Claim against Safeway's online grocery goes forward

Rodman v. Safeway, Inc., 2011 WL 5241113 (N.D. Cal.)

Rodman brought a putative class action against Safeway for breach of contract and violations of the California consumer protection laws in connection with overcharges for groceries sold by Safeway through its website for home delivery. He alleged that, while Safeway clearly disclosed its home delivery fee, the contract and the information at Safeway.com says that consumers will be charged the same prices for products bought online as those charged in the local store on the date of delivery. However, he alleged, Safeway secretly adds about 10% to the in-store price for most groceries bought on the web.

Safeway moved to dismiss the breach of contract claim on the ground that it made no such promise of price parity. The contract said:

The prices quoted on our web site at the time of your order are estimated prices only. You will be charged the prices quoted for Products you have selected for purchase at the time your order is processed at checkout. The actual order value cannot be determined until the day of delivery because the prices quoted on the Web site are likely to vary either above or below the prices in the store on the date your order is filled and delivered.

Rodman argued that this language meant that the online shopper would get the same price as that charged in the store at the time of delivery. Safeway responded that there was no affirmative price parity statement. While the court was more inclined to Rodman’s interpretation, at this stage the contract was reasonably susceptible to both parties’ interpretations. Looking at the extrinsic evidence provided by the FAQ revealed this statement: “Depending on the delivery date you select, prices could vary from the time you place the order and the time your order is delivered, …. You will be charged the prices charged in the store on the day your order is picked and delivered.” This was a clear statement of price parity. To the extent Safeway argued that “store” was ambiguous in this context, a motion to dismiss was not the place to argue about it.

Rodman adequately alleged the existence of a contract and its breach.

Safeway also lost on its motion to dismiss the consumer protection claims. To the extent that the contract and the FAQ were reasonably susceptible to constructions other than Safeway gave them, they could mislead a reasonable consumer into believing that there was price parity between the store and the online service for products. “Price differentials are material.” The complaint’s allegations that Safeway misled or failed to disclose material information were clearly sufficient.

Safeway argued that Rodman didn’t properly allege reliance. But, with materiality adequately alleged, an inference of common reliance arose. Moreover, the complaint specifically alleged that Rodman read the price terms. And, the court pointed out, Safeway required consumers to agree that they’d “read, understood and agree to these Terms and Conditions.” This was enough to allege reliance.

Finally, Safeway suggested that Rodman and the class weren’t injured. The court was similarly unpersuaded. The injury is the alleged 10% mark-up; Rodman didn’t need to allege that he could’ve bought the same groceries elsewhere for less.