Falsely Advertising That a Product Is ‘On Sale’ Is Actionable Under California Law9 Jul, 2013 By: John Waller, Blank Rome LLP, Jeffrey Richter
How many times have you gone into a store and seen a product advertised as “on sale” and later discovered that the product’s “sale” price was actually its normal price? When that happens, you may feel upset and deceived, but you also recognize that you purchased the product for the amount that you agreed to pay. What can you do?
According to the U.S. Court of Appeals Ninth Circuit, if you bought the product in California you have a claim under California’s Unfair Competition Law, False Advertising Law and Consumers Legal Remedies Act. In a decision clarifying the scope of Proposition 64, which was passed by voters in California to limit who has standing to bring claims under California’s Unfair Competition Law and False Advertising Law to those persons who “lost money or property” as a result of the deception, the Ninth Circuit held that the plaintiffs in a recent case had standing to pursue their claims.
In Hinjos v. Kohl’s Corp., the plaintiff alleged that he was a victim of false advertising by department store chain Kohl’s when he was induced to purchase products that were advertised as being “on sale” when they were actually being sold at their customary prices and filed his case as a putative class action. According to the plaintiff, the prices that Kohl’s advertised as being “on sale” were the same prices it had sold the products for during the previous three-month period. According to the allegations in his complaint, Hinjos would not have purchased the products if he known that the purported “on sale” prices were actually the regular prices that Kohl’s had been selling those products.
The trial court held that Hinjos did not have standing to pursue his claims against Kohl’s because he purchased the products at the prices at which they were advertised and, thus, lost neither money nor property. The Ninth Circuit disagreed, noting that the California Supreme Court’s 2011 decision in Kwikset Corp. v. Superior Court established that consumers have “lost money or property,” and thus have standing under California’s Unfair Competition Law and False Advertising Law to pursue such claims, when they allege that the false advertising induces them to purchase a product or to pay more for the product than they otherwise would have spent. Although the claims at issue in Kwikset and the examples cited by the California Supreme Court in issuing its ruling in that case did not include false advertisements regarding price, the Ninth Circuit held that the Court’s ruling in Kwikset is not limited to the specific facts of that case or the illustrative examples regarding what constitutes “lost money or property” set forth therein.
There may well be additional cases interpreting how far Proposition 64 actually reigns in claims under California’s Unfair Competition Law and False Advertising Law, but it is becoming increasingly clear that California’s courts are not going to dramatically reduce the scope of claims that can be pursued under those statutes.