Title: Price v. Philip Morris, Inc.

State: illinois

Issuer: Illinois Supreme Court

Document:

Docket No. 96236-Agenda 10-November 2004.
SHARON A. PRICE et al., Appellees, v. PHILIP MORRIS, INC., 							

Appellant.
Opinion filed December 15, 2005.
	JUSTICE GARMAN delivered the opinion of the court:
	After a bench trial in the circuit court of Madison County, the
court found defendant, Philip Morris USA, Inc. (PMUSA) (formerly
known as Philip Morris, Inc.), liable for fraud in violation of the
Consumer Fraud and Deceptive Business Practices Act (Consumer
Fraud Act) (815 ILCS 505/1 et seq. (West 1998)), and the Uniform
Deceptive Trade Practices Act (Deceptive Practices Act) (815 ILCS
510/1 et seq. (West 1998)), and awarded the estimated 1.14 million
members of the plaintiff class compensatory and punitive damages,
attorney fees, and prejudgment interest totaling $10.1 billion. We
ordered that PMUSA's appeal be taken directly to this court pursuant
to Supreme Court Rule 302(b) (134 Ill. 2d R. 302(b)).
	We have permitted the Chamber of Commerce of the United
States and the Illinois Chamber of Commerce; the National
Association of Manufacturers and the Illinois Manufacturers'
Association; and the Product Liability Advisory Council, Inc., to file
briefs amici curiae on behalf of the defendants. We have also
permitted Public Citizen, Inc., along with various public health
organizations; economists Robert Solow and George Akerlof; the
Trial Lawyers for Public Justice, along with various consumer
advocacy groups; the American Medical Association, along with
numerous medical societies; and the Citizens' Commission to Protect
the Truth to file briefs amici curiae on behalf of the plaintiffs. 155 Ill.
2d R. 345. In addition, 11 Illinois law schools that, depending on the
outcome of this appeal, may receive some of the proceeds of the
punitive damages award have been permitted to intervene. 735 ILCS
5/2-408 (West 2002).
	We now reverse the judgment of the circuit court on the basis
that this action is barred by section 10b(1) of the Consumer Fraud Act
(815 ILCS 505/10b(1) (West 2000)).
I. BACKGROUND
A. History of FTC Regulation of the Cigarette Industry
	The immense documentary record reveals the following industry
history, which is essentially undisputed.
	The FTC's jurisdiction over the advertising and testing of
cigarettes is premised on the Federal Trade Commission Act, section
45(a) of which declares unlawful: "unfair methods of competition in
or affecting commerce, and unfair and deceptive acts or practices in
or affecting commerce." 15 U.S.C. §45(a) (2000). As early as the
1930s, the FTC took action against tobacco companies that made
unsupported claims about the health benefits of smoking their
particular brand of cigarettes. See, e.g., Julep Tobacco Co., 27 F.T.C.
1637 (1938).
 	In September 1955, the FTC issued its first Cigarette Advertising
Guidelines, which permitted cigarette manufacturers to make claims
regarding tar and nicotine yields, but only if they could substantiate
their claims by "competent scientific proof":
			"No representation, claim, illustration, or combination
thereof, should be made or used which directly or indirectly:
			2. Represents that any brand of cigarette or the smoke
therefrom is low in nicotine or tars, acids, resins, or other
substances, by virtue of its ingredients, method of
manufacture, length, added filter, or for any other reason or
without any assigned reason, than any other brand or brands
of cigarettes when it has not been established by competent
scientific proof applicable at the time of dissemination that
the claim is true and, if true, that such difference or
differences are significant.
			Note: Words, including those relating to filtration, which
imply lesser substances in the smoke, through filter
comparisons or otherwise, are considered subject to this
guide." 6 Trade Reg. Rep. (CCH) par. 39,012 (1988) (FTC
Release, September 22, 1955, entitled "Guides").
	Different manufacturers used different testing methods, however,
making cross-brand comparison unreliable. In late 1959, the FTC
Bureau of Consultation issued an industrywide advisory stating that
"all representations of low or reduced tar or nicotine, whether by
filtration or otherwise," would be construed as health claims. The
purpose of the advisory and the accompanying demand for prompt
compliance by the tobacco industry was to "eliminate from cigarette
advertising representations which in any way imply health benefit."
Letter of William H. Brain, Attorney, FTC Bureau of Consultation
(December 17, 1959). The FTC indicated its intent to take
enforcement action against cigarette manufacturers making such
representations, effectively banning advertising regarding tar and
nicotine levels. See 3 Trade Reg. Rep. (CCH) par. 7853.51, at 11,730
(1988) (reporting that, in 1960, FTC and the tobacco industry reached
an agreement that the companies would refrain from advertising tar
and nicotine content).
	In 1964, Dr. Luther Terry released the groundbreaking Report of
the Surgeon General's Advisory Committee on Smoking and Health.
The Report concluded that "[c]igarette smoking is a health hazard of
sufficient importance in the United States to warrant appropriate
remedial action." Department of Health, Education, and Welfare, U.S.
Surgeon General's Advisory Committee, Smoking and Health, at 33.
Later that same year, the FTC promulgated a trade regulation rule
defining it an unfair and deceptive act within the meaning of section
5 of the FTC Act to "fail to disclose, clearly and prominently, in all
advertising and on every pack, box, carton or other container in which
cigarettes are sold to the consuming public that cigarette smoking is
dangerous to health and may cause death from cancer or other
diseases." Unfair or Deceptive Advertising and Labeling of Cigarettes
in Relation to the Health Hazards of Smoking, 29 Fed. Reg. 8324,
8325 (1964).
	Congress' enactment in 1965 of the Federal Cigarette Labeling
and Advertising Act (Labeling Act) (Pub. L. 89-92, 79 Stat. 282,
codified at 15 U.S.C. §1331 et seq. (2000)), contained a preemption
provision that vacated the newly promulgated trade regulation rule.
The Labeling Act served two purposes. First, it was intended to
inform the public of the hazards of smoking. Second, it was designed
to address the emerging problem of inconsistent state regulation of
cigarette labeling and advertising. Pub. L. 89-92, §2. The Labeling
Act required manufacturers to place a specific warning label on all
cigarette packs. Pub. L. 89-92, §4. The Act also required both the
Secretary of Health, Education, and Welfare and the FTC to make
annual reports to Congress on the health consequences of smoking
and the advertising and promotion of cigarettes. Pub. L. 89-92, §5.
(The content of the warning was subsequently revised on two
occasions: in 1969, when the Labeling Act was amended by the Public
Health Cigarette Smoking Act (Pub. L. 91-222, 84 Stat. 87 (1969)),
and in 1984, when the Labeling Act was again amended by the
Comprehensive Smoking Education Act (Pub. L. 98-474, 98 Stat.
2200 (1984)). Prior to the adoption of the 1984 revisions, both the
FTC and the Surgeon General recommended to Congress that the
required warnings address the phenomenon of compensation, which
refers to smokers' alteration of smoking behavior to achieve their
accustomed level of nicotine consumption. This recommendation was
not adopted by Congress.)
	In 1966, the United States Public Health Service reported that
scientific evidence strongly suggested that the lower the levels of tar
and nicotine in cigarette smoke, the less harmful the effects on the
health of the smoker. United States Department of Health and Human
Services, The Health Consequences of Smoking: The Changing
Cigarette, at i (1981) (quoting 1996 statement by Public Health
Service). Later that same year, the FTC announced that it had sent
letters to each of the major United States cigarette manufacturers
ending the ban on including tar and nicotine content on labels and in
advertising of cigarettes. The letters stated:
			"The Cigarette Advertising Guides promulgated by the
Commission in September 1955 provided that no
representation should be made that any brand of cigarette or
the smoke therefrom is low in nicotine or tars *** when it
has not been established by competent scientific proof
applicable at the time of dissemination that the claim is true,
and if true, that such difference or differences are significant.
On the basis of the facts now available to it, the Commission
has determined that a factual statement of the tar and nicotine
content (expressed in milligrams) of the mainstream smoke
from a cigarette would not be in violation of such Guides, or
of any of the provisions of law administered by the
Commission, so long as (1) no collateral representation
(other than factual statements of tar and nicotine contents of
cigarettes offered for sale to the public) are made, expressly
or by implication, as to reduction or elimination of health
hazards, and (2) the statement of tar and nicotine content is
supported by adequate records of tests conducted in
accordance with the Cambridge Filter Method ... . It is the
Commission's position that it is in the public interest to
promote the dissemination of truthful information concerning
cigarettes which may be material and desired by the
consuming public." 6 Trade Reg. Rep. (CCH) par. 39,012.70
(1988).
	When public concern about the health effects of smoking began
to increase, the FTC determined that it might be desirable for
consumers to be able to choose among cigarette brands based on their
yield of tar and nicotine. In support of this goal, the FTC, in 1967,
adopted the "Cambridge Method" (FTC method) as the single
acceptable means of measuring tar and nicotine yields in cigarettes.
The record is clear that both the FTC and the cigarette manufacturers
were aware at that time that no method of measurement, including the
FTC method, could accurately predict the actual exposure of
individual smokers who smoked any particular brand of cigarette. The
variations in smoking habits, including the phenomenon of
compensation, are simply too complex to account for in any uniform
test. However, despite this awareness that the test data would not be
accurate as to any individual smoker, the FTC found this concern
outweighed by the need for a basis for comparison among brands.
Thus, the FTC method was adopted for the purpose of providing a
consistent benchmark, not as a means of measuring the actual
exposure of individual smokers to tar and nicotine. FTC Press
Release-Statement of Considerations 2 (August 1, 1967).
	The FTC later declared that a manufacturer's use of tar and
nicotine measurements based on the FTC method would be deemed
substantiated and would not result in any regulatory action.
Eventually, the FTC authorized cigarette manufacturers to include in
their advertising a statement of the tar and nicotine content of their
cigarettes, expressed in milligrams, as measured by the FTC method.
Indeed, the FTC itself presented these measurements in its reports to
Congress and published the data for circulation to consumers. 4 Trade
Reg. Rep. (CCH) par. 39,012.70. See also Letter from Federal Trade
Commission to major cigarette manufacturers and to Robert. B.
Meyner, Administrator of the Cigarette Advertising Code (March 25,
1966).
	The FTC made its first Report to Congress, pursuant to the
Labeling Act, in 1967. In that report, the FTC recommended that
Congress strengthen the language of the warning statement that was
then required on all cigarette packages. The warning statement stated
that cigarette smoking "may be hazardous" to health. The FTC
recommended a more direct statement that smoking is hazardous to
health. The FTC also recommended that a "statement setting forth the
tar and nicotine content of each cigarette should be required to appear
on the package and in all cigarette advertising." Federal Trade
Commission, Report to Congress Pursuant to the Federal Cigarette
Labeling and Advertising Act, at 30 (June 30, 1967). The
recommendations were not adopted at that time.
	In its 1968 Report to Congress, the FTC responded to the
emerging consensus regarding the possible benefit to smokers of
reducing tar and nicotine yields. "Based upon the proposition that
lower yield cigarettes present a lessened hazard to the American
public," the Commission explained, it had acted during the previous
year to: "(1) augment information available to the public on the tar
and nicotine content of cigarettes and (2) prompt cigarette
manufacturers to develop less hazardous cigarettes." Federal Trade
Commission, Report to Congress Pursuant to the Federal Cigarette
Labeling and Advertising Act, at 17 (June 30, 1968). However, the
FTC observed:
			"An analysis of sales data provided by cigarette
manufacturers indicates that sales of comparatively low yield
cigarettes, e.g., for purposes of this report only, those having
15 milligrams (mg.) of tar or less, have not been extensive
thus far. Three categories of cigarettes, classified according
to tar yields, divided the market in 1967 as follows: 15 mg.
and under-2%; 16-21 mg.-59%; 22 mg. and over-39%."
(Emphasis added.) Federal Trade Commission, Report to
Congress Pursuant to the Federal Cigarette Labeling and
Advertising Act, at 19 (June 30, 1968).
The 1968 report also reported that only a small number of companies
were making voluntary tar and nicotine disclosures on their packaging,
despite there being "every reason to believe that the promotion of low
tar and nicotine yield cigarettes can be profitable." Federal Trade
Commission, Report to Congress Pursuant to the Federal Cigarette
Labeling and Advertising Act, at 19 (June 30, 1968). "[R]ather than
alert smokers to less hazardous low yield cigarettes, advertisers
sought for the most part to allay smoker anxiety by proclaiming the
wonders of their filters." Federal Trade Commission, Report to
Congress Pursuant to the Federal Cigarette Labeling and Advertising
Act, at 19 (June 30, 1968).
	In its 1969 Report to Congress, the FTC continued to press for
mandatory disclosure of tar and nicotine content on each cigarette
package and in all cigarette advertising and for stronger warnings. In
addition, the FTC urged repeal of the Labeling Act and a complete
ban on cigarette advertising on television and radio. Federal Trade
Commission, Report to Congress Pursuant to the Federal Cigarette
Labeling and Advertising Act, at 35 (June 30, 1969). Congress did not
adopt these recommendations.
	A subsequent FTC proposal that would have declared it an unfair
or deceptive practice under section 5 of the FTC Act for cigarette
manufacturers to fail to disclose in their advertising the tar and
nicotine content of the product, based on the most recent FTC test
results (see 35 Fed. Reg. 12,671 (August 8, 1970)), was dropped after
five major industry members and three of the smaller companies
voluntarily agreed to provide this information on all cigarette
packages (see 36 Fed. Reg. 784 (1971)). See also Federal Trade
Commission, Report to Congress Pursuant to the Public Health
Cigarette Smoking Act, at 18-19 (December 31, 1970).
	The voluntary approach was seen by the FTC as a more efficient
means of accomplishing its goal. As then-chairman Fitzpatrick said,
"Trade regulation rules, if contested in the courts, might take a long
time to become effective. A workable voluntary plan by the industry
could be put into effect immediately." (As late as 1997, the voluntary
agreement remained in effect. See Cigarette Testing; Request for
Public Comment, Federal Trade Commission, 62 Fed. Reg. 48,158
(September 12, 1997). Nothing in the record suggests that the
agreement has been terminated since that date.) As a result of this
voluntary agreement, PMUSA and the other major manufacturers of
cigarettes have, since 1971, included information on tar and nicotine
yields as measured by the FTC method on packaging and in
advertising. See Federal Trade Commission, Staff Report on the
Cigarette Advertising Investigation, May 1981, at 4-5.
	The descriptor "low tar" began to appear in cigarette advertising
by the late 1960s as the industry responded to public interest in
lowered tar and nicotine by adopting innovations, such as the use of
filters, aeration holes, or wrapping paper that burned more quickly.
Each of these innovations caused reductions in the amounts of tar and
nicotine measured by the FTC method. As noted above, the FTC and
industry members were well aware that the FTC method did not
replicate actual smoking behavior. They were also aware that smokers
who switched from a brand that was higher in tar and nicotine to a
brand with one of these features tended to compensate by smoking
more cigarettes or by smoking differently.
	In 1969, the FTC informed cigarette manufacturer American
Brands of its intent to charge the company with engaging in unfair,
misleading, and deceptive advertising with respect to the tar content
of its Pall Mall and Lucky Strike cigarettes. (American Brands, Inc.,
was formed in 1969 as the parent company of the American Tobacco
Company, which traced its corporate roots to the founding of W.
Duke & Sons in North Carolina in 1864.)
	Shortly thereafter, but before a formal complaint was filed, the
Code Authority of the National Association of Broadcasters sought
an advisory opinion from the FTC. See 16 C.F.R. §1.1 (permitting any
person, partnership, or corporation to request advice from the FTC
"with respect to a course of action which the requesting party
proposes to pursue"). By letter to the FTC, the Code Authority
inquired whether the FTC had formulated a policy regarding the use
of words such as "low," "lower," and "reduced" in describing the level
of tar and nicotine in cigarettes. American Brands, Inc., 77 F.T.C.
1623 (1970). The FTC responded, by letter, that "the use of 'low' and
'less' or similar words when describing tar and nicotine content,
create[s] an imprecise picture, which, absent a full and fair disclosure,
could lead to a mistaken conclusion that the advertised brand is lower
in tar and nicotine than many other brands." American Brands, Inc.,
77 F.T.C. at 1624. The FTC also stated that the "degree of
imprecision created would vary," depending on what representations
were being made and the actual tar and nicotine levels of the
advertised cigarette, but that "imprecision could almost always be
avoided" if "clear and conspicuous disclosure" was made of the tar
and nicotine content, in milligrams, of the advertised cigarette, that
brand to which it was being compared, and the domestic cigarettes
with the highest and lowest yields. American Brands, Inc., 77 F.T.C.
at 1624. The FTC further advised the Code Authority that all
representations regarding tar and nicotine levels in cigarette
advertising should be based on recent test results. Finally, because the
topic was of substantial public interest, the exchange of
correspondence between the FTC and the Code Authority was made
public. American Brands, Inc., 77 F.T.C. at 1624.
	On April 1, 1970, the Public Health Cigarette Smoking Act
became law, making several significant changes to the Labeling Act.
Pub. L. 91-222, 84 Stat. 87 (1969). First, since November 1970, all
cigarette packages have been required to carry the following warning
statement: "Warning: The Surgeon General Has Determined That
Cigarette Smoking Is Dangerous To Your Health." Pub. L. 91-222,
§4. Second, since January 2, 1971, the Public Health Cigarette
Smoking Act has barred cigarette advertising from television and
radio. Pub. L. 91-222, §6. And, third, a new preemption provision
forbids any "requirement or prohibition based on smoking and health
*** imposed under State law with respect to the advertising or
promotion of cigarettes." Pub. L. 91-222, §5(b). As the new
preemption provision was directed only at actions by the states, the
FTC remained free to regulate cigarette advertising. See Lorillard
Tobacco Co. v. Reilly, 533 U.S. 525, 545, 150 L. Ed. 2d 532, 553,
121 S. Ct. 2404, 2416-17 (2001).
	In its 1970 Report to Congress, the FTC described the exchange
with the Code Authority under the heading "Voluntary Regulation."
The FTC reported that the Code Authority had "adopted as its policy
a position similar to the order" that the FTC "believed to be
appropriate" as a resolution of its pending complaint against American
Brands. The FTC's clearly stated policy was that:
		"if a broadcast cigarette advertisement used comparative
language such as 'low' or 'lower' to describe the tar and
nicotine content of the advertised cigarette, the advertisement
must also disclose:
				1. The tar and nicotine content in milligrams of the
advertised cigarette;
				2. The tar and nicotine content in milligrams of the
lowest and highest yield domestic cigarettes; and
				3. If the tar and nicotine content of the advertised
cigarette is compared to any other specific cigarette, the
brand name and tar and nicotine content in milligrams of
the smoke produced by such other cigarettes." Federal
Trade Commission, Report to Congress Pursuant to the
Public Health Cigarette Smoking Act, at 21 (December
31, 1970).
One result of the advisory opinion rendered to the Code Authority,
according to the Report, was that several television commercials had
been withdrawn and that only two brands made comparative claims in
broadcast advertisements during 1970. Federal Trade Commission,
Report to Congress Pursuant to the Public Health Cigarette Smoking
Act, at 21 (December 31, 1970).
	Subsequently, when the formal complaint against American
Brands was filed, the FTC accused the company of creating the false
impression that its cigarettes were low in tar when, in fact, Pall Mall
Gold 100s and Lucky Filters contained approximately 20 and 21
milligrams of tar, respectively, at a time when the brand containing the
lowest level of tar contained only 4 milligrams. In re American
Brands, Inc., 79 F.T.C. 225 (1971). By this time, the voluntary
agreement had been reached, but American Brands had not signed on
to it.
	The dispute between the FTC and American Brands was resolved
in 1971, with the entry of a consent order that required American
Brands to cease and desist from:
		"Stating in advertising that any cigarette manufactured by it,
or the smoke therefrom is low or lower in 'tar' by use of the
words 'low,' 'lower,' or 'reduced' or like qualifying terms,
unless the statement is accompanied by a clear and
conspicuous disclosure of:
				1. The 'tar' and nicotine content in milligrams of the
smoke produced by the advertised cigarette; and
				2. If the 'tar' content of the advertised brand is
compared to that of another brand or brands of cigarette,
(a) the 'tar' and nicotine content in milligrams of the
smoke produced by that brand or those brands of
cigarette, and (b) the 'tar' and nicotine content in
milligrams of the lowest yield domestic cigarette."
American Brands, 79 F.T.C. at 225.
The consent order further defined the term "tar" as "the total
particulate matter in the mainstream smoke of cigarettes as determined
by the testing method employed by the Federal Trade Commission in
its testing of the smoke of domestic cigarettes." American Brands, 79
F.T.C. at 225.
	The content of the consent order was slightly different from that
of the order the FTC anticipated in its 1970 Report to Congress.
Significantly, the FTC originally intended to require that any claim of
low or lower tar be accompanied not only by the tar and nicotine
content in milligrams, but also by the tar and nicotine content of the
lowest yield domestic cigarette. See Federal Trade Commission,
Report to Congress Pursuant to the Public Health Cigarette Smoking
Act, at 21 (December 31, 1970). In the end, the order allowed the use
of the words " 'low,' 'lower,' or 'reduced' or like qualifying terms,"
so long as the tar and nicotine content of the cigarette being
advertised was clearly and conspicuously disclosed. Only if the
advertised brand was being compared to another specific brand or
brands of cigarettes was the manufacturer required to disclose the
additional information.
	Later in 1971, after having reached a voluntary agreement with
most cigarette manufacturers to disclose tar and nicotine levels in their
advertising (and having obtained the compliance of American Brands
and other nonsigners through the 1971 consent order), the FTC
announced its intention to file complaints against six cigarette
companies if they failed to display in their advertising, clearly and
conspicuously, the same warning that Congress had already required
on cigarette packages. Again, negotiations between the FTC and the
major cigarette manufacturers resulted in the entry of a consent order.
In re Lorillard, 80 F.T.C. 455 (1972). (In 1975, the FTC sought civil
penalties against the six major cigarette manufacturers for violations
of these consent orders. See United States v. R.J. Reynolds Tobacco
Co., No. 76 Civ. 813 (JMC) (S.D.N.Y., February 20, 1981)
(disposing of last remaining enforcement action after five other
companies entered into consent judgment approved by the FTC).
	In its 1971 Report to Congress, the FTC described the resolution
of the American Brands dispute via consent order as part of its
"[r]egulatory activity" for the year. Federal Trade Commission,
Report to Congress Pursuant to the Public Health Cigarette Smoking
Act, at 13-14 (December 31, 1971). In addition, the FTC reported
under the heading of "Regulatory activity" its "extended negotiations"
with "six proposed respondents" in the Lorillard matter. Settlement
by consent order would "meet the public interest in this matter" and
would "take effect much sooner than orders resulting from
adjudicative proceedings." Such orders, the FTC observed, would
"carry the force of law" and violation of the orders could carry civil
penalties. The FTC did not comment on the effect or application of
the orders on companies that were not parties thereto. Federal Trade
Commission, Report to Congress Pursuant to the Public Health
Cigarette Smoking Act, at 16 (December 31, 1971).
	By the early 1970s, in addition to including the tar and nicotine
content numbers in their packaging and advertising in accordance with
the voluntary plan and the 1971 and 1972 consent orders, several
manufacturers were advertising their products as being "low" or
"lower" in either or both tar and nicotine. Vantage, True, and Doral,
for example, were advertised as low tar and nicotine cigarettes. Pall
Mall Extra Mild, Silva Thins, Pall Mall Gold 100s, Lucky Ten,
Carlton, and Iceberg 10 were advertised as low or lower in tar.
Federal Trade Commission, Report to Congress Pursuant to the
Public Health Cigarette Smoking Act, at 5 (December 31, 1973). In
its 1974 Report to Congress, the FTC noted that "as the
manufacturers of Raleighs, Kools, Pall Malls, Viceroy's and
Marlboros are doing, Winston now offers a Winston Light with
lowered 'tar' and nicotine content." Federal Trade Commission,
Report to Congress Pursuant to the Public Health Cigarette Smoking
Act, at 5 (December 31, 1974).
	By 1978, the FTC was reporting to Congress that low tar
cigarettes, which it defined as those with 15 milligrams or less of tar,
had increased in market share from 2% in 1967 to 28% in 1978.
Federal Trade Commission, Report to Congress Pursuant to the
Public Health Cigarette Smoking Act, at 3 (1978). In addition, the
FTC noted that "[m]arketing shifts to lower 'tar' and nicotine
cigarettes may be another way of assessing the effects of health
warnings." The increasing market share of the low tar brands was seen
as an indication that the public health message was reaching
consumers. The FTC also noted, however, that "[w]hile there is
evidence suggesting that cigarettes with lower 'tar' and nicotine are
less hazardous, the evidence is not conclusive and even the lowest
yield of cigarettes presents health hazards much higher than would be
encountered without smoking at all." Federal Trade Commission,
Report to Congress Pursuant to the Public Health Cigarette Smoking
Act, at 3 (1978).
	By 1979, the FTC was reporting that the market share of low tar
cigarettes had increased to 40.9%. Federal Trade Commission, Report
to Congress Pursuant to the Federal Cigarette Labeling and
Advertising Act, at 8 (1979). In this report, the FTC provided data on
the total advertising expenditures and market shares for cigarettes
with 15, 12, 9, 6, and 3 milligrams of tar. The report noted that
advertisers sometimes described cigarettes with 3 milligrams or less
of tar as "ultra low 'tar.' " Federal Trade Commission, Report to
Congress Pursuant to the Federal Cigarette Labeling and Advertising
Act, at 11 (1979). In a footnote, the FTC stated that it had not defined
" 'ultra-low tar', or any term related to 'tar' level except for 'low tar',
which the FTC defines as 15.0 mg. or less tar." Federal Trade
Commission, Report to Congress Pursuant to the Federal Cigarette
Labeling and Advertising Act, 1979, at 11 n.8 (1979). "As a result,"
the FTC observed, "advertisers use a variety of terms to distinguish
among 'tar' levels." Federal Trade Commission, Report to Congress
Pursuant to the Federal Cigarette Labeling and Advertising Act, at 11
n.8 (1979). (An identical footnote appeared in the FTC's 1980 Report
to Congress. Federal Trade Commission, Report to Congress
Pursuant to the Federal Cigarette Labeling and Advertising Act, at 11
n.8 (November 15, 1982).
	The FTC also employed the term "low 'tar' " when it issued a
press release on December 15, 1981, announcing the release of a
report entitled "Report of 'Tar,' Nicotine and Carbon Monoxide of
the Smoke of 200 Varieties of Cigarettes." The lead paragraph in the
press release stated that "Test results released today by the Federal
Trade Commission show an increase in the number of cigarettes with
low 'tar,' nicotine and carbon monoxide levels." In addition, the
report showed that 150 of the 200 brands tested had 15 milligram or
less tar, compared to 125 of 187 brands tested the previous May. FTC
Press Release-FTC Cigarette Report Shows More Brands on Market
with Low "Tar," Nicotine, Carbon Monoxide Levels (December 15,
1981).
	Over the years, the FTC conducted multiple investigations
regarding the use of tar and nicotine levels and of descriptors such as
"lights" and "low tar" in cigarette advertising. Such investigations
took place in 1976, 1981, 1988, and 1992.
	In 1981, the FTC concluded that the warning on cigarette
packages and in cigarette advertising was not effective and did not
provide sufficient information to consumers regarding the health risks
of smoking. Federal Trade Commission, Staff Report on the Cigarette
Advertising Investigation, May 1981, at 4-7. The staff report
concluded that even though warnings and disclosure of FTC test
measurements of tar and nicotine were required by the FTC, the then-current state of cigarette advertising might be deemed deceptive under
section 5 of the FTC Act because a substantial segment of the
purchasing public was likely to be deceived. Federal Trade
Commission, Staff Report on the Cigarette Advertising Investigation,
May 1981, at 4-17. This conclusion was based on data in the report
indicating that a large portion of the public lacked sufficient
knowledge of the hazards of cigarette smoking. Federal Trade
Commission, Staff Report on the Cigarette Advertising Investigation,
May 1981, at 4-21, 4-36. The Commissioners unanimously agreed
that this staff report should be transmitted to Congress. With only one
Commissioner objecting, the staff report was released to the public.
The entire Commission endorsed the substance of the report. See
letter from David A. Clanton, Acting Chairman of the FTC, to George
Bush, Vice President (May 21, 1981) (transmitting the staff report to
the Senate). Nevertheless, neither the FTC nor Congress acted upon
this staff suggestion that cigarette advertising under the then-current
FTC policy and regulations should be deemed deceptive.
	Also in 1981, the FTC began an investigation of Barclay
cigarettes. The investigation was triggered by complaints from
manufacturer Brown & Williamson's competitors, who claimed that
the design of the Barclay filter caused it to falsely register very low tar
measurements on the FTC smoking machine. Federal Trade Comm'n
v. Brown & Williamson Tobacco Corp., 778 F.2d 35, 37 (D.C. Cir.
1985). The FTC determined that the Barclay claim of 1 milligram of
tar was false and deceptive and attempted to require Brown &
Williamson (B&W) to state an estimated tar content of 3 to 7
milligrams. B&W refused, but changed its advertisements to state that
the 1 milligram tar measurement was obtained using a method
recognized by "independent laboratories." Brown & Williamson, 778 F.2d  at 38. The FTC thereafter sought an injunction to prevent such
advertising and the district court granted injunctive relief. The Court
of Appeals, although affirming the finding that B&W violated section
5 of the FTC act (Brown & Williamson, 778 F.2d at 43), reversed on
first amendment grounds (Brown & Williamson, 778 F.2d at 45).
	After the 1988 investigation, the FTC recommended to Congress
that it not adopt a proposed amendment to the Labeling Act that
would have permitted states to impose additional duties with respect
to such advertising. The FTC argued that allowing individual states to
impose their own rules would conflict with the FTC program.
	In the 1992 investigation, the FTC considered whether the use of
terms such as "low tar" and "light" in cigarette advertising should be
banned because they were deceptive, given what was known about the
limits of the FTC method and the real world phenomenon of
compensation by smokers. The FTC concluded, however, that if the
use of such terms was substantiated by FTC method results, they were
not false, unfair, or misleading under the provisions of the FTC Act.
	In the course of at least two of the investigations, the FTC
reexamined the test method and considered whether the protocol
should be changed to render it a more accurate representation of
human behavior, given the changes in cigarette design. In both cases,
the FTC solicited public comment on the FTC method. The first
reexamination occurred in 1977 and was triggered by the suggestion
of Lorillard, Inc., that the protocol of the FTC method be changed so
that the cigarette being tested would not be inserted quite as far into
the machine. Lorillard's concern was that when its cigarettes were
inserted to the prescribed depth, the machine blocked the ventilation
holes, resulting in a higher tar and nicotine rating than if the holes had
remained uncovered. In the end, Lorillard was the only industry
member to advocate altering the standard insertion depth. The FTC
concluded that the protocol should not be changed. The agency
reiterated its 1967 statement that the purpose of the testing was not
to predict the tar and nicotine exposure of any individual smoker but,
rather, to determine the amount of tar and nicotine generated when
the cigarette was smoked by a machine under a prescribed protocol.
43 Fed. Reg. 11,856 (March 22, 1978). Noting that innovations such
as aerated filters had complicated the task of providing comparability
among cigarette brands, the FTC concluded that "a change in the
insertion depth would cause a lack of continuity with previous test
results." 43 Fed. Reg. 11,856-57 (March 22, 1978). Further, the FTC
noted that if a consumer "smoked each different cigarette the same
way, he would inhale 'tar' and nicotine in amounts proportional to the
relative values of the FTC figures." 43 Fed. Reg. 11,856 (March 22,
1978). Thus, "in the absence of information indicating that a new
insertion depth would be me more consistent with the manner in which
smokers insert cigarettes in actual use," the FTC decided not to
modify the protocol. 43 Fed. Reg. 11,857 (March 22, 1978). In the
end, the FTC concluded this investigation by issuing an advisory
opinion stating that the tar values set forth in cigarette advertisements
must be consistent with the latest applicable FTC tar number, based
on the FTC methodology, and that any tar and nicotine claims not so
substantiated were not permitted. See In re Lorillard, 92 F.T.C. 1035
(1978).
	The second reexamination of the FTC method occurred in the
early 1980s, when some manufacturers began using channel
ventilation systems rather than air holes. The channels remained open
when the cigarette were inserted in the machine, yielding very low
numbers. Competitors complained that the results were inaccurate
because the channels did not remain open when the cigarette was in
the hands of an actual smoker. In addition to initiating the Barclay
investigation, noted above, the FTC invited public comment on this
development and on possible modifications of its method that might
render it a more accurate representation of actual smoking behavior.
48 Fed. Reg. 15,953-54 (April 13, 1983). The FTC also asked for
comments on whether such modifications might result in unintended
consequences or affect further innovation in cigarette design. 48 Fed.
Reg. 15,954-55 (April 13, 1983). In addition, the FTC sought
comment on the possibility of using a system of ranges or "bands" of
tar content, as opposed to specific numerical values expressed in
milligrams of tar. Finally, the FTC reiterated its long-standing position
that its ratings were intended to be relative, not absolute, even as it
posed the question: "should consumers be advised that the cigarettes'
actual 'tar' delivery depends on how it is smoked?" 48 Fed. Reg.
15,955 (April 13, 1983).
	Comments were received not only from those in the cigarette
industry, but also from a number of health organizations. The opinions
expressed were widely disparate, ranging from a call for development
of a testing system that did approximate actual smoking behavior to
a suggestion that all such testing be abolished. In response to the idea
of a "banding" system, which would categorize cigarettes as high tar,
medium tar, low tar, and ultra low tar, several manufacturers noted
that this would tend to concentrate brands near the upper level of each
range, in contrast to the existing system that gave manufacturers an
incentive to create a product that would deliver the lowest possible
level of tar. In the absence of a consensus on any means of eliminating
or reducing the limitations of the FTC test method, the FTC made no
changes to its testing methodology.
	The issue of cigarette labeling and advertising rules remained
status quo until February 27, 1992, when The Coalition on Smoking
OR Health (made up of the American Heart Association, the
American Lung Association, and the American Cancer Society), filed
a petition with the FTC in which it sought the issuance of an
administrative complaint against PMUSA and other tobacco
companies pursuant to section 5 of the FTC Act. Specifically, the
Coalition alleged that PMUSA's labeling and advertising of one of its
low tar products and similar labeling and advertising by other
manufacturers were false and misleading because the use of terms
such as "low tar," "light," and "ultra low tar" falsely implied that these
cigarettes were safer than other products. The Coalition charged that
the failure of PMUSA and other manufacturers "to disclose that while
the tar yield of their low tar cigarettes may be less than other tobacco-related products, there are numerous known carcinogens in the
constituents of these tobacco products, carcinogens which pose a
health hazard to the consumer," and that this failure to make such
additional disclosures "is a material omission in violation of the
Federal Trade Commission Act." Petition of The Coalition on
Smoking OR Health before the Federal Trade Commission, par. 25
(February 27, 1992).
	The FTC responded to the Coalition's petition by means of a
letter from C. Lee Peeler, the Associate Director of the FTC. Peeler's
letter stated that after giving careful consideration to the questions
raised in the Coalition's petition, the FTC had asked the National
Cancer Institute (NCI) to convene a "consensus conference" on this
topic. Letter from C. Lee Peeler to Matthew L. Myers, Counsel to
Coalition on Smoking OR Health (August 8, 1994).
	The National Cancer Institute Conference on the FTC Cigarette
Test Method was also brought about by the request of Representative
Henry A. Waxman, chairman of the Subcommittee on Health and the
Environment of the House Committee on Energy and Commerce, who
asked the NCI to convene a conference to review the FTC's method
of determining the relative tar and nicotine content of cigarettes. At
the "direction of the Commission," the FTC chairman wrote to the
NCI director, noting the substantial overlap between the issues
identified by Chairman Waxman and those the FTC was then
examining. The FTC chair asked that the consensus conference
"provide a comprehensive review of the existing scientific evidence on
issues relating to low-tar and ultra-low tar cigarettes." The letter
further asked that the conference consider whether the "current rating
system is sufficiently flawed as to pose harm to consumers who rely
on the ratings." Among the list of specifically suggested topics for the
conference, the letter listed:
		"are low-tar cigarettes (cigarettes rated at 15 mg. or less of
tar) less dangerous than high-tar cigarettes (those rated at
more than 15 mg. of tar) and, if so, what is the extent of their
health benefit?"
and:
		"are ultra low-tar cigarettes (cigarettes rated at 6 mg. or less
of tar) less dangerous than low-tar and/or high-tar cigarettes
and, if so, what is the extent of their health benefit?"
Letter from Janet D. Steiger, FTC Chairman, to Samuel Broder,
M.D., Director, National Cancer Institute (July 20, 1994).
	The conference was held on December 5 and 6, 1994, in
Bethesda, Maryland. The conferees concluded that yield numbers and
descriptors of yield numbers, such as "light" and "ultra light," were
health claims. They recommended that such numbers and descriptors
in labeling and advertising be accompanied by appropriate disclaimers
as to health consequences of smoking, but did not recommend
banning such descriptors. See NCI Monograph 7: The FTC Cigarette
Testing Method for Determining Tar, Nicotine, and Carbon Monoxide
Yields of U.S. Cigarettes (1996). The FTC, in the end, did not adopt
a trade regulation rule or take other regulatory action to require such
disclaimers for light and low tar descriptors.
	In 1994, the FTC initiated an investigation into the practices of
the American Tobacco Company, which by this time had been sold by
its corporate parent, American Brands. American Tobacco was
advertising its Carlton brand cigarettes by showing 10 packs of
Carltons next to a single pack of another brand. The tar and nicotine
ratings for each brand was shown, along with a claim that 10 packs of
Carltons had less tar than one pack of the other brand. In other ads,
the claim was made that an entire carton of Carltons had less tar than
a single pack of the other brand. The FTC complaint alleged that these
ads were false and misleading because consumers would not, in fact,
get less tar by smoking 10 packs of Carlton than by smoking one pack
of the other brands. Although the other cigarettes were, indeed, rated
as having 10 times or more tar, measured in milligrams, than Carltons,
"those ratings are obtained through smoking machine tests that do not
reflect actual smoking, in part because the machines do not take into
account such behavior as compensatory smoking." In re American
Tobacco Co., 119 F.T.C. 3 (1995).
	Again, the matter was resolved by agreement. American Tobacco
agreed to abandon any representation of the tar and nicotine levels of
Carlton cigarettes by using "a numerical multiple, fraction or ratio" of
the tar or nicotine levels of other brands or by depicting more than one
pack of Carltons versus one pack of any other brand. The agreed
order provided, further, that "presentation of the tar and/or nicotine
ratings of any of respondent's brands of cigarettes and the tar and/or
nicotine ratings of any other brand (with or without an express or
implied representation that respondent's brand is 'low,' 'lower,' or
'lowest' in tar and/or nicotine) shall not be deemed" to violate the ban
on numerical comparisons. American Tobacco, 119 F.T.C. at 11.
Prior to the entry of the agreed order, the FTC described this
provision as a "limited 'safe harbor' for advertising that complies with
certain requirements in its use of official tar and nicotine ratings."
Analysis of Proposed Consent Order to Aid Public Comment, In re
American Tobacco Co., F.T.C. File No. 932 2268 (August 31, 1994).
	Most recently, in 1997, the FTC solicited public comment on
various proposals for altering the FTC testing method and for
changing cigarette advertising so that it would more accurately reflect
the limits of the testing method. The request for comment explained
that the 1970 voluntary agreement between the FTC and most
cigarette manufacturers "remains in effect today, and it forms the basis
for current disclosure of tar and nicotine yield." The request for
comment also raised the issue of compensation and noted the inability
of the current testing method to allow for compensatory behavior by
smokers. See Cigarette Testing: Request for Public Comment, Federal
Trade Commission, 62 Fed. Reg. 48,158 (September 12, 1997). The
record suggests that this inquiry is still ongoing.

