Kathy Haywood v. Massage Envy Franchising, LLC
887 F.3d 329
| 7th Cir. | 2018Background
- Plaintiffs Kathy Haywood (Illinois) and Lia Holt (Missouri) sued Massage Envy Franchising, LLC alleging deceptive advertising: website ads promoted a “1‑hour” massage but, in practice, customers received only about 50 minutes of massage time because the “session” included consultation and dressing time disclosed in buried fine print.
- Complaint described the website layout, screenshots, the advertised “Introductory 1‑hour Massage Session*” and disclaimers reachable only via multiple asterisks/links; plaintiffs allege disclosures were effectively hidden and confusing.
- Haywood used a $75 electronic gift card and received a ~50‑minute massage in May 2016; she later returned in September 2016 for a second appointment to verify duration. Holt allegedly viewed the site in April 2012, called the Oakville, MO location, booked a one‑hour massage, and received ~50 minutes of massage.
- Haywood asserted claims under the Illinois Consumer Fraud Act (ICFA); Holt asserted claims under the Missouri Merchandising Practices Act (MMPA). Both pleaded deception, omission, and unfair practices on behalf of putative classes.
- District court dismissed both plaintiffs’ complaints with prejudice under Fed. R. Civ. P. 12(b)(6), holding plaintiffs failed to plead damages/causation required by ICFA/MMPA and that Holt’s MMPA claim failed Rule 9(b) particularity.
- Seventh Circuit affirmed: held plaintiffs’ pleadings did not plausibly allege the required pecuniary injury and but‑for causation (and Holt failed to satisfy Rule 9(b)); dismissal with prejudice was not an abuse of discretion because plaintiffs never asked for leave to amend or identified how to cure defects.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ICFA/MMPA claims were pleaded with requisite particularity under Rule 9(b) | Haywood/Holt: allegations describe website, screenshots, and individual encounters sufficient for Rule 9(b) | Massage Envy: allegations are too vague (Holt gives no time/place/how; Haywood fails to identify specific deceptive representation causing payment) | 9(b) applies; Holt fails 9(b); Haywood’s claim also treated under 9(b) and found deficient on causation/damages grounds |
| Whether plaintiffs alleged "actual damages"/ascertainable loss under ICFA/MMPA | Plaintiffs: they received less than promised (benefit‑of‑the‑bargain injury); gift card payment still constitutes pecuniary loss | Massage Envy: no out‑of‑pocket loss shown (Haywood paid with gift card; no allegation that service was worth less than price) | Court: plaintiffs failed to adequately plead damages as required; benefit‑of‑the‑bargain argument not resolved in plaintiffs' favor given pleading defects |
| Whether plaintiffs pleaded but‑for causation between deceptive act and alleged injury | Plaintiffs: viewing deceptive ads and receiving shorter massage connects deception and injury | Massage Envy: complaint lacks allegation that deception induced appointment; no causal link between advertising and payment | Court: dismissal affirmed — plaintiffs did not plausibly allege that the alleged deception was the but‑for cause of their losses |
| Whether dismissal with prejudice was an abuse of discretion | Plaintiffs: defects curable; district court should have granted leave to amend despite no explicit request | Massage Envy: plaintiffs never sought leave to amend or explained how to cure defects | Court: not an abuse of discretion to dismiss with prejudice where plaintiffs did not request leave or show how to cure flaws |
Key Cases Cited
- Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732 (7th Cir. 2014) (Rule 12(b)(6) standard and Rule 9(b) particularity requirement for fraud‑sounding claims)
- Mulligan v. QVC, Inc., 888 N.E.2d 1190 (Ill. App. 2008) (but‑for causation and court may decide proximate cause as matter of law where only one conclusion evident)
- Kim v. Carter's, Inc., 598 F.3d 362 (7th Cir. 2010) (discussion of actual damages in consumer‑fraud context and limits on certain benefit‑of‑the‑bargain theories)
- Oshana v. Coca‑Cola Co., 472 F.3d 506 (7th Cir. 2006) (ICFA damages require deception and damage caused by deception)
- Connick v. Suzuki Motor Co., 675 N.E.2d 584 (Ill. 1996) (reliance is not an element of statutory consumer fraud under Illinois law)
- Oliveira v. Amoco Oil Co., 776 N.E.2d 151 (Ill. 2002) (discussion that plaintiffs who "know the truth" cannot claim deception; causation/damage framing under ICFA)
- Ward v. West Cnty. Motor Co., 403 S.W.3d 82 (Mo. 2013) (elements for MMPA deceptive practice claim)
- Gonzalez‑Koeneke v. West, 791 F.3d 801 (7th Cir. 2015) (standard of review for dismissal with prejudice/abuse of discretion)
- Indep. Tr. Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930 (7th Cir. 2012) (affirming dismissal with prejudice where plaintiff did not seek leave to amend)
- James Cape & Sons Co. v. PCC Constr. Co., 453 F.3d 396 (7th Cir. 2006) (district court may dismiss with prejudice when amendment would likely suffer same defects)