Imperial Apparel, Ltd. v. Cosmo's Designer Direct, Inc.

Opinion

THIRD DIVISION FILED: July 31, 2006

No. 1-05-2744

IMPERIAL APPAREL, LTD., CYRIL ) APPEAL FROM THE ROSENGARTEN, and PAUL ROSENGARTEN, ) CIRCUIT COURT OF ) COOK COUNTY Plaintiffs-Appellants, ) ) v. ) ) COSMO'S DESIGNER DIRECT, INC., an ) Illinois Corporation, and CHICAGO ) SUN-TIMES, INC., a Delaware Corporation,) HONORABLE ) JEFFREY LAWRENCE, Defendants-Appellees. ) JUDGE PRESIDING.

PRESIDING JUSTICE HOFFMAN delivered the modified opinion of

the court:

The plaintiffs, Imperial Apparel, Ltd. (Imperial), Cyril

Rosengarten and Paul Rosengarten, appeal from an order of the

circuit court dismissing their five-count complaint for failure to

state a cause of action. For the reasons which follow, we affirm

in part, reverse in part, and remand this cause for further

proceedings.

The facts necessary to an understanding of our resolution of

this appeal are not in dispute and are taken exclusively from the

plaintiffs' complaint. Imperial and the defendant Cosmo's Designer

Direct, Inc (Cosmo) are competitors engaged in selling discounted

men's clothing. As a sales promotion, Cosmo regularly advertised

suits and other items of menswear on a "3 for 1" basis.

Thereafter, Imperial, in order to compete more effectively, began 1-05-2744

to advertise its own "3 for 1" sales.

On October 15, 2004, Cosmo ran a full-page advertisement in

the Chicago Sun-Times which, in addition to promoting an "8 DAY

BLOWOUT SALE," contained the following column of text which gives

rise to this litigation:

"WARNING!

Beware of Cheap Imitations Up North ... We all know, there is only one 'America' in the world and only one '3 for 1' in the Midwest...and in both cases it was the original thinking of an Italian that made them famous. So to the shameless owners of Empire rags cen- ter, east Eden and south of quality, we say...'Start being kosher...Stop openly copying and coveting your neighbor's concepts or a hail storm of frozen matzo balls shall del- uge your 'flea market style warehouse.'

Thankfully most readers, like thousands of our customers,

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possess a taste level that can easily decipher the quality gap between dried cream cheese and real Parmigiano ...or alas we would be wasting ink.

It is laughable how with all the integrity of the 'Iraq Information Minister', they brazenly attempt pulling polyester over your eyes by conjuring up a low rent 3 for imitation that has the transparency of a hookers come on...but no matter how they inflate prices and compromise quality, much to their dismay, Cy and his son Paul the plagiarist still remain light years away from delivering anything close to our '3 for 1' values.

Remember, things that sound the same might not necessarily be alike.

Finally, it's an undisputed fact that when it comes to fine clothing nothing substi- tutes for the heritage of the land of Columbus, DaVinci

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and Armani...Hence all that needs to be said is that... 'They can at best poorly imitate what we create...for we are Italian and they are not!' " (Emphasis in original.)

Following the publication of Cosmo=s ad, Imperial along with its

president, Paul Rosengarten, and Cyril Rosengarten, one of its

employees, (collectively referred to as the plaintiffs) filed the

instant action against Cosmo and the Chicago Sun-Times, Inc. (Sun-

Times). In counts I and II of their complaint, the plaintiffs

sought recovery against both defendants on theories of defamation

per se and defamation per quod, respectively. Count III was a

claim for false light invasion of privacy against Cosmo only.

Count IV asserted a cause of action for commercial disparagement

against Cosmo and the Sun-Times. Finally, in count V, the

plaintiffs sought recovery against Cosmo predicated upon a

violation of the Consumer Fraud and Deceptive Business Practices

Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2004)).

