Karila v. EF Educ. First Int'l

• Decision Date: 03 March 2022
• Docket Number: 21-cv-10643-DJC
• Court: U.S. District Court — District of Massachusetts
• Parties: KRISTINE KARILA on behalf of herself and all others similarly situated, Plaintiffs, v. EF EDUCATION FIRST INTERNATIONAL, LTD., AND GO AHEAD VACATIONS, INC., Defendants.

KRISTINE KARILA on behalf of herself and all others similarly situated, Plaintiffs,
v.
EF EDUCATION FIRST INTERNATIONAL, LTD., AND GO AHEAD VACATIONS, INC., Defendants.

No. 21-cv-10643-DJC

United States District Court, D. Massachusetts

March 3, 2022

MEMORANDUM AND ORDER

Denise J. Casper, United States District Judge

I. Introduction

Plaintiff Kristine Karila (“Karila”), on behalf of herself and a purported class of similarly situated individuals (collectively, “Plaintiffs”), has filed this lawsuit against Defendants EF Education First International, Ltd. (“EF International”) and Go Ahead Vacations, Inc. (“Go Ahead”) (collectively, “Defendants”), alleging violations of Mass. Gen. L. c. 93A. D. 1. Defendants have moved to dismiss. D. 17. For the reasons stated below, the Court DENIES the motion in part and ALLOWS it in part.

II. Standard of Review

On a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6), the Court must determine if the facts alleged “plausibly narrate a claim

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for relief.” Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012) (citation omitted). Reading the complaint “as a whole, ” the Court must conduct a two-step, context-specific inquiry. García-Catalán v. United States, 734 F.3d 100, 103 (1st Cir. 2013). First, the Court must perform a close reading of the claim to distinguish the factual allegations from the conclusory legal allegations contained therein. Id. Factual allegations must be accepted as true, while conclusory legal conclusions are not entitled credit. Id. Second, the Court must determine whether the factual allegations present a “reasonable inference that the defendant is liable for the conduct alleged.” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (citation omitted). In sum, the complaint must provide sufficient factual allegations for the Court to find the claim “plausible on its face.” García-Catalán, 734 F.3d at 103 (citation omitted).

III. Factual Background

The following summary is based upon the allegations in the complaint, D. 1, and are accepted as true for the purposes of resolving the motion to dismiss, D. 17. EF International is a Swiss corporation that operates tours in the United States and abroad. D. 1 ¶¶ 1, 5. Go Ahead is a U.S. company that markets and sells EF International tours. Id. ¶¶ 6, 11-12. Defendants are affiliated entities in EF Education First, a global education company based in the U.S. that provides language, academic, cultural exchange and educational travel programs. Id. ¶ 7.

On November 29, 2019, Karila paid Defendants a $300 deposit (the “Deposit”) to reserve a tour of Portugal, Spain and Morocco, which was scheduled for April 3-18, 2020 (the “April Trip”). Id. ¶ 30. After making two additional installment payments, Karila paid the remaining balance of the $3, 799 total cost of the trip on January 17, 2020. Id. Subsequently, Defendants canceled the April Trip because it was undersubscribed. Id. ¶ 33. Karila opted to join a trip with the same itinerary as the April Trip which was scheduled to depart on May 15, 2020 (the “May

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Trip”). Id. On March 27, 2020, Go Ahead postponed the May Trip indefinitely due to the COVID-19 pandemic. Id. Defendants provided Karila four options but did not offer the choice of a full refund. Id. ¶ 34. In an exchange of emails between Defendants and Karila, Defendants refused to give Karila a full refund and instead offered a refund less the $300 Deposit. Id. Defendants also declined to provide Karila a partial refund with the option to apply the Deposit to the cost of future travel. Id. Ultimately, Karila accepted a refund less her Deposit. Id. ¶ 36.

In a letter to Defendants dated January 8, 2021, Karila sought relief pursuant to Mass. Gen. L. c. 93A on behalf of herself and purported class members (the “Demand Letter”). Id. ¶ 38; D. 1-1. Karila demanded that Defendants: (1) offer each purported class member the three options required by 940 C.M.R § 15.06, including the options of a full or partial refund; (2) provide all requested refunds within thirty days from when the client elects to receive a refund; and (3) within thirty days of election, pay $25.00 in Chapter 93A statutory damages to each purported class member who elects to receive a substitute travel service valued at or below the cost of the canceled trip. D. 1 ¶ 39; D. 1-1 at 6-7. Defendants responded to the Demand Letter on February 5, 2021, stating that they would not adhere to Karila's demands. Id. ¶ 39; D. 1-2. Defendants argued that the terms of the travel contract provided that when a tour is postponed, modified or cancelled due to public health concerns, quarantine or restrictions imposed by the government, customers are entitled to a voucher for future travel, less non-refundable fees. Id. ¶ 40; D. 1-2.

