“prevailing price” consumer protection rule isn’t unconstitutionally vague

Haley v. Macy’s, Inc., 2017 WL 6539825, No. 15-cv-06033
(N.D. Cal. Dec. 21, 2017)
Haley brought a typical putative class action, with the
usual California claims, alleging that Macy’s mislabeled its merchandise with
false or inflated “original” or “regular” prices to induce customers to
purchase “on sale” merchandise based on a perceived bargain.  The court found that Haley had alleged Article
III injury in fact.
Macy’s argued that several named plaintiffs couldn’t have
been deceived because they had knowledge of Macy’s pricing practices before
they bought.  One plaintiff worked at a
Michael Kors boutique in Macy’s, and another had a close relationship with
her.  At the time of the first plaintiff’s
employment, Michael Kors was involved in an unrelated false advertising case. But
that employment history didn’t “establish or even suggest that she had
knowledge of any pricing practices.” Any inference of knowledge due to online
friendship was even more attenuated. 
Likewise, the fact that Haley bought an ornament from Macy’s four days
before suing was “suggestive,” but didn’t establish knowledge of Macy’s pricing
practices.  Nor did one plaintiff’s
documentation of her purchase suggest that she was anticipating litigation.  “Consumers may research and document their
purchases and compare with other items without anticipating litigation or
having knowledge of the pricing practices at issue in this case.”  [The judge must know someone like my spouse.]
Among other things, Macy’s also argued that plaintiffs didn’t
offer a factual basis for their allegations that Macy’s didn’t sell the
products at the original or regular prices and that other merchants did not
sell merchandise of like grade and quality at Macy’s advertised prices. The
court found that the complaint was sufficient. 
It cited “an exemplar coffee maker that was advertised with a regular
price of $149.99, but which all sellers on Amazon.com and the manufacturer’s
website offered for significantly lower prices.” Other named plaintiffs noted that
the products they purchased continued to be on sale at the discounted, rather
than original price, months after purchase. Macy’s pricing policy for its
online merchandise also stated that “regular” and “original” prices “may not be
based on actual sales of the item.” This was enough at this early stage of the

Finally, Macy’s argued that California Business &
Professions Code § 17501 is unconstitutionally vague in stating: “No price
shall be advertised as a former price of any advertised thing, unless the
alleged former price was the prevailing market price …within three months
next immediately preceding the publication of the advertisement or unless the
date when the alleged former price did prevail is clearly, exactly and
conspicuously stated in the advertisement.” The statute defines “prevailing
market price” as the “worth or value” at “wholesale if the offer is at
wholesale, retail if the offer is at retail, at the time of publication of such
advertisement in the locality wherein the advertisement is published.” The
court found that this language was sufficient to provide fair warning of what
is proscribed, given the context of the FAL more generally and its aim of
preventing “unfair, deceptive, untrue, or misleading advertising.” The OED
defines “prevailing” as “[p]redominant in extent or amount” and “most widely
occurring or accepted.” That wasn’t unconstitutionally vague. 

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