Haywood v. Massage Envy Franchising, LLC - 887 F.3d 329 (7th Cir. 2018)

Rule:

A damages claim under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., requires that the plaintiff was deceived in some manner and damaged by the deception. On the other, to state a claim for a deceptive practice under the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.010 et seq., a plaintiff must allege that (1) she purchased merchandise from the defendant; (2) the merchandise was for personal, family, or household purposes; (3) she suffered an ascertainable loss of money; and (4) the loss was the result of a deceptive act, as defined by the statute.

Facts:

Plaintiffs Kathy Haywood was an Illinois resident, and Lia Holt was a Missouri resident. Defendant Massage Envy Franchising LLC, has multiple franchise locations in both states that offer massages and other related services. Plaintiff Illinois resident’s first encounter with defendant came after receiving an electronic gift card via email. Plaintiff Missouri resident’s, was when she made an appointment after vising defendant’s website searching for its massage service. The complaint focused on the advertisement on the website's homepage for an "Introductory 1-hour Massage Session*". One disclaimer titled "Session" explained that a session includes massage or facial and time for consultation and dressing. The complaint alleged that the multiple asterisks confused the average consumer and that defendant deceptively hid the disclosures where they were nearly impossible to find. Both plaintiffs alleged that they received a massage that lasted no more than 50 minutes. On behalf of plaintiff and all other similarly situated Illinois residents, the complaint alleged counts of Affirmative Deception, Material Omissions of Fact, and Unfair Practices in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (IFCA). As for the other plaintiff and all other similarly situated Missouri residents, it alleged the same three counts in violation of the Missouri Merchandising Practices Act (MMPA), when it offered and sold what it stated were one-hour massages or 'massage sessions' that provided no more than 50 minutes of massage time. Defendant moved to dismiss the complaint arguing both a lack of subject matter jurisdiction and failure to state a claim on which relief may be granted. The district court granted defendant’s motion and dismissed the complaint with prejudice. The court first held that plaintiffs had standing, rejecting defendant’s argument that they had not pleaded a cognizable injury that was fairly traceable to the latter. However, when analyzing the requirements for pleading damages under the IFCA and the MMPA, the court held that plaintiff’s allegations failed to meet the standards set forth by those statutes and the corresponding case law. The court also found that one of the claims did not meet the heightened pleading standard required under Federal Rule of Civil Procedure 9(b), as she did not alleged a time or a place for the fraudulent conduct, nor did she state particularly how she was deceived. Plaintiffs timely appealed.

Issue:

Was the court’s dismissal of the complaint with prejudice proper?

Answer:

Yes.

Conclusion:

The court granted defendant’s Fed. R. Civ. P. 12(b)(6) motion to dismiss plaintiff’s claim that it violated the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq., by advertising and selling one-hour massages, but providing massages that lasted only 50 minutes. The court found that it was the receipt of a gift card, not the alleged deceptive representations, which caused the plaintiff to book the massage. On the other, plaintiff Missouri resident failed to state a claim under the Missouri Merchandising Practices Act, Mo. Rev. Stat. § 407.010 et seq., where she failed to specify what she saw on the seller's website that led her to believe she was paying for one hour of massage time or how much she paid for her massage. Thus, the court held that dismissal with prejudice was proper where the plaintiffs did not request leave to amend or indicate to the court how they would cure the defects. Accordingly, the court affirmed the order.