Wellington Homes, Inc. v. W. Dundee China Palace Rest., Inc.

2013 IL App (2d) 120740

984 N.E.2d 554

368 Ill.Dec. 608

WELLINGTON HOMES, INC., Individually and as the Representative of a Class of Similarly Situated Persons, Plaintiff–Appellee,

v.WEST DUNDEE CHINA PALACE RESTAURANT, INC., Ahmad Azmi, and Tehmina Azmi, Defendants–Appellants.

No. 2–12–0740.

Appellate Court of Illinois, Second District.

Feb. 4, 2013.

Rehearing Denied March 13, 2013.

Edward K. Grasse and Christopher D. Willis, Busse, Busse & Grasse, PC, Chicago, IL, for Appellants.

Brian J. Wanca, David M. Oppenheim, Anderson & Wanca, Rolling Meadows, James A. Bock, Robert M. Hatch, James M. Smith, Bock & Hatch, LLC, Chicago, IL, for Appellee.

OPINION

Justice ZENOFF delivered the judgment of the court, with opinion.

[368 Ill.Dec. 610]¶ 1 The federal Telephone Consumer Protection Act of 1991 (TCPA) (47 U.S.C. § 227 (2006)) prohibits, among other things, the use of “ any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C) (2006). In addition to permitting state attorneys general and the Federal Communications Commission to pursue civil actions in federal district court for violations of the statute (47 U.S.C. § 227(f)(1), (f)(2), (f)(3) (2006)), the TCPA permits individuals to bring private actions seeking statutory damages of $500 per violation of the statute, in either state court or federal district court (47 U.S.C. § 227(b)(3), (c)(5) (2006); Mims v. Arrow Financial Services, LLC, 565 U.S. ––––, ––––, 132 S.Ct. 740, 747, 181 L.Ed.2d 881 (2012)). Congress, which enacted the TCPA in 1991, previously had enacted a statute providing that, “[e]xcept as otherwise provided by law, a civil action arising under an Act of Congress enacted after [December 1, 1990,] may not be commenced later than 4 years after the cause of action accrues.” 28 U.S.C. § 1658(a) (2006). Relevant to this appeal, section 13–202 of the Illinois Code of Civil Procedure (Code) provides: “Actions * * * for a statutory penalty * * * shall be commenced within 2 years next after the cause of action accrued * * *.” 735 ILCS 5/13–202 (West 2006).

¶ 2 This interlocutory appeal pursuant to Illinois Supreme Court Rule 308 (eff. Feb. 26, 2010) involves two certified questions: (1) “Does Illinois' two-year limitations period for a statutory penalty * * * apply to TCPA claims brought in Illinois state courts seeking statutory damages pursuant to [section 227(b)(3) of the TCPA?]” and (2) “If not, what limitations period applies to TCPA claims brought in Illinois state courts?” We answer the first certified question in the negative. As to the second certified question, we conclude that the four-year federal catchall statute of limitations codified at 28 U.S.C. § 1658(a) applies to private TCPA claims filed in Illinois state courts.

¶ 3 BACKGROUND

¶ 4 On March 31, 2009, plaintiff, Wellington Homes, Inc., an Illinois corporation with its principal place of business in Lake County, filed in the circuit court of Lake County a class action complaint individually and on behalf of a class of individuals who, “[o]n or about May 16, 2006,” received an unsolicited one-page fax advertising China Palace, a restaurant located in West Dundee, Illinois, and owned by defendant, West Dundee China Palace Restaurant, Inc. Count I of the complaint alleged that the transmissions violated the TCPA and, pursuant to section 227(b)(3) of the TCPA, triggered statutory damages of $500 per transmission. Count II alleged common-law conversion. Count III alleged violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2006)). Plaintiff's third amended complaint, filed November 18, 2010, also named as defendants Ahmad Azmi and Tehmina Azmi, who allegedly were the “officers, directors, shareholders and control persons” of West Dundee China Palace Restaurant, Inc.

¶ 5 On January 14, 2011, the court certified a class consisting of all persons who received an unsolicited fax advertising China Palace in May 2006. By October 2011, defendants had not appeared, despite having being served. On October 11, 2011, on plaintiff's motion, the court entered summary judgment in favor of plaintiff and against defendants in the amount of $2,440,196. The court calculated the amount of the judgment based on 3,842 unsolicited fax transmissions at $500 per occurrence, plus prejudgment interest of $519,196. Shortly thereafter, defendants filed an appearance and, pursuant to section 2–1301(e) of the Code (735 ILCS 5/2–1301(e) (West 2010)), moved to vacate the October 11, 2011, order. Counsel for defendants stated in the motion that defendants' insurer had filed a declaratory judgment action seeking a declaration that it had no duty to defend against the instant litigation. However, the declaratory judgment action had been resolved with a finding that defendants' insurer did have a duty to defend. On January 26, 2012, the court granted defendants' motion to vacate and gave defendants 28 days to answer or otherwise plead.

