The Issue of Harm in Lawsuits on Retail Price-Comparison Advertising: Massachusetts Cases to Note
While the swell of class-action lawsuits based on retail price-advertising practices continues to build daily (particularly in California), retailers should note an interesting development from last week in a case out of Massachusetts. In that case, Mulder v. Kohl’s Department Stores, Inc. [FN 1], the plaintiff alleged a number of claims that centered around Kohl’s practice of advertising comparison prices on its merchandise, including allegations that Kohl’s failure to abide Massachusetts’ regulations on price comparisons[FN2] constituted an unfair or deceptive trade practice pursuant to Mass. Gen. Law Ch. 93A. Last week, Kohl’s was granted its motion to dismiss all claims. The dismissal of the deceptive-practices claim followed from a conclusion by the court that - while plaintiff had sufficiently plead that the “misrepresentation” and “causation” elements of her claim - she had failed to allege sufficient injury.
Per the opinion (omitting internal citations):
The alleged harm, if any, suffered by Mulder here is not a “non-economic” injury; she does not claim, for example, that she suffered emotional distress as a result of the transaction. If it is anything, therefore, it is some form of “economic” injury. However, the injury that Mulder claims to have suffered is not an “injury” in any traditional sense of the word. She paid $40.78 for merchandise on the alleged belief “that she was getting a significant discount on her purchase.” But it appears that she paid $40.78 for items that were, in fact, worth $40.78. The fact that plaintiff may have been manipulated into purchasing the items because she believed she was getting a bargain does not necessarily mean she suffered economic harm.
… [I]t is superficially appealing to conclude that plaintiff has suffered a cognizable “injury” under the law. The requirements of misrepresentation and causation have been met: plaintiff alleges that she was unfairly induced into a making a purchase that she would not have made, but for the misrepresentation. And the transaction was arguably to her detriment; she would rather have her money—which she could use to purchase other things—than the items.
The question, however, is whether that amounts to a legally cognizable “injury” within the meaning of Chapter 93A. Based on the allegations in the complaint, it does not. The law requires more than misrepresentation, causation, and a potential remedy: it requires a legally cognizable “injury.” There does not appear to be such an injury here. . . . Plaintiff has not suffered an economic injury; among other things, she has suffered no loss, and there is no sum of money that could be awarded to her that could “compensate” her without providing a windfall.
This dismissal closely tracks the reasoning set out in another recent Massachusetts decision, Shaulis v. Nordstrom, Inc. [FN3], in which the court dismissed a similar claim brought against Nordstrom based on use of price-comparison advertising in its Nordstrom Rack stores. Shaulis was before the same judge as the Mulder case (and plaintiff was represented by the same counsel as that in the Mulder case). The Shaulis decision is currently on appeal to the First Circuit.
While the Mulder and Shaulis cases are worth monitoring for their potential impact on Massachusetts law, note that a 2013 9th Circuit decision (also in a price-comparison case against Kohl’s) held that – under California law – a consumer who alleges that (s)he made a purchase based on false price information and that (s)he would otherwise not have made that purchase has suffered an economic injury.[FN4] As noted, the courts of California (as well as in other jurisdiction) remain rife with recent cases attacking retailer price-advertising issues.
FN1: No. 15-cv-11377 (D. Mass. motion to dismiss granted Feb. 1, 2016).
FN2: 940 Code Mass. Regs. § 6.01 et seq.
FN3: No. 15-cv-10326 (D. Mass. dismissed Aug. 14, 2015).
FN4: Hinojos v. Kohl's Department Stores, Inc., 718 F.3d 1098 (9th Cir. 2013)).