HP's purported discounts were plausibly misleading

Carvalho v. HP, Inc., 2022 WL 17825688, No. 21-cv-08015-BLF (N.D. Cal. Dec. 20, 2022)

Plaintiffs alleged that HP displays false and inflated “strikethrough” prices on its website for its products that it then offers to consumers at a purported “discount price.” At the bottom of each page, HP includes a section entitled “Disclaimer +”. Clicking on the “+” expands the Disclaimer section. One of the disclaimers makes clear that the strikethrough price is a Manufacturer’s Suggested Retail Price (MSRP):

HP’s MSRP is subject to discount. HP’s MSRP price is shown as either a stand-alone price or as a strikethrough price with a discounted or promotional price also listed. Discounted or promotional pricing is indicated by the presence of an additional higher MSRP strikethrough price.

Near the strikethrough price and typically in a larger and bolder font, HP advertises a “sale price.” The website also advertises discounts of savings using words such as “Save,” “You’ll Save,” and “You Saved.”

Plaintiffs alleged, with examples, that the strikethrough prices do not represent the actual prices at which computers were sold or offered for sale for a reasonably substantial period of time. In addition, HP allegedly falsely advertises that the discounts are available only for a limited time when in fact those discounts continue beyond their advertised expiration date, such as “Weekly Deals” that sometimes don’t end for months. Further, plaintiffs alleged that

the “vast majority” of computers (e.g., 152 out of 155 models) sold on HP’s website are sold exclusively on HP’s website and not from traditional big box retailers.

The court noted that plaintiffs couldn’t proceed on theories involving allegedly false limited quantity offers because they didn’t allege they relied on those.

Price discounts: The cases divide price comparison cases into two categories: cases involving “exclusive products” and those involving “non-exclusive products.” In the former, cases can proceed where the plaintiff alleges a false comparison (a different product from that sold exclusively at the store is used for the comparison “full price” for the exclusive product, which was never actually sold at that price). Where other retailers offer the same product for sale, there are legitimate prices to which to compare the defendant’s comparative reference price, and a plaintiff must show that the comparative reference price is misleading.

HP argued that its products were sold at other retailers, putting this case in the latter category. But the court found that the facts didn’t fit neatly into either category. “According to Plaintiffs’ allegations, which are based on a thorough investigation and must be taken as true at this stage, the majority of the relevant HP products are not sold at traditional big box retailers, suggesting they are not non-exclusive products.” But there were also no allegations that HP was selling these products at some sort of discount or outlet store.

The court turned to the “reasoning underlying both non-exclusive and exclusive products cases: whether a price is false or misleading in light of the price(s) at which that item is generally available for purchase.” Plaintiffs alleged that, based on their investigation, very few of these products were available for purchase at third-party retailers. And, of those that were available, the prices were all somewhere between the HP strikethrough price and the HP sale price. In addition, “the particular facts as to whether the [strikethrough] prices are fictitious are likely only known to [HP].” The court also took into account the prices for which the products were available before and after plaintiffs’ purchases on HP’s own site. Plaintiffs were not required at this early stage to do an investigation of every HP product; they adequately alleged that the strikethrough prices were misleading.

Would that deceive a reasonable consumer? The MSRP disclaimer was not enough, nor was the absence of words like “regularly,” “usually,” “formerly,” and “reduced to” from the prices or HP’s argument that consumers understand that manufacturers often provide a discount from the MSRP. “[T]he fact that a consumer could only learn that the strikethrough price is a MSRP upon reading the fine print at the bottom of the webpage and then clicking on the ‘+’ suggests that a reasonable consumer could justifiably be unaware of that disclaimer.” This required factual development.