Both Cosmo and the Sun-Times filed motions to dismiss the

plaintiffs= complaint pursuant to section 2-615 of the Code of Civil

Procedure (Code) (735 ILCS 5/2-615 (West 2004)), contending that,

for a number of reasons, the claims asserted were substantially

insufficient at law. The circuit court granted the defendants=

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motions, finding that Cosmo's ad constituted "non-actionable

opinion." This appeal followed.

Because this matter was disposed of at the trial level in

response to the defendants' section 2-615 motions, the only

question before this court is whether the dismissed counts state

causes of action upon which relief could be granted. Burdinie v.

Village of Glendale Heights, 139 Ill. 2d 501, 505, 565 N.E.2d 654

(1990). The issue presented is one of law, and our review is de

novo. T & S Signs, Inc. v. Village of Wadsworth, 261 Ill. App. 3d

1080, 1084, 634 N.E.2d 306 (1994).

At the outset of our analysis, we wish to make it quite clear

that our function is not to judge the literary merit of Cosmo's ad

or the journalistic standards of a newspaper that would publish

such obviously offensive material. Our function is solely to

determine whether the ad is legally actionable under any of the

theories pled.

In urging affirmance of the dismissal of all of the counts in

the plaintiffs= complaint, the defendants argue that Cosmo=s ad

cannot reasonably be interpreted as asserting facts and, as a

consequence, is entitled to protection under the First Amendment to

the United States Constitution (U.S. Const., amend. I). For their

part, the plaintiffs argue that the trial court erred in dismissing

their claims as the ad can reasonably be interpreted as stating

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actual facts which impute a want of integrity in the discharge of

their employment duties and prejudiced them in their business.

The fact that statements might reasonably be interpreted as

defamatory does not entirely resolve the issue of whether they are

actionable. A determination must still be made as to whether the

statements constitute protected speech under the First Amendment.

Hopewell v. Vitullo, 299 Ill. App. 3d 513, 517-18, 701 N.E.2d 99

(1998). Statements which do not make factual assertions enjoy

First Amendment protection and cannot form the basis of a

defamation action. Milkovich v. Lorain Journal Co., 497 U.S. 1,

19, 111 L.Ed.2d 1, 110 S.Ct. 2695 (1990). However, "[t]he test to

determine whether a defamatory statement is constitutionally

protected is a restrictive one." Kolegas v. Heftel Broadcasting

Corp., 154 Ill. 2d 1, 14, 607 N.E.2d 201 (1992). Only statements

which "cannot 'reasonably [be] interpreted as stating actual

facts'" are protected under the First Amendment. Milkovich, 497

U.S. at 20, quoting Hustler Magazine v. Fawell, 485 U.S. 46, 50, 99

L.Ed.2d 41, 108 S.Ct. 876 (1988); see also Kolegas, 154 Ill. 2d at

14-15. Whether a particular statement is one of fact or opinion is

a question of law. Doherty v. Kahn, 289 Ill. App. 3d 544, 557, 682

N.E.2d 163 (1997).

In determining whether statements are fact or opinion, two

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approaches have been employed. The Restatement (Second) of Torts

sets forth the principal that statements of fact "usually concern

the conduct or character of another." Restatement (Second) of

Torts ' 565, cmt. a (1977). The Restatement also distinguishes

between "pure opinion" which enjoys First Amendment protection and

"mixed opinion" which can be actionable. A pure opinion is one in

which the maker states the facts upon which the opinion is based.

Mixed opinions are those which, while opinion in form or content,

are apparently based on facts which have not been stated or are

assumed to exist. Restatement (Second) of Torts ' 565, cmt. b

(1977). In Ollman v. Evans, 750 F.2d 970 (D.C.Cir.1984), the court

expanded upon the Restatement's approach and articulated four

issues which a court should consider in determining whether a

particular statement is one of fact or opinion, namely: (1) whether

the statement has a precise core of meaning; (2) whether the

statement is objectively verifiable; (3) whether the literary

context of the statement implies that it has factual content; and

(4) whether the broader social context in which the statement

appears implies fact or opinion. Ollman, 750 F.2d at 979.

