Another court finds that injury from fake “sale” prices is redressable

Le v. Kohls Department Stores, Inc., 160 F. Supp. 3d 1096
(E.D. Wisc. 2016)
Le sued under various state consumer protection statutes
(and unjust enrichment), alleging that Kohls falsely advertised “sale” or
“discount” prices off of the “regular” or “original” item prices, which were
not in fact regular. As a graph from Consumers’ Checkbook/Center for the Study
of Services, an independent, nonprofit consumer organization, indicates, “at
Kohl’s, the sales often never end”:

CC graph
Le alleged that Kohls’ marketing tactics are economically
harmful because they deceive consumers to: (1) buy products that they would not
have bought “but for” the illusory “sale”; or (2) pay more for products than
they would have paid had they been fully informed of the actual “item price.”
Kohls moved to dismiss, arguing that Le didn’t offer a
legally cognizable method of calculating his claimed restitution.  Kohls argued that restitution would require
proving a difference between the value of the products Le bought and the price
he paid.  He didn’t allege any such
The court, however, concluded that California’s UCL and CLRA
didn’t confine restitutionary relief to that available under the price-to-value
method.  The appropriate measure of
recovery depends on the circumstances. 
Furthermore, determining the proper calculation would be inappropriate
at the pleading stage, and the court reserved questions about how to factor in
the value of the products that Le received. 
The measure of his harm, as alleged, was that he bought a product that
he paid more for than he would’ve been willing to pay if he’d known the truth,
which is a measure the 9th Circuit has endorsed.  Likewise, the court allowed Le’s claims for
injunctive relief to continue.  Although
he was aware of the alleged scheme, that wasn’t enough, because to use that as
a reason to preclude injunctive relief would vitiate the intent of California’s
consumer protection law.  Le properly
alleged the likelihood of continued harm because he alleged that the pervasive,
ongoing scheme made it impossible for any consumer to tell what the true price
was.  Given that Le wasn’t complaining
about a specific product but a broad practice,
the Court is unclear just exactly what
Le would be expected to be “aware” of in order to avoid future harm from Kohls.
For example, should Le be “aware” that housewares are deceptively priced, while
men’s apparel is not? Should Le be “aware” that Kohls’ holiday sales are more
egregiously deceptive than their day-to-day offers? These hypothetical
questions underscore the point that discovery is necessary to parse out the
salient facts in relation to Le’s claim for relief.
The court also allowed Le to claim on behalf of a
multi-state class of consumers, at least under Article III at this point in the
case; choice of law issues remained to be decided.  The court acknowledged Kohls’ “prudential” concerns
about the effects of this kind of claim—presumably settlement pressure—it pointed
out that, via CAFA, Congress “authorize[d] federal judges to resolve
big-stakes, multi-state class actions.”
The Wisconsin Deceptive Trade Practices Act claim survived
because, though it required statements “made” or “disseminated” in Wisconsin,
Le adequately pled that Kohls’ principal place of business was in Wisconsin and
that its “acts, practices and policies pertaining to the advertising,
marketing, and sale of merchandise…were established and emanated from
Wisconsin.” Even if Le “saw” Kohls’ allegedly deceptive statements in California,
the ads at issue were “made,” and then “disseminated,” by Kohls from its
Wisconsin headquarters.

Unjust enrichment claims also survived in the alternative.

from Blogger

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