Court Opinion

ID: 4189730
Source: CourtListenerOpinion
Date Created: 2017-07-26 21:00:44.964546+00
Date Added: 2024-06-11T14:40:35.709581
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 16-1238

                          ELLEN MULDER,

                      Plaintiff, Appellant,

                               v.

                 KOHL'S DEPARTMENT STORES, INC.,

                      Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. F. Dennis Saylor IV, U.S. District Judge]

                             Before

          Torruella, Lynch, and Lipez, Circuit Judges.

     S. James Boumil, with whom Boumil Law Offices, Konstantine W.
Kyros, and Law Offices of Konstantine W. Kyros, were on brief, for
appellant.
     Lauri A. Mazzuchetti, with whom Michael C. Lynch, James B.
Saylor, Kelly Drye & Warren LLP, and William T. Harrington, were
on brief, for appellee.

                          July 26, 2017
             LIPEZ, Circuit Judge.             This appeal involves a putative

class action lawsuit arising out of allegedly deceptive labeling

and   marketing     of    products      by    Kohl's   Department    Stores,    Inc.

Appellant Ellen Mulder purchased several items from a Kohl's store

in Hingham, Massachusetts.           The price tags on these items listed

both purchase prices and significantly higher "comparison prices."

Mulder   alleges         that   these        comparison     prices   are   entirely

fictional, and were selected by Kohl's to mislead unsuspecting

consumers about the quality of its products.                   Feeling cheated by

Kohl's   allegedly       deceitful      pricing     scheme,    Mulder   filed   suit

alleging that Kohl's had, in violation of Massachusetts statutory

and common law, improperly obtained money from her and other

Massachusetts consumers.          She requested that a court order Kohl's

to restore this money and enjoin Kohl's from continuing to violate

Massachusetts law.          The district court granted Kohl's motion to

dismiss all of Mulder's claims.               We affirm.

             We faced identical claims against a different retailer

in a related case, Shaulis v. Nordstrom, No. 15-2354, slip op. at

5-32 (1st Cir. July 26, 2017), also decided today.                   The reasoning

of that opinion applies fully here.                    We provide the following

background    and   analysis      only       to   address   Mulder's    contentions

regarding the district court's denial of her motion for leave to

amend and to address a new "travel expenses" theory of injury

proposed in an accompanying proposed second amended complaint.

                                         - 2 -
                             I. Background

             The facts underlying this case are taken from the amended

complaint and are presumed true for the purposes of this appeal.

They are fully set forth in the opinion of the district court.

See Mulder v. Kohl's Dept. Stores, Inc., 15-11377-FDS, 2016 WL

393215, at *1-3 (D. Mass. Feb. 1, 2016).

             Defendant Kohl's Department Stores, Inc. is a Wisconsin-

based corporation that operates department stores throughout the

United States, including more than twenty stores in Massachusetts.

Mulder purchased two items at one of these stores in 2014.        The

first item listed a "manufacturer's suggested retail price" of

$55; the second displayed a "comparison price" of $26.      The items

were listed as being on sale for $29.99 and $17.99, respectively.

             Mulder claims that these price tags were deceptive.

According to Mulder, 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 reality, the listed sale prices were "fabricated [and]

inflated."     In short, Mulder claims that the comparison prices

listed on the price tags were "fictional amounts intentionally

selected so that Kohl's could advertise phantom markdowns" and

persuade customers to make purchases they otherwise would not make.

                                 - 3 -
              On November 20, 2014, Mulder filed suit in Massachusetts

Superior Court.          She filed an amended complaint on February 19,

2015.       The amended complaint alleged claims for fraud, breach of

contract,       unjust     enrichment,    violations     of     the    Code    of

Massachusetts Regulations and the Federal Trade Commission Act,1

and violations of Mass. Gen. Laws ch. 93A ("Chapter 93A").

              After Kohl's removed the case to federal court, it

successfully moved to dismiss the action for failure to state a

claim.        The   district   court   held    that   Mulder   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 second amended complaint.                  The court also

dismissed all of Mulder's common law claims.

              On appeal, Mulder 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, 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).

        1
       The district court dismissed Mulder's claim for violations
of the Code of Massachusetts Regulations and the Federal Trade
Commission Act on the ground that neither provides for a private
cause of action. Mulder does not appeal this decision.

                                       - 4 -
                                  II. Discussion

              In dismissing all of Mulder's claims, the district court

noted       that    this   case    involved    allegations   "substantially

identical" to those made against another retailer in Shaulis v.

Nordstrom Inc., 120 F. Supp. 3d 40 (D. Mass. 2015), in which the

plaintiff was also represented by Mulder's counsel.2           Mulder, 2016

WL 393215, at *9 (D. Mass. Feb. 1, 2016).           Plaintiffs appealed in

both cases, and their appeals were joined for oral argument before

this court.        Discerning no relevant factual or legal distinctions

between these two cases, and applying our opinion in Shaulis v.

