Haywood v. Massage Envy Franchising, LLC

Filing 52

ORDER granting 27 Motion to Dismiss for Failure to State a Claim. The Court dismisses with prejudice plaintiffs' amended complaint. The Court DIRECTS the Clerk of the Court to enter judgment reflecting the same. Signed by Judge David R. Herndon on 6/9/17. (klh)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
KATHY HAYWOOD and LIA HOLT, on
behalf of themselves and all others similarly
situated,
Plaintiffs,
v.
MASSAGE ENVY FRANCHISING,
LLC,
Defendant.

Case No. 3:16-cv-01087-DRH-SCW
MEMORANDUM and ORDER

HERNDON, District Judge:
I.

Introduction

Pending before the Court is defendant Massage Envy Franchising, LLC
(hereinafter “MEF”) Motion to dismiss or alternatively to strike (Doc. 27). MEF
contends that the amended class action complaint (“amended complaint”) should
be dismissed with prejudice for lack of subject matter jurisdiction and failure to
state a claim. In the alternative, MEF moves to strike the class action allegations
because they are both facially and inherently deficient. MEF also requests the
Court find judicial notice of MEF’s franchise disclosure document and MEF’s
training documents (Doc. 29). Haywood filed a response in opposition to
defendant’s request for judicial notice on December 29, 2016 (Doc. 33) and filed a
response in opposition to defendant’s motion to dismiss and strike on (Doc. 40).

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MEF filed a reply (Doc. 42). For the reasons discussed below, the Court grants
MEF’s motion.
II.

Background

Plaintiffs’ amended complaint alleges that MEF harmed Kathy Haywood and
Lia Holt and others similarly situated by committing unfair and deceptive
practices in “offering and selling what it stated were one-hour massages or
‘massage sessions’ that provided no more than 50-minutes of massage time. . .”
(Doc. 20 at 1, ¶ 1). Plaintiffs claim that MEF did not adequately disclose that
consultation with the massage therapist and time to undress and redress were
part of the advertised hour-long massage session. Therefore, plaintiffs argue that
they received less value than was promised for the amount that they paid.
MEF is a franchisor based in Scottsdale, Arizona that exclusively grants
licenses “to various independently owned and operated entities for use of the
Massage Envy® name, trademark, and standardized business operations in
exchange for payment of a franchise fee and royalties.” (Doc. 28 at 2). Because
each location is independently owned, each franchise is responsible for making
appointments, deciding which services to offer and at what price, and whether to
provide certain discounts (Id. at 3). MEF has multiple franchises in both Illinois
and Missouri (Doc. 20 at 2, ¶ 5).
Kathy Haywood is a resident of East St. Louis, Illinois and she visited the
O’Fallon, Illinois Massage Envy Franchise location on two occasions (Id. at 1, ¶ 3).
The first occurred on May 11, 2016 after receiving a $75 gift card from her

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daughter, Amber. Id. at 48, ¶ 119. When Amber purchased the card, MEF’s
website said that the $75 gift card would provide for a one-hour massage session
(Id. at 20–21, ¶ 49–52). Haywood claims that the downloaded e-gift card that she
received did state that “Session includes massage or facial and time for
consultation and dressing,” but it was contained in fine print at the bottom of the
email instead of in plain sight (Id. at 48, ¶121). Haywood states that when she was
booking her appointment on the MEF’s website, she did not find any disclaimer
that the massage would last less than the advertised one hour (Id. at 48, ¶ 123).
Likewise, when she arrived at the O’Fallon franchise, nothing alluded to the actual
length of the massage session. (Id. at 48, ¶ 124).
On the second occasion, Haywood made an appointment with the O’Fallon
franchise on September 8, 2016 for another one-hour session to verify that the
session included only 50 minutes of actual massage time and 10 minutes for
dressing and consultations (Id. at 49, ¶ 127). Again Haywood claims that no sign
or employee indicated that the actual massage would only be 50 minutes except
for a card she found in a stack on the front desk on her way out (Id. at 49, ¶ 128–
29).
Lia Holt is a resident of Missouri. In or about April 2012, she accessed the
MEF website to research the prices for a one hour massage and to find a Massage
Envy location close to her. Thereafter, she telephoned the Oakville, Missouri
Massage Envy franchise to book an appointment for a one-hour massage (Id. at
49, ¶ 131). She also asserts that she went to the Oakville, Missouri Massage Envy

