Opinion
2-19-0130
02-22-2022
CE DESIGN LTD., Individually and on behalf of a certified class, as assignees, Plaintiff-Appellee and Cross-Appellant, v. FRANKLIN EDISON CORPORATION, HOMEGROWN ADVERTISING, INC., MONTY LOREE, and LISA LOREE, Defendants Saskatchewan Mutual Insurance Company, Third-Party Respondent, Third-Party Appellant and Cross-Appellee
This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).
Appeal from the Circuit Court of Lake County. No. 04-L-1048 Honorable Jorge L. Ortiz Judge, Presiding.
HUTCHINSON, JUSTICE delivered the judgment of the court. Justices Schostok and Birkett concurred in the judgment.
ORDER
HUTCHINSON, JUSTICE
¶ 1 Held: The circuit court did not err in denying third-party respondent's petition for relief from judgment under section 2-1401 of the Code of Civil Procedure.
¶ 2 Following the circuit court's granting summary disposition in favor of plaintiff, CE Design LTD (CED), third-party respondent, Saskatchewan Mutual Insurance Company (SMI), appeals. SMI contends that the court erred in finding for CED, and in denying SMI's petition for relief from judgment under section 2-1401 of the Code of Civil Procedure (the Code) (735 ILCS 5/2-1401 (West 2008)). CED cross-appeals, arguing the court made procedural errors throughout the course of litigation and should have found in its favor much earlier in the litigation process. We affirm the circuit court's decision denying SMI's section 2-1401 petition and dismiss CED's cross-appeal as moot.
¶ 3 I. BACKGROUND
¶ 4 This case, a post-judgment satellite to a class-action lawsuit that has spanned some 15 years of litigation, has generated a common law record more than 18, 000 pages, or one of the largest records in this court's collective memory. Despite the sheer volume of the common law record however, the parties have supplied us with no transcripts or alternative reports of proceedings from the circuit court, and no statement of agreed facts (see Ill. S.Ct. R. 323(a), (c), (d) (eff. July 1, 2017)). Those transcripts or other reports might have shed light on matters that are otherwise unclear to us, such as why the circuit court repeatedly granted the parties leave to file multiple responsive pleadings and sur-replies (some of which contradicted their earlier respective post-judgment filings, and fail to actually respond to the points made in the opposing parties' motion), or why exactly the parties and the circuit court bifurcated consideration of two groups of SMI's potential coverage defenses-namely, the first 21 defenses labeled "a" through "u," and the final two defenses labeled "v" and "w."
¶ 5 These shortcomings do not seriously endanger our ability to review the limited issues that are properly before us, but the lack of transcripts and the parties' shared habits of talking cross-purposes, returning to already-resolved matters, citing to boilerplate without explaining its application, filing documents well in excess of page limits (without first obtaining leave to do so), and citing to entire pleadings and exhibits without providing pinpoint cites, needlessly complicated our review. Courts are entitled to have issues clearly defined and presented for our careful consideration. See In re Application of Skidmore, 2018 IL App (2d) 170369, ¶ 20. With that in mind, we turn to the facts of this case.
¶ 6 In December 2004 CED, an Illinois company with a long history of litigating junk-fax cases (see e.g., CE Design Ltd. v. Ernida, LLC, 2017 IL App (1st) 161129-U; CE Design Ltd. v. HealthCraft Products, Inc., 2017 IL App (1st) 143000; CE Design Ltd. v. Continental Cas. Co., 2016 IL App (2d) 150530-U; CE Design Ltd. v. C&T Pizza, Inc., 2015 IL App (1st) 131465; CE Design Ltd. v. Speedway Crane, LLC, 2015 IL App (1st) 132572; CE Design, Ltd. v. Mortgage Exchange, Inc., 375 Ill.App.3d 379 (2007)), filed a three-count class action suit against Franklin Edison Corporation, a Florida company. The suit alleged that Franklin Edison sent an unsolicited one-page fax, advertising a two-day seminar on electrical power, during a four-day cruise from Miami to the Bahamas, to CED and thousands of other recipients in violation of the Telephone Consumer Protection Act (TCPA) (42 U.S.C. § 227 (2002)), the Illinois Consumer Fraud and Deceptive Practices Act, (815 ILCS 505/1 et seq. (West 2002)) and an Illinois criminal statute prohibiting such behavior (720 ILCS 5/26-3(b) (West 2002)). The complaint also contained a common law conversion claim, but the primary basis for the plaintiffs' claims was the TCPA. In May 2005 CED filed an amended complaint which also impleaded the same claims against Homegrown Advertising, Inc. (Homegrown), and its principals, Monty and Lisa Loree.
