Friday, May 31, 2019
Plaintiff Charges Chain Uses Ploy of ‘Phantom Markdowns,’ With Original Prices Not Having Been as High as Represented
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday reversed the dismissal with prejudice of a putative class action against Saks for allegedly lying that its goods have been marked down from the normal prices.
In a memorandum opinion, a three-judge panel reinstated an action by a frequent litigant, Randy Nunez, who alleged that he paid for $79 at a Saks outlet store for a pair of black slip-on shoes, making his purchase in reliance on the representation that the “market price” was $145. He charged that Saks’s supposed reduced prices were “nothing more than mere phantom markdowns because the represented market prices were artificially inflated and were never the original prices.”
District Court Judge John A. Houston of the Southern District of California dismissed Nunez action on March 22, 2017. He found that Nunez did not have standing under Article III to sue on behalf of others in connection with goods he had not personally purchased.
Also, the judge determined, the complaint lacked requisite specificity. Houston wrote:
“The Court finds Plaintiff fails to sufficiently allege the ‘who, what, where, how and why’ of Defendant’s misconduct to sufficiently give notice so that Defendant may adequately defend against the allegations. The pleadings do not allege with specificity how Defendant misrepresented its prices, nor do the pleadings provide specific examples in which Defendant has misrepresented its prices and fraudulently advertised its pricing.”
Reversing the dismissal were Circuit Judges Kim Wardlaw and Andrew D. Hurwitz, joined by District Court Judge Edward R. Korman of the Eastern District of New York, sitting by designation.
“Nunez has both Article III and statutory standing to pursue his individual claims for damages under California’s False Advertising Law (FAL), Consumer Legal Remedies Act (CLRA), and Unfair Competition Law (UCL),” their memorandum opinion says. “He alleges sufficient economic injury: that he purchased a pair of Saks Fifth Avenue branded shoes and that he would not have purchased the shoes but for his reliance on the allegedly fictitious inflated ‘Market Price’ on the shoes’ price tag.”
The opinion says Houston acted too early in dismissing the class allegations, explaining:
“Because Nunez has demonstrated standing to pursue his individual claims, the district court should have deferred consideration of whether he was an adequate class representative until the class certification stage of proceedings.”
Injunctive Relief Sought
The plaintiff sought injunctive relief—a matter not addressed by Houston. His pleading was inadequate, the opinion says, under the Ninth Circuit’s opinion last year in See Davidson v. Kimberly-Clark Corp. because he did not allege an intent to purchase Saks-branded items in the future.
“However, because Nunez filed his Third Amended Complaint before we decided Davidson, which resolved the open question whether a previously deceived consumer has standing to seek injunctive relief for false advertising…, he should be allowed to amend his complaint to allege facts supporting standing to pursue injunctive relief on remand,” the opinion provides.
Contradicting Houston, it declares:
“Nunez has pleaded ‘the who, what, when, where, and how’ of Saks’s alleged misconduct….Nunez alleges he purchased a pair of Saks Fifth Avenue branded shoes at an Off Fifth store in San Diego, California (the Where) on July 15, 2015 (the When). He further alleges that Saks (the Who) used a uniform pricing scheme for its price tags for Saks Fifth Avenue branded clothing (the What) sold exclusively at Off Fifth stores. These price tags include a fictious [sic] ‘Market Price’ alongside a ‘You Pay’ price at which the product is sold, but the products are never in fact offered for sale or sold at the ‘Market Price’ (the How). Nunez also alleges that the ‘Market Price’ is likely to mislead a reasonable consumer into believing he is purchasing a discounted product.”
The case is Nunez v. Saks Incorporated, 17-56821.
Nunez has unsuccessfully brought several other putative class actions against major companies, including Best Buy.
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