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for a massage and that the actual massage time lasted 50 minutes (Id. at 50, ¶
132).
On November 14, 2016, Haywood and Holt filed the amended complaint on
behalf of Illinois and Missouri residents who paid for a one-hour massage session,
but only received 50 minutes of actual massage time (Id. at 57, ¶ 168). 1 The
Amended complaint contends that MEF violated the unfair and deceptive
practices provisions of the Illinois Consumer Fraud Act (“ICFA”), 815 ILCS 505/1

et seq. and the Missouri Merchandising Practices Act (“MMPA”), Mo. Rev. Stat. §§
407.010 et seq. Id. at 1, ¶ 2. Specifically, plaintiffs allege six counts against MEF:
Count I - Affirmative Deception in Violation of the ICFA; Count II - Omissions of
Material Fact in Violation of the ICFA; Count III - Unfair Practices in Violation of
the ICFA; Count IV - Affirmative Deception in Violation of the MMPA; Count V Omissions of Material Fact in Violation of the MMPA; and Count VI - Unfair
Practices in Violation of the ICFA (Id. at 59–69). In response, MEF filed a motion
to Dismiss and Strike on December 15, 2016, claiming that the Court lacks
subject matter jurisdiction because the plaintiffs lack standing to bring this action
due to the fact that neither plaintiff has a cognizable injury that is fairly traceable
to MEF (Doc. 28 at 1). Additionally, MEF claims that the plaintiffs also fail to
state a claim which relief may be granted because neither plaintiff “has alleged a
plausible theory of deception or a cognizable injury or damages under the ICFA or
the MMPA” (Id.).
Plaintiffs seek to represent the following classes:
1

Haywood filed the initial class action complaint on September 27, 2016 (Doc. 1).
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Illinois class. All consumers who, in the State of Illinois,
purchased a one-hour massage or massage session from Massage
Envy or its franchisees (other than a purchase as part of a
membership) and received no more than 50 minutes of actual
massage time.
Missouri class. All consumers who, in the State of Missouri,
purchased a one-hour massage or massage session for personal,
family or household purposes from Massage Envy or its franchisees
(other than a purchase as part of a membership) and received no
more than 50 minutes of actual massage time. 2
III.

Judicial Notice

First, the Court will address the defendant’s request for judicial notice of
MEF’s franchise disclosure document and MEF’s training documents. The Federal
Rules of Evidence provides that the Court may take judicial notice of adjudicative
facts if they are “not subject to reasonable dispute” and either: “(1) are generally
known within the within the trial court’s territorial jurisdiction; or (2) can be
accurately and readily determined from sources whose accuracy cannot
reasonably be questioned.” FED. RULES

OF

EVID. 201(b)(1)(2); Ennenga v. Starns,

677 F.3d 766, 773–74 (7th Cir. 2012) (citing General Elec. Capital Corp. v. Lease

Resolution Corp., 128 F.3d 1074, 1081 (7th Cir. 1997)). Additionally, as the MEF
correctly stated, the Court “must take judicial notice if a party requests it and the
court is supplied with the necessary information.” FED. RULES

OF

EVID. 201(c)(2).

However, judicial notice requires a high standard because it “substitutes the

2

According to the amended complaint, “[t]he class periods are the periods beginning with the
dates of the applicable statutes of limitations began to run for the respective state and ending
when Massage Envy changed its website approximately one month after the original complaint was
filed herein to remove the deceptive statements and to disclose clearly that a one-hour massage
session includes only 50 minutes of massage time.” (Doc. 20, ¶ 170).
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acceptance of a universal truth for the conventional method of introducing
evidence.” General Elec. Capital Corp., 128 F.3d at 1081. Therefore, judicial
notice warrants “the traditional caution it is given, and courts should strictly
adhere to the criteria established by the Federal Rules of Evidence before taking
judicial notice of pertinent facts.” Id.; see also Daniel v. Cook County, 833 F.3d
728, 742 (7th Cir. 2016) (“Judicial notice is a powerful tool that must be used
with caution.”).
Here, the Court agrees with the plaintiffs that MEF did not adequately
establish the authenticity of the exhibits and whether those documents are
publically available in order to satisfy Rule 201 for judicial notice. Doc. 33 at 2–5.
The burden of proof is on the proponent to show the accuracy of the documents
and whether they are free from reasonable dispute. FED. RULES OF EVID. 201(c)(2).
MEF did not provide any authentication to establish the accuracy of the exhibits
and the Court has no way of knowing whether the exhibits are in fact publically
available. See, e.g., Rowe v. Gibson, 798 F.3d 622, 628–31 (7th Cir. 2015) (stating
that Internet searches cannot be found to be conclusive or accurate enough for
judicial notice even if they are from a reputable medical website); Vajk v. Tindell,
No. 97-2030, 1998 WL 60391 *3 (7th Cir. Feb. 9, 1998) (ruling that the Court did
not err by refusing to grant judicial notice of letters sent directly to the Court
which the Court did not read nor could authenticate). Merely citing to statutes
that require disclosure in some cases does not show that the documents are
publically available. In this case, the defendants cite federal regulation 16 C.F.R. §

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436.2, which only requires disclosure to a franchisee when requested, and 815
ILCS 705/37, which states that the Administrator can withhold any information
from the public that he or she determines is “not necessary in the public interest
or for the protection of franchisees.” 815 ILCS 705/37. Neither of these statutes
demonstrates that MEF’s exhibits are currently publically available. To the
contrary, the financial disclosure document shows that Illinois is exempt from the
rule requiring registration of the document with the state Administrator. Ex. 1 at
3–4. MEF’s financial statement and training documents are not of the type of facts
so universally or generally known as to merit judicial notice, such as statutes or
prior court documents. See, e.g., Starns, 677 F.3d at 773–74 (citing Henson v.

