Lack of Injury Costs Plaintiffs Their Deceptive Pricing Suit

by Manatt, Phelps & Phillips, LLP
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Manatt, Phelps & Phillips, LLP

Not long after the U.S. Court of Appeals, First Circuit tossed deceptive pricing claims for lack of injury, a California federal court reached a similar result in a putative class action against Ross Stores Inc. for violations of the California Unfair Competition and False Advertising Law.

Patrons of Ross department stores—which claim to offer bargains on a wide variety of items—brought suit over the company’s price tags, which displayed two prices: a sale price and an “advertised reference price.” At the time the complaint was filed in 2015, the reference price was labeled “Compare At.” Ross later changed the designation to “Comparable Value.”

The plaintiffs argued that a reasonable consumer would interpret the advertised reference price to refer to the amount charged for an identical product at a “regular price” department store.

Ross countered that the plaintiffs lacked standing because they failed to demonstrate they suffered any economic injury as a result of their purchases.

Granting the defendant’s motion for summary judgment, U.S. District Court Judge Michael W. Fitzgerald agreed.

“Plaintiffs never relied on Ross’ Comparable Value price tags, and thus lack standing under California law to pursue any claims stemming from Ross’ use of that phrase,” the court said. “Plaintiffs may have met the minimal burden under California law to show that a reasonable consumer would have been deceived by Ross’ use of the term ‘Compare At’ on its price tags. But even so, Plaintiffs fail to show that they suffered economic harm as a result, and their claim for injunctive relief is mooted by Ross’ adoption of the Comparable Value tags.” The phrase “Compare At” is not “obviously false or misleading on its face,” the court noted. It remarked that the plaintiffs offered no evidence from other potential class members about their interpretation of the phrase and relied solely upon their own declarations to support their theory that a reasonable consumer would have been deceived by the term.

Even permitting the plaintiffs leeway on the question of reasonableness, Judge Fitzgerald found they still lacked standing without evidence of economic harm.

“It is not enough to aver vaguely that Plaintiffs were injured by their purchase,” the court wrote, and they neither made an argument nor presented evidence that they were entitled to economic damages. Other than their own declarations, the plaintiffs “have not submitted any other basis from which a jury could conclude that Ross’ pricing scheme caused Plaintiffs economic harm.”

The plaintiffs’ claims for injunctive relief also failed because Ross had already stopped using the “Compare At” language on its price tags, the court added.

To read the order in Jacobo v. Ross Stores Inc., click here.

Why it matters: Could the deceptive pricing litigation trend be coming to an end? After a wave of lawsuits across the country, courts appear to be cracking down on the actions. In addition to the California federal court decision, the First Circuit recently affirmed dismissal of two deceptive pricing actions, similarly concluding that the plaintiffs failed to demonstrate an injury and therefore lacked standing.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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