Old Navy's discounted sales failed to provide basis for valid Missouri Merchandising Practices Act claim.
ABSTRACT: Eighth Circuit Court of Appeals holds that a customer failed to sufficiently plead that she suffered an “ascertainable loss,” which is an essential element of a Missouri Merchandising Practices Act claim. Notwithstanding her assertion that the advertised price was not truly a “sale” price, the customer paid the prices advertised at the time of the sale and received the goods she expected to receive. The MMPA claim was thus properly dismissed.
Retail customer Jill Hennessy brought a putative class action against clothing retailers The Gap, Inc. and its wholly owned subsidiary, Old Navy, LLC. Hennessy claimed she purchased numerous products at Old Navy stores at discount prices that were deceptively advertised because Old Navy did not sell a substantial quantity of those products at the advertised “regular” prices for a sufficient time prior to selling them at the advertised “sale” prices. She sought class wide compensatory damages under the Missouri Merchandising Practices Act, alleging that as a result of Defendants' misleading advertising practices, she and the putative class members did not receive the benefit of the bargain Defendants promised them, because the products they purchased from Defendants did not have the higher value that Defendants allegedly represented they had. She also sought equitable relief under the theory of unjust enrichment, claiming it would be unfair for Old Navy retain her payments for the products.
Hennessey claimed the advertised product sale prices were deceptive and misleading because Old Navy did not sell a large quantity of those products at the regular price for a substantial enough time prior to selling them at the discounted sales price—essentially artificially inflating the value of those products. For example, Old Navy’s crew neck T-shirt was listed at a regular price of $14.99 with a sales price of $7.49. Hennessy alleged she was promised a bargain by paying $7.49 for a shirt that was supposedly worth $14.99. According to Hennessey, because the shirt was worth less than $14.99, and potentially worth even less than the $7.49 sales price, she should recover the difference between the actual value of the product and the promised value of $14.99. Hennessey also claimed Old Navy was unjustly enriched by her payments and should compensate her accordingly.
The District Court dismissed the case because the allegations failed to establish the actual market values of the products that Hennessey received were lower than the represented values of those products. Hennessey failed to prove she suffered an ascertainable loss. The lower court also held that Old Navy was not unjustly enriched because Hennessy received the goods expected at the price she willingly paid. Hennessey appealed.
The Court of Appeals affirmed the District Court’s dismissal of the MMPA claim, noting recovery of damages under a private MMPA claim requires a Plaintiff to allege and prove that she: (1) purchased merchandise from the defendant; (2) for personal, family, or household purposes; and (3) suffered an ascertainable loss of money or property, (4) resulting from an act declared unlawful under the MMPA. To determine whether an MMPA plaintiff has suffered an ascertainable loss, Missouri courts generally apply the “benefit of the bargain” rule, which awards a prevailing party the difference between the value of the product as represented and the actual value of the product received. Hennessy merely made speculative, conclusory “information and belief” assertions about the actual value of the products received, but alleged no definitive facts supporting the claim of a higher represented actual value of the products other than the purportedly false assertions that the advertised former price was the represented value. Because the allegations were rooted in fraud, under the Federal Rule of Civil Procedure Rule 9(b) heightened pleading standard—which is similar to Missouri Rule of Civil Procedure 55.15—Plaintiff was required to plead such facts as the time, place, and content of defendant’s false representations, as well as the details of the defendant’s fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result. As Hennessey failed to plead such key information, the Court held she failed to establish an ascertainable loss—and consequently failed to state an MMPA claim.
The Court of Appeals agreed with a growing number of courts by finding complaints based solely on a plaintiff’s disappointment over not receiving an advertised discount at the time of purchase failed to establish the suffering of an ascertainable loss—which is a necessary element of an MMPA claim.
The Court also affirmed the District Court’s dismissal of Hennessey’s unjust enrichment claim. A properly pleaded unjust enrichment claim in Missouri requires: (1) a benefit conferred by a plaintiff on a defendant; (2) the defendant’s appreciation of the fact of that benefit, and (3) the acceptance and retention of that benefit by defendant in circumstances that would render that retention inequitable. Plaintiff’s unjust enrichment claim was based on the same facts as her MMPA claim. However, there can be no unjust enrichment if the parties receive what they intended to obtain—which both parties did here. Moreover, the existence of an express contract precludes a claim of unjust enrichment. Each of Hennessey's product purchases constituted an express contract memorialized by the payment receipt. Accordingly, the Court also dismissed the unjust enrichment claim.
Conclusion:
While plaintiffs may broadly allege questionable and far-reaching MMPA counts in their Petitions and Complaints, this case demonstrates that not all broad allegations will withstand scrutiny. While statutory MMPA claims are not quite the same thing as common law fraud claims, for purposes of Federal Rule 9(b) and Missouri Rule 55.15, they “sound in fraud,” and are subject to those rules’ heightened pleading requirements. Defendants should be ready to challenge generic allegations that lack the requisite specificity under those rules.Kansas City Area Returns to Pre-Pandemic Jury Verdict Trends ...
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