motion for summary judgment. In support, defendant attached the affidavits of Linda

Teter and Vicki Norton dated November 10, 2005, and November 11, 2005, respectively. defendant. Teter averred that she was the director of service delivery for defendant and was working on special projects until her retirement at the end of 2005. She then stated: Both Teter and Norton were employees of

"American Express charges customers that utilize the Exchange Service a fee per currency exchange transaction. Each

individual [travel service office] TSO manager has the ability to decide at what amount to set the fee. This decision is

based upon, among other things, the level of competition from other Exchange Service vendors in the area. Accordingly, the fees

charged by each individual TSO vary by market and location. In setting the fee, American

Express always takes care to ensure that its fee is competitive from a customer perspective."

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1-06-0878 She further explained that the transaction fee on September 16, 2004, at the Monroe Street TSO was $3, which employees were trained to communicate to customers. Teter then averred: "American Express does not state what its net 'profit' is in providing the Exchange Service. In addition, American Express does

not state to the customer what its 'cost' is for what is sold (in this case, the cost of the currency that it sells to customers). The fee listed on the customer's receipt is not identified as a 'net fee' and there is no language on the receipt advising or indicating to customers what American Express's 'profit' is on any individual transaction. Rather, American Express

accurately discloses the cost to the customer -- that is, the retail exchange rate applied and the fee." Teter further explained that American Express could not anticipate its "profit" for each individual transaction. stated: "In processing each customer transaction, She

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1-06-0878 American Express does not take the currency exchanged in an individual transaction by a customer at a retail exchange rate and convert such currency at a wholesale rate in an individual transaction. Rather, American

Express buys foreign currencies in bulk at a wholesale rate, and uses these bulk funds to pay out the selected currency, as the individual transactions occur. American

Express FSRs have no information regarding the wholesale rate at which American Express buys and sells currency in bulk, and FSRs have no information regarding any potential profit from any individual transaction. Because customers do not trade currency in these large volumes, wholesale currency rates are not available to them." Norton averred that her position with defendant was manager, personal travel and financial services. In that position, she

was responsible for overall operations of owned American Express TSOs in Illinois, including the TSO located at 55 West Monroe Street in Chicago. She confirmed that on September 16, 2004,

plaintiff exchanged 1,050 Mexican pesos for United States dollars

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1-06-0878 at a "buy" exchange rate of 0.080936652 United States dollars per Mexican peso. That exchange rate yielded plaintiff $81.98 after Norton stated that the $3

a $3 transaction fee was subtracted.

fee was noted twice on plaintiff's receipt, once as a "fee" and once as "total fees." She further explained:

"The fee is not, and was not, intended to lead customers to believe that American Express only makes a profit of $3 for the Exchange Service, and American Express agents make no such representation to customers. Rather, the fee is clearly disclosed as a charge separate and apart from, and in addition to, the retail exchange rate that is quoted to the customer and applied to the transaction." On November 3, 2005, the parties deposed plaintiff. Plaintiff testified that he decided to bring this suit when he learned that defendant "[makes] money off of the exchange, the currency exchange." a bigger fee." He added, "They stated one fee and there was

Upon further questioning, plaintiff stated, "They

charged more for my exchange than they told me they were charging." Plaintiff acknowledged that he previously worked for Legal

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1-06-0878 Helpers. During that time, he shared office space at 444 North

Wells Street in Chicago with the attorney representing him in this case. Plaintiff then testified that on September 16, 2004, he sought to exchange Mexican pesos left over from a vacation for United States dollars. Although he knew of other currency

exchanges in the city, he did not visit another foreign currency exchange merchant prior to entering defendant's office. Plaintiff remembered seeing an exchange rate board in the office, but did not recall whether he saw the "buy" rate. He

also did not remember whether he asked the FSR what the exchange rate for Mexican pesos was on that day. Despite not recalling

many of the details of the exchange, plaintiff confirmed that he counted his money after exchanging his Mexican pesos for United States dollars and stated it was an accurate exchange. He said

that he did not expect to receive anything other than the $81.98 he received from the FSR. During the deposition, plaintiff acknowledged that other than conversations with his counsel, he had no basis for his belief that on September 16, 2004, he paid more in connection with his currency exchange that he had agreed to pay. He further

confirmed that other than conversations with his attorney, he had no basis for his allegation that defendant skimmed and stole some

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1-06-0878 of his money. Plaintiff neither decided to hire an attorney nor

felt he had to bring a lawsuit against defendant until he had discussions with his present attorney. Subsequently, the parties deposed Teter on January 27, 2006. Teter disclosed that she retired four weeks prior to her deposition. She further testified that she had been deposed She

twice before due to her expertise in foreign currency.

