Presenting a live 90-minute webinar with interactive Q&A Class Action Claims Against Retailers: Deceptive Pricing, False Advertising, Privacy and Gift Card Compliance Lessons From Recent Cases for Pursuing, Defending or Avoiding Claims TUESDAY, MARCH 1, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Amy Pierce, Esq., Pillsbury Winthrop Shaw Pittman , Los Angeles Kai Richter, Partner, Nichols Kaster , Minneapolis Stephanie A. Sheridan, Partner, Sedgwick , San Francisco The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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CLASS ACTION CLAIMS AGAINST RETAILERS Amy Pierce , Pillsbury Winthrop Shaw Pittman amy.pierce@pillsburylaw.com Stephanie Sheridan , Sedgwick LLP stephanie.sheridan@sedgwicklaw.com Kai Richter , Nichols Kaster, PLLP krichter@nka.com 5
Overview Class actions against retailers • ― Identify trends and case law developments ― Identify strategies from both plaintiff and defense perspective ― Identify proactive steps for retailers to mitigate the risk of class actions Hottest litigation trends and related case law developments • ― False advertising ― Deceptive pricing ― Made in U.S.A. ― Transparency in Supply Chain ― Song-Beverly Credit Card Act ― Data privacy ― Telephone Consumer Protection Act ― Gift cards 6
FALSE ADVERTISING 7
False Advertising Deceptive Sale Pricing • Made in the U.S.A. • • California Transparency in Supply Chains Act of 2010 Photo: Koshy Koshy, Hot & Sour - – Creative Commons 8
Deceptive Pricing Claims Historically, pricing practices have been enforced by the FTC. In the last two years, a wave of private actions have targeted dozens of retailers. Claims in those cases generally fall into two categories: • Perpetual Sales Claims ― Based on the retailer’s own former price ― CA’s Former Price Law (Cal. Bus. & Prof. Code § 17501) ― Theory: Plaintiffs claim that retailers create a fake "original" price in order to offer the item for sale at a discounted "sale" price; this leads consumers into believing they are getting a bargain, even though the item never actually sold for the "original" price. • Price Comparison Claims 9
Deceptive Pricing Claims • Perpetual Sales Claims • Price Comparison Claims ― Comparisons to Third-Parties : Listing a "Compare At" price deceives consumers into believing that the same item has sold at a third-party retailer for that price, when in reality no other retailers offer the item for the comparison price, or offer it for less than the comparison price. Thus, the consumer is deceived into believing that he or she is getting a bargain that is illusory. ― Outlet Retailers : Listing a reference price previously used by the outlet’s full - priced counterpart. In many cases, however, the item was manufactured exclusively for the outlet. The claim here is that consumers thought they were buying products from the full-priced store at a substantial discount, when in reality, the products were never sold at the full-priced stores. 10
Deceptive Pricing Claims In the last year, courts have granted several motions to dismiss deceptive • pricing cases involving “Compare At” prices: ― Rubenstein v. Neiman Marcus, Branca v. Nordstrom, Sperling v. DSW, Sperling v. Stein Mart • During the same time period, two “perpetual sales” cases settled for $50 million each. • In response to those settlements, plaintiffs have begun incorporating “perpetual sales” claims into their claims against outlet retailers. 11
Deceptive Sale Pricing – CA Statutes • Value determinations; Former price advertisement (Cal. Bus. & Prof. Code § 17501) ― “For the purpose of this article the worth or value of any thing advertised is the prevailing market price, 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.” ― “No price shall be advertised as a former price of any advertised thing, unless the alleged former price was the prevailing market price as above defined 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.” • Possible defenses that have been asserted (with some success) ― Failure to state a Claim Lack of proof ― Lack of standing Plaintiffs cannot prevail on class certification 12
Deceptive Sale Pricing – Prior Suits Numerous retailers have been the subject of suits: Dell Ross Stores • • Kohl’s Kenneth Cole • • J.C. Penney Neiman Marcus • • • Justice • Gap • TJ Maxx • Michaels • Sears • Ralph Lauren • Nordstrom • Saks Michael Kors Marshall’s • • HomeGoods Best Buy • • Burlington Coat Factory Select Comfort • • Tween Brands Guess • • 13
Deceptive Sale Pricing – Federal Law • Cases build on well-established case law regarding reference price schemes • FTC v. Colgate-Palmolive Co ., 380 U.S. 374, 387 (1965) (“It has long been considered a deceptive practice to state falsely that a product ordinarily sells for an inflated price but that it is being offered at a special reduced price, even if the offered price represents the actual value of the product and the purchaser is receiving his money's worth.”) FTC v. Standard Education Soc. , 302 U.S. 112, 114 (1937) • • FTC Regulations also prohibit deceptive reference pricing. See 16 C.F.R. § 233.1 The advertiser should be especially careful … that the [reference] price is one at which the product was openly and actively offered for sale, for a reasonably substantial period of time, in the recent, regular course of his business, honestly and in good faith — and, of course, not for the purpose of establishing a fictitious higher price on which a deceptive comparison might be based. In January 2014, 4 members of Congress wrote to the Chair of the FTC asking it • to investigate this practice. 14
Deceptive Sale Pricing – State Law Successful claims brought under California’s Unfair Competition Law, • False Advertising Law and Consumer Legal Remedies Act Spann v. J.C. Penney Corp. , 2015 WL 1526559 (C.D. Cal. Mar. 23, 2015) • • Hinojos v. Kohl’s Corp ., 718 F .3d 1098 (9 th Cir. 2013) Brazil v. Dell, Inc ., 2010 WL 5387831 (N.D. Cal. Dec. 21, 2010) • But See Rubenstein v. Neiman Marcus , 2015 WL 1841254 (C.D. Cal. Mar. 2, 2015); Sperling v. DSW, Inc. , 2016 WL 354319 (C.D. Cal. Jan. 28, 2016) • Claims under other state laws have fared less favorably – for now Shaulis v. Nordstrom, Inc. , 2015 WL 4886080 (D. Mass. Aug. 14, 2015) • Kim v. Carter’s, Inc. , 598 F .3d 362 (7th Cir. 2010) • 15
Deceptive Sale Pricing – Settlements Settlement values have been substantial • - J.C. Penney: $50 million - Justice Stores: $50 million - Dell: $26,648,950 (estimated value) 16
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