Illinois courts appear to have embraced the Ollman approach. See

Brennan v. Kadner, 351 Ill. App 3d 963, 969, 814 N.E.2d 951 (2004);

Moriarty v. Greene, 315 Ill. App. 3d 225, 235, 732 N.E.2d 730

(2000). Although this test considers the context in which the

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statement appears, its emphasis is on whether the statement

contains objectively verifiable assertions. Milkovich, 497 U.S. at

19-21. In determining whether a statement is one of fact, we

evaluate the totality of the circumstances and consider whether the

statement is capable of objective verification. Piersall v. Sports

Vision, 230 Ill. App. 3d 503, 510, 595 N.E.2d 103 (1992).

The Sun-Times argues that the statements in Cosmo's ad are

"examples of unvarnished hyperbole" and concludes that, "[e]ven if

Imperial might interpret the isolated passage 'no matter how they

inflate [prices] and compromise quality' as conveying some abstract

factual content, the overwhelming presence of slang and non-literal

language throughout Cosmo's Ad precludes any reasonable reader from

believing that Cosmo's was stating objective facts." In contrast,

the plaintiffs argue that a number of the statements in the ad

which impute a want of integrity in the discharge of their

employment duties are capable of being proven true or false and

are, therefore, not entitled to constitutional protection.

The threshold question is whether a reasonable reader would

interpret Cosmo's ad as stating actual facts about the plaintiffs.

Milkovich, 497 U.S. at 20; Bryson v. New America Publications, 174

Ill. 2d 77, 100, 672 N.E.2d 1207 (1996). Referring to the

plaintiffs as the "shameless owners of Empire rags" and their

business establishment as a "flea market style warehouse,"

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certainly amounts to vituperative name-calling, but the comments

hardly qualify as statements of objectively verifiable fact. See

Pease v. International Union of Operating Engineers Local 150, 208

Ill. App. 3d 863, 870, 567 N.E.2d 614 (1991). Likening the quality

comparison of the plaintiffs= goods and Cosmo=s goods to the

difference between dried cream cheese and "real Parmigano" might

well be considered by some as a veiled ethnic slur, but again it is

not capable of objective verification. However, the statements

contained in the third paragraph of the ad present a more difficult

question.

In the third paragraph, the individual plaintiffs' integrity

is compared to that of the "Iraq Information Minister." The charge

is related to Imperial's "3 for 1" sale which the ad states is an

attempt to pull "polyester" over the eyes of the public. Finally,

the paragraph asserts that the plaintiffs inflate the price of

their clothing and compromise the quality. The statements

specifically refer to the "3 for 1" sale and implicitly accuse the

plaintiffs of deceiving the public as to the quality of Imperial's

clothing, all under the heading of "Beware of Cheap Imitations Up

North." We believe that the statements contained in the third

paragraph are not pure opinion. They address both the conduct and

character of the individual plaintiffs and appear to be based on

facts concerning the quality of Imperial's goods which have not

9 1-05-2744

been stated. Whether Imperial was selling imitation goods of

inferior quality is certainly capable of objective verification.

Although the statements were made in the context of a competitor's

advertisement, certainly not a setting which would lead a reader to

infer that the statements are factual in nature, we nevertheless

believe that a reasonable reader could very well interpret Cosmo's

ad as stating actual facts about the plaintiffs and the originality

and quality of Imperial's goods.

Based upon the foregoing analysis, we conclude that Cosmo's ad

is not entitled to First Amendment protection. We find, therefore,

that the circuit court erred in concluding that the ad constituted

"non-actionable opinion" and in dismissing the claims set forth in

the plaintiffs' complaint on that ground.

Although we have rejected the basis upon which the trial court

dismissed the plaintiffs' complaint, the defendants argue that

other grounds supporting the dismissal of each count exist.

