2014 saw the plaintiffs' class action bar file a flurry of class action lawsuits aimed at retailers' price advertising. Several of the suits focused on alleged "fictional" savings claims made by outlet stores. In one of these actions, Nordstrom, Inc. scored a victory last week when it obtained dismissal of a case filed in the U.S. District Court for the Southern District of California.

The plaintiff, Kevin Branca, alleged that Nordstrom violated California false advertising laws when it deceived him with false "Compare At" price comparisons on the price tags at its Nordstrom Rack outlet stores. For example, Branca purchased a pair of pants for $79.97 that had a tag with a "Compare At" price of $150 and a represented savings of 47%. Branca alleged that these are "sham discounts" because the merchandise is manufactured exclusively for Nordstrom Rack or are brands not sold at mainline Nordstrom stores.

On a motion to dismiss, U.S. District Judge Michael M. Anello applied the "reasonable consumer" standard and determined that the allegations did not establish that a reasonable consumer would believe that the "Compare At" price is the former price at which Nordstrom or other retailers sold the same merchandise. The court largely based its decision on the FTC's Guides Against Deceptive Pricing, under which "Compare At" would be a comparable value comparison referring to the price of similar merchandise of "like grade and quality." That is distinct from former price comparisons which are comparisons to the retailer's former price for the same item. The plaintiff's allegations were at odds with the FTC definitions and, moreover, the plaintiff failed to allege that he personally viewed the "Compare At" claim as a representation of the price at which Nordstrom's mainline stores previously sold the merchandise. The court's analysis was confined to the price tags because the court also ruled that Branca's failure to allege that he was exposed to any other representations about the prices, such as those on Nordstrom's website, meant that he did not have standing to bring claims based on those representations.

All was not lost for the plaintiff, however, as Judge Anello granted leave to file an amended complaint.

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