CSC Credit Servs., 29 F.3d 280, 284 (7th Cir. 1994)) (holding that the Court can
take judicial notice of earlier state court records); United States v. Arroyo, 310
Fed.Appx. 928, 929–30 (7th Cir. 2009) (statutes and geographic boundaries are
legislative facts, not adjudicative facts, and therefore, proper for judicial notice).
Moreover, there is clearly a dispute over the facts at issue. Plaintiffs
maintain that MEF is responsible for misrepresenting the actual hands-on time on
their massages, and the training documents are introduced to demonstrate that
MEF encourages staff members to explain the time distribution of the massage
during booking. This is a critical issue, and therefore, judicial notice would not be
appropriate in this case. See Daniel, 833 F.3d at 742–43 (ruling that the Court
correctly refused to take judicial notice of the Agreed Order because the facts
from the Order were in dispute); Hennessy v. Penril Datacomm Networks, Inc., 69

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F.3d 1344, 1354 (7th Cir. 1995) (“In order for a fact to be judicially noticed,
indisputability is a prerequisite.”). For the reasons stated above, the Court
DENIES MEF’s request for judicial notice.
IV.

Motion to Dismiss

MEF moves to dismiss pursuant to FEDERAL RULES

OF

CIVIL PROCEDURE

12(b)(6). A Rule 12(b)(6) motion challenges the sufficiency of the complaint to
state a claim upon which relief can be granted. Hallinan v. Fraternal Order of

Police Chicago Lodge 7, 570 F.3d 811, 820 (7th Cir. 2009). The Supreme Court
explained in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), that Rule
12(b)(6) dismissal is warranted if the complaint fails to set forth “enough facts to
state a claim to relief that is plausible on its face.” In making this assessment, the
district court accepts as true all well-pled factual allegations and draws all
reasonable inferences in the plaintiff's favor. See Rujawitz v. Martin, 561 F.3d
685, 688 (7th Cir. 2009); St. John's United Church of Christ v. City of Chicago,
502 F.3d 616, 625 (7th Cir. 2007).
Even though Twombly (and Ashcroft v. Iqbal, 556 U.S. 662 (2009)) retooled
federal pleading standards, notice pleading remains all that is required in a
complaint. “A plaintiff still must provide only enough detail to give the defendant
fair notice of what the claim is and the grounds upon which it rests and, through
his allegations, show that it is plausible, rather than merely speculative, that he is
entitled to relief.” Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008)
(citations and quotations omitted).

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The Seventh Circuit Court of Appeals offers further guidance on what a
complaint must do to withstand dismissal for failure to state a claim. The Court
in Pugh v. Tribune Co., 521 F.3d 686, 699 (7th Cir. 2008) reiterated the premise:
“surviving a Rule 12(b)(6) motion requires more than labels and conclusions;” the
complaint’s allegations must “raise a right to relief above the speculative level.” A
plaintiff’s claim “must be plausible on its face,” that is, “the complaint must
establish a non-negligible probability that the claim is valid…” Smith v. Medical

Benefit Administrators Group, Inc., 639 F.3d 277, 281 (7th Cir. 2011); See also
Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012) (Rule 12(b)(1) motion to
dismiss for lack of standing).

With this standard in mind, the Court now turns

to defendant’s arguments for dismissal.
V.

Analysis

A. Subject Matter Jurisdiction/Standing
Defendants argue that the plaintiffs lack standing to bring ICFA and MMPA
claims because plaintiffs did not allege a cognizable injury that can be “fairly
traceable” to MEF (Doc. 28 at 8). For standing to be satisfied, a plaintiff must
establish: “(1) [it] has suffered an ‘injury in fact’ that is (a) concrete and
particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the
injury is fairly traceable to the challenged action of the defendant; and (3) it is
likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision.” Lehn v. Holmes, 364 F.3d 862, 871 (7th Cir. 2004) (quoting

Friends of the Earth, Inc. v. Laidlaw Environmental Servs. (TOC), Inc., 528 U.S.

