Sunday, November 26, 2023

FYI: 8th Cir Rejects Challenge to Advertised Discounts as "Deceptive"

The U.S. Court of Appeals for the Eighth Circuit recently upheld the dismissal of a putative class action challenging an advertised discount as supposedly deceptive.


In so ruling, the Eighth Circuit held that the named plaintiff's allegations failed to meet the "ascertainable loss" requirement under the Missouri Merchandising Practices Act ("MMPA"). Furthermore, the Court held that an unjust enrichment claim based on the same facts as that of the MMPA claim fails for the same reasons.


A copy of the opinion is available at:  Link to Opinion


A consumer brought a putative class action under the Class Action Fairness Act against a retailer and its wholly-owned subsidiary. The consumer alleged that she purchased numerous products at physical stores and online at discount prices that were deceptively advertised because the defendants allegedly did not sell a substantial quantity of these products at the advertised "regular" prices prior to selling them at the advertised "sale" prices. The consumer sought class-wide compensatory damages under the MMPA, along with the price she paid the defendants under the equitable doctrine of unjust enrichment.


The trial court granted the defendants' motion to dismiss the consumer's amended complaint with prejudice. The consumer timely appealed.


To recover damages under the MMPA, a private plaintiff must 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) as a result of an act declared unlawful under the [MMPA]." Goldsmith v. Lee Enter., Inc., 57 F.4th 608, 615 (8th Cir. 2023).


Furthermore, Missouri courts generally apply the common-law "benefit of the bargain" rule to determine whether an MMPA plaintiff has suffered an ascertainable loss. Vitello v. Natrol, LLC, 50 F.4th 689, 693 (8th Cir. 2022). "The 'benefit of the bargain rule' awards a prevailing party the difference between the value of the product as represented and the actual value of the product as received." Id. The Supreme Court of Missouri adopted the rule in Kendrick v. Ryus, 123 S.W. 937, 939-40 (Mo. 1909).


Therefore, as the consumer had not alleged a deficiency in the quality of the clothing she purchased compared to the quality the retailers' advertising represented, the Eighth Circuit held that the consumer has the right to sue for rescission in a common law fraud action, but there was no ascertainable loss under the MMPA. Goldsmith v. Lee Enter., Inc., 57 F.4th 608, 610 (8th Cir. 2023).


Thus, the Court agreed with the trial court's decision to "join[] a growing number of courts, in finding that complaints based solely on a plaintiff's disappointment over not receiving an advertised discount at the time of purchase has not suffered an ascertainable loss." Robey v. PVH Corp., 495 F. Supp. 3d 311, 321 (S.D.N.Y. 2020).


Regarding the consumer's second cause of action, a claim for unjust enrichment under Missouri law requires the plaintiff to plead and prove three elements, "a benefit conferred by a plaintiff on a defendant; the defendant's appreciation of the fact of that benefit; and the acceptance and retention of the benefit by the defendant in circumstances that would render that retention inequitable." Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 854 (8th Cir. 2014). Only the third element was in dispute here on appeal.


The Eighth Circuit found that the consumer's unjust enrichment claim was based on the same facts as her MMPA claim and that it failed for the same reason -- she received the products she intended to purchase and paid the advertised sale price. "[T]here can be no unjust enrichment if the parties receive what they intended to obtain." Howard v. Turnbull, 316 S.W.3d 431, 436 (Mo. App. 2010). Moreover, the Court concluded that the existence of an express contract precluded a claim of unjust enrichment. Topchian, 760 F.3d at 854. "[A] contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." Dean Mach. Co. v. Union Bank, 106 S.W.3d 510, 520 (Mo. App. 2003).


Accordingly, the Eighth Circuit affirmed the judgment of the trial court and held that the trial court did not err in dismissing the customer's MMPA and unjust enrichment claims.




Ralph T. Wutscher
Maurice Wutscher LLP
20 N. Clark Street, Suite 3300
Chicago, Illinois 60602
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