IV. Procedural History

Karila instituted this action on April 16, 2021. D. 1. Defendants have now moved to dismiss the complaint. D. 17. The Court heard the parties on the pending motion and took the matter under advisement. D. 31.

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V. Discussion

A. Chapter 93A

“Chapter 93A . . . is a broad consumer protection statute that provides a private cause of action for a consumer who ‘has been injured,' . . . by ‘unfair or deceptive acts or practices in the conduct of any trade or commerce.'” Shaulis v. Nordstrom, Inc., 865 F.3d 1, 6 (1st Cir. 2017) (quoting Mass. Gen. L. c. 93A §§ 9(1), 2(a)) (internal citations omitted). Although Chapter 93A “does not define what acts and practices are unfair or deceptive, § 2(c) of [Chapter] 93A specifically authorizes the Attorney General to promulgate regulations making these determinations.” Casavant v. Norwegian Cruise Line, Ltd., 76 Mass.App.Ct. 73, 76 (2009) (citing Purity Supreme, Inc. v. Attorney Gen., 380 Mass. 762, 775 (1980)), aff'd, 460 Mass. 500 (2011); see McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 775 F.3d 109, 116 (1st Cir. 2014).

1. 940 C.M.R § 15.06

Karila claims that Defendants violated Chapter 93A by failing to comply with 940 C.M.R. § 15.06 when it cancelled the May Trip and did not offer a full refund. D. 1 ¶¶ 53-54. § 15.06 requires that where “a seller of travel services is acting as a tour operator, and the seller fails to provide any of the travel services that a consumer has purchased directly or indirectly, ” the seller must offer the consumer their choice of (1) “cash [in] an amount equal to the fair market retail value of any undelivered, purchased travel service, ” (2) “specifically identified substitution travel service of equal or greater fair market retail value for any undelivered, purchased travel service” or (3) “specifically identified substitute travel service of lower fair market retail value for any undelivered, purchased travel service, and refund to the consumer in cash an amount equal to the difference in the fair market retail prices of the purchased and the substitute travel services.”

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940 C.M.R. § 15.06. A violation of § 15.06 is “an unfair or deceptive act or practice.” 940 C.M.R. § 15.01(1).

Defendants argue that to satisfy the first element of a Chapter 93A claim, however, Karila must allege more than a violation of § 15.06. D. 18 at 18-22. The Court disagrees. The SJC has held that “the [A]ttorney [G]eneral may make rules and regulations interpreting the provisions of [Chapter 93A]” and that 940 C.M.R. § 15.00, “defines and outlaws certain unfair or deceptive business practices in the sale of travel services to the public.” Casavant v. Norwegian Cruise Line Ltd., 460 Mass. 500, 503-04 (2011) (internal citations omitted). Where, as here, a regulation establishes per se unfair or deceptive acts or practices, a plaintiff need not make an additional showing of unfairness or deceptiveness aside from evidence of the violation itself. See Cranmore v. Wells Fargo Bank, N.A., 410 F.Supp.3d 336, 341-42 (D. Mass. 2019) (rejecting defendants' argument that a Chapter 93A claim requires more than an allegation that conduct violated 209 C.M.R. § 18.22(1) because a violation of the regulation “is per se ‘an unfair or deceptive act or practice' under Chapter 93A”). Thus, when regulations define such unfair or deceptive acts or practices, evidence showing “violations [of the Attorney General's Regulations] qualify as unfair or deceptive acts” as a matter of law. Casavant, 460 Mass. at 504 (reversing trial judge's holding that no Chapter 93A violation occurred when evidence at trial showed regulatory violation and remanding for determination of damages); see Hebert v. Vantage Travel Service, Inc., No. 17-cv-10922-DJC, 2021 WL 2516076, at *3 (D. Mass. June 18, 2021) (discussing and distinguishing Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 165, 174 (2013) from McDermott, 775 F.3d at 120-22 and concluding that although both cases barred “per se Chapter 93 liability, ” neither addressed “whether regulations could define acts or practices as per se unfair or deceptive”).

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Even where violating a regulation is a per se unfair or deceptive, however, a plaintiff must still satisfy the other elements of the Chapter 93A claim. See Barron v. NCMIC Ins. Co., No. 17-cv-11969-ADB, 2018 WL 2089357, at *5 (D. Mass. May 4, 2018) (explaining that “[v]iolations of state regulations that constitute per se unfair or deceptive practices under Chapter 93A do not, without more, establish injury under Chapter 93A” (citing Hershenow v. Enterprise Rent-A-Car Co. of Boston, Inc., 445 Mass. 790, 798-99 (2006))); see also Ferreira v. Sterling Jewelers, Inc., 130 F.Supp.3d 471, 478 (D. Mass. 2015) (noting that a plaintiff must prove regulatory violation plus injury caused by the unfair or deceptive act); Tyler v. Michaels Stores, Inc., 464 Mass. 492, 503 (2013) (concluding that “violation of the legal right that has created the unfair or deceptive act or practice must cause the consumer some kind of separate,...