Shaw, Britt A. v. Hyatt Int'l Corp ( 2006 )


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  •                              In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________
    No. 05-4625
    BRITT A. SHAW, on behalf of himself
    and all others similarly situated,
    Plaintiff-Appellant,
    v.
    HYATT INTERNATIONAL CORPORATION,
    Defendant-Appellee.
    ____________
    Appeal from the United States District Court
    for the Northern District of Illinois, Eastern Division.
    No. 05 C 5022—Harry D. Leinenweber, Judge.
    ____________
    ARGUED JUNE 8, 2006—DECIDED AUGUST 29, 2006
    ____________
    Before EASTERBROOK, ROVNER, and EVANS, Circuit
    Judges.
    ROVNER, Circuit Judge. This case arises out of a hotel
    reservation made through the Hyatt International Corpora-
    tion website “Hyatt.com,” by Britt Shaw, an American
    citizen, from his residence in London, England, for a hotel
    stay in Moscow, Russia. Shaw used that Hyatt website
    to reserve a room at the Ararat Park Hyatt Moscow.
    Although the hotel in Moscow for which the reservation was
    made carries the Hyatt name, Shaw avers that it is
    a separate entity not owned by Hyatt, and in fact Shaw
    2                                               No. 05-4625
    does not claim that the Moscow hotel engaged in any
    wrongdoing; his lawsuit is solely against Hyatt.
    The Hyatt website established a nightly hotel room rate
    for the Ararat Park Hyatt Moscow of $502.00. The web-
    site contained a currency converter to obtain a quote in
    other currencies, but cautioned that the conversion repre-
    sented an approximate price based on the recent exchange
    rates, and that “the price paid at the time of hotel checkout
    will be of the currency initially quoted and displayed.”
    Russian rubles were not included as an option in the
    currency conversion. The website further specified the
    terms and conditions governing the use of the site, includ-
    ing that any disputes arising out of or related to the use of
    the website would be governed by Illinois law.
    Shaw reserved the room through the website, and stayed
    at the hotel for three nights. Upon checkout, his bill was
    provided in Russian rubles. Shaw paid the bill using his
    American Express card, which charged him a total of
    $ 3182.33 for the room, value added tax, and other ameni-
    ties. Shaw’s hotel bill reflected a hotel exchange rate of 32
    Russian rubles per United States dollar, whereas the
    official exchange rate set by the Central Bank of Russia on
    the date of check-out was 28.01 Russian rubles per dollar.
    The result was that Shaw paid approximately 14% more for
    his room in U.S. dollars than the rate promised by
    the website. Accordingly, he pursued this class action
    in Illinois court against Hyatt on behalf of himself and
    all others similarly situated, alleging unjust enrichment
    and violation of the Illinois Consumer Fraud and Deceptive
    Business Practices Act, 815 ILCS 505/1 et seq. (“Consumer
    Fraud Act”). Shaw did not allege breach of contract, main-
    taining throughout the proceedings that there is no contract
    between himself and Hyatt. Hyatt removed the case to
    federal court.
    The district court granted Hyatt’s motion to dismiss both
    claims. With respect to the consumer fraud claim, the court
    No. 05-4625                                                 3
    noted initially that a non-resident plaintiff may sue under
    the Consumer Fraud Act only if the fraudulent transaction
    occurred “primarily and substantially” within Illinois. See
    Avery v. State Farm Mutual Auto. Ins. Co., 
    835 N.E.2d 801
    ,
    853-54 (Ill. 2005). Applying that standard, the district court
    concluded as a matter of law that the allegations failed to
    establish the requisite nexus with Illinois, and therefore
    that there was no basis for the application of the Consumer
    Fraud Act to the hotel transaction. In addition, the court
    dismissed the unjust enrichment claim, holding that the
    claim arose out of an express contract between Hyatt and
    Shaw, and therefore the doctrine of unjust enrichment was
    inapplicable. In concluding that there was an express
    contract, the district court noted that a specific transaction
    was entered into between the parties and that Shaw relied
    on the details of that transaction for his lawsuit, including
    the price of the room, the currency in which it was to be
    charged, and even the website’s terms and conditions of the
    transaction such as its choice of law provision.
