A federal court in Michigan recently dismissed fraud claims brought against a provider of cryotherapy chambers for failure to state a cause of action. Live Cryo, LLC v. CryoUSA Import & Sales, LLC, 2017 WL 4098853 (E.D. Mich. Sept. 15, 2017). Live Cryo alleged that it had been fraudulently induced to enter into the parties’ agreement, under which CryoUSA provided cryotherapy chambers to Live Cryo for use at its Michigan locations. Prior to signing the agreement, Live Cryo had received a booklet stating that some CryoUSA locations reached a 25-client-per-day mark fairly quickly, and that CryoUSA’s Dallas location averaged about 50 clients per day. Live Cryo challenged the figures as predictions of its future performance and claimed that there was no factual basis for the prediction that it could service 25 clients per day or that it could replicate the success of the Dallas location. CryoUSA moved to dismiss on the grounds that the fraud claims were fatally deficient.
The court agreed that Live Cryo failed to state viable fraud claims. First, the court held that the fraud claims were deficient because Live Cryo engaged in impermissible “group pleading” and failed to specify the CryoUSA employees allegedly responsible for the misrepresentations and which statements they made. Second, the court held that to the extent that Live Cryo interpreted the figures as estimates of future profits, they were forward-looking projections, not statements of past or present facts, and thus were not actionable as fraud. Third, the court held that Live Cryo could not show reasonable reliance on any of the alleged misrepresentations because in signing the parties’ written agreement it had agreed that no such promises had been made. Accordingly, the court dismissed the fraud claims with prejudice.