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167, 180–81 (2000)). At the pleading stage, “general factual allegations of injury
resulting from the defendant’s conduct may suffice, for on a motion to dismiss we
‘presum[e] that general allegations embrace those specific facts that are necessary
to support the claim.’” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)
(quoting Lujan v. National Wildlife Federation, 497 U.S. 871, 883–89 (1990)).
MEF challenges Haywood’s standing claim arguing that Haywood’s daughter
is the person who purchased the $75 gift card from the MEF website, and then
conferred the 60 minute hands-on time promise to Haywood, not MEF (Doc. 28 at
8). However, Haywood alleges that she was deceived by MEF’s gift card receipt
that failed to disclose the actual time of the massage and by MEF’s website that
failed to disclose the actual time of the massage when she accessed the website in
order to research and schedule her appointment. According to those allegations,
she was directly deceived by MEF’s fraudulent actions.
The Court finds that even without these additional facts, Haywood has
standing because Illinois law recognizes stranding under the ICFA if there is a
sufficient “consumer-nexus” between the plaintiff who is not a consumer and a
corporate defendant. Walsh Chiropractic, Ltd. V. StrataCare, Inc., 52 F. Supp.2d
896, 913 (S.D.Ill. Sept. 20, 2010). The consumer-nexus test requires Haywood to
plead “(1) actions that establish a link between them and consumers; (2) how
defendant’s unfair or deceptive practice concerned consumers other than Walsh;
and (3) ‘how the requested relief would serve the interest of consumers.’” Id.,
(citing Brody v. Finch University of Health Sciences, 698 N.E.2d 257, 268–69

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(Ill.App.Ct. 1998). By bringing this class action suit, Haywood alleges that many
Illinois consumers were likewise deceived by MEF’s practices and that the lawsuit
addresses consumer protection concerns, thereby establishing an adequate
consumer-nexus to withstand standing under the ICFA at this time.
MEF also contends that each franchise is locally and independently owned
and operated, and therefore, Haywood and Holt cannot show any communications
or contact with MEF which resulted in their injury (Doc. 28 at 2, 8). It is true that
MEF is merely a franchisor company who grants franchises to entrepreneurial
individuals to manage independently across the United States and that plaintiffs
scheduled the appointments through these independently owned franchises, but
MEF misunderstands the plaintiffs’ injury allegations. Haywood and Holt do not
claim that their injury is the 50 minute massage that occurred at the individual
franchises, but that MEF’s national website and policies deceptively and
fraudulently mislead them into believing they purchased 60 minutes of hands-on
time when MEF knew the massage would only last 50 minutes. The allegations
support the inference that if MEF had effectively disclosed the actual hands-on
time of the massage, plaintiffs would not have brought this lawsuit because there
would have been no deceptive practices at issue. Plaintiffs only need to show “a
causal connection between the injury and the conduct complained of” in order to
establish traceability. Rawoof v. Texor Petrol. Co., 521 F.3d 750, 756 (7th Cir.
2008). Plaintiffs state that MEF’s deceptive acts caused their injuries of receiving a
shorter massage than advertised, which satisfies Article III standing.

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However, this also means that plaintiffs’ injuries must be limited to the
activities that MEF directly controls, namely the information on the gift card
receipt and the national MEF website. See Anthony v. Am. Airlines, Inc., No. 03 C
3681, 2006 WL 2794777, at *4 (N.D.Ill. Sept. 27, 2006) (“Article III requires that
a federal court act only to redress injury that fairly can be traced to the challenged
action of the defendant, and not injury that results from the independent action of
some third party not before the court.”). The allegations that discuss the
interactions with the employees at individual MEF franchise locations must be
discarded. A company’s issuing of certain quality control measures to ensure
brand uniformity cannot be used as evidence of a franchisor’s control of
independent franchisee actions, thereby, triggering liability. See Brunner v.

Liautaud, No. 14–c–5509, 2015 WL 1598106 at *4 (N.D.Ill. Apr. 8, 2015) (citing
Patterson v. Domino’s Pizza, LLC, 60 Cal.4th 474, 478 (Cal. 2014) (“A franchisor,
which may have thousands of stores located throughout the country, often
imposes comprehensive and meticulous standards to protect its brand and
operate the franchises in a uniform way in order to maintain a consistent
customer experience.”); Braucher ex rel. Braucher v. Swagat Group, L.L.C., 702
F.Supp.2d 1032, 1043 (C.D.Ill. Mar. 19, 2010) (holding that a franchisor is not
responsible for the actions of franchisees unless the franchisor “asserts more
direct control than these limited rights associated with maintaining the quality of
its brand.”); Bartolotta v. Dunkin’ Brands Group, Inc., No: 16 CV 4137, 2016 WL
7104290 at *2 (N.D.Ill. Dec. 6, 2016) (same).

