Monday, January 30, 2017

False claims of discounts cause Article III injury

Morrow v. Ann Inc., 2017 WL 363001, No. 16-CV-3340 (S.D.N.Y. Jan. 24, 2017)

Plaintiffs alleged that Ann deceptively advertised merchandise sold in its Ann Taylor Factory and LOFT Outlet stores by falsely claiming on its sales tags, in-store signage, and website that products sold in outlet stores were originally or regularly sold at much higher prices.  They brought the usual California (and other state consumer protection law) claims.

Ann argued that plaintiffs lacked Article III standing for want of a concrete injury.  Though they alleged that they wouldn’t have bought the products had they known the truth, they didn’t allege that the merchandise was worth less than the price they actually paid for it. Still, they alleged Article III injury—they spent money they otherwise would not have spent, which is sufficiently concrete.  Spokeo doesn’t change that, since it’s about bare statutory violations in the absence of concrete injury.

Likewise, plaintiffs adequately pled lost money or property under California law.  The allegedly false labels induced them to buy products they wouldn’t otherwise have bought.  Ann argued that only misrepresentations about the “nature of the product” could confer standing, but California law required only that the misrepresentation affect consumers’ “beliefs about quality,” and “[p]rices, like other attributes, can impact consumers’ perception of merchandise.”

Among other things, Ann argued that reasonable consumers wouldn’t be deceived, but this is a question for a jury.  Plus, the court noted, “the very fact that Ann represented its prices as discounted suggests that such representations might impact reasonable consumer purchasing decisions.”

Ann also argued that claims based on the FTCA should be dismissed because there’s no private right of action under that law.  If plaintiffs were actually trying to assert direct FTCA claims, that would be true. But instead, they were using the alleged FTCA violation to identify “unlawful” conduct under the UCL.  It’s ok to use FTCA violations to establish unlawfulness when another statute does confer a private right of action. 

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