FIRST DI VISI ON March 26, 2007

No. 1-05-3987 MARK P HI LL

IPS , AARO

N STON E, TE RESA B ROWN and STEVEN BENJAMIN, on Be half of Themselves and All Others Similarly Situated, Plaintiff s-Appell ants,

v. BALL Y TOTAL FI

TNESS HOLDI

NG CORPORATION and BALL

Y TOTAL FI

TNESS CORPORATION, Defend ants-App ellees. ) ) ) ) ) ) ) ) ) ) ) ) Appeal from the Circuit Court of Cook Cou

nty

No. 04 CH 4619

Honorab le Philip L. Bronstein, Judge Presi ding.

JUSTICE CAHI LL deliver ed the opi nion of the

court: Plaintiff s Aaron St

one of Col orado an

d Teresa Brown o f Missouri

appeal f rom their dismissal f

or lack o f standin

g as na med plain tiffs in a class action lawsu

it agai nst defe ndants Bally Total Fit ness Hold ing Corp . and Ba

lly T otal Fitn ess Corp. (collectively , Bally ). They also claim the trial court erred in ordering a stay of discover

y that would have a

llowed them to find a sufficie nt nexus with

Illinois to esta

blish stand

ing. Plai ntiffs Ma rk Phillips a

nd Steven Benjami n are not p arties to

this appe al. Their

standing has not be en chall enged

because they are I llinois residents who joined Bally centers in Illinois. In 2004 and 2005, the four plaintiffs filed their original and amended class action1-05-3987

2

complain ts, alleging Ba

lly e ngag ed in dec eptive a

nd unfair conduct i n violation

of the Illinois Consumer Fraud and

Decept ive Business Prac tices Ac t (Consume r Fraud Act) (81 5 IL CS 505/1 et seq. (West 2004 )), and t he I llinois Phy

sical Fi tness Ser vices Act (Fitne ss Act) ( 815 I LCS 645/10 et seq. (West 2004)). The complaint alleged that defendant B ally Total Fitness Corp. was a wholly owned subsidiar y of defenda nt Bally Total Fit ness Hold ing Corp . and a De laware corpora tion with its principa l place o f busines s in Chicago. It a lleged that Bal ly ma

intained its corpo rate headquarters in Cook County, tra nsacted substantial business in Cook County and committed many of the al leged w

rongfu l acts in Co ok County . The com plaint ass erted th at Bally

fitness centers had 4 million members, 420 facilities in 29 states and international locations and a "virtual labyr

inth of subsidiaries" under a variety of names. The comp laint alle ged tha t Stone joined defe

ndant' s Fort Coll ins, Colora do, fitne ss center on March 26, 2001. Stone agre ed to pay $1,901.40 at 17.34% inter est for three y

ears. Stone was

told that th e contra

ct was mon

th-to-mon th, could b e cance lled at an y time and co

uld be trans ferre d to anothe

r club if he moved. S tone move d to Denve r but foun d no compa

rable club in his area. He tried to cancel his membership in writing but de fendant refused and demanded full pay

ment. Defendant sent collection letters to Stone approximately every two weeks for the next several months. The letters threatened to sell the " bad debt" to a national recovery agency , which could damage Stone's future c redit ratings. Defendant did sell the alleged "bad debt" to c ollection agencies that threatened Stone with leg al action. Defendant allegedly gave negative re

ports on Stone to national credit bureaus. Exhibits attached to the1-05-3987

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complain t include a copy of Stone' s retail i

nstallmen t contra ct which l ists the company 's addr ess as Lakewood, Colorado. The c ontract contains a provision that disputes related to contracts are "governed by

the laws of the state in which it was signed." Statements and c orrespondence addressed to Stone from Bally Total Fitness show the return and mailing addresses in Norwalk, California. The complaint alleged that Brown was a resident of Springfield, Missouri, who joined defendant's St. Louis fitness ce nter in June 1994. The contract Brown signed containe d a provision that disputes related to contracts are "g overned by the laws of the state in which it was signed." She agree d to pay $1,189.76 at 12% intere st for three years. She was told that if she moved, she

would be h eld to her

contrac t only if an alte rnative progra m was made

availab le to her. One year later Teresa moved to Columbia, Missouri, and because no fitness center was

