April 24, 2018
In two recent cases decided by the United States Court of Appeals for the First Circuit, the Court held that consumers cannot make out claims under Massachusetts’ Consumer Protection Act, M.G.L. c. 93A, where the only claimed injury is that the consumer was deceived into purchasing a product. In the absence of an allegation and proof that the product purchased was of lesser quality than what was advertised or represented, the consumer has no actionable injury under Chapter 93A.
These decisions, Mulder v. Kohl’s Dep’t Stores, Inc., 865 F.3d 17 (1st Cir. 2017), and Shaulis v. Nordstrom, Inc., 865 F.3d 1 (1st Cir. 2017), affirmed orders dismissing putative class actions under Chapter 93A, where the plaintiffs had alleged that they were induced to purchase items at Kohl’s and Nordstrom Rack after observing price tags containing the retail price and falsely inflated comparison prices that misled them into believing they were getting a large bargain. The First Circuit panels unanimously concluded that “the subjective belief as to the value [the consumer] received – does not state a legally cognizable economic injury under Chapter 93A because it fails to identify anything objective that [the consumer] bargained for that she did not, in fact, receive.” Shaulis, 865 F.3d at 12 (internal quotations omitted). The First Circuit noted that the Massachusetts Supreme Judicial Court has previously “moved away from recognizing ‘per se’ or ‘deception-as-injury’ theories of injury under Chapter 93A.” Mulder, 865 F.3d at 22.
Therefore, merely alleging that a consumer was deceived into purchasing a product or that the consumer did not get as big of a discount as advertised is insufficient to state a claim under Chapter 93A. The consumer will have to show, at least in the consumer goods context, that he or she was deceived into purchasing a product of lesser quality relative to the price paid and/or to representations made. Deception alone is not actionable injury.
In a recent putative class action case, the Nelson Mullins team of Matthew G. Lindenbaum, Kevin P. Polansky, and Christine M. Kingston obtained a complete dismissal of the individual and putative class claims against their client under Chapter 93A (and all other claims), in part on the basis that the plaintiff had alleged deception as per se injury. The U.S. District Court for the District of Massachusetts, relying on Mulder and Shaulis in part, found that the plaintiff’s Chapter 93A count failed to state a claim because the plaintiff failed to plausibly allege that the tires he purchased were worth less than what he paid, regardless of his subjective belief as to the tires’ value based on advertisements he allegedly saw. See Presti v. Toyota Motor Sales U.S.A., Civil Action No. 17-10320-DJC, 2018 U.S. Dist. LEXIS 22120, at *5-7 (D. Mass. Feb. 8, 2018).
Businesses that have been sued under Chapter 93A for deceptive advertising or other similar conduct should be aware of this recent First Circuit precedent in defending against Chapter 93A claims. Nelson Mullins can help your company defend against threatened or actual litigation under Chapter 93A and related claims, including in proposed class action cases. Please contact us if you have been served with a Chapter 93A demand letter, sued under Chapter 93A, or otherwise threatened with suit thereunder or under related laws.
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