Nordstrom, we affirm the district court's dismissal of Mulder's

Chapter 93A claim for damages and injunctive relief and her common

law claims for fraud, breach of contract, and unjust enrichment

for the reasons stated therein.3          See Shaulis, slip op. at 5-32.

              The only remaining issue is Mulder's challenge to the

district court's denial of her motion for leave to file a second

amended complaint. We review a district court's denial of a motion

to amend for abuse of discretion.             Nikitine v. Wilmington Trust

        2
       On appeal, Kohl's emphasizes the similarity of this case
with Shaulis by noting that portions of Mulder's complaint appear
to have been copied directly from the complaint in that case.
        3
       Mulder asks us to certify several questions concerning
Chapter 93A to the SJC, which we may do if the questions are
determinative of the pending cause of action and there is no
controlling precedent. See Mass. S.J.C. R. 1:03; Easthampton Sav.
Bank v. City of Springfield, 736 F.3d 46, 50 (1st Cir. 2013). We
decline to do so for the reasons stated in Shaulis.

                                      - 5 -
Co., 715 F.3d 388, 389 (1st Cir. 2013).    In doing so, we "defer to

the district court's hands-on judgment so long as the record

evinces an adequate reason for the denial."      Id. (quoting Aponte–

Torres v. University of P.R., 445 F.3d 50, 58 (1st Cir. 2006)).

Although Rule 15 proposes that leave to amend be "freely give[n]"

in instances in which "justice so requires," Fed R. Civ. P.

15(a)(2), this "does not mean . . . that a trial court must

mindlessly grant every request for leave to amend." Aponte–Torres,

445 F.3d at 58.    Rather, "a district court may deny leave to amend

when the request is characterized by 'undue delay, bad faith,

futility, [or] the absence of due diligence on the movant's part.'"

Nikitine, 715 F.3d at 390 (quoting Palmer v. Champion Mortg., 465

F.3d 24, 30 (1st Cir. 2006)); see also Foman v. Davis, 371 U.S.

178, 182 (1962).    In sum, a request to amend requires the district

court to "examine the totality of the circumstances and to exercise

its informed discretion in constructing a balance of pertinent

considerations."    Palmer, 465 F.3d at 30-31.

          Mulder sought leave to amend to add new allegations that

she was "induced" to travel to a Kohl's store by false advertising

and that she suffered a resulting economic injury in the form of

travel expenses -- primarily, the cost of gasoline and depreciation

of her vehicle -- incurred by driving ten miles from her home to

a Kohl's store in Hingham, Massachusetts.         The district court

denied Mulder's motion to amend her complaint both because of undue

                                - 6 -
delay and because her proposed amendments to the complaint would

have been futile.

               We find no fault with the district court's denial of

Mulder's motion for leave to amend on either ground.             With respect

to delay, as the court noted, Mulder did not file for leave to

amend after Kohl's filed its motion to dismiss, and instead opposed

the motion, filed a sur-reply, opposed the motion again at oral

argument, and then filed a third memorandum in opposition to Kohl's

motion.    Moreover, Mulder admitted her motion was filed, at least

in part, to rectify the deficiencies the district court identified

with the theories of injury presented in Shaulis v. Nordstrom,

which, as we noted, involved substantially identical allegations

made by a plaintiff represented by Mulder's counsel. Thus, "[t]his

is   not   a    case   of   new   allegations   coming   to   light   following

discovery,       or    of   previously   unearthed   evidence     surfacing."

Villanueva v. United States, 662 F.3d 124, 127 (1st Cir. 2011).

Rather, the district court reasonably could have concluded that

Mulder was scrambling to devise new theories of liability based on

the same facts pled in her original complaint -- "theories that

could and should have been put forward in a more timeous fashion."

Nikitine, 715 F.3d at 391. Even on appeal, Mulder does not explain

why her "travel expense" theory of injury was not advanced earlier.

We therefore conclude that the district court acted within its

expansive discretion in denying leave to amend. See id.; Calderón–

                                      - 7 -
Serra v. Wilmington Trust Co., 715 F.3d 14, 20 (1st Cir. 2013)

("Appreciable delay alone, in the absence of good reason for it,

is enough to justify denying a motion for leave to amend.").

            The district court likewise acted within its discretion

by denying Mulder's motion for leave to amend as futile.4               As the

district court noted here, and as we similarly noted in Shaulis,

Mulder's    "travel    expenses"   theory    of   injury    suffers   from   a

causation problem, as she "does not explain how a deceptive price

tag could have caused her to travel to [Kohl's] in the first

place."    Shaulis, slip op. at 25.

