In the
United States Court of Appeals
For the Seventh Circuit
Nos. 09-2169 & 09-2186
S U Y EUN K IM , on behalf of herself
and all others similarly situated, and
G INA P OLUBINSKI, on behalf of herself
and all others similarly situated,
Plaintiffs-Appellants,
v.
C ARTER’S INC.,
Defendant-Appellee.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
Nos. 09 C 706 & 08 C 5547—Virginia M. Kendall, Judge.
A RGUED D ECEMBER 2, 2009—D ECIDED M ARCH 15, 2010
Before B AUER, K ANNE, and T INDER, Circuit Judges.
T INDER, Circuit Judge. Our consumer culture thrives
on hunting for the best deal. Wise to this fact, retailers
try to lure customers with advertised sales that promise
huge savings off the regular price. But the promised
savings are false if a store simply recasts its regular price
2 Nos. 09-2169 & 09-2186
as a discount off some higher, made-up, “suggested”
price that no one ever pays. Plaintiffs Su Yeun Kim
and Gina Polubinski claim that they were the victims of
such deceptive pricing by Carter’s, Inc., a children’s
clothing retailer, and have sued Carter’s for damages
under Illinois contract and consumer protection law.
(Kim and Polubinski actually filed two separate but
substantially identical complaints against Carter’s, so
we, like the district court, take up their cases together.)
The district court dismissed the plaintiffs’ complaint for
failure to state a claim, and in this appeal, we accept as
true the following facts alleged in the complaint. Sharp
Elecs. Corp. v. Metro. Life Ins. Co., 578 F.3d 505, 510 (7th
Cir. 2009).
Between June 2005 and March 2008, the plaintiffs pur-
chased children’s clothing from several Carter’s retail
outlets located in Illinois. The clothing had price tags
listing a “Carter’s Suggested Price,” but Carter’s fre-
quently displayed signs in its stores advertising percent
discounts off these suggested prices. For example, for a
child’s T-shirt with a suggested price of $16.00, Carter’s
might display a “30% off” sign next to the item and then
charge a sales price of $11.20 at the register. Through
these advertised percent-off savings, Carter’s led cos-
tumers to believe that they were getting a great deal—
30% off the regular price. The promised savings were a
sham, the plaintiffs claim, because the “Suggested
Prices” that Carter’s puts on its price tags are fictitious;
these suggested prices are substantially higher than
what Carter’s products actually sell for on a regular
basis. Ignorant to this reality, the plaintiffs continued
Nos. 09-2169 & 09-2186 3
buying Carter’s products thinking that they were
realizing significant savings.
The plaintiffs apparently caught on to the pricing
scheme and brought a diversity suit against Carter’s (a
Delaware corporation with its principal place of business
in Georgia) on behalf of themselves and a putative class
of similarly situated Carter’s customers. The plaintiffs
claimed that Carter’s practice of comparing actual sales
prices to higher, fictitious “Carter’s Suggested Prices” was
both a breach of contract and a violation of the Illinois
Consumer Fraud and Deceptive Business Practices Act
(“ICFA”), 815 ILCS 505/2. In response, Carter’s passed
over issues of class certification and moved to dismiss
the plaintiffs’ complaint on the merits for failure to
state a claim. The district court granted Carter’s motion
(showing, in retrospect, that class certification might
have been advantageous to Carter’s, as the court’s
existing judgment in favor of Carter’s binds only the
individual plaintiffs Kim and Polubinski). On the contract
claim, the court rejected the plaintiffs’ theory that the
parties’ sales contract required Carter’s to apply the
advertised percent discounts to the actual sales prices of
the clothing, rather than the “Carter’s Suggested Prices”
listed on the price tags. It “strains common sense,” the
court reasoned, to conclude that Carter’s “30% off” signs
meant “30% off an undisclosed ‘actual regular price.’ ” As
for the ICFA claim, the court concluded that the plain-
tiffs failed to allege the “actual damage” required for a
private cause of action under the Act. See 815 ILCS
505/10a(a).
