This past week, the following consumer protection actions made headlines:
Retail Pricing: Class Action Complaint Against Gap Dismissed
A putative class action, alleging that The Gap, Inc.’s deceptive advertising in stores confuses customers as to what products are actually discounted and tricks many into buying products at full price, was tentatively tossed by a California state judge last week. The Court granted Gap’s demurrer in part because the named plaintiff failed to identify particular advertisements relied upon in her purchases and, more importantly, could not allege that she was actually injured by Gap’s alleged practices. In fact, the Court stated that being “psychologically committed” to an item such that the named plaintiff did not return it was not enough to state a claim. The court gave the plaintiff one last chance to allege an injury.
Retail Pricing: Consumer Class Action Brings “Phantom Markdown” Allegations Against J. Crew
J. Crew faces a class action complaint alleging that the retailer misleads customers by running permanent online sales on items with arbitrary “values” or list prices. The plaintiffs allege that customers are led to believe they were getting deep discounts when they were actually paying full price. Plaintiffs argue that because the sales never end the prices are not discounted, but instead constitute the regular prices for the available items. Hunton has previously commented on a recent spate of reference pricing lawsuits. Several other retailers have faced similar “phantom markdown” allegations, including DSW, Calvin Klein and Tommy Hilfiger, for both online and outlet store pricing practices. Michael Kors recently paid out $4.9 million to settle similar allegations.
Retail Pricing: Whole Foods No Longer Weighed Down By Overcharging Class Action
A New York judge dismissed a class action complaint alleging that Whole Foods had deliberately overstated the weights of prepackaged food items, resulting in consumer overcharges. The Court held that the named plaintiffs did not have standing because they could not identify any particular transaction in which they were allegedly overcharged. The complaint rested almost entirely on the NYC Department of Consumer Affairs’ press release stating the findings of its study that Whole Foods had overstated the weight by up to 40% in some instances. Without any factual allegations or a basis to show that the named plaintiffs might have actually been injured, the Court dismissed the complaint.
Food Marketing: Coca-Cola Watered Down by Juice Blend False Advertising Class Action
Putative class members settled litigation last week against Coca-Cola alleging that Minute Maid’s pomegranate blueberry-flavored, five-juice blend contains far less pomegranate and blueberry than Coca-Cola advertises. The settlement, reached before class certification or merits stages of the litigation, provides cash refunds to actual purchasers: 200,000 vouchers valued up to $4.99 for those with valid proof of purchase and $700,000 in attorneys’ fees. Coca-Cola also agreed to stop selling the offending juice. This settlement comes on the heels of setbacks in a similar suit, brought by Pom Wonderful LLC, challenging Coca-Cola’s fruit content claims that knocked out Coca-Cola’s nutrition expert.
Food Marketing: Castle Cheese President Feeling Blue After Confessing to Low Quality Parmesan and Romano
Michelle Myrter pled guilty last week to a misdemeanor violation of the Food, Drug, and Cosmetics Act for Castle Cheese Company’s sales of cheeses falling below FDA standards to identify or market cheeses as Parmesan or Romano. She faces up to a year in prison for her role in substituting inferior cheese and non-milk fat for FDA-required Parmesan and Romano ingredients, while still claiming they were “100%” Parmesan and Romano. This is the latest in a string of high-profile cheese fraud cases in recent weeks, including a national class action against Walmart claiming its private label grated Parmesan actually contains fillers such as wood pulp.
Environmental Marketing: Judge Flushes Consumer Class Action Over Walmart Wipes
A Florida federal district judge refused to allow a putative consumer class action to proceed against Walmart for labeling wipes as flushable even though they allegedly caused plumbing backups and failures. Dennis and Heather Sweeney had filed suit under the Florida Deceptive and Unfair Trade Practices Act, alleging that the wipes were not, in fact, flushable, and that they had paid a premium because they were labeled flushable and paid a plumber $370 to unclog their pipes. Judge Elizabeth Kovachevich, on a motion for reconsideration, clarified that her original order was intended to dismiss all aspects of the plaintiffs’ claims, including those for equitable relief. She held that the Sweeneys were not injured by paying a premium price because they preferred the wipes for aesthetic reasons. This is the most recent private plaintiff attempt after an FTC probe in 2015 resulted in a consent order with Nice-Pak Products, Inc., a private-label wipe manufacturer for Costco and others.