Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Shaulis v. Nordstrom, Inc.

United States Court of Appeals, First Circuit

July 26, 2017

JUDITH SHAULIS, Plaintiff, Appellant,
v.
NORDSTROM, INC., d/b/a/ NORDSTROM RACK, Defendant, Appellee.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. F. Dennis Saylor IV, U.S. District Judge]

          S. James Boumil, with whom Boumil Law Offices, Konstantine W. Kyros, and Law Offices of Konstantine W. Kyros, were on brief, for appellant.

          P. Craig Cardon, with whom Dylan J. Price, Sheppard Mullin Richter & Hampton LLP, John P. Bueker, Rebecca C. Ellis, and Ropes & Gray LLP, were on brief, for appellee.

          Before Torruella, Lynch, and Lipez, Circuit Judges.

          LIPEZ, Circuit Judge.

         This case is about a sweater with a controversial price tag. Appellant Judith Shaulis purchased a cardigan sweater for $49.97 at a Nordstrom Rack outlet store in Boston, Massachusetts. The price tag attached to that sweater listed both the purchase price of $49.97 and a higher "Compare At" price of $218. Shaulis claims that the listed "Compare At" price was deceptive. The sweater was, she alleges, never sold by Nordstrom Rack, or any other retailer, for $218. Instead, Shaulis claims that the "Compare At" price tags are used by Nordstrom to mislead consumers about the quality of items. To vindicate this position, Shaulis filed suit alleging that Nordstrom had, in violation of Massachusetts statutory and common law, improperly obtained money from her and other Massachusetts consumers and requested that a court order Nordstrom to restore this money and enjoin Nordstrom from continuing to violate Massachusetts law. The district court, in a well-reasoned opinion, granted Nordstrom's motion to dismiss all of Shaulis's claims. We affirm.

         I. Background

         The facts underlying this case are taken from the second amended complaint and are presumed true for the purpose of this appeal. They are fully set forth in the opinion of the district court. See Shaulis v. Nordstrom Inc., 120 F.Supp.3d 40, 43-44 (D. Mass. 2015).

          Defendant Nordstrom, Inc. is a Seattle, Washington-based corporation that operates department stores throughout the United States and Canada, including five "Nordstrom Rack" outlet stores in Massachusetts. Shaulis purchased a sweater at one of these stores in Boston in 2014. The price tag attached to the sweater, which included both the $49.97 purchase price and the "Compare At" price of $218, identified the difference between the two numbers as "77%" worth of savings.[1]

         Shaulis claims that this price tag was deceptive. According to Shaulis, although price tags on Nordstrom Rack products contain both a sale price and a "Compare At" price that purports to represent a bona fide price at which Nordstrom (or some other retailer) formerly sold those products, Nordstrom, in reality, sells goods manufactured by designers for exclusive sale at its Nordstrom Rack stores, which means that such items were never sold -- or intended to be sold -- at the "Compare At" prices advertised on the price tags. Shaulis claims that she was wrongfully "[e]nticed by the idea of paying significantly less than the 'Compare At' price charged outside of Nordstrom Rack, " and that, but for Nordstrom's deception, she never would have purchased the sweater.

          On November 6, 2014, Shaulis initiated this action with a complaint filed in the Massachusetts Superior Court. She filed an amended complaint on December 8, 2014, and a second amended complaint ("SAC") on December 24. The SAC alleged claims for fraud, breach of contract, unjust enrichment, violations of the Code of Massachusetts Regulations and the Federal Trade Commission Act, [2] and violations of Mass. Gen. Laws ch. 93A ("Chapter 93A"). The SAC was brought on behalf of herself and all those similarly situated, and proposed a class consisting of "[a]ll individuals residing in the Commonwealth of Massachusetts who, within the applicable statute of limitations preceding the filing of this action . . ., purchased Nordstrom Rack Products."

         Nordstrom removed the case to federal court and successfully moved to dismiss the action for failure to state a claim. The district court held that Shaulis had failed to adequately plead a legally cognizable injury under Chapter 93A, and further denied her requests to certify several Chapter 93A questions to the Massachusetts Supreme Judicial Court ("SJC") and for leave to file a third amended complaint. The court also dismissed all of Shaulis's common law claims, again citing the failure to plead a legally cognizable injury.

          On appeal, Shaulis challenges dismissal of her Chapter 93A claim and her common law claims for fraud, breach of contract, and unjust enrichment. Our review is de novo. Carter's of New Bedford, Inc. v. Nike, Inc., 790 F.3d 289, 291 (1st Cir. 2015). As a federal court sitting in diversity, we apply the substantive law of Massachusetts, as articulated by the SJC. Sanders v. Phoenix Ins. Co., 843 F.3d 37, 47 (1st Cir. 2016).

