Haywood v. Massage Envy Franchising, LLC

887 F.3d 329 (7th Cir. 2018)

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Nature of the Case

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Facts

D is a franchisor based in Scottsdale, Arizona. D grants licenses to independently owned and operated entities for use of its name, trademark, and standardized business operations. P is an Illinois resident and Holt (P) is a Missouri resident. D has multiple franchise locations in both states that offer massages and other related services. P alleges that D violated numerous provisions of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Missouri Merchandising Practices Act when it offered and sold what it stated were one-hour massages or massage sessions that provided no more than 50 minutes of massage time. P's complaint explained how Massage Envy advertised massage services on its website. An advertisement on the website's homepage gives an 'Introductory 1-hour Massage Session*' at the price of $50. Clicking the asterisk leads a user to a separate web page that did not contain information about the length of a massage. At the bottom of the homepage, there was a link that stated '*View pricing and promotional details.' That link led to a separate page with a number of disclaimers. One disclaimer titled 'Session' explained that a 'session includes massage or facial and time for consultation and dressing.' The complaint alleges that the multiple asterisks confused the average consumer and that D deceptively hid the disclosures where they were 'nearly impossible' to find. P booked a 1 hour massage and was given a massage that lasted no more than 50 minutes. P booked another 1 hour massage and did not see any sign or display at the location noting that the massage time would be less than one hour. It lasted no more than 50 minutes. D moved to dismiss the complaint arguing both a lack of subject matter jurisdiction and failure to state a claim on which relief may be granted. The court granted motion and dismissed the complaint with prejudice. When analyzing the requirements for pleading damages under the IFCA and the MMPA, the court held that both P's and Holt's allegations failed to meet the standards set forth by those statutes and the corresponding case law. The court also found that Holt's claims did not meet the heightened pleading standard required under Federal Rule of Civil Procedure 9(b), as she did not allege a time or a place for the fraudulent conduct, nor did she state particularly how she was deceived. Ps appealed.