Deceive, inveigle, obfuscate–false discount claims still don’t cause cognizable injury

Mulder v. Kohl’s Department Stores, Inc., — F.3d —-,
2017 WL 3167620, No. 16-1238 (1st Cir. Jul. 26, 2017)
Mulder bought several items that listed both purchase prices
and significantly higher “comparison prices.” Mulder alleged that these
comparison prices were inflated and invented, and that Kohl’s misled
unsuspecting consumers about the quality of its products. The court of appeals
affirmed the district court’s grant of a motion to dismiss.  She simply didn’t suffer relevant injury under
Massachusetts Chapter 93A.  Even
allegations that Mulder was “induced” to travel to a Kohl’s store by false
advertising and that she therefore suffered a resulting economic injury in the
form of travel expenses wasn’t good enough. 
She didn’t explain how deceptive statements on a price tag could have
caused her to travel to Kohl’s in the first place, and didn’t identify other
deceptive ads with the requisite specificity.
A false sense of value isn’t the requisite identifiable
injury, distinct from the claimed deceptive conduct itself, required by
Massachusetts law. “[A]bsent allegations of real loss grounded in some
objective measure, [an] ‘induced purchase’ theory of injury is simply the ‘per
se’ theory of injury in new clothing.”  So too with the “induced travel” theory,
which, if accepted, “would render meaningless the SJC’s clear rule against ‘per
se’ or ‘deception-as-injury’ claims.”
The same conclusions are also provided in Shaulis v.
Nordstrom, Inc., — F.3d –, 2017 WL 3167619, No. 15-2354 (1st Cir.
Jul. 26, 2017). Shaulis argued that the sweater she bought, allegedly due to
the price misrepresentation, was “worth nothing at all to [her] since she never
would have bought it” absent Nordstrom’s deception. But she received the
benefit of her bargain, and didn’t allege that there were flaws in the sweater
that made it worth less than what she paid. 
Subjective belief in value isn’t a legally cognizable injury under
Chapter 93A.
Of possible interest: the court of appeals rejected Shaulis’
analogy to “fake-Rolex hawking” because “falsely advertising a watch as a ‘Rolex’
is a material misstatement about the watch’s quality.”  But this is obviously insufficient as a
distinction!  According to Shaulis’
complaint, so was the discount claim—and the court of appeals supposedly
accepts her claim that she was materially misled (that is, that she changed her
behavior because of the misrepresentation). 
Why then is not a factual inquiry required to determine whether the fake
Rolex-buyer received the benefit of her bargain?  Arguably there is a drop in resale price once
the fakery is revealed—but if the initial price were low enough, that shouldn’t
matter.  The point being that the court
of appeals carefully distinguishes deception from injury when it comes to the
price representations, but not when it comes to the fake Rolex, because
trademark is different.
The court of appeals did note that Shaulis might well have
inferred greater value from the deceptive price tag, and that Nordstrom could
have hoped that consumers would make that inference.  “Indeed, it is presumably just this kind of
erroneous inference that Massachusetts seeks to prevent by regulation.”  Still, that doesn’t mean there was injury
under Chapter 93A. This essentially means that there is no private cause of
action, because without injury there can’t be injunctive relief either, for
conduct banned by Massachusetts consumer protection law.  But the AG can still enforce the law.

Shaulis’s common law claims — for fraud, unjust enrichment,
and breach of contract – failed for basically the same reasons.

from Blogger

This entry was posted in Uncategorized and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s