B. PMUSA's Marlboro Lights and Cambridge Lights
	Against this industry backdrop, in 1971, PMUSA responded to
increasing consumer concerns about the health effects of smoking by
introducing Marlboro Lights cigarettes as an alternative to its
Marlboro Reds. PMUSA began selling Cambridge Lights in 1986. In
addition to the use of the word "light" in the names of these new
products, which suggested that they were in some way "lighter" than
their "full-flavored" counterparts, the Marlboro Lights label promised
"lowered tar and nicotine."
	Marlboro Lights became the most popular cigarette brand in the
country and inspired many imitators. Light cigarettes, including the
PMUSA brands, eventually constituted 89% of the United States
cigarette market.
	The tobacco contained in Marlboro Lights did not carry any less
tar or nicotine than the tobacco in so-called "full-flavor" cigarettes.
Instead, the claim of low tar and nicotine was premised on the use of
a different type of filter, which was designed to dilute the smoke and
to make it more difficult for the smoker to draw smoke, and therefore
tar and nicotine, into his or her lungs. When subjected to testing by
the FTC method, Lights indeed delivered less tar and nicotine.
	In actual experience, however, smokers who changed from
regular cigarettes to Lights were likely to compensate for the lower
amount of nicotine delivered by the more restrictive filter by smoking
more cigarettes, smoking them longer, taking more frequent drags as
they smoked, or inhaling more deeply. As a result, many smokers of
Lights likely inhaled just as much tar as they would have had they
remained smokers of regular cigarettes.

C. Procedural History
1. The Pleadings
	On February 10, 2000, plaintiffs, as individuals and on behalf of
a class of similarly situated individuals, brought this lawsuit alleging
violations of the Consumer Fraud Act and the Deceptive Practices
Act. They did not seek damages for the health effects, if any, of their
consumption of Lights. Instead, they sought only economic damages
based on their claim of having purchased a product in reliance on
statements by PMUSA that were fraudulent, deceptive, and unfair.
	In response to plaintiffs' first amended complaint, PMUSA raised
27 separate affirmative defenses including laches, waiver, the statute
of limitations, federal preemption, and the statutory exemption
contained in section 10b(1) of the Consumer Fraud Act for conduct
that is specifically authorized by a state or federal regulatory body
(815 ILCS 505/10b(1) (West 1998)).
	On February 11, 2003, plaintiffs filed their second amended
complaint and a motion for withdrawal of three of the five named
plaintiffs, which was granted by the circuit court.
	The second amended complaint establishes the parameters of this
litigation. The relevant factual allegations contained in plaintiffs'
second amended complaint are:
			"7. At all relevant times, Defendant sold and packaged
Cambridge Lights and Marlboro Lights as 'light' and as
having decreased tar and nicotine.
			8. While marketing and promoting decreased tar and
nicotine deliveries, Defendant designed Cambridge Lights and
Marlboro Lights cigarettes to register lower levels of tar and
nicotine to the 'Cambridge' or 'Ogg' testing apparatus-the
testing machine used by the tobacco industry to 'measure' tar
and nicotine levels in cigarettes-than would be delivered to
the consumers of the product. Defendant controlled the tar
and nicotine delivery of Cambridge Lights and Marlboro
Lights under machine testing conditions to achieve apparent
support for their representations that their Cambridge Lights
and Marlboro Lights cigarettes are 'light' and contain
decreased tar and nicotine and that their Marlboro Lights
cigarettes contain 'lowered tar and nicotine.'
			9. Defendant's representation that Cambridge Lights and
Marlboro Lights cigarettes are lower in tar and nicotine than
regular cigarettes is deceptive and misleading.
			10. Not only do consumers receive higher levels of tar and
nicotine than the testing apparatus registers, the smoke
produced by Cambridge Lights and Marlboro Lights is more
mutagenic (causing genetic and chromosomal damage) per
milligram of tar than 'regular' cigarettes."
Plaintiffs' second amended complaint further alleged the following
"deceptive and unlawful conduct" by PMUSA in connection with its
"manufacture, distribution, and marketing and sale of Cambridge
Lights and Marlboro Lights cigarettes":
			"a. falsely and/or misleadingly representing that their
product is 'light' and/or delivers lowered tar and nicotine in
comparison to regular cigarettes;
			b. describing the product as light when the so-called
lowered tar and nicotine deliveries depended on deceptive
changes in cigarette design and composition that dilute the tar
and nicotine content of smoke per puff as measured by the
industry standard testing apparatus, but not when used by the
consumer.
			c. intentionally manipulating the design and content of
Cambridge Lights and Marlboro Lights cigarettes in order to
maximize nicotine delivery while falsely and/or deceptively
claiming lowered tar and nicotine. These manipulations
include, but are not limited to, the modification of tobacco
blend, weight, rod length, and circumference; the use of
reconstituted tobacco sheets and/or expanded tobacco; and
the increase of smoke pH levels by chemical processing and
additives, such as ammonia, which resulted in the delivery of
greater amounts of tar and nicotine when smoked under
actual conditions than Defendant represented by use of the
'light' description;
			d. employing techniques that purportedly reduce machine-measured levels of tar and nicotine in Cambridge Lights and
Marlboro Lights cigarettes, while actually increasing the
harmful biological effects, including mutagenicity (genetic
and chromosomal damage) caused by the tar ingested by the
consumer per milligram of nicotine."
	In answer to the second amended complaint, PMUSA continued
to assert the same 27 affirmative defenses.

2. Class Certification and Class Representatives
	On September 8, 2000, plaintiffs moved for class certification
pursuant to section 2-801 of the Code of Civil Procedure (735 ILCS
5/2-801 (West 1998)). A hearing on plaintiffs' motion for class
certification was held on November 28, 2000, with a supplemental
hearing on January 12, 2001.
	On February 8, 2001, the circuit court granted plaintiffs' motion
to certify a plaintiff class of consumers who purchased Cambridge
Lights and Marlboro Lights in the State of Illinois for personal
consumption between their introduction and February 8, 2001. Thus,
the class period for purchases of Cambridge Lights was from 1986 to
2001; the class period for Marlboro Lights was from 1971 to 2001.
	On July 7, 2002, PMUSA filed a motion to decertify the class
based on this court's decision in Oliveira v. Amoco Oil Co., 201 Ill. 2d 134 (2002). In Oliveira, this court held that "to properly plead the
element of proximate causation in a private cause of action for
deceptive advertising brought under the Act," the plaintiff must allege
that he was "in some manner" deceived by the advertisement.
Oliveira, 201 Ill. 2d  at 155. The circuit court denied the motion to
decertify the class, rejecting PMUSA's argument that class
certification was improper because the question of deception was
necessarily an individual question, not a common question of fact that
could be determined for the class as a whole.
	Notice of the class action was published in 21 newspapers,
including the Chicago Tribune, the St. Louis Post-Dispatch, USA
Today, and 18 regional Illinois newspapers. In addition, notice was
given to the general public via the Internet and a press release to PR
Newswire International Newslines Service. PMUSA's request that
notice be given to individual Illinois residents whose names and
addresses were available from its own database of consumers was
denied.
	PMUSA requested that the circuit court adopt a trial plan that
would allow it to address the questions of actual deception, actual
reliance, and other issues that, it argued, were individual issues. The
circuit court rejected the proposed trial plan. Similarly, PMUSA's
request to depose individual class members other than the named
plaintiffs and those selected by plaintiffs' counsel was denied by the
circuit court.
	At the close of evidence, on March 10, 2003, PMUSA again
moved for decertification of the class. In the final judgment order, the
circuit court again found that class certification was proper because
common issues of law and fact predominated. Specifically, "Philip
Morris has engaged in a course of conduct that affects this Class in
such a way that all members share various elements of this cause of
action." The following factual issues were determined by the circuit
court to be common to all members of the class:
			"a. whether Class members understood the descriptor
'lights' and 'lowered tar and nicotine' to mean less harmful,
safer and/or delivering less tar;
			b. whether these representations were false and/or
misleading to Class members;
			c. whether Defendant Philip Morris intended for the Class
to rely upon these representations;
			c. [sic] whether Philip Morris's conduct violated the
Illinois Commerce Fraud Act [sic] and whether this violation
was willful and wanton; and
			d. whether Class members sustained damage as a result of
Philip Morris' deceptive conduct."
	On appeal, PMUSA argues that the circuit court erred in
certifying the class because of the predominance of individual issues.
In particular, PMUSA questions whether it was proper for the circuit
court to conclude that the elements of actual deception and reliance
could be established for all members of the class. PMUSA argues that
the expert testimony offered by plaintiffs on these issues could not and
did not establish the existence of these facts as to every member of the
plaintiff class.
	In addition, PMUSA argues that the circuit court improperly
applied the discovery rule to toll the running of the statute of
limitations (815 ILCS 505/10a(e) (West 1998)). According to
PMUSA, Consumer Fraud Act claims based on purchases that
occurred more than three years prior to the filing of this lawsuit are
barred by section 10a(e) of the Consumer Fraud Act. The discovery
rule tolls the running of the limitations period with respect to claims
that would have put a reasonable person on notice of the need to
investigate " 'whether actionable conduct is involved.' " Hermitage
Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 86 (1995),
quoting Knox College v. Celotex Corp., 88 Ill. 2d 407, 416 (1981).
Thus, PMUSA asserts, application of the discovery rule to extend the
class period beyond three years raises additional individual questions
of fact regarding when individual class members were exposed to
public information about the controversy regarding "light" and "low
tar" cigarettes.
	Plaintiffs respond that because the circuit court found each of the
factual elements of the fraud claimed proven, PMUSA cannot now
argue that the class certification was improper without demonstrating
to this court that each of the court's factual findings was against the
manifest weight of the evidence.

3. Motion for Summary Judgment Based on PMUSA's
Claims of Preemption and Exemption
	PMUSA filed a motion for summary judgment on its affirmative
defenses of express and implied federal preemption and exemption
from liability under sections 2 and 10b of the Consumer Fraud Act
(815 ILCS 505/2, 10b (West 1998)).
	On October 28, 2002, a hearing was held to consider PMUSA's
motion for summary judgment. PMUSA argued that plaintiffs' claim
is expressly preempted by the Federal Cigarette Advertising and
Labeling Act, which provides that "[n]o requirement or prohibition
based on smoking and health shall be imposed under State law with
respect to the advertising or promotion of any cigarettes the packages
of which are labeled in conformity with [this Act]." 15 U.S.C.
§1334(b) (2000). PMUSA also argued that under the Supreme
Court's decision in Cipollone v. Liggett Group, Inc., 505 U.S. 504,
120 L. Ed. 2d 407, 112 S. Ct. 2608 (1992), plaintiffs cannot base their
claim on an allegation that defendant has neutralized the warning
Congress requires on cigarette packages and, under Buckman Co. v.
Plaintiffs' Legal Committee, 531 U.S. 341, 148 L. Ed. 2d 854, 121 S. Ct. 1012 (2001), plaintiffs' claim cannot be predicated on an
alleged fraud upon the FTC. Based on the comprehensive federal
regulatory scheme governing the labeling and advertising of cigarettes
as well as the disclosure of tar and nicotine levels, PMUSA argued
implied preemption.
	PMUSA further argued that section 10b(1) of the Consumer
Fraud Act "exempts conduct that complies with federal laws or the
rules, regulations, or decisions of federal agencies" and that the
"enormous record" of "advertising guides, agreements, proposed
trade regulation rules, consent orders, investigations, determinations,
and rulemakings *** related specifically to the use of 'low tar' and
'lights' " in cigarette advertising and labeling. Because the record
clearly demonstrates that PMUSA has used these terms only on
products "below the fifteen milligram cutoff," PMUSA asserted that
such compliance provided a "full defense" to plaintiffs' Consumer
Fraud Act claim. Relying on this court's decisions in Lanier v.
Associates Finance, Inc.,114 Ill. 2d 1, 18 (1986) (finding compliance
with disclosure requirements of federal Truth in Lending Act as
interpreted by Federal Reserve Board staff to be a defense to liability
under the Consumer Fraud Act), Jackson v. South Holland Dodge,
Inc., 197 Ill. 2d 39, 47 (2001) (finding compliance with federal statute
to be a defense to liability under the Consumer Fraud Act), and Jarvis
v. South Oak Dodge, Inc., 201 Ill. 2d 81, 88 (2002) (recognizing state
policy against extending consumer disclosure requirements beyond
those mandated by federal law), PMUSA attempted to rebut plaintiffs'
argument that the lack of trade regulation rules governing the use of
these descriptors meant that their use could not have been "specifically
authorized" by the FTC.
	Plaintiffs' argument on this point was that the FTC had not
specifically authorized PMUSA to use the terms "lights" or "lowered
tar and nicotine" and, "in fact, lacks the authority to do so."
	The circuit court took the matter under advisement. Between that
date and November 8, 2002, the date upon which the circuit court
issued its order, plaintiffs filed their first amended complaint. In the
first amended complaint, plaintiffs abandoned some of the claims that
defendants had argued were preempted. The remaining complaint,
according to plaintiffs, was that defendant's use of the terms "lights"
and "lowered tar and nicotine" was an affirmative misrepresentation
and, thus, according to Cipollone, not preempted by the Act.
	The circuit court's order noted PMUSA's argument that this
claim of affirmative misrepresentation necessarily depends on
plaintiffs' proving neutralization of the warning and a fraud on the
FTC and acknowledged that "to the extent that their claims do depend
on such a showing," such claims would be preempted under Cipollone
and Buckman. However, the circuit court reserved judgment on the
preemption question, finding it premature to address these defenses
because there were "significant disputes about several material facts"
that could not be resolved without live testimony. "A trial," according
to the circuit court, would be required before the court could decide,
"on a full and complete record whether the plaintiffs have stayed
within the bounds of Cipollone and whether they are attempting to
cross the line laid down in Buckman."
	The November 8, 2002, order did not address PMUSA's
affirmative defense based on the exemption provision contained in
section 10b(1) of the Consumer Fraud Act. The order did not,
however, reject this defense. Thus, when the circuit court "specifically
reserve[d] judgment until trial on the issues presented in defendants'
motion for summary judgment," judgment on this defense was
reserved, presumably in order for the circuit court to determine, at
trial, whether the FTC had specifically authorized the use of the
disputed terms.

4. Trial
	At trial, plaintiffs' case in chief consisted of the testimony of the
2 class representatives, 4 other class members, and 12 expert
witnesses. PMUSA presented the testimony of 18 class members (one
of the class representatives, 3 of the originally named plaintiffs who
had withdrawn, and 14 others) and 7 experts. On rebuttal, plaintiffs
recalled 2 of their experts and offered 2 additional experts.
	Little of the testimony presented by plaintiffs in their case in chief
was directed at PMUSA's affirmative defenses for the obvious reason
that the burden of proving these defenses rested with the defendant.
For purposes of resolving the issue that this court finds dispositive,
only the testimony of two expert witnesses is relevant.
	Plaintiffs' expert witness Dr. Neil Benowitz holds an M.D. from
the University of Rochester and is board certified in internal medicine,
clinical pharmacology, and medical toxicology. He is a full professor
on the faculty of the University of California at San Francisco, where
he is chief of the clinical pharmacology division in the department of
medicine. In addition to teaching and seeing patients, Dr. Benowitz
does research involving the actions of various drugs, including
nicotine, and has written numerous articles on the subject of smoking
and health.
	Dr. Benowitz testified at length about nicotine addiction, the
health effects of smoking, compensatory behavior, and the limitations
of the FTC testing method. On cross-examination, Dr. Benowitz
testified that he had recently received a letter from the FTC eliciting
his opinion on a number of issues, including the FTC testing method
and the use of the term "lights" and other descriptors. A copy of the
letter was admitted into evidence. In addition to replying to the FTC
inquiry, Dr. Benowitz and other scientists who had received similar
inquiries wrote a joint letter to the FTC in which they expressed their
concern that their responses to the FTC inquiries might be used to
suggest that they supported the FTC's testing method. The joint letter
also expressed the scientists' opinion that the terms "low tar," "light,"
and "ultra-light" are deceptive. The joint letter was also admitted into
evidence. Dr. Benowitz stated that the FTC had not yet concluded the
inquiry and that the use of the descriptors was still under
consideration.
	At this point in the cross-examination, the circuit court sustained
plaintiffs' objection to further questioning on the subject of descriptors
on the basis of relevance. PMUSA argued that the FTC's ongoing
consideration of the use of descriptors was "directly relevant to pre-emption." The court ruled that there was "no question in this court on
pre-emption." Although counsel for PMUSA reminded the circuit
court that it had reserved ruling on its affirmative defenses pending the
resolution of factual issues, the court would not permit further
questioning of this witness with regard to his knowledge of or
participation in the recent FTC inquiry into the use of low tar
descriptors.
	The circuit court thereafter sustained a series of objections to
questions regarding the FTC testing method and the use of
descriptors, but allowed PMUSA to make a written offer of proof.
Nothing in the redirect or re-cross-examination of this witness related
to the question of whether the FTC authorized use of the disputed
descriptors. At the conclusion of re-cross-examination, counsel for
PMUSA clarified that the written offer of proof would be filed,
addressing three of its affirmative defenses. The circuit court
reiterated its ruling that any currently pending FTC consideration of
the use of descriptors was not relevant to this case.
	Plaintiffs have not called our attention to any other portion of the
trial transcript in which they elicited testimony, either on direct
examination or cross-examination, on the question of whether the
FTC may or may not have specifically authorized the use of
descriptors such as "light" or "low tar" in cigarette labeling or
advertising.
	Dr. John Peterman testified as an expert witness on behalf of
PMUSA. Dr. Peterman holds a Ph.D. in economics and has taught at
the University of Chicago and the University of Virginia. He was
employed at the FTC from 1976 to 1993. From 1988 until he left the
FTC, he was the director of its Bureau of Economics. His area of
expertise is regulatory economics. He testified that he had made an
extensive study of regulation of the tobacco industry, including the
history of FTC regulation of cigarettes, especially those described as
"light" or "low tar."
	According to Dr. Peterman, the FTC tar and nicotine program,
which began in 1966, has two goals. First, it aims to provide
consumers with information about tar and nicotine yields with the aim
of facilitating their movement from higher yield products to lower
yield products. Second, the FTC seeks to promote an overall
reduction in tar and nicotine yields by encouraging tobacco companies
to compete to bring lower yield products to market. The FTC adopted
several mechanisms in support of these goals. First, it adopted a
"single uniform protocol" to derive the tar and nicotine numbers that
could be conveyed to consumers. Second, it published the numbers
derived from the testing program. Initially, the numbers were reported
to Congress. Later, the FTC permitted (and eventually required) that
the numbers be included in cigarette packaging and advertising. Thus,
in keeping with both goals, the FTC encourages competitive
advertising of tar and nicotine yields. Dr. Peterman further testified
that a third part of the FTC program is the permitting of the use of
certain designators such as "light" and "low tar" if the product meets
certain conditions specified by the FTC.
	In response to questions regarding the FTC's regulatory activity,
Dr. Peterman testified that the FTC can undertake the promulgation
of formal rules. In lieu of formal rulemaking, the FTC can withdraw
proposed rules if those affected voluntarily agree to comply. In
addition, the FTC can issue advisory opinions upon request by an
industry actor or other interested party. Finally, the FTC can
undertake investigative and enforcement efforts pursuant to section 5
of the FTC Act. 15 U.S.C. §45(a) (2000). After filing a formal
complaint charging a violation of the Act, the FTC can resolve the
complaint and achieve its regulatory objective by means of a consent
order. Such orders are a matter of public record and are published in
the Federal Register. According to Dr. Peterman, the FTC uses such
orders to "provide guidance to other firms in the industry." He stated,
"While I was at the Commission, we considered all the activities that
resulted in changes in firm behavior in response to Commission action
as the FTC regulation of that activity." Thus, the FTC selected cases
for enforcement "with the aim" of providing "significant guidance" to
industry members.
	A substantial part of Dr. Peterman's testimony involved the
history of the regulation of cigarette advertising that this court has
already summarized, above, based on the documentary record. In
addition, he testified regarding the FTC's own use of and definitions
of the terms "low tar" and "ultra low tar." Specific reference was
made to the FTC's annual Report to Congress, which Dr. Peterman
described as a report summarizing "what's going [on with regard] to
cigarette advertising, the regulatory activities the commission is
engaged in, and to make recommendations to Congress for changes
in the law." The Annual Report is an official statement of the FTC,
which the FTC is required by the Labeling Act to prepare.
	Copies of the annual FTC Reports to Congress from 1967 to
2000 were identified by Dr. Peterman and admitted into evidence
without objection. Dr. Peterman testified that he reviewed the reports
in preparation for his testimony and that they reflected the official
position taken by the FTC at the time they were transmitted to
Congress. Specifically, he called attention to the portions of the 1968,
1970, 1971, 1979, and 1980 reports in which the FTC used or defined
the term "low tar." He opined that the FTC has adopted an "official
definition" of the term as a cigarette containing 15 milligrams or less
tar.
	Through the testimony of Dr. Peterman, PMUSA also called the
circuit court's attention to several reports prepared by FTC staff that
were placed on the public record and transmitted to Congress.
According to Dr. Peterman, such reports represent the position of the
FTC. In one report, the FTC staff noted that FTC annual reports to
Congress "began in early 1967 and signaled the beginning of a new
submarket trend based upon the FTC's official definition of low-tar
cigarettes (15 or less milligrams of tar)." See FTC Staff Report,
Bureau of Economics, Brand Performance in the Cigarette Industry
and the Advantage to Early Entry, at 35 (June 1979). In 1981, the
FTC reported to Congress on the conclusion of a study undertaken in
1976, in response to FTC's taking notice of extensive promotion and
development of low tar and nicotine cigarettes. According to Dr.
Peterman, the staff report "reconfirmed" that FTC "formally defines"
low tar as 15 milligrams or less. See FTC Staff Report, Cigarette
Advertising Investigation, at 1-50 n.175 (May 1981).
	Over plaintiffs' objection, PMUSA was allowed to admit into
evidence a copy of a November 24, 1998, letter from Senator Frank
R. Lautenberg of New Jersey to then-FTC Chairman Robert Pitofsky.
The Senator urged Chairman Pitofsky "to begin a proceeding to
suspend the right of tobacco companies to market any cigarettes as
'Light' or 'Ultra Light' or list supposed nicotine and 'tar' ratings on
their products and advertisements until and unless an accurate system
of measuring the health implications of smoking is established."
Lautenberg accompanied the letter with copies of "tobacco industry
documents" that provided, in Lautenberg's words, "strong evidence
that the tobacco industry knows that the nicotine and tar ratings used
to determine what constitutes 'Light' cigarettes are false and
misleading to consumers." Peterman described the Senator's request
as specifically targeting the use of the word "light" as a descriptor by
PMUSA and other tobacco companies.
	The FTC responded to the letter in a news release, a copy of
which was also admitted into evidence. The FTC acknowledged
receipt of documents of which it was not previously aware and that
the "existing testing methodology both significantly understates actual
tar and nicotine intakes and doesn't properly account for differences
in tar and nicotine intakes." The FTC also announced that its staff had
been working with the Department of Health and Human Services on
an informal basis to address these issues and that it had "now formally
requested, and HHS has agreed," to conduct a review of the FTC
testing methodology and of the "limited health benefits, previously
believed to be associated with lower tar and nicotine cigarettes." FTC
Statement in Response to Senator Frank Lautenberg's Release of
Tobacco Documents, November 24, 1998.
	Dr. Peterman then testified that the FTC does regulate the use of
the descriptor "lights" and that it permits "the use of the descriptor
'lights' in cigarette advertising under certain conditions." He based
this conclusion on his expert understanding of the FTC's functions and
operations and on the 1971 consent order, the 1995 consent order,
and the results of the various FTC investigations and deliberations on
the subject of the use of measurements and descriptors of tar in
cigarette advertising. He further testified that, based on his
investigation and experience, that PMUSA's advertising of Marlboro
Lights and Cambridge Lights is in compliance with the FTC
requirements. Both cigarettes yield less than 15 milligrams of tar based
on the FTC test method and both brands are lower in tar than their
full-flavor counterparts, Marlboro Reds and regular Cambridge
cigarettes.
	Regarding the 1971 American Brands consent order, Dr.
Peterman testified that the order was an "official act" of the FTC and
that it was published for the purpose of providing guidance to industry
members regarding the use of descriptors. He stated that the consent
order said to industry members, in effect: "If in the future you use the
term 'low,' 'lower,' or any light [sic] qualifying terms to describe your
product, it [will be] necessary to put the tar and nicotine yield in the
ad."
	Regarding the FTC investigation into the "channel" filter used by
the manufacturer of Barclay cigarettes, Dr. Peterman explained that
because the construction of the filter caused the mandatory FTC
method to produce unreliable results, there were no accurate yield
numbers that the manufacturer could include on the package or in its
advertising. Thus, he opined, the FTC "indicated to Barclay that if it
wished, it could advertise the product simply as low tar," because the
FTC estimated that, if not for the channel filter construction, the yield
under the FTC method would have measured in the 3 to 7 milligrams
range, well within the 15 milligrams or less definition of a low tar
cigarette.
	Similarly, when it investigated Carlton cigarettes in 1994, the
FTC acted to ban use of "fractions, multiples, or ratios that implied
actual intake differences" between Carlton and other brands.
Nevertheless, Dr. Peterman stated, the FTC allowed American
Brands, the manufacturer of Carltons, to make the claim that Carlton
cigarettes were "low" or "the lowest" in tar. He was allowed to
testify, over plaintiffs' objection, that the publication of the consent
order in this matter was intended by the FTC to give guidance to the
rest of the industry.
	Dr. Peterman further testified that on September 12, 1997, the
FTC caused the publication in the federal register of a request for
comments regarding cigarette descriptors. Specifically, "it asked for
comments as to whether the descriptors 'low tar' and 'light,' which
covered products between [sic] 15 milligrams and less, should be
changed or in any way are potentially misleading. And they asked for
similar comments with respect to 'ultra light' products, which were
cigarettes ranked using the FTC test method from 6 and under
milligrams of tar." According to Dr. Peterman, that investigation
remained open as of the date of his testimony.
	PMUSA's expert summarized the FTC's rules regarding the use
of "low," "lower," "light," and similar descriptors as follows: use of
the terms "low tar" and "lowered tar" is permitted if the cigarette
yields 15 milligrams or less of tar under the FTC test method; it is not
permissible for a manufacturer to make representations of specific
numeric reductions in tar intake by smokers; the term "lights" is
deemed by the FTC to be synonymous with the term "low tar"; and,
finally, the FTC "intended the industry generally to conform its
advertising to these rules." Dr. Peterman specifically relied upon the
various consent orders to formulate this opinion.
	Questioned further about the terms "light" or "lights" as applied
to cigarettes, Dr. Peterman testified that the FTC equates the term
"light" with "low tar." He based his opinion on an internal study
conducted during his tenure at the FTC which revealed that the two
terms were used synonymously to refer to cigarettes with a tar yield
of 15 milligrams or less. The FTC considers the term "lights" to be a
description of a "low tar" cigarette.
	He testified further regarding the FTC investigation that began in
1976 and concluded in 1981 with an FTC staff report to Congress.
The staff report stated that the FTC had determined that such
descriptors were not false or misleading. As a result, the report did not
recommend banning the use of such descriptors. Instead, the report
recommended strengthening the required warnings on cigarette
packages and rotating several different warnings to keep the message
fresh in the minds of consumers. According to Dr. Peterman, the FTC
responded to the staff report by recommending changes in the warning
program, but continued to permit use of the descriptors.
	The cross-examination of Dr. Peterman focused almost entirely
on questions related to the issue of federal preemption. He was not
asked in any detail about the FTC's authorization of the use of the
terms "low tar," "lower tar," "lights," or other descriptors. Rather, he
was questioned in great detail about whether state regulation of the
use of such terms would conflict with the FTC's program.
	During a recess in the cross-examination of Dr. Peterman, the
circuit court indicated to counsel for PMUSA that "if you're relying
on [sic] just on him, you lose preemption, and I-I'll just go ahead and
not waste your time and strike your defense." Counsel for PMUSA
explained that Dr. Peterman's testimony also went "directly to the
primary jurisdiction defense," and that the testimony regarding "the
use of descriptors is very direct evidence of our primary jurisdictional
affirmative defense."
	After cross-examination resumed, Dr. Peterman admitted that he
could not identify any FTC trade regulation rule that regulated the use
of low tar descriptors. He also agreed with plaintiffs' assertion that no
FTC trade regulation rule either requires the use of such descriptors
or approves the use of such descriptors. He was then asked if the use
of such descriptors by a tobacco company was "a voluntary one." He
replied that it would be a decision to be made by the individual firm.
A cigarette manufacturer could drop the use of the term "light" or
other low tar descriptors if it chose to do so, but would still, under
FTC policy, have to publish the tar and nicotine numbers.
	With regard to the 1971 consent order entered into by the FTC
and American Brands, Dr. Peterman was asked whether he believed
that the consent order provided guidance to the cigarette industry and
if, even though PMUSA was not a party to the order, it would "sort
of know how far they can go and how far they can't go." He agreed
with this statement.
	The evidence offered by plaintiffs on the issue of damages is
worthy of mention. Plaintiffs' expert Jeffrey Harris, M.D., testified
regarding the "contingent valuation analysis" that he conducted using
data obtained by J. Michael Dennis, Ph.D. Dr. Harris holds a
bachelor's degree from Harvard University and masters and doctoral
degrees from the University of Pennsylvania. He is currently on the
faculty of the economics department of the Massachusetts Institute of
Technology and holds an appointment with the Harvard Medical
School. Dr. Dennis is the vice president and managing director of the
Government and Academic Research Department of Knowledge
Networks in California.
	Dr. Dennis testified that Knowledge Networks conducts surveys
on the Internet, primarily for university professors or other academics
who are conducting federally sponsored research. The company has
"web-enabled" a panel of some 40,000 randomly selected United
States households to participate in various surveys. The demographic
characteristics of these households is generally similar to the United
States population as a whole.
	For purposes of this case, 2,701 panel members were invited to
participate in a survey on the basis of their being current or recent
smokers. 1,779 of these responded to the on-line invitation by
completing the "screening survey"; 276 of these "qualified for the
main interview" based on their answers to three screening questions.
The screening questions eliminated those who had not smoked in the
previous year, those who did not smoke Marlboro or Cambridge
products, and, finally, those who did not smoke Lights. In addition,
the panel members were eliminated if they answered "no" to the
question whether they could recall the reason they initially chose to
smoke a light or lower tar and nicotine cigarette. About 23% of those
remaining could not. In addition to answering a series of questions
about their beliefs regarding the relative safety of lower tar cigarettes
compared to full-flavor cigarettes, the remaining respondents were
asked to assume that Marlboro Lights were more hazardous than full-flavor cigarettes and to imagine the existence of a Marlboro Light that
was identical in all other respects to the current product, except that
it was truly safer to smoke. The respondents were then asked to state
how much of a discount would be required to cause them to purchase
the more hazardous product if the safer version were actually
available.
	Based on the answers to this question, Dr. Harris calculated that
class members, on average, would demand a 92.3% discount from the
market price if they were to continue to purchase Marlboro Lights.
Applying this discount to all purchases of Marlboro and Cambridge
Lights during the relevant class periods, and calculating prejudgment
interest at 5%, noncompounded, Harris concluded that the 1.14
million members of the class had suffered $7.1005 billion in economic
damages.
	On cross-examination, Dr. Harris agreed that he had provided
input into language used in the survey questions used by Knowledge
Networks. He agreed that he was not an expert in survey design and
did not consult such an expert before formulating the questions. He
was unaware of any texts or guides for the formulation of contingent
valuation surveys, although he was aware that such surveys are
controversial. When asked if his diminution-in-value analysis "assumes
both the reliability and the validity of the Knowledge Networks
survey," he answered "yes," but offered no basis for his assumption.
	PMUSA's expert, W. Kip Viscusi, Ph.D., is a professor of
economics who holds four degrees from Harvard University. He has
taught at Northwestern University and the University of Chicago and
is presently on the faculty at Harvard University, where he holds an
endowed chair and heads the program on Empirical Legal Studies. Dr.
Viscusi described his particular expertise in the area of survey design
and analysis. He has been analyzing survey data since 1976 and
designing surveys since 1981 and has been published in numerous
peer-reviewed books and journals. His specialty is the subject of risk
and uncertainty.
	Dr. Viscusi testified that the price of Marlboro Lights and
Cambridge Lights has always been identical to the price of their full-flavored counterparts and, therefore, because the plaintiffs did not pay
a premium for the claimed "lightness" of these products, they could
not have suffered any economic loss. With regard to Dr. Harris'
reliance on the Knowledge Networks survey offered by plaintiffs as
evidence of economic damages, Dr. Viscusi explained that a
contingent valuation survey attempts to determine the value in the
marketplace of a hypothetical product. He offered three guidelines
that he described as "good, sound practice" for such surveys. First, the
survey should be pretested to ensure that the people taking the survey
understand the questions. Second, the hypothetical "good" that is
being described must be made fully understandable to the survey
respondents, so that they will be able to "value the good." Third,
because the "good" is a hypothetical product, "not a real market
transaction," it is necessary for the survey to contain "internal
consistency checks." When real market data is not available to
compare to the survey answers and the survey itself does not ensure
consistency, it may not be possible to determine whether the survey
respondents took the questions seriously. They may perceive the
hypothetical transaction as involving only "funny money." Dr. Viscusi
testified that the Knowledge Networks survey violated all three of
these guidelines.
	At the close of evidence, PMUSA again sought decertification of
the class and moved for judgment as a matter of law. After
considering proposed findings of fact and conclusions of law
submitted by both parties, the circuit court declined to decertify the
class, rejected each of PMUSA's 27 affirmative defenses, and entered
judgment for the plaintiffs on the issue of liability.

