Shaw, Britt A. v. Hyatt Int'l Corp

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