August 21, 2018

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Ninth Circuit Puts Restitution Claims to Rest in Discount Advertising Case

The Ninth Circuit recently addressed once again the common practice in outlet stores and other retail establishments of juxtaposing the price at which a fashion item is offered for sale with a higher price advertised as a former price, or as the supposed market value, of that item.  Chowning v. Kohl’s Dep’t Stores, 2018 WL 3016908, (9th Cir. 2018).  The most recent previous Ninth Circuit decisions addressing discount price advertising concerned the adequacy of pleadings at the motion to dismiss stage, and thus had limited relevance to the merits of those cases or their ultimate outcomes.

The Kohl’s decision is of potentially greater significance.  In Kohl’s, the panel affirmed the district court’s grant of partial summary judgment in favor of defendant, finding that plaintiff was not entitled to restitution under California law for allegedly being tricked into thinking she was purchasing items at a substantial discount.  In doing so, the court construed California consumer protection laws in a way that potentially significantly limits the ability of plaintiffs to recover any money in cases involving allegedly false or fraudulent discount price advertising.

Plaintiff, who asserted claims under the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA), alleged that Kohl’s displayed two prices on goods for sale in its store:  the “Actual Retail Price,” and a significantly lower price reflecting what Kohl’s charges consumers for the item.  According to the complaint, the Actual Retail Prices did not reflect prevailing market retail prices and were therefore fraudulent, deceiving the plaintiff into believing she was purchasing the products at a discounted price.

Judge Gary Klausner of the Central District of California had granted Kohl’s motion for summary judgment as to the plaintiff’s monetary claims for restitution.  In affirming, the Ninth Circuit held that under the UCL, FAL and CLRA, restitutionary damages are calculated by the difference between the price paid and the value received.  Although plaintiff alleged that the Actual Retail Prices were deceptive, she did not introduce competent evidence of how much value she received for the items she purchased.  Thus, the Ninth Circuit agreed with the district court that because there was no evidence of the value of the goods purchased, the restitution calculation was “impossible,” which entitled Kohl’s to summary judgment.

The Ninth Circuit’s decision was designated Not for Publication, and thus it does not have precedential value.  However, it likely will put a damper on damages claims under California law based on allegations of deceptive discount price advertising, as it signals that the Ninth Circuit is receptive to the holdings of other courts that previously reached the same result in precedential opinions.  We recently covered some of those decisions here.  

© 2018 Proskauer Rose LLP.

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About this Author

Lawrence I Weinstein, False Advertising and Trademark Copywright Law, Proskauer
Partner

Larry Weinstein is a Partner in Proskauer's Litigation Department. He is co-head of the firm’s Intellectual Property Litigation Group, and also co-head of the firm’s False Advertising & Trademark Practice. Larry is both a distinguished trial lawyer and counselor, whose practice covers a broad spectrum of intellectual property law, including Lanham Act false advertising and trademark cases, consumer class action cases, NAD and FTC proceedings, and trade secret and copyright litigations, as well as sports, art and other complex commercial cases.

212-969-3240
Daniel Werb, Proskauer Rose, litigation attorney
Law Clerk

Daniel Werb is an associate in the Litigation Department.

Prior to joining Proskauer, Dan was a judicial intern for the Honorable Eric N. Vitaliano of the U.S. District Court for the Eastern District of New York. At Columbia Law School, he served as an Articles Editor of the Columbia Journal of Law & the Arts and was an extern at Volunteer Lawyers for the Arts.

212.969.3273
Law Clerk

Carl Mazurek is a law clerk in the Litigation Department. His area of concentration in the firm is litigation law. Carl Mazuerk is a contributing author for the firm's blog content. 

Education 

  • New York University School of Law, J.D., 2017
  • University of Cambridge, Ph.D., 2014
  • University of Cambridge, M.Phil., 2009
  • McGill University, B.A., 2007
212- 969- 3539