5. Judgment Order
	The circuit court issued its judgment order on March 21, 2003.
The portion of the order relating to the issue of class certification was
noted above.
	In the judgment order, the circuit court ruled on issues upon
which it had earlier reserved judgment. Ruling that the Labeling Act
does not expressly preempt plaintiffs' claims under the Consumer
Fraud Act, the circuit court stated that plaintiffs' Consumer Fraud Act
claims are based upon " 'a state-law duty not to make false statements
of material fact or to conceal such facts' " (quoting Cipollone, 505 U.S.  at 528, 120 L. Ed. 2d  at 430, 112 S. Ct. at 2623). Further, the
circuit court ruled that even if plaintiffs' Consumer Fraud Act claim
is expressed in terms of an omission rather than misrepresentation, the
omission of information qualifying the claim of lower tar cannot be
read as a claim of failure to warn. See Cipollone, 505 U.S.  at 528, 120 L. Ed. 2d  at 430, 112 S. Ct.  at 2623. A claim of concealment of a
material fact-that the claim of lowered tar was based on a laboratory
measurement that was known to be an inaccurate representation of the
actual delivery of tar-is a claim of fraud, not a claim of failure to
warn.
	Further, the circuit court noted that neither the Labeling Act nor
the regulations of the FTC govern a cigarette manufacturer's
voluntary use of the terms "lights" and "lowered tar and nicotine" as
descriptors on packaging. The mere fact that the FTC has, at times,
considered and rejected such regulations does not create conflict
preemption. The circuit court also rejected defendant's reliance on the
first amendment and on article I, sections 4 and 5, of the Illinois
Constitution as bases for finding plaintiffs' claim preempted. The
circuit court stated that neither the federal nor the state constitution
protects commercial speech that is false and misleading.
	Then, without specifically referring to section 2 or section 10b(1)
of the Consumer Fraud Act, the circuit court stated:
			"Philip Morris' Seventh Affirmative Defense-Compliance
with Government Regulations-is denied. The false and
misleading use of the descriptors 'Lights' and 'Lowered Tar
and Nicotine' has never been specifically authorized by law.
Philip Morris voluntarily chose to use these terms on its
packages of Marlboro Lights and Cambridge Lights. No
regulatory body has ever required (or even specifically
approved) the use of these terms by Philip Morris. The court
finds that Philip Morris has not established that its conduct is
'specifically authorized' by law."
	The circuit court characterized plaintiffs' Consumer Fraud Act
claim as being based on two distinct types of fraudulent statements by
PMUSA. First, plaintiffs alleged that the representations "light" and
"lower in tar and nicotine" on Marlboro Lights and Cambridge Lights
labels were "material and false." Second, with regard to plaintiffs'
claim that the smoke delivered by Marlboro Lights and Cambridge
Lights is more mutagenic than the smoke delivered by their full-flavored counterparts, the circuit court characterized the claim as one
of misrepresentation by omission. That is, the descriptors "light" and
"lowered tar and nicotine" were "fraudulent and misleading because
[they] did not state matters which materially qualify the statement as
made." The "matters not stated," according to the circuit court, were
that the tar from Marlboro Lights and Cambridge Lights "is higher in
toxic substances and more mutagenic" than tar from regular
cigarettes. The circuit court expressly noted its reliance on the
testimony of plaintiffs' experts, whom it found more credible than
PMUSA's experts. In its findings of fact, the circuit court stated that
although PMUSA's "misrepresentations in this case were not in the
form of an explicit statement" of increased health or safety, class
members "universally understood the message of reduced risk from
these products." The court also found that PMUSA was aware, as a
result of its own research, of increased mutagenicity of the smoke
from its light cigarettes. In addition, the court found that even if a
smoker of light cigarettes does not compensate completely, he or she
will receive higher levels of most of the toxic substances contained in
cigarette smoke than a smoker of regular cigarettes.
	As for the elements of the Consumer Fraud Act claim, the circuit
court found:
			"After considering all the testimony and evidence admitted
at trial, the Court finds that the Plaintiffs have proven that
Philip Morris has violated the Consumer Fraud Act through
the deceptive act of misrepresenting its Cambridge Lights and
Marlboro Lights products as 'Lights' and misrepresenting
Marlboro Lights as 'Lowered Tar and Nicotine.' The Court
further finds that Philip Morris intended that the Class
members in this case rely upon the deception created by these
misrepresentations. These misrepresentations occurred in the
course of conduct involving trade or commerce and caused
actual damage to the Plaintiffs in the amount of $7.1005
Billion. This actual damage to the Plaintiffs' was proximately
caused by the misrepresentations of Philip Morris."
	The circuit court awarded $3 billion in punitive damages, to be
paid to the State of Illinois and attorney fees in the amount of 25% of
the compensatory award.
	In response to a posttrial motion raising the issue of whether the
multistate tobacco settlement agreement barred the state from
receiving any of the punitive damages amount, the court modified its
judgment so that the punitive damages award would revert to the
members of the plaintiff class if the state were found to be barred from
receiving such funds. See People v. Philip Morris, Inc., 198 Ill. 2d 87,
92-93 (2001) (explaining the circumstances under which the State of
Illinois joined the multistate "Master Settlement Agreement" of claims
against several tobacco industry defendants).

II. ISSUES ON APPEAL
	On appeal, PMUSA argues that (1) the circuit court erred by
rejecting certain of its affirmative defenses, (2) the circuit court erred
by certifying a plaintiff class, (3) plaintiffs failed to establish their
claims and the claims of the class members, (4) the damages award is
erroneous, and (5) the circuit court erred in finding that certain
documents were not privileged. Under each of these issues, PMUSA
raises numerous subissues.

III. PMUSA'S AFFIRMATIVE DEFENSES
	Since the mid-1950s, the FTC has regulated the labeling and
advertising of cigarettes, including the disclosure by manufacturers of
tar and nicotine levels in their products. PMUSA unsuccessfully
argued to the circuit court that the existence of a comprehensive
federal regulatory scheme governing these topics bars plaintiffs' claim
as a matter of law on four separate bases. PMUSA renews these
arguments before this court. First, PMUSA asserts that sections 2 and
10b of the Consumer Fraud Act (815 ILCS 505/2, 10b (West 2000))
bar plaintiffs' claim. Second, PMUSA argues that even if state law
permits such a claim, plaintiffs' Consumer Fraud Act action is
expressly preempted by the Federal Cigarette Labeling and
Advertising Act (Labeling Act) (15 U.S.C. §1331 et seq. (2000)).
Third, PMUSA contends that this claim is barred by the doctrine of
conflict preemption. Fourth, PMUSA argues that labeling of its light
cigarettes comes within the protection of the first amendment and
article I, section 4, of the Illinois Constitution. In addition, PMUSA
cites the three-year statute of limitations applicable to actions brought
under the Consumer Fraud Act (815 ILCS 505/10a(e) (West 1998)),
which, it argues, precludes class certification and limits the damages
period. Because we find section 10b(1) of the Consumer Fraud Act
bars plaintiffs' claim, we need not address the other issues raised in
this appeal.
	The Consumer Fraud Act was enacted in 1961 as a regulatory
and remedial statute for the purpose of protecting consumers and
others against fraud, unfair methods of competition, and unfair or
deceptive acts or practices in the conduct of any form of trade or
commerce. Robinson v. Toyota Motor Credit Corp., 201 Ill. 2d 403,
416-17 (2002). It is to be liberally construed to effectuate this
purpose. Cripe v. Leiter, 184 Ill. 2d 185, 191 (1998). Section 10b(1)
of the Consumer Fraud Act provides that nothing in the Act shall
apply to "[a]ctions or transactions specifically authorized by laws
administered by any regulatory body or officer acting under statutory
authority of this State or the United States." 815 ILCS 505/10b(1)
(West 1998).
	Illinois enacted the Deceptive Practices Act in 1965 primarily for
the purpose of defining and prohibiting deceptive trade practices (see
1965 Ill. Laws 2647, eff. January 1, 1966 (title of Act)) and unfair
competition (see Chabraja v. Avis Rent A Car System, Inc., 192 Ill.
App. 3d 1074, 1079 (1989) (noting that the prefatory notes to the
statute specifically refer to deceptive conduct that unreasonably
interferes with another in the promotion and conduct of his business).
Section 4(1) of the Deceptive Practices Act provides: "This Act does
not apply to: (1) conduct in compliance with the orders or rules of or
a statute administered by a Federal, state or local governmental
agency." 815 ILCS 510/4 (West 1998).
	Before this court can determine whether section 10b(1) of the
Consumer Fraud Act bars plaintiffs' claim, we must be clear about the
precise nature of the conduct alleged by the plaintiffs to have
constituted fraud. Having carefully reviewed the pleadings, we reject
PMUSA's attempt to cast plaintiffs' claim as one of failure to make
additional disclosures beyond the warning required by federal law.
Plaintiffs' claim is not based on failure to warn or on neutralization of
the required warnings. It is not a claim of fraud on the FTC, nor is it
a claim for damage to plaintiffs' health.
	Plaintiffs have pleaded a pure case of consumer fraud. They
allege that PMUSA used the descriptive terms "light" and "lowered
tar and nicotine" on its packaging and in its advertising with the
knowledge that these terms are deceptive, and with the intent that
consumers rely upon the false message in making purchasing
decisions. Plaintiffs have further alleged that the class members relied,
to their detriment, on these false claims. See Oliveira, 201 Ill. 2d  at
149 (listing elements of a cause of action under the Consumer Fraud
Act). In addition, plaintiffs assert that the smoke that was delivered by
the PMUSA products was even more toxic and more mutagenic than
smoke from full-flavor cigarettes.
	If the use of these descriptive terms in the manner alleged has
been specifically authorized by the FTC in the course of carrying out
the duties assigned to it by Congress, this action cannot stand, even if
the terms might be found deceptive by a trier of fact. 815 ILCS
505/10b(1) (West 1998). Similarly, if these terms have been used by
PMUSA in compliance with the orders or rules of the FTC, an action
under the Deceptive Practices Act is also barred. 815 ILCS 510/4
(West 1998).

A. Standard of Review
	PMUSA suggests that its affirmative defenses raise questions of
law and, therefore, the proper standard of review is de novo, citing
Woods v. Cole, 181 Ill. 2d 512, 516 (1998). Plaintiffs have not
objected to de novo review. We conclude that de novo review is
warranted, but not for the reason suggested by PMUSA.
	As a threshold matter, we must construe the language of section
10b(1). Statutory construction is a question of law, subject to de novo
review. Advincula v. United Blood Services, 176 Ill. 2d 1, 12 (1996).
Once the statute is properly construed, its terms must be applied to
the circumstances of the individual case to determine whether it bars
this action. It is arguably a question of fact whether the FTC did, or
did not, specifically authorize the use of certain descriptive terms in
cigarette labeling and advertising. Indeed, the circuit court felt it
necessary to reserve judgment on the affirmative defenses pending the
creation of a factual record at trial. It could, therefore, be argued that
the application of section 10b(1) to the facts should be reviewed under
a more deferential standard. See, e.g., Carpetland U.S.A., Inc. v.
Illinois Department of Employment Security, 201 Ill. 2d 351, 369
(2002) (noting that when the "issue presented cannot be accurately
characterized as either a pure question of fact or a pure question of
law," it may be properly reviewed under an intermediate standard of
review).
	We, nevertheless, review de novo the application of section
10b(1) to the facts of this case. Although the circuit court made a
finding that the FTC did not specifically authorize the use of the
disputed terms, this is not a finding of fact that proceeded from the
circuit court's assessment of credibility of witnesses or the weight it
chose to give to conflicting pieces of evidence. Rather, the actions of
the FTC with relation to the use of these terms in cigarette advertising
and labeling are a matter of public record. Thus, the statute is being
applied to facts that are essentially undisputed. Because we need not
evaluate the credibility of witnesses or weigh conflicting testimony to
determine whether the actions of the FTC have resulted in specific
authorization of the use of these terms by cigarette manufacturers, we
may properly draw our own conclusion on the issue. Steinbrecher v.
Steinbrecher, 197 Ill. 2d 514, 523 (2001) (where the question on
appeal is limited to application of the law to undisputed facts, the
standard of review is de novo).

B. PMUSA's Argument
	PMUSA argues that section 10b(1) bars this action based on the
FTC's regulatory scheme and Congress' regulation of cigarette
advertising through the Labeling Act. Citing this court's decisions in
Lanier, 114 Ill. 2d  at 17, and Jackson, 197 Ill. 2d  at 49, which are
discussed in detail below, PMUSA argues that its compliance with
federal law, combined with the policy against extending disclosure
requirements beyond what is mandated by law, satisfy the
requirements of section 10b(1). At oral argument, counsel for
PMUSA characterized section 10b(1) as a "safe harbor for those
whose conduct does not violate federal law."
	In the alternative, PMUSA argues that even if compliance with
applicable law is not sufficient to bar Consumer Fraud Act liability
(see Jackson, 197 Ill. 2d  at 58-60 (Kilbride, J., specially concurring,
joined by Harrison, C.J.) (rejecting view that mere compliance with
the applicable regulatory scheme, by itself, is sufficient to trigger the
operation of section 10b(1))), the FTC has specifically authorized the
use of the disputed descriptors in cigarette labeling and advertising.
PMUSA asserts that regulatory agencies, including the FTC, "use a
wide array of tools other than formal regulations to control industry
conduct."
	Throughout the history of FTC regulation of cigarette marketing,
PMUSA claims, the agency has used advisory opinions, voluntary
cooperation obtained in response to threatened regulation,
investigations of individual industry actors, reports to Congress, and
other methods of influencing the behavior of industry actors.
Specifically, PMUSA argues, the FTC "has found that one especially
effective method of regulation is to bring an enforcement action
against one company to announce to an entire industry what behavior
is and is not authorized." By resolving such actions with a consent
decree, as the FTC did in the 1971 and 1995 cases, the FTC
communicated to all industry actors the circumstances under which
they may use "low tar" descriptors. For this assertion, PMUSA relies,
in part, upon National Labor Relations Board v. Bell Aerospace Co.,
416 U.S. 267, 294, 40 L. Ed. 2d 134, 153-54, 94 S. Ct. 1757, 1771,
(1974) (" '[A]djudicated cases may and do ... serve as vehicles for the
formulation of agency policies, which are applied and announced
therein' "), quoting National Labor Relations Board v. Wyman-Gordon Co., 394 U.S. 759, 765, 22 L. Ed. 2d 709, 714-15, 89 S. Ct. 1426, 1429 (1969) . Further, PMUSA insists, the FTC itself considers
such conduct to be regulatory activity, as evinced by the testimony of
Dr. Peterman and the many FTC documents admitted into evidence at
trial.
	In addition, PMUSA notes that the circuit court found in
paragraph 148 of its judgment order that its practices "offend public
policy, are immoral, unethical, oppressive and unscrupulous and that
this course of conduct caused a substantial injury to the Class
members," in violation of both the Consumer Fraud Act and the
Deceptive Practices Act. Because an action under the Deceptive
Practices Act is barred if the defendant's conduct is "in compliance
with" FTC rules, PMUSA argues that it cannot be held liable under
the Deceptive Practices Act in the absence of proof a violation of a
governing rule or statute.

C. Plaintiffs' Response
	Plaintiffs argue that the FTC has never "specifically authorized
the fraudulent use of any descriptor, and it would lack the legal
authority to do so in any event." They further argue that, whatever is
meant by the term "specifically authorized," it clearly requires
something more than mere compliance with federal law.
	Plaintiffs point to Dr. Peterman's testimony on cross-examination
in which he acknowledged that the FTC generally does not adopt
trade regulation rules that approve conduct that a regulated entity may
or may not choose to engage in. Rather, the FTC adopts regulations
that require certain conduct or forbid other conduct. They note that
no FTC document or official statement has ever announced that a
tobacco company has "substantiated" its use of such descriptors.
Further, they point to the FTC's "disavowal" of any "official"
definition of these terms. See Cigarette Testing, Request for Public
Comment, 62 Fed. Reg. 48,158, 48,163 (September 12, 1997) (noting
that the FTC itself does not define terms such as "low tar," "light,"
"medium," "extra light," "ultra light," "ultra low," or "ultima,"
although "they appear to be used by the industry to reflect ranges of
FTC tar ratings").
	With regard to the 1971 and 1995 consent orders, plaintiffs
dispute their relevance to the conduct of any industry actor other than
the company that was a party to the enforcement action. The 1971
consent order, according to plaintiffs, did not mention "lights" and did
not define "low tar." It imposed conditions upon the use of such terms
with which, it argues, PMUSA has never complied. The 1995 consent
order neither defined "lights" nor established a "numerical standard for
'low tar.' "
	Plaintiffs distinguish Lanier on the basis that it involved an
alleged fraudulent failure to disclose while this case involves
PMUSA's "active and direct misrepresentations." In addition,
plaintiffs offer Jenkins v. Mercantile Mortgage Co., 231 F. Supp. 2d 737, 752 (N.D. Ill. 2002), in which the federal district court, applying
Illinois law, stated that Lanier did not hold that mere compliance with
federal law does not bar liability under the Consumer Fraud Act.

D. Analysis
	We begin our analysis with the observation that each party
overstates its case with respect to this issue.
	PMUSA asserts that mere compliance with applicable FTC
regulations is enough to bar a Consumer Fraud Act action, correctly
noting that application of section 10b(1) of the Consumer Fraud Act
has never been held by this court to require that a federal agency or
statute expressly authorize the conduct at issue. Rather, according to
PMUSA, so long as the challenged conduct is in compliance with
applicable federal law, section 10b(1) bars liability under the
Consumer Fraud Act. Citing Lorillard Tobacco, 533 U.S.  at 548, 150 L. Ed. 2d  at 555, 121 S. Ct.  at 2418. PMUSA notes that by enacting
the Labeling Act, Congress not only mandated the precise warnings
that must appear on cigarette packaging and in cigarette advertising
but also vested authority in the FTC to enact additional targeted
regulations of cigarette advertising. See Lorillard Tobacco, 533 U.S. 
at 550, 150 L. Ed. 2d  at 556, 121 S. Ct.  at 2419 (holding that the
Labeling Act preempts state regulations specifically targeting cigarette
advertising, but does not preempt state regulation of cigarette use or
sales, or imposition of regulations of general applicability, such as
zoning, which may have an effect on cigarette advertising). PMUSA
argues that, pursuant to the authority vested in it by Congress to enact
additional regulations regarding cigarette advertising, the FTC "has
addressed precisely how cigarette manufacturers may communicate
with consumers about tar and nicotine levels and has specifically
considered and allowed the use of the descriptors at issue here."
PMUSA asserts that its use of the terms "lights" and "lowered tar and
nicotine" are in undisputed compliance with FTC regulations
governing cigarette labeling and advertising and, as a result, plaintiffs'
claims under the Consumer Fraud Act are barred.
	We reject PMUSA's assertion that section 10b(1) operates to bar
plaintiffs' claim merely because PMUSA may have been in compliance
with applicable federal law. The plain language of section 10b(1)
requires that two separate conditions be present before a claim is
barred. First, a regulatory body or officer must be operating under
statutory authority. In this case, the first condition is met. The FTC
operates under the authority of the FTC Act (15 U.S.C. §45(a)
(2000)), and the Labeling Act (15 U.S.C. §1331 et seq. (2000)), to
regulate the packaging and advertising of cigarettes. Second, liability
under the Consumer Fraud Act is barred by section 10b(1) only if the
action or transaction at issue is "specifically authorized by laws
administered" by the regulatory body. 815 ILCS 505/10b(1) (West
1998). As we explain in detail, below, PMUSA's mere compliance
with the rules applicable to labeling and advertising is not sufficient to
trigger the exemption created by section 10b(1).
	Similarly, while the FTC's own use of the terms "low tar" and
"ultra low tar" and its apparent adoption of definitions of these terms
(15 milligrams or less of tar and 6 milligrams or less of tar,
respectively) clearly invites others to use the same or similar terms to
describe certain cigarettes, it cannot be said that the FTC's own use
of such terms in its reports to Congress or elsewhere "specifically
authorizes" cigarette manufacturers to use these terms in labeling and
advertising. Conduct is not specifically authorized merely because it
has not been specifically prohibited. Conduct is not specifically
authorized merely because it has been passively allowed to go on for
a period of time without regulatory action being taken to stop it.
Instead, we must look to the affirmative acts or expressions of
authorization by the FTC to answer this question.
	Plaintiffs' argument that the FTC "has never 'specifically
authorized' the fraudulent use of any descriptor, and it would lack the
legal authority to do so in any event" (emphasis in original), is
similarly overstated. Whether these terms are deceptive goes to the
merits of the fraud claim, not to the threshold question of exemption
under section 10b(1), under which the real issue is whether the FTC
has specifically authorized PMUSA and other cigarette manufacturers
to use these terms on their packaging and in their advertising, no
matter how vague or unhelpful these terms might be to consumers.
	Plaintiffs also claim that PMUSA's use of these terms cannot be
deemed authorized by the 1971 consent order because PMUSA has
not accompanied its use of these terms with "a clear and conspicuous
disclosure of" the tar and nicotine content of the advertised cigarette
and of the cigarettes to which it was being compared. This argument
has no merit because the quoted language applies only when the
manufacturer is making a direct comparison between its brand of
cigarettes and a competing brand. See American Brands, 79 F.T.C.
255 (permitting advertising of cigarettes using "the words 'low,'
'lower,' or 'reduced' or like qualifying terms," if the statement is
accompanied by a "clear and conspicuous disclosure" of the tar and
nicotine content of the advertised cigarette; and, if a direct comparison
is made to another brand or brands, disclosure of the tar and nicotine
content of that brand or brands and of the "lowest domestic yield
cigarette"). Indeed, the consent order expressly provides that "a
comparison to a class of cigarettes, or to many or most of the
cigarettes of a class, shall not be deemed a comparison to another
brand or brands of cigarettes."
	Having disposed of these arguments, we turn to the interpretation
and application of section 10b(1) of the Consumer Fraud Act.

1. The Statutory Language
	In determining whether section 10b(1) of the Consumer Fraud
Act operates to bar the action at issue, we are guided by established
principles. The primary rule of statutory construction is to ascertain
and give effect to the intent of the legislature. Bridgestone/Firestone,
Inc. v. Aldridge, 179 Ill. 2d 141, 149 (1997), quoting Illinois Power
Co. v. Mahin, 72 Ill. 2d 189, 194 (1978). To do so, we examine the
language of the statute, which is the most reliable indicator of the
legislature's objectives in enacting the law. Michigan Avenue National
Bank v. County of Cook, 191 Ill. 2d 493, 504 (2000). When
interpreting statutes, this court gives undefined words their plain and
ordinary meaning. Granite City Division of National Steel Co. v.
Illinois Pollution Control Board, 155 Ill. 2d 149, 181 (1993). It is
entirely appropriate to employ the dictionary as a resource to ascertain
the meaning of undefined terms. People ex rel. Daley v. Datacom
Systems Corp., 146 Ill. 2d 1, 16 (1991).
	The statutory language at issue provides that the Consumer Fraud
Act shall not apply to actions "specifically authorized by laws
administered by any regulatory body or officer acting under statutory
authority of this State or the United States." 815 ILCS 505/10b(1)
(West 1998). It is undisputed that the FTC acts under federal
statutory authority to administer federal laws regarding the labeling
and advertising of cigarettes.
	To authorize is to "give legal authority; to empower," "[t]o
formally approve; to sanction." Black's Law Dictionary 143 (8th ed.
2004). Although the dictionary definition clearly encompasses
formally promulgated trade regulation rules of the FTC, neither the
definition nor the statute itself limit the application of the provision to
authorization via formal agency rulemaking. Rather, so long as the
conduct is specifically authorized "by laws administered by" the
regulatory body, it is exempt from Consumer Fraud Act liability.
Based on the dictionary definition, therefore, the specific authority
contemplated by section 10b(1) may be either express or implied.
	Authorization is "specific" if it is "[o]f, relating to, or designating
a particular or defined thing; explicit," "[o]f or relating to a particular
named thing." Black's Law Dictionary 1434 (8th ed. 2004). The term
"specifically" in section 10b(1) describes the substance or content of
the authorization. It refers to the conduct that has been authorized,
rather than the manner in which the authorization has been
communicated. The term "specifically" indicates a legislative intent to
require a certain degree of specificity or particularity in the
authorization.
	Neither party has offered any argument as to the meaning of the
phrase "by laws administered by." However, we conclude that the
legislature must have intended the phrase to require deference to
agency policy and practice as it carries out the duties delegated to it
by Congress or the General Assembly. If the legislature had intended
to require that the specific authorization be contained in the law itself,
it would have exempted conduct "specifically authorized by state or
federal statute," not conduct "specifically authorized by laws
administered by" a regulatory body.
	Our focus, therefore, must be on the actions of the FTC with
regard to cigarette labeling and advertising to determine whether, as
a matter of state law, it specifically authorized PMUSA to use the
disputed terms in its labeling and advertising. If the FTC has
specifically authorized the use of the terms "lights" and "lowered tar
and nicotine" by PMUSA in its labeling and advertising, PMUSA may
not be held liable under the Consumer Fraud Act, even if the terms
might be deemed false, deceptive, or misleading.

2. Legislative Intent and Public Policy
	Our reading of the plain and ordinary meaning of the language of
section 10b(1) is consistent with apparent legislative intent and with
the public policy embodied in the Consumer Fraud Act. Although the
Consumer Fraud Act is to be liberally construed to effectuate its
purposes of protecting "consumers, borrowers, and business persons
against fraud, unfair methods of competition, and other unfair and
deceptive business practices" (Robinson, 201 Ill. 2d at 416-17), the
legislature clearly intended for certain actions or transactions engaged
in by entities otherwise subject to the Consumer Fraud Act to be
exempt from liability under the Consumer Fraud Act and the
Deceptive Practices Act, without regard to the possible merits of the
asserted claim.
	Section 10b(1) reflects a legislative policy of deference to the
authority granted by Congress or the General Assembly to federal and
state regulatory agencies and a recognition of the need for regulated
actors to be able to rely on the directions received from such agencies
without risk that such reliance may expose them to tort liability.
	Further, section 10b(1), by exempting certain conduct from
liability even if the conduct itself is objectionable, serves to channel
objections to agency policy and practice into the political process
rather than into the courts. See City of Chicago v. Beretta U.S.A.
Corp., 213 Ill. 2d 351, 432 (2004) (suggesting that change in law
affecting highly regulated industry be left to the legislature and the
political process); Charles v. Seigfried, 165 Ill. 2d 482, 493 (1995)
(noting that public and social policy should emanate from the
legislature). Parties who desire to bring about change in agency
policies or rules can take their complaints to the agency itself and can
participate in the formal rulemaking process. If their concerns are not
addressed by the agency, they may seek assistance from their
legislators and may use the political process, including the power of
the ballot box, if their voices are not heard.
	We conclude that neither the language of section 10b(1) nor the
public policy of the State of Illinois, as expressed by the legislature,
requires that a regulatory agency engage in formal rulemaking before
it can specifically authorize conduct by the entities over which it has
regulatory authority.

