Thursday, December 01, 2005

California unfair competition law: not quite as expansive as all that

Bivens v. Gallery Corp., 2005 WL 3114167 (Cal.App. 4 Dist.), shows that there are limits even of a very expansive state UCL. According to the complaint, the defendant published an ad in the L.A. Times advertising mattresses with “'PRICING STARTING AS LOW AS ... $48' in large type. In smaller print it states 'TWIN EA. PC.' In substantially smaller type, in parenthesis, it states 'SOLD IN SETS ONLY.'” The plaintiff allged that failure to give the total price for a set was likely to mislead consumers, especially because the ad didn’t define “set.”

In addition to determining that the plaintiff’s claims were barred by the newly added standing requirement of actual injury (substantially limiting plaintiffs’ ability to allege claims acting as private attorneys general, as in Nike v. Kasky), the court found that plaintiff’s claims were unsustainable because the defendant’s actions didn’t violate California law. Plaintiff’s first claim was that the ad violated a specific provision of California law stating that, if an ad lists a price for items only sold in multiple units, it has to also clearly state the minimum price – that is, if oranges are twenty cents each but only if you buy at least five, the ad has to say something like “minimum purchase $1.00” or “5 for $1.00.” The court determined that mattress sets aren’t identical goods sold in multiple units, so that provision didn’t apply. As for the more general false advertising claim (that innumerate consumers, of whom there are apparently many in California, would be fooled by the failure to display the price of the set), the court determined as a matter of law that no reasonable consumer would be deceived, since mattresses are generally sold in sets and the set requirement was clearly disclosed.

Of potential interest: the case illustrates the limited application of carefully delineated bans on particular acts, as often found in state unfair competition law. But more suggestively, if no reasonable consumer would be fooled by a price for a component when the component is only sold in a set, why would a reasonable consumer be fooled by a price for an item when the item is only sold in multiples? To reverse the question, doesn’t the specific provision, even if inapplicable by its terms, demonstrate that the legislature intended to protect consumers from this type of manipulation of numbers?

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