            Mulder's    belated    attempt   to   resolve   this   causation

problem -- by alleging that she was "deceived by Kohl's advertising

in general," and that "but for the reputation that Kohl's developed

as a result of its false advertising of 'amazing prices,'" she

would not have traveled to Kohl's in the first place -- runs afoul

of   the   particularity   requirements      of   Federal   Rule   of    Civil

Procedure 9(b).       Rule 9(b)'s requirements apply to both general

claims of fraud and also to "associated claims," such as Mulder's,

      4Although we generally review a district court's denial of a
motion to amend for abuse of discretion, "[w]ithin that standard,
pure questions of law are reviewed de novo." Platten v. HG Bermuda
Exempted Ltd., 437 F.3d 118, 132 (1st Cir. 2006). Here, because
the district court also dismissed Mulder's motion as futile because
the proposed second amended complaint still failed to state a claim
"sufficient to survive a motion to dismiss, our review . . . is,
for practical purposes, identical to review of a Rule 12(b)(6)
dismissal based on the allegations in the amended complaint." Id.

                                    - 8 -
"where the core allegations effectively charge fraud."             North Am.

Catholic Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8,

15 (1st Cir. 2009); see also, Martin v. Mead Johnson Nutrition

Co., No. 09-cv-11609-NMG, 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.").             Here, Mulder's

claim       that   she   was   "induced"   to   travel   to   Kohl's   by   its

"advertising in general" and its "reputation" of "amazing prices"

is too vague to satisfy Rule 9(b), which requires plaintiffs to

specifically plead "the time, place, and content of an alleged

false representation."         See United States ex rel. Heineman-Guta v.

Guidant Corp., 718 F.3d 28, 34 (1st Cir. 2013) (quoting United

States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 731 (1st Cir.

2007)).       Hence, we agree with the district court that Mulder's

claim falls well short of meeting Rule 9(b)'s requirements for

allegations sounding in fraud.5

               Mulder's "travel expenses" theory of injury is also

fundamentally flawed in another way.             In Shaulis, we rejected a

plaintiff's "induced purchase" theory of injury -- a claim that

she was "induced" to make a purchase by the false sense of value

        5
       Furthermore, we also agree with the district court that
advertising of "amazing prices" in most circumstances is non-
actionable puffery because, standing alone, such advertisements do
not make an explicit promise or guarantee. See Shaw v. Digital
Equip. Corp., 82 F.3d 1194, 1218 (1st Cir. 1996).

                                      - 9 -
created by a retailer's allegedly deceptive "Compare At" price

tags -- because it fell short of "alleging the 'identifiable'

injury, distinct from the claimed deceptive conduct itself that

the   SJC   requires   for   individual    relief   under   Chapter   93A."

Shaulis, slip op. at 17-18.      In doing so, we emphasized that the

SJC has moved away from recognizing "per se" or "deception-as-

injury" theories of injury under Chapter 93A, and that, "absent

allegations of real loss grounded in some objective measure, [an]

'induced purchase' theory of injury is simply the 'per se' theory

of injury in new clothing."      Id. at 24.

            Mulder's "induced travel" theory of injury fares no

better than the "induced purchase" theory.          Mulder identifies no

authority, and we are aware of none, ratifying this theory of

injury under Chapter 93A.      This is unsurprising.        Such a theory,

if recognized, would render meaningless the SJC's clear rule

against "per se" or "deception-as-injury" claims.            See Tyler v.

Michaels Stores, Inc., 984 N.E.2d 737, 745-46 (Mass. 2013) (holding

that a Chapter 93A plaintiff must have suffered a "separate,

identifiable harm arising from the [regulatory] violation" that is

distinct "from the claimed unfair or deceptive conduct itself");

Bellermann v. Fitchburg Gas and Elec. Light Co., 54 N.E.3d 1106,

1111 (Mass. 2016) (reaffirming Tyler); see also Shaulis, slip op.

at 7-25.     Indeed, the only court to have addressed a "travel

expenses" theory of injury under a state's consumer protection

                                  - 10 -
statutes rejected it for just this reason.     See Braynina v. TJX

Cos., 15 CIV. 5897 (KPF), 2016 WL 5374134, at *11 (S.D.N.Y. Sept.

26, 2016).    As the court in Braynina explained, a

     customer whose claim is foreclosed by [the bar against
     "per se" theories of injury"] could easily circumvent
     that [rule] by latching onto the travel or other (often
     inevitable) collateral expenses that led to their
     purchase. Smartphone users who make deceptively induced
     purchases on a preferred retailer's website could
     likewise claim data usage costs involved in the
     transaction. Indeed, actual purchases would no longer
     be necessary under Plaintiffs' proposed theory . . .
     because the travel expense injury would be completed,
     not upon a plaintiff's purchase of a good, but upon his
     or her mere visit to a store or website.      The Court
     declines to adopt so broad a theory.

Id. (emphasis added).    In light of the SJC's current Chapter 93A

injury jurisprudence, we similarly decline to recognize a "travel

expenses" theory of injury.      If the SJC wishes to carve out

exceptions to its holdings in Tyler and Bellermann to allow for

such claims, "it is for the SJC to identify and define them."   Rule

v. Ft. Dodge Animal Health, Inc., 607 F.3d 250, 255 (1st Cir.

2010).

             Affirmed.

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