3. Illinois Case Law
	As noted above, both parties rely on this court's decision in
Lanier, 114 Ill. 2d 1, as the seminal case regarding application of
section 10b(1) of the Consumer Fraud Act. PMUSA argues that,
under Lanier, compliance with a federal regulatory scheme is
sufficient to trigger the exemption of section 10b(1). Plaintiffs argue
that this case is readily distinguishable from Lanier.
	In Lanier, the consumer plaintiff alleged that the creditor
defendants violated the Consumer Fraud Act and the Deceptive
Practices Act by failing to explain the effect of the "Rule of 78s" if she
prepaid her loan. Lanier, 114 Ill. 2d  at 5. Application of the rule to her
loan caused her to have to pay more than $4,600 more than she would
have been charged under the actuarial method of calculating interest.
She argued that since the rule was understood by few borrowers, the
defendants were obliged to explain the rule at the time of making a
loan and that failure to do so constituted fraud. Lanier, 114 Ill. 2d  at
6. Defendants argued that their full compliance with the requirements
of the federal Truth in Lending Act (TILA) (15 U.S.C. §§1601
through 1665 (1982)) was a defense to liability under the Illinois
Consumer Fraud Act. Lanier, 114 Ill. 2d  at 11.
	Relying on a Federal Reserve Board staff interpretation of the
applicable regulation (Lanier, 114 Ill. 2d at 12-13), this court
determined that the defendant did not violate the TILA by failing to
explain the operation of the Rule of 78s. Lanier, 114 Ill. 2d  at 14. This
court then considered whether compliance with the TILA was a
defense to liability under the Consumer Fraud Act and concluded that
the Consumer Fraud Act did not create more extensive disclosure
requirements than the TILA. Rather, we noted "a consistent policy
against extending disclosure requirements under Illinois law beyond
those mandated" by federal law, in situations where both the TILA
and Illinois statutes apply. Lanier, 114 Ill. 2d  at 17. Thus, this court
held:
		"Because the [Truth in Lending] Act is a law administered by
the Federal Reserve Board, we find that, under section
10b(1) of the Consumer Fraud Act, the defendant's
compliance with the disclosure requirements of the Truth in
Lending Act is a defense to liability under the Illinois
Consumer Fraud Act in the present case." Lanier, 114 Ill. 2d 
at 18.
	PMUSA argues that Lanier and the policy recognized therein
against imposing disclosure requirements beyond those mandated by
applicable federal law require the application of the bar of section
10b(1) to plaintiffs' claim. Plaintiffs respond that PMUSA's reliance
on Lanier is misplaced because the basis of their claim of fraud is not
PMUSA's failure to make additional disclosures. Their claim is based
on allegations of "active and direct" misrepresentation.
	Our decisions since Lanier make it clear that mere compliance
with applicable federal regulations is not necessarily a shield against
liability under the Consumer Fraud Act. For example, in Martin v.
Heinold Commodities, Inc., 163 Ill. 2d 33 (1994), this court held that
a broker's failure to reveal certain information in its disclosure
statement was not authorized by the Commodity Futures Trading
Commission (CFTC) or its regulations and, therefore, could be the
basis for liability under the Consumer Fraud Act. The defendant did
not fail to accurately disclose the amount of fees it charged investors
for processing commodity options contracts. Rather, defendant failed
to reveal the true nature of the fees being charged. Specifically,
Heinold failed to reveal that the "foreign service fee" it was charging
was instead a commission from which it would derive a share and that
the fee was not authorized by the CFTC. Martin, 163 Ill. 2d  at 40-42.
Citing Lanier, Heinold argued that its literal compliance with the
disclosure requirements of the CFTC was a complete defense to
liability under the Consumer Fraud Act. Martin, 163 Ill. 2d  at 49. This
court concluded that the deception was "neither specifically
authorized by the Commission, nor in compliance with the
Commission's regulations." Martin, 163 Ill. 2d  at 50. In addition, this
court commented that the CFTC itself had noted that "literal
compliance" with its disclosure requirements would not "necessarily
ensure that a violation of the Commission's regulations has not
occurred." Martin, 163 Ill. 2d  at 50. The CFTC was on record as
stating that " 'a customer may be deceived about [material facts]
despite receipt of the information required by [the Commission's
regulations.]' " Martin, 163 Ill. 2d  at 50, quoting Hammond v. Smith
Barney, Harris Upham & Co. [1987-1990 Transfer Binder] Comm.
Fut. L. Rep. (CCH) par. 24,617 (C.F.T.C. 1990).
	In Jackson, this court again considered whether a defendant's
compliance with its obligations under the TILA provided a defense to
a claim under the Consumer Fraud Act. The specific issue was
whether the car dealership and Chrysler Financial Corporation, the
assignee of the car sales contract, could be held liable when the
dealership failed to reveal in the contract that it would retain a
substantial portion of the amount charged for an extended warranty
rather than transmit the entire amount to the manufacturer. Jackson,
197 Ill. 2d  at 41-42. The trial court dismissed the complaint and the
appellate court affirmed, relying on Lanier. Jackson, 197 Ill. 2d  at 43.
This court affirmed, following the rule established in Lanier and
holding that "compliance with the disclosure requirements of TILA is
a defense to the Consumer Fraud Act claim against Chrysler
[Financial] in this case." Jackson, 197 Ill. 2d  at 50. In addition, this
result was based on an exemption clause in the TILA that exempts
assignees from liability under federal law unless the creditor's
violation of the TILA is "apparent on the face of the disclosure
statement." 15 U.S.C. §1641(a) (2000). Thus, we held that "an
assignee is not responsible for the misrepresentations made by the
dealer to the consumer outside of reviewing the face of the assigned
document for apparent defects." Jackson, 197 Ill. 2d  at 50. In effect,
we held that the assignee was "specifically authorized" (815 ILCS
505/10b(1) (West 2000)) to do no more than meet its obligations
under section 1641(a) of the TILA.
	It is significant that in both Lanier and Jackson, the holding was
limited to the facts of the particular case. Lanier, 114 Ill. 2d  at 18 ("in
the present case"); Jackson, 197 Ill. 2d  at 50 ("in this case"). As we
noted in Jackson, Lanier did "not confer a blanket immunization"
from Consumer Fraud Act liability. If the alleged fraud were "active
and direct," such as a scheme to make false statements on the
financing statement, liability under the Consumer Fraud Act could be
imposed. Jackson, 197 Ill. 2d  at 51-52. As Justice Kilbride noted in
his special concurrence, mere compliance with applicable law does not
necessarily bar Consumer Fraud Act liability. Instead, the conduct at
issue must be specifically authorized. Jackson, 197 Ill. 2d  at 59
(Kilbride, J., specially concurring, joined by Harrison, C.J.).
	In Lanier and Jackson, this court held that full compliance with
applicable disclosure requirements is a defense, under section 10b(1),
to a claim of fraud based on the failure to make additional disclosures.
In the present case, however, the plaintiffs' claim is not based on an
alleged failure to disclose and, thus, compliance with disclosure
requirements cannot constitute a defense.
	Consider, for example, if the alleged fraud was the practice of a
cigarette manufacturer to put only 19 cigarettes instead of 20 in every
fifth pack of cigarettes. Such a scheme would increase profits by 1%
by selling 99 cigarettes instead of the 100 promised on the labels.
Without a doubt, the manufacturer would be liable under the
Consumer Fraud Act for the fraud, notwithstanding scrupulous
compliance with all applicable rules and regulations of the FTC. Such
a fraud would be "active and direct." See Jackson, 197 Ill. 2d  at 51-52. See also Hill v. St. Paul Federal Bank for Savings, 329 Ill. App.
3d 705, 713 (2002) (rejecting argument that defendant's failure to
disclose posting order of checks in its fee schedule was deceptive,
even if in compliance with federal law, because the Consumer Fraud
Act does not require more extensive disclosure than that required by
the TILA).
	Plaintiffs' claim in the present case is that the use of the terms
"lights" and "lowered tar and nicotine" on PMUSA's packaging and
in its advertising is every bit as false as the package label that promises
20 cigarettes but delivers only 19. Plaintiffs argue that Martin should
control the result in this case because the use of these terms has not
been specifically authorized by the FTC and was not done in
compliance with FTC rules. We conclude that Martin does not
provide the answer; it merely helps us formulate the dispositive
question. Unless the use of these terms has been specifically
authorized by the FTC, section 10b(1) of the Consumer Fraud Act
does not exempt PMUSA from liability.
	The circuit court, in rejecting PMUSA's section 10b(1) defense,
relied on Aurora Firefighter's Credit Union v. Harvey, 163 Ill. App.
3d 915 (1987). After the credit union brought a collection action
against the guarantor of a loan, he raised affirmative defenses and filed
counterclaims under the TILA, the Consumer Fraud Act, and the
Deceptive Practices Act. Aurora Firefighters, 163 Ill. App. 3d at 918.
With regard to his counterclaim that the credit union failed to make
required disclosures under the TILA, the court held that the TILA
requires disclosure only to the borrower, not to the guarantor, in a
credit transaction. Aurora Firefighters, 163 Ill. App. 3d at 919. With
regard to his counterclaims under the Consumer Fraud Act and
Deceptive Practices Act, the court agreed with the credit union it
could not be held liable because its alleged failure to disclose was both
authorized by and in compliance with the TILA. Aurora Firefighters,
163 Ill. App. 3d at 921-22. However, the court further held that the
defendant should be allowed to assert defenses under the Consumer
Fraud Act and the Deceptive Practices Act based on alleged abuses
other than disclosure violations. Aurora Firefighters, 163 Ill. App. 3d
at 926. Rejecting the credit union's reliance on its regulation by and
compliance with the Credit Union Act, the court stated that the mere
existence of such a statute does not create "a blanket exemption" for
credit unions from the operation of the Consumer Fraud Act.
	We conclude that the present case can be distinguished from
Lanier and its progeny because it does not involve the alleged lack of
disclosure in the context of loans, leases, or other transactions.
Rather, this case involves the use of allegedly deceptive terms in the
name and description of a consumer product. That is, this is not a case
in which the plaintiff argues that the defendant should have made
disclosures in addition to the disclosures specifically required by the
applicable regulations. In the present case, the question is whether the
FTC specifically authorized the use of the disputed terms.
	Despite this distinction, Lanier and its progeny, including the
case upon which the circuit court relied, do stand for three separate
propositions that are relevant to the present case. First, if section
10b(1) is to apply to bar a claim, the authorization relied upon must
come from a state or federal regulatory body. See Lanier, 114 Ill. 2d 
at 13 (the Federal Reserve Board "is the agency empowered by
Congress to prescribe implementing and interpretive regulations" for
the TILA); Lanier, 114 Ill. 2d  at 18 (applying section 10b(1) because
the TILA is "a law administered by the Federal Reserve Board). See
also Datacom Systems, 146 Ill. 2d  at 33 (defendant corporation, which
engaged in impermissible conduct while attempting to collect unpaid
parking fines under a contract with the City of Chicago, was not
exempt under section 10b(1) of the Consumer Fraud Act; although
hired by the city to perform this function, its "actions were not
specifically authorized by any laws administered by a regulatory body
acting under statutory authority of this State").
	Second, such a regulatory body may specifically authorize
conduct by regulated entities without engaging in formal rulemaking.
A Federal Reserve Board staff interpretation, for example, may be a
sufficient basis for a finding of specific authorization. See Lanier, 114 Ill. 2d  at 13 (agency is "entitled to the greatest respect in the
interpretation of its own regulations"; and noting that both Congress
and the Supreme Court have expressed approval for treating staff
interpretations as authoritative).
	Third, while the authorization must be specific-related to a
particular thing-it need not be express. Thus, in Lanier, full
compliance with disclosure requirements of the TILA was a defense
to liability because the required disclosure implicitly provided specific
authorization not to make any additional disclosures Lanier, 114 Ill. 2d  at 17. Neither the rules nor the staff interpretation of the Federal
Reserve Board expressly stated that lenders need not disclose the
effect of the Rule of 78s; rather, the regulatory body dictated the
content of the required disclosure, implying that no additional
disclosure was necessary and, thus, specifically authorizing lenders not
to disclose the information.
	Although there is extensive Illinois case law dealing with
applicability of section 10b(1) in the context of financial transactions
where the alleged fraud is related to the issue of disclosure, this case
involves alleged fraud in the advertising and promotion of a consumer
product. It also requires us to delve deeply into the functions and
actions of a federal agency. For these purposes, we turn to other
authorities.

4. Other Authorities
	We look to the FTC's own published materials and cases from
the United States Supreme Court and the federal courts for additional
authority in our effort to determine what constitutes "specific
authorization" and whether PMUSA used the terms "lights" and
"lowered tar and nicotine" under such authority.
	PMUSA argues that, over the years, the FTC used a number of
mechanisms to regulate and to authorize the making of claims
regarding the tar and nicotine content of cigarettes. These include
formal agency rulemaking, the issuance of advisory opinions, the use
of voluntary agreements with cigarette manufacturers to obviate the
need for rulemaking, and the initiation of enforcement proceedings
against an individual manufacturer. Such enforcement proceedings
might result in a judgment against the particular manufacturer or in the
entry of a consent order. Although the consent order may be enforced
only against the party who agreed to the terms of the order, PMUSA
asserts that an enforcement action against one industry actor is an
"especially effective method of regulation" that the FTC employs "to
announce to an entire industry what behavior is and is not authorized."
	Thus, PMUSA argues, American Brands was specifically
authorized by the 1971 consent order to use the terms "low," "lower,"
"reduced," or "like qualifying terms" in its advertising and packaging
to describe the level of tar and nicotine in its cigarettes, so long as it
also provided the actual measurement of the level in milligrams.
American Brands, 79 F.T.C. 255. Similarly, the 1995 consent order
prohibited American Tobacco Company from representing the tar and
nicotine levels of Carlton cigarettes by using "a numerical multiple,
fraction or ratio" of the tar or nicotine levels of other brands or by
depicting more than one pack of Carltons versus one pack of any
other brand. The agreed order provided, further, that "presentation of
the tar and/or nicotine ratings of any of respondent's brands of
cigarettes and the tar and/or nicotine ratings of any other brand (with
or without an express or implied representation that respondent's
brand is 'low,' 'lower,' or 'lowest' in tar and/or nicotine) shall not be
deemed" to violate the ban on numerical comparisons. American
Tobacco, 119 F.T.C. at 11. Both consent orders, PMUSA argues,
specifically authorized other members of the tobacco industry to act
in accordance with their terms.
	This assertion is supported by the FTC's own statements and
actions. In 1964, the FTC announced the promulgation of a trade
regulation rule requiring the disclosure on all cigarette packaging of
the fact that "cigarette smoking is dangerous to health and may cause
death from cancer and other diseases." Unfair or Deceptive
Advertising and Labeling of Cigarettes in Relation to the Health
Hazards of Smoking, 29 Fed. Reg. at 8325. This rule was rendered
unnecessary the following year with the enactment of the Labeling
Act. However, the FTC's "Statement of Basis and Purpose of the
Trade Regulation Rule" (Unfair or Deceptive Advertising and
Labeling of Cigarettes in Relation to the Health Hazards of Smoking,
29 Fed. Reg. at 8325-75 (hereinafter 1964 FTC Statement)), contains
valuable insights into the FTC's use of rulemaking and adjudication in
the regulatory process.
	The 1964 FTC Statement offers "ten reasons why a formal rule-making proceeding may be preferable to an adjudicative proceeding,
or a series of adjudicative proceedings." 1964 FTC Statement, 29 Fed.
Reg. at 8368. Among these reasons are: in formal rulemaking
proceedings, all interested persons are given an opportunity to be
heard; the rules of evidence and other procedural safeguards that
operate in the adjudicative process are not tailored to the needs of
rulemaking; and rulemaking through adjudication may be a more
costly and time-consuming means of dealing with a problem common
to an entire industry. 1964 FTC Statement, 29 Fed. Reg. at 8366-68.
Nevertheless, the Statement clearly reveals that the FTC considered
the adjudicative process as an alternative means of rulemaking:
			"Rule-making through adjudication is not always
completely fair and even handed in its results. This is
especially true where a practice sought to be eliminated is
industry-wide and the agency sues the members of the
industry one-by-one to stop the practice." 1964 FTC
Statement, 29 Fed. Reg. at 8367.
In addition,
			"The focus in adjudication is on settling a dispute over
past practices, and while a rule may be announced in the
process, it tends to be done incidentally and without sufficient
concern for laying down clear guidelines for the future. Most
often, rules contained in adjudicative decisions, whether
judicial or administrative, are not designated as rules or stated
in the form of rules. The rule must be inferred from the
language of the opinion and the facts of the case; it is implicit
rather than explicit; and it may remain uncontroversial and
uncertain until many subsequent adjudications have refined
and clarified it. It may take a long time for a rule even to be
recognized and understood as such." 1964 FTC Statement,
29 Fed. Reg. at 8367.
Despite these concerns, however, the FTC did not repudiate
adjudication as a regulatory tool:
		"We do not suggest, however, that the agencies in general, or
the Federal Trade Commission in particular, should abandon
reliance on the adjudicative method in all situations where a
substantive principle or standard of conduct having general
application is to be declared. The force of each of the [10]
reasons discussed above varies with the concrete situation in
which a choice between approaches is presented. That is why
the supreme court has held that the choice between rule-making and adjudicative proceedings is ordinarily within the
agency's discretion." 1964 FTC Statement, 29 Fed. Reg. at
8368, citing Securities & Exchange Comm'n v. Chenery
Corp., 332 U.S. 194, 202, 91 L. Ed. 1995, 2002, 67 S. Ct. 1575, 1580 (1947).
	The 1964 FTC Statement did not mention the use of advisory
opinions or the resolution of adjudicative actions by consent order.
However, the expressed concern about the ability of regulated entities
to discern clear rules from the opinions rendered after adjudication is
not present when the enforcement action is resolved by entry of a
consent order. Such an order is clearly intended to serve as a rule, at
least with respect to the parties to the consent order. The question for
this court is whether the entry of a consent order, expressly directing
one industry member to behave in a certain way, is an implicit
authorization for other industry members to conduct themselves in the
same manner. The FTC's observation that adjudication could be used
to announce "a substantive principle or standard of conduct having
general application" suggests that a consent order may serve as
authorization for nonparties to the order to follow its directives.
	The United States Supreme Court has considered the role of
adjudication as a means of establishing agency policy. Bell Aerospace
involved a dispute between an employer and a union over the proper
classification of certain buyers within the company's purchasing
procurement department. Bell Aerospace, 416 U.S.  at 269, 40 L. Ed. 2d  at 140, 94 S. Ct.  at 1759. The National Labor Relations Board
(NLRB) determined that the buyers were not managerial employees
and, therefore, were entitled to the protections of the National Labor
Relations Act. Bell Aerospace, 416 U.S.  at 288-89, 40 L. Ed. 2d  at
150-51, 94 S. Ct.  at 1768-69. The Court of Appeals held, inter alia,
that although the NLRB was not precluded from determining that
some buyers or all buyers were not managerial employees, it could not
do so without invoking its rulemaking procedures under the National
Labor Relations Act. Bell Aerospace, 416 U.S.  at 290, 40 L. Ed. 2d 
at 152, 94 S. Ct.  at 1770. The Supreme Court reversed in part,
disagreeing with this portion of the appellate court's holding. Bell
Aerospace, 416 U.S.  at 294, 40 L. Ed. 2d  at 154, 94 S. Ct.  at 1771-72.
	As noted above, PMUSA cites Bell Aerospace for the
proposition that " '[A]djudicated cases may and do ... serve as
vehicles for the formulation of agency policies, which are applied and
announced therein.' " Bell Aerospace, 416 U.S.  at 294, 40 L. Ed. 2d 
at 153-54, 94 S. Ct.  at 1771, quoting Wyman-Gordon, 394 U.S.  at
765, 22 L. Ed. 2d  at 714-15, 89 S. Ct.  at 1429. The Supreme Court
also stated in that case that the NLRB was "not precluded from
announcing new principles in an adjudicative proceeding and that the
choice between rulemaking and adjudication lies in the first instance
within the [NLRB's] discretion." Bell Aerospace, 416 U.S.  at 294, 40 L. Ed. 2d  at 154, 94 S. Ct.  at 1771.
		Bell Aerospace, therefore, offers some support for PMUSA's
contention that the 1971 and 1995 consent orders could be the source
of specific authorization for the conduct described therein. The Court
in Bell Aerospace, however, emphasized the importance of a
regulatory agency to have the ability to make case-by-case
determinations when the question is such that it would be of marginal
utility to announce a generalized standard for an entire industry. Bell
Aerospace, 416 U.S.  at 294, 40 L. Ed. 2d  at 154, 94 S. Ct.  at 1771-72. Thus, the Court observed, " 'an administrative agency must be
equipped to act either by general rule or by individual order. To insist
upon one form of action to the exclusion of the other is to exalt form
over necessity.' " (Emphasis omitted.) Bell Aerospace, 416 U.S.  at
293, 40 L. Ed. 2d  at 153, 94 S. Ct.  at 1771, quoting Chenery, 332 U.S.  at 202, 91 L. Ed.  at 2002, 67 S. Ct.  at 1580. Bell Aerospace,
however, offers little support for PMUSA's contention that the 1971
and 1995 consent orders resolving disputes between the FTC and
individual tobacco companies should be deemed by this court to
specifically authorize PMUSA or other cigarette manufacturers to
follow the directives contained in the orders.
	PMUSA also points to numerous documents in the record that,
it contends, reveal that the FTC itself considers the resolution of
adjudicated cases, either by judgment or by consent order to
constitute "regulatory activity." See, e.g., Federal Trade Commission,
Report to Congress Pursuant to the Public Health Cigarette Smoking
Act, at 13-14 (December 31, 1971) (describing the resolution of the
American Brands dispute via consent order and its "extended
negotiations" with "six proposed respondents" in the Lorillard matter
as part of its "[r]egulatory activity" for the year); Federal Trade
Commission, Report to Congress Pursuant to the Public Health
Cigarette Smoking Act, at 1 (December 31, 1972) (noting that by
October of 1972 "almost all cigarette advertising published in this
country was in compliance with the terms of consent orders" directly
involving only six cigarette companies). PMUSA's characterization of
the documentary record is consistent with the testimony of Dr.
Peterman, a former FTC bureau director, who stated that the FTC
uses consent orders to provide guidance to the entire cigarette
industry.
	We conclude that the FTC's informal regulatory activity,
including the use of consent orders, comes within the scope of section
10b(1)'s requirement that the specific authorization be made "by laws
administered by" a state or federal regulatory body. 815 ILCS
505/10b(1) (West 2000). This is consistent with our holding in Lanier,
which found specific authorization for the challenged conduct in an
agency staff interpretation (Lanier, 114 Ill. 2d at 17), and with the
plain meaning of the statute and the public policy expressed by the
legislature.
	The United States Court of Appeals for the Seventh Circuit,
applying Illinois law in the case of Bober v. Glaxo Wellcome PLC,
246 F.3d 934 (7th Cir. 2001), cited in Avery v. State Farm Mutual
Insurance Co., 216 Ill. 2d ___, ___ (2005), found that the plaintiff's
claim was properly dismissed by the district court because it was, as
a matter of law, not deceptive under the Consumer Fraud Act. Bober,
246 F.3d  at 940. However, because one member of the panel
disagreed with this holding, the court made an alternate holding
affirming the district court's conclusion that the plaintiff's claim was
barred by section 10b(1) of the Consumer Fraud Act. Bober, 246 F.3d 
at 941 n.4.
	Bober, like the present case, involved a claim of fraud in the
marketing of a consumer product. The defendant drug company
marketed both over-the-counter and prescription forms of the drug
ranitidine, which is a stomach acid reliever. By means of its consumer
hotline and other marketing practices, Glaxo indicated to Bober and
other consumers that the two medicines, known as Zantac 75 and
Zantac 150, were not substitutable. Bober, 246 F.3d  at 936-37. In
fact, although the two products contained exactly the same
medication, the cost to consumers of one tablet of Zantac 150 was
almost twice the cost of two 75 milligram tablets of Zantac 75. Bober,
246 F.3d  at 937. Plaintiff filed a claim under the Consumer Fraud Act,
alleging that Glaxo's statements that the two products were not
readily substitutable were deceptive and caused consumers to pay an
inflated price. Bober, 246 F.3d  at 937-38.
	The court noted that the "case law interpreting the relevant
portion of the [Consumer Fraud Act's] exemption provision is not
entirely clear on the question of what is meant by 'specifically
authorized.' " Bober, 246 F.3d  at 940. After reviewing this court's
decisions in Martin, 163 Ill. 2d 33 (discussed in detail, above), and
Weatherman v. Gary-Wheaton Bank of Fox Valley, 186 Ill. 2d 472
(1999) (compliance with federal statute is defense to Consumer Fraud
Act liability when the statute specifically authorizes the making of a
good faith estimate of fees), the Seventh Circuit concluded that:
			"Taken together, the [Illinois] cases stand for the
proposition that the state [Consumer Fraud Act] will not
impose higher disclosure requirements on parties than those
that are sufficient to satisfy federal regulations. If the parties
are doing something specifically authorized by federal law,
section 10b(1) will protect them from liability under the
[Act]. On the other hand, the [Consumer Fraud Act]
exemption is not available for statements that manage to be
in technical compliance with federal regulations, but which
are so misleading or deceptive in context that federal law
itself might not regard them as adequate." Bober, 246 F.3d 
at 941.
	The Seventh Circuit defined the issue as "whether the statements
Bober complains of are sufficiently within what is authorized by
federal law that Glaxo is entitled to section 10b(1) protection." Bober,
246 F.3d  at 941. The only statement that the court found "potentially
misleading" (Bober, 246 F.3d at 941) was the statement of Glaxo's
hotline operator, who told Bober that the two tablets were "not the
same medications" and that he "could not substitute two Zantac 75
tablets for one Zantac 150 tablet."Bober, 246 F.3d  at 937.
	The statement that the two dosages of the same drug were "not
the same medication" was found to be specifically authorized by a rule
formally adopted by the FDA and codified in the Code of Federal
Regulations. Bober, 246 F.3d  at 941. The exemption of section 10b(1)
applied to this statement, the court stated, "even if the statement may
have led Mr. Bober as a layperson to misunderstand what was being
said." Bober, 246 F.3d  at 941.
	The second part of the operator's statement regarding the
nonsubstitutability of the two tablets was "not so easily dealt with"
because "Glaxo was required by federal law to say a certain amount
and simultaneously required not to say too much." Bober, 246 F.3d 
at 942. Although the applicable regulations did not expressly authorize
Glaxo to answer a consumer's question with the statement "you
cannot substitute," the statement was consistent with federal
regulations prohibiting drug companies from suggesting "off-label"
uses for its products. Bober, 246 F.3d  at 942.
	In the end, even though there was no express authorization for
the "cannot substitute" statement, the Seventh Circuit concluded that
what Glaxo "chose to say and not to say was a sufficiently careful
compromise to fall within what is specifically authorized by federal
law." Bober, 246 F.3d  at 942. The court explained further:
			"The pharmaceutical industry is highly regulated, both at
the federal level and internationally. Technical requirements
abound, and it is not only possible but likely that ordinary
consumers will find some of them confusing, or possibly
misleading as the term is used in statutes like Illinois's
[Consumer Fraud Act]. But, recognizing the primacy of
federal law in this field, the Illinois statute itself protects
companies from liability if their actions are authorized by
federal law. (Such protection would amount to nothing if it
applied only to statements that were not susceptible to
misunderstanding; those statements would escape liability
under the [Consumer Fraud Act] in any event.) Because
Glaxo's statements fall within the boundaries established by
federal law, under Weatherman [186 Ill. 2d 472] and Martin
[163 Ill. 2d 33] they are entitled to protection under section
10b(1) of the [Consumer Fraud Act]." Bober, 246 F.3d  at
942-43.
		Bober is particularly helpful to our analysis of the present case,
because, unlike Lanier, 114 Ill. 2d 1, Martin, 163 Ill. 2d 33, and
Jackson, 197 Ill. 2d 39, it does not concern federal disclosure
requirements. Like the present case, it concerns whether the federal
regulatory agency has specifically authorized the making of certain
statements about the product. The Seventh Circuit has read the
statutory term "specifically authorized by laws administered by" in
section 10b(1) to encompass the making of statements that "fall within
the boundaries established by federal law" (Bober, 246 F.3d at 943)
in a highly regulated industry, even if those statements may tend to be
confusing or misleading and even if there is no express authorization
for the making of such statements in the applicable federal regulations.
This is entirely consistent with our previous decisions, our reading of
the statutory language, and our understanding of the legislative policy
underlying section 10b(1).
	The United States Court of Appeals for the District of Columbia
Circuit long ago noted the FTC's tendency to regulate by obtaining
voluntary compliance with its policies, rather than engaging in formal
rulemaking. See Holloway v. Bristol-Myers Corp., 485 F.2d 986, 995
(D.C. Cir. 1973) (noting that, due to its "expertise in dealing with
commercial practices," the FTC is able to secure "voluntary
compliance through informal proceedings," and, in its sound
discretion, determines when "formal enforcement measures" are
necessary; and, further, that Congress has "voiced approval" of the
FTC's "record in shaping the fluid contours of generalized statutory
policy pronouncements into meaningful and coherent rules of business
conduct"). In reaching its holding that the FTC Act did not create a
private cause of action under which that the Holloway plaintiffs could
bring their claim, the court of appeals provided a detailed history of
the FTC Act and its amendments and of the FTC itself. The court
noted that when considering the 1939 amendments to the FTC Act,
Congress made a fundamental policy judgment regarding the FTC's
"expertise in dealing with commercial practices, its ability to act as a
buffer in securing voluntary compliance through informal proceedings,
and its sound discretion in determining when formal enforcement
measures were necessary." Holloway, 485 F.2d  at 995. Holloway also
offers support for the conclusion that the consent orders obtained by
the FTC with respect to one industry member provided specific
authorization for other industry members to act in conformity with
those orders.
	Finally, although lacking in significant precedential weight, we
note with great interest the memorandum opinion and order of the
federal district court for the Eastern District of Arkansas in Watson v.
Philip Morris Cos., No. 4:03-CV-519 GTE (E.D. Ark., December
12, 2003), aff'd, No. 04-1225 (8th Cir. August 25, 2005). The
Watson class of plaintiffs was comprised of smokers who had
consumed at least one pack of Marlboro Lights during the six years
prior to the filing of their action pursuant to the Arkansas Deceptive
Trade Practices Act (Ark. Code Ann. §4-88-107). The substance of
their complaint was that Philip Morris advertised Marlboro Lights as
being lighter or lower in tar, despite the fact that the cigarettes
actually delivered more tar and nicotine than shown by the FTC
testing method. Philip Morris removed the action to federal court
pursuant to 28 U.S.C. §1442(a)(1) (2000), on the basis that it had
raised a colorable federal defense to the plaintiffs' claims. Specifically,
Philip Morris argued that its actions were at the direction of a federal
agency-the FTC-and that there was a causal nexus between the
FTC's actions and Philip Morris' marketing practices with regard to
light cigarettes. The district court denied the plaintiffs' motion to
remand the matter back to state court.
	For our purposes, the relevant portion of the Watson decision is
the district court's discussion of the FTC's regulation of advertising
of light and low tar cigarettes and the FTC's use of mechanisms other
than formal rules to direct the actions of regulated entities.
	After an exhaustive recounting of the history of regulation of
cigarette advertising, the district court noted that Philip Morris was
not required to advertise its cigarettes as "light" or "low tar."
Nevertheless, the court acknowledged:
		"[Philip Morris] is permitted by the FTC to so advertise its
cigarettes if they meet the FTC's standard. Philip Morris is
required to adhere to the FTC's regulation of 'lights'
advertising. The FTC requires disclosure of Cambridge Filter
Method tar and nicotine ratings in cigarette advertisements,
and has stated that a cigarette may be advertised as light if its
rating using the FTC Method is less than 15mg using the
FTC Method. Therefore, any contention that Philip Morris'
advertising of these two cigarette brands as 'Lights' is
misleading squarely confronts the FTC's mandate that
cigarette companies disclose FTC Method results in their
advertising and use the Method to determine whether a
particular cigarette may be classified as 'Light.' " Watson,
No. 4:03-CV-519 GTE.
	The district court also observed that a "formal rule is not required
in order for a federal agency to direct the actions of a private
company." The FTC "often regulates the industries it governs by
compelling voluntary agreements and consent orders rather than
promulgating formal rules." In reaching this conclusion, the district
court relied upon a documentary record similar to the record in the
present case. In addition, the district court cited the 1987 testimony
before Congress of then-chairman of the FTC Daniel Oliver, in which
he described the FTC's preference for informal regulation via the use
of enforcement actions and consent orders rather than formal
rulemaking. Oliver stated that it is "more efficient" to bring a single
case against one industry actor than to use scarce resources to engage
in rulemaking and that in "the case of the cigarette industry," it was
"entirely reasonable to suppose that one action against [one] cigarette
company would have an effect on all of them, and that you would not
have to make a rule." Quoting Statement of Daniel Oliver, Chairman
of the Federal Trade Commission, Hearing before the Subcommittee
on Transportation, Tourism, and Hazardous Materials of the House
Comm. on Energy and Commerce, 100th Cong. 17-19 (1987).
	The Watson court noted that the FTC coerced Philip Morris and
other cigarette manufacturers into "voluntary" cooperation with its
cigarette labeling and advertising policies "in such a way that a formal
rule" was not required to create federal jurisdiction. Finally, although
formal rulemaking "may be one of the principal ways federal agencies
regulate," "it is clearly not the only way. In the FTC's case, it is not
even the preferred way to regulate the cigarette industry."
	The issue addressed by the Watson court-whether removal to
federal court was proper-has no bearing on the present case.
However, the federal district court's detailed analysis does support
our conclusion that specific authorization for the use of the disputed
descriptors may be found in consent orders rather than in formally
promulgated trade regulation rules of the FTC.

5. Summary
	Based on these other authorities, read in conjunction with Illinois
law, we conclude that the FTC could, and did, specifically authorize
all United States tobacco companies to utilize the words "low,"
"lower," "reduced" or like qualifying terms, such as "light," so long
as the descriptive terms are accompanied by a clear and conspicuous
disclosure of the "tar" and nicotine content in milligrams of the smoke
produced by the advertised cigarette. See American Brands, 79
F.T.C. 255. Further, the FTC reiterated this authorization in the 1995
consent order, which forbade the representation of tar ratings as "a
numerical multiple, fraction or ratio of the tar or nicotine ratings of
any other brand," but specifically allowed the "express or implied
representation" that a cigarette is " 'low,' 'lower,' or 'lowest' in tar
and/or nicotine." American Tobacco, 119 F.T.C. at 10, 11. Thus, we
hold that plaintiffs' claim is barred by section 10b(1) of the Consumer
Fraud Act.
	At oral argument, plaintiffs' counsel noted that the circuit court
made two separate findings of fraud: (1) a finding that PMUSA's use
of the terms "light" and "lowered tar and nicotine" was fraudulent and
deceptive based on the known phenomenon of compensation, and (2)
a finding that the members of the plaintiff class were defrauded
because PMUSA failed to disclose that its "light" cigarettes were
more mutagenic than full-flavor cigarettes. Counsel argued that, even
if this court were to reverse on the merits of the first claim, the second
portion of the circuit court's judgment must still stand.
	We have not reached the merits of either aspect of plaintiffs'
fraud claim, having found the entire claim barred by section 10b(1) of
the Consumer Fraud Act. However, our discussion thus far has
focused on the PMUSA's use of the disputed terms. The question we
must next address is whether, even if the use of the terms was
specifically authorized by the FTC, a claim may be brought under the
Consumer Fraud Act based on PMUSA's describing more mutagenic
cigarettes as "light" and as delivering "lower tar and nicotine." For
two reasons, we find that the claim of fraud based on increased
mutagenicity cannot stand.
	First, plaintiffs' claim regarding mutagenicity is inextricably
linked to their claim that the terms "lights" and "lowered tar and
nicotine" are fraudulent and deceptive. Even though the circuit court
found that members of the plaintiff class understood these terms as
making an implied claim of safety and relied on this understanding,
their Consumer Fraud Act claim is barred by section 10b(1). It is clear
from the record that the FTC has defined both terms as meaning 15
milligrams or less of tar. Because PMUSA was specifically authorized
to use these descriptive terms on its labels and in its advertising of
products meeting this definition, any claim based on the use of these
terms is barred by section 10b(1) of the Consumer Fraud Act, no
matter what meaning the plaintiffs might have attributed to them.
	Second, plaintiffs' mutagenicity claim is based on PMUSA's
failure to make additional disclosures beyond those required by federal
statute and the voluntary agreement with the FTC-the tar and nicotine
content in milligrams and the mandatory warning label. Thus, the
claim is barred by this court's decisions in Lanier, 114 Ill. 2d  at 18
(finding compliance with disclosure requirements of federal statute to
be a defense to liability under the Consumer Fraud Act), Jackson, 197 Ill. 2d  at 47 (same), and Jarvis, 201 Ill. 2d  at 88 (recognizing state
policy against extending consumer disclosure requirements beyond
those mandated by federal law).