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Here, MEF’s training manuals and supervisory role are limited to
maintaining the Massage Envy brand and do not establish the level of control
needed to confer franchisee liability onto the franchisor. Moreover, MEF’s
Franchising Agreement clearly states that
“[w]ith the exception of policies regarding inappropriate conduct and
minimum requirements for managers, massage therapists and
estheticians, any personnel policies or procedures which are made
available in the Operations Manual are for your [franchisee’s]
optional use and are not mandatory. You shall determine to what
extent, if any, such personnel policies and procedures may be
applicable to your Business operations in your jurisdiction. You and
we recognize that we neither dictate nor control labor and
employment matters for you and your employees.”
(Doc. 29, Ex. 1 at B-1 pg. 12). MEF’s training manuals encourage staff members
to fully discuss the duration of the appointment and massage, but individual
employees’ decisions to forego this instruction cannot be attributed to MEF (Doc.
29, Ex. 2-4). Accordingly, MEF cannot be liable for the actions of independent
franchisee’s employees, but the alleged fraud, concealment, or deception on
MEF’s website and general gift cards that the national company controls can be
“fairly traceable” to MEF.
B. FRCP 9(b)
Although both Haywood and Holt have standing, the claims in the amended
complaint involving fraud under the ICFA and the MMPA must also meet the
higher pleading standard pursuant to Federal Rule of Civil Procedure 9(b). See

Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust v. Walgreen Co., 631
F.3d 436, 441 (7th Cir. 2011) (“When a plaintiff in federal court alleges fraud

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under the ICFA, the heightened pleading standard of Federal Rule of Civil
Procedure 9(b) applies.”); Freitas v. Wells Fargo Home Mortg., Inc., 703 F.3d 436,
439 (8th Cir. 2013) (same). FRCP 9(b) states that “in alleging fraud or mistake, a
party must state with particularity the circumstances constituting fraud or
mistake.” FED. RULES CIV. PRO. 9(b). Both Illinois and Missouri law require the
plaintiff to describe the “who, what, when, where, and how of the fraud” similar to
the first paragraph of a newspaper story. Pirelli, 631 F.3d at 441–42; H & Q

Properties, Inc. v. Doll, 793 F.3d 852, 856 (8th Cir. 2015) (ruling that a plaintiff
must state the specific circumstances of the fraud “such matters as the time, place
and contents of false representations, as well as the identity of the person making
the misrepresentation and what was obtained or given up thereby.”). But because
availability of such information will vary among parties, the 9(b) standard is
determined on a case-by-case basis. Emery v. Am. Gen. Fin., Inc., 134 F.3d 1321,
1324 (7th Cir.1998).
However, according to Illinois law, the more rigorous 9(b) standard only
applies to the deceptive practices allegations, while claims of unfairness are
governed under the FRCP 8(a) notice pleading standard. Camasta v. Jos. A. Bank

Clothiers, Inc., 761 F.3d 732, 737 (7th Cir. 2014). The Seventh Circuit adopts the
Federal Trade Commission 5(a) approach to determining unfairness: “(1) whether
the practice offends public policy; (2) whether it is immoral, unethical,
oppressive, or unscrupulous; (3) whether it causes substantial injury to
consumers.” Windy City Metal Fabricators & Supply, Inc., v. CIT Tech. Financing

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Servs. Inc., 536 F.3d 663, 669 (7th Cir. 2008). The pleading may suffice even if
the claim does not contain all three factors. Id. (“A court may find unfairness even
if the claim does not satisfy all three criteria.”). A heavy showing of one factor may
compensate for the lack of evidence of the other two. Robinson v. Toyota Motor

Credit Corp., 775 N.E.2d 951, 961 (Ill. 2002) (a “practice may be unfair because
of the degree to which it meets one of the criteria or because to a lesser extent it
meets all three.”).
In Missouri, the courts normally do not make a distinction between
deceptive and unfair practices under the MMPA. See, e.g., Khaliki v. Helzberg

Diamond Shops, Inc., No. 4:11–CV–00010–NKL, 2011 WL 1326660 at *3
(W.D.Mo. Apr. 6, 2011) (“the Court reconfirms that Rule 9(b) states the applicable
standard of pleading for claims made under the MPPA.”); Blake v. Career Educ.

Corp., No. 4:08CV00821 ERW, 2009 WL 140742 at *2 (E.D.Mo. Jan. 20, 2009)
(“The United States District Courts in Missouri have consistently applied Rule
9(b) to cases arising under the MMPA.”) (citations omitted).
1. Haywood’s Pleading
a. Deceptive Practices Claims
Plaintiff Haywood raises claims of both deceptive and unfair practices
under the ICFA. Because the deceptive allegations involve fraudulent behavior, the
claims must meet Rule 9(b)’s particularity requirements. Haywood’s allegations
do state the basis of the fraud, the time and the place of the fraud, and who
committed the alleged fraud. Doc. 20 at ¶¶ 119–30. Claims have been struck