av ai la bl e, de fe nd an t a gr ee d t o c an ce l h er co nt ra ct . F ou r ye ar s l at er , B ro wn wa s c on ta ct ed by a collection agency , claiming she owed defendant money . The agency accepted her explanation that the contract had been cancelled a nd she had no obligations. Five y ears later, another collecti on age

ncy , Profess ional Rec overy Syst ems, L LC, ob tained a

default judgmen t again st Brown in the amount of $1,789.31 and instituted garnishment proceeding s with her employer. She retained an attorney

and the judgment against her was se t aside. Exhibits attached to the complaint include a copy of Stone' s retail installment contract that lists the company's a

ddress as Mary

land Heights, Missouri. Documents and correspondence from Professional Recovery Systems' brea

ch-of-contract action ag ainst Brown show that the actions a ll took plac e in Missou

ri. Attor ney s in St. L ouis filed

defenda nt's com plaint ag ainst1-05-3987

4

Brown in a Missour

i circuit court. Bally moved to dismiss plaintiffs' se cond amended class action complaint on June 8, 2005, unde

r section 2-619.1 o f the Code

of Civil Pro cedure

(Code) ( 735 I LCS 5/2 -619.1 (We st 2004)). Bally

argued that plaintiffs failed to state a claim under section 2-615 of the Code (735 IL CS 5/2-615 (West 2004)). It also moved to dismiss the claims of out-of-state plaintiffs Stone and Brown for la

ck of sta nding un der sec tion 2-619of the Cod e (735 I LCS 5/2 -619 (Wes t 2004)). Bally

argued that Stone was a resident of Colorado who joined H oliday Health Clubs., Inc., and Brow

n was a resident of Missouri who joined Vic Tanny of Missouri, Inc. Bally

argued that neither compa

ny d oes busine ss in I llinois and both contr

acts pro vided tha

t disputes were to be gove rned by the laws o f the stat

e in which

they were sig ned. Ba lly c ontended

that bec ause plaintiffs signed contracts and allege dly suffere d damages in their respective states, there was no nexus with Illinois. While the case was pending, the I llinois Supreme Court issued Avery v. State F arm Mutual Automobile Insurance Co. , 216 Ill. 2d 100, 187-89, 835 N.E.2d 801 (2005), addre ssing the issues raised here. Stone and Brown moved to lift the stay on discovery, a

rguing that the analysis in Avery

require d the cons ideration of "a p lethora of fact s and cir

cumstanc es" tha

t could not be ascertained unless the court lifted the stay . The trial court denied the motion. The trial court granted Bally 's motion to dismiss Stone and Brown for lack of standing under se ction 2-6 19 of the C ode (735 IL CS 5/2-619 ( West 2004) ). The c ourt inclu ded in its order a finding of no just r

eason to d

elay an appe al of the

dismissal u

nder Supr eme Court

Rule 304(a) (155 Ill. 2d R. 304(a)) . The court denied defendant's motion under se ction 2-615 (7351-05-3987

5

IL CS 5/2-615 (West 2004)) to dismiss the complaint as to Phillips, Benjamin and the class. The court al so extende d the stay of discov ery . Plaintiff

s appeal

. Plaintiff s argue that dismis sal under

section 2 -619 was

improper because : (1) the s

upreme court's decision in Avery

permits nonreside

nt standin g under the Consume

r Fraud Act; (2) the trial cou rt's re fusal to p ermit disc overy placed t he nonre sident pla

intiffs in an uncon scionabl e bind; and (3) the trial court erred in deciding tha t the out-of-state plaintiffs' claims did not occur "primar ily a nd substan

tially " in I llinois. We review de novo a trial court's disposition of a section 2- 619 motion for dismissal on the grounds of lack of standing. International Union of Oper ating Engineers, L ocal 148 v. Illinois Depa

rtment of Employ ment Secu

rity , 215 Ill. 2d 37, 45, 828 N.E.2d 1104 (2005). The statutes at issue are sections 2 and 1(f) of the Consumer Fraud Act and sections 10(a) and 10(b ) of the F itness Ac t. The Cons umer Fr aud Act provides c onsumer protection again st: "[U]nfair or dece ptive ac ts or pra

ctices, including

but not limite d to the use or employment of any

deception, fraud, false pretense, fa lse promise, misrepresentation or the concealment, suppression or omission of any material fact, with intent that others rely upon the concealment, suppression or omission of such material fact, *** in the conduct of any trade or commerce are he reby declared unlawful whether any person has in fact been misled, deceived or damaged thereby ." 815 IL CS 505/2 (West 2004). Section 1( f) of the

