Shaulis v. Nordstrom Inc.
2015 WL 4886080, 120 F. Supp. 3d 40, 2015 U.S. Dist. LEXIS 107293 (2015)
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Rule of Law:
Under Massachusetts consumer protection law (Chapter 93A), a consumer who is deceptively induced to purchase a product based on a fabricated reference price does not suffer a legally cognizable injury if the product received is worth the actual purchase price paid.
Facts:
- On November 1, 2014, Judith Shaulis shopped at a Nordstrom Rack store in Boston, Massachusetts.
- Shaulis observed a cardigan sweater with a price tag showing a purchase price of $49.97 and a 'Compare At' price of $218.00, which represented a '77% savings.'
- Enticed by the apparent discount, Shaulis purchased the sweater for $49.97.
- Shaulis's sales receipt stated, 'You SAVED: $168.03 Congratulations! You saved more than you spent. You’re a shopping genius!'
- Shaulis alleged that the sweater was never sold by Nordstrom or anyone else at the represented 'Compare At' price.
- Shaulis did not allege that the sweater was defective, of poor quality, or worth less than the $49.97 she paid for it.
Procedural Posture:
- Judith Shaulis filed a class action complaint against Nordstrom, Inc. in Suffolk Superior Court, a state trial court in Massachusetts.
- Shaulis filed a first and second amended complaint in the state court.
- Nordstrom removed the action to the United States District Court for the District of Massachusetts, a federal trial court.
- Nordstrom filed a motion to dismiss the second amended complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).
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Issue:
Does a consumer suffer a legally cognizable injury under Massachusetts General Laws Chapter 93A when deceptively induced to purchase a product by a fabricated 'Compare At' price, if the product is not defective and is worth the purchase price paid?
Opinions:
Majority - F. Dennis Saylor IV
No. A consumer does not suffer a legally cognizable injury under Chapter 93A where a deceptive pricing practice induces a purchase, but the consumer receives a product worth the price paid. To sustain a claim, a plaintiff must prove that the defendant’s unfair or deceptive act caused a separate, identifiable harm, such as a pecuniary loss. Here, although Nordstrom's alleged use of a fabricated 'Compare At' price constitutes a deceptive practice under Massachusetts regulations, Shaulis failed to allege an injury because she received a sweater worth the $49.97 she paid. Her injury was based entirely on her subjective belief that she was receiving a bargain, which does not constitute a tangible economic loss required for a private action under Chapter 93A or common law fraud. The court, citing precedents like Hershenow v. Enterprise Rent-A-Car and Rule v. Fort Dodge Animal Health, concluded that a regulatory violation alone, without causing the consumer to be 'worse off' in an economic sense, does not create a private cause of action. The court dismissed all claims, including fraud, breach of contract, and unjust enrichment, for failure to plead a cognizable injury or damage.
Analysis:
This decision significantly clarifies the 'injury' requirement under Massachusetts General Laws Chapter 93A, reinforcing a judicial trend that moves away from finding 'per se' injury from mere regulatory violations. By requiring plaintiffs in deceptive pricing cases to demonstrate an actual economic loss (i.e., that the product was worth less than the price paid), the court raises the bar for consumer class actions based on misleading 'compare at' prices. The ruling suggests that while such pricing schemes may be unlawful, enforcement is better left to the Attorney General rather than private litigants who have not suffered a tangible financial harm. This precedent makes it more difficult for consumers to sue over the loss of a perceived, but unreal, bargain.
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