IV. OTHER ISSUES RAISED IN THIS APPEAL
	Our resolution of plaintiffs' claim on the threshold issue of
statutory exemption moots most of the other issues raised in this
appeal. One issue, however, is not resolved by our determination that
plaintiffs' claim is barred by section 10b(1) of the Consumer Fraud
Act. PMUSA argues that the circuit court erred by ruling that its
delivery of some 39,000 documents to Congress in compliance with
a congressional subpoena constituted waiver of both attorney-client
privilege and work-product protection for those documents. Although
only one of the disputed documents was actually admitted into
evidence in the present case, PMUSA urges this court to reverse the
circuit court's ruling on the issue. PMUSA's concern is that if it does
not raise the issue in this appeal, it may be estopped from doing so in
subsequent litigation in which an adverse party seeks to admit these
documents into evidence.
	Despite plaintiffs' well-supported arguments in favor of
upholding the circuit court's determination, we decline to address the
issue except to note that PMUSA did make the privilege argument
before this court and, thus, cannot be deemed to have acquiesced in
the admission of the single document into evidence in this case.
	Several of the other issues raised in this appeal are of great
importance and deserving of consideration by this court in the proper
case. In particular, the circuit court's certification of a plaintiff class
of 1.14 million individuals with claims covering decades raises several
significant issues. The circuit court found sufficient commonality of
issues to certify the class. Citing Oliveira, 201 Ill. 2d  at 155, in which
this court held that the proximate cause element of a Consumer Fraud
Act claim must be met by proof of a plaintiff's having been deceived
in some manner, PMUSA argues that the element of causation is an
individualized issue that makes class certification improper.
	We note that the five common questions of fact justifying class
certification that were enumerated by the circuit court in its judgment
order do not correspond to the five elements of a private cause of
action under the Consumer Fraud Act that this court has repeatedly
spelled out. See Zekman v. Direct American Marketers, Inc., 182 Ill. 2d 359, 373 (1998); Oliveira, 201 Ill. 2d  at 149. Specifically, although
the circuit court considered what the class members understood the
terms "lights" and "lowered tar and nicotine" to mean, and whether
PMUSA intended reliance on its allegedly false and misleading
statements, and whether the class members sustained damages as a
result, it did not make the specific inquiry required by
Oliveira-whether the members of the plaintiff class were deceived by
the use of the terms. That is, did they hold a false impression
intentionally created by PMUSA's use of these terms when they made
each and every purchase decision over a period of as long as 30 years?
	Similarly, in the portion of the judgment order listing five
elements of a claim under the Consumer Fraud Act, the circuit court
cites Oliveira as the source for the elements, but does not mention
actual deception as a necessary finding under the element of proximate
cause. However, in making its factual findings as to each element, the
circuit court did find that the false message of lighter smoke and lower
tar was "relied upon as a causative or determining factor for all Class
members even if the degree or extent may have varied between Class
members."
	In the present case, the causation issue has at least two aspects.
First, to meet the causation element of a Consumer Fraud Act claim
(Oliveira, 201 Ill. 2d at 154), the members of the class must have
actually been deceived in some manner by the defendant's alleged
misrepresentations of fact. In Oliveira, this court equated cause-in-fact with deception. Oliveira, 201 Ill. 2d  at 150. In the context of a
fraud claim, as in a negligence claim, cause-in-fact is "but for" cause.
That is, the relevant inquiry is whether the harm would have occurred
absent the defendant's conduct. Evans v. Shannon, 201 Ill. 2d 424,
434 (2002). The circuit court's use of the words "may have relied to
different degrees" causes us to question the existence of cause-in-fact.
Even if, as the circuit court found, every purchaser must have relied
to some degree on the disputed language, perhaps upon making the
first purchases of a light cigarette, we question whether it can
reasonably be said that the words "light" and "lowered tar and
nicotine" actually deceived over a million people for decades.
 	The circuit court cited Leonardi v. Loyola University of Chicago,
168 Ill. 2d 83 (1995), for the proposition that "[a] person is liable for
his or her conduct whether it contributed wholly or partly to the
plaintiffs' injury as long as it was one of the proximate causes of the
injury." Leonardi, however, was a medical malpractice action in which
the question was whether the defendant hospital and physicians could
admit evidence of the alleged negligence of another physician who
was not a party to the suit to demonstrate lack of proximate cause.
Leonardi, 168 Ill. 2d  at 91. Unlike Leonardi, the present case does
not involve the apportionment of causation among multiple
tortfeasors. The question is not whether PMUSA's use of the
descriptors was "one of the proximate causes" of plaintiff's injury.
Again, the question is whether it can reasonably be said that deception
created by the presence of the words "Lights" and "lowered tar and
nicotine" on packages of Marlboro Lights and Cambridge Lights was
the "but for" cause of millions of purchasing decisions made over a
period of some 30 years by the 1.14 million members of the plaintiff
class.
	We question, for example, whether all or most of the young
people who began smoking long after these products were brought to
market were deceived by the disputed words when choosing these
brands of cigarettes. It may be just as likely that peer group pressure
was the proximate cause of their adopting Marlboro Lights as their
preferred brand. Similarly, there is no way of knowing how many
smokers first tried Marlboro Lights because they were deceived by the
promised lower level of tar, then tried one or more other brands, only
to return to Marlboro Lights as a matter of personal preference.
	Second, a great deal of evidence was presented on the
phenomenon of compensation, which is the term applied to the
tendency of smokers to change their smoking behavior after switching
to a lower tar and nicotine product in order to achieve the level of
nicotine delivery that they had become accustomed to. The circuit
court concluded, based on the testimony of plaintiffs' experts, that
plaintiffs demonstrated that compensation is "complete." That is, that
every smoker compensates fully for the effects of the lowered tar and
nicotine cigarette. However, even if this is true with respect to
smokers of full-flavor cigarettes who switch to the so-called "light" or
"low tar" brands, we question whether the members of the class who
never smoked prior to smoking Marlboro Lights would have felt the
need to compensate when they lacked a prior habit to compensate for.
	In addition to our reservations about the existence of individual
issues that might make class certification inappropriate, we have grave
reservations about the novel approach to the calculation of damages
that was offered by the plaintiffs and accepted by the circuit court.
	However, despite the importance of these questions and the
parties' having thoroughly briefed and argued them, we decline to
address them. Because we have resolved this appeal on the threshold
question of a statutory bar to maintaining the action, these are issues
for another day.

V. CONCLUSION
	Plaintiffs note that the FTC has never adopted a trade regulation
rule approving the use of descriptors such as "light" or "low tar," and
that the FTC has never stated that the use of such descriptors has been
"substantiated" by any cigarette manufacturer. Further, plaintiffs argue
that PMUSA has never claimed to have any proof that its "Lights" are
safer than regular cigarettes. These statements are true, but do not
resolve the question whether the FTC has specifically authorized the
use of these terms. Plaintiffs also assert that the FTC has, fairly
recently and after entering into the consent orders, expressly
disavowed any "official" definitions of the terms. See Cigarette
Testing, Request for Public Comment, 62 Fed. Reg. 48,158, 48,163
(September 12, 1997) ("There are no official definitions for these
terms but they appear to be used by the industry to reflect ranges of
FTC tar ratings"). It is not clear to this court what the FTC meant by
"no official definitions," unless it was referring to the absence of a
trade regulation rule. The FTC itself certainly uses these terms in its
publications and its reports to Congress. Perhaps the FTC's published
definitions of these terms in these contexts are considered by the
agency to be "unofficial."
	We conclude that the specific authorization required to trigger
the exemption of section 10b(1) does not require formal rulemaking
or official definitions. See Lanier, 114 Ill. 2d  at 12-13 (finding specific
authorization in Federal Reserve Board staff interpretation of the
applicable regulation). It is sufficient if the authorization proceeds
from regulatory activity, including the resolution of an enforcement
action by means of a consent order. The consent order provides
express authority for the party that was the target of the enforcement
action to engage in the conduct described in the consent order. In
addition, a consent order entered into by the FTC with one member
of a regulated industry, which is published pursuant to statute,
provides implied authority for other members of the regulated industry
to engage in the same conduct. It would elevate form over substance
to say that FTC specifically authorized American Brands to use such
descriptors so long as certain conditions were met (American Brands,
79 F.T.C. 255), but did not thereby specifically authorize other
members of the industry to act accordingly. Thus, while the
authorization given to American Brands was express, the
authorization given to the rest of the industry was implied, but no less
specific.
	The necessary degree of specificity is provided by the language
of the consent orders and by the FTC's long-standing use, if not
formal adoption, of the definition of "low tar" as meaning 15
milligrams or less of tar per cigarette.
	Because PMUSA was specifically authorized to use the disputed
terms without fear of the FTC challenging them as deceptive or unfair,
it is exempt from civil liability under 10b(1) of the Consumer Fraud
Act for the use of the terms so long as the other conditions set out in
the consent orders were met. We find no evidence in the record that
PMUSA failed to use these terms in compliance with the terms of the
consent orders.
	The increased mutagenicity of the smoke delivered by Marlboro
Lights and Cambridge Lights cannot be a separate basis for a claim
under the Consumer Fraud Act because, even if the terms "light" and
"lowered tar and nicotine" do convey a message of safety, their use is
specifically authorized by the FTC. In addition, any claim of fraud
based on PMUSA's failure to disclose increased mutagenicity is
barred by this court's long-standing rule against imposing additional
disclosure requirements beyond those established by statute or agency
regulation.
	Plaintiffs' claim under the Deceptive Practices Act must also fail.
Section 4 of the Deceptive Practices Act exempts from liability
"conduct in compliance with the orders" of a federal agency. 815
ILCS 510/4 (West 2000). Because we have concluded that the 1971
and 1995 consent orders provided specific authorization to all industry
members to engage in the conduct permitted by the orders, these
orders fall within the scope of section 4, even though PMUSA was
not a party to either consent order. See also Mario's Butcher Shop &
Food Center, Inc. v. Armour & Co., 574 F. Supp. 653, 655 (N.D. Ill.
1983) (noting parallel between exemption clauses of the Consumer
Fraud Act and the Deceptive Practices Act).
	We have resolved the present case entirely on the basis of state
law by construing and applying an exemption clause in a state statute.
We do not address PMUSA's arguments that this action is expressly
or impliedly preempted by federal law. Operation of section 10b(1) is
not dependent on the intent of Congress. Rather, it is dependent on
the intent of the Illinois General Assembly to allow regulated entities
to engage in commercial conduct that might otherwise be alleged to
be fraudulent or deceptive without risk of civil liability, so long as that
content is specifically authorized by the regulatory body.
	Finally, we share the concerns expressed by plaintiffs and their
amici about the devastating health effects of smoking and, in
particular, the scourge of smoking among young people. We
emphasize that because this action is barred by section 10b(1) of the
Consumer Fraud Act, it is unnecessary to reach the merits of
plaintiffs' claim that PMUSA intentionally deceived the public. Our
resolution of the present case is in no way an expression of approval
of PMUSA's alleged conduct. Nevertheless, as justices, our role is to
apply the law as it exists, not to decide how the law might be
improved. We must defer to the policy of the legislature as expressed
in the language of the Consumer Fraud Act. Therefore, plaintiffs and
others who would seek to alter the conduct of tobacco companies
must take their case to the General Assembly, where they might seek
amendment of section 10b(1); to the FTC, where they might seek
changes in regulations; or to Congress, where they might seek
amendments to the Labeling Act.
	We reverse the judgment of the circuit court and remand with
instructions to dismiss pursuant to section 10b(1) of the Consumer
Fraud Act.
Circuit court judgment reversed;
cause remanded with instructions.
	CHIEF JUSTICE THOMAS took no part in the consideration or
decision of this case.
	JUSTICE KARMEIER, specially concurring:
	I agree that the judgment of the circuit court should be reversed.
In my view, however, that conclusion is not dependent on the
applicability of section 10b(1) of the Consumer Fraud Act (815 ILCS
505/10b(1) (West 2000)). Plaintiffs' consumer fraud claim is fatally
infirm for an additional and more basic reason: plaintiffs failed to
establish that they sustained actual damages.
	In Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill. 2d 100, 195 (2005), this court recently reiterated the well-settled
principle that in order to maintain a private cause of action under the
Consumer Fraud Act, a plaintiff must prove that he or she suffered
actual damages as a result of a violation of the Act.(1) Actual damages
are thus an element of a private right of action under the statute. See
815 ILCS 505/10a (West 2000); Oliveira v. Amoco Oil Co., 201 Ill. 2d 134, 140 (2002). If a plaintiff cannot establish that the defendant's
conduct caused him or her to suffer actual damages, no recovery
under the Act will lie. See Avery, 216 Ill. 2d  at 196-200.
	The requirement of actual damages means that the plaintiff must
have been harmed in a concrete, ascertainable way. That is, the
defendant's deception must have affected the plaintiff in way that
made him or her tangibly worse off. Theoretical harm is insufficient.
Damages may not be predicated on mere speculation, hypothesis,
conjecture or whim. See Petty v. Chrysler Corp., 343 Ill. App. 3d
815, 823 (2003).
	The record in the case before us shows that PMUSA developed
and marketed Marlboro Lights and Cambridge Lights cigarettes in
response to heightened public concern over health risks posed by
smoking. The company believed that it could forestall declining sales
by offering a product which consumers perceived as better for them
than conventional "full-flavored" brands. Pursuant to that strategy,
PMUSA advertised Marlboro Lights and Cambridge Lights cigarettes
in a way that led consumers to believe that the brands posed a lower
health risk than their "full flavored" counterparts. In reality, and as
PMUSA was fully aware, the so-called "light" cigarettes not only
offered no health benefits, but were actually more toxic.  
	When a consumer chooses one product over another in the belief
that it will be less harmful to his or her health, only to discover later
that it may have been more harmful, the existence of damages might
seem self-evident. In this case, however, plaintiffs are not seeking
damages based on any heightened adverse effects on their health.
Personal injury is not at issue. The losses for which plaintiffs seek
compensation are purely economic. Their claim is simply that they did
not receive what they bargained for. They paid for health benefits they
did not get.  
	The benefit-of-the-bargain rule invoked by plaintiffs governs
common law fraudulent misrepresentation cases. Gerill Corp. v. Jack
L. Hargrove Builders, Inc., 128 Ill. 2d 179, 196 (1989). Although
plaintiffs' cause of action is statutory in nature, the parties agree that
the benefit-of-the-bargain rule provides the appropriate standard for
ascertaining plaintiffs' right to damages in this case. Under the rule,
damages are determined by looking at the loss to the plaintiff rather
than the gain to the defendant. The rule is based on the rationale that
the defrauded party is entitled to be placed in the same financial
position he would have occupied had the misrepresentations in fact
been true. See Martin v. Allstate Insurance Co., 92 Ill. App. 3d 829,
835 (1981). Consistent with this rationale, the measure of damages
			"is such an amount as will compensate the plaintiff for the
loss occasioned by the fraud, or, as it has been expressed, the
amount which the plaintiff is actually out of pocket by reason
of the transaction ***." 19A Ill. L. & Prac., Fraud § 61
(1991).
	When this case ultimately proceeded to trial, two individuals were
identified as representing the plaintiff class, Sharon Price and Michael
Fruth. Both named plaintiffs testified that they switched to light
cigarettes because they believed such cigarettes to be lower in tar and
nicotine and therefore healthier. Price also stated that she valued the
health component of light cigarettes, or what she thought was the
health component of lights. Significantly, however, Price also admitted
that she continued smoking PMUSA's light cigarettes even after this
litigation alerted her to the fact that the cigarettes were not, in fact,
any healthier and may actually be more harmful than the regular
version of those cigarettes. News that PMUSA's low tar and light
representations were illusory likewise did not deter Fruth from
continuing to smoke, although he testified that he did switch back
from lights to regulars.
	Whatever valuation the class representatives may have placed on
the health component of light cigarettes, that valuation had no
observable economic consequences. Neither Price nor Fruth offered
any testimony suggesting that switching from regulars to lights
resulted in their paying any more for cigarettes than they would have
otherwise. There was no price disparity between light cigarettes and
their full-flavored counterparts, and there is no indication that the
switch from regulars to lights caused them to buy more packages of
cigarettes. The price they paid did not go up. The quantity they
purchased did not increase. No additional ancillary or incidental costs
were identified. Moreover, neither Price nor Fruth complained that the
cigarettes were not worth what they paid for them. To the contrary,
Price's continued purchase of lights even after being alerted to their
lack of health benefits suggests that she was entirely satisfied with the
value of what she received for her cigarette-purchasing dollar.
	Under these circumstances, Price and Fruth cannot be said to
have sustained any actual damages as a result of the
misrepresentations made by PMUSA. Because they did not show any
actual damages, Price and Fruth failed to prove a private right of
action under the Consumer Fraud Act. Under Avery v. State Farm
Mutual Automobile Ins. Co., that is fatal not only to their own cause
of action, but to the entire class action. As we held in Avery, when a
class representative has not proven his claim for consumer fraud, the
consumer fraud claim asserted on behalf of the class cannot stand
either. The consumer fraud judgment in favor of the class must be
reversed. Avery, 216 Ill. 2d  at 204. There is no basis for reaching a
contrary result here. Accordingly, regardless of the applicability of
section 10b(1) of the Consumer Fraud Act (815 ILCS 505/10b(1)
(West 2000)), the judgment in favor of plaintiffs must be set aside.
	At trial, counsel for plaintiffs did not attempt to compensate for
the absence of actual damages to the class representatives by relying
on testimony from other members of the class, for the smoking experiences
of the other class members were similar to those of Price and Fruth and
therefore similarly unhelpful. Instead, class counsel presented the
results of an internet survey they had commissioned. Plaintiffs have
not cited, and I am not aware of, any authority that would permit the
opinions of internet survey respondents to establish actual damages
under the Consumer Fraud Act where, as here, the class
representatives have not been shown to share the survey respondents'
views and have not themselves been harmed in the way those who answered
the survey claimed they would be under the hypotheticals presented
to them.
	Even if I could look past these problems, plaintiffs' damages
model is insufficient as a matter of law to support the circuit court's
judgment. Plaintiffs contend that their damages under the benefit-of-the-bargain rule, as applied to the facts of this case, are equal to the
difference between the value the cigarettes would have had if they
possessed the qualities they were represented to have and their value
as actually sold. See Gerill Corp. v. Jack L. Hargrove Builders, Inc.,
128 Ill. 2d 179, 196 (1989). Because defendant's misrepresentations
as to the properties of their cigarettes were believed to be true,
ascertaining the market value of cigarettes possessing the qualities
defendants claimed its lights to possess is straightforward. It is the
price PMUSA actually charged and the amount plaintiffs actually paid
for those cigarettes.
	The problem in plaintiffs' analysis arises from the second value,
i.e., the value of the cigarettes as actually sold. To compute that value,
which is equivalent to the price the cigarettes would have commanded
in the marketplace had they not possessed the health attributes
suggested by PMUSA's misrepresentations, plaintiffs did not look to
the marketplace or actual consumer behavior. Instead, they relied on
the Internet survey mentioned earlier, which was commissioned by
class counsel. Based on the results of that survey, which sampled
fewer than 300 respondents, plaintiffs' expert, Dr. Jeffrey Harris,
postulated that the price of lights would have to be discounted by 77.7%
before consumers would still be willing to buy them, assuming the
cigarettes were the same healthwise as their full-flavored counterparts.
When the hypothetical was changed to assume that lights might be
more harmful than regular cigarettes, Harris' analysis determined that
the amount of the discount would have to be increased to 92.3%.
Based on these figures, plaintiffs argued that difference between the
hypothetically discounted prices and the prices consumers actually
paid showed that consumers had significantly overpaid for PMUSA's
light cigarettes in the false hope that those cigarettes would be
healthier for them. In plaintiffs' view, the difference was equivalent to
the value of the perceived health benefit of the lights, and the
overpayment was the measure of plaintiffs' damages.
	Professors Robert Solow and George Akerlof, both recipients of
the Bank of Sweden Prize in Economic Sciences in Memory of Alfred
Nobel, submitted a brief as amici curiae attesting that the benefit-of-the-bargain rule expressed by our court in Gerill Corp. v. Jack L.
Hargrove Builders, Inc., 128 Ill. 2d  at 196, comports with accepted
principles of economics. Although they made general statements in
support of the basic theoretical and methodological approach taken by
Harris, Solow and Akerlof also noted that the "the actual
measurement of damages under the applicable legal standard is
intrinsically difficult to implement under the facts and circumstances
of this case" and that, under those facts and circumstances, "there may
be more than one way to measure damages." One senses from these
remarks, and from amici's lack of elaboration in evaluating plaintiffs'
approach, a certain unease with plaintiffs' damages calculations. It is
no wonder.
	Putting aside any questions regarding the scientific validity of the
survey on which Harris relied, there is a fundamental flaw in his
approach. To understand why, one must first recall the purpose of the
benefit-of-the-bargain rule, which is to compensate the plaintiff for the
pecuniary loss occasioned by the defendant's fraud, that is, for "the
amount which the plaintiff is actually out of pocket by reason of the
transaction. 19A Ill. L. & Prac. Fraud §61 (1991). If a plaintiff cannot
prove that he was any worse off financially as a result of the
defendant's deceit, his personal feelings of disappointment or
dissatisfaction with the transaction are of no consequence. Financial
loss is not measured by subjective feelings. It is determined by the
choices and values actually available to a consumer in the
marketplace. See, e.g., Restatement (Second) of Torts §549,
Comment c, at 110-12 (1977) (for purposes of measuring damages in
action for fraudulent misrepresentation, value is normally determined
by the price for which an item could be resold in an open market or by
private sale if its quality or other characteristics that affect its value
were known).
			The need for objective, market-based standards to prove financial loss is not being raised here for the first time. It was recognized by
defendant's damages expert and is fatal to the plaintiffs' damages
model. While the Internet survey commissioned for this case may have
shown that survey respondents would have placed a lower subjective
value on cigarettes that lacked the health qualities claimed by PMUSA
in its marketing of Marlboro Lights and Cambridge Lights, the
marketplace demonstrated that, in reality, consumers would not have
paid less to satisfy their tobacco habits had the lights' true properties
been known. They would not have stopped smoking, for they were
addicted, and they could not have bought cigarettes that cost 77.7%
less or 92.3% less, for no such cigarettes existed. At most, they would
have reverted back to "full-flavored" versions of the cigarettes.(2)
	Significantly, and as I have already observed, the price charged
by PMUSA for such cigarettes, and the price consumers were willing
to pay despite the absence of claimed health benefits, was precisely the
same as the price charged for "lights." In marked contrast to the
situation with many products aimed at health consciousness, there was
no cost differential for consumers between the "healthy" and "regular"
versions of the product. Accordingly, while PMUSA's
misrepresentations may have deceived consumers into altering their
purchasing decisions, the net change in consumers' economic position
as a result of those misrepresentations was zero. In other words,
plaintiffs may not have received the benefit of their bargain, but the
bargain (i.e., obtaining what were thought to be healthier cigarettes
than they would otherwise have purchased) cost them nothing extra.
In terms of pecuniary harm, plaintiffs were unaffected. Their financial
status remained the same.  
	This conclusion is not altered by the fact that PMUSA's light
cigarettes were more toxic than the full-flavored versions. The
additional toxicity unquestionably had adverse effects on plaintiffs'
health. It bears repeating, however, that health effects are not part of
plaintiffs' damages claim. They are not seeking compensation for
personal injury, only pecuniary loss based on their switch to lights in
reliance on PMUSA's misrepresentations. For purposes of calculating
pecuniary loss, the increased toxicity of lights would be relevant only
if one could show (1) that an alternative cigarette with equally high
toxicity levels was available on the market at lower cost than the price
charged for lights and (2) that consumers would have switched to that
lower cost alternative had the truth about lights been known.
	The notion that cigarette manufacturers could successfully market
a cigarette known to be more toxic than regulars is inconsistent with
the realties of consumer demand for more healthful products that led
to the development of light cigarettes. It is therefore unsurprising that
there is no evidence that a cheaper but more toxic brand of cigarette
is actually available for purchase. Given the nature of the class bringing
this suit, that is, smokers interested in a product less harmful to their
health, it is also highly unlikely that any of them would change to a different
brand that was more harmful than regulars, even at a reduced price.
The testimony of the class representatives certainly does not suggest
they would, and plaintiffs' Internet survey does not speak to the issue.
	The Internet respondents were not queried about it. The Internet
survey looked to hypothetical conduct assuming that a truly healthier
version existed. It did not measure or purport to measure how
consumers would actually behave if, as is really the case, there is no
truly healthier version.
	Having sustained no pecuniary harm, plaintiffs lack the actual
economic damages necessary to sustain their cause of action under the
Consumer Fraud Act. When the same situation confronted the
representative for the putative Illinois class in Avery, we concluded
that the deficiency was fatal to his consumer fraud claim (Avery, 216
Ill. 2d at 199) and reversed the judgment for plaintiffs outright. We
should not hesitate to reach the same conclusion here.
	Here, as in Avery, there is no need to remand for a new trial on
the damages question. This case does not present a situation in which
erroneous rulings by the trial court hampered plaintiffs' ability to fully
present their evidence or theory of recovery. The record is complete,
and plaintiffs were given wide latitude in developing their damages
claim. Further proceedings would serve no purpose. Plaintiffs' claim
fails as a matter of law. Because they sustained no actual economic
damages, no judgment in their favor under the Consumer Fraud Act
could ever stand.
	Plaintiffs' consumer fraud claim cannot be revived on the theory
that they might be entitled to an award of nominal damages
notwithstanding their inability to show actual damages. Nominal damages
can only be awarded where a plaintiff prevails in a case. As already
discussed, however, a plaintiff cannot sustain a private right of action
under the Consumer Fraud Act unless he or she has sustained actual
damages. Unless all of the elements of the cause of action, including
the element of actual damages, are established, nominal damages cannot
be recovered. See Tolve v. Ogden Chrysler Plymouth, Inc., 324 Ill.
App. 3d 485, 491-92 (2001). The lack of actual damages would
therefore preclude plaintiffs from recovering nominal damages even
if the case were remanded.(3)
	Similarly, plaintiffs cannot sidestep the lack of actual damages on
the grounds that they are nevertheless entitled to an award of punitive
damages. Illinois law does not permit an award of punitive damages
in the absence of compensatory damages. See Lowe v. Norfolk &
Western Ry. Co., 96 Ill. App. 3d 637, 648 (1981). The Consumer
Fraud Act is no exception. Punitive damages are in addition to
compensatory damages and cannot be allowed unless actual damage
is shown. See In re Application of Busse, 124 Ill. App. 3d 433, 438
(1984). Because plaintiffs sustained no actual damages here, their
claim for punitive damages must therefore fail as well. See Florsheim
v. Travelers Indemnity Co. of Illinois, 75 Ill. App. 3d 298, 310
(1979).
	For the foregoing reasons, I fully concur in the result reached by
the majority. Plaintiffs cannot recover under the Consumer Fraud Act,
and the circuit court's judgment awarding them damages under the
Act cannot stand. In reaching this conclusion, I hasten to add, as the
majority opinion did, that rejection of plaintiffs' cause of action should
in no way be construed as an endorsement of PMUSA's conduct. Our
reversal of the circuit court's judgment is not an exoneration of
PMUSA. It is merely a conclusion that this particular cause of action
by this particular group of claimants seeking this particular form of
recovery cannot be sustained under the law of Illinois.
	JUSTICE FITZGERALD joins in this special concurrence.
	This is a consumer fraud class action brought under the
Consumer Fraud and Deceptive Business Practices Act (Consumer
Fraud Act) (815 ILCS 505/1 et seq. (West 1998)) and the Uniform
Deceptive Trade Practices Act (Deceptive Practices Act) (815 ILCS
510/1 et seq. (West 1998)). The circuit court found Philip Morris
USA (PMUSA) liable for consumer fraud for using the materially false
and deceptive terms "lights" and "lower tar and nicotine" in marketing
its Marlboro Lights and Cambridge Lights cigarettes. This court
reverses the judgment on the basis that the action is barred by section
10b(1) of the Consumer Fraud Act, which exempts conduct
"specifically authorized by laws administered by any regulatory body
or officer acting under statutory authority of this State or the United
States." The court holds that the Federal Trade Commission (FTC),
through the use of two "consent orders," specifically authorized all
American tobacco companies to use descriptive terms such as "lights,"
or "lowered tar and nicotine" in marketing and promoting cigarettes.
Slip op. at 67. Therefore, PMUSA was exempt from civil liability for
the use of those terms under section 10b(1) of the Consumer Fraud
Act and section 4 of the Deceptive Practices Act. Slip op. at 73.
	The court's action today is predicated upon an erroneous and
irresponsible interpretation of our Consumer Fraud Act, an act which
I note is to be interpreted so as to give full protection to the citizens
of this state against the fraudulent conduct of others. The protection
of consumers from unfair practices is, of course, a traditional state
police power function. The court's construction of section 10b(1)
serves not only to dilute needlessly the force of our state consumer
protection legislation, but to limit unnecessarily our state's citizens'
consumer protection in this area to a federal agency. For these reasons
and because I do not agree that PMUSA was exempt from liability
under section 10b(1), I cannot join in the court's opinion. Rather, I
would hold that the FTC did not specifically authorize PMUSA,
within the meaning of section 10b(1) of the Consumer Fraud Act, to
use the disputed descriptors. I therefore respectfully dissent.

I. Background
	Plaintiffs filed their initial complaint on February 10, 2000. In it,
they alleged violations of the Consumer Fraud Act and claims of
unjust enrichment against PMUSA on behalf of a purported class of
Illinois residents who had purchased "Light" cigarettes in Illinois since
the introduction of Marlboro Lights in 1971. Plaintiffs claimed that the
word "lights" and the phrase "lowered tar and nicotine" were
deceptive in that those words led each consumer to believe that he or
she would receive lower tar and nicotine from these cigarettes, and
that, as a result, smoking them would be less hazardous than smoking
regular, full-flavored cigarettes. Plaintiffs alleged that all class
members purchased Lights because of a belief that they were less
hazardous, and provided health benefits not associated with regular,
full-flavored cigarettes, and that no one would have purchased Lights
"but for" PMUSA's "unfair and/or deceptive acts and/or practices."
Plaintiffs sought damages solely for economic loss. Plaintiffs moved
for class certification on September 8, 2000. PMUSA opposed the
motion, arguing that the plaintiffs failed to satisfy the requirements of
the Illinois class action statute, because, inter alia, individual
questions of fact predominated over any common issues shared by the
purported class members. The circuit court certified the class on
February 8, 2001.
	Following class certification, PMUSA moved for summary
judgment. PMUSA argued that Congress, in enacting the Federal
Cigarette Labeling and Advertising Act (Labeling Act) (15 U.S.C.
§1331 et seq. (2000)), had specified the warnings that cigarette
manufacturers must give to consumers and had expressly prohibited
states from requiring additional disclosures. PMUSA also argued that
the FTC had adopted the FTC test method to measure tar and nicotine
yields and had allowed and encouraged manufacturers to use
descriptive terms such as "lowered tar and nicotine" and "lights" so
long as those terms were consistent with the FTC method. Any
inconsistent state-law duty, PMUSA contended, would conflict with
the FTC's policies regarding tar and nicotine disclosures. For this
reason, PMUSA asserted that its conduct as alleged by the plaintiffs
was exempt from the Consumer Fraud Act by virtue of section 10(b).
Both parties thereafter submitted affidavits of experts on this issue.
Plaintiffs' expert averred that the FTC did not have an official policy
which permitted cigarette companies to use these terms. Plaintiffs
further maintained that the FTC had not had occasion to ever consider
the terms at issue, "lowered tar and nicotine" and "lights" as those
descriptors were used by PMUSA in this case, Finding that there were
"significant disputes about several material facts which can only be
decided at trial," the circuit court "reserved judgment" on the matter
until trial.
	At trial, as it was during the pretrial proceedings, it was
PMUSA's position, established through testimony and exhibits, that
its use of the terms "lights" and "lowered tar and nicotine" were in
compliance with FTC policies. Dr. John Peterman testified as an
expert on behalf of PMUSA with respect to the FTC's relationship to
cigarette advertising. The FTC in 1955 established "Cigarette
Manufacturing Guides," which set forth the FTC's policies on the
disclosure of tar and nicotine yields in cigarettes. The Guidelines
permitted a manufacturer to make claims regarding tar and nicotine
yields only if the manufacturer could substantiate the claims "by
competent and scientific proof." In the late 1950s, scientists began to
discern a relationship between exposure to cigarette tar and tumors in
laboratory animals. Cigarette manufacturers responded by testing the
amount of tar produced by their cigarettes and advertising the results.
Each manufacturer used different machines to measure the tar, and
confusion ensued. According to Dr. Peterman, in response to the
multiple testing systems being used, the FTC developed a uniform
testing system for use throughout the country. Tar and nicotine
measures could be advertised provided that they were measured
according to the FTC's testing method. Under this testing
methodology, a low tar cigarette is a cigarette which had a tar level of
15 milligrams or less. However, the FTC did not enact or adopt any
trade regulation rule with respect to cigarette advertising. Indeed, the
parties do not dispute the fact that there is not any industrywide
formal rulemaking authorizing the use of the disputed descriptors at
issue in this case, "lights" and "lowered in tar and nicotine." Nor do
they dispute the fact that the FTC does not have any industrywide
formal rule which authorizes or requires cigarette manufacturers to
use the terms "light" or "low tar" or any variation thereof. Moreover,
it is undisputed that the FTC views what it considers to be a
"regulatory" scheme in this area as a "voluntary approach." See slip
op. at 7.
	Defendant's expert, Dr. Peterman, testified that the primary
mission of the FTC is to enforce a variety of federal antitrust and
consumer protection laws. The FTC is primarily a law enforcement
agency, conferred with both investigative and enforcement powers.
However, to the best of Dr. Peterman's knowledge, there was no
bureau, section, or other subset of the FTC dedicated to, or even
associated with, tobacco regulation. The two primary tools the FTC
employs to enforce consumer protection laws are trade regulation
rules and enforcement procedures. Trade regulation rules are
promulgated though formal notice and comment rulemaking. FTC
policy is adopted or approved by the FTC commissioners acting
collectively as the commission. Dr. Peterman admitted that an
individual FTC commissioner giving a speech discussing FTC policy
is not, per se, FTC policy. An FTC staff member cannot create FTC
policy.
	Dr. Peterman, defendant's expert, testified that there has never
been an FTC trade regulation rule governing cigarette advertising that
has been put into effect. In 1964, the FTC formally promulgated a
trade regulation rule declaring it an unfair and deceptive practice
within the meaning of the FTC Act to fail to prominently disclose, in
all cigarette advertising and packaging, that cigarette smoking is
dangerous and may cause death from cancer or other diseases. Unfair
or Deceptive Advertising and Labeling of Cigarettes in Relation to the
Health Hazards of Smoking, 29 Fed. Reg. 8324, 8325 (1964).
However, in 1965, Congress enacted the federal Labeling Act. This
Act, inter alia, vacated the newly promulgated FTC cigarette health
warning trade regulation rule. No FTC regulation, document, or
official statement has ever regulated "low tar" and "lights"
descriptors. Further, the FTC has disavowed any "official" definition
of these terms as well as the term involved in this case, "lowered tar
and nicotine." Rather, a cigarette company's decision to use
descriptors such as "light," or "low tar," is voluntary; there is no FTC
rule requiring or governing their use. A cigarette company could stop
using those descriptors, and there is no FTC policy that would
prohibit it.
	Dr. Peterman did not offer an expert opinion that the FTC has a
policy that prohibits states from regulating the term "lights" on
cigarettes. Nor did he offer an expert opinion that the FTC has
granted cigarette companies the right to use the "lights" and "low tar"
descriptors and, thereby, immunize them from state regulation of
those descriptors.
	In 1970, the FTC proposed a formal trade regulation rule that
would have required cigarette companies to disclose in their
advertising FTC-measured tar and nicotine content of their cigarettes.
See 35 Fed. Reg. 12,671 (proposed August 8, 1970). However, the
FTC dropped this proposed order after eight cigarette companies
entered into a voluntary trade agreement. Those signatories
voluntarily agreed to provide the information on their cigarette
packages. See 36 Fed. Reg. 784 (1971). The 1970 voluntary trade
agreement was not all-inclusive; not every cigarette company signed
the agreement. Those companies that did not sign the agreement have
not included tar and nicotine rates in their cigarette advertising. Up to
the time of trial, the FTC has taken no enforcement action against
those companies.
	In 1971, the FTC and a cigarette company, American Brands,
Inc., reached an agreement that was memorialized in a consent order.
In the 1971 consent order, the FTC charged that American Brands'
advertisements of its cigarettes designated as "Pall Mall Gold" 100s,
"Pall Mall Menthol" 100s and "Lucky Filters" was imprecise and
misleading because the cigarettes were being described as "lower than
the best selling filter king." In actual fact, however, the FTC found
that these brands were higher in tar levels than many other brands.
The FTC and American Brands agreed that American Brands'
advertisements which stated that its cigarettes were low in tar must
contain the tar and nicotine yield results as measured under the FTC
testing methods (the advertisements challenged by the FTC in this
action did not contain any tar and nicotine yield results). If American
Brands' advertisements contained a comparison to another product,
then the advertisement had to include the tar and nicotine yield of that
product as well. In re American Brands, Inc., 79 F.T.C. 225 (1971).
	During the direct examination of defendant's expert witness, Dr.
Peterman, he stated that the 1971 consent order against American
Brands, Inc., was "an official act of the FTC." Further, the order
provided "industry guidance to [PMUSA] and others regarding the
use of descriptors." This "guidance" was found in the terms of the
order against American Brands. According to Dr. Peterman,
nonparties to a consent order, even an entire industry, learn from the
order how far it can and cannot go. According to Peterman, the 1971
consent order was exemplary of the FTC intending to provide
industrywide guidance with respect to issues addressed in consent
orders.
	However, on cross-examination, Dr. Peterman qualified his direct
examination testimony by admitting that the 1971 consent order did
not mention the descriptor "lights." Also, the consent order did not
define the descriptor "low tar," or establish a numerical standard for
that term. This form of "compliance" is a voluntary decision on the
part of each cigarette company. It is not a trade regulation rule.
Further, PMUSA was never a party to the proceeding and never
signed the consent order. Each cigarette company, including PMUSA,
and the entire industry collectively, could simply stop using the
disputed descriptors if they so chose. Peterman further acknowledged
that the FTC has never taken any enforcement action against a
cigarette manufacturer of these so-called "light" brands because that
manufacturer did not use the word "light" in the brand name. There
is no evidence in the record that PMUSA ever complied with this
consent order.
	In 1995, the FTC and another cigarette company, American
Tobacco Company, reached an agreement that was memorialized in
a consent order. In the 1995 consent order, the FTC and American
Tobacco agreed that "presentation of the tar and/or nicotine ratings
of any of respondent's brands of cigarettes and the tar and/or nicotine
ratings of any other brand (with or without an express or implied
representation that respondent's brand is 'low,' 'lower,' or 'lowest'
in tar and/or nicotine) shall not be deemed" to violate an existing ban
on numerical comparisons. In re American Tobacco Co., 119 F.T.C.
3 (1995). Dr. Peterman testified that the FTC intended to provide
industrywide guidance with respect to issues addressed in the 1995
consent order against American Tobacco Company.
	At the conclusion of the trial, the circuit court denied PMUSA's
affirmative defense based upon section 10b(1) of the Consumer Fraud
Act. The court specifically found Dr. Peterman's testimony to be
"unpersuasive" on PMUSA's claim that the issues in this case could
potential cause a conflict between state and federal law. Moreover, the
court found that Dr. Peterman did not have any "expertise in assessing
FTC involvement in regulation of the issues" and that the plaintiffs'
claims in this case did not conflict in any way with the federal Labeling
Act or the regulations and policies of the FTC. With respect to the
FTC, the court ruled:
		"The false and misleading use of the descriptors 'Lights' and
'Lowered Tar and Nicotine' has never been specifically
authorized by law. Philip Morris voluntarily chose to use
these terms on its packages of Marlboro Lights and
Cambridge Lights. No regulatory body has ever required (or
even specifically approved) the use of these terms by Philip
Morris. The court finds that Philip Morris has not established
that its conduct is 'specifically authorized' by law."
The circuit court further found plaintiffs had proven that PMUSA
violated the Consumer Fraud Act through the deceptive act of
misrepresenting its Cambridge Lights and Marlboro Lights products
as "lights" and misrepresenting Marlboro Lights as "Lowered in Tar
and Nicotine."

