Shaulis v. Nordstrom, Inc.

865 F.3d 1, 2017 WL 3167619, 2017 U.S. App. LEXIS 13545
CourtCourt of Appeals for the First Circuit
DecidedJuly 26, 2017
Docket15-2354P
StatusPublished
Cited by165 cases

This text of 865 F.3d 1 (Shaulis v. Nordstrom, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shaulis v. Nordstrom, Inc., 865 F.3d 1, 2017 WL 3167619, 2017 U.S. App. LEXIS 13545 (1st Cir. 2017).

Opinion

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 Nord-strom 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, *5 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]ntieed 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, *6 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,” icl § 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., 460 Mass. 500, 952 N.E.2d 908, 912 (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., 445 Mass. 790, 840 N.E.2d 526, 535 (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 sufficieiitly 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.

*7 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., 464 Mass. 492, 984 N.E.2d 737, 745 n.15 (2013) (discussing differing interpretations of earlier' SJC opinions); Rule v.

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865 F.3d 1, 2017 WL 3167619, 2017 U.S. App. LEXIS 13545, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shaulis-v-nordstrom-inc-ca1-2017.