¶ 7 Homegrown is a Canadian company, based in Regina, Saskatchewan, which specializes in marketing and advertising. At all times relevant, Homegrown had a commercial insurance policy through SMI.
¶ 8 Homegrown was served with the complaint in May 2005 but did not contact SMI regarding the suit until May 2006. Shortly thereafter, an SMI claims adjuster sent a letter to Homegrown disclaiming all coverage under an exclusion for intentional acts. The letter further noted that because there was "no coverage, there [wa]s no duty to defend." Subsequently, Homegrown negotiated with CED to settle the suit, and to assign its rights under SMI's insurance policy to CED. In other words, the judgment could only be satisfied by SMI's insurance policy.
¶ 9 On November 28, 2006, the circuit court entered an order certifying the class and preliminarily approving the class-action settlement. Then, on February 15, 2007, the court approved the settlement agreement and entered a $5 million judgment against Homegrown to be satisfied by SMI.
¶ 10 On March 20, 2007, CED filed a third-party citation to discover assets pursuant to section 2-1402 of the Code (735 ILCS 5/2-1402 (West 2006)). The citation named SMI as the entity receiving the citation, care of its vice president, R.J. Wotherspoon, and contained the "return or appear date" of April 26, 2007. SMI contacted its local Canadian attorney, Rod Rath, who sent a letter to the circuit court. The letter, dated April 10, 2007, stated:
"When this claim was presented to our client, coverage was denied. The insurance coverage offered by [SMI] relates to loss or damage caused by 'accident'. Since the complaint appears to have alleged intentional conduct, [Homegrown] were advised that the claim did not fall within coverage. We trust this is sufficient for your purposes."
¶ 11 At the hearing on CED's citation to discover assets, SMI did not appear and CED filed a motion for turnover. The notice for the turnover motion was again directed to SMI, care of R.J. Wotherspoon. On May 3, 2007, the court held a hearing on the motion for turnover and ordered SMI to pay $5 million in principal and $94,931.50 in interest for the judgment against it.
¶ 12 CED attempted to register the May 3 judgment in October 2007 by filing a motion before the Queen's Bench for Saskatchewan. The Queen's Bench denied the motion because SMI had not received any notice of the request for judgment against it. Subsequently, CED received leave from the circuit court to file a second citation to discover assets in December 2007. On January 25, 2008, SMI's Illinois counsel filed an appearance and a motion to dismiss the citation to discover assets for lack of personal jurisdiction (735 ILCS 5/2-301 (West 2008)) as well as a petition for relief from judgment pursuant to section 2-1401 of the Code (735 ILCS 5/2-1401 (West 2008)). In April 2010 the circuit court found that it did not have personal jurisdiction over SMI and dismissed the December 2007 citation. In January 2011, the court granted SMI's section 2-1401 petition and vacated the May 3, 2007, judgment against SMI for lack of personal jurisdiction.
¶ 13 CED appealed and we reversed the circuit court's order dismissing the citation. CE Design LTD. v. Homegrown Advertising, Inc., No. 2-10-0399 (2011) (unpublished order under Illinois Supreme Court Rule 23). We determined that Rath's April 2007 letter to the court constituted a responsive pleading under section 2-301(a-5) of the Code (735 ILCS 5/2-301(a-5) (West 2008)), which in turn waived SMI's objection to personal jurisdiction. The Illinois Supreme Court denied SMI's petition for leave to appeal. CE Design LTD. v. Homegrown Advertising, Inc., No. 112982 (Jan. 30, 2013).
¶ 14 After the case was remanded, on July 18, 2013, the circuit court granted CED's motion to reinstate the May 2007 judgment against SMI and gave SMI leave to file a new section 2-1401 petition against the reinstated judgment. SMI filed a section 2-1401 petition in August 2013, and an amended section 2-1401 petition in November 2013. The amended petition alleged that SMI had 21 meritorious coverage defenses-labeled "a" through "u"-that would have prevented entry of the judgment against it.
¶ 15 CED filed a motion to dismiss the amended supplemental petition, arguing, in part, that it was untimely. The circuit court denied CED's motion, finding that the amended supplemental petition related back to the original timely filed (April 2009) section 2-1401 petition. CED subsequently filed its answer to and affirmative defenses for the amended supplemental petition. Shortly thereafter, both parties submitted motions for judgment on the pleadings. SMI based its motion on Canadian law while CED's motion was predicated on Illinois law.