II. Section 10b(1) of the Consumer Fraud Act
	Section 10b(1) of the Consumer Fraud Act exempts conduct
"specifically authorized by laws administered by any regulatory body
or officer acting under statutory authority of this State or the United
States." 815 ILCS 505/10b(1) (West 1998). PMUSA contends that
the FTC's policies regarding cigarette advertising falls within the
scope of the phrase "specifically authorized by laws administered by
an regulatory body or officer acting under statutory authority of this
State or the United States." Because PMUSA asserted section 10b(1)
as an affirmative defense, PMUSA has the burden of proving it. See
Pascal P. Paddock, Inc. v. Glennon, 32 Ill. 2d 51, 54 (1964)
(observing "elementary" rule that party asserting affirmative defense
has the burden of proving it); In re Marriage of Jorczak, 315 Ill. App.
3d 954, 957 (2000) (same).
	After reviewing the plain language of the statute, this court's case
law concerning section 10b(1), and the facts in this case, I am unable
to conclude, as the court today does, that section 10b(1) exempts
Philip Morris from suit. I believe that a fair reading of the statute
compels the conclusion that the policies of the FTC, as presented at
trial, do not rise to the level of specific authorization contemplated by
our legislature when it enacted the statute.
	My colleagues correctly point out that the primary rule of
statutory construction is to ascertain and give effect to the intent of
the legislature; that the best indicator of legislative intent is the
statutory language; that a court gives undefined words their plain and
ordinary meaning; and that it is appropriate to use a dictionary to
ascertain the meaning of undefined terms. Slip op. at 48-49. I note,
however, that the court ignores several other principles of statutory
construction. For example, the court does not mention that, in
examining a statute's plain language, " '[t]he statute should be
evaluated as a whole, with each provision construed in connection
with every other section.' " Eden Retirement Center, Inc. v.
Department of Revenue, 213 Ill. 2d 273, 291 (2004), quoting Paris
v. Feder, 179 Ill. 2d 173, 177 (1997); accord In re Detention of
Lieberman, 201 Ill. 2d 300, 308 (2002) (recognizing that "words and
phrases should not be construed in isolation, but must be interpreted
in light of other relevant provisions of the statute"); Huckaba v. Cox,
14 Ill. 2d 126, 131 (1958); 2A N. Singer, Sutherland on Statutory
Construction §46:05 (6th ed. 2000); 73 Am. Jur. 2d Statutes §165
(2001). Nor does the court acknowledge the fundamental canon of
statutory construction which provides that "in determining the intent
of the legislature, the court may properly consider not only the
language of the statute, but also the reason and necessity for the law,
the evils sought to be remedied, and the purpose to be achieved."
Lieberman, 201 Ill. 2d  at 308.
	Section 11a of the Consumer Fraud Act mandates: "This Act
shall be liberally construed to effect the purposes thereof." 815 ILCS
505/11a (West 1998). By virtue, then, of its plain language, courts are
mandated to give the Act a liberal construction: "This section provides
a clear mandate to Illinois courts to utilize the Act to the greatest
extent possible to eliminate all forms of deceptive or unfair business
practices and provide appropriate relief to consumers." Totz v.
Continental Du Page Acura, 236 Ill. App. 3d 891, 901 (1992); accord
American Buyers Club of Mt. Vernon, Illinois, Inc. v. Honecker, 46
Ill. App. 3d 252, 257 (1977) (expressly referring to statute). Thus, in
construing the exemption provided in section 10b(1) of the Act, it is
not merely proper for this court to consider, inter alia, the evils
sought to be remedied and the purpose to be achieved, but the Act
itself affirmatively mandates such consideration. Although the court
acknowledges that the Act is to be liberally construed (slip op. at 50),
its actual interpretation of section10b(1) is decidedly not a liberal one,
as it constricts, rather than expands, the Act's ambit.
	What does "liberal construction" mean?
			"Liberal statutory construction signifies an interpretation
that produces broader coverage or more inclusive application
of statutory concepts. [Citation.] Liberal construction is
ordinarily one that makes a statute apply to more things or in
more situations than would be the case under strict
construction. [Citation.] ' " '[L]iberal construction' means to
give the language the language of a statutory provision, freely
and consciously, its commonly, generally accepted meaning,
to the end that the most comprehensive application thereof
may be accorded, without doing violence to any of its
terms." ' [Citation.]" Board of Education of Community
Consolidated School District No. 59 v. State Board of
Education, 317 Ill. App. 3d 790, 795 (2000).
Accord Smith v. Stevens, 82 Ill. 554, 556 (1876) (observing that
statute "is emphatically a remedial act, and, in accordance with a well
established canon, it must receive a liberal construction, and made to
apply to all cases which, by a fair construction of its terms, it can be
made to reach"); 3 N. Singer, Southerland on Statutory Construction
§58:2, at 88 (6th ed. 2001); 73 Am. Jur. 2d Statutes §179 (2001).
Thus, section 11a of the Consumer Fraud Act actually directs courts
to employ judicial construction to supply gaps in the statutory
language, in order to afford broader coverage or a more inclusive
application. Bank One Milwaukee v. Sanchez, 336 Ill. App. 3d 319,
321-22, 324 (2003); Hurlbert v. Cottier, 56 Ill. App. 3d 893, 896
(1978).
	In this case, however, rather than using judicial construction to
effectuate expansive coverage of the Consumer Fraud Act, the court
employs arduous judicial construction to establish limitations on the
reach of the Act. The court breaks down the statutory term
"specifically authorized by laws administered by" and, with the aid of
a dictionary, separately and in a vacuum defines the word "specific"
and the word "authorize." Slip op. at 49. Based on this dissection, the
court speculates that the legislature "must have intended" the phrase
"laws administered by" to require deference to agency policy and
practice. Slip op. at 49-50. I disagree with this interpretation. Courts
have long recognized that ascertaining legislative intent is not always
properly accomplished by mechanically applying the dictionary
definitions of individual words and phrases. See, e.g., Whelan v.
County Officers' Electoral Board, 256 Ill. App. 3d 555, 558 (1994).
As Judge Learned Hand observed:
		"Of course it is true that the words used, even in their literal
sense, are the primary, and ordinarily the most reliable,
source of interpreting the meaning of any writing ***. But it
is one of the surest indexes of a mature and developed
jurisprudence not to make a fortress out of the dictionary; but
to remember that statutes always have some purpose or
object to accomplish ***." Cabell v. Markham, 148 F.2d 737, 739 (2d Cir. 1945).
 The court's tortured construction of section 10b(1) ignores the rule
that statutes are to be construed as a whole, and the fact that
expansive construction of the Act comes from the Act itself.
	Even more disturbing than the dissection of the statutory
language of section 10b(1) is the court's speculation as to the
"apparent legislative intent." Slip op. at 50. The court states that
section 10b(1):
		"serves to channel objections to agency policy and practice
into the political process rather than into the courts.
[Citations.] Parties who desire to bring about change in
agency policies or rules can take their complaints to the
agency itself and can participate in the formal rulemaking
process. If their concerns are not addressed by the agency,
they may seek assistance from their legislators and may use
the political process, including the power of the ballot box, if
their voices are not heard." Slip op. at 50-51.
This statement is a brazen usurpation of the power of the legislature.
Not only does it completely ignore the statutorily mandated expansive
construction of the Act, but it injects the court's own preferred public
policy into this statutory provision without any basis in law or fact.
	Such an expansive reading of section 10b(1) flies in the face of
the plain language of the Act read as a whole. First, as I have
explained, the plain language of section 11a mandates an expansive
construction. 815 ILCS 505/11a (West 1998). Second, the plain
language of section 10b(1) exempts conduct "specifically authorized
by laws administered by any regulatory body or officer acting under
statutory authority of this State or the United States." 815 ILCS
505/10b(1) (West 1998). Accepting that this plain language is "the
most reliable indicator of the legislature's objectives" in enacting the
Consumer Fraud Act (Michigan Avenue National Bank v. County of
Cook, 191 Ill. 2d 493, 504 (2000)), it is clear that the legislature
would not consider PMUSA's conduct exempt under section 10b(1).
The record simply does not establish that the FTC's regulatory activity
constituted "specific authorization" for PMUSA to use the disputed
descriptors, i.e., "Lights," and "lowered tar and nicotine," in
marketing Marlboro Lights or Cambridge Lights.
	Further, section 10b(1) pf the Consumer Fraud Act lists
exemptions from the otherwise expansive and inclusive reach of the
Act. Because of this, I believe that the court's expansive reading of
section 10b(1), an exception to the Consumer Fraud Act, not only
flies in the face of the plain language of the Act mandating an
expansive construction, but also ignores another rule of statutory
construction: exceptions in a statute, being designed to qualify or limit
what is declared in the body of an act, should be strictly construed.
Mid-South Chemical Corp. v. Carpentier, 14 Ill. 2d 514, 519 (1958)
(and cases cited therein); see People v. Chas. Levy Circulating Co.,
17 Ill. 2d 168, 171 (1959); 82 C.J.S. Statutes §371 (1999). "Where a
general rule is established by statute with exceptions, the court
ordinarily will not curtail the former or add to the latter by
implication." (Emphasis added.) 82 C.J.S. Statutes §371, at 496-97
(1999). I note that "[t]hese rules are particularly applicable where, in
general, the law itself is entitled to a liberal construction." 73 Am. Jur.
2d Statutes §212, at 402 (2001). Courts may give apparently plain
words a restrictive meaning if such is understood by the statute as a
whole, or by the persuasive gloss of legislative history. United States
v. Witkovich, 353 U.S. 194, 199, 1 L. Ed. 2d 765, 769, 77 S. Ct. 779,
782 (1957); Whelan, 256 Ill. App. 3d at 558; Fleischer v. Board of
Community College District No. 519, 128 Ill. App. 3d 757, 760
(1984). The court's disregard for the combination of the statutorily
mandated expansive and inclusive construction of the Consumer Fraud
Act, and the well-settled rule of statutory construction that exceptions
in statutes are to be strictly construed, fatally undercuts the
persuasiveness of its statutory construction.
	The court holds that "the FTC's informal regulatory activity,
including the use of consent orders, comes within the scope of section
10b(1)'s requirement that the specific authorization be made 'by laws
administered by' a state or federal regulatory body." Slip op. at 61.
However, neither the court's lengthy discussion of FTC policy and
practice nor the court's citations to our case law establish that the
FTC's regulatory activity constituted "specific authorization" for
PMUSA to use the disputed descriptors in marketing Marlboro Lights
or Cambridge Lights.
	The court correctly observes that our past decisions "make it
clear that mere compliance with applicable federal regulations is not
necessarily a shield against liability under the Consumer Fraud Act."
Slip op. at 52. My colleagues, in fact, devote several pages of their
analysis to discussing some of this court's decisions involving section
10b(1). Slip op. at 51-56 (discussing Lanier v. Associates Finance,
Inc., 114 Ill. 2d 1 (1986), Martin v. Heinold Commodities, Inc., 163 Ill. 2d 33 (1994), and Jackson v. South Holland Dodge, Inc., 197 Ill. 2d 39 (2001)). None of these cases, however, support the court's
holding in this case.
	In Lanier, for example, the issue was whether the "specific
authorization" requirement of section 10b(1) was found in a Federal
Reserve Board staff interpretation of a federal regulation. This court
explained as follows:
			"The Truth in Lending Act was enacted by Congress to
assure meaningful disclosure of credit terms, so that
consumers can readily compare various credit options
available to them. [Citation.] Congress granted the Federal
Reserve Board the authority to prescribe regulations to carry
out the purposes of the Truth in Lending Act. [Citation.]
Pursuant to that authority, the Board enacted a
comprehensive set of rules, known as Regulation Z [citation],
implementing the principles of the Truth in Lending Act."
(Emphasis added.) Lanier, 114 Ill. 2d  at 11.
In 1973, the Federal Reserve Board staff issued an "official
interpretation" of Regulation Z. Lanier, 114 Ill. 2d  at 12. This court
further explained:
			"Although not binding upon the courts, the Federal
Reserve Board's formal interpretations are entitled to a great
degree of deference. This deference is especially appropriate
in interpreting the Truth in Lending Act and the Board's own
Regulation Z. [Citation.] The Supreme Court has stated that
'[u]nless demonstrably irrational, Federal Reserve Board staff
opinions construing the Act or regulation [Z] should be
dispositive.' [Citations.]" Lanier, 114 Ill. 2d  at 13.
The Lanier court explained as follows. The Federal Reserve Board is
the agency that Congress empowered to prescribe implementing and
interpretive regulations for the Truth in Lending Act. Therefore, the
Board is entitled to the greatest respect in the interpretation of its own
regulations. Further, it is unimportant that "formal interpretations" are
issued by Federal Reserve Board staff rather than the Board itself,
because judicial deference is based on agency expertise. Moreover:
		"Congress included compliance with official staff
interpretations when it absolved creditors from liability under
the Truth in Lending Act for 'any act done or omitted in
good faith in conformity with any rule, regulation, or
interpretation thereof by the Board or in conformity with any
interpretation or approval by an official or employee of the
Federal Reserve System duly authorized by the Board to
issue such interpretations.' (15 U.S.C. sec. 1640(f) (1980).)
Section 1640 evinces a clear congressional determination to
treat the Board's administrative interpretations under the
Truth in Lending Act as authoritative." Lanier, 114 Ill. 2d  at
13-14.
The Lanier court concluded that the disclosure required by the
Board's staff interpretation of Regulation Z implicitly provided
"specific authorization" not to make any additional disclosures.
Lanier, 114 Ill. 2d  at 17-18.(4)
	The clarity and strength of the agency regulation in Lanier stands
in marked contrast to the implicit and uncertain methodology of the
FTC in this case. Lanier involved a formal staff interpretation of an
agency's formally promulgated regulation. Indeed, the enabling
legislation recognizes such a staff interpretation. In this case, the FTC
has never promulgated any industrywide formal rule that regulates the
use of the disputed descriptors. There is no formal rule to interpret,
either formally or informally. The evidence adduced at trial established
that, rather than employ even informal rulemaking, the FTC took a
"voluntary approach" to regulating the cigarette industry. Dr.
Peterman acknowledged that the FTC, generally, does not adopt trade
rules that approve conduct that an FTC-regulated business may
choose to engage in. Rather, the FTC adopts regulations that require
or forbid specific conduct. Regarding cigarettes, the FTC has never
promulgated a single trade regulation governing cigarette advertising
that has ever been in effect. No FTC regulation, document, or official
statement has ever regulated "low tar" and "lights" descriptors.
Further, the FTC has disavowed any "official" definition of these
terms. Rather, a cigarette company's decision to use descriptors such
as "light," or "low tar," is voluntary; there is no FTC rule requiring
their use. A cigarette company could stop using those descriptors and
there is no FTC policy that would prohibit it. Indeed, Dr. Peterman
admitted that if "light" cigarettes delivered the same level of tar and
nicotine as "regular" cigarettes, the "light" descriptor would be false
and misleading.
	In its opinion, the court describes a 1970 FTC proposal that
would have declared it an unfair or deceptive practice under the FTC
Act for cigarette manufacturers to fail to disclose in their advertising
the tar and nicotine content of the product, based on the most recent
FTC test results. Slip op. at 7. The court notes that this proposal was
dropped after eight cigarette companies voluntarily agreed to provide
the information on their cigarette packages. Slip op. at 7. The court,
however, fails to observe that, during his cross-examination, Dr.
Peterman recognized that the 1970 trade agreement was not all-inclusive. In other words, not every cigarette company signed the
agreement. Further, those companies who did not sign the agreement
have not included tar and nicotine rates in their cigarette advertising.
Indeed, up to the time of trial, the FTC has taken no enforcement
action against those companies.
	Unwilling to allow the FTC's lack of definitive regulations in the
area of cigarette advertising to control the question of the application
of section 10b(1) to this case, the court holds that two consent orders
entered into by the FTC and another tobacco producer constitute the
type of regulatory activity that falls within the scope of section 10b(1).
The majority opinion describes the background to the 1971 consent
order against American Brands (slip op. at 8-11) and the 1995 consent
order against American Tobacco (slip op. at 19-20).
	During his direct examination, Dr. Peterman, defendant's expert,
testified that the 1971 FTC consent order against American Brands,
Inc., was "an official act of the FTC." Further, the order provided
"industry guidance to [PMUSA] and others regarding the use of
descriptors." This "guidance" was found in the terms of the order
against American Brands. According to Dr. Peterman, nonparties to
a consent order, even an entire industry, learn from the order how far
it can and cannot go. According to Peterman, the 1971 consent order
was exemplary of the FTC intending to provide industrywide guidance
with respect to issues addressed in consent orders.
	However, the 1971 consent order did not mention the descriptor
"lights." Nor did it concern the disputed descriptor in this case,
"lowered tar and nicotine." The consent order did not define the
descriptor "low tar," or establish a numerical standard for that term.
Peterman testified that this form of "compliance" is a voluntary
decision on the part of each cigarette company. It is not a trade
regulation rule. Peterman acknowledged that PMUSA was never a
party to the proceeding and never signed the consent order. Each
cigarette company, including PMUSA, and the entire industry
collectively, could simply stop using the disputed descriptors if they
so chose. Peterman further acknowledged that the FTC has never
taken any enforcement action against a cigarette manufacturer of these
so-called "light" brands because that manufacturer did not use the
word "light" in the brand name. There is no evidence in the record
that PMUSA ever complied with this consent order.
	Dr. Peterman also testified that the FTC intended to provide
industrywide guidance with respect to issues addressed in the 1994
consent order against American Tobacco Company. However, as with
the 1971 consent order, the 1994 consent order did not mention the
descriptor "lights." Also, it did not define the descriptor "low tar," or
establish a numerical standard for that term. Indeed, the two consent
orders upon which PMUSA relies were not directed at it, but at other
parties. This is the issue: whether PMUSA's conduct was "specifically
authorized" by the two FTC consent orders directed at other parties:
American Brands, Inc., and American Tobacco Company. See slip op.
at 57. I observe that Dr. Peterman did not offer an expert opinion that
the FTC has granted cigarette companies the right to use "light" or
"low tar" descriptors and immunize them from state regulation of
those descriptors.
	Further proof as to the lack of regulatory action with respect to
the disputed descriptors can be found in Dr. Peterman's testimony.
The FTC, in 1997, asked for comments as to whether the use of the
disputed descriptors "should be changed or in any way are potentially
misleading." According to Peterman, "that investigation remained
open as of the date of his testimony." Slip op. at 33. Given that the
record evidence establishes that the FTC's position on the use of the
descriptors "remained open," it is difficult to understand how the
FTC's activities in this area can be deemed to be "specific
authorization" of anything.
	In light of the above, I believe the regulatory action present in
this case is much less specific than the regulatory action taken by the
Federal Reserve Board with respect to Regulation Z in Lanier.
Lanier, therefore, is distinguishable from and, contrary to, not
consistent with, the court's conclusion in this case. Jackson is likewise
distinguishable from the court's holding in this case.
	Unlike my colleagues in the majority, I do not believe that the
Illinois General Assembly intended that such "implicit" and
"uncertain" (see slip op. at 59) methods of agency action, such as
consent orders, directed at other parties, constitute the "specific
authorization" required in section 10b(1) to exempt conduct from the
broad coverage of the Consumer Fraud Act. I note that the court
refers to a 1964 FTC Statement that offers "ten reasons why a formal
rulemaking proceeding may be preferable to an adjudicative
proceeding, or a series of adjudicative proceedings." Slip op. at 58.
While not condemning the use of agency adjudicative proceedings to
establish agency policy, the court's own quotations clearly evince a
FTC preference for formal rulemaking. Slip op. at 58-59. Given the
agency's own preference for formal rulemaking, it is not unreasonable
for our legislature to have likewise had this understanding of
administrative law in mind in enacting section 10b(1) as an exception
to the expansive reach of the Act.
	Further, while an agency has the discretion to use adjudicatory
proceedings to announce a sectorwide substantive principle or
standard of conduct, it must be remembered that the consent orders
upon which PMUSA relies are not directed at PMUSA. The court
reasons:
		"The FTC's observation that adjudication could be used to
announce 'a substantive principle or standard of conduct
having general application' suggests that a consent order may
serve as authorization for nonparties to the order to follow its
directives." (Emphases added.) Slip op. at 59.
This reasoning, by its own terms, is based on mere conjecture and
suggestion. The proof to which the court points in support of this
conclusion-two FTC reports to Congress (slip op at 61)-is, in my
opinion, insufficient to show that these two consent orders establish
sectorwide policy. I view these reports as the FTC describing its
efforts to obtain voluntary compliance with the two consent orders.
Negotiations to obtain voluntary compliance from individual parties
do not equate with announcing an industrywide substantive principle
or standard of conduct.
	Federal courts share my view of consent orders. An
administrative consent order is an agreement reached in an
administrative proceeding between parties, one of which is usually the
agency's litigation staff. If the agency accepts the agreement, the
agency issues an order as a court issues a consent decree. A.R. ex rel.
R.V. v. New York City Department of Education, 407 F.3d 65, 77 n.12
(2nd Cir. 2005) (and authorities cited therein). While the
interpretation of a statute by the agency charged with its
administration is accorded deference, a consent order simply
memorializes an agreement of the parties to end litigation upon certain
terms. An unsubstantiated assertion of a legal proposition in an
administrative consent order is untested in the adversarial crucible. It
reflects nothing more than the drafting or view of an agency staff
member that has not been considered carefully by the agency itself.
"Hence, it is not necessarily reliable evidence of an agency's
considered view of the issue." Commodity Futures Trading Comm'n
v. Hanover Trading Corp., 34 F. Supp. 2d 203, 206 n.19 (S.D.N.Y.
1999).
	Continuing with the accepted analogy between administrative
consent orders and judicial consent decrees, it is clear that the 1971
and 1995 FTC orders cannot be considered to have industrywide legal
force. The United States Supreme Court has explained:
			"Consent decrees are entered into by parties to a case after
careful negotiation has produced agreement on their precise
terms. The parties waive their right to litigate the issues
involved in the case and thus save themselves the time,
expense, and inevitable risk of litigation. Naturally, the
agreement reached normally embodies a compromise; in
exchange for the saving of cost and elimination of risk, the
parties each give up something they might have won had they
proceeded with the litigation. Thus the decree itself cannot be
said to have a purpose; rather the parties have purposes,
generally opposed to each other, and the resultant decree
embodies as much of those opposing purposes as the
respective parties have the bargaining power and skill to
achieve. For these reasons, the scope of a consent decree
must be discerned within its four corners, and not by
reference to what might satisfy the purposes of one of the
parties to it." (Emphases in original.) United States v.
Armour & Co., 402 U.S. 673, 681-82, 29 L. Ed. 2d 256, 263,
91 S. Ct. 1752, 1757 (1971).
Thus, a court has no authority to expand or contract a consent order's
terms to reflect "what might have been." Willie M. v. Hunt, 657 F.2d 55, 60 (4th Cir. 1981).
	This authority demonstrates that it is simply incorrect for the
court to refer to the 1971 and 1995 consent orders as establishing
FTC policy. Only the FTC commissioners can formally adopt policy.
The FTC staff members who drafted the consent orders cannot make
agency policy. Further, the orders have not been subjected to
adversarial testing. The 1971 and 1995 consent orders must be viewed
only as what they are: two private agreements between the FTC and
individual cigarette companies without industrywide force of law.
	It is clear from the long history of FTC regulation of the cigarette
industry, as described in the court's opinion, that consent orders are
economic, i.e., they are not based on substantive law. The cases
before the FTC are filed as a result of competitors complaining one
against the other. They are simply administrative and are not binding
authority. At most they may be persuasive to other participants in the
industry. Indeed, in Part I(A) of the court's opinion ("History of FTC
Regulation of the Cigarette Industry"), the court mentions Federal
Trade Comm'n v. Brown & Williamson Tobacco Corp., 778 F.2d 35,
37 (D.C. Cir. 1985), which I believe to be instructive on this point.
Slip op. at 14-15. In Brown & Williamson, the manufacturer claimed
that its Barclay brand of cigarettes contained 1 milligram of tar.
Brown & Williamson's competitors complained that the design of the
Barclay filter caused it to register very low tar measurements.
Publishing its findings, the FTC determined that the Barclay claim was
false and deceptive. The FTC attempted to require Brown and
Williamson to state a higher tar content. Brown & Williamson refused
and retained the 1 milligram claim, but voluntarily qualified the claim.
The FTC thereafter sought an injunction to prevent such advertising.
Brown & Williamson, 778 F.2d  at 37-38. Even after making published
findings, the FTC nonetheless had to resort to a court order to enforce
compliance. In my view, this demonstrates why the FTC's "voluntary"
compliance scheme cannot equate to formal agency rulemaking.
	Despite the uncertain nature of FTC involvement in this area, the
court today concludes that the FTC's "informal regulatory activity,
including the use of consent orders," satisfies the requirement of
section 10b(1) (slip op. at 61) and has the force of law. I very much
doubt, however, that a federal court would regard the FTC consent
orders as "law" in the context of section 10b(1). For example, in
Wabash Valley Power Ass'n v. Rural Electrification Administration,
903 F.2d 445 (7th Cir. 1990), the Seventh Circuit Court of Appeals
was presented with the issue of whether a letter from a federal agency
to the regulated business was sufficient for federal preemption. The
court held that it was not. The court recognized that to preempt state
authority, the agency was required to establish rules with the force of
law, and that regulations adopted after notice and comment
rulemaking have the effect of law. Wabash Valley Power, 903 F.2d  at
453-54. However, the court recognized that the agency sent the
regulated business a letter. "There was no notice, no opportunity for
comment, no statement of basis, no administrative record, no
publication in the Federal Register-none of the elements of
rulemaking under the [Administrative Procedure Act]. 5 U.S.C.
§553." Wabash Valley Power, 903 F.2d  at 454 (collecting cases). The
court concluded: "Procedural shortcomings prevent giving this letter
the force of law." Wabash Valley Power, 903 F.2d  at 454.
	In the present case, as in Wabash Valley Power, the FTC has
never promulgated an industrywide formal rule. Just as the agency
letter in Wabash was not based on a formal rule, the two consent
orders in this case are not based on any formal rule. If the letter in
Wabash Valley Power cannot be considered as "law" as a matter of
federal law, then there is no basis for concluding that the consent
orders constitute "laws" administered for the purposes of section
10b(1).
	As a final matter, the court, in its opinion, "note[s] with great
interest" (slip op at 65) a decision by the United States District Court
for the Eastern District of Arkansas. Watson v. Philip Morris Cos.,
Inc., No. 4:03-CV-519 GTE (E.D. Ark., December 12, 2003), aff'd,
420 F.3d 852 (8th Cir. 2005), involved an Arkansas consumer fraud
class action, which charged Philip Morris with the same fraudulent
misconduct as in this case. Philip Morris removed the cause from
Arkansas state court to federal court pursuant to 28 U.S.C.
§1442(a)(1) (2000), which provides for removal where a person is
sued for actions taken under the direction of a federal officer. Philip
Morris claimed that it satisfied the requirements of the federal officer
statute "because it was acting under the direct control of the [FTC]
when it engaged in the allegedly unlawful conduct." Watson, 420 F.3d 
at 854.
	A key requirement for federal removal jurisdiction is that the
defendant act under the direction of a federal officer.
			" '[R]emoval by a "person acting under" a federal officer
must be predicated upon a showing that the acts ... were
performed pursuant to an officer's direct orders or to
comprehensive and detailed regulations.' Virden v. Altria
Group, Inc., 304 F. Supp. 2d 832, 844 (N.D. W. Va. 2004)
(quoting Ryan v. Dow Chem. Co., 781 F. Supp. 934, 947 (E.
D. N.Y. 1992)). Mere participation in a regulated industry is
insufficient to support removal unless the challenged conduct
is 'closely linked to detailed and specific regulations.' Virden,
304 F. Supp. 2d  at 844." Watson, 420 F.3d  at 857.
The model cases in which private actors have successfully removed
cases to federal court under the statute have involved: government
contractors with limited discretion; Medicare program contractors
because they serve as agents of the federal government; and private
actors whose functions are so intertwined with the federal government
that they are considered effectively to be federal employees. Virden v.
Altria Group, Inc., 304 F. Supp. 2d 832, 845 (N.D. W. Va. 2004)
(and cases cited therein). "Removal under §1442(a)(1) will not be
permitted if the defendant cannot establish direct and detailed control
but only that the relevant acts occurred under the general auspices of
a federal officer, as would be the case, for example, if the defendant
were simply a participant in a regulated industry." Paldrmic v. Altria
Corporate Services, Inc., 327 F. Supp. 2d 959, 966 (E.D. Wis. 2004).
	The district court in Watson reasoned that the FTC often
regulates industries within its purview by compelling voluntary
agreements and consent orders rather than by promulgating formal
regulations. See slip op. at 66. Further, the district court stated that
"the FTC coerced Philip Morris and other cigarette manufacturers into
'voluntary' cooperation with its cigarette labeling and advertising
policies 'in such a way that a formal rule' was not required to create
federal jurisdiction." See slip op. at 66-67. The court of appeals
agreed with the district court's view of the record: "We are convinced
that the record in this case shows a level of compulsion that
establishes that Philip Morris was indeed 'acting under' the direction
of a federal officer." Watson, 420 F.3d  at 859. Regarding the 1970
voluntary agreement: "The FTC effectively used its coercive power to
cause the tobacco companies to enter the agreement. *** This
'voluntary agreement' was a substitute for a formal rule." Watson,
420 F.3d  at 859. Regarding the consent orders, the court of appeals
opined that the consumer fraud class action "directly implicates the
enforcement and wisdom of the FTC's tobacco policies" as explained
in the 1971 consent order. Watson, 420 F.3d  at 862.
	In this case, the court concludes:
			"The issue addressed by the Watson court-whether
removal to federal court was proper-has no bearing on the
present case. However, the federal district court's detailed
analysis does support our conclusion that specific
authorization for the use of the disputed descriptors may be
found in consent orders rather than in formally promulgated
trade regulation rules of the FTC." Slip op. at 67.
I respectfully disagree.
	I note with great interest that removal actions "have been brought
in other jurisdictions, and courts have generally declined to permit
Philip Morris to remove, concluding that the FTC did not exercise
direct and detailed control over the acts for which it was being sued."
Paldrmic, 327 F. Supp. 2d  at 966. Indeed, the federal district courts
in Paldrmic and Virden candidly acknowledged the contrary holding
of the district court in Watson. Paldrmic, 327 F. Supp. 2d  at 966 n.2;
Virden, 304 F. Supp. 2d  at 846. Likewise, the court of appeals in
Watson candidly acknowledged the contrary holding of the district
courts. Watson, 420 F.3d  at 857-59. Although the district court's
reasoning in Watson was affirmed on appeal, Watson was the only
district court to hold that the FTC "regulated" the use of the disputed
descriptors to such a degree as to qualify for federal officer removal
jurisdiction.
	The Virden and Paldrmic courts recognized that Philip Morris
has never acted as an agent or an employee of the federal government.
Virden, 304 F. Supp. 2d  at 846. "At most, it [Philip Morris] is a
private corporation doing business in a regulated industry." Paldrmic,
327 F. Supp. 2d  at 968. Indeed, in the court of appeal's decision in
Watson, a member of that panel concurred "to emphasize that our
decision today should not be construed as an invitation to every
participant in a heavily regulated industry to claim that it, like Philip
Morris, acts at the direction of a federal officer merely because it tests
or markets its products in accord with federal regulations." Watson,
420 F.3d  at 863 (Gruender, J., concurring). The concurring judge
believed that "in most instances, a contract, principal-agent
relationship, or near-employee relationship with the government will
be necessary to show the degree of direction by a federal officer
necessary to invoke removal under 28 U.S.C. §1442(a)(1)." Watson,
420 F.3d  at 863 (Gruender, J., concurring). However, because the
concurring judge viewed the level of FTC regulation of the cigarette
industry as "extraordinary," he opined that "this is a rare case in which
federal officer jurisdiction is appropriate even in the absence of a
contract, principal-agent relationship, or near-employee relationship
with the government." Watson, 420 F.3d  at 864 (Gruender, J.,
concurring).
	However, as the Virden court concluded: "The indicia of federal
control present in cases finding federal officer removal jurisdiction are
wholly lacking here." Virden, 304 F. Supp. 2d  at 846. In Paldrmic,
the court found that Philip Morris did not establish that its use of the
disputed descriptors "was mandated by the FTC." Paldrmic, 327 F. Supp. 2d  at 966. Both courts focused on the voluntary nature of the
1970 agreement. According to the Virden court, "the most that can be
said is that the FTC has been impliedly regulating the tobacco industry
through its tacit acceptance of a voluntary private agreement made
thirty years ago." Virden, 304 F. Supp. 2d  at 846. The Paldrmic court
reasoned: "while it may be true that the cigarette companies preferred
an agreement to a regulation, the fact remains that they entered into
the agreement voluntarily." Paldrmic, 327 F. Supp. 2d  at 966. These
courts, therefore, reasoned:
			"On some level the FTC clearly has coercive control over
the tobacco companies' tar and nicotine advertising based on
its power to regulate deceptive advertising. However, in this
Court's opinion, neither the right to control, nor the threat of
taking control, constitutes the direct and detailed control
required for the application of federal officer removal
jurisdiction." Virden, 304 F. Supp. 2d  at 846-47.
See Paldrmic, 327 F. Supp. 2d  at 966.
	I disagree with the reasoning in Watson, on which the court
relies, and agree with the better-reasoned decisions such as Paldrmic
and Virden.
	In light of the above, I believe that a proper statutory
construction analysis leads to the conclusion opposite to that reached
by the majority. The analysis must begin with our Consumer Fraud
Act, viewed as a whole. Its plain language mandates expansive
coverage and the use of judicial construction to effectuate that
mandate. Section 10b of the Consumer Fraud Act exempts from the
Act conduct "specifically authorized by laws administered by" Illinois
or federal regulatory bodies. In this case, the two consent orders upon
which PMUSA relies, directed at other parties, did not establish an
industrywide standard of conduct for PMUSA. Stated simply,
PMUSA did not carry its burden in proving the existence of this
affirmative defense.
	Further, regardless of how the FTC views the role of consent
orders in industrywide rulemaking, for purposes of the Consumer
Fraud Act, including section 10b(1), a court may not expand the
exemption of section 10b(1) by implication. I do not believe that the
consent orders in this case are sufficient to "specifically authorize"
PMUSA's use of the disputed descriptors, so as to exempt that
conduct from the statutorily mandated expansive scope of the
Consumer Fraud Act.