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down for lack of particularity for failure to name the individuals responsible for
the fraud. See, e.g., Camasta, 761 F.3d at 737 (7th Cir. 2014); Wivell v. Wells

Fargo Bank, N.A., 773 F.3d 887, 898 (8th Cir. 2014). But because Haywood
claims the corporation itself, not any individual, is the perpetrator, that omission
is warranted. Plaintiff Haywood explicitly states that MEF deceived her by failing
to disclose the actual hands-on time of the massage session, and the injury was
receiving a massage of lesser value than MEF had advertised. Doc. 20 at ¶ 154.
Accordingly, the amended complaint successfully alleges the ICFA claim with
sufficient particularity to pass muster under Rule 9(b).
b. Unfair Practices Claims
As discussed above, Haywood’s unfair practices claims do not need to
satisfy the heightened Rule 9(b) standards, but still need to pass basic Rule 8(a)
notice pleading standards. Therefore, the allegations in the pleading must “raise a
right to relief above the speculative level.” Tamayo v. Blagojevich, 526 F.3d 1074,
1084 (7th Cir. 2008). Haywood relies solely on MEF’s unethical business
practices to show that MEF’s advertising was unfair. Doc. 20 at ¶¶ 135–51. The
amended complaint includes ethical guidelines from the Direct Marketing
Association to demonstrate MEF’s violation of customary ethical practices. Id.
Illinois courts have agreed that if a plaintiff can show a strong showing of one
unfair criterion, then the complaint will be upheld. Because the amended
complaint adequately provides facts of possible unethical behavior on the part of

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MEF and, if proven true, could result in “relief above a speculative level”, the
pleading is valid under Rule 8(a). Tamayo, 526 F.3d at 1084.
2. Holt’s Pleading
a. Deceptive and Unfair Practices Claims
Plaintiff Holt also brings deceptive and unfair allegations under the MMPA.
Unlike Illinois, Missouri courts normally treat deceptive and unfair allegations the
same under the MMPA, and therefore, Rule 9(b) applies to both claims. See

supra, Khaliki , 2011 WL 1326660 at *3; Blake, 2009 WL 140742 at *2. In this
case, Holt’s pleading is far too bare to survive Rule 9(b) scrutiny. Holt’s claims do
not sufficiently provide a time or a place for the fraudulent behavior or describe
how she was particularly deceived. The complaint only alleges that Holt called the
Oakville, Missouri MEF location to schedule an appointment “in or about April
2012,” and “accessed Massage Envy’s website to research the prices for a onehour massage.” Doc. 20 at ¶ 131. Holt does not state the price of the massage or
how the value of what she received is less than what she agreed to pay. See

Snelling v. HSBC Card Servs. Inc., No. 4:14CV431 CDP, 2015 WL 457949 at *9
(E.D. Mo. Feb. 3, 2015) (holding that Snelling’s fraud pleadings against HSBC’s
commercials did not satisfy Rule 9(b) requirements because “Snelling never
alleges when in those years the commercials were aired—let alone who aired them
or how the advertisements connect to these defendants.”). These facts do not
support the “content of the misrepresentation, [or] the method by which the
misrepresentation was communicated to the plaintiff.” Windy City Metal., 536

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F.3d at 669 (quoting Gen. Elec. Capital Corp., 128 F.3d at 1078); See also Wivell,
773 F.3d at 898. Rule 9(b) requires plaintiffs to engage in deeper investigating
prior to filing suit to combat the inherently prejudicial and reputation damaging
effects of a fraud based lawsuit on a business. See Camasta, 761 F.3d at 737
(quoting Ackerman v. Northwestern Mutual Life Ins. Co., 172 F.3d 467, 469 (7th
Cir. 1999)) (“One of the purposes of the particularity and specificity required
under Rule 9(b) is ‘to force the plaintiff to do more than the usual investigation
before filing his complaint.’”). Holt’s allegations do not show any signs of pre-trial
investigation and enhanced particularly. Accordingly, Holt’s pleading fails the Rule
9(b) requirements.
C. Failure to State a Claim
1. ICFA Claims
The Illinois Consumer Fraud Act intends to “to protect consumers,
borrowers, and business persons against fraud, unfair methods of competition,
and other unfair and deceptive business practices.” Camasta, 761 F.3d at 737.
The statute is “liberally construed to effectuate its purpose.” Wigod v. Wells Fargo

Bank, N.A., 673 F.3d 547, 574 (7th Cir. 2012) (quoting Robinson, 775 N.E.2d
951, 960). In order to state a claim under the ICFA, a plaintiff must show: “(1) a
deceptive act or practice by [defendant]; (2) that the act or practice occurred in
the course of conduct involving trade or commerce; (3) that [defendant] intended
[plaintiffs] and the members of the class to rely on the deception; and (4) that
actual damages were proximately caused by the deception.” Oshana v. Coca-Cola