Because we may affirm the trial court's judgment upon any ground

warranted by the record, regardless of whether that ground was

relied upon by the trial court (Material Service Corp. v.

Department of Revenue, 98 Ill. 2d 382, 387, 457 N.E.2d 9 (1983)),

we will address each of the defendants' other arguments in support

of affirmance.

The Sun-Times argues that the plaintiffs are limited purpose

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public figures with respect to their merchandising endeavors and,

as such, in order to recover, they were required to plead and prove

that the Sun-Times published Cosmo's ad with actual malice. See

Kessler v. Zekman, 250 Ill. App. 3d 172, 179-85, 620 N.E.2d 1249

(1993). The underlying basis for the Sun-Time=s assertion that the

plaintiffs are limited purpose public figures is the fact that they

advertised their goods for sale. See Steaks Unlimited , Inc. v.

Deaner, 623 F.2d 264, 271-74 (3rd Cir. 1980). The Sun-Times

contends that, because the plaintiffs only alleged negligence on

its part, and not actual malice, their complaint failed to state

any cause of action against it.

In addition to the fact that there are no allegations in the

complaint supporting the proposition that the individual plaintiffs

ever advertised any goods for sale, the plaintiffs argue that the

mere fact that Imperial advertised its merchandise does not,

without more, establish it as a limited purpose public figure. We

agree.

The complaint alleges that Imperial advertised its merchandise

prior to the publication of Cosmo's ad. However, there are no

allegations in the complaint which would support the notion that,

in doing so, Imperial thrust itself to the forefront of any

particular public controversy. See Gertz v. Robert Welch, Inc.,

418 U.S. 323, 345, 41 L.Ed.2d 789, 94 S.Ct. 2997 (1974).

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Consequently, the facts pled in the complaint do not establish

Imperial=s status as a limited purpose public figure, and therefore

the plaintiffs failure to plead actual malice on the part of the

Sun-Time does not render the complaint deficient. A defendant

cannot by its defamation make a plaintiff a limited purpose public

figure for First Amendment purposes; rather, the plaintiff must be

a limited purpose public figure prior to the alleged defamation.

Rety v. Green, 546 So.2d 410, 425 (Fla.App.3 Dist. 1989); see also

Waldbaum v. Fairchild Publications, Inc., 627 F.2d 1287, 1293 n. 12

(D.C.Cir 1980), cert. denied, 449 U.S. 898, 66 L.Ed.2d 128, 101

S.Ct. 266 (1980).

Cosmo having failed to advance any additional arguments in

support of the dismissal of the plaintiffs= claim for false light

invasion of privacy, we reverse the dismissal of count III of the

complaint. However, we continue our analysis of the defendants=

arguments in support of the dismissal of the remaining four counts.

Count I of the plaintiffs' complaint charged that Cosmo's ad

is defamatory per se. Under Illinois law, five categories of

statements are considered actionable per se, giving rise to an

action for defamation without a showing of special damages. They

are words that: 1) impute the commission of a criminal offense; 2)

impute infection with a loathsome communicable disease; 3) impute

an inability to perform or want of integrity in the discharge of

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one=s duties of office or employment; 4) prejudice a party, or

impute lack of ability, in his or her trade, profession or

business; and 5) impute fornication or adultery. Bryson, 174 Ill.

2d at 88-89. In this case, the plaintiffs' charged that the ad

imputes a want of integrity on their part in the discharge of their

employment duties and prejudices them in their business.

The defendants argue that Cosmo's ad may be innocently

interpreted and, therefore, is not actionable per se. See Chapski

v. Copely Press, 92 Ill. 2d 344, 352, 442 N.E.2d 195 (1982).

According to the Sun Times, the ad may reasonably be interpreted as

"conveying Cosmo's objection to Imperial's admitted copying of

Cosmo's signature 3 for 1 sale." Cosmo asserts that the ad should

be construed "as confronting Plaintiffs' admitted attempts to

capitalize on Cosmo's established '3 for 1' sale." The plaintiffs

argue that, when read in context, Cosmo's entire ad "can only be

reasonably construed as accusing [p]laintiffs of being commercial

courtesans, who entice customers in only to cheat them."