¶ 16 On May 12, 2015, the circuit court denied SMI's motion because "SMI had the burden to prove that there is an outcome-determinative conflict of law between Illinois and Saskatchewan and failed to do so." The court reasoned that "international law is a question that must be pled and proved, requiring expert testimony. SMI did not do so. Therefore, Illinois law governs." CED's motion was granted in part and denied in part. The court ultimately found, "[u]nder Illinois law, judgment is entered in favor of [CED] with respect to all defenses except *** SMI's defenses based on the reasonableness of the underlying settlement and whether [CED] may recover in excess of policy limits." Thus, the court disposed of SMI's coverage defenses "a" through "u."
¶ 17 On July 15, 2015, SMI filed a motion to reconsider the May 12 order arguing, inter alia, that the court erred in determining that Illinois law applied and attached a 33-page affidavit from M. Kim Anderson, a Saskatchewanian attorney, averring that under Saskatchewan law and the particular facts of the case, SMI had no duty to defend or indemnify Homegrown. The motion to reconsider was denied.
¶ 18 On November 20, 2015, CED filed a motion for summary judgment pursuant to section 2-1005 of the Code (735 ILCS 5/2-1005 (West 2018)) on SMI's "reasonableness" defense, which asserted that the underlying settlement agreement between CED and Homegrown was reasonable under the analysis developed by our supreme court in Guillen ex rel. Guillen v. Potomac Insurance Co. of Illinois, 203 Ill.2d 141 (2003). Further, CED argued that SMI never pled "unreasonableness" as a defense, and thus the argument was waived.
¶ 19 On April 17, 2017, SMI filed a motion for summary judgment on its amended supplemental petition, which argued that, under Guillen, SMI had a meritorious defense because the settlement was unreasonable. On June 15, 2017, CED filed a cross-motion for summary judgment. The circuit court denied both motions on August 10, 2017, but the written order does not articulate its reasoning. This court was not provided with a transcript or report of proceedings that may have elucidated the trial court's specific findings, if any. On October 20, 2017, SMI filed its second amended supplemental petition with leave of court, which included the previously pleaded 21 coverage defenses, "a" through "u," and two additional defenses, "v" and "w." Under defense "v," SMI argued that the settlement entered into between CED and Homegrown was not reasonable, was collusive in nature, and was contrary to the terms of SMI's policy. And under defense "w," SMI asserted that CED cannot recover more than the limits of the SMI policy.
¶ 20 CED filed a combined motion to strike SMI's second amended supplemental petition for violating the court's order granting leave, and combined motions to dismiss under sections 2-615 (735 ILCS 5/2-615 (West 2016)) and 2-619 (735 ILCS 5/2-619 (West 2016)) of the Code. On November 28, 2017, the circuit court entered an order, which in pertinent part read:
"3. The 2-615 motion is granted as to defense 'v' (reasonableness) and denied as to defense 'w,' [recovery was more than the limits of the policy] and the Court notes that its earlier rulings on defenses [1-21] stand ***;
4. The Court defers ruling on the issues raised under 2-619 (in anticipation of an amended petition and further motion practice; the parties' positions on those questions, and applications of the mend-the-hold doctrine, are preserved for further argument)***."
¶ 21 SMI filed its final amended supplemental petition on January 18, 2018. The final petition was similar to its immediate predecessor, albeit with more detail. SMI also filed a second motion to reconsider the May 12, 2015, order, again arguing that Saskatchewan law should be applied. CED filed a motion to dismiss SMI's January 2018 amended supplemental petition.
¶ 22 On June 5, 2018, the circuit court issued an 18-page memorandum opinion and order denying both SMI's motion to reconsider and CED's motion to dismiss. Then, on July 17, 2018, the circuit court entered an agreed order, which stated in pertinent part:
"[T]he parties have agreed to submit this matter to the Court at this time for summary disposition of the [final amended supplemental] [p] etition. The parties will focus only on those matters which were not resolved by the Court's earlier Orders *** the parties' submissions will address only issues related to the newly[ ]pleaded defenses 'v' and 'w' alleged in SMI's [final amended supplemental] [p]etition."
¶ 23 Pursuant to the July 17, 2018, order, both parties filed written motions for summary judgment in accordance with section 2-1005 of the Code (735 ILCS 5/2-1005 (West 2018)) about the remaining two defenses in SMI's final amended supplemental petition.
¶ 24 On January 25, 2019, after reviewing the parties' submissions, the circuit court issued a 37-page memorandum opinion and order. The court found that the settlement was reasonable under Guillen, and that the settlement was not in excess of SMI's policy's limits. Put differently, the court found that neither defense "v" nor defense "w" were meritorious, and they could not suffice as a basis for vacating the judgment entered against SMI. Accordingly, the court granted summary judgment in favor of CED and against SMI. SMI timely appealed and CED filed a timely notice of cross-appeal.
