The Ninth Circuit recently addressed once again the common practice in outlet stores and other retail establishments of juxtaposing the price at which a fashion item is offered for sale with a higher price advertised as a former price, or as the supposed market value, of that item. Chowning v. Kohl’s Dep’t Stores, 2018 WL 3016908, (9th Cir. 2018). The most recent previous Ninth Circuit decisions addressing discount price advertising concerned the adequacy of pleadings at the motion to dismiss stage, and thus had limited relevance to the merits of those cases or their ultimate outcomes.
The Kohl’s decision is of potentially greater significance. In Kohl’s, the panel affirmed the district court’s grant of partial summary judgment in favor of defendant, finding that plaintiff was not entitled to restitution under California law for allegedly being tricked into thinking she was purchasing items at a substantial discount. In doing so, the court construed California consumer protection laws in a way that potentially significantly limits the ability of plaintiffs to recover any money in cases involving allegedly false or fraudulent discount price advertising.
Plaintiff, who asserted claims under the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA), alleged that Kohl’s displayed two prices on goods for sale in its store: the “Actual Retail Price,” and a significantly lower price reflecting what Kohl’s charges consumers for the item. According to the complaint, the Actual Retail Prices did not reflect prevailing market retail prices and were therefore fraudulent, deceiving the plaintiff into believing she was purchasing the products at a discounted price.
Judge Gary Klausner of the Central District of California had granted Kohl’s motion for summary judgment as to the plaintiff’s monetary claims for restitution. In affirming, the Ninth Circuit held that under the UCL, FAL and CLRA, restitutionary damages are calculated by the difference between the price paid and the value received. Although plaintiff alleged that the Actual Retail Prices were deceptive, she did not introduce competent evidence of how much value she received for the items she purchased. Thus, the Ninth Circuit agreed with the district court that because there was no evidence of the value of the goods purchased, the restitution calculation was “impossible,” which entitled Kohl’s to summary judgment.
The Ninth Circuit’s decision was designated Not for Publication, and thus it does not have precedential value. However, it likely will put a damper on damages claims under California law based on allegations of deceptive discount price advertising, as it signals that the Ninth Circuit is receptive to the holdings of other courts that previously reached the same result in precedential opinions. We recently covered some of those decisions here. Watch this space for further developments.
Want to talk advertising? We welcome your questions, ideas, and thoughts on our posts. Email or call us at email@example.com /212-969-3240 or firstname.lastname@example.org /212-969-3671. We are editors of Proskauer on Advertising Law and partners in Proskauer’s False Advertising & Trademark practice.