As many readers know, deceptive pricing cases have exploded in recent years. While we've seensome defendant success in caseswhere plaintiffs have been unable to prove actual harm, not alldefendants have been so lucky.The most recent Eddie Bauer case is a cautionary tale showing that deceptive pricing issues still loom large. Here's what happened:
In 2020, a consumer sued Eddie Bauer LLC and its parent company in the Eastern District of Washington, accusing the retailer of violating Oregon's Unlawful Trade Practices Act (UTPA) by misleadingly promoting discounts of 50% on items that never were sold at the claimed original prices. The lawsuit was dismissed by a district court judge who ruled that Clark, the named plaintiff, was ineligible for monetary damages under the UTPA because she failed to demonstrate an "ascertainable loss of money or property." Clark appealed.
On appeal, the Ninth Circuit Court sought guidance from the Oregon Supreme Court on whether Clark had to allege a misrepresentation as to a "characteristic, quality or feature" of the items she purchased to claim an "ascertainable loss" under the UTPA. In response, the Oregon Supreme Court stated that if a consumer decides to purchase an item based on false information given by the seller regarding the item's past prices or current sale price, this situation can still represent a quantifiable loss under UTPA, even without any misrepresentation of the item's attributes or quality.
Based on this clarification, in January, the Ninth Circuit majority determined that Clark sufficiently demonstrated "ascertainable loss", thus making her lawsuit improperly dismissed. The majority panel was concerned with the possibility that Clark might again be uncertain about the authenticity of Eddie Bauer's sales, questioning whether they represent genuine discounts or not, which was enough to establish a tangible injury. This decision allowed her to proceed with her lawsuit, specifically her claim for an injunction, though her requests for disgorgement and restitution were denied.
Following this decision, Eddie Bauer requested an en banc review of the Ninth Circuit's decision. The retailer argued that the Ninth Circuit ruling permitted the lawsuit to advance despite no ongoing risk of deception, and was thus inconsistent with a Supreme Court ruling from 2021 suggesting that actual harm is required for standing for injunctive relief. Yesterday, the Ninth Circuit announced they would not entertain any more requests for a rehearing on this matter, leaving the Ninth Circuit's decision to stand. Clark v. Eddie Bauer LLC, No. 21-35334, 2024 WL 177755 (9th Cir. Jan. 17, 2024).
This case is an important reminder that deceptive pricing cases can still present a major risk for retailers and advertisers, and an area to watch closely from a compliance perspective.
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