¶ 25 II. ANALYSIS
¶ 26 SMI contends that the circuit court should have granted SMI's motion for summary judgment on its section 2-1401 petition and reopened the $5 million judgment against it. CED's response and cross-appeal contend that the circuit court properly granted summary judgment in CED's favor on SMI's section 2-1401 petition, and further asserts that the circuit court should have granted judgment in CED's favor sooner. We will address SMI's appeal first.
¶ 27 To be entitled to relief from judgment under section 2-1401, a petitioner must establish (1) the existence of a meritorious defense, (2) due diligence in presenting this defense, and (3) due diligence in filing the section 2-1401 petition. Warren County Soil and Water Conservation Dist. v. Walters, 2015 IL 117783, ¶ 51 (citing Smith v. Airoom, 114 Ill.2d 209, 221 (1986)). If, like the trial court, we determine that neither defense was meritorious, then we need not address whether SMI exercised due diligence in presenting those defenses. See Rockford Financial Systems, Inc. v. Borgetti, 403 Ill.App.3d 321, 327 (2010). As the parties conducted extensive discovery, and there were no factual issues for the circuit court to resolve, the issue of a meritorious defense presents a question of law, which we review de novo. Guillen ex rel. Guillen v. Potomac Insurance Co. of Illinois, 203 Ill.2d 141, 149 (2003); cf., e.g., Central Mutual Insurance Co. v. Tracy's Treasures, Inc., 2014 IL App (1st) 123339, ¶ 85 (where open factual questions precluded summary judgment on reasonableness of underlying settlement).
¶ 28 On appeal, although SMI advances a number of arguments on a wide range of issues, we need not consider them at length. SMI first seeks to challenge the circuit court's rulings on its coverage defenses, "a" through "u," all of which relate to the terms of the underlying policy. The circuit court entered judgment in CED's favor, and against SMI, on each of these defenses based on either principles of estoppel or the "mend-the-hold" doctrine. "The phrase, 'mend the hold,' is a *** wrestling term meaning to get a better grip (hold) on your opponent. [Citation.]" William J. Templeman Co. v. U.S. Fidelity and Guaranty Co., 317 Ill.App.3d 764, 772 (2000). The mend-the-hold doctrine prevents an insurer from denying coverage on one ground, and then changing its position to deny coverage on another ground after it has been sued. See generally Smith v. Union Automobile Indemnity Co., 323 Ill.App.3d 741, 745 (2001).
¶ 29 SMI asserts that it would be unfair to apply this "archaic" doctrine to bar it from presenting some or all of its coverage defenses. Although we recently noted that the doctrine has been applied in Illinois for over a century (First Bank of Highland Park v. Sklarov, 2019 IL App (2d) 190210, ¶ 14; see also County of Schuyler v. Missouri Bridge & Iron Co., 256 Ill. 348, 353 (1912)), we need not determine whether it applies to any particular coverage defense in "a" through "u." Rather, we determine that all of SMI's coverage defenses were barred.
¶ 30 In Illinois
" [i] t is well settled that when an insured tenders defense of a claim to its insurer and the insurer believes the claim is not covered by the insurance policy, it must either (1) defend in the underlying lawsuit under reservation of rights or (2) seek a declaratory judgment that no coverage exists under the terms of the policy. [Citation.] Where the insurer fails to take either of those two actions and is later found to have wrongfully denied coverage, the insurer is estopped from later asserting any policy defenses to coverage, even if those defenses may have been successful in the absence of the breach. [Citation.] (Emphasis added.) It is an extraordinary remedy but warranted in light of the fact that the insurer's duty to defend is 'so fundamental an obligation that a breach of that duty constitutes a repudiation of the contract.' [Citation]." Rogers Cartage Company, 2018 IL App (5th) 160098, ¶ 52.
Our supreme court specifically held that an insurer's late-notice defense is barred by estoppel. Employers Insurance of Wausau v. Ehlco Liquidating Trust, 186 Ill.2d 127, 154-55 (1999). ¶ 31 The record reflects that although Homegrown waited for nearly a year to tender CED's suit to SMI, SMI received notice of the suit on May 15, 2006, and disclaimed coverage on June 23, 2006. This was six months before the parties sought and received preliminary approval for a settlement in a publicly accessible court order, and roughly nine months before the court entered judgment on February 15, 2007, on the settlement itself. In this state, it is axiomatic that actual notice of a claim against the insured that is even potentially covered by the policy triggers an insurer's duty to defend. Cincinnati Companies v. West American Ins. Co., 183 Ill.2d 317, 326 (1998); Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90, 108 (1992). So, when SMI disclaimed coverage altogether, without defending Homegrown under a reservation of rights and without seeking a declaratory judgment, SMI waived its right to contest coverage. See Ehlco, 186 Ill.2d at 150-52. We therefore affirm the circuit court's judgment on coverage defenses "a" through "u," as each defense related to the policy, or asserted late notice of the suit, and was barred by estoppel.
