Tag: civil conspiracy

Planting GPS Device On Car Not Enough for Invasion of Privacy Claim – IL Fed Court

Troeckler v. Zeiser, 2015 WL 1042187, a recent Southern District of Illinois case, examines this question adapted to a plaintiff’s intrusion on seclusion claim filed against her ex-husband – the defendant who, with some help, secretly affixed a GPS device (a “black box”) to the plaintiff’s car.

The defendant’s two principal acts giving rise to plaintiff’s suit were (1) installing the GPS device; and (2) repeatedly trying to log-in to the plaintiff’s personal email, computer and cell phone accounts.  Plaintiff sued for invasion of privacy/intrusion on seclusion (the “Intrusion Claim”) and conspiracy against the ex-husband and the people he hired to install the device and log in to plaintiff’s e-mail.

The defendant moved to dismiss all claims and the Court dismissed some claims and sustained others.

On the Intrusion Claim, the court noted that in Illinois, intrusion on seclusion is a species of the invasion of privacy tort.  To make out a valid invasion of privacy claim in Illinois, a plaintiff must demonstrate (1) an unauthorized intrusion or prying into the plaintiff’s seclusion; (2) an intrusion that is offensive or objectionable to a reasonable person, (3) the matter upon which the intrusion occurs is private; and (4) the intrusion causes anguish and suffering.

Element (3) – the intrusion involves something that is private – generates the most litigation.  Case examples of private matters include poking holes in a bathroom ceiling and installing hidden cameras in a doctor’s examination room.  Conversely, private facts contained in public records (name, address, SS #, e.g.) do not satisfy the privacy element.

The court looked to a New Jersey case for guidance as to whether installing a GPS device was actionable intrusion on seclusion.  The New Jersey court in Villanova v. Innovative Investigations, Inc., 21 A.3d 650 (N.J.App.Ct 2001) held that a defendant who surreptitiously placed a GPS monitor on her ex-husband’s car (to see if he was cheating on her) was not an invasion of privacy where there was no evidence the defendant drove his car into a private or secluded location.

Following the reasoning of the NJ case, the Troeckler court dismissed the plaintiff’s Intrusion Claim since the plaintiff failed to allege that she drove her car somewhere in which she had a reasonable expectation of privacy.

The plaintiff fared better on the Intrusion Claim as it pertained to the defendant hacking into her private email accounts.  The court found that for purposes of a motion to dismiss, the plaintiff did sufficiently allege a claim for invasion of privacy based solely on the e-mail allegations.

The plaintiff won and lost parts of her conspiracy claim against her ex and the various people he enlisted to help him install the GPS device and breach the plaintiff’s emails accounts.  Civil conspiracy requires concerted action and an underlying wrongful act.  Since the plaintiff failed to establish invasion of privacy on her Intrusion Claim, there was no predicate tort for the conspiracy.

The result was different with respect to the e-mail hacking though.  Since logging in to the plaintiff’s private accounts was a possible invasion of privacy (at least at the early pleading stage), the conspiracy claim survived as it related to the e-mail claims.

Afterwords:

1/A defendant’s unauthorized hacking into a plaintiff’s private email accounts can underlie an intrusion on seclusion/invasion of privacy claim;

2/ In the context of installing a monitoring device on someone’s car, the privacy tort is applied literally: if the plaintiff doesn’t show that she drove somewhere private or “secluded,” invasion of privacy isn’t the proper cause of action to assert.  With the benefit hindsight, the plaintiff probably should have pled a violation of the civil stalking statute based on the defendant’s GPS installation.

Illinois Fraud and Civil Conspiracy Basics – Illinois Law

In Al Maha Trading v. Darley, 2014 WL 2459674 (N.D. Ill. 2014), the plaintiff brought fraud and civil conspiracy claims in connection with a fire truck sales contract.  The plaintiff, a Saudi Arabia-based fire and rescue services company, ordered six fire trucks and related equipment from the  Illinois-based defendant.

The plaintiff claimed the defendant submitted inflated invoices for the trucks and paid nearly $500k in secret kickbacks to plaintiff’s agent.

The Northern District denied defendant’s motion to dismiss and summarized Illinois fraud and civil conspiracy law in the process.

Fraudulent Misrepresentation and Omission

The elements of common law fraud are: (1) a false statement of material fact, (2) knowledge that the statement was false, (3) intent to induce the defendant to act, (4) reliance on the statement by the plaintiff; and (5) damages.

Fraudulent concealment has the same elements with the additional requirement that the plaintiff show the defendant omitted or concealed a material fact when it had a duty to disclose it.

The Court held that plaintiff’s claims of inflated invoices and bribes to plaintiff’s agent sufficiently alleged a misrepresentation (the false invoices) and concealment (failure to alert plaintiff to defendant’s bribe payments).

The plaintiff also adequately pled that the defendant knew the invoices were false, that plaintiff relied on them and sustained monetary damages by paying several million dollars for the trucks.

Civil Conspiracy

The Court also sustained the plaintiff’s civil conspiracy claim.  The plaintiff alleged that the defendant and plaintiff’s Fire  Chief conspired to submit excessive equipment price lists to the plaintiff so that defendant could make truck sales and cover the secret kickbacks to plaintiff’s agent.

