United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON MOTION TO DISMISS, MOTION TO AMEND, AND MOTION TO CERTIFY
F. DENNIS SAYLOR, IV, District Judge.
This is a putative class action arising out of allegedly deceptive and misleading labeling and marketing of merchandise by Kohl's Department Stores, Inc. The amended complaint alleges that Kohl's has engaged in false advertising of its merchandise by listing fictional "comparison prices" at which it had never previously sold that merchandise and that were "intentionally selected so that Kohl's could advertise phantom markdowns." (Am. Compl. ¶ 5). Plaintiff Ellen Mulder purchased two items that were listed with a comparison price at the Kohl's store in Hingham, Massachusetts. She has brought this action alleging fraud, breach of contract, unjust enrichment, and violation of Mass. Gen. Laws ch. 93A, 940 Mass. Code Regs. § 6.01, and the Federal Trade Commission Act.
Kohl's has moved to dismiss the amended complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. After submitting three rounds of written briefing in opposition and participating in oral argument, plaintiff has moved to amend the complaint. Plaintiff has also filed a motion to certify a question of law to the Massachusetts Supreme Judicial Court.
Because the complaint does not allege a legally cognizable injury, and for the other reasons set forth below, defendant's motion to dismiss will be granted, and plaintiff's motions for leave to amend and to certify questions to the Massachusetts Supreme Judicial Court will be denied.
A. Factual Background
Unless otherwise indicated, the facts below are presented as stated in the amended complaint.
Kohl's Department Stores, Inc. is a Wisconsin corporation with a principal place of business in Menomonee, Wisconsin. (Am. Compl. ¶ 12). It operates a chain of department stores, including more than twenty stores in Massachusetts. ( Id. ¶ 13).
The amended complaint alleges that Kohl's listed false "comparison prices" both on the price tags of its products and on LED displays throughout the store. ( Id. ¶¶ 3-4). Specifically, it alleges that "Kohl's misrepresented the existence, nature, and amount of price discounts on [its] products" by falsely "purporting to offer specific dollar discounts from its own former retail prices... or manufacturer's suggested retail prices" when, in fact, the listed prices were "fabricated [and] inflated, and d[id] not represent the true prices for which products were being sold at Kohl's." ( Id. ¶ 2). It specifically alleges that the comparison prices listed on the price tags were "fictional amounts intentionally selected so that Kohl's could advertise phantom markdowns." ( Id. ¶ 5). It further alleges that "[t]he Kohl's pricing scheme was prominently displayed on all products available for sale at Kohl's stores in Massachusetts." ( Id. ¶ 8).
On November 3, 2014, Ellen Mulder went to the Kohl's store located in Hingham, Massachusetts. ( Id. ¶ 23). The complaint alleges that she observed at least two price tags that displayed comparison prices; one represented the manufacturer's suggested retail price as having been $55 and another displayed an undefined comparison price of $26. ( Id.; Am. Compl. Exs. B, C). The products were listed as being on sale for $29.99 and $17.99, respectively. (Am. Compl. Ex. A). She paid a total of $40.78 to purchase both items as a result of an additional 15 per cent discount. ( Id. ).
According to the complaint, Mulder "was induced to purchase" both items because she was "[e]nticed by the idea of paying significantly less than the comparison pricing price." (Am. Compl. ¶ 23). The amended complaint alleges that Mulder "would not have made such purchase, or would not have paid the amount she did, but for Kohl's false representations of the former price of the items she purchased." ( Id. ¶ 10). According to the amended complaint, "Kohl's never intended [to], nor did it ever, sell the items at the represented comparison price." ( Id. ¶ 24).
B. Procedural Background
Mulder initially filed a complaint in Plymouth County Superior Court on November 20, 2014. (St. Ct. Rec. at 2). She filed an amended complaint on February 19, 2015. ( Id. ). Kohl's removed the action to this Court on March 27, 2015.
Kohl's has moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted. Mulder has filed a motion to amend the complaint, and a motion to certify a question of law to the Massachusetts Supreme Judicial Court.