4 Nos. 09-2169 & 09-2186
The plaintiffs appeal, and we review de novo the
district court’s dismissal of their complaint for failure to
state a claim. Sharp Elecs., 578 F.3d at 510.
Beginning with the plaintiffs’ breach of contract claim,
we conclude that Carter’s fulfilled its obligations under
the straightforward, everyday sales contract described in
the complaint. Returning to the same T-shirt example
above, Carter’s advertised the sale of a clothing item at
30% off the $16.00 “Carter’s Suggested Price,” or $11.20.
The plaintiffs selected the clothing and offered to pur-
chase it at the advertised price, at which point Carter’s
accepted by taking the plaintiffs’ money in exchange for
possession of the clothing. See Steinberg v. Chi. Med. Sch.,
371 N.E.2d 634, 639 (Ill. 1977) (describing the contract
formed when a merchant accepts the customer’s offer
to purchase goods at an advertised price). The contract
terms were memorialized in the sales receipt that the
plaintiffs received at the cash register, which recorded
the sale at the agreed price of $11.20. By charging this
agreed price in exchange for ownership of the clothing,
Carter’s gave the plaintiffs the benefit of their bargain.
The plaintiffs protest that Carter’s advertised sale at
30% off an inflated, fictitious “Suggested Price” led them
to believe that they were paying 30% less than what
other consumers usually paid, when in fact they were
simply paying the full, regular price. In an attempt to
realize their expected savings, the plaintiffs suggest that
the contract should be interpreted so as to apply the
advertised 30% discount to the $11.20 sales price that
they actually paid, rather than the $16.00 “Suggested
Nos. 09-2169 & 09-2186 5
Price” listed on the price tag. Under this interpretation,
the contract price is only 70% of $11.20, or $7.84, and
Carter’s breached the contract by charging the plaintiffs
the full $11.20.
The plaintiffs’ interpretation of the contract is unrea-
sonable. Courts interpret contracts with the goal of effec-
tuating the parties’ intent, giving contract terms their
plain and ordinary meaning. Hot Light Brands, L.L.C. v.
Harris Realty Inc., 912 N.E.2d 258, 263 (Ill. App. Ct. 2009).
Here, the parties intended to complete a sale in accord-
ance with the plain terms of Carter’s advertising—a
T-shirt for 30% off the $16.00 “Carter’s Suggested Price”
displayed on the price tag. We agree with the district
court that it “strains common sense” to conclude that
the parties actually intended to apply the advertised
30% discount to some lower, undisclosed, regular price.
The plaintiffs’ interpretation renders meaningless the
$16.00 “Carter’s Suggested Price” term conspicuously
displayed on the clothing’s price tag, resulting in a very
peculiar sales contract that lacks any disclosed price
term. See id. (Courts “will not interpret the agreement in
a way that would nullify provisions or would render
them meaningless.”). The only reasonable interpretation
of this transaction is a contract to purchase clothing for
the advertised price of $11.20. Carter’s fulfilled its ob-
ligations under this contract.
Although Carter’s didn’t breach any contract, its al-
legedly deceptive price comparisons may violate the
Illinois Consumer Fraud and Deceptive Business Practices
Act. The ICFA declares unlawful “[u]nfair methods of
6 Nos. 09-2169 & 09-2186
competition and unfair or deceptive acts or practices . . . in
the conduct of any trade or commerce . . . .” 815 ILCS 505/2.
A deceptive practice violates the ICFA even if it doesn’t
actually deceive or injure anyone, see id., and the Illinois
Attorney General has the power to investigate and
enjoin such a practice without a showing of actual loss,
see id. §§ 505/3-4, /7. A private party, however, must
show “actual damage” in order to maintain an action
under the ICFA. Id. § 505/10a(a).
Here, the plaintiffs have sufficiently alleged an ICFA
violation by Carter’s; regulations promulgated under the
Act specifically identify this type of comparison between
actual and fictitious “suggested retail price[s]” as an
“unfair or deceptive act.” Ill. Admin. Code tit. 14, § 470.250.
The issue in this case is whether the plaintiffs’ ICFA
claim nonetheless fails for lack of actual damages.