    The district court properly noted that Illinois courts
    have interpreted the Consumer Fraud Act as providing
    a cause of action for non-residents only if the “circum-
    stances that relate to the disputed transaction occur
    primarily and substantially in Illinois.” Avery, 
    835 N.E.2d at 853-54
    . The “disputed transaction” at issue is the
    material misrepresentation made by Hyatt on its website as
    to the rate for the room and the currency in which the room
    would be charged, designed to lure potential guests into
    making a reservation. On initial impression, there would
    appear to be little connection between the legislature’s
    desire to protect against frauds perpetrated in Illinois, and
    a reservation made on the internet from London for a hotel
    room in Moscow. The nexus is not, however, non-existent.
    Hyatt is a Delaware corporation with its principal place of
    business in Chicago, Illinois. Shaw alleges that its corporate
    headquarters are located in Illinois and it operates its
    4                                               No. 05-4625
    website out of Chicago, and the representations on that
    website are the basis for the suit. Specifically, the website
    offered the room at the Moscow hotel for the price of
    $ 502.00 per night, and declared that the charge for the
    hotel room would be made in the currency initially
    offered—which for Shaw’s reservation was U.S. dollars. The
    Hyatt website further provided that Illinois law governs all
    disputes arising out of its website, that exclusive jurisdic-
    tion for any claim or action arising out of the website shall
    be in Illinois, and that the customer agrees to submit to the
    exercise of personal jurisdiction in Illinois courts for such
    claims. Whether the above circumstances are enough to
    establish that the dispute occurred primarily and substan-
    tially in Illinois rather than London, Moscow or elsewhere
    is a question we need not decide, because the district court
    properly held that there was an express contract between
    Shaw and Hyatt, and that ultimately resolves both of his
    claims.
    In Avery v. State Farm Mutual Auto. Ins. Co., 
    835 N.E.2d 801
    , 844 (Ill. 2005), the Illinois Supreme Court rejected
    efforts by the plaintiff to enforce contractual promises
    through a consumer fraud action, holding that “[a] breach
    of contractual promise, without more, is not actionable
    under the Consumer Fraud Act.” Quoting Zankle v. Queen
    Anne Landscaping, 
    724 N.E.2d 988
    , 992-93 (Ill. App. 2 Dist.
    2000), the court explained:
    What plaintiff calls “consumer fraud” or “deception” is
    simply defendants’ failure to fulfill their contractual
    obligations. Were our courts to accept plaintiff’s asser-
    tion that promises that go unfulfilled are actionable
    under the Consumer Fraud Act, consumer plaintiffs
    could convert any suit for breach of contract into a
    consumer fraud action. However, it is settled that the
    Consumer Fraud Act was not intended to apply to every
    contract dispute or to supplement every breach of
    contract claim with a redundant remedy. [citation
    No. 05-4625                                                  5
    omitted] We believe that a “deceptive act or practice”
    involves more than the mere fact that a defendant
    promised something and then failed to do it. That type
    of “misrepresentation” occurs every time a defendant
    breaches a contract.
    Avery, 
    835 N.E.2d at 844
    ; Zankle, 
    724 N.E.2d at 993-93
    ;
    Sklodowski v. Countrywide Home Loans, Inc., 
    832 N.E.2d 189
    , 196-97 (Ill. App. 1 Dist. 2005); Pappas v. Pella Corp.,
    
    844 N.E.2d 995
    , 999-1000 (Ill. App. 1 Dist. 2006). This
    principle has been consistently applied by Illinois courts
    in myriad circumstances. For instance, the Avery court
    relied on that principle in holding that the failure to ful-
    fill promises contained in State Farm’s insurance policies
    could not form the basis for a consumer fraud action.