¶ 32 For this reason, we also reject SMI's reliance on Central Mutual Insurance, 2014 IL App (1st) 123339, in attempting to contest the settlement. In that case, the insurer did not breach its duty to defend; it filed a declaratory judgment action to preserve its coverage claims. Id. ¶ 52. Here, SMI breached its duty to defend Homegrown, so, it waived its coverage defenses "a" through "u." See Rogers Cartage Company v. Travelers Indemnity Company, 2018 IL App (5th) 160098, ¶ 85 (citing Central Mutual Insurance, 2014 IL App (1st) 123339, ¶ 54).
¶ 33 The next question is whether defense "v" was meritorious. SMI asserted in defense "v" that the settlement between CED and Homegrown was unreasonable and collusive. We agree with the circuit court that the settlement was not unreasonable and not collusive.
¶ 34 The two-part test for a settlement's reasonableness was set forth by our supreme court in Guillen, 203 Ill.2d 141. We first ask whether, (1) the insured's decision to settle, under the totality of the circumstances, conformed to "the standard of a prudent uninsured" (emphasis, citation, and internal quotation marks omitted) (id. at 163)-that is, we ask whether an uninsured person reasonably would have accepted the same settlement as if they were bearing their own expenses. If so, we then ask (2) "what a reasonably prudent person in the position of the [insured] would have settled for" (internal quotation marks and citation omitted) when faced with the merits of the plaintiffs' claims. Id.
¶ 35 Both inquiries require that we assess the facts bearing on liability and damages under the plaintiffs' claim, as well as the risks of going to trial. Id. at 163-64. The burden of proving a settlement's reasonableness is borne first by the plaintiff as the party who agreed to the settlement (in this case, CED) and may be rebutted by the insurer (SMI) as the party attempting to show the settlement was not reasonable. See id. The test "for the reasonableness of the decision to settle, as well as the amount of the settlement, is objective rather than subjective." Daily v. Greensfelder, Hemker & Gale, P.C., 2018 IL App (5th) 150384, ¶ 30.
¶ 36 CED asserts that the $5 million settlement was the reasonable result of an arm's-length negotiation between plaintiffs' class counsel and Homegrown's counsel. CED further noted that the TCPA provides for statutory damages of $500 per violation to compensate a recipient of an unsolicited fax for the invasion of privacy, inconvenience, and loss of use of the recipient's fax machine, toner, and paper. See 47 U.S.C. § 227(b)(3)(B). Courts also have discretion under the TCPA to award treble damages, or $1,500, for each willful or knowing violation, with no maximum cap. See 47 U.S.C. § 227(b) (3) (C). During discovery, CED learned that Franklin Edison and Homegrown's unsolicited message was received by nearly 22, 976 fax recipients. (We round to 23, 000 for the reader's convenience.) So, at $500 per fax, Homegrown's potential liability was $11.5 million. And at $1,500 per fax, it was $34.5 million.
¶ 37 Homegrown's initial settlement offer was for treble damages for a single fax, or $1,500, while CED's initial settlement demand was $11.5 million. Subsequently, Homegrown's counsel, in the circuit court's words, "successfully negotiated" the settlement to a much lower figure: $5 million.
¶ 38 The circuit court also found that the deposition testimony of the attorneys who were part of the settlement negotiations further indicated that the settlement was the product of good-faith bargaining and arm's-length negotiation. Thus, as the circuit court noted, "the resulting settlement figure was a fraction of [Homegrown's] potential liability under the TCPA if further litigation resulted in an adverse judgment."
¶ 39 The circuit court also considered several putative defenses that SMI asserted Homegrown should have raised. The circuit court considered these arguments at length; however, we need only discuss them briefly as none amounted to "an abdication of a true defense" (Central Mutual Insurance, 2014 IL App (1st) 123339, ¶ 76) by Homegrown.