¶ 6 Defendants timely filed a combined motion to dismiss plaintiff's third amended complaint pursuant to section 2–619.1 of the Code (735 ILCS 5/2–619.1 (West 2010)). Relevant to the issue raised on appeal, defendants sought dismissal of count I of the complaint pursuant to section 2–619(a)(5) of the Code (735 ILCS 5/2–619(a)(5) (West 2010)), because, defendants contended, plaintiff's TCPA claim was barred by Illinois's two-year statute of limitations for actions for statutory penalties. Plaintiff argued in response that its TCPA claim was subject to the four-year federal catchall statute of limitations codified at 28 U.S.C. § 1658(a).

¶ 7 On April 24, 2012, the trial court denied defendants' motion to dismiss. On June 28, 2012, the trial court entered an agreed order certifying the two questions set forth above for interlocutory appeal pursuant to Illinois Supreme Court Rule 308, and this court subsequently allowed the appeal.

¶ 8 ANALYSIS

¶ 9 Section 227(b)(3) of the TCPA, entitled “Private right of action,” provides:

“A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State—

(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation, (B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or

(C) both such actions.

If the court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph.” (Emphasis added.) 47 U.S.C. § 227(b)(3) (2006).

¶ 10 The proper interpretation of the statutory language “if otherwise permitted by the laws or rules of court of a State” has been the subject of extensive debate in both federal and state courts across the country. Until the United States Supreme Court resolved the issue in Mims, a split existed among the federal courts of appeals as to whether private TCPA claims could be brought in federal district court, or whether the statutory language meant that state courts had exclusive jurisdiction over such claims. Mims, 565 U.S. at ––––, 132 S.Ct. at 747. In Mims, the Supreme Court resolved the split by concluding that state and federal courts have concurrent jurisdiction over such actions. Mims, 565 U.S. at ––––, 132 S.Ct. at 747. Additionally, at least one state court has interpreted the statutory language to mean that individuals cannot bring private actions under the TCPA in state court unless the state “opts in” by passing legislation permitting such actions. The Chair King, Inc. v. GTE Mobilnet of Houston, Inc., 184 S.W.3d 707, 716 (Tex.2006).

¶ 11 In Italia Foods, Inc. v. Sun Tours, Inc., 2011 IL 110350, ––– Ill.Dec. ––––, ––– N.E.2d ––––, our supreme court addressed the issue of how to properly interpret the statutory language. The court outlined three possible approaches, including the “opt in” approach, the “opt out” approach, and the “acknowledgment” approach. Italia Foods, 2011 IL 110350, ¶¶ 20, 29, 35, ––– Ill.Dec. ––––, ––– N.E.2d ––––. The court rejected the “opt in” approach—adopted by the Texas Supreme Court ( The Chair King, 184 S.W.3d at 716)—because the approach “ ‘runs afoul’ ” of the supremacy clause of the United States Constitution (U.S. Const., art. VI, cl. 2). Italia Foods, 2011 IL 110350, ¶ 29, ––– Ill.Dec. ––––, ––– N.E.2d –––– (quoting Condon v. Office Depot, Inc., 855 So.2d 644, 647 (Fla.Dist.Ct.App.2003)). The court did not discuss the merits of the “opt out” approach, which would interpret the statutory language as permitting states to pass legislation that specifically would prohibit TCPA claims in state courts, because none of the parties argued for that approach. Italia Foods, 2011 IL 110350, ¶ 36, –––Ill.Dec. ––––, ––– N.E.2d ––––. Ultimately, the court adopted the “acknowledgment” approach, which interprets the statutory language “if otherwise permitted by the laws or rules of court of a State” as simply an acknowledgment of well-established supremacy clause jurisprudence. Italia Foods, 2011 IL 110350, ¶¶ 21, 25, ––– Ill.Dec. ––––, ––– N.E.2d ––––. The chosen approach “acknowledge[s] that states have the right to structure their own court systems; that neutral state laws and court rules concerning state court jurisdiction and procedure ¹ apply to TCPA claims; and that state courts are not obligated to change their procedural rules to accommodate TCPA claims.” Italia Foods, 2011 IL 110350, ¶ 20, –––Ill.Dec. ––––, ––– N.E.2d ––––.

¶ 12 With this background in place, we can now address the parties' arguments regarding which statute of limitations applies to TCPA claims brought in Illinois ...