Antitrust Law Daily Wrap Up, ADVERTISING—D. Mass.: Sterling Jewelry shines in gemstone treatment and special care case, (Sep 17, 2015)

By Michael Menzhuber, J.D., LL.M.

A motion to dismiss claims in a putative class action that Sterling Jewelers, Inc., as a result of its failure to provide gemstone treatment and special care disclosures in an appropriate location on its consumer website, violated CPA of the Massachusetts Consumer Protection Act (CPA) and created an unjust enrichment, was granted by the federal district court in Boston. The court dismissed the CPA claim because the purchaser failed to prove a cognizable injury. It dismissed her unjust enrichment claim because, regardless of the likelihood of success, her CPA claim provided her an adequate remedy at law (Ferreira v. Sterling Jewelers, Inc., September 15, 2015, Woodlock, D.).

Background. Emilia Ferreira purchased an emerald charm necklace from the website for Sterling Jeweler’s Inc., doing business as Jared the Galleria of Jewelry. The emerald was described as a “genuine 2 millimeter round emerald”. Although the word “natural” did not appear in the description of the emerald, Ferreira asserted that Sterling’s use of the word “genuine” misrepresented to her that the emerald was “natural”. At the time of purchase, the emerald treatment was discussed in the FAQ section of Sterling’s website. However, the main webpage did not have an emerald treatment disclosure and the FAQ did not inform Ferreira whether the specific emerald in her charm had been treated and did not distinguish between permanent and non-permanent treatments.

Ferreira believed that her emerald was treated with plastic resins and polymers and, therefore, was not a “genuine” gemstone. The experts for Ferreira and Sterling agreed that the emerald was mined from the ground and was treated with a polymer or similar resin that was subject to special care requirements. However, they disagreed whether this treatment was permanent, whether it would require re-treatment, and how the treatment impacted the value of the emerald.

Ferreira contended that: (1) Sterling did not comply with certain FTC regulations which require jewelers to disclose to consumers, at the time and place of purchase, whether a natural gemstone has been subject to treatment; and (2) she was misled by the use of the term “genuine” to believe that her emerald was untreated and, therefore, more valuable. She sought to represent a putative class of similarly situated individuals. However, because no class had yet been certified, only Ferreira’s individual claims under CPA and for unjust enrichment were the subject of the parties’ summary judgment motions.

CPA Claim. The CPA provides a private right of action to individual consumers who have been injured by “unfair or deceptive acts or practices in the conduct of any trade or commerce.” These acts include those that would be unfair or deceptive under § 5(a)(1) of the Federal Trade Commission Act. The court concluded that it was likely that Sterling’s website was not in compliance with FTC regulations because: (1) the treatment of Ferreira’s emerald received created special care requirements; (2) disclosure of the treatment was required; and (3) a treatment or special care disclosure was not provided on the particular webpage that Ferreira visited when she purchased the emerald.

Although the court determined that it was likely that Sterling had engaged in a deceptive act or practice with respect to Ferreira’s purchase of the emerald, it granted Sterling’s motion to dismiss because she failed to prove a cognizable injury.

Ferreira identified three types of injuries she claimed to have suffered from Sterling’s omission or misrepresentation: (1) loss of bargain; (2) unanticipated re-treatment costs; and (3) unanticipated special care requirements. With respect to “loss of bargain”, she argued that Sterling’s failure to disclose that the emerald had been treated caused her to pay a premium price and that she was owed the difference between the price she paid for the charm and the charm’s true value.

The court disagreed because there was insufficient evidence that she was led to believe that she was purchasing something other than what was sold to her. Although she contended that she thought the emerald was “natural” and, therefore, untreated; the word “natural” did appear on Sterling’s website. Her contention that the treated emerald was less valuable than the untreated emerald she believed that she was purchasing was based on a conclusory phrase, taken out of context, which appeared in the Federal Register in a summary of revisions by the FTC to the Jewelry Guides in 2000. The court also found that the parties’ experts’ opinions were speculative and were, therefore, of limited evidentiary significance.

With respect to her claim of unanticipated re-treatment costs, Ferreira offered only some anecdotal evidence supporting the proposition that the treatment of her emerald could degrade and require re-treatment in the future. Also, the court found the testimony of both experts, with respect to issue of degradation and re-treatment in the future, speculative. Finally, the court noted that the evidence in the record defeated Ferreira’s claim for re-treatment costs because: (1) there was no evidence that her emerald had any existing degradation attributable to the treatment that it initially received; and (2) Ferreira indicated that she observed the emerald’s color faded after she used a cleaning method, not recommended by Sterling, to clean it.

The court also disagreed with Ferreira’s assertion that she suffered an injury in the form of a special care requirement that increased her cost of her ownership of the emerald. The court found that, while the parties agreed that special care was required, the special care consisted only of cleaning the emerald with warm, soapy water.

The court also determined that Ferreira was not entitled to her claim of minimum statutory damages based solely on her claim of a per se CPA violation. It noted that: (1) statutory damages cannot substitute for the requirement that a plaintiff prove injury and causation; and (2) Ferreira failed to satisfy her evidentiary burden, with respect to the CPA, as to her asserted loss.

Unjust Enrichment. After noting that Ferreira offered no argument on her unjust enrichment claim, the court determined that her claim under the CPA, regardless of the likelihood of success, was an adequate remedy at law. Because a claim of unjust enrichment is not available to a party with an adequate remedy at law, the court granted Sterling’s motion to dismiss.

The case is No. 13-13165-DPW .

Attorneys: Thomas P. Sobran (Thomas P. Sobran, PC) for Emila S. Ferreira. David G. Thomas (Greenberg Traurig, LLP) for Sterling Jewelers, Inc. d/b/a Jared the Galleria of Jewelry.

Companies: Sterling Jewelers, Inc. d/b/a Jared the Galleria of Jewelry.

Cases: Advertising StateUnfairTradePractices ConsumerProtection MassachusettsNews