A Chicago judge has upheld the validity of an Illinois law - the only one in the country - that requires plaintiffs to notify dealerships at least 30 days before filing a consumer protection lawsuit.
Judge Dorothy Kinnaird rejected a constitutional challenge to the pre-litigation notice requirement, an issue raised in a deceptive price advertising lawsuit against Woodfield Chevrolet & Geo Inc. in Schaumburg.
The decision did not address the merits of the underlying claim by Charles Allen and Eugenia Melko, who allege the dealership misrepresented the price of a 1993 Nissan 4x4 pickup they bought in 1996.
Although some other states require pre-lawsuit notice for consumer fraud actions, Illinois is the only one that imposes that requirement specifically to encourage settlements in disputes with new- and used-vehicle dealers, according to the dealership's lawyer, Mark Lyman of Chicago.
The requirement, which took effect Jan. 1, 1996, doesn't confer an improper 'special benefit or exclusive privilege' that violates the Illinois or U.S. constitutions, Kinnaird ruled.
There will be an appeal, the plaintiffs' lawyer, Christopher Langone of Chicago, said.
According to the complaint filed in Cook County Circuit Court, the customers signed a retail installment sales contract and bill of sale for $15,495. When they returned to Woodfield a few days later with a service problem, they saw an advertisement posted on the wall listing a $10,900 price for the same truck.
They asked about the large discrepancy but were told the advertised truck was a different vehicle with a different stock number, although the same model and make, the lawsuit alleges. However, when they reviewed their odometer disclosure statement, they discovered it had the same stock number as the one advertised.
No 30-day notice
Woodfield refused to reduce the price of their truck, the suit contends, so they sued for consumer fraud, asking for compensatory damages, attorney fees and punitive damages. They did not give Woodfield 30 days' advance notice of the lawsuit, said dealer attorney Lyman, who said the plaintiffs' real motivation behind the case is to overturn the notification law.
Lyman also said the dealership denies any fraud. 'The consumers walked in, and the car was sold for what was shown on the car at the time.' Under state law, he added, 'just because you advertise a price doesn't mean you have to sell it for that price.'
In her decision, Kinnaird said the Illinois Legislature was concerned about 'aggressive plaintiffs' attorneys' and 'recognized a need to regulate disputes and claims between automobile dealers and consumers.'
Rejecting the challenge, she said, 'The entire case is about whether the automobile industry is unique and whether the Legislature can enact pre-suit notification requirements.' And the state has other laws limited to dealerships, such as retail installment sales and franchise laws.
The unsuccessful challenge covered both the notification requirement and a procedure that encourages dealers to make settlement offers before a case goes to trial.
'The Legislature sufficiently identified a problem unique to new- and used-car dealerships,' Kinnaird said, including 'particular concerns for abuse by attorneys seeking to generate litigation which would guarantee attorney fees in relatively minor cases.'
Langone said his clients had 'tried to work it out orally' before suing Woodfield, to no avail. He said Allen and Melko will ask the Illinois Appellate Court to reverse Kinnaird's decision on the constitutional issue and will ask Kinnaird for summary judgment in their favor on the consumer fraud claim.