Under the innocent construction rule, statements which fall

within one of the categories of words which are actionable per se

are, nevertheless, non-actionable if they are reasonably capable of

an innocent construction. Bryson, 174 Ill. 2d at 90. In applying

the innocent construction rule, courts are required to consider the

statement in context, giving the words, and their implications,

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their natural and obvious meaning. Bryson, 174 Ill. 2d at 90. If

so construed, a statement may be innocently interpreted, it cannot

be actionable per se. Chapski, 92 Ill. 2d at 352. However,

"[o]nly reasonable innocent construction will remove an allegedly

defamatory statement from the per se category." (Emphasis in

original.) Bryson, 174 Ill. 2d at 90. In Bryson, our supreme court

held that:

"The innocent construction rule does not apply, however,

simply because allegedly defamatory words are 'capable'

of an innocent construction. See Chapski, 92 Ill. 2d at

351-52 (modifying the innocent construction rule

announced in John v. Tribune Co., 24 Ill. 2d 437, 442

(1962)). In applying the innocent construction rule,

courts must give the allegedly defamatory words their

natural and obvious meaning. Chapski, 92 Ill. 2d at

351-52; 33A Ill L. & Prac. Slander & Libel '12 (1970).

Courts must therefore interpret the allegedly defamatory

words as they appeared to have been used and according to

the idea they were intended to convey to the reasonable

reader. 33A Ill L. & Prac. Slander & Libel '12 at 25

(1970). When a defamatory meaning was clearly intended

and conveyed, this court will not strain to interpret

allegedly defamatory words in their mildest and most

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inoffensive sense in order to hold them nonlibellous

under the innocent construction rule." 174 Ill. 2d at

93.

Whether a statement can be innocently interpreted is a question of

law for the court to decide. Chapski, 92 Ill. 2d at 352.

In this case, when we consider Cosmo's ad in its entirety,

giving the words and implications their natural and obvious

meaning, it is clear that the ad conveys much more that a mere

objection to Imperial's copying of Cosmo's "3 for 1" sale. The ad

warns the reader against imitation products and accuses the

plaintiffs of deceiving the public as to the quality of Imperial's

clothing and inflating prices. The innocent construction rule does

not require a court to strain to find an innocent meaning for words

when, as in this case, the defamatory meaning is far more

reasonable. Bryson, 174 Ill. 2d at 94. For this reason, we reject

the defendants' argument that Cosmo's ad can be reasonably

innocently construed.

The defendants also argue that the dismissal of count I should

be affirmed because Cosmo's ad may be construed as not referring to

the plaintiffs. They contend that a publication which does not

mention the plaintiff by name cannot be defamatory per se. See

Barry Harlem Corp. v. Kraff, 273 Ill. App. 3d 388, 391, 652 N.E.2d

1077 (1995). The plaintiffs argue that, although the ad does not

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name Imperial or use the last names of the individual plaintiffs,

it is nonetheless actionable per se as third parties reasonably

understood the statements contained therein to refer to the

plaintiffs.

In Chapski, our supreme court held that, if a statement may

"reasonably be interpreted as referring to someone other than the

plaintiff[,] it cannot be actionable per se." Chapski, 92 Ill. 2d

at 352. However, in Bryson, the supreme court declined to dismiss

an action involving an article which used only the plaintiff's last

name, stating that it was unable to "find, as a matter of law, that

no reasonable person would believe that the article was about the

plaintiff." Bryson, 174 Ill. 2d at 97. The standards articulated

by the supreme court in these two cases are entirely different. It

is one thing to say that a statement might reasonably be

interpreted as referring to someone other than the plaintiff (see

Chapski, 92 Ill. 2d at 352) and quite another thing to say that no

reasonable person would believe that the statement was about the

plaintiff (see Bryson, 174 Ill. 2d at 97).