III. Damages
	Although I could end my dissent here, I feel compelled to address
the special concurrence's suggestion that reversal is warranted for a
"more basic reason" than section 10b(1). The special concurrence
claims that plaintiffs failed to establish that they sustained actual
damages and suggests the absence of actual damages is an alternate
basis for the result the majority reaches. The special concurrence
applies the wrong measure of damages, however, to plaintiffs'
consumer fraud claim. A proper application of the law to the facts at
issue leads to the conclusion that the alternate basis suggested by the
special concurrence is lacking in merit.
	The special concurrence begins with a frank assessment of the
deceptive practices employed by PMUSA in promoting its cigarette
products:
			"The record in the case before us shows that PMUSA
developed and marketed Marlboro Lights and Cambridge
Lights cigarettes in response to heightened public concern
over health risks posed by smoking. The company believed
that it could forestall declining sales by offering a product
which consumers perceived as better for them than
conventional 'full-flavored' brands. Pursuant to that strategy,
PMUSA advertised Marlboro Lights and Cambridge Lights
cigarettes in a way that led consumers to believe that the
brands posed a lower health risk than their 'full flavored'
counterparts. In reality, and as PMUSA was fully aware, the
so-called 'light' cigarettes not only offered no health benefits,
but were actually more toxic." Slip op. at 75-76 (Karmeier,
J., specially concurring, joined by Fitzgerald, J.).
The special concurrence further comments, "When a consumer
chooses one product over another in the belief that it will be less
harmful to his or her health, only to discover later that it may have
been more harmful, the existence of damages might seem self-evident." Slip op. at 76 (Karmeier, J., specially concurring, joined by
Fitzgerald, J.). The "self-evident" nature of the damages, however,
hardly gives pause to the special concurrence in its quest to prove that
plaintiffs failed to establish actual damages.
	The special concurrence notes that class representative Sharon
Price "continued smoking PMUSA's light cigarettes even after this
litigation alerted her to the fact that the cigarettes were not, in fact,
any healthier and may actually be more harmful than the regular
version of those cigarettes." Slip op. at 77 (Karmeier, J., specially
concurring, joined by Fitzgerald, J.). Additionally, the special
concurrence notes that "[n]ews that PMUSA's low tar and light
representations were illusory" did not deter class representative
Michael Fruth "from continuing to smoke, although he testified that
he did switch back from lights to regulars." Slip op. at 77 (Karmeier,
J., specially concurring, joined by Fitzgerald, J.). From these
observations, the special concurrence concludes:
			"Whatever valuation the class representatives may have
placed on the health component of light cigarettes, that
valuation had no observable economic consequences. Neither
Price nor Fruth offered any testimony suggesting that
switching from regulars to lights resulted in their paying any
more for cigarettes than they would have otherwise. There
was no price disparity between light cigarettes and their full-flavored counterparts, and there is no indication that the
switch from regulars to lights caused them to buy more
packages of cigarettes. The price they paid did not go up.
The quantity they purchased did not increase.[(5)] No additional
ancillary or incidental costs were identified. Moreover,
neither Price nor Fruth complained that the cigarettes were
not worth what they paid for them. To the contrary, Price's
continued purchase of lights even after being alerted to their
lack of health benefits suggests that she was entirely satisfied
with the value of what she received for her cigarette-purchasing dollar." Slip op. at 77 (Karmeier, J., specially
concurring, joined by Fitzgerald, J.).
	Having explained that the class representatives did not sustain
damages because they continued to smoke after learning the true
nature of light cigarettes, the special concurrence makes a similar
argument regarding smokers and class members in general. The
special concurrence recognizes that the Knowledge Network Survey
respondents placed a "lower subjective value on cigarettes that lacked
the health qualities claimed by PMUSA in its marketing of Marlboro
Lights and Cambridge Lights." Slip op. at 80 (Karmeier, J., specially
concurring, joined by Fitzgerald, J.). However, the special
concurrence maintains that real world "consumers would not have
paid less to satisfy their tobacco habits had the lights' true properties
been known." Slip op. at 80 (Karmeier, J., specially concurring, joined
by Fitzgerald, J.). According to the special concurrence, "consumers
would not have stopped smoking, for they were addicted, and they
could not have bought cigarettes that cost 77.7% less or 92.3% less,[(6)]
for no such cigarettes existed. At most, they would have reverted back
to 'full-flavored' versions of the cigarettes." Slip op. at 80 (Karmeier,
J., specially concurring, joined by Fitzgerald, J.). Since the price of
light cigarettes and regular cigarettes were the same at all times, the
special concurrence concludes that "while PMUSA's
misrepresentations may have deceived consumers into altering their
purchasing decisions, the net change in consumers' economic position
as a result of those misrepresentations was zero." Slip op. at 80
(Karmeier, J., specially concurring, joined by Fitzgerald, J.).
	The special concurrence's analysis, as it applies to both the class
representatives and to the members of the class, suffers from a
fundamental misunderstanding of the measure of damages in an action
that is based upon a fraudulent misrepresentation made by a
defendant. This court's opinions in Drew v. Beall, 62 Ill. 164 (1871),
and Gerill Corp. v. J. L. Hargrove Builders, 128 Ill. 2d 179 (1989),
are particularly instructive. In Drew, the plaintiff traded a house and
lot in Dixon, Illinois, in return for acreage in Missouri and the sum of
$800. The plaintiff charged that the defendant had made certain
misrepresentations concerning the Missouri land. The defendant
sought to limit the plaintiff's damages, arguing the proper measure of
damages was the value of the house and lot in Dixon, less the $800,
and less the actual value of the land in Missouri. The defendant
maintained that this would restore the plaintiff to the condition he was
in before the exchange of property. On appeal, the defendant argued
the trial court should have allowed the jury to hear testimony
regarding the value of the house and lot in Dixon. This court
disagreed, holding that the proper measure of damages was "the
difference between the actual value of the land and the value of such
a tract of land as defendant's land was represented to be, and the
value of the Dixon house and lot was not properly involved." Drew,
62 Ill.  at 168. The court reasoned that the "parties had, by their
agreement fixed an estimate and value upon the property which each
sold and transferred to the other, and it was not for the jury to make
a new contract for them, or fix a new price upon the plaintiff's
property for them. The plaintiff was entitled to the benefit of his
bargain." Drew, 62 Ill.  at 168.
	The court in Drew thus sharply distinguished between the benefit-of-the-bargain rule for the measure of damages in cases of fraud and
deceit and the out-of-pocket rule measure of damages.(7) The plaintiff
in a fraud and deceit case is not merely entitled to be placed in the
condition he was in before the bargain was made. He is entitled to the
benefit of his bargain. Moreover, the courts will not rewrite the
plaintiff's bargain by assigning a different price to an item than what
the plaintiff and defendant originally agreed to.
	In Gerill, 128 Ill. 2d  at 179, Gerill Corporation and Jack L.
Hargrove Builders, Inc., had formed a joint venture to develop land
owned by Gerill in Woodridge, Illinois. Eventually, the parties
approached John Rosch with the proposition that Rosch purchase
Hargrove's interest in the joint venture. Rosch purchased Hargrove's
interest after reviewing a 19-page handwritten list of the joint
venture's outstanding loans and open invoices prepared by Hargrove.
Upon consummation of the sale, Rosch's accountant discovered that
Hargrove had misrepresented the joint venture's liabilities in that a
number of liabilities related to the Woodridge properties had either
been omitted from the list or misstated. The circuit court awarded
damages to Rosch for Hargrove's fraudulent misrepresentations and
the appellate court affirmed.
	In this court, Hargrove argued that the circuit court's
computation of damages was incorrect. Hargrove claimed that under
the benefit-of-the-bargain rule, damages for fraudulent
misrepresentation must be based upon the amount of money the
plaintiff paid as a result of the misrepresentation. Thus, Hargrove
argued, the circuit court should not have excluded evidence that the
misrepresented liabilities were either never paid or were not paid until
after Rosch sold his interest in the joint venture. The court rejected
this argument, reasoning:
		"Under the benefit-of-the-bargain rule, which governs the
damage computations in fraudulent misrepresentation cases,
damages are determined by assessing the difference between
the actual value of the property sold and the value the
property would have had if the misrepresentations had been
true. (Hicks v. Deemer (1900), 187 Ill. 164, 170; Munjal v.
Baird & Warner, Inc. (1985), 138 Ill. App. 3d 172, 186-87;
Kinsey v. Scott (1984), 124 Ill. App. 3d 329, 341.) In this
case, it was found that Hargrove represented the joint
venture's liabilities as being less than they actually were. The
proper measure of damages under the benefit-of-the-bargain
rule, then, and the formula that was used by the circuit court,
was the difference between the joint venture's liabilities as
misrepresented by Hargrove and what those liabilities actually
were. How Rosch or the joint venture subsequently dealt
with those liabilities was irrelevant to this determination."
Gerill, 128 Ill. 2d  at 196.
	The Gerill court restated that the proper measure of damages in
an action for fraudulent misrepresentation is the difference between
the actual value of the property sold and the value the property would
have had if the misrepresentations had been true. The court added that
the bargain, and the measure of damages, are not affected by
subsequent actions. Rosch might or might not have been held liable
for the full amount of the liabilities of the joint venture. However,
whether Rosch was made to pay for the liabilities mattered not to the
determination of damages. See also Antle & Brothers v. Sexton, 137 Ill. 410, 416 (1891) (where the land conveyed consisted of 30 acres
rather than 80 acres as represented, the trial court did not err "in
refusing evidence tending to show that notwithstanding the shortage
[in acreage] plaintiffs got the worth of their money in the whole
trade"); Kinsey v. Scott, 124 Ill. App. 3d 329 (1984) (holding the
proper measure of damages was the difference in value between the
apartment building as a five-unit structure including a basement unit
and as a four-unit structure in 1973, the year of the purchase. In
addition, the rental income which the plaintiff received from the
basement unit, which defendant had not built to code, from 1973 to
1981 also belonged to the plaintiff as owner of the building). And see
City of Chicago v. Michigan Beach Housing Cooperative, 297 Ill.
App. 3d 317 (1998) (observing that in an appropriate case, a plaintiff
may recover the difference between the value of the note or security
interest as represented, and the value of the note or security interest
received); Kleinwort Benson N. America v. Quantum Financial
Services, 285 Ill. App. 3d 201 (1996) (reversing entry of summary
judgment and holding that a question for a fact finder existed as to the
amount of damages where counterclaimant purchased the company at
a premium and evidence showed that, without the promised
institutional sale force, the company had no value beyond the book
value of assets); Poeta v. Sheridan Point Shopping Plaza Partnership,
195 Ill. App. 3d 852 (1990) (holding that a benefit-of-the-bargain
analysis for damages is appropriate in an action for fraud); Four "S"
Alliance, Inc. v. American National Bank & Trust Co. of Chicago,
104 Ill. App. 3d 636, 640 (1982) (trial court properly applied the
benefit-of-the-bargain formula in awarding plaintiff "the profit
difference for the gas actually sold during the three months [at the gas
station plaintiff leased from defendants] and the volume of sales which
had been represented orally").
	The special concurrence and PMUSA concede that the proper
measure of damages in the case at bar, as in an action for common law
fraudulent misrepresentation, is the benefit-of-the-bargain. Slip op. at
76 (Karmeier, J., specially concurring, joined by Fitzgerald, J.).
Having made that concession, however, the special concurrence
applies a measure of damages that is closer to the out-of-pocket
measure of damages than the benefit-of-the-bargain measure. In the
process, the special concurrence impermissibly rewrites the bargain
that plaintiffs entered into in purchasing light cigarettes from PMUSA.
As to the class representatives, the focus of the analysis that the
special concurrence employs is the continued use of cigarettes by the
representatives beyond the time that they learned the true properties
of light cigarettes. The special concurrence maintains that, since the
class representatives continued to smoke after they learned that the
health benefits were illusory, the class representatives could not have
placed any real value on the health components of light cigarettes, and
hence could not have suffered any economic loss when the
representations regarding the health benefits turned out to be false.
The special concurrence thus looks beyond the time frame of the
bargain between the parties, and rewrites the bargain in light of the
representatives' subsequent behavior. In other words, rather than look
to the time frame when plaintiffs were deceived by PMUSA's
representations and purchased light cigarettes for their perceived
health benefits, the special concurrence looks to the time frame when
the class representatives learned of the falsity of the representations.(8)
The fact that the class representatives knew of the true properties of
light cigarettes in the second time frame and bargained for cigarettes
based on that knowledge, however, does not in any way undercut the
damages they sustained in the first time frame, when they purchased
light cigarette for the health benefits touted by PMUSA.
	A simple illustration makes the point. I purchase 10 acres of land
for development upon a representation that the land is never subject
to flooding. After constructing houses on nine acres, I discover that
the remaining acre is not suitable for development because it lies
below the flood plain and is subject to periodic flooding. I construct
a fishing pond on part of the remaining acre and leave the balance in
its natural state so the purchasers of the houses may benefit from the
view. Under the benefit-of-the-bargain measure of damages, I am
entitled to the difference between the value of the land as promised,
that is, the value of land suitable for development in toto, and the
value of the land as received, that is, the value of land with only nine
acres suitable for development. Contrary to this approach, the special
concurrence would focus on the development of the fishing pond and
the benefit of the natural view, and conclude that I must have placed
a higher value on the land received since I was able to find some use
for it. The special concurrence would rewrite my bargain by assigning
a greater value to the land based on my actions subsequent to the time
of the purchase.
	The special concurrence repeats the same mistake in its analysis
regarding the class members in general. As noted above, the special
concurrence recognizes that the Knowledge Network Survey
respondents placed a lower value on cigarettes that lacked the health
qualities claimed by PMUSA. However, the special concurrence does
not focus on the difference between the value of the cigarettes as
represented by PMUSA and the value of the cigarettes without the
health benefits. Instead, the special concurrence focuses on two
factors: (1) discounted cigarettes were not available for purchase in
the marketplace; and (2) the class members were addicted to the use
of cigarettes. From these factors the special concurrence concludes
that the class members did not incur damages, and are not entitled to
compensation, because they would have purchased cigarettes at the
nondiscounted prices to continue feeding their addiction.
	In essence, the special concurrence rewrites the bargain that
plaintiffs made. The special concurrence ignores the evidence that
cigarette consumers would have required a steep discount to purchase
light cigarettes without the health benefits. Instead, the special
concurrence asserts that cigarette consumers would have continued to
purchase light cigarettes, at nondiscounted prices, even knowing the
true properties of the cigarettes. In the alternative, the special
concurrence asserts that cigarette consumers would have purchased
regular cigarettes at a price equal to the price paid for light cigarettes
as misrepresented by PMUSA. But the focus under the benefit-of-the-bargain is the difference in value, as of the time of the transaction,
between the goods as received and the goods as promised. Thus, the
Gerill court focused on the difference between the joint venture's
liabilities as misrepresented and what those liabilities actually were.
How Rosch subsequently dealt with those liabilities was irrelevant to
the determination of damages. Hargrove could not share in the
forgiveness of any of the liabilities by rewriting the bargain to assign
a higher value to the joint venture.
	The result that the special concurrence advocates is, at best,
surprising. PMUSA misrepresented the qualities of its light cigarettes.
The misrepresentations led cigarette consumers to overcome their
aversion to the taste of light cigarettes and purchase light cigarettes in
an unsuccessful attempt to lower their intake of the harmful products
to which they were exposed in smoking cigarettes. While PMUSA
saw its profits increase because of the sale of light cigarettes, cigarette
consumers did not receive the health benefits for which they
bargained. The special concurrence dispenses with the inequities in the
transaction, however. So long as the price the consumers paid for the
false light cigarettes was no more than the price for the nonbargained
for cigarettes, PMUSA could make misrepresentations of whatever
kind it desired.
	When considered in light of the addictive nature of cigarettes, the
special concurrence's position is not only surprising but untenable.
Recall the special concurrence's acknowledgment that "PMUSA was
fully aware, the so-called 'light' cigarettes not only offered no health
benefits, but were actually more toxic." Slip op. at 76 (Karmeier, J.,
specially concurring, joined by Fitzgerald, J.). Also recall the special
concurrence's claim that cigarette consumers could "not have stopped
smoking, for they were addicted." Slip op. at 80 (Karmeier, J.,
specially concurring, joined by Fitzgerald, J.). The stepping stones to
the special concurrence's position are as follows. Cigarette
manufacturers, including PMUSA, could market a highly addictive
and toxic product, a cigarette, with the result that the consumer
became addicted to the product. PMUSA could then market a light
cigarette, just as addictive as a full-flavored cigarette, that it claimed
contained less toxic compounds than a full-flavored cigarette.
Consumers could flock to the light cigarette, believing the
misrepresentations regarding the health benefits flowing from the
claimed reduction of toxic compounds in the light cigarette. PMUSA
could reap increased profits as customers switched to the light
cigarette marketed by PMUSA. However, consumers could not
recover for the misrepresentations because they could not break free
of the addiction directly flowing from PMUSA's marketing of full-flavored and light cigarettes.
	Far from bolstering the result reached by the majority, the special
concurrence serves as a reminder of the problems associated with the
out-of-pocket measure of damages in an action for fraud or deceit. In
an opinion joined by the author of today's majority opinion, our
appellate court observed:
			"The rule set forth in [Perry v. Engel, 296 Ill. 549 (1921)]
comports with section 549, comment I of the Restatement
(Second) of Torts, which discusses the measure of damages
in misrepresentation cases where the recipient of the
misrepresentation has suffered no out-of-pocket loss. That
section provides as follows:
				'When the value of what the plaintiff has received under
the transaction with the defendant is fully equal to the
value of what he has parted with, he has suffered no out-of-pocket loss, and under the rule stated in subsection (1),
clause (a) [providing that the recipient of
misrepresentation may choose to recover his actual out-of-pocket loss], he could recover no damages. This would
mean that the defrauding defendant has successfully
accomplished his fraud and is still immune from an action
in deceit. Even though the plaintiff may rescind the
transaction and recover the price paid, the defendant is
enabled to speculate on his fraud and still be assured that
he can suffer no pecuniary loss. This is not justice
between the parties. The admonitory function of the law
requires that the defendant not escape liability and justifies
allowing the plaintiff the benefit of his bargain.' (Emphasis
added.) Restatement (Second) of Torts §549, Comment I,
at 115 (1977).
		See also W. Keeton, Prosser & Keeton on Torts §110, at 768
(5th ed. 1984) ('in many cases the out-of-pocket measure will
permit the fraudulent defendant to escape all liability and
have a chance to profit by the transaction if he can get away
with it')." Kirkruff v. Wisegarver, 297 Ill. App. 3d 826, 837
(1998).
Perhaps these words still ring true in the heart of the author of today's
majority opinion, and are the reason that the majority of the court
does not endorse the position advanced by the special concurrence. Be
that as it may, I note that the proper measure of damages in Illinois in
a fraud and deceit action, whether based on statute or at common law,
is the benefit-of-the-bargain, rather than the out-of-pocket measure of
damages or some close relative thereof. I note further that the record
contains sufficient evidence to support an award of damages to the
plaintiff class. Several members of the class testified that they switched
to light cigarettes because they wanted to reduce their exposure to the
harmful compounds in regular cigarettes. Class representative Sharon
Price testified that, having switched to light cigarettes because of
concerns about lung cancer and other diseases, she would not have
gone back to regular cigarettes even if they were offered to her for
free. In a similar vein, the Knowledge Network Survey respondents
stated that they would have required a steep discount had they known
that light cigarettes either did not offer any health benefits compared
to regular cigarettes or were actually more harmful than regular
cigarettes. The fact remains that the members of the plaintiff class
were defrauded because of the misrepresentations made by PMUSA
regarding light cigarettes. Illinois law should not tolerate the use of
deceptive practices aimed at defrauding the consumers of this state.

IV. Conclusion
	Today marks the second time in just six months that this court
has completely reversed a multibillion dollar verdict in favor of a
corporate defendant. See Avery v. State Farm Mutual Automobile
Insurance Co., 216 Ill. 2d 100 (2005). To do so in Avery, the court
construed an insurance contract strictly against an insured despite its
ambiguities and our own precedent to the contrary. See Avery, 216 Ill. 2d  at 215-29 (Freeman, J., concurring in part and dissenting in part,
joined by Kilbride, J.). In this case, the court does so by interpreting
section 10b(1) so narrowly that it dilutes the very purpose of the Act.
In addition, not content with just speaking to section 10b(1), the two
specially concurring justices engage in nothing more than a conclusory
analysis on damages-an analysis which, as I have detailed above,
overlooks or ignores several salient legal points which serve to greatly
undercut their position. Suffice it to say, the issue of damages is not
as cut and dry as these justices would have one believe.
	The manner in which these two, highly publicized cases have been
decided by this court leads me to several troubling conclusions. First,
a majority of this court has become increasingly desensitized to the
interests of the average Illinois consumer. There is little doubt in my
mind that these decisions will send a chill wind over consumer
protection. That said, I am not blind to the very real problems that
exist in the world of class action lawsuits. As I stated in my separate
opinion in Avery, I share in the concerns that the class action vehicle
has the potential to be greatly abused. However, that concern must
not transcend the rules of law that have been set by this court in past
decisions. In my view, this means that all cases, even class actions
filed in our Fifth District, must be guided by the same long-recognized
standards of review, rules of construction, procedural requirements,
and burdens of proof that have guided all other types of actions over
the years. Aspects of the court's opinion today and in its opinion in
Avery cause me to fear that a majority of my colleagues will continue
to hold large class actions to different standards in an effort to reduce
the perception that the Illinois court system serves as a playpen for the
disingenuous class action practitioner.
	JUSTICE KILBRIDE joins in this dissent.
	JUSTICE KILBRIDE, also dissenting:
	I fully agree with all aspects of Justice Freeman's dissent and I
join in it. I write separately to express additional concerns with the
majority opinion.
	The majority notes that neither party has offered argument
regarding the meaning of the phrase "by laws administered by" in
section 10b(1) of the Consumer Fraud Act. Slip op. at 49. The
majority then concludes that the phrase reflects legislative intent
requiring deference to agency policy and practice in its performance
of duties delegated by Congress or the General Assembly. Slip op. at
49. As support for this conclusion, the majority asserts the legislature
would have referred to state or federal statutes, rather than laws, if it
intended to require that specific authorization be contained in the law
itself. Slip op. at 49-50. The majority fails to explain or describe any
conceptual difference between "laws" and "statutes." The majority's
conclusion therefore does not logically follow from the premise.
Further, although the majority acknowledges that the term
"specifically authorized" in the statute "indicates a legislative intent to
require a certain degree of specificity or particularity in the
authorization" (slip op. at 49), it points to no specificity or
particularity in the claimed authorization here. Indeed, "agency policy
and practice" and the consent orders relied on by the majority as
authorization are neither specific nor particular.
 	Nowhere in section 10b(1) is there any reference to "agency
policy and practice." Yet the majority concludes that agency policy
and practice have the force of law. Statutes and published rules made
in accordance with statutory authority are clearly "laws administered
by a regulatory body." To the extent statutes and published rules
authorize certain conduct, that conduct cannot serve as a predicate for
an action under the Consumer Fraud Act. That was the import of this
court's holding in Lanier.
		Lanier did not, however, hold that agency policy and practice
allowed use of the unexplained "Rule of 78's" term in loan
documents. Instead, we held that Regulation Z permitted use of the
term without further elaboration. Regulation Z is a set of
comprehensive rules, enacted and published by the Federal Reserve
Board, pursuant to authority granted by Congress implementing the
principles of the Truth in Lending Act. Lanier, 114 Ill. 2d  at 11. In
holding the conduct complained of was specifically authorized by law,
we relied on a formal, published Federal Reserve Board staff
interpretation of a section of Regulation Z. That regulation required
identification of the method of computing any unearned portion of the
finance charge in the event of prepayment. The published staff
interpretation concluded that a simple reference by name to the "Rule
of 78's" without describing its operation satisfied the identification
requirement. Lanier, 114 Ill. 2d  at 12.
	We held that the Federal Reserve Board's formal, published
interpretation of its own rules is entitled to great deference, absent any
obvious repugnance to the Truth in Lending Act. Lanier, 114 Ill. 2d 
at 13. We observed that the Truth in Lending Act absolved creditors
from liability "for 'any act done or omitted in good faith in conformity
with any rule, regulation, or interpretation thereof by the Board or in
conformity with any interpretation or approval by an official or
employee of the Federal Reserve System duly authorized by the
Board to issue such interpretations.' [Citation.]" (Emphasis added.)
Lanier, 114 Ill. 2d  at 14.
	 We concluded that the foregoing provision evinced a
congressional determination to treat the Board's administrative
determinations under the Truth in Lending Act as authoritative.
Lanier, 114 Ill. 2d  at 14. Thus, we held section 10b(1) of the
Consumer Fraud Act exempted from liability conduct authorized by
federal statutes and regulations, including those administered by the
Federal Reserve Board, and that "defendant's compliance with the
disclosure requirements of the Truth in Lending Act is a defense to
liability under the Illinois Consumer Fraud Act in the present case."
(Emphasis added.) Lanier, 114 Ill. 2d  at 18.
	 It is apparent, therefore, that Lanier upheld the creditor's section
10b(1) defense because the disclosure was specifically authorized by
the federal Truth in Lending Act. We found defendant complied with
the requirements of the Act because a formal, published agency
interpretation of a regulation authorized by Congress, specifically
authorized the disputed conduct.
	Conversely, the record in this case does not present a basis for
application of Lanier. Congress has empowered and directed the
Federal Trade Commission to prevent the use of unfair or deceptive
acts or practices in or affecting commerce. 15 U.S.C. §45. It has also
delegated rulemaking authority to the Commission. 16 C.F.R. §1.22.
As the defendant's expert, Dr. Peterman, conceded, the Commission
has never promulgated any rule authorizing the use of the specific
descriptors at issue in this case. The Commission is primarily an
enforcement agency charged with protecting consumers from unfair
and deceptive trade practices. Unlike the Truth in Lending Act, the
Federal Trade Commission Act contains no provision absolving from
liability persons who in good faith comply with official interpretations
of its regulations. Further, as the Commission has not published any
functional equivalent to Regulation Z, there is no comparable
Commission regulation governing the conduct at issue here.
	Hence, Lanier offers no support for the conclusion that use of the
descriptors claimed to be deceptive in this case is specifically
authorized by federal law. Lanier teaches only that section 10b(1) can
bar a Consumer Fraud Act remedy if the conduct is specifically
authorized by a federal law. It neither holds nor suggests that informal
agency policy or policy enforcement techniques short of formal,
published rulemaking could invoke the section 10b(1) exemption from
liability. The majority concludes, however, that "the FTC's informal
regulatory activity, including the use of consent orders, comes within
the scope of section 10b(1)'s requirement that the specific
authorization be made 'by laws administered by' a state or federal
regulatory body," contending that this assertion "is consistent with our
holding in Lanier." Slip op. at 61. Again, Lanier simply offers no
support for this conclusion.
	Additionally, the majority acknowledges, as noted in my special
concurrence in Jackson, that mere compliance with applicable law
does not necessarily bar Consumer Fraud Act liability and that, rather,
the conduct at issue must be specifically authorized. Slip op. at 54.
Yet, the majority effectually ignores that principle in its analysis.
	The majority can take no comfort in the reasoning of the Seventh
Circuit in Bober. The alleged deceptive statement in that case was
held specifically authorized by a rule formally adopted by the FDA and
codified in the Code of Federal Regulations. Bober, 246 F.3d  at 941.
Bober is remarkably similar to this court's holding in Lanier, finding
a formal published interpretation of a regulation of the Federal
Reserve Board to authorize specifically the disclosures in question.
	In this case, the federal law in question forbids unfair or deceptive
acts or practices affecting commerce. The FTC has issued no formal
rule or regulation authorizing the descriptors in question, as in Bober,
and it has issued no formal interpretations of any regulations, as in
Lanier.
	The majority asserts that Lanier is authority for the proposition
that an agency staff interpretation may be a sufficient basis for a
finding of specific authorization and that formal rulemaking is
therefore not a prerequisite for specific authorization. Slip op. at 56.
It must be remembered that the staff interpretation in Lanier was both
formal and published and that Congress expressly provided that
reliance on staff interpretations would excuse liability. Opening the
door to informal policy advice could lead to absurd results. For
instance, advice given casually between an FTC commissioner and a
PMUSA executive could not and should not serve as the specific
authorization required by section 10b(1). Common sense indicates that
no specific authorization by law can derive from informal
policymaking or agency practices. Thus, there is no basis for the
majority to conclude that either informal agency policy and practice
or the use of consent orders involving other parties are within the
ambit of our holding in Lanier.
	Nevertheless, the majority relies on 1971 and 1995 FTC consent
orders entered in resolution of claims asserting that American Brands,
Inc., and American Tobacco Company, respectively, violated the
Act's prohibition of unfair methods of competition and unfair and
deceptive acts and practices in commerce. In the case of the 1971
order, the FTC filed a complaint in 1969 detailing advertising claims
related to American Brands products it found deceptive. American
Brands then agreed, in a consent order, without admitting it violated
the law as alleged in the complaint, to refrain from advertising that its
cigarettes were low or lower in tar by use of the words "low," "lower"
or "reduced," or like qualifying terms, unless the statement is
accompanied by a clear and conspicuous disclosure of the tar and
nicotine content in milligrams in the smoke produced by the advertised
cigarette. In re American Brands, Inc.,79 F.T.C. 255 (1971).
	It is apparent that the complaint against American Brands was
directed at particular advertising used only by that company. The
order forbade only American Brands from making the reduced tar
claims, and authorized only American Brands to use "low tar"
descriptors only if accompanied by conspicuous disclosures of tar and
nicotine content. The order cannot reasonably be viewed as directing
the use of the descriptors. Indeed, it prohibited their use unless certain
conditions were met. No reference whatever is made to the
descriptors "light" or "lights," as used by PMUSA. The plain facts,
therefore, demonstrate no basis to conclude that "lights" is a like
qualifying term to "low in tar." Thus, even if other cigarette marketers
read the published consent order, they could not reasonably conclude
it specifically authorized any descriptors other than "low tar" or
"lower in tar." Nor could they conclude that the agreed resolution of
the Commission's claim against American Brands was anything other
than the compromise of a disputed claim. It was not, and did not
purport to be, a rule or regulation permitting the entire cigarette
industry to use these or any other descriptors.
	Similarly, the 1995 consent order was entered after the FTC filed
a complaint alleging that American Tobacco Company committed
unfair and deceptive acts or practices in advertising its Carlton brand
of cigarettes. The complaint alleged the advertisements claimed that
10 packs of Carltons contained less tar than one pack of five
competing brands. The Commission alleged that, in truth, consumers
would not get less tar by smoking 10 packs of Carltons because of the
behavior of compensatory smoking. As in the 1971 consent order,
American Tobacco entered into an agreement for settlement purposes,
without admitting it had violated the law. American Tobacco
consented to entry of an order forbidding the disputed representations
unless the representations were true as confirmed by competent and
reliable scientific evidence. The 1995 order further provided that
comparison of the tar and nicotine ratings of American Tobacco's
cigarette brands and the ratings of competing brands, with or without
representation that respondent's brand is "low," "lower," or "lowest"
in either tar or nicotine, would not be deemed violations of the
consent order under certain conditions. Specifically, use of the
descriptors was not forbidden if American Tobacco did not visually
depict more than a single cigarette or pack of its and the comparative
brands. In re American Tobacco Co., 119 F.T.C. 3 (1995).
	Like the 1971 consent order, the 1995 consent order made no
reference whatever to the terms "light" or "lights." The reference to
"low tar" in the 1995 order is clearly not a Commission authorization
to use that term or similar terms. It only refers to comparisons of
brands with or without use of such descriptors. The 1995 consent
order merely resolved a disputed claim against American Tobacco
Company arising from alleged false advertising of one particular brand
of cigarettes. Competitors of American Tobacco Company might look
to the order for guidance concerning what advertising practices the
Commission may deem unfair or deceptive, but could not reasonably
conclude that the use of any descriptors were specifically authorized
by the order. The 1995 complaint did not even question American
Tobacco's use of particular descriptors. Instead, it contended that
American Tobacco's comparative claim was untrue. Thus, that
consent order forbade conduct not at issue in this case, and only
conditioned use of "low tar" descriptors on American Tobacco's
forbearance of using more than a depiction of a single cigarette or
pack of its brand versus a single cigarette or pack of any other brand.
	Both the 1971 and 1995 consent orders dealt with conduct
deemed by the Commission to violate the FTC Act. The orders have
the force of law only as to the parties entering into the settlement
agreements-American Brands and American Tobacco Company. At
most, the orders may be predictive of Commission attitudes toward
advertising practices in future cases. Simply stated, those consent
orders cannot reasonably be deemed to be an industrywide specific
authorization for the use of particular advertising descriptors.
	Equally important, the FTC has certainly not closed the book on
the issue of deceptive cigarette advertising. In 1997, it sought public
comment on whether its policies regarding testing methods and the
use of descriptors should be revised. At the agency's request, the
National Cancer Institute (NCI) studied the issues and, in November
2001, published Monograph 13. The NCI concluded there was no
convincing evidence that cigarettes lower in tar and nicotine yield
reduced the disease burden on a population basis. Monograph 13 was
critical of industry testing practices and its use of comparative
descriptors. According to Dr. Peterman, the FTC, at the time of trial,
was evaluating whether to change its policies in light of the NCI's
conclusions. The ongoing FTC review should indicate to industry
competitors that agency policy on the use of cigarette comparative
descriptors was, and remains, in a state of flux.
	The foregoing illustrates why policies, as opposed to formal
published regulations and statutes, cannot be deemed to have the force
of law within the meaning of section 10b(1). The legislative purpose
of the exemption in section 10b(1) is to shield defendants from liability
for conduct specifically authorized by law. That purpose is not served
if discernment of what is forbidden and what is authorized rests on the
shifting sands of ever-changing and evolving agency policy. A statute
or published regulation, on the other hand, remains in effect unless
formally repealed. Policy change can be effected simply by an agency
decision to commence an enforcement proceeding. Thus, consent
orders enforceable only against parties to an enforcement proceeding
are not laws administered by a federal agency within the meaning of
section 10b(1). Accordingly, I agree with the trial court that defendant
did not establish its section 10b(1) affirmative defense.
	On a different issue, I am compelled to respond to Justice
Karmeier's argument that plaintiffs did not prove damages. Justice
Karmeier observes that plaintiffs cited no authority permitting
opinions of Internet survey respondents to establish actual damages
under the Consumer Fraud Act because the representative plaintiffs
have not been harmed in the way the survey respondents claimed they
would be in answering the survey hypotheticals. Slip op. at 78
(Karmeier, J., specially concurring, joined by Fitzgerald, J.). The
Internet survey was admitted in evidence during the testimony of Dr.
Cohen, a credentialed survey expert, who validated the survey. Dr.
Cohen testified that the Knowledge Networks survey was "proper"
and represented "appropriate ways of gathering information from
smokers via survey method." Dr. Dennis, who conducted the survey,
is highly credentialed in survey research practices and was recognized
by the trial court as a qualified and experienced expert in survey
research.
	On appeal, defendant has not challenged the trial court's
qualification of Dr. Dennis as an expert, nor could it legitimately
question his qualifications. At the time of the trial, defendant's own
damage expert, Dr. Viscusi, was working with Dr. Dennis on a
government-sponsored survey research project utilizing the
Knowledge Networks survey methodology. Similarly, defendant's
survey expert, Dr. Mathiowetz, had coauthored a learned treatise with
Dr. Dennis concerning survey techniques.
	 Admittedly, Dr. Dennis was subjected to extensive cross-examination, and his conclusions were challenged by defendant's
expert witness, Dr. Mathiowetz. Nonetheless, the record reveals no
pretrial request for a Frye hearing on the issue of general acceptance
of the Knowledge Networks survey methodology. See Frye v. United
States, 293 F. 1013 (D.C. Cir. 1923). Although defendant moved to
strike Dr. Dennis' testimony regarding the survey on foundation and
Donaldson grounds, no challenge to the general acceptance of his
survey methods was enunciated for the record. Thus, no coherent
requisite challenge to the general acceptance of the survey method
appears either in the trial record or in defendant's briefs. Frye issues
are reviewed under an abuse of discretion standard. Donaldson v.
Central Illinois Public Service Co., 199 Ill. 2d 63, 76 (2002).
Accordingly, there is no basis in the record to conclude the trial court
abused its discretion in admitting the Knowledge Networks survey
because of its authentication by credentialed witnesses and defendant's
failure to lodge a sufficient challenge to the general acceptance of the
survey method.
	Thus, in addition to the points asserted by Justice Freeman, I
conclude that neither section 10b(1), nor the admission of the
Knowledge Network survey, provides a basis for reversing the trial
court's judgment. Therefore, I respectfully dissent.
	JUSTICE FREEMAN joins in this dissent.
	 


