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Shaulis v. Nordstrom Inc.

United States District Court, D. Massachusetts

August 14, 2015

JUDITH SHAULIS, Plaintiff,
v.
NORDSTROM INC., d/b/a NORDSTROM RACK, Defendants

Page 41

For Judith Shaulis, Plaintiff: S. James Boumil, LEAD ATTORNEY, Boumil Law Offices, Lowell, MA; Konstantine W. Kyros, Hingham, MA.

For Nordstrom, Inc. d/b/a Nordstrom Rack, Defendant: Joseph Duffy, LEAD ATTORNEY, PRO HAC VICE, Morgan, Lewis & Bockius LLP, Los Angeles, CA; Julie V. Silva Palmer, LEAD ATTORNEY, Morgan, Lewis & Bockius LLP, Boston, MA.

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MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS

F. Dennis Saylor IV, United States District Judge.

This is a class action arising out of the alleged deceptive and misleading labeling and marketing of merchandise. Plaintiff Judith Shaulis has filed suit against defendant Nordstrom, Inc., doing business as Nordstrom Rack. The complaint alleges that Nordstrom " misrepresented the existence, nature, and amount of price discounts on products" by " purporting to offer discounts off of fabricated former prices." (Second Am. Compl. ¶ 2). Specifically, the complaint alleges that the price tags of Nordstrom Rack products represented " Compare At" prices that did not represent a bona fide price at which Nordstrom formerly sold these products or at which these products were sold elsewhere.

On February 18, 2015, defendant filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. In support of its motion to dismiss, defendant submitted an attorney affidavit with attachments. Plaintiff has moved to strike the affidavit and its attachments.

The complaint alleges that plaintiff purchased a cardigan sweater at Nordstrom Rack for $49.97. The price tag included a " Compare At" price of $218.00. The complaint alleges that the sweater had never been sold at Nordstrom, or anywhere else, for $218.00, and that therefore the pricing language was illegal.

Massachusetts regulations appear to prohibit the alleged practice. However, plaintiff has suffered no injury in any traditional sense: she purchased a sweater for $49.97 that was, in fact, worth $49.97. She does not complain about the quality of the materials or the workmanship, or otherwise suggest that the sweater was worth less than what she paid for it. She nonetheless alleges that she was enticed to purchase the sweater by a price tag that made her believe she was obtaining a deal.

Because the complaint does not allege a legally cognizable injury, and for the other

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reasons set forth below, the motion to dismiss will be granted.

I. Background

A. Factual Background

Nordstrom, Inc. is a Washington corporation with a principal place of business in Seattle, Washington. (Second Am. Compl. ¶ 13). It operates a chain of department stores, including five Nordstrom Rack stores in Massachusetts. ( Id. ¶ 14).

The complaint alleges that " Nordstrom misrepresented the existence, nature, and amount of price discounts on products: (a) manufactured exclusively for Nordstrom Rack and sold at Nordstrom Rack; and (b) manufactured by other brands and sold at Nordstrom Rack . . . by purporting to offer discounts off of fabricated former prices." (Second Am. Compl. ¶ 2). According to the complaint, price tags on Nordstrom Rack products contained the sale price and " Compare At" prices that purported to represent bona fide prices at which Nordstrom formerly sold those products or those products were sold elsewhere on the market within three months. ( Id. ¶ 3). The complaint alleges that " [i]n fact, Nordstrom sells certain goods manufactured by third-party designers for exclusive sale at its Nordstrom Rack stores and other outlet stores, which means that such items were never sold--or ever intended to be sold--at the 'Compare At' prices advertised on the price tags." ( Id. ¶ 5). It alleges that " [m]ost Nordstrom Rack [p]roducts are seldom if ever offered for sale at the Nordstrom main line retail stores and are typically of lesser quality." ( Id. ).

The complaint alleges that Judith Shaulis shopped at the Nordstrom Rack in Boston, Massachusetts on November 1, 2014. ( Id. ¶ 24). While shopping, she observed merchandise with price tags that stated the price at which the merchandise could be purchased. ( Id. ). Appearing above those prices, the price tags listed " Compare At" prices. ( Id. ). Shaulis purchased a cardigan sweater for $49.97 that had a " Compare At" price of $218.00. ( Id. ). The price tag identified the difference between the two numbers as representing " 77%" worth of savings. (Second Am. Compl. Exs. A-B). The complaint alleges that Shaulis was " [e]nticed by the idea of paying significantly less than the 'Compare At' price charged outside of Nordstrom Rack." (Second Am. Compl. ¶ 24). The sales receipt for the cardigan purchased stated " You SAVED: $168.03 Congratulations! You saved more than you spent. You're a shopping genius!" ( Id. ). The complaint further alleges that " Nordstrom never intended nor did it ever sell the [cardigan] at the represented 'Compare At' price." ( Id. ). It does not directly allege that the cardigan was never sold anywhere by anyone at the " Compare At" price. However, the complaint alleges that the sweater's " 'Compare At' price does not exist in the market place within the meaning of the requirements of the Code of Massachusetts Regulations." ( Id. ¶ 58).

The complaint further alleges " certain typical examples of the pricing schemes and tactics utilized by" Nordstrom. ( Id. ¶ 37.1). On December 6, 2014, the Nordstrom Rack store in Danvers, Massachusetts, offered a Lafayette 148 New York " Stretch Wool Jacket" for a price of $89.70. ( Id. ¶ 37.1(a)). The price was identified as an 85% discount from the " suggested retail price" of $598. ( Id. ). According to the complaint, a " thorough search of internet sites offering this product could find non[e] offering the product for anywhere near $598.00." ( Id. ). Nordstrom's main store website listed the product as " not available." ( Id. ).

