Clark v. Eddie Bauer LLC, 371 Or. 177, --- P.3d ----, SC S069438 (Jun. 29, 2023)
Under Oregon’s Unlawful Trade Practices Act (UTPA), a person
who suffers an “ascertainable loss of money or property” as a result of another
person’s violation of the UTPA may maintain a private action against that
person. The Ninth Circuit certified to the state supreme court the question
whether a consumer can suffer an “ascertainable loss” under the UTPA when she
buys items at an outlet store that have been advertised as being sold at a
substantial discount but that have never been sold at that or any other
location at the “list,” or non-sale price, and when she would not have
purchased at that price but for the false advertising of a sale price. The state
supreme court answered yes, that was an ascertainable loss.
Under the facts as stated in the certification order, more
than 90 percent of the products offered at Eddie Bauer outlet stores are
manufactured solely for sale at the outlet stores and are not sold elsewhere:
Defendants advertise clothing at
the Eddie Bauer Outlet stores as being sold at a substantial discount, typically
between 40 percent and 70 percent off. However, with limited exceptions, the
clothing is never sold—at the outlet stores or anywhere else—at the “list”
price, i.e., the price shown on each product’s original tag; the clothing sold
at the outlet stores is only ever sold at “discounted” prices.
State law bars, among other things, false or misleading
representations of fact concerning the reasons for, existence of, or amounts of
price reductions and advertising price comparisons without conspicuously
identifying the origin of the price the seller is comparing to the current
price. The plaintiff alleged that she wouldn’t have made her purchases if she’d
known that the goods weren’t in fact being sold at a discount.
Defendants argued that plaintiff
had received exactly the products that she believed she was buying, and that
their value at the time of sale was at least what plaintiff had paid. They
noted that plaintiff had not alleged, for example, that the Fleece Zip [she
bought] was worth less than the $19.99 sale price or that it did not possess
the features or quality that plaintiff had expected it to have.
Thus, they argued, there was no ascertainable loss. The
district court granted defendants’ motion to dismiss on the ground that the
complaint didn’t allege that defendants had made false representations about
the character or quality of the garments that plaintiff bought, which the
district court understood to be essential under the state supreme court’s
decision in Pearson v. Philip Morris, Inc., 361 P.3d 3 (2015). On appeal,
plaintiff noted that many of the provisions of the consumer protection law prohibit
deception in ways that do not relate to the quality or characteristics of a
product, and argued that she’d suffered an ascertainable loss in various ways,
including price inflation from the putative bargain.
“Ascertainable loss” means, generally, “any determinable
loss,” even a loss that cannot be measured exactly. Only economic losses may be
recovered, although even if “[t]he private loss … may be so small that the
common law likely would reject it as grounds for relief, yet it will support an
action under the statute.” And, given the legislature’s consumer-protection
concerns, it was appropriate to take a broad view of “ascertainable loss.”
The court here addressed only the theory that the plaintiff
wouldn’t have purchased at the price that she actually paid had she known the
truth, not other theories of injury (such as that the overall market price was
inflated by the even higher reference prices).
“[P]laintiff only was required to allege that, as a result
of any practice prohibited under the UTPA, she suffered an ascertainable
loss—that is, a loss capable of being observed or determined, however small.”
Where the product was not what was bargained for, it doesn’t matter that there’s
no outside, objective measure of market value.
In plaintiff’s case, what she
wanted was items of clothing whose selling price had, at some earlier time,
been what defendants’ false price list-ings indicated. What she received, on
the other hand, was merchandise that had never been offered for sale at those
prices. Thus, whether or not those items ever sold at those higher price
points, and whether or not defendants’ alleged pricing scheme can be viewed as
representing that the items previously had retail or market values equivalent
to the prices shown on their product tags, plaintiff paid money to defendants
for articles of clothing that she would not have bought had she known their
true price history. The money that plaintiff is out as a result is her “loss.”…
As the Connecticut Supreme Court
observed in discussing that state’s statute, it should not matter that a person
unlawfully led to believe that she was buying one thing ultimately received
another thing of equal or even greater value. Hinchliffe, 184 Conn at 614, 440
A2d at 814 (“To the consumer who wishes to purchase an energy saving
subcompact, for example, it is no answer to say that he should be satisfied
with a more valuable gas guzzler.”).
The alternative holding would leave citizens without a
remedy where the legislature declared a practice unlawful and provided for a
private remedy, and we don’t live in a world of perfect efficiency where the
plaintiff could resell the product without transaction costs for exactly the
price she paid. Thus, the court rejected
the idea that “a person does not suffer an ascertainable loss so long as she
receives something of equal or greater value than the money she was deceived
into giving up for it.”
Although other courts interpreting other laws have reached
the opposite conclusion, reasoning that deception alone can’t be injury, that’s
not what’s going on. The injury is loss of money the consumer would have
retained if the defendant had not unlawfully deceived her (as opposed to a situation
where she saw the allegedly fake sale price, believed it and thus was deceived,
but still didn’t buy, where there would be no loss).
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