Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Non-Illinois residents could not bring claims in Illinois for deceptive business practices , (Jul 11, 2013)

By Jody Coultas, J.D.

Consumers could not state Massachusetts Consumer Protection Act (CPA) or Illinois Consumer Fraud and Deceptive Business Practices Act (DBPA) claims against website operator HighBeam Research, Inc., according to the federal district court in Chicago (Bagg v. HighBeam Research, Inc., July 10, 2013, Leinenweber, H.). Highbeam’s choice-of-law provision in its user agreement did not control claims brought by non-residents of Illinois.

The consumers alleged that HighBeam offered a free seven-day trial and then charged consumers for monthly and/or yearly memberships and/or monthly and/or years’ membership renewals without their knowledge after the trial ended. Highbeam argued that the CPA claim was precluded by its User Agreement choice-of-law provision.

The court dismissed the proposed CPA class action claim for lack of jurisdiction. Under Illinois law, courts must select the law of the jurisdiction that has the ‘most significant relationship’ with the claims. The place of the injury generally controls. In consumer fraud cases, the injury is where the consumer is located and not where the seller is located. Only one plaintiff resided in Massachusetts. Assuming the court certified the proposed class, the class could not pursue a CPA claim because the place of injury for each individual class member varied. The plaintiffs could file and amendment including a subclass that includes only consumers who resided in Massachusetts.

Even though HighBeam’s website was designed in Illinois and the alleged deceptive conduct was disseminated to consumers from Illinois, the court held that Illinois did not have sufficient contact with the claims. Highbeam argued that the connection between the alleged wrongful conduct and Illinois was insufficient. The DBPA only applies to nonresident claimants if the circumstances of the disputed transaction occurred “primarily and substantially” in Illinois. The individual plaintiffs were nonresidents of Illinois and suffered injury in their home states. Although the User Agreement included a choice-of-law provision designating Illinois, an Illinois choice-of-law provision is not dispositive of the effect of the DBPA on nonresident claimants.

The case is No. 12 C 9756.

Attorneys: Jeffrey S. Morneau (Connor Morneau & Olin, LLP) for Robert Bagg. James F. Rittinger (Satterlee Stephens Burke & Burke LLP) for HighBeam Research, Inc.

Companies: HighBeam Research, Inc.

Cases: StateUnfairTradePractices IllinoisNews