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Co., 472 F.3d 506, 513–14 (7th Cir. 2006) (“In other words, a damages claim
under the ICFA requires that the plaintiff was deceived in some manner and
damaged by the deception.”). Under the ICFA, the element of actual damages
“requires that the plaintiff suffer actual pecuniary loss.” Kim v. Carter’s Inc., 598
F.3d 362, 365 (7th Cir. 2010). For example, in the case where an individual
customer brings an ICFA action against a corporation “actual loss may occur if
the seller’s deception deprives the plaintiff of ‘the benefit of her bargain’ by
causing her to pay ‘more than the actual value of the property.’” Id. (citing

Mulligan v. QVC, Inc., 888 N.E.2d 1190, 1197 (Ill. 2008)).
In this case, Haywood states that MEF’s gift card receipt and national
website did not adequately disclose the actual hands-on time of the massage,
causing customers to believe the hands-on session would constitute a full hour
when it really only lasted 50 minutes. Doc. 20 at ¶¶ 152–59. To satisfy the first
element of the ICFA, such practices must be considered deceptive or unfair under
the statute. Baston v. Live Nation Entertainment, Inc., 746 F.3d 827 (7th Cir.
2014) (holding that including a parking fee with the concert ticket did not violate
ICFA because it was not a deceptive or unfair business practice). Haywood’s
amended complaint concedes that the gift card receipt does include the language,
“Session includes massage or facial and time for consultation and dressing,” (Doc.
20 at ¶ 121), and that MEF did provide a disclaimer on their website indicating
the actual hands-on time of the massage, (Doc. 20 at ¶ 20), all of which suggest
curative measures against deception. However, she believes the warnings to be

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ineffective at overcoming the misrepresentation that the actual hands-on time
would be an hour, and the Court could agree that these acts at least constitute
unethical practices, and therefore unfair practices under the ICFA.
Even if the Court agrees with plaintiffs that MEF committed deceptive and
unfair practices by acting unethical in its representation of the length of the
massage sessions, Haywood’s claim would still need to show that she suffered
“actual pecuniary loss,” and this is where Haywood’s amended complaint falls
short. In her amended complaint, Haywood states that her daughter bought the
$75 gift card for the massage. (Doc. 20 at ¶ 119). Therefore, Haywood did not
spend any money on her first massage and cannot claim any actual pecuniary loss
resulting from MEF’s actions. Also, her second massage visit cannot obtain relief
under ICFA because she knew the massage would last only 50 minutes. Oshana,
472 F.3d at 514 (citing Oliverira v. Amoco Oil Co., 776 N.E.2d 151, 164 (Ill.
2002) (“those who ‘knew the truth’ do not have valid ICFA claims because they
cannot claim to have been deceived.”).
But for the sake of argument, assume that Haywood was the original
purchaser of the massages. Haywood does not allege that the price she paid for
the massage was more than a 50 minute massage is worth. The Seventh Circuit
has routinely rejected plaintiffs’ arguments that fail to show either that the
product was “defective or worth less than what they actually paid.” Kim v. Carter’s

Inc., 598 F.3d 362, 365 (7th Cir. 2010) (finding that plaintiffs did not suffered
actual pecuniary harm because the clothes were priced at their value even if there

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were misleading); Mulligan v. QVC, Inc., 888 N.E.2d 1190, 1197 (Ill. 2008)
(same); Camasta, 761 F.3d at 739–40 (same); Baston, 746 F.3d at 833 (same).
Secondly, these cases also state that plaintiffs must allege that, but for the
deception, they could have searched around and found a better price in the
marketplace. Id. In her amended complaint, Haywood provided Massage Luxe, a
competitor company, one-hour introductory massage rate as $48, after showing
that its one-hour massage also only lasts 50 minutes. (Doc. 20 at ¶ 86). An
introductory one-hour massage at MEF locations cost $50. (Doc. 20 at ¶ 17).
Therefore,

Haywood’s

amended

complaint

indicates

that

other

massage

companies provided similar 50 minute massages at similar prices, showing that a
50 minute massage has the value of roughly $50, which is what she paid, and that
she could not have found better price in the marketplace. Moreover, Haywood’s
claims cannot survive a but-for analysis of causation. MEF’s misrepresentation of
the actual hands-on time of the massage did not cause Haywood to receive a
lesser valued product or induce her to purchase a MEF franchise massage over
other competitors. For example, in Siegel v. Shell Oil Company, the Seventh
Circuit determined that no ICFA violation took place because “Siegel cannot show
that the defendants’ conduct caused him to purchase their gasoline, because
many factors contributed to Siegel’s gasoline purchasing decision; his claim that
the defendants’ conduct caused him to purchase their gasoline at ‘artificially
inflated prices’ is therefore undermined.”). 612 F.3d at 937. Obviously, Haywood
received a massage at a MEF franchise because it was a gift from her daughter,