¶ 40 To prevail on a TCPA claim, the plaintiff must show that (1) defendant used a fax machine or other device to send one or more faxes to plaintiff's fax machine; (2) the faxes contained material advertising the" 'commercial availability [or quality] of any property, goods, or services' "; and (3) plaintiff did not give prior permission or express invitation for defendant to send the fax. Loncarevic and Associates, Inc. v. Stanley Foam Corporation, 2017 IL App (1st) 150690, ¶ 28 (quoting Saf-T-Gard International, Inc. v. Wagener Equities, Inc., 251 F.R.D. 312, 314 (N.D. Ill. 2008). To satisfy the first element, the fax must have been sent by the defendant or on behalf of the defendant. Palm Beach Golf Center-Boca, Inc. v. Sarris, 781 F.3d 1245, 1254 (11th Cir. 2015).
¶ 41 One of SMI's suggested defenses was that Homegrown should have denied liability on the basis that it sent the faxes on behalf of Franklin Edison. But there was no point in disputing whether Homegrown had sent the faxes; evidence established that it did, and even though it sent the faxes on behalf of Franklin Edison, an agent sender is just as liable under the TCPA as its principal. See, e.g., Loncarevic, 2017 IL App (1st) 150690, ¶ 28 (noting that TCPA liability attaches to both the sender and the party on behalf of whom the fax was sent).
¶ 42 SMI also asserted that Illinois lacked personal jurisdiction over Homegrown and that Homegrown, as a non-resident corporation, waived its defense that it did not have sufficient minimum contacts in Illinois to establish long-arm jurisdiction. This assertion, too, was meritless. CED conducted jurisdictional discovery and evidence established that Homegrown sold life insurance leads in Illinois and authorized the sending of faxes on behalf of its clients in Illinois. CED thus established that Homegrown's principals "purposefully availed themselves of the privilege of conducting business in Illinois." Aasonn, LLC v. Delaney, 2011 IL App (2d) 101125, ¶ 24. The argument was not remotely colorable, and like the circuit court, we note that a settlement reached after discovery indicates that the settlement was not a mere subterfuge accomplished "at virtually the earliest possible point" in the litigation. Cf. Central Mutual Insurance, 2014 IL App (1st) 123339, ¶ 84.
¶ 43 SMI also suggested that Homegrown should have asserted that CED consented to receiving the subject fax by voluntarily publishing its fax number, and that the fax was related to CED's business, namely civil engineering. The circuit court here noted what it felt was a split in authority between two First District decisions-CE Design, Ltd. v. C & T Pizza, Inc, 2015 IL App (1st) 131465, and CE Design, Ltd. v. Speedway Crane, LLC, 2015 IL App (1st) 132572-on the issue of whether the voluntary publication of a company's fax number in a "Blue Book" to be circulated amongst similar businesses amounted to consent to receive faxed solicitations, provided they were within that same industry.
¶ 44 Although there is tension between those two decisions, we need not weigh in on it for two reasons. First, as CED pointed out, Homegrown did not use any sort of Blue Book or specialized industry publication. Rather, Franklin Edison's principal, Richard Lopez, testified that he purchased an "annual CD-ROM" from Yellow Pages, for "probably, like, over $100," and "put a database together" of "[contractors, electrical contractors" so he could "do seminars *** for continuing education." Lopez supplied the list to Homegrown, which then sent the faxes, so, the First District's split is irrelevant. Second, SMI fails to develop this issue in its brief and cites no authority to support it." 'A failure to cite relevant authority violates [Supreme Court] Rule 341 and can cause a party to forfeit consideration of the issue.'" Gakuba v. Kurtz, 2015 IL App (2d) 140252, ¶ 19 (quoting Kic v. Bianucci, 2011 IL App (1st) 100622, ¶ 23). We will honor SMI's forfeiture and move on.
¶ 45 SMI next asserted that the power seminar advertisements were not truly "advertisements" under section 227(b)(1)(c) of the TCPA (47 U.S.C. § 227(b)(1)(c)). This assertion, too, was meritless. The faxes plainly advertised a paid-for service in the form of a 14-hour informational seminar on a Carnival cruise ship. This was not some free amenity or a charitable endeavor. The cost, as advertised, was $590 per person for a double occupancy inside cabin, a $630 per person for an outside cabin. (Group discounts were also available.) Like the circuit court, we find CED's citation to FCC regulations, which predate the settlement agreement, to be persuasive. They note that the FCC "conclude[d] that facsimile messages that promote goods or services even at no cost, such as free magazine subscriptions, catalogs, or free consultations or seminars, are unsolicited advertisements under the TCPA's definition. In many instances, 'free' seminars serve as a pretext to advertise commercial products and services." Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991; Junk Fax Prevention Act of 2005, 71 FR 25967-01 (F.C.C. May 3, 2006). Here, the seminar was not free, and neither was the cruise. Therefore, the fax was an advertisement, and like the preceding putative defense, SMI has forfeited this issue by not developing it in their brief or citing pertinent authority. See Gakuba, 2015 IL App (2d) 140252, ¶ 19.
