Misleading Pricing Cases Coast-to-Coast

Allegations that outlet pricing not reflective of flagship store pricing

Part I


In California, in Rubenstein v. Neiman Marcus, plaintiff alleged Niemen Markus sold products in its outlets with inflated ‘Compared to’ prices. Since the items, plaintiff alleged, were not actually for sale in traditional Neiman Marcus flagship stores, the ‘Compared To’ pricing was misleading, as actual savings were overstated. The district court dismissed for failure to state a claim, but the Appellate court found:

  • Plaintiff had both Article III and statutory standing (sufficiently alleged economic injury and actual reliance on the ‘Compared To’ prices)
  • Plaintiff alleged enough facts to raise a reasonable expectation that discovery will reveal evidence to support her claims
    • neither Neiman Marcus nor other merchants in the vicinity sold comparable products at the ‘Compared To’ prices at the time of her purchase
  • Plaintiff pled the “who, what, when, where, and how”” of the alleged misconduct
    • who: Neiman Marcus
    • what: ‘Compared To’ price tags
    • when: 21 July 2014
    • where: Last Call store in Camarillo, California
    • how: misled consumers into believing that the Compared To prices were charged by either Neiman Marcus or other merchants in the vicinity for comparable products

The court went on to say that only Neiman Marcus could know if the ‘Compared To’ prices were fictitious, and plaintiff didn’t have to plead specific facts to which she had no access.

Without an opportunity to conduct any discovery, (plaintiff) cannot reasonably be expected to have detailed personal knowledge of Neiman Marcus’s internal pricing policies or procedures for its Last Call stores.”

UPDATE: 13Dec2017 – notice of settlement (Doc#100). Parties request all pending matters be taken off calendar. Plaintiff will file her Motion for Preliminary Approval of Class Action Settlement within 60 days of the date of this Notice.

[Rubenstein v. Nieman Marcus: 9th Circ.; 15-55890 (Orig: C.D. CA; 2:14-CV-07155) – Reversed and Remanded]


Part II


Meanwhile, in New York, in Belcastro v. Burberry, plaintiff sought to represent a class of consumers who shopped at Burberry Factory Outlet stores who were allegedly misled by inflated ‘MSRP’ and ‘Was’ pricing applied to items intended exclusively for sale in outlet stores, and were never sold at claimed prices in ‘real’ Burberry ‘mainline’ stores. The complaint took the extra steps of listing the “who, what, when, where, and how” of the alleged misconduct, and added a “why”
• who: Burberry
• what: deceptive reference prices
• when: every point of purchase throughout the Class Period
• where: on the tag of the Burberry Outlet Products
• how: tags of the Burberry Outlet Products designed to mislead
• why: inducing plaintiff and others to purchase and/or pay more for the Burberry Outlet Products

UPDATE: 1Dec2017 – dismissed with prejudice (Doc#64). The court found plaintiff failed to allege he overpaid for merchandise or that there were any objectively, measurable differences from what he believed he was purchasing. Neither New York nor Florida law recognized subjective disappointment over a promised bargain as a cognizable injury. Plaintiff’s amendments to his complaint failed to cure deficiencies, and simply restated his subjective “but-I thought-I-got-a-bargain” theory the Court had already rejected. As the amended complaint failed to allege an “actual injury” cognizable under New York or Florida law, the amended complaint was dismissed with prejudice.

[Belcastro v. Burberry: S.D. N.Y; 1:16-cv-01080 – Class Complaint]
jbho: Looks like (at least in the 9th) any accusation of deceptive base pricing will require discovery. So discount rates must be based on an actual price, supported by evidence of the price basis (how a company actually determines the listed prices), and the basis for the pricing to consumers must be readily available.

And makes sure you don’t misstate discounts or jack up you prices in anticipation of a big sale. And that your merchants aren’t misstating anything either.

fyi: although Belcastro shopped outlet stores in Florida, suit was brought in New York, where Burberry is incorporated.

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