         II. Chapter 93A

         The bulk of Shaulis's appeal involves objections to the district court's dismissal of her Chapter 93A claim for damages and injunctive relief.[3] Chapter 93A, commonly known as the Massachusetts Consumer Protection Act, is a broad consumer protection statute that provides a private cause of action for a consumer who "has been injured, " Mass. Gen. Laws ch. 93A § 9(1), by "unfair or deceptive acts or practices in the conduct of any trade or commerce, " id. § 2(a). See Rule v. Fort Dodge Animal Health, Inc. (Rule II), 607 F.3d 250, 253 (1st Cir. 2010); see also Casavant v. Norwegian Cruise Line Ltd., 952 N.E.2d 908, 912 (Mass. 2011) ("If any person invades a consumer's legally protected interests, and if that invasion causes the consumer a loss --whether that loss be economic or noneconomic -- the consumer is entitled to redress under our consumer protection statute." (quoting Hershenow v. Enterprise Rent-A-Car Co., 840 N.E.2d 526, 535 (Mass. 2006))).

         After reviewing the relevant Massachusetts regulations, [4]the district court determined that Nordstrom's alleged pricing scheme "constitut[ed] an unfair or deceptive practice under Chapter 93A." Shaulis, 120 F.Supp.3d at 48-49. The court further found that Shaulis had adequately alleged that Nordstrom's deception "caused" an identifiable "harm" -- namely, that Shaulis had sufficiently alleged that she was "directly induced" to make a purchase she would not have made, absent the unfair or deceptive practice. Id. at 50, 52. The court held, however, that Shaulis had failed to allege a legally cognizable injury for purposes of Chapter 93A because Shaulis's "subjective belief that she did not receive a good value, without more, is not enough to establish the existence of a Chapter 93A injury." Id. at 53.

         On appeal, Shaulis contends that the district court misread the SJC's Chapter 93A jurisprudence and erroneously concluded that she had failed to adequately allege a legally cognizable injury based on Nordstrom's deceptive pricing scheme. Hence, we first review the relevant case law on Chapter 93A injuries, and then review Shaulis's claim de novo.

         A. Injury under Chapter 93A

         Many courts -- both state and federal -- have struggled to explain what constitutes an injury under Chapter 93A. See Tyler v. Michaels Stores, Inc., 984 N.E.2d 737, 745 n.15 (Mass. 2013) (discussing differing interpretations of earlier SJC opinions); Rule v. Fort Dodge Animal Health, Inc. (Rule I), 604 F.Supp.2d 288, 298 (D. Mass. 2009) (noting that case law "construing the Chapter 93A . . . injury requirement has had a less than intellectually coherent course of development"). We last explored the parameters of Chapter 93A injuries in 2010 in Rule II. That case involved a Chapter 93A claim by a plaintiff who purchased heartworm medication for her dog, Luke. 607 F.3d at 251. After administering the medication, the plaintiff learned that the FDA had recalled the medication because of harmful side effects. Id. Plaintiff then brought a class action against the manufacturer of the heartworm medication, alleging that, although Luke was none the worse for wear, she had overpaid for the medication. Id. at 251-52. Plaintiff's theory of the case was that "she purchased [the medication] because of a deception (failure to disclose the risk), the product was 'in reality' worth less than she paid for it (because of that undisclosed risk), " and thus she had suffered "injury, " the measure of her damages being "the difference between what she paid and what she would have paid if the risk had been disclosed." Id. at 253.

         A central issue in Rule II was whether a "per se" theory of injury -- that is, a claim that the deception itself is the requisite injury -- was sufficient to state a claim under Chapter 93A. Or, as we put the question in Rule II: whether "[C]hapter 93A injury requires that a plaintiff who seeks to recover show 'real' economic damages, " or whether "injury as a violation of some abstract 'right' like the right not to be subject to a deceptive act that happened to cause no economic harm" was sufficient. Id. We noted that the plaintiff had suffered no "economic injury in the traditional sense" because she had "used up" the medication for its advertised purpose without ill effect, and she thus held nothing of reduced value nor faced any risk of harm. Id. at 255. We acknowledged, however, that if Rule had sued before Luke consumed the medication, she may have been able to claim injury based on her overpayment theory, because she would have possessed medication that was not what she bargained for. Id.

         In reaching this decision, we observed that "the most recent SJC cases" had "moved away" from the "per se" theory of injury supported by earlier cases -- that is, a claim that an unfair or deceptive act alone constitutes injury -- and had "returned to the notion that injury under [C]hapter 93A means economic injury in the traditional sense." Id. at 254-55; see also Rule I, 604 F.Supp.2d at 298-306 (surveying the development of the SJC's Chapter 93A jurisprudence). Specifically, we contrasted the SJC's earlier opinions in Leardi v. Brown, 474 N.E.2d 1094 (Mass. 1985), and Aspinall v. Philip Morris Cos., 813 N.E.2d 476 (Mass. 2004), with more recent opinions in Hershenow, 840 N.E.2d at 526, and Iannacchino v. Ford Motor Co., 888 N.E.2d 879 (Mass. 2008), which had rejected the "per se" theory of injury. See Hershenow 840 N.E.2d at 535 ("A consumer is not . . . entitled to redress under [Chapter 93A], where no loss has occurred."); Iannacchino, 888 N.E.2d at 886-87 (explaining that, if properly alleged, a claim that plaintiffs own vehicles with defective door handles, in violation of federal safety regulations, would support a cause of action under Chapter 93A because plaintiffs would have paid for fully compliant vehicles, which they did not receive). We acknowledged, however, that there may remain certain "exceptions" to this general rule, embodied in older SJC opinions that have not been expressly overruled, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.