Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Ill.: Steak purchaser could not show harm from allegedly deceptive sale price advertisement, (Aug 22, 2013)

By Jody Coultas, J.D.

A consumer failed to state an Illinois Consumer Fraud and Deceptive Business Practices Act (CFA) claim against Omaha Steaks International, Inc. for allegedly misrepresenting that its products were on sale, the federal district court in Chicago has held (Camasta v.Omaha Steaks International, Inc., August 21, 2013, Lefkow, J.).

The purchaser alleged that Omaha Steaks’ advertisements of its sale induced him to buy filet mignon from the retailer because he believed that the steaks were temporarily on sale. His receipt indicated a 35% discount off the regular retail price. However, the purchase price of the steaks was not actually reduced but instead representative of a pattern and practice of advertising the normal retail price as a temporary price reduction.

At the outset, the court noted that there was a question as to whether the court had personal jurisdiction over Omaha Steaks International Inc. The consumer had bought the steaks at an Illinois store operated through the company’s retail division, OS Sales. Because there were legitimate questions surrounding personal jurisdiction over Omaha Steaks International, the company’s motion to dismiss for lack of personal jurisdiction was denied.

Personal jurisdiction can be either general or specific. General jurisdiction exists when the defendant has “continuous and systematic” contacts with the forum state. Specific jurisdiction exists if the defendant has purposefully directed his activities at residents of the forum, and the litigation results from alleged injuries related to those activities. Omaha Steaks does not do business in Illinois, does not have offices in Illinois, does not solicit business in Illinois, and does not have control over any advertising or marketing carried out by OS Sales, a corporate affiliate, in the state of Illinois. The purchaser argued that there were questions that could affect jurisdiction, including the way in which Omaha Steaks was compensated for any sales in Illinois, the interrelationship between Omaha Steaks and the company that actually sold the steaks in Illinois, and the extent to which Omaha Steaks controls use of the Omaha Steaks trademark.

Although the purchaser properly alleged deception by Omaha Steaks, the court dismissed the CFA claim for failure to show actual harm. Omaha Steaks argued that the purchaser was not deceived because he could have determined the pricing practices from public sources and Omaha Steaks offered him a full refund. However, a money back guarantee does not make allegedly false advertising harmless and the argument has been repeatedly rejected. The purchaser also could show that Omaha Steaks’ actions offended public policy and was so oppressive that the consumer has little alternative but to submit. There was a sufficient connection between the alleged injury and the deceptive conduct. However, the purchaser failed to show actual harm. The allegation that the price comparison induced the purchaser to buy the steaks was insufficient to allege actual damages. The purchaser’s allegation that Omaha Steaks caused the purchaser to pay too much for the items purchased was too speculative. Without allegations that the steaks bought were worth less than he paid, the purchaser could not allege he was harmed.

The case is No. 12-cv-08285.

Attorneys: Brian J. Wanca (Anderson & Wanca) for Patrick Edward Camasta. Bartholomew L. Mcleay (Kutak Rock LLP) for Omaha Steaks International, Inc.

Companies: Omaha Steaks International, Inc.

Cases: StateUnfairTradePractices Advertising IllinoisNews