If we were to apply the Bryson standard, we would reverse the

dismissal of count I because we would be unable to find, as a

matter of law, that no reasonable person would believe that Cosmo's

ad was about the plaintiffs. As the plaintiffs argue, the ad gives

a geographical location of the subject establishment, "east of

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Eden," which corresponds to Imperial's location east of the Edens

expressway. Additionally, as pled in the complaint, on the date

that the ad was published, the individual plaintiffs received phone

calls from people who read the ad and understood it to refer to the

plaintiffs. However, if we apply the standard articulated in

Chapski, we must affirm the dismissal of count I of the plaintiffs'

complaint. Cosmo's ad does not mention Imperial by name and,

although it refers to "Cy and his son Paul," it never mentions

their last names. On its face, the ad could reasonably be

interpreted as referring to some entity named "Empire" owned by two

individuals named Cy and Paul. Extrinsic facts and circumstances

are pled in the plaintiffs' complaint to establish that the

statements in the ad refer to them. See Barry Harlem Corp., 273

Ill. App. 3d at 391-93; Schaffer v. Zekman, 196 Ill. App. 3d 727,

731-733, 554 N.E.2d 988 (1990).

The standard applied in Chapski was recently reaffirmed by the

Supreme Court in Solaia Technology v. Specialty Publishing Co., No.

100555, slip op. at 18 (Ill. June 22, 2006), and, as a consequence,

we are compelled to employ it. Because the statements in Cosmo's

ad do not refer to Imperial by name or give the last names of the

individual plaintiffs, they could reasonably be interpreted as

referring to someone other than the plaintiffs. For this reason,

the statements are not actionable per se, and we affirm the

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dismissal of Count I of the plaintiffs' complaint.

Next, the defendants argue that count II, the plaintiffs'

claim for defamation per quod, was properly dismissed because

special damages were not adequately pled. The plaintiffs argue

that they satisfied their pleading requirement in this regard by

alleging that Imperial's sales decreased from the month preceding

the publication of Cosmo's ad and also as compared to the same

period in the previous year and by alleging that the individual

plaintiffs suffer "substantial pain."

In order to state a cause of action for defamation per quod,

special damages must be alleged with particularity. Barry Harlem

Corp., 273 Ill. App. 3d at 394. General allegations of damage to

one's health or reputation, economic loss, or emotional distress

are insufficient to satisfy the pleading requirement in such an

action. Taradash v. Adelet/Scott-Fetzer Co., 260 Ill. App. 3d 313,

318, 628 N.E.2d 884 (1993).

In this case, the complaint alleged that Cosmo's ad

"humiliated and embarrassed" the individual plaintiffs and "caused

them substantial pain." As to Imperial, the complaint alleged

that:

"The Ad proximately injured Imperial's sales.

During the weekend and the weeks immediately following

the publication of the Ad, Imperial's sales decreased

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from the preceding month and as compared to the same

period during 2003.

***

The immediate decline in Imperial's business

following the publication of the Ad resulted from the

defamation therein."

Nothing further is alleged in the complaint relating to the

injuries suffered or damages sustained by any of the plaintiffs.

Clearly, the allegations as to the injuries suffered by the

individual plaintiffs are general in nature and fail to satisfy

their burden to plead actual damages of a pecuniary nature. Bryson,

174 Ill. 2d at 87-88; Kurczaba v. Pollock, 318 Ill. App. 3d 686,

694-95, 742 N.E.2d 425 (2000). We find, therefore, that count II

of the complaint fails to state a cause of action in favor of the

individual plaintiffs for defamation per quod, and on that basis

affirm the dismissal of count II as to the plaintiffs Cyril

Rosengarten and Paul Rosengarten.

The defendants argue that Imperial's damage allegations are

also general in nature because the complaint fails to allege with

particularity which potential customers were deterred from

purchasing Imperial's merchandise. See Salamone v. Hollinger

International, Inc., 347 Ill. App. 3d 837, 844, 807 N.E.2d 1086

(2004). We disagree.