The actual damage element of a private ICFA action
requires that the plaintiff suffer “actual pecuniary loss.”
Mulligan v. QVC, Inc., 888 N.E.2d 1190, 1197 (Ill. App. Ct.
2008). In the case of a private ICFA action brought by a
business, the plaintiff may claim actual loss in the form
of lost profits caused by a competitor’s unfair trade
practices. See B. Sanfield, Inc. v. Finlay Fine Jewelry Corp.,
258 F.3d 578, 580-81 (7th Cir. 2001) (finding that the
plaintiff failed to show lost business or other financial
injury from a competitor’s deceptive price comparisons);
Chicago’s Pizza, Inc. v. Chicago’s Pizza Franchise Ltd. USA,
893 N.E.2d 981, 994-95 (Ill. App. Ct. 2008) (involving a
failure to prove that a competitor’s adoption of the plain-
tiff’s trade name and deceptive advertising caused any
Nos. 09-2169 & 09-2186 7
loss of customers or revenues). In the less typical case of
a private ICFA action brought by an individual con-
sumer, actual loss may occur if the seller’s deception
deprives the plaintiff of “the benefit of her bargain” by
causing her to pay “more than the actual value of the
property.” Mulligan, 888 N.E.2d at 1197-98.
Mulligan involved comparative price deception similar
to that alleged here. In that case, QVC listed its actual
sales prices next to substantially higher but allegedly
fictitious “retail values,” creating the false impression
that customers were getting a better deal than they really
were. 888 N.E.2d at 1192-93. A customer lured in by
this comparative pricing sued QVC under the ICFA,
but the Illinois Appellate Court concluded that she had
not suffered actual damages. The plaintiff “agreed to
purchase . . . items for a certain price” and could not
show “that the value of what she received was less than
the value of what she was promised.” Id. at 1197.
We think that this case is substantially similar to Mulli-
gan. The plaintiffs agreed to pay a certain price for
Carter’s clothing, which they do not allege was defective
or worth less than what they actually paid. Nor have
the plaintiffs alleged that, but for Carter’s deception, they
could have shopped around and obtained a better price
in the marketplace. Cf. id. at 1194, 1197 (noting that the
plaintiff’s own evidence showed that QVC’s actual prices
were lower than what the plaintiff would have paid in
the marketplace); DOD Techs. v. Mesirow Ins. Servs., Inc.,
887 N.E.2d 1, 10 (Ill. App. Ct. 2008) (finding no actual
damages where an insured failed to allege “that it would
8 Nos. 09-2169 & 09-2186
have bargained for better insurance prices” had it known
of an insurance broker’s undisclosed commission costs).
Like the plaintiff in Mulligan, and as concluded above
in our discussion of the contract claim, the plaintiffs in
this case got the benefit of their bargain and suffered no
actual pecuniary harm. It follows that the plaintiffs’
allegations fail to establish the actual damages element
of their ICFA claim.
We do note one distinction between this case and
Mulligan. In Mulligan, the plaintiff admitted to her suspi-
cions that QVC’s retail values were much higher than
what people actually paid, allowing the court to rely in
part on the fact that the plaintiff wasn’t actually deceived
by QVC’s pricing scheme. 888 N.E.2d at 1199. By contrast,
the plaintiffs here allegedly didn’t know that Carter’s
rarely if ever sells its clothing at the suggested prices
listed on the price tags. Still, it is not enough that Carter’s
price comparisons deceived the plaintiffs and induced
them to buy Carter’s clothing. See id. at 1197 (“Even if
QVC’s alleged inflated retail values may have induced
Mulligan into altering her purchasing decision because
of the represented bona fide savings, she suffered no
actual pecuniary loss.”). To sustain their private ICFA
action, the plaintiffs must sufficiently allege actual dam-
ages, which, we conclude, they have failed to do.
Carter’s did not breach its sales contract to sell the
plaintiffs clothing at an agreed price, and Carter’s alleged
ICFA violation did not cause the plaintiffs actual damage.
A FFIRMED.
3-15-10