    Accordingly, the court held as a matter of law that the
    consumer fraud claim in Avery could not be based on the
    assertion that State Farm breached its promise to restore
    the vehicles to their pre-loss conditions, nor could it rest on
    the promise to repair vehicles using parts of “like kind and
    quality,” both of which claims were based on policy lan-
    guage. 
    Id.
     The Avery court therefore considered only
    the claims that were not based on the policy language
    in assessing the consumer fraud claim. Similarly, in Zankle,
    the court held that allegations that landscapers failed to
    fulfill the terms of the landscaping contract— including
    false representations as to when they would complete the
    project, that they would fertilize the lawn twice, and that
    they would utilize a rock picker to remove rocks—were
    actionable only as a breach of contract and could not
    support a consumer fraud claim. 
    724 N.E.2d at 992-93
    . See
    also Sklodowski, 
    832 N.E.2d at 196-97
     (challenge to 14-day
    delay in refunding mortgage escrow could not be brought as
    a consumer fraud action, because it was based on the
    provision in the mortgage requiring “prompt” refund and
    was simply an allegation that Countrywide failed to fulfill
    its contractual obligation); Kindernay v. Hillsboro Area
    6                                               No. 05-4625
    Hospital, 
    851 N.E.2d 866
     (Ill. App. 5 Dist. 2006) (allegation
    that the defendant failed to properly administer the
    Department of Transportation drug test constituted a
    breach of contract claim and was not actionable under the
    Consumer Fraud Act).
    Shaw’s consumer fraud claim similarly seeks to enforce
    an unfulfilled contractual promise. Although Shaw argues
    that he had no contract with Hyatt, that is unfounded.
    Shaw’s claim is based entirely on the promise made by
    the Hyatt website that the cost of the room would be
    $502.00 in U.S. currency. Shaw accepted that offer by
    reserving his room through the website, thereby locking
    in that rate for the room. The “deception” that he now
    claims is nothing more than the failure to fulfill that
    promise as to the ultimate rate for the room. That is true as
    well of his claim that the website deceived him and other
    customers by providing that the charge would be in U.S.
    dollars, when it knew that the Moscow hotel would charge
    clients in rubles. The Hyatt statement appears when the
    customer selects the currency conversion option, and relates
    to the rate being offered by the website. The currency
    converter specifies that it is an approximation based on
    current exchange rates, and that the price paid at the time
    of hotel checkout would be of the currency actually quoted.
    Again, this is a promise as to the price that Shaw must pay
    for the room. Rather than promising that the hotel would
    bill the room in dollars rather than rubles, it promises that
    the price he pays for the room will be in the dollar amount
    originally quoted. If he were charged in rubles but the price
    paid in dollars amounted to $502.00, it is difficult to see
    how this provision would have been violated. Even assum-
    ing, however, that this provision guarantees that the hotel
    will charge him in dollars rather than rubles, that is again
    an express contractual promise that was unfulfilled, and is
    properly maintained as a breach of contract action. Shaw’s
    consumer fraud argument thus relies exclusively on the
    No. 05-4625                                                  7
    express promises made by the Hyatt website, which he
    accepted by booking on its site, and therefore is based
    entirely on the breach of that contract. Similarly, Shaw fails
    to present a claim for unjust enrichment, because that is
    unavailable where the claim rests on the breach of an
    express contract. Guinn v. Hoskins Chevrolet, 
    836 N.E.2d 681
    , 704 (Ill. App. 2005) (the doctrine of unjust enrichment
    has no application where a specific contract governs the
    relationship of the parties). Shaw failed to pursue a breach
    of contract action, explicitly disavowing it to this court, and
    therefore the district court properly granted Hyatt’s motion
    to dismiss the complaint for failure to state a claim under
    Fed. R. Civ. P. 12(b)(6). The decision of the district court is
    AFFIRMED.
    A true Copy:
    Teste:
    ________________________________
    Clerk of the United States Court of
    Appeals for the Seventh Circuit
    USCA-02-C-0072—8-29-06