stated, however, that her expertise as to foreign currency buying and selling procedures was limited to defendant's policies. Teter then testified as to defendant's procedures for conducting buy and sell transactions with customers. She distinguished the

transactions in that, in a buy transaction, defendant receives foreign currency from a customer in exchange for United States dollars. Conversely, in a sell transaction, defendant provides a

customer foreign currency in exchange for United States dollars. Teter stated that during a buy transaction, as occurred in the case at bar, the FSR first asks the consumer as to which currency he wishes to exchange if not identified and how many increments of that currency he wants to transact. The FSR then

quotes the consumer the applicable rate of exchange in effect for that business day, the transaction or service fee, and the United States dollar equivalent for that transaction. The FSR does not,

however, inform the customer for what amount the defendant

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1-06-0878 purchased the currency it sells to a customer. Teter stated that

the FSRs do not know the rate at which defendant buys currency. She further asserted that, as in other retail establishments, even if the FSR possessed the information, he or she would not disclose it to the customer. With respect to an individual transaction, Teter explained that defendant does not generate any revenue on a single "buy" transaction other than the service fee. Rather, revenue does not

arise until defendant resells the currency on a "sell" exchange. The revenue generated from these transactions is not calculated for each individual transaction, but is determined on a teller (TSO) till level for all foreign currency cash notes that would have been sold on a given day. Teter stated that all currencies, notes, and cash, which are sold and bought on different days at varying exchange rates, are lumped together. As such, certain currencies could sit in a TSO

till for a number of days before that exact currency was involved in another transaction. revenue generated. Thus, a weighted cost average determines

Teter further testified that the constant

varying of exchange rates affects the total revenue generated. Teter again confirmed that defendant charges a customer a transaction fee per currency exchange. She explained that the However,

fee varied between defendant's offices and markets.

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1-06-0878 Teter stated, "Well as I understand the process, once the fee is changed in the express change system, then it becomes constant in terms of how it appears on the rate board and in express change." She further asserted that the fee became "constant" for a particular office. Teter also testified that, as stated in her affidavit, FSRs are trained to disclose a transaction fee to customers. During

training, FSRs are informed that defendant purchases currency at a lower wholesale rate than that used in transactions involving sales of the same currency. She did not know whether FSRs are

told to inform customers of the difference in exchange rates. Teter explained that each TSO orders foreign currency cash notes from defendant's United States money center in Las Vegas. The money center then receives foreign currency notes from its England office, which is the Global Foreign Exchange, and supplies the TSOs with their orders. Each TSO has set limits Teter confirmed that

that it must stay within on a daily basis.

the Global Foreign Exchange is responsible for purchasing currency. In addition, the Las Vegas office buys back excess

currency cash notes from TSOs, which are then either returned to the Global Foreign Exchange or distributed to other TSOs. When asked as to how defendant profited from its business, Teter stated, "Our TSOs will buy currency that they acquire via

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1-06-0878 the Las Vegas money center. Those currencies are then marked up She also testified

a percentage and sold to retail customers."

that fees are assessed to retail customers for transactions. Teter explained that the "percentage markups" are determined by local market managers who are responsible for the operation of TSOs within their given region. She stated that defendant had a

system of tiers across the United States to determine markup rates. Each local market manager then determined the tier rate Teter

to apply in a given market based on the local competition. stated that the tier would reflect "the spread rate on a percentage basis."

Teter acknowledged that the retail rate at which defendant buys currency from a customer differs from the rate at which it sells the currency. She then confirmed that defendant's goal was

to profit from the spread rate, which is the difference between the defendant's wholesale rate and plaintiff's retail rate. Teter further testified that the words "total fees," as used in plaintiff's transaction, "reflect the total amount of fees that this particular customer paid to [defendant] for the transactions that are listed in express change." She confirmed She

that plaintiff paid a "total fee" of $3 for his transaction. also again stated that defendant did not generate any other revenue from its individual transaction with plaintiff. That

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1-06-0878 said, defendant may have generated revenue in addition to the $3 fee if it sold the pesos it bought from plaintiff at a later date for a better rate. Teter stated, "I would hope that we would

generate additional revenue over and above the $3 on this 1,050 pesos that were sold to us on the 16th of September. be my hope." Thereafter, on March 21, 2006, the circuit court granted defendant's motion for summary judgment following the parties' respective arguments. court stated: "Counsel, when I ruled on the Motion to Dismiss, I denied the Motion to Dismiss because I can only grant such a motion on the face of the Complaint where there was no set of facts that the plaintiff could prove that would allow them to recover. And if you In granting summary judgment, the circuit That would

could introduce evidence that somehow portrayed this $3 fee as the absolute net fee, then of course, you could recover. But since the Motion to Dismiss, you have taken discovery. The plaintiff's

deposition has been taken, and the plaintiff is unable to characterize this fee as the net

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1-06-0878 fee or point to any misrepresentation made by American Express. You have also been unable

to establish that had the plaintiff transacted business elsewhere, there would have been a different result. So I am going

to grant the Motion for Summary Judgment." Plaintiff now appeals. ANALYSIS This court reviews a circuit court's order granting summary judgment de novo. 666 (2004). Novakovic v. Samutin, 354 Ill. App. 3d 660,

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 judgment as a matter of law." 735 ILCS 5/2-1005(c) (West 2004).