Consumer Fraud Ac t provide s: "The terms 'trade'

and 'commerce' mea

n the advertising, offering for sale,1-05-3987

6

sale, or distributi on of any

service s and any

propert y, t angible or intang ible, re al, personal or mixed, and any other article, commodity, or thing of value wherever situated, and shall include any trade or commerce directly or indirectly af

fecting the people of this State." 815 ILCS 505/1(f) (West 2004). Section 10(a) of the Fitness Act prohibits unfair or dece ptive acts and practices. 815 IL CS 645/10(a) (West 2004). Section 10(b) of the Fitness Act provides: "(b) Any contract for physical fitness servic es entered into in reliance upon any false , fraudulent, or misleading informat ion, repr esentat ion, notic e, or adv ertiseme nt of the phys ical fitness cent er or an y of its employees or a

gents shall be void and unenforceable." 815 IL CS 645/10(b) (West 2004). The Consumer Fraud Ac t and the F itness Act are inte rrelate d in that " [a]ny

person w ho knowing

ly violates *** the Physical Fitness Service s Act *** commits an unlawful practice within the meaning of [the Consumer Fraud] Act." 815 I LCS 505/2Z (West 2004). Plaintiffs first argue that Stone and Brown have sta nding under Avery

which did not strictly preclude nonr

esident standing or hold that a single factor, including the situs of the deception, is dispositive. Plaintiffs argue that the trial court misapplied the Avery "facts and circumstances" test when it concluded that the eve nts at issue did not occur "primarily and substantially" in I

llinois when, in fact, the deceptive policies were devised in and pr omulgated from Illinois. Avery involved a class action suit where the plaintiffs represente d a nearly nationwide class of State Farm insurance policy holders who asserted breach-of-c ontract claims. Avery , 216 Ill. 2d at 109. One of the issues was whe ther the circuit court erred in finding that State F arm1-05-3987

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had violated the Consumer Fraud Act (815 I LCS 505/2 (West 1998)). Avery , 216 Ill. 2d at 155. The circuit court, in certify ing the plaintiff class, determined that the Consumer Fraud Act could, as a matter of statutory

interpretation, be applied to members of the plaintiff class who did not reside in Illinois. Avery , 216 Ill. 2d at 160. The appellate cour t agreed. Avery , 216 Ill. 2d at 165. The supreme court reversed, conc luding that "the General Assembly did not intend the Consumer Frau d Act to appl y to fraudulent tran sactions wh ich take place outside Illin ois." Avery , 216 Ill. 2d at 185. The court then conducted an analy sis to determine whether the transactions at issue took place inside or outside Illinois. Avery , 216 Ill. 2d at 185. The court acknowle dged that it can be difficult to identify the situs of a consumer transaction when parts of it occurred in more than one state. But the place of injury or deception is only one of the relevant circumstances. Avery , 216 Ill. 2d at 185. The court cautioned that f ocusing solely on the

place of injury

or deception "can create questi onable resul ts." Avery , 216 Ill. 2d at 186. The court concluded: " a fraudulent transaction may be

said to take place within a state if the circumstances re lating to the transaction occur primari ly and substanti ally within that state." Avery , 216 Ill. 2d at 186. A private cause of action under the Consumer F raud Act is allowed "if the circumstances that relate t o the dispu ted transact ion occur pri marily and substan tially in Illinois ." Avery , 216 Ill. 2d at 187. "[T]here is no single formula or bright-line test for determining whether a transactio n occurs wit hin this state. Rat her, each case mu st be decided on its own facts." Avery , 216 Ill. 2d at 187. "[T]he critical question in this case becomes whe ther the circumstances relating to plaintif

fs' disp uted tra nsaction s with State

Farm oc curred

primaril y a nd substan

tially1-05-3987

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in Illinois. " Avery , 216 Ill. 2d at 187. The place where a company policy was cr