II. Motion to Dismiss
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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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 (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 Pharm., 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 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 Rule 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, 567 F.3d 8, 15 (1st Cir. 2009); Martin v. Mead Johnson Nutrition Co., 2010 WL 3928707, at *3 (D. Mass. Sept. 30, 2010) ("A claim under Chapter 93A that involves fraud is subject to the heightened pleading requirement.").
A. Count Four: Violation of CMR and FTCA
Count Four alleges a claim for violations of the Code of Massachusetts Regulations and the Federal Trade Commission Act. Specifically, Count Four alleges that Kohl's "violated and continues to violate 940 [Mass. Code Regs.] 6[.]01" and "violated and continues to violate the [Federal Trade Commission Act], 15 U.S.C. § 45(a)(1) and 15 U.S.C. § 52(a), as well as FTC Guidelines published at 16 C.F.R. § 233." Count Five alleges a violation of Mass. Gen. Laws. ch. 93A that is predicated on violation of the underlying regulations. The Federal Trade Commission Act does not provide for a private cause of action. See Marini v. Dragadosusa, 2012 WL 4023674, at *1 (D. Mass. Sept. 11, 2012) ("[T]he Federal Trade Commission Act... does not provide a cause of action by private persons such as the plaintiff." (citing Holloway v. Bristol-Myers Corp., 485 F.2d 986, 1002 (D.C. Cir. 1973))). Likewise, there is no private right of action under the Code of Massachusetts Regulations. As a result, Count Four will be dismissed for failure to state a claim upon which relief can be granted.
B. Count Five: Violation of Chapter 93A
Chapter 93A of the Massachusetts General Laws prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Mass. Gen. Laws ch. 93A, § 2(a). Conduct is "unfair or deceptive" if it falls "within any recognized or established common law or statutory concept of unfairness." VMark Software v. EMC Corp., 37 Mass.App.Ct. 610, 620 (1994). Pursuant to 940 Mass. Code Regs. 3.16, "[a]n act or practice is a violation of [Mass. Gen. Laws] Ch. 93A, s.2 if:... (3) [i]t fails to comply with existing statutes, rules, regulations or laws, meant for the protection of the public's health, safety, or welfare promulgated by the Commonwealth...; or (4) [i]t violates the Federal Trade Commission Act, the Federal Consumer Credit Protection Act or other Federal consumer protection statutes within the purview of [Mass. Gen. Laws ch.] 93A, s.2." The Supreme Judicial Court has interpreted the "regulation as being bound by the scope of [Mass. Gen. Laws ch.] 93A, § 2(a). In other words, under 940 Mass. Code Regs. § 3.16(3) a violation of a law or regulation... will be a violation of c[h]. 93A, § 2(a), only if the conduct leading to the violation is both unfair or deceptive and occurs in trade or commerce." Klairmont v. Gainsboro Restaurant, 465 Mass. 165, 174 (2013). "[W]hether the particular violation or violations qualify as unfair or deceptive conduct is best discerned from the circumstances of each case." Id. (quoting Kattar v. Demoulas, 433 Mass. 1, 14 (2000)) (internal quotation marks omitted).
1. Code of Massachusetts Regulations
Title 940 of the Code of Massachusetts Regulations establishes rules governing, among other things, retail advertising and price comparisons. Under Section 3.02(2), "[n]o statement or illustration shall be used in any advertisement which creates a false impression of the grade, quality, make, value, currency of model, size, color, usability, or origin of the product offered...." 940 Mass. Code Regs. 3.02(2). Under Section 6.01, an advertisement is defined as including a "representation... printed on or contained in any tag or label which is attached to or accompanies any product offered for sale."
Section 6.03(2) provides that "[s]ellers shall not use advertisements which are untrue, misleading, deceptive, fraudulent, falsely disparaging of competitors, or insincere offers to sell." 940 Mass. Code Regs. 6.03(2). The regulations define two specific types of "unfair or ...