The trial court must construe the record against the moving party and may only grant summary judgment where the record shows that the movant's right to relief is clear and free from doubt. Samutin, 354 Ill. App. 3d at 666. That said, the moving party is

entitled to judgment as a matter of law where the nonmoving party fails to make a sufficient showing of an essential element of the case where the nonmoving party bore the burden of proof. v. Janes, 239 Ill. App. 3d 786, 794 (1992). Swisher

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1-06-0878 In this case, plaintiff alleged that defendant violated the Illinois Consumer Fraud and Deceptive Business Practices Act (Act) (815 ILCS 505/1 et seq. (West 2004)) by misrepresenting the profit that it generated from the September 16, 2004, transaction in which plaintiff exchanged Mexican pesos for United States dollars. The Act is a "regulatory and remedial statute intended

to protect consumers, borrowers, and business people against fraud, unfair methods of competition, and other unfair and deceptive business practices." Johnson v. Matrix Financial To establish a

Services Corp., 354 Ill. App. 3d 684, 690 (2004).

claim under the Act, plaintiff had to show that defendant committed a deceptive act or practice, that defendant intended for plaintiff to rely on the deception, and that the deception occurred in the course of conduct involving trade or commerce. Johnson, 354 Ill. App. 3d at 690. act in pertinent part as "the use or employment of any deception, fraud, false pretense, false promise, misrepresentation 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 The Act defines a deceptive

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1-06-0878 or commerce." 815 ILCS 505/2 (West 2004).

The Act is to be liberally construed in order to effectuate its purpose. Johnson, 354 Ill. App.3d at 690.

Here, the circuit court held that plaintiff failed to establish his claim under the Act where he "was unable to characterize [the $3 service fee] as the net fee or point to any misrepresentation made by American Express." The court further We agree.

determined that plaintiff failed to show damages.

As he did in the court below, plaintiff bases his entire argument in this court on Covarrubias v. Bancomer, 351 Ill. App. 3d 737 (2004). In Bancomer, the plaintiff utilized the services

of the defendant monetary transfer service to send the equivalent of $100 to a relative in Mexico for a $12 fee. The transaction

receipt showed a $12 "Net Sale Fee" and stated that at a "Sure Money Exchange Rate" of 9.71 pesos to the United States dollar, the plaintiff's relative received 971 pesos. The receipt also

had a line that provided, "Current Interbank Exchg Rate: 0." A few months after the transaction, the plaintiff filed a complaint in which he alleged that the defendant violated the Act because it had paid considerably less than $100 for the 971 pesos it provided the plaintiff's relative. As such, he argued that

the defendant deceptively labeled the transaction as providing a "net sale fee" of $12 when the defendant also earned a profit by

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1-06-0878 obtaining the 971 pesos it provided the plaintiff's relative for less than $100. The circuit court dismissed the plaintiff's

claim based on its conclusion that the defendant was not under a duty to disclose that its 9.71 exchange rate included a profit. Bancomer, 351 Ill. App. 3d at 738-39. On appeal, however, the

reviewing court reversed the circuit court and held that the plaintiff did state a cause of action under the Act. 351 Ill. App. 3d at 742. Although we acknowledge the factual similarities between Bancomer and the case at bar, we find plaintiff's reliance on Bancomer to be unpersuasive. First, we observe that the Bancomer Bancomer,

court's analysis relied heavily on Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33 (1994), and Bernhauser v. Glen Ellyn Dodge, Inc., 288 Ill. App. 3d 984 (1997). distinguishable. In Martin, 163 Ill. 2d at 51, the plaintiff purchased commodity options contracts through the defendant, Heinold Commodities, Inc. Following a London Commodity Option (LCO) We find those cases

transaction, the defendant labeled a commission as a foreign service fee in its summary disclosure statement to plaintiff. The court concluded that the plaintiff was thus led to believe that the "fee" was an additional cost that the defendant incurred and paid to a third party in LCO transactions. Martin, 163 Ill.

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1-06-0878 2d at 51. Despite the defendant's protestations that the

labeling complied with the Commodity Futures Trading Commission's regulations found in the Code of Federal Regulations (CFR), and thus served as a defense to a violation of the Act, our supreme court held that the defendant not only violated the CFR but affirmed the lower courts' rulings that the defendant had violated the Act. Martin, 163 Ill. 2d at 51-53. In so holding,

our supreme court explained, "However, we simply note that Heinold's deception was not in failing to disclose the exact amount of its compensation, but in failing to disclose that the foreign service fee was a commission, from which it would derive compensation." 52. In Bernhauser, 288 Ill. App. 3d at 986-87, plaintiffs brought separate lawsuits against defendant car dealers in which plaintiffs alleged that the respective defendants placed the fees for extended-service contracts under the heading "Amounts Paid to Others for You" in their respective retail installment contracts (RIC), and thus represented the extended-service contract fees as "pass through charges." The records showed, however, that the (Emphasis in original) Martin, 163 Ill. 2d at

defendants merely paid administrative fees to third parties and pocketed the balance of the extended-service contract fee. That

said, the respective circuit courts dismissed plaintiffs' claims

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1-06-0878 pursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West 1994)) where the courts found that the Truth in Lending Act (15 U.S.C.

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