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Haywood v. Massage Envy Franchising, LLC

United States District Court, S.D. Illinois

June 9, 2017

KATHY HAYWOOD and LIA HOLT, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
MASSAGE ENVY FRANCHISING, LLC, Defendant.

          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). 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 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 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:

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 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. § 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 F.3d 1344, 1354 (7th Cir. 1995) ...


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