Spann v. J.C. Penney Corp., 2015 WL 1526559, No. SA CV
12–0215 (C.D. Cal. Mar. 23, 2015)
Spann brought the usual claims against JCP based on
purchases she made shopping the sale racks. She believed that she was getting
sale items. Her receipt listed ten
items, each with a price; then each price was followed by a line of “Total
Discounts,” a negative number; then came a “Discounted Price,” the price minus
the “Total Discounts.” At the bottom, the receipt said, “Your Total Savings
Today: 135.10.” She testified that she wouldn’t have bought the items at the
same prices if she hadn’t believed they were on sale. The size of the
sale/discount mattered to her. She
alleged that the price comparisons listed were false. Spann testified that she “would like to
visit” defendant’s stores again but does not “feel like [she] can trust
[JCPenney.]” “If the Court issues an injunction ordering [JCPenney] to comply
with California’s comparative price advertising law, [she] would likely shop at
[JCPenney] again in the near future.”
The court first rejected JCP’s argument that Spann wasn’t entitled
to restitution, which “under [the UCL, FAL, and CLRA] must be of a measurable
amount to restore to the plaintiff what has been acquired by violations of the statutes,
and that measurable amount must be supported by evidence.” JCP argued that restitution must account for
benefits received in the transaction.
But the cited case, In re Google Adwords Litigation, 2012 WL 28068
(N.D.Cal. 2012), articulated a rule specifically limited to its “parties and
facts,” and was contrary to the weight of California authority anyway. The difference between what the plaintiff
paid and the value of what the plaintiff received can be a measure of restitution, but it’s not the only one. The
advantage realized by the defendant can be another.
The court accepted, at this stage, three possible
alternatives for calculation restitution: (1) “complete restitution, measured by
the full purchase price paid”; (2) “restitution based on the false ‘transaction
value’ promised by JCPenney”; or (3) “restitution measured by the net profits
that JCPenney received from sales of its products based on deceptive price
comparisons[.]” Recission with complete restititution could be an appropriate
remedy. Another case involving an unfair
practice of adding an insurance premium to the price of purchased vehicles
increased the cost of cars sold by approximately $30; in that case, full
restitution for all money paid for the cars was inappropriate. But the statutory objective is to “restor[e]
to the victims sums acquired through [defendant’s] unfair practices,” and Spann
testified that every dollar she spent was as a result of JCP’s alleged false
advertising, which would make a full refund proper.
Or, restitution could be calculated using the difference
between the amount that plaintiff actually paid to defendant and the amount
that plaintiff would have paid had defendant “advertised a truthful discount
from the real ‘regular’ price as required by statute.” JCP argued this was an unwarranted award of
expectations (rather than a real interest).
But that conflated the measurement with the nature of Spann’s interest
in the money she wanted restored. JCP
accepted Spann’s money in exchange for clothing; her interest in that money was
not merely an expectation interest.
JCP also argued that the discount approach didn’t make
sense, because then a customer who bought a blouse for its original price of
$40 would suffer no injury, but if JCP discounted it by 33%, customers who
bought at 26.67% would be harmed. The
bigger the markdown/the lower the price, the more the customer would be “harmed.” The court found that JCP deliberately ignored
the “crux” of the case:
[P]laintiff alleges that
defendant’s discounts were false, and that customers did not actually save any
money at all. What plaintiff proposes, therefore, is “the more you think you save,
the more you are harmed.” Or, as plaintiff puts it, “the bigger the lie, the
more restitution JCPenney should owe.” The amount plaintiff thought she was
saving was a factor in her purchase decisions.
Plus, Spann’s expert explained that, at least for some
purchases, she paid more than the prevailing market price. She could argue that
payment of the “transaction value,” if measurable and supported by evidence,
would restore sums acquired through JCP’s unfair pricing practices.
Finally, JCP’s net profits from transacting with Spann was a
possible alternative. Disgorgement can
be restitutionary or non-restitutionary; only the latter form was unavailable
to Spann.
JCP also argued that the CLRA claims based on “[a]dvertising
goods or services with intent not to sell them as advertised,” and “[m]aking
false or misleading statements of fact concerning reasons for, existence of, or
amounts of price reductions” sounded in fraud. A fraud plaintiff is “entitled
to recover the difference between the actual value of that with which [she]
parted and the actual value of that which [she] received,” but JCP argued that
there was no evidence of such a difference here. There were material questions of fact on
that, as noted above (evidence that she paid more than the prevailing
price). JCP argued that Spann’s expert
failed to account for coupons and discounts, but that just created a fact
question.
JCP argued that Spann lacked standing to seek injunctive
relief because there was no threat of future injury. The court disagreed (and here, the injury “I
don’t know whether this discount is real” really does seem capable of
recurring, as opposed to someone who once didn’t know what high fructose corn
syrup was). “When determining what constitutes the same type of relief or the
same kind of injury, [courts] must be careful not to employ too narrow or
technical an approach ... [and] must reject the temptation to parse too
finely[.]” Armstrong v. Davis, 275 F.3d 849 (9th Cir. 2001), abrogated on other
grounds by Johnson v. California, 543 U.S. 499 (2005). Accordingly, “[w]hen a
named plaintiff asserts injuries that have been inflicted upon a class of
plaintiffs, [courts] may consider those injuries in the context of the harm
asserted by the class as a whole, to determine whether a credible threat that
the named plaintiff’s injury will recur has been established.” So here.
Although the alleged scheme temporarily stopped in 2012,
Spann alleged that JCP has, since 2013, “experimented with a variety of pricing
practices, including a return to false comparative price advertising.” It was
undisputed that JCP “restore[d] initial markups ... to support the return to a
promotional department strategy and that means initially marking up its goods
to sufficient levels to protect margins when the discount or sale is applied.” And there was a fact issue about whether Spann
planned to return to JCP—she had returned there and bought an item since she
sued. Her knowledge of the false advertising wasn’t enough to keep her from
having standing; otherwise federal courts wouldn’t be able to enjoin false
advertising. Plus, JCP acknowledged “that its repeated adjustments to its
pricing strategies may create confusion among customers,” which might create a
threat of future harm.
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