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In Salamone, the plaintiff alleged, on information and belief,

that repeat customers of his grocery store ceased patronizing the

establishment after the defamatory article was published.

Salamone, 347 Ill. App. 3d at 844. In concluding that the

plaintiff failed to adequately allege special damages, the Salamone

Court noted that he failed to allege "actual monetary loss from a

lack of business" and "failed to allege with particularity which

members of the community have ceased *** patronizing his store."

Salamone, 347 Ill. App. 3d at 844. We believe, however, that the

instant case is factually distinguishable from Salamone. Imperial

alleged an actual monetary loss as a consequence of Cosmo's ad. As

for the complaint's failure to allege with particularity which

potential customers were deterred from purchasing Imperial's

merchandise as a result of Cosmo's ad, we do not believe that such

specificity is required.

Where, as in this case, there has been wide dissemination of

the disparaging material to persons unknown and the plaintiff is in

the business of offering goods for sale to the general public, it

is obviously impossible for such a plaintiff to specifically

identify the potential customers who, as a result of the defamatory

material, did not purchase its goods. While we have no quarrel

with the proposition that a plaintiff in a per quod action must

plead special damages with specificity, we nevertheless believe

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that a plaintiff is only obligated to be as specific as it is

reasonable to require. See W. Keeton, Prosser and Keeton on Torts

'128, at 972-73 (5th ed. 1984). In a case such as this where a

plaintiff claims a decline in sales to the general public caused by

defamatory material published in a major newspaper, we believe that

special damages are sufficiently alleged by asserting a decline in

sales as compared to prior periods. Imperial has alleged that its

sales decreased both from the month preceding the publication of

Cosmo's ad and as compared to the same period during the prior

year; and, in our opinion, satisfied its burden of pleading special

damages with specificity. For these reasons, and the reasons

stated earlier, we reverse the dismissal of Imperial's defamation

per quod claim as pled in count II of the complaint.

Next, we address the defendants= argument that commercial

disparagement is not a viable cause of action in this State.

Relying primarily upon the holding in Becker v. Zellner, 292 Ill.

App. 3d 116, 128, 684 N.E.2d 1378 (1997), they assert that no such

common law cause of action exists. We disagree and respectfully

decline to follow Becker on this point.

In arriving at its conclusion that Illinois does not recognize

a cause of action for commercial disparagement, the Becker Court

relied upon its own opinion in Kolengas v. Heftel Broadcasting

Corp., 217 Ill. App. 3d 803, 810, 578 N.E.2d 299 (1991), aff=d in

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part & rev=d in part on other grounds, 154 Ill. 2d 1, 607 N.E.2d 201

(1992). In turn, the Kolengas Court relied upon a footnote

appearing in American Pet Motels, Inc. v. Chicago Veterinary

Medical Assn., 106 Ill. App. 3d 626, 633 n. 2, 435 N.E.2d 1297

(1982). Kolengas, 217 Ill. App. 3d at 810. The statement

appearing in American Pet Motels to the effect that there is no

Illinois cause of action for commercial disparagement is pure dicta

and rests entirely upon an unsupported and unexplained holding in

National Educational Advertising Services, Inc. v. Cass, 454

F.Supp. 71, 73 (N.D.Ill.1977). However, even the Federal District

Court for the Northern District of Illinois has criticized its own

decision in National Educational Advertising Services, Inc. and

has concluded that commercial disparagement is, in fact, a viable

action in Illinois. See Appraisers Coalition v. Appraisal

Institute, 845 F.Supp. 592, 610 (N.D.Ill.1994); Richard Wolf

Medical Instruments Corp. v. Dory, 723 F.Supp. 37, 42

(N.D.Ill.1989).

Contrary to the holding in Becker and the cases upon which it

relies, we believe that Illinois recognizes commercial

disparagement as a tort separate and distinct from the tort of

defamation. A defamation action may lie when the integrity of a

business has been impugned; whereas, an action for commercial

disparagement lies when the quality of its goods is demeaned.