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not because of any action on the part of MEF. Haywood may have had an
expectation of a full 60 minutes hands-on massage created by MEF, but her
disappointment does not rise to the level of actual damages under the ICFA.
Therefore, Haywood has not alleged any actual pecuniary loss entitling her to
relief under the ICFA and her claim must be dismissed for failure to state an ICFA
violation.
2. MMPA Claims
Even if plaintiff Holt had adequately pleaded MMPA allegations under Rule
9(b), her claims would still constitute a failure to state a claim under FRCP
12(b)(6). Like the ICFA, the MMPA was created to protect consumers and “to
preserve

fundamental

honesty,

fair

play,

and

right

dealings

in

public

transactions.” Scott v. Blue Springs Ford Sales, Inc., 215 S.W.3d 145, 160 (Mo.
Ct. App. 2006). The Missouri statute condemns “deception, fraud, false pretense,
false

promise,

misrepresentation,

unfair

practice

or

the

concealment,

suppression, or omission of any material fact in connection with the sale or
advertisement of any merchandise in trade or commerce” as unlawful practices.
MO. REV. STAT. § 407.020.1 (2010). The MMPA contains four elements: plaintiff
“(1) purchased or leased [merchandise] from [Defendant]; (2) for personal, family,
or household purposes; and (3) suffered an ascertainable loss of money or
property [4] as a result of an act declared unlawful by section 407.020.” Claxton v.

Kum & Go, L.C., No. 6:14–cv–03385–MDH, 2014 WL 6685816 at *5 (W.D.Mo.
Nov. 26, 2014) (citing Ward v. W. Cnty. Motor Co., 403 S.W.3d 82, 84 (Mo.

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2013)). Defendants clarify in its response that MEF is a franchisor company that
profits from the licensing and royalties of individual franchisees, and does not
provide any massage services itself. (Doc. 28 at 2). Therefore, Holt fails the first
element under the MMPA because Holt cannot claim that she purchased anything
from MEF. Holt instead alleges that she purchased the massage or “merchandise”
from the individual Oakville franchise. (Doc. 20 at ¶ 133). Further, Holt does not
allege any “ascertainable loss of money or property” which is required to show
actual damage under the MMPA. MO. REV. STAT. § 407.025(1); see also Schriener

v. Quicken Loans, Inc., 774 F.3d 442, 445 (8th Cir. 2014) (holding that
Schriener’s MMPA claim must fail because Quicken Loans never charged him for
the preparation of the deed of trust, and therefore, Schriener “failed to plead an
ascertainable loss of money or property as a result of Quicken Loans's conduct, as
required by the MMPA.”). Furthermore, Holt needs to demonstrate a “causal
connection between the ascertainable loss and the unfair or deceptive
merchandising practice.” Owen v. General Motors Corp., 533 F.3d 913, 922 (8th
Cir. 2008). Here, there is no evidence to suggest that Holt paid more for the
massage than it is worth, and therefore, Holt has not alleged that MEF’s
advertising caused any ascertainable loss of money or property.
Additionally, Holt’s unfair business practices claim fails to state a MMPA
claim as well. Plaintiffs are correct to state that the Missouri Attorney General
promulgated that an unfair practice is (A) either “(1) Offends any public policy as
it has been established by the Constitution, statutes or common law of this state,

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or by the Federal Trade Commission, or its interpretive decisions; or (2) Is
unethical, oppressive or unscrupulous; and (B) Presents a risk of, or causes,
substantial injury to consumers.” MO. CODE REGS. tit. 15, § 60-8.020 (emphasis
added); see Doc. 20 at ¶ 166. Even if the Court accepts plaintiffs’ evidence of the
DMA guidelines showing that MEF’s acted unethically, Holt failed to allege the
second element of “substantial injury to consumers.” See Toben v. Bridgestone

Retail Operations, LLC, 751 F.3d 888, (8th Cir. 2014) (ruling that charging a
“shop supplies fee” did not constitute an unlawful practice or cause substantial
injury to consumers under the MMPA). As stated above, Holt has not alleged that
she received a value that was worth less than what she paid, and therefore, cannot
show the existence of a substantial injury to herself or others. As a result, Holt’s
allegations cannot support a plausible MMPA claim and must be dismissed.
VI.

Conclusion

For the reasons stated above, the Court GRANTS MEF’s motion to dismiss.
The Court DISMISSES with prejudice plaintiffs’ amended complaint. The Court
DIRECTS the Clerk of the Court to enter judgment in favor of defendant and
against plaintiffs.
IT IS SO ORDERED.
Signed this 9th day of June, 2017.

Digitally signed by
Judge David R.
Herndon
Date: 2017.06.09
16:17:08 -05'00'
United States District Judge

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