To plead and prove a civil conspiracy in Illinois, the plaintiff must demonstrate (1) a combination of two or more persons, (2) for the purpose of accomplishing either an unlawful purpose or a lawful purpose by unlawful means, (3) concerted action, and (4) an overt tortious or unlawful act to further the plan.  (*8).

The Court found that plaintiff alleged all of these elements.  The combination consisted of defendant and the plaintiff’s agent who received the secret kickbacks.  The unlawful means consisted of defendant submitting swollen invoices and paying secret bribes to the agent.

While a conspiracy claim will normally not lie against a corporation acting through one of its officers based on agency rules (because the corporation can only act through its agents), that rule doesn’t apply in cases where the corporate officer actively participates in the tortious conduct.

Here, the plaintiff’s agent actively participated in the kickback scheme – an unlawful act taken in connection with accomplishing a lawful purpose – the sale of the fire trucks.  (*9).  As a result, the Fire Chief’s actions in arranging the bribes were separate from his role as a corporate agent.

Consumer Fraud Act – Can A Foreign Corporation Sue Under the Act?

The Court answered “yes.”  To determine whether a non-resident can invoke protections of the Illinois consumer fraud statute, the Court considers (a) the parties’ residence, (b) location of the transaction and of plaintiff’s contacts with defendant, (d) the place where the contracts were executed and performed, (e) where the deceptive statements were made, and (f) where payments were sent to and from. (*10).

The Court held that the plaintiff alleged enough of a connection with Illinois to allow it to sue for consumer fraud.  Plaintiff’s contacts with Illinois were initiated by defendant (an Illinois corporation) and the subject matter of the contract – the fire trucks – originated in and were shipped to plaintiff from Illinois.  Taken together, these factors led the Court to uphold the consumer fraud claim despite plaintiff’s foreign company status. (*10).

Afterwords:

– a foreign company can utilize the Illinois consumer fraud statute against an Illinois company – at least at the pleading stage;

–  a corporate officer who participates in a fraudulent scheme can be personally liable on a civil conspiracy claim.

 

 

Illinois Court Tackles Civil Conspiracy and Consumer Fraud in Interior Design Spat

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Carol Studios, Inc. v. Hong, 2013 IL App 122293-U (1st Dist.2013) provides a good summary of Illinois pleading requirements for consumer fraud, civil conspiracy and unjust enrichment in a construction contract dispute involving commercial property.  

Facts:

Over a span of two years, the owners of a mixed-use property in Skokie, Illinois hired the plaintiff interior design firm along with the defendants architect and general contractor to develop the site.  

At some point the architect and general contractor defendants (the “Defendants”) developed a mutual disdain for the plaintiff and started excluding plaintiff from the development and disparaging the plaintiff’s design services to the owners. 

When the owners fired it, the plaintiff sued.  The trial court dismissed plaintiff’s claims and plaintiff appealed.

Held: Affirmed.

Rules/Reasoning:

To allege civil civil conspiracy in Illinois, the plaintiff must plead: (1) an agreement between two or more persons, (2) to participate in an unlawful act, or a lawful act in an unlawful manner, (3) injury caused by the unlawful overt act performed by one of the parties; and (4) overt act was done in furtherance of a common scheme.

The essence of plaintiff’s conspiracy claim was that the Defendants ganged up on and conspired to block plaintiff from the project by denigrating the plaintiff’s services and telling the owners that Defendants could perform plaintiff’s interior design work better and cheaper. 

The Court found there was nothing inherently unlawful about this: defendants were free to express their work partner preference and to not work with the plaintiff. ¶¶ 23-26.

The Court also rejected plaintiff’s Consumer Fraud Act (the “CFA”) count based on Defendants’ misrepresenting their qualifications to the owners and false statements that they could do plaintiff’s design work for less money. 

In Illinois, a consumer fraud plaintiff must plead: (1) a deceptive act or practice; (2) defendant’s intent to induce plaintiff’s reliance on the deceptive act/practice, (3) occurrence of the deception in trade or commerce, and (4) actual damages to the plaintiff caused by the deception.  ¶¶ 28-29.

The Court narrowly construed the CFA and dismissed plaintiff’s claim.  The Court found that while the CFA can at times apply to business-to-business transactions, a garden-variety breach of contract claim doesn’t equate to consumer fraud.  ¶ 30

 And since the plaintiff’s core claim was that the owners breached the interior design contract, defendants’ freeze-out efforts against plaintiff didn’t have a sufficient connection to consumer protection concerns to bring plaintiff’s claims within the CFA’s coverage.  ¶¶ 27-31

Take-aways:

This case reaffirms that a basic breach of contract claim can’t be transmuted into a statutory consumer fraud claim.  Otherwise, all breach of contract claims would give rise to companion consumer fraud counts. 

Carol Studios also shows how difficult it is to prove civil conspiracy when all that’s really involved is a business dispute among different commercial parties. 

Note: the plaintiff in Carol Studios was permitted to amend its tortious interference with contract claims.