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Crinkley v. Dow Jones & Co., 67 Ill. App. 3d 869, 876, 385 N.E.2d

714, (1979). In point of fact, Illinois has long recognized

commercial disparagement as a distinct tort. See Montgomery Ward &

Co. v. Department Store Employees of America, C.I.O., 400 Ill. 38,

50, 79 N.E.2d 46 (1948). Moreover, when, as in this case,

statements impugn the quality of goods and the integrity of a

business, both an action for defamation and an action for

commercial disparagement may lie. Crinkley, 67 Ill. App. 3d at

877.

For the reasons stated, we conclude that the trial court erred

in dismissing count IV of the complaint, Imperial=s action for

commercial disparagement, and we reverse its judgment in that

regard.

Finally, we address Cosmo=s argument that count V, the

consumer fraud claim, fails to state a cause of action because it

contains no allegation that Imperial was in anyway deceived by its

ad. As Cosmo correctly asserts, in Shannon v. Boise Cascade

Corp., 208 Ill. 2d 517, 525, 805 N.E.2d 213 (2004), our supreme

court held that, since the deceptive advertising at issue did not

deceive the plaintiff, no claim under the Consumer Fraud Act could

be maintained. See also Oliveira v. Amoco Oil Co., 201 Ill. 2d

134, 155, 776 N.E.2d 151 (2002). However, the cases upon which

Cosmo relies involved actions by, or on behalf of, consumers

23 1-05-2744

against an entity that was accused of deceptive advertising.

Shannon, 208 Ill. 2d at 520; Oliveira, 201 Ill. 2d at 137; see also

County of Cook v. Philip Morris, Inc., 353 Ill. App. 3d 55, 57, 817

N.E.2d 1039 (2004). This case is readily distinguishable as it

involves an action by a business whose goods were disparaged.

Section 10a of the Consumer Fraud Act creates a private cause

of action in favor of any natural person or corporation (see 815

ILCS 505/1(c) (West 2004)) who suffers actual damages as a result

of a violation of the act. 815 ILCS 505/10a (West 2004). Section

2 provides that the act is violated by the use of any practice

described in section 2 of the Uniform Deceptive Trade Practices

Act. 815 ILCS 505/2 (West 2004). One of the practices described

in section 2 of the Uniform Deceptive Trade Practices Act is

"disparag[ing] the goods, services, or business of another by false

or misleading representation of fact." 815 ILCS 510/2(8) (West

2004). Imperial alleged such a practice on the part of Cosmo and

damages suffered as a result. As the plaintiffs correctly argue,

nothing in the Consumer Fraud Act requires that a competitor-

plaintiff be deceived by the false representation. Causation

necessary to support an action under the Consumer Fraud Act in such

circumstances is established by pleading and proving that the false

representation was addressed to the market and caused injury to the

competitor-plaintiff. See Empire Home Services, Inc. v. Carpet

24 1-05-2744

America, Inc., 274 Ill. App. 3d 666, 669-70, 653 N.E.2d 852 (1995);

Downers Grove Volkswagen, Inc. v. Wigglesworth Imports, Inc., 190

Ill. App. 3d 524, 533-34, 546 N.E.2d 33 (1989). We reject Cosmo=s

argument that, to state a cause of action under the Consumer Fraud

Act, Imperial was required to allege that it relied upon the ad.

For the reasons stated, we reverse the trial court=s dismissal of

count V of the plaintiffs= complaint.

In summary, we: affirm the dismissal of count I; affirm the

dismissal of count II as to the plaintiffs Cyril Rosengarten and

Paul Rosengarten; reverse the dismissal of counts III, IV, and V;

reverse the dismissal of count II as to the plaintiff Imperial; and

remand this cause to the circuit court for further proceedings.

Affirmed in part, reversed in part and remanded.

KARNEZIS and ERICKSON, JJ., concur.