Antitrust Law Daily Wrap Up, PRIVACY—NDIll: Chiropractor’s TCPA Claims Proceed Against Pizza Company Despite Dissolution of Pizzeria Promoted in the Advertisement, (Jan 18, 2013)

By Tobias J. Gillett, J.D., LLM.

A pizza company could not obtain summary judgment on a claim that it sent an unsolicited fax advertisement to a chiropractor in violation of the Telephone Consumer Protection Act (TCPA) because disputed factual issues remained regarding whether the advertisement promoted the pizza company or a bankrupt sister company, and whether the advertisement was sent on behalf of the pizza company, the federal district court in Chicago has ruled (Rosen Family Chiropractic, S.C. v. Chi-Town Pizza on Division Street, Inc., January 16, 2013, Tharp, J.).

A Chicago individual, Milenko Peles, owned two pizza restaurants, Chi-Town Pizza on Division Street, Inc. (“Chi-Town Division”) and Chi-Town Express, Inc. Although Peles continued to operate Chi-Town Express until March 2011, its corporate form was involuntarily dissolved in December 2009.

According to the chiropractor’s complaint, Peles hired a marketing company to send facsimile advertisements to local businesses, including the chiropractor, Rosen Family Chiropractic, Inc., that contained Chi-Town Express’s contact information and lunch specials, and promoted “Chi-Town Catering,” a catering service with orders fulfilled by Chi-Town Division that did not constitute a separate company. The advertisement listed a website address that Chi-Town Division and Chi-Town Express shared, and a link to order online from both companies.

Rosen filed suit against Chi-Town Division, claiming that the advertisement violated the TCPA, the Illinois Consumer Fraud Act, and Illinois law regarding conversion. Chi-Town Division moved for summary judgment, arguing that the advertisement had been sent on behalf of the now-defunct Chi-Town Express, and therefore Chi-Town Division bore no responsibility for it under the TCPA. The court explained that Chi-Town Division would have violated the TCPA “only if the advertisement promoted its goods or services, or if the advertisement was sent on its behalf.”

Rosen initially argued that the advertisement promoted Chi-Town Division by inviting readers to visit its website, a claim that the court found “dubious.” The court noted that Chi-Town Division and Chi-Town Express shared the website, and concluded that Chi-Town Division could not face TCPA liability “solely because the chitownpizzaexpressonline.com website promoted Chi-Town Division in addition to Chi-Town Express.”

However, the court found Rosen’s claim that the advertisement promoted Chi-Town Division by publicizing its catering service had more merit. Assuming Rosen accurately alleged that Chi-Town Division filled the orders for the catering service, the advertisement did “explicitly promote a service provided by Chi-Town Division, and therefore Chi-Town Division would be liable under the terms of the TCPA.” The court found “irrelevant” the fact that the advertisement indicated that Chi-Town Express operated the catering business, since the TCPA assigned liability to the company whose “services are advertised or promoted,” and Chi-Town Division allegedly provided those services.

The court also agreed with Rosen that a factual dispute existed regarding whether the advertisement was sent “on behalf of” Chi-Town Division. No evidence had been presented that would permit the court to determine whether Peles ordered the advertisement on behalf of both companies, or only on behalf of Chi-Town Express. No evidence demonstrated how he paid for the advertisements, or whether Peles had sent the advertisement after the dissolution of Chi-Town Express’s corporate form. Moreover, the shared website and the catering services promotion “raise[d] the possibility that Peles intended for the advertisement to promote both of his restaurants.”

Although the court permitted Rosen’s claims to proceed based on the preceding rationales, it refused to pierce Chi-Town Express’s corporate veil, finding that Rosen failed to satisfy the Illinois law’s requirement that “adherence to the fiction of separate corporate existence would sanction a fraud or promote injustice.” Moreover, Rosen’s claims would survive summary judgment without the court resorting to piercing the corporate veil.

The case is No. 11 C 6753.

Attorneys: Keith James Keogh (Keogh Law, Ltd.) for Rosen Family Chiropractic, S.C. Mark B. Ruda (Condon & Cook) for Chi-Town Pizza on Division Street, Inc.

Companies: Rosen Family Chiropractic, S.C.; Chi-Town Pizza on Division Street, Inc.

Cases: Advertising ConsumerProtection Privacy IllinoisNews