Inconceivable: allegedly made-up price comparison allows consumer suit

Chester v. TJX Cos., 2016 WL 4414768, No 5:15-cv-01437 (C.D.
Cal. Aug. 18, 2016)
When an opinion begins with the quote, “You keep using that
word. I don’t think it means what you think it means,” it’s not going to go
well for the false advertising defendant.
Plaintiffs brought the usual California claims against three
off-price retailers under the TJX umbrella: TJ Maxx, Marshalls, and HomeGoods.  TJX’s price tags list (1) the price the
retailer is selling the item for; and (2) a higher, comparative reference price
accompanied by the phrase, “Compare At.” Neither tags nor ads define the term “Compare
At” or otherwise offer context for the pricing provided. Some of defendants’
products also have a second price tag noting a purported manufacturer’s
suggested retail price, or “MSRP,” for an item.  Where is “compare at” defined?  A page on the TJ Maxx website, found by
searching the fine print, and a sign near the customer service/returns counter
at one retailer store.  It says:
The “compare at” price is our
buying staff’s estimate of the regular, retail price at which a comparable item
in finer catalogs, specialty or department stores may have been sold. We buy
products from thousands of vendors worldwide, so the item may not be offered by
other retailers at the “compare at” price at any particular time or location.
We encourage you to do your own comparison shopping as another way to see what
great value we offer.
Plaintiffs alleged that they, like other reasonable
consumers, expect that the “Compare At” tags listed “prices at which the
‘principal retail outlets’ in California have sold, or are selling, those
products in any ‘substantial volume.’” This picks up on the FTC’s preferred
means of substantiating such a claim. 
Using the term for unverified estimates of possible prices, they argued,
was deceptive.
The court quickly disposed of TJX’s standing challenges,
including its challenge to plaintiffs’ standing to seek injunctive relief.  “It is inconceivable to think prospective
relief in the false advertising context is bound by the rules of ‘fool me once,
shame on you; fool me twice shame on me.’”  Accepting the no-standing argument would “eviscerate”
California’s consumer protection laws.
TJX argued that plaintiffs hadn’t alleged sufficient facts
about why the tags were deceptive to a reasonable consumer.  It argued that the FTC guidelines allowed it to
offer price comparisons between one item and another of comparable value, and
that those comparisons could be based on good faith estimates. However, the FTC
specifies that comparison prices cannot “appreciably exceed the price at which
substantial sales of the article are being made in the area.”  Comparisons must thus be based on actual
prices, not “estimates” of prices at which “a comparable item” in another store
or catalog “may” have been sold.  By
contrast, TJX’s definition says outright that an item “may not be offered by
other retailers at the ‘compare at’ price at any particular time or location.” “If
Defendants believe that ‘estimates’ are the same as ‘comparisons with actual
merchandise,’ then the Court is here to say that this word does not mean what
you think it means.”  The court referred
to TXJ’s practice as looking at “what a fictitious retailer may charge.”  Ulp.
Moreover, the FTC had more limits; the FTC Guidelines
require retailers who use reference pricing to make “clear to the consumer that
a comparison is being made with other merchandise.”  This TXJ failed to do: “a link at the bottom
of a webpage and a sign near the return counter, not the sales counter, will
not suffice” given the predominance and prominence of the “compare at” claims. “[I]t
is unrealistic for Defendants to expect consumers to pull out their smart
phones and search the retailer’s website for a definition of the seemingly
clear phrase, or chance that they see a sign offering insight before they reach
the check-out counter.” The tags and ads therefore didn’t clearly communicate a
comparison between “like” items rather than with the same item.

As the court pointed out, there’s a reason that retailers
use reference pricing: “it makes consumers think they are getting a deal.” Relying
on the plain meaning of “compare at” to draw in consumers while also using an
unrecognizable internal defintion of that phrase “is not very sportsmanlike.
Anyone who says differently is selling something.”

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