¶ 46 The remainder of SMI's suggested defenses for Homegrown can be dealt with summarily. CED did not have to plead a common-law conversion claim or de minimis damages for the recipient fax machines; the TCPA established Homegrown's liability for damages. The notion that Homegrown should have pursued a third-party contribution claim against Franklin Edison and resisted class certification likewise would not have been successful. Both the sending and the receipt of the seminar faxes was unquestionably confirmed by evidence in discovery, and as noted, liability could have attached to both Homegrown and Franklin Edison under the TCPA. See Loncarevic, 2017 IL App (1st) 150690, ¶ 28.
¶ 47 Likewise, it would have been fruitless for Homegrown to object to attorney fees in the customary amount of one-third of the settlement fund. SMI merely suggested, without supporting data, that a reduced percentage or lodestar calculation would have been "more equitable"-but without data from comparable litigation or settlement agreements, or even data from the underlying litigation in this case in the form of class counsel's time records, it is impossible to make such a determination. As we explained in Shaun Fauley, Sabon, Inc. v. Metropolitan Life Ins. Co., 2016 IL App (2d) 150236, it is the appellant's burden to supply that information (id. ¶ 60 (citing Foutch v. O'Bryant, 99 Ill.2d 389, 391-92 (1984))-and it may often be the case that a lodestar determination is not materially different from the standard one-third award, which further takes into account the contingent nature and the upfront costs class counsel often bears in bringing class-action litigation. See Shaun Fauley, Sabon, Inc., 2016 IL App (2d) 150236, ¶¶ 56-61.
¶ 48 Similarly, SMI also objects to a cy pres provision to distribute unclaimed funds in the underlying settlement agreement, but the objection is of no moment. A cy pres provision in a settlement agreement is not a bug, but a feature. SMI fails to consider that since 2008, a cy pres award of unclaimed common funds to eligible non-profit charitable organizations is mandatory in Illinois. See 735 ILCS 5/2-807(a)-(c) (West 2008). Although the original settlement predates the statute by nearly a year, it is difficult to see how the inclusion of a cy pres distribution before it became mandatory was unreasonable or against public policy. In short, SMI simply has not demonstrated how Homegrown plausibly could have challenged the award of class counsel's attorney fees, or the cy pres distribution of unclaimed funds, as an abuse of the settlement court's discretion. See generally Shaun Fauley, Sabon, Inc., 2016 IL App (2d) 150236, ¶ 56 (citing Brundidge v. Glendale Federal Bank, F.S.B., 168 Ill.2d 235, 243-44 (1995)).
¶ 49 We return to the reasonableness of the amount of the award. Neither party has supplied us with any empirical data on the frequency (or scarcity) of treble damages awards under the TCPA. SMI asserts these amounts are excessive-which is to say, "punitive"-especially in comparison to the cost of a single sheet of paper, ink, and the opportunity cost of a briefly commandeered fax machine. However, our supreme court has noted that the award of any possible penalty under the TCPA "is but one part of the regulatory scheme, intended as a supplemental aid to enforcement rather than as a punitive measure. [Citation.]" (Internal quotation marks omitted.) Standard Mutual Insurance Co. v. Lay, 2013 IL 114617, ¶ 33; cf. Central Mutual Insurance Co., 2014 IL App (1st) 123339, ¶ 66 ("to the extent the statute provides for the trebling of damages for willful violations, it clearly imposes a penalty"). In any event, the question is not whether we think $1,500-or even $500-is appropriate or even excessive compensation for the inconvenience of an unwanted fax, nor are we in a position to evaluate the underlying settlement from that standpoint. It may well be that "the TCPA is the biggest cash cow in the history of American class action practice." Eric J. Troutmann, TCPA World (Feb. 2, 2022). But that is not our concern here. Our task is to evaluate the settlement at hand, under the relevant statutory authority, considering "the objective the legislature sought to accomplish and the evils it desired to remedy" (People v. Scharlau, 141 Ill.2d 180, 192 (1990))-nothing more. The responsibility for the wisdom or justice of legislation rests with the legislature (Henrich v. Libertyville High School, 186 Ill.2d 381, 394 (1998)), and so, the virtues of the TCPA are a matter for Congress, not us.