eated may

be relevant in establishing the situs of a consumer transaction, but this single factor is not enoug h to show that the deceptive practice occurred in Illinois. Avery , 216 Ill. 2d at 187. The fact that a sc heme to defraud was disseminated from a company's headquarters in I llinois is insufficient. Avery , 216 Ill. 2d at 189, citi ng Rohlfing v. Manor Care, I nc. , 172 F.R.D. 330, 340 & n.10 (N.D. I ll. 1997) (the Consumer Fraud Act does not apply to the claims of non-Illinois plaintiffs where the sole I llinois connection is the defendant's headquarters or the fact that the scheme to defraud emana ted from Illinois). Out-of-state plaintiffs "have no cog nizable cause of action under the Consumer Fraud Ac t" where "the overwhelming majority of the circumstances" pertaining to their claims took place outside Illinois. Avery , 216 Ill. 2d at 188. Using Avery

as our g uide, we believe that the r ecord su pports a f inding that the maj ority of transactions pertaining to Stone and Brown took place outside Illinois. Stone and Brown resided, bought memberships, signed contrac ts, used fitness facilities and were subject to the disputed billing and collection practices in states other than Illinois. Correspondence to Stone and Brown about their accounts came f rom California, not Illinois. Brown's wa ges were garnished in Miss ouri. Plai ntiffs do n

ot alleg e that Stone and Br own came

to Ill inois or sp oke to Bally re presentatives in Illinois. Under Avery , plaintiffs' claim that the deceptive policies were devised in and promulgated from I llinois is not sufficient to establish a nexus with Illinois. Avery , 216 I ll. 2d at 18 9. While the place w here a c ompany

's dec eptive po licy

was cre ated is relevant, that alone does not establish that the allegedly fraudulent practices occurre d in Illinois.1-05-3987

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Avery , 216 I ll. 2d at 18 7. Stone a nd Brow n have no t established that t hey have sta nding to pursue a cause of action under the Consumer Fraud Act. Plaintiffs next argue that the trial court erred in deny ing its motion to lift its stay of discovery. The

y claim that if only

they had bee

n allowed to engage in furthe r discovery, the

y could have shown that the disputed transactions occurred primar ily and substantially

in Illinois. Bally ar gues that additional discovery was not warranted because the out-of -state plaintiffs had sufficient information to file a 35-page, sec ond amended complaint with 65 pages of exhibits. Bally conte

nds that even if plaintiffs had been allowed additional discovery , the results would not have supported a finding of standing under Avery

. We review a trial judge's dec ision to limit discovery for an abuse of discretion. People v. Williams , 209 Ill. 2d 227, 234, 807 N.E.2d 448 (2004). We find no abuse of discretion here. Not only did plaintiffs compile a prodigious complaint and volume of exhibits, but most of the information necessary f or an Avery

analy sis was within plaintiffs' knowledge. The only factor that was arguably

unknown to them was exactly where the

allegedly deceptive policies or practices were devised. Even if Stone and Brown could show that a scheme to defraud e manated from Illinois, it would be insufficient under Avery

for a cause of action under the Consumer Fraud Act. Plaintiffs knew where Stone and Brown resided, the locations of the circumstanc es leading to their claims, the locations of the alleged deceptions and the locations where they sustained their dama ges. Plaintiffs did not suffer prejudic e as a re sult of the court' s stay

of discov ery . Additiona

l discove ry to embelli sh plaintif

fs' argument that the deceptive practices emanated from I llinois would not have changed the fact no1-05-3987

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other Illinois connections could be established for Stone and Brown. The trial court did not ab us e i ts di sc re ti on in li mi ti ng di sc ov er y. Finally , plaintif fs arg ue that th e phrase

"primar ily a nd substan

tially " is unde fined in Illino is, m aking i t imp ossi ble fo r part ies an d cour ts to determ ine wh ether a party has stand ing, particu larly when disc overy

is limited. P laintiff

s recomme

nd a "fl exible, fa

ct-base d protoco l" adopted by the Massa

chusetts Supreme Court in Kuwaiti Danish Computer Co. v. Digital Equipment Corp. , 438 Mass. 459, 472, 781 N.E.2d 787, 798 (2003). The Illinois Supreme Court established in Avery

the anal ysi s to be use d when out-of-sta te reside nts attemp t to claim a

private cause of actio n under the C onsumer Fraud Act. "[E]a ch case must b e decided on i ts own facts ." Avery , 216 Ill. 2d at 187. There is no need to turn to a f oreign jurisdiction for direction. The judgment of the circuit court is affirmed. Affirmed. McBRIDE, P.J., and GARCI A, J., concur.