Dissent Upon Denial of Rehearing
Plaintiffs petitioned for rehearing in this case. 
Because I believe that this court's judgment may have been erroneous, I dissent 
from the denial of the petition for rehearing.



As a preliminary matter, plaintiffs correctly question the precedential value 
of this court's decision. Plaintiffs observe that no rationale in the December 
15, 2005, judgment received a majority of votes. In other words, there was no 
holding by a majority opinion-except for the disposition of the cause, i.e., 
four justices voted for reversal.  
Justice Garman's opinion, holding that PMUSA's conduct was exempt under 
section 10b(1) of the Consumer Fraud Act (815 ILCS 505/10b(1) (West 1998)), was 
joined by Justice McMorrow. Justice Karmeier, joined by Justice Fitzgerald, did 
not specifically agree with Justice Garman's section 10b(1) holding. Slip op. at 
74 (Karmeier, J., specially concurring, joined by Fitzgerald, J.) ("I agree that 
the judgment of the circuit court should be reversed. In my view, however, that 
conclusion is not dependent on the applicability of section 10b(1) of the 
Consumer Fraud Act"). "On this point, the language this court uses when it 
delivers a divided opinion can use some clarification. A 'special concurrence' 
is one where the authoring Justice joins both the opinion and the judgment. A 
'concurrence' is one where the authoring Justice joins only the judgment of the 
court." People v. Cruz, 162 Ill. 2d 314, 389 n.1 (1994) (Heiple, J., 
dissenting, joined by Bilandic, C.J.). In this case, Justice Karmeier expressly 
states: "I fully concur in the result reached by the majority." 
(Emphasis added.) Slip op. at 83 (Karmeier, J., specially concurring, joined by 
Fitzgerald, J.). Since Justice Karmeier does not join Justice Garman's opinion, 
his opinion should not be designated a "special concurrence" but, rather, a 
"concurrence."
Justice Garman's opinion in this case did not receive the assent of four 
justices. Therefore, it cannot constitute "the opinion of the court." Rather, 
Justice Garman delivered the judgment of the court in an opinion that presents 
the views of only a plurality of this court. "The only thing four justices agree 
on today is that reversal is necessary. In terms of precedent, none of the 
opinions filed in this case has the force of law." Cruz, 162 Ill. 2d  at 
389 n.1 (Heiple, J., dissenting, joined by Bilandic, C.J.).
Perhaps the fact that the court's decision is not binding precedent is for 
the best. As this dissent upon denial of rehearing will establish, a majority of 
this court has not responded, in any way, to the critical points plaintiffs have 
raised during this rehearing period. Given the plurality's "erroneous and 
irresponsible interpretation of our Consumer Fraud Act" (slip op. at 83 
(Freeman, J., dissenting, joined by Kilbride, J.)), we do well to remember that 
Justice Garman's interpretation of our Consumer Fraud Act does not have the 
force of law and the issues that the opinion discusses remain open for a 
better-reasoned adjudication.


II
In their petition for rehearing, plaintiffs contend that Justice Garman's 
plurality opinion overlooked or misapplied four critical points. Plaintiffs 
first contend that the plurality failed to properly apply the canons of 
statutory construction and, accordingly, misinterpreted section 10b(1) of the 
Consumer Fraud Act (815 ILCS 505/10b(1) (West 1998)). Specifically, plaintiffs 
argue that Justice Garman's plurality opinion fails to apply section 11a of the 
Consumer Fraud Act, which requires a court to liberally construe the Act (815 
ILCS 505/11a (West 1998)), and overlooks the canon of statutory construction 
that exceptions in a statute should be liberally construed (see Mid-South 
Chemical Corp. v. Carpentier, 14 Ill. 2d 514, 519 (1958) (and cases cited 
therein)).
Plaintiffs also contend that Justice Garman's plurality opinion misapplied 
the de novo standard of review, or mischaracterized the standard of 
review it actually utilized. Justice Garman's plurality opinion concluded that
de novo review is appropriate because the actions of the FTC with 
respect to the use of the disputed descriptors are a matter of public record. 
Therefore, reasons the plurality, section 10b(1) is being applied to essentially 
undisputed facts. The plurality concludes that "we need not evaluate the 
credibility of witnesses or weigh conflicting testimony to determine whether the 
actions of the FTC have resulted in specific authorization of the use of these 
terms by cigarette manufacturers." Slip op. at 43 (Garman, J., joined by 
McMorrow, J.). However, plaintiffs argue that Justice Garman's plurality opinion 
did precisely this.(9)
Plaintiffs next contend that Justice Garman's plurality opinion relied 
heavily on the testimony of defendant's expert witness Dr. Peterman, yet at the 
same time ignores his testimony on cross-examination. Plaintiffs further argued 
that Justice Garman's plurality opinion overlooked PMUSA's "Petition for 
Rulemaking" filed in the FTC on September 18, 2002, which it submitted as an 
exhibit at trial. PMUSA's own trial witness, Nancy Lund, testified on direct 
examination that PMUSA filed this FTC petition for the following purpose:
"There were kind of three areas where we asked for guidance. One was in the 
measurement itself, the FTC method; one was about disclaimers about talking 
about what descriptions and low tar cigarette yields is actually all about; and 
the last one was some guidance on descriptors, such as lights and ultra lights."
Plaintiffs argue that this FTC petition and Lund's corresponding trial 
testimony, PMUSA acknowledged in this litigation that, as of 2002, the FTC had 
never authorized PMUSA's use of the terms "lights" or "lowered tar and 
nicotine." Indeed, as plaintiffs reasoned in the petition for rehearing, if the 
FTC had previously authorized PMUSA to use the disputed descriptors as part of 
consent decrees it had entered into with other tobacco companies in 1971 and 
1995, then there would have been no reason for PMUSA to petition the FTC for 
"guidance" and rulemaking on the use of these very same descriptors.
Plaintiffs also contend that the plurality acknowledged PMUSA's intentional 
fraud. Slip op. at 20 (Garman, J., joined by McMorrow, J.), at 75 (Karmeier, J., 
specially concurring, joined by Fitzgerald, J.). However, according to 
plaintiffs, Justice Garman's plurality opinion erroneously concluded that the 
FTC "specifically authorized" such fraud. In reaching this erroneous conclusion, 
Justice Garman's plurality opinion misinterprets the scope of FTC voluntary 
consent orders, in direct conflict with federal precedent. Consent orders are 
binding only upon the named parties and represent a settlement in which neither 
side has insisted upon an adjudication on the merits. FTC consent orders 
represent a compromise between the parties to the consent order and no 
precedential weight is given to such a consent order for purposes of FTC 
enforcement proceedings against another party. Plaintiffs inform this court that 
we have no authority under state law, i.e., the Consumer Fraud Act or 
the Deceptive Practices Act, to expand the scope and meaning of an FTC consent 
order. As plaintiffs inform us, "federal law is clear that a consent order 
involving other parties cannot serve as authorization or permission for a 
different industry participant to engage in the same conduct-let alone conduct 
that is not covered by the prior consent order." Plaintiffs insist that the 1971 
and 1995 consent orders "are no more than isolated voluntary agreements having 
nothing to do with PMUSA and the conduct at issue in this litigation."
Also, according to the petition for rehearing, Justice Garman's plurality 
opinion overlooks the fact that neither the 1971 nor the 1995 consent orders 
applied to PMUSA's misconduct and, in any event, PMUSA failed to comply with 
these orders.  
Plaintiffs filed a supplement to their petition for rehearing, which focuses 
on their contention that Justice Garman's plurality opinion misinterprets the 
scope of FTC voluntary consent orders. Plaintiffs inform us that the FTC itself 
has plainly held that a "consent agreement [with one party] is binding only 
between the Commission and [that party]." Trans Union Corp., 118 F.T.C. 
821, 864 n.18 (1994), aff'd, 245 F.3d 809 (D.C. Cir. 2001). Thus, 
according to plaintiffs, an FTC voluntary consent order cannot be used as a 
shield by a third party.
Indeed, plaintiff further informs us that the 1971 consent order, upon which 
Justice Garman's plurality opinion relies, was terminated by FTC rule between 
the FTC and the actual party to that voluntary agreement-American Brands. 
According to plaintiffs: "Therefore, it is not possible for this Court to rely 
upon this terminated order with a different party concerning different conduct 
as 'specific authorization' for Philip Morris to engage in the intentional fraud 
at issue in this litigation."
These contentions are significant and persuade me to vote for rehearing.



III
In plaintiffs' supplement to their petition for rehearing, pursuing their 
contention regarding the misinterpretation of the FTC voluntary consent orders, 
plaintiffs: (A) invoke the doctrine of primary jurisdiction, and (B) suggest a 
means by which this court could implement the doctrine. 



A
"Despite the name, the doctrine of primary jurisdiction does not involve 
jurisdictional questions. It is a common law doctrine used to coordinate 
administrative and judicial decisionmaking." Red Lake Band of Chippewa 
Indians v. Barlow, 846 F.2d 474, 476 (8th Cir. 1988). "Nor can it be 
questioned that the doctrine applies to the states." Agricultural Services 
Ass'n v. Commonwealth, 210 Va. 506, 509, 171 S.E.2d 840, 843 (1970); accord
Segers v. Industrial Comm'n, 191 Ill. 2d 421, 428 (2000) ("noting 
doctrine of primary jurisdiction is not technically a question of jurisdiction 
at all but rather a question of judicial self-restraint and relations between 
the courts and administrative agencies"), citing Peoples Energy Corp. v. 
Illinois Commerce Comm'n, 142 Ill. App. 3d 917, 931 (1986); Flo-Sun, 
Inc. v. Kirk, 783 So. 2d 1029, 1037-38 (Fla. 2001) ("It is also important 
to note that the application of the doctrine of primary jurisdiction is a matter 
of deference, policy and comity, not subject matter jurisdiction"); State v. 
United States Steel Corp., 307 Minn. 374, 380, 240 N.W.2d 316, 319 (1976) 
("The judicially created doctrine of primary jurisdiction is concerned with the 
orderly and sensible coordination of the work of agencies and courts"). 
 
The doctrine of primary jurisdiction
"applies where a claim is originally cognizable in the courts, and comes into 
play whenever enforcement of the claim requires the resolution of issues which, 
under a regulatory scheme, have been placed within the special competence of an 
administrative body; in such a case the judicial process is suspended pending 
referral of such issues to the administrative body for its views." United 
States v. Western Pacific R.R. Co., 352 U.S. 59, 64, 1 L. Ed. 2d 126, 132, 
77 S. Ct. 161, 165 (1956).
Accord Port of Boston Marine Terminal Ass'n v. Rederiaktiebolaget 
Transatlantic, 400 U.S. 62, 68, 27 L. Ed. 2d 203, 209, 91 S. Ct. 203, 208 
(1970) ("When there is a basis for judicial action, independent of agency 
proceedings, courts may route the threshold decision as to certain issues to the 
agency charged with primary responsibility for governmental supervision or 
control of the particular industry or activity involved"); Kellerman v. MCI 
Telecommunications Corp., 112 Ill. 2d 428, 444-45 (1986). Courts recognized 
long ago that coordination between traditional judicial machinery and 
administrative agencies "was necessary if consistent and coherent policy were to 
emerge. [Citation.] The doctrine of primary jurisdiction has become one of the 
key judicial switches through which this current has passed." Port of Boston, 
400 U.S.  at 68, 27 L. Ed. 2d  at 208-09, 91 S. Ct.  at 208.
The rationale for the doctrine of primary jurisdiction has been described as 
follows:
" '[I]n cases raising issues of fact not within the conventional experience 
of judges or cases requiring the exercise of administrative discretion, agencies 
created by Congress for regulating the subject matter should not be passed over. 
This is so even though the facts after they have been appraised by specialized 
competence serve as a premise for legal consequences to be judicially defined. 
Uniformity and consistency in the regulation of business entrusted to a 
particular agency are secured, and the limited functions of review by the 
judiciary are more rationally exercised, by preliminary resort for ascertaining 
and interpreting the circumstances underlying legal issues to agencies that are 
better equipped than courts by specialization, by insight gained through 
experience, and by more flexible procedure.' " Weinberger v. Bentex 
Pharmaceuticals, Inc., 412 U.S. 645, 654, 37 L. Ed. 2d 235, 242, 93 S. Ct. 2488, 2494 (1973), quoting Far East Conference v. United States, 342 U.S. 570, 574-75, 96 L. Ed. 576, 582, 72 S. Ct. 492, 494 (1952).
Accord Western Pacific, 352 U.S.  at 64-65, 1 L. Ed. 2d  at 132, 77 S. Ct.  at 165; Kellerman, 112 Ill. 2d  at 444-45 (both cases quoting 
Far East Conference). There is no fixed formula for applying the doctrine 
of primary jurisdiction. In each case, the question is whether the reasons for 
the doctrine are present, and whether the purposes of the doctrine will be 
furthered by its application in the particular litigation. Western Pacific, 
352 U.S.  at 64, 1 L. Ed. 2d  at 132, 77 S. Ct.  at 165.
In their supplement to their petition for rehearing, plaintiffs request that 
this court solicit the FTC's views on the issue of the 1971 and 1995 FTC 
voluntary consent orders. A majority of this court, however, apparently believes 
that this request should go unanswered with no response to the compelling legal 
arguments made in support of it. Unlike my colleagues, I believe that the 
plaintiffs in their supplemental petition for rehearing have raised legitimate 
questions about this court's decision and the denial of their request merits 
some form of discussion.
I note that plaintiffs have made this request for the first time, before this 
court, in their petition for rehearing. Consequently, we could deem this issue 
procedurally forfeited. See 188 Ill. 2d R. 341(e)(7) ("Points not argued are 
waived and shall not be raised in the reply brief, in oral argument, or on 
petition for rehearing"). Indeed, since the doctrine of primary jurisdiction 
does not refer to the subject matter jurisdiction of a court, primary 
jurisdiction is an issue that can be waived or forfeited. Gross Common 
Carrier, Inc. v. Baxter Healthcare Corp., 51 F.3d 703, 706 (7th Cir. 1995);
Kendra Oil & Gas, Inc. v. Homco, Ltd., 879 F.2d 240, 242 (7th Cir. 
1989); Segers, 191 Ill. 2d  at 428; see, e.g., Northwest 
Airlines, Inc. v. County of Kent, 510 U.S. 355, 366 n.10, 127 L. Ed. 2d 183, 195 n.10, 114 S. Ct. 855, 863 n.10 (1994) (declining to invoke, sua 
sponte, primary jurisdiction doctrine where parties failed to brief or 
argue it).
However, the waiver rule is a principle of administrative convenience, an 
admonition to the parties; it is not a jurisdictional requirement or any 
limitation upon the jurisdiction of a reviewing court. In this regard, this 
court has recognized that a reviewing court may, in furtherance of its 
responsibility to provide a just result and to maintain a sound and uniform body 
of precedent, override considerations of waiver that stem from the adversarial 
nature of our system. In re C.R.H., 163 Ill. 2d 263, 274 (1994); 
Hux v. Raben, 38 Ill. 2d 223, 224-25 (1967); accord 155 Ill. 2d R. 
366(a)(5). In this case, for the following reasons, this responsibility 
outweighs plaintiffs' procedural default. See, e.g., Dillon v. 
Evanston Hospital, 199 Ill. 2d 483, 504-05 (2002) (and cases cited 
therein).
As our rule of procedural default is a principle of administrative 
convenience for the courts, similarly, the doctrine of primary jurisdiction 
"exists for the proper distribution of power between judicial and administrative 
bodies and not for the convenience of the parties." Distrigas of 
Massachusetts Corp. v. Boston Gas Co., 693 F.2d 1113, 1117 (1st Cir. 1982). 
Accordingly, a court may examine, sua sponte, whether the doctrine 
applies. For example, in Western Pacific, 352 U.S.  at 63, 1 L. Ed. 2d  
at 131-32, 77 S. Ct.  at 165, the United States Supreme Court felt obliged to 
address the issue of primary jurisdiction, although neither party had challenged 
that aspect of the lower court's rulings. Indeed, "courts often invoke the 
doctrine on their own motion." Fontan de Maldonado v. Lineas Aereas 
Costarricenses, S.A., 936 F.2d 630, 632 (1st Cir. 1991) (collecting cases); 
see also Syntek Semiconductor Co. v. Microchip Technology Inc., 307 F.3d 795, 780 n.2 (9th Cir. 2002) ("Although the parties did not raise the 
question of primary jurisdiction, we may do so sua sponte"); 
Williams Pipe Line Co. v. Empire Gas Corp., 76 F.3d 1491, 1496 (10th Cir. 
1996) (same); Red Lake Band, 846 F.2d  at 475-76 (addressing primary 
jurisdiction issue raised for first time in petition for rehearing); 
Baltimore & Ohio Chicago Terminal R.R. Co. v. Wisconsin Central Ltd., 154 F.3d 404, 411 (7th Cir. 1998) (acknowledging that court "would relieve the 
parties of their waiver" if primary jurisdiction doctrine were "of transcendent 
importance" to administration of statute); Gross Common Carrier, 51 F.3d  at 706 n.3 (noting that a court's failure to address the doctrine may, in 
some cases, constitute plain error).
Another recent example is found in Cole v. U.S. Capital, Inc., 389 F.3d 719 (7th Cir. 2004). After oral argument in Cole, the 
United States Court of Appeals for the Seventh Circuit invited the FTC to file 
an amicus curiae brief to inform the court of the agency's views. 
Cole, 389 F.3d  at 722 n.2. The court of appeals apparently raised this 
issue sua sponte and was not concerned with any notion of procedural 
default.
Given the foregoing, I do not believe that plaintiffs' procedural default 
would serve as a bar to this court's granting of its request to address the 
doctrine of primary jurisdiction. Turning to the merits of plaintiffs' 
arguments, I agree with plaintiffs that the doctrine applies in the present 
case. It is clear that the reasons for the doctrine are present. Justice 
Garman's plurality opinion purports to resolve this case by construing and 
applying section 10b(1) of the Consumer Fraud Act (815 ILCS 505/10b(1) (West 
2000)). The opinion attempts the following explanation:
"Operation of section 10b(1) is not dependent on the intent of Congress. 
Rather, it is dependent on the intent of the Illinois General Assembly to allow 
regulated entities to engage in commercial conduct that might otherwise be 
alleged to be fraudulent or deceptive without risk of civil liability, so long 
as that content is specifically authorized by the regulatory body." Slip op. at 
74.
This is precisely the context for application of the primary jurisdiction 
doctrine. The application of section 10b(1) of the Consumer Fraud Act depends on 
whether the alleged conduct of PMUSA was "specifically authorized" by the FTC. 
Plaintiffs' Consumer Fraud Act claim, originally cognizable in the circuit 
court, requires the resolution of an issue, i.e., the existence and 
extent of the FTC's "specific authorization" of PMUSA's conduct, which lies 
within the special competence of the FTC. See Western Pacific, 352 U.S. 
at 64, 1 L. Ed. 2d  at 132, 77 S. Ct.  at 165.
The purposes of the doctrine will be furthered by its application in this 
case. The purposes of the primary jurisdiction doctrine are to: (1) ensure 
desirable uniformity in the determination of certain types of administrative 
questions, and (2) promote resort to administrative agency experience and 
expertise where the court is presented with a question outside its conventional 
experience. Western Pacific R.R., 352 U.S.  at 64, 1 L. Ed. 2d  at 132, 
77 S. Ct.  at 411. The furtherance of these purposes is more than sufficient to 
override the effect of plaintiffs' procedural default. See, e.g., 
Dillon, 199 Ill. 2d  at 504-05.
In the present case, Illinois courts necessarily have become embroiled in the 
technical aspects of FTC voluntary consent orders to determine if the FTC 
"specifically authorized" PMUSA's conduct. Plaintiffs seek referral to the FTC 
of the question whether the terms of the FTC voluntary consent orders, involving 
American Brands and American Tobacco, specifically authorized representations by 
PMUSA, which was not a party to those consent orders. Referral in this case 
would obviously promote uniformity in the determination of this crucial issue 
and would correctly acknowledge the FTC's experience and expertise in the 
function and interpretation of FTC voluntary consent orders. See, e.g.,
In re Starnet, Inc., 355 F.3d 634, 639 (7th Cir. 2004) ("Instead of 
trying to divine how the FCC would resolve the ambiguity *** we think it best to 
send this matter to the Commission under the doctrine of primary jurisdiction");
Access Telecommunications v. Southwestern Bell Telephone Co., 137 F.3d 605, 609 (8th Cir. 1998) (finding that determination of dispositive issue would 
necessarily embroil court in technical aspects of FCC matter, and that "FCC has 
far more expertise than the courts" concerning administrative matter; concluding 
that "the need to draw upon the FCC's expertise and experience" was present).
If, as Justice Garman's plurality opinion contends, the FTC has been actively 
concerned with the complex policy issues that cigarette advertising presents, 
then prudential judicial restraint should counsel referral of this specific 
dispositive issue to the specialized agency that Congress intended to deal with 
this issue-the FTC. See generally Hansen v. Norfolk & Western Ry. Co., 
689 F.2d 707 (7th Cir. 1982). The FTC should first address this issue to avoid 
the possibility of a multitude of interpretations by several states of the same 
FTC voluntary consent orders, and to achieve a uniform administration of FTC 
policy. See Agricultural Services Ass'n, 210 Va. at 509, 171 S.E.2d  at 
842-43, quoting Service Storage & Transfer Co. v. Commonwealth of Virginia, 
359 U.S. 171, 179, 3 L. Ed. 2d 717, 722, 79 S. Ct. 714, 719 (1959).
Indeed, a question of how to interpret an administrative agency order is the 
sort of determination "classically committed to agency discretion under the 
doctrine of primary jurisdiction." Zapp v. United Transportation Union, 
727 F.2d 617, 625 (7th Cir. 1984). The denial of plaintiffs' referral request 
appears to constitute a rejection of "orderly and sensible coordination of the 
work of agencies and courts" (United States Steel, 307 Minn. at 380, 
240 N.W.2d at 319), and indicates that this court is insensitive to the 
emergence of "consistent and coherent policy." Port of Boston, 400 U.S. 
at 68, 27 L. Ed. 2d  at 208, 91 S. Ct.  at 208.



B
Plaintiffs suggest that this court can implement referral by soliciting the 
FTC to submit an amicus curiae brief. I agree with plaintiffs that the 
FTC, through an amicus brief, can speak definitively to the issues 
without undue delay. The only question this court would primarily ask the FTC is 
simply what it intended to do when it entered into the 1971 and 1995 voluntary 
consent orders. I believe that "this question can be answered fully and quickly 
through amicus participation. If more elaborate agency proceedings are required, 
the agency can so inform us." Distrigas, 693 F.2d  at 1119. Further, the 
FTC regularly accommodates referral requests. Indeed, a visit to the agency's 
website, www.ftc.gov, leads to an on-line sample of their amicus 
briefs.
My research has revealed two common examples of referral requests: one 
general and one more specific.
An example of a general referral is found in Cole v. U.S. Capital, Inc., 
389 F.3d 719, 722 n.2 (7th Cir. 2004):
"After oral argument, the court invited the Federal Trade Commission ('FTC'), 
the agency charged with administering the FCRA [Fair Credit Reporting Act], to 
file a brief as amicus curiae. The FTC accepted the court's invitation, and the 
court expresses its thanks to the FTC for the assistance that it has rendered."
The Seventh Circuit's invitation took the form of the following order issued 
through the court's clerk office:
"Because this case presents issues that will have a significant effect on the 
enforcement of the Fair Credit Reporting Act, the court invites the Federal 
Trade Commission to file a brief as amicus curiae. If the Commission accepts our 
invitation, the brief should be filed within 45 days of this order. The brief 
should not exceed 30 pages.
The court would also appreciate the Commission's informing the court, as soon 
as practicable, as to whether it plans to file such a brief. This notification 
can be effected through a letter to the Clerk.
If the Commission accepts the court's invitation, the parties may file 
supplemental reply briefs addressing matters presented in the Commission's 
brief. Any such reply brief should not exceed 20 pages in length and shall be 
filed within 20 days of the filing of the Commission's brief with this court."
As the court acknowledged in its opinion, the FTC accommodated the court with 
an amicus brief, which aided the court in reaching its decision.
Another example of a general request is found in Distrigas, where 
the First Circuit Court of Appeals concluded its original opinion as follows:
"We therefore shall hold this case on the docket, while instructing the clerk 
to send a copy of this opinion to the Solicitor General along with this court's 
request that FERC [Federal Energy Regulatory Commission] file an amicus brief. 
The parties may file responses to FERC's brief. This court will then take such 
further action as is appropriate." Distrigas, 693 F.2d  at 1119.
The next section of the opinion, captioned "MEMORANDUM AND ORDER," 
acknowledged receipt of the agency's amicus brief, and disposed of the 
case. Distrigas, 693 F.2d  at 1119.
In contrast to a court's general request for an amicus brief, the 
form of the request can be very specific, resembling a certified question. For 
example, in Phillips v. AWH Corp., 376 F.3d 1382 (Fed. Cir. 2004), the 
United States Court of Appeals for the Federal Circuit denied the petition for 
rehearing, but allowed rehearing en banc. The court invited amicus 
briefs from several administrative agencies, including the FTC, to address seven 
specific questions. Phillips, 376 F.3d  at 1383. The FTC joined in an
amicus brief and the court ultimately decided the case. Phillips v. 
AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005).
With respect to the present case, I would have allowed plaintiffs' petition 
for rehearing. I also would have requested the FTC to file an amicus 
brief in order to address specifically the following question: Did the FTC 
specifically authorize Philip Morris' conduct (i.e., the use of the 
terms "Lights" or "Lowered Tar and Nicotine" on the packages of Marlboro Lights 
or Cambridge Lights from October, 1973 through February 8, 2001) through any of 
the following FTC actions:
(1) the 1971 consent order between the FTC and American Brands, Inc.;
(2) the 1995 consent order between the FTC and American Tobacco Company; 
and/or
(3) the 1970 voluntary agreement?
Further, was Philip Morris' use of "Lights" and/or "Lowered Tar and Nicotine" 
on the packages of Marlboro Lights or Cambridge Light cigarettes, governed by 
and thereby "in compliance" with the 1971 and 1995 consent orders?
Further, had the FTC accepted the invitation, I would have held this case on 
our docket until we could have decided this appeal with the benefit of the FTC's 
experience and expertise.



IV
Plaintiffs raise significant points which this court has overlooked or 
misapprehended. Plaintiffs also suggest a reasonable and generally accepted 
means by which this court can obtain the FTC's view of that agency's own consent 
orders. The adoption of this approach would obviously be of great benefit to 
this court in the present appeal. Further, such a basic request addressed to the 
FTC would indicate that this court: (1) is cognizant of the need for uniformity 
in the determination of administrative issues such as this, and (2) is sensitive 
to the need for prudential judicial restraint. Regrettably, however, the court 
appears more concerned with finality than reaching the most informed decision 
possible based on highly pertinent-if not dispositive-information from the very 
federal agency whose consent orders are at the heart of Justice Garman's 
analysis. The court's denial of the petition for rehearing does not speak well 
of this court. It is disappointing, and will ultimately prove to be 
embarrassing. History will be the judge.
For the foregoing reasons, I dissent from the court's denial of the petition 
for rehearing.


JUSTICE KILBRIDE joins in this dissent.
 
 
 
1.  ï»¿ Courts have been criticized 
for erroneously using the terms "damage"
and "damages" interchangeably when these should actually be considered
distinct concepts, damage being the loss or hurt that results from injury and
damages being the amount awarded to compensate for damage. J. Fischer,
Understanding Remedies §161(c), at 506 (1999). Without passing on the
merits of this criticism, I note that there is no such confusion here. The need
to prove damages and not merely damage is based not on a judicial gloss, but
on the express language of section 10a of the Consumer Fraud Act, which
authorizes consumers to bring an "action for damages" and recover "actual
economic damages." 815 ILCS 505/10a (West 2000). (Emphasis added.)
2.       
 ï»¿ The "full-flavored" versions 
manufactured by PMUSA used the very
same tobacco as the light brands. The only difference between the cigarettes
was the filters. Ironically, to the extent that the light brands were more 
toxic,
the filters were to blame. The filters had the additional effect of impairing 
the
light brands' flavor. The only reason lights were chosen over their full-flavored versions was their perceived health benefits.
3. 
ï»¿Because actual damages must be shown to prevail in a private right of
action for damages under the Consumer Fraud Act, nominals actually serve
no purpose in such cases. If a plaintiff shows actual damages, he or she will
receive real compensation. When compensation is awarded, there is no need
for the largely symbolic function served by nominals. That is no doubt why
plaintiffs did not request nominals in their complaint and were not awarded
nominals by the circuit court.
 
4. ï»¿ The court also 
discusses a subsequent decision of this court, Jackson v.
South Holland Dodge, Inc., 197 Ill. 2d 39 (2001). Slip op. at 53. Although
the court does not rely on Jackson in its holding, I note that Jackson involved
the same federal disclosure requirement as in Lanier. Jackson, 197 Ill. 2d  at
45-47.
5.  ï»¿ My reading of 
the record differs on this point from that of the special
concurrence. When Price switched to Cambridge Lights in 1986, she smoked
one pack of cigarettes a day. Her consumption increased to 1½ packs of
cigarettes a day. In 2002, after she learned of the lawsuit, Price was able to
reduce her cigarette consumption to one-half to one pack per day. A
summary of Price's cigarette consumption admitted into evidence as
Plaintiffs' Exhibit 99 reflected the increase in cigarette consumption.
6.  
ï»¿The Knowledge Network Survey respondents would have demanded a
discount of 77.7% had they known that light cigarettes did not provide any
health benefit when compared to the full-flavored cigarettes, and a discount
of 92.3% had they known that light cigarettes were more harmful than
regular cigarettes.     
           
  
    
           
  

7.  ï»¿According to W. Keeton, Prosser & 
Keeton on Torts §110, at 767-68
(5th ed. 1984), the "out of pocket" rule, followed by a minority of perhaps
a dozen American jurisdictions, "looks to the loss which the plaintiff has
suffered in the transaction, and gives him the difference between the value of
what he has parted with and the value of what he has received. If what he
received was worth what he paid for it, he has not been damaged, and there
can be no recovery." In contrast, the loss-of-bargain rule, adopted by some
two-thirds of the courts which have considered the question in actions for
deceit, "gives the plaintiff the benefit of what he was promised, and allows
recovery of the difference between the actual value of what he has received
and the value that it would have had if it had been as represented."  
 

8.                 
            
          
         
             
            
         
 ï»¿ The class period for purchases of 
Cambridge Lights was from 1986 to 
2001. The class period for purchases of Marlboro Lights was from 1971 to
2001. Plaintiffs did not seek damages for cigarette purchases made outside
of those time periods. For example, class representative Sharon Price
testified that she learned that light cigarettes were not truly lower in tar and
nicotine in the spring of 2002. Plaintiffs entered into evidence a summary of
her cigarette purchases from 1986 until February 1, 2001. 

9.   ï»¿ Justice Garman's plurality opinion relies 
heavily upon the testimony of defendant's expert witness Dr. Peterman. Viewing 
the totality of Dr.
Peterman's testimony, both on direct and cross-examination, it is clear that the 
facts relating to the FTC's supposed "specific authorization" of the fraud in 
this case were highly disputed by the parties. Justice Garman's plurality 
opinion selectively weighs Dr. Peterman's testimony, crediting his testimony on 
direct examination and ignoring his testimony on cross-examination. Such action 
on review is inconsistent with a de novo standard of review.