¶ 50 SMI also points out that only 304 of the nearly 23, 000 fax recipients submitted a claim form to the settlement fund. That is unsurprising. As one of our local federal district judges has noted, citing a well-known treatise on the matter, response rates in consumer class-action suits are typically below 10% of the identified class. See Henry v. Sears Roebuck & Co., 1999 WL 33496080, at *10 (N.D.Ill. 1999) (Leinenweber, J.) (citing 2 Newberg on Class Actions, Appendix 8-4, Tables of Response Rate Levels (3d ed. 1992)). In fact, the intervening years have seen a decrease in response rates: the authors report that three in 11 cases have claim rates below 5%, two of which were below 1%. 4 Newberg on Class Actions § 12:17 (5th ed. 2011) (2021 update).
¶ 51 As to the question of collusion, we likewise agree with the circuit court that the settlement was not designed" 'to injure the interests of" SMI as" 'an absent or nonparticipating party.' (Internal quotation marks omitted) Rogers Cartage Company v. Travelers Indemnity Company, 2018 IL App (5th) 160098, ¶ 78 (quoting Central Mutual Insurance, 2014 IL App (1st) 123339, ¶ 80). There is simply no evidence indicating that Homegrown was unreasonable during negotiations, misrepresented or concealed information critical to the settlement, abdicated or failed to consider viable defenses, or intended to injure SMI. See id. As our supreme court has said, "once a preliminary showing of good faith has been made by the settling parties, the party challenging the good faith of the settlement need prove the absence of good faith by a preponderance of the evidence." Johnson v. United Airlines, 203 Ill.2d 121, 132 (2003). We determine here that SMI has failed to carry that burden.
¶ 52 In sum, we reject SMI's assertions that the settlement agreement was unreasonable or collusive. A reasonably prudent uninsured person facing a potential $34.5 million suit, and an $11.5 million initial demand, for sending 23, 000 unsolicited faxes, and with no viable defense, would seriously consider a settlement for $5 million. Therefore, defense "v" asserting the settlement's unreasonableness, was not meritorious and did not warrant relief from the judgment under section 2-1401 of the Code.
¶ 53 With respect to defense "w"-that the settlement exceeded the policy's limits-SMI has forfeited this argument. SMI devotes a mere four sentences in its 49-page brief to this issue, one of which states as follows: "In denying CED's motions for judgment on the pleadings and first two motions for summary judgment on this issue, the [circuit] court ruled that SMI sufficiently pled a meritorious defense based on the [settlement amount exceeding the [p]olicy's limits." The brief then goes on to cite three of the circuit court's minute orders. In each of the orders SMI refers to, the circuit court denied CED's motion for summary judgment on the issues of both defenses "v" and "w." However, each of the cited minute orders denied CED's motion for summary judgment, an interlocutory ruling. See Pence v. Northeast Illinois Regional Commuter R.R. Corp., 398 Ill.App.3d 13, 16 (2010) (noting that a trial court may deny a motion for summary judgment and later change its position and grant the same motion). None of the cited minute orders reflect the trial court's judgment in favor of SMI's policy-limits defense. SMI's assertion to the contrary is a misrepresentation of the record and will not be entertained by this court. Furthermore, SMI's failure to develop this issue in its brief, or cite any authority for its position, results in this issue being forfeited. See O'Neil v. Illinois Workers' Compensation Commission, 2020 IL App (2d) 190427WC, ¶ 26. And forfeiture aside, the circuit court's rationale for rejecting SMI's policy limits argument was consistent with both precedent as well as the policy's plain language. See Bituminous Casualty Corp. v. Iles, 2013 IL App (5th) 120485, ¶ 20. Accordingly, defense "w" was not meritorious.
¶ 54 SMI also asks that we take judicial notice of the fact that Canadian courts have refused to enforce the underlying judgment against SMI, finding, inter alia, that CED failed to properly notify SMI of the suit under Canadian law. See Canada s CE Design Ltd. v. Saskatchewan Mutual Insurance Company, 2021 SKCA 14, ¶ 2 (CanLII) (stating that "it will be difficult for [CED] to enforce the Illinois judgment against SMI in this jurisdiction"). We can take notice of the fact, but it does not impact our analysis. We do not sit in judgment of Canadian courts or of our own nation's federal courts (see Saskatchewan Mutual Insurance Co. v. CE Design, Ltd., 865 F.3d 537 (7th Cir. 2017). Again, our task is to apply Illinois law in reviewing the judgment at hand, and under that law, we agree with the circuit court's conclusion that SMI failed to present a meritorious defense pursuant to section 2-1401 of the Code.
¶ 55 III. CONCLUSION
¶ 56 In sum, SMI's petition for relief from judgment was properly denied. We also dismiss CED's cross-appeal as moot, as it is duplicative of its general position that we should affirm. For the reasons stated we affirm the judgment of the circuit court of Lake County.
¶ 57 Affirmed; cross-appeal dismissed.