Syester v. Banta
Iowa Supreme Court
133 N.W.2d 666 (1965)
Syester (plaintiff) was a widow, lived alone, and was in her mid 60s when she began taking dance lessons at Arthur Murray Studio, owned by Mr. Theiss and others (the owners) (defendants) in 1957. The studio offered dance instructions in private studios by dance instructors. The private studios were wired for sound so that the manager of the studio could monitor conversations and provide sales techniques to the instructors. The instructors were provided lessons in and were closely supervised for salesmanship. They were provided an exhaustive set of instructions regarding sales techniques, which included preventing a client from consulting legal or other advice, preventing a client from “thinking it over,” telling a client that she has “natural ability” and other flattery, and using “emotional selling.” Syester purchased lessons in advance in packages that included varying hours of instruction and lifetime memberships to the studio’s weekly dances. For all lesson hours, Syester was charged approximately $10 per hour. Syester was instructed by Carey, with whom she quickly became enamored. Syester was awarded a succession of medals for her dancing—a bronze, silver, and gold—the effect of which was that she purchased higher skill-level dance packages after each medal. Syester was awarded these medals all in one year. The manager of the studio admitted that it typically takes two to four years to earn a bronze medal, five to seven years to earn a silver medal, and approximately 1200 hours of instruction to earn a gold medal. After Syester was awarded the gold medal, the representatives of the studio showed her a video to entice her to buy more classes. They had studied this video 15-20 times to determine what parts of it they should stress to get Syester to purchase more classes. After seeing the video, Syester purchased the Gold Star course, which consisted of an additional 625 hours of instruction with an instructor who was “faking it.” Carey stated that it would have taken only 200 to 400 hours of instruction to teach her to dance at the level at which she was dancing in 1960. By that time, however, Syester had purchase 3425 hours of instructions, which included three lifetime memberships to the weekly dances. According to Carey, she was overcharged for over 3000 hours of instruction, which equals over $20,000. Carey was discharged in 1960. Syester quit the studio shortly thereafter. At that time she had 1750 hours of unused instruction. In 1961, Syester hired counsel and filed a lawsuit against the owners of the studio. The owners offered Carey his job back, as well as other enticements, if he would convince Syester to drop the lawsuit. After Carey and other representatives of the studio visited Syester several times, she dropped her lawsuit. Representatives of the studio also convinced her to discharge her counsel. The owners’ counsel refused to be involved in reaching a settlement agreement with Syester. Syester signed a settlement and release with the owners, and she received a refund of about $6,000 for lessons previously purchased. Syester participated in the studio for approximately two more months. She shortly thereafter quit again, with almost 900 hours of unused lessons outstanding. She filed suit again. She alleged fraud and misrepresentation in connection with the settlement and release and the dismissal of the previous lawsuit. The owners moved for directed verdict. The trial court denied the motion. A jury returned a verdict for Syester in the amount of $14,300 in actual damages and $40,000 in punitive damages. The owners appealed to the Iowa Supreme Court.
Rule of Law
Holding and Reasoning (Snell, J.)
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