State consumer fraud action unavailable to nonresident website user

Plaintiff Shaw, a U.S. citizen but resident of London, used Hyatt International Corporation’s website to make a reservation for three nights in the Ararat Park Hyatt in Moscow, Russia. On the website, Hyatt quoted Shaw a rate of $502 USD per night. When checking out of the hotel, however, Shaw was charged some 15% more than the quoted price, allegedly because of an inflated exchange rate Hyatt used to convert between dollars and rubles.

Shaw filed suit against Hyatt in federal court in Chicago, alleging two causes of action under Illinois law: (1) violation of the Illinois Consumer Fraud and Deceptive Business Practices Act 815 ILCS 505/1 et seq. (“ICFA”), and (2) common law unjust enrichment. Hyatt moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6). The court granted the motion and dismissed the complaint.

In dismissing Shaw’s ICFA claim, the court applied the test set forth in the recent Illinois Supreme Court decision of Avery v. State Farm Mut. Auto Ins. Co., 835 N.E.2d 801 (Ill., 2005) which held that a nonresident plaintiff may sue under the ICFA only if the fraudulent transaction occurred “primarily and substantially” within Illinois. In the present case, the court found that:

[T]he overwhelming majority of the circumstances relating to the transaction between Plaintiff and Hyatt concern events outside of Illinois. Even assuming, as the Court must for purposes of a motion to dismiss, that Hyatt’s currency inflation scheme originated in its principal place of business in Illinois, Avery makes clear that this fact alone does not warrant application of the ICFA.

The court went on to dismiss Shaw’s unjust enrichment claim, because the “Terms and Conditions” displayed on the Hyatt website at the time of the reservation were an express agreement between Shaw and Hyatt. Because the specific transaction giving rise to the dispute was governed by an express agreement, the extra-contractual claim for unjust enrichment was unavailable.

Shaw v. Hyatt International Corp. 2005 WL 3088438 (N.D.Ill., November 15, 2005).