On that same day, the Nordstrom Rack in Danvers also offered a Tailorbyrd " Aubergine

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Sharkskin" blazer for a price of $89.97. ( Id. ¶ 37.1(c)). The blazer had a " Compare At" price of $499. ( Id. ). The complaint alleges that the blazer was " unavailable on the Tailorbyrd website, and anywhere else that could be found, except at the Rack and at the price of $89.97," and that " [t]here is no evidence that this product was ever sold in any relevant market for any meaningful period of time for a price of $499, against a thorough search for such price and therefore upon informed information and belief, it did not." ( Id. ).

The Nordstrom Rack in Danvers also offered for sale an " Olivia Sky" sweater for a price of $54.97. ( Id. ¶ 37.1(d)). The sweater had a " Compare At" price of $168. ( Id. ). The complaint alleges that " [t]here is no evidence that this product was ever sold in any relevant market for any meaningful period of time for a price of $168, against a thorough search for such price, and therefore upon informed information and believe it did not." ( Id. ). Another " Olivia Sky" sweater was offered for sale for $29.97. ( Id. ¶ 37.1(e)). The sweater had a " Compare At" price of $58. ( Id. ). According to the complaint, " [t]here is no evidence that this product was ever sold in any relevant market for any meaningful period of time for a price of $58.00 against a thorough search for such price, and therefore upon information and belief it did not." ( Id. ).

Finally, the Nordstrom Rack in Danvers offered for sale a Brooks Brothers shirt, " Blue #100014930." ( Id. ¶ 37.1(h)). It was offered for sale at $49.97, and had a " Compare At" price of $92. ( Id. ). The complaint alleges that the " 'Compare At' shirt offered for $92 are [sic] in actuality NOT the same shirts as Nordstrom carries, but are [sic] instead are [sic] 'Classic' Brooks Brothers shirts carried by Brooks Brothers and made of trademarked material 'Supima' cotton." ( Id. ). In contrast, the Brooks Brothers shirts for sale at the Nordstrom Rack " are not labeled as made from Supima and are not of the quality of the Brooks Brothers 'Classic' line." ( Id. ).

The complaint does not allege that Shaulis or anyone else purchased any of these " certain typical examples."

B. Procedural History

On November 6, 2014, Shaulis filed a complaint in this action in Suffolk Superior Court. She filed an amended complaint on December 8, 2014, and a second amended complaint on December 24. The second amended complaint is brought on behalf of herself and all those similarly situated. The proposed class consists 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." ( Id. ¶ 29). The second amended complaint alleges claims for fraud, breach of contract, unjust enrichment, violations of the Code of Massachusetts Regulations and the Federal Trade Commission Act, and violations of Mass. Gen. Laws ch. 93A. ( Id. ¶ ¶ 38-73).[1] On February 11, 2015, Nordstrom removed the action to this Court.

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On February 18, 2015, defendant filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. In support of its motion to dismiss, defendant submitted an affidavit from its attorney Joseph Duffy with attachments. Plaintiff has moved to strike the affidavit and its attachments.[2]

II. Legal Standard

On a motion to dismiss, the Court " must assume the truth of all well-plead[ed] facts and give . . . plaintiff the benefit of all reasonable inferences therefrom." Ruiz v. Bally Total Fitness Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007) (citing Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999)). To survive a motion to dismiss, the complaint must state a claim that is plausible on its face. Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). That is, " [f]actual allegations must be enough to raise a right to relief above the speculative level, . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. at 555 (citations omitted). " The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 556). Dismissal is appropriate if the facts as alleged do not " possess enough heft to show that plaintiff is entitled to relief." Ruiz Rivera v. Pfizer Pharms., LLC, 521 F.3d 76, 84 (1st Cir. 2008) (alterations omitted) (internal quotation marks omitted).

Ordinarily, a complaint need only contain " a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). For that reason, " great specificity is ordinarily not required to survive a Rule 12(b)(6) motion." Garita Hotel Ltd. Partnership v. Ponce Federal Bank, F.S.B., 958 F.2d 15, 17 (1st Cir. 1992). However, under Fed.R.Civ.P. 9(b), in cases " alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." The purposes of that requirement are (1) to give the defendants notice and enable them to prepare meaningful responses; (2) to preclude the use of a groundless fraud claim as a pretext to using discovery as a fishing expedition; and (3) to safeguard defendants from frivolous charges that might damage their reputations. See In re Lupron Mktg. & Sales Practices Litig., 295 F.Supp.2d 148, 170 (D. Mass. 2003) (quoting New England Data Services, Inc. v. Becher, 829 F.2d 286, 288 (1st Cir. 1987)); see also McGinty v. Beranger Volkswagen, Inc., 633 F.2d 226, 228-29 (1st Cir. 1980). Under the 9(b) heightened pleading requirement, a complaint must state the time, place, and content of the alleged false or fraudulent representations to state a claim for fraud. Epstein v. C.R. Bard, Inc., 460 F.3d 183, 190-91 (1st Cir. 2006). The Rule 9(b) pleading requirement applies both to general claims of fraud and also to " associated claims where the core allegations effectively charge fraud." North Am. Catholic Educ. Programming Found., Inc. v. Cardinale,

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567 F.3d 8, 15 (1st Cir. 2009); see Martin v. Mead Johnson Nutrition Co., 2010 WL 3928707, *3 (D. Mass. Sept. 30, 2010) (" A claim under Chapter 93A that involves fraud is subject to the ...


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