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Southern District of California Dismisses Serial Plaintiff’s Suit Challenging Discount Prices

930660427_f9b535e230_oBy Sandra Hanian

On March 22, Judge John A. Houston of the Southern District of California dismissed one of the latest in a long line of putative class action lawsuits against retailers for allegedly deceptive pricing practices at outlet and factory stores, but allowed the plaintiff leave to amend the complaint.

The plaintiff Randy Nunez — who had previously filed putative consumer class actions against Best Buy, Microsoft, ConAgra, and others — alleged that Saks Incorporated advertised false comparable prices and false price discounts for the retailer’s branded merchandise sold at Saks Fifth Avenue OFF 5th stores and on the website.  Specifically, he claimed that he purchased a pair of Saks-branded shoes advertised with a “market price” of $145.00 and sold at a discounted sale price of $79.00, but that this and advertised discounts for other products were “nothing more than mere phantom markdowns because the represented market prices were artificially inflated and were never the original prices” for the items sold.  Amended Complaint at ¶¶ 2, 10, Nunez v. Saks Inc., No. 15-02717 (S.D. Cal. Jan. 15, 2016), ECF No. 8.  Further, the plaintiff asserted that the represented “market” prices were not the prevailing market retail prices within 90 days preceding the publication of the advertised former prices, as required by California law.  Nunez alleged that Saks’ pricing practices violated California’s Unfair Competition Law (“UCL”) False Advertising Law (“FAL”), and Consumer Legal Remedies Act (“CLRA”), as well as the Federal Trade Commission Act.

The court dismissed the complaint for two reasons.  First, it held that the plaintiff lacked Article III standing to bring claims on behalf of a class of Saks shoppers for products he did not purchase or for advertisements upon which he had not relied.  Saks sells a wide variety of Saks-branded products, including jewelry, home goods, clothing, and accessories, yet the plaintiff alleged that he had purchased only a pair of shoes — and solely in reliance on the shoes’ price tag.  Second, the court found that the plaintiff failed to satisfy Federal Rule of Civil Procedure 9(b)’s heightened pleading standard.  Nunez did not allege with specificity how Saks purportedly misrepresented its prices or provide specific examples of it doing so.  The court gave the plaintiff permission to file a second amended complaint.  Order Granting Defendant’s Motion to Dismiss, Nunez, No. 15-02717 (S.D. Cal. Mar. 22, 2017), ECF No. 33.   

The court’s dismissal should have come as no surprise to the plaintiff and his counsel, given the District of Minnesota’s dismissal last year of similar claims they asserted against Best Buy.  Nunez v. Best Buy Co., Inc., 315 F.R.D. 245 (D. Minn. 2016).  Nunez alleged in that case that Best Buy had duped him into purchasing a discounted microwave by misrepresenting the “regular” price of the microwave.  As in the suit against Saks, the court held that Nunez’s vague allegations and omission of critical information — such as the date on which he allegedly purchased the microwave, the “marketing” on which he had purportedly relied, and the basis of his assertion, “[u]pon information and belief,” that the microwave’s “regular” price was not as represented — failed to satisfy Rule 9(b)’s particularity requirement.  Id. at 249.  The court also held that Nunez’s reliance on a report by Consumers’ Checkbook/Center for the Study of Services was insufficient to support his fraud allegations.  Although the study reported pricing trends for several items sold by Best Buy, the microwave Nunez allegedly purchased was not among them.  Nor did the findings of the study “support the proposition that Best Buy offers all or even most of its products at discounts for periods of three months or more.”  It thus “[could not] rescue Nunez’s deficient pleading.”  Id. at 250.   As in the case against Saks, the court in Minnesota dismissed without prejudice.

Despite these and other dismissals, the trend of suits against retailers over their reference prices, stated discounts, and sale prices shows no sign of slowing down.

Nunez’s other dismissed suits include Nunez v. NBTY, Inc., No. 13-0495 (S.D. Cal. Dec. 2, 2016), ECF No. 41 (parties voluntarily dismissed with prejudice UCL, CLRA, and common law claims for statements made regarding the efficacy of a dietary supplement); Nunez v. Supervalu, Inc., No. 13-0626 (S.D. Cal. May 29, 2015), ECF No. 42 (plaintiff voluntarily dismissed with prejudice UCL, CLRA, and common law claims for statements made regarding the efficacy of a dietary supplement pursuant to a settlement in Quinn v. Walgreen Co., No. 12-8187 (S.D.N.Y.)); Nunez v. Microsoft Corp., No. 07-02209 (S.D. Cal. Sept. 22, 2009), ECF No. 42 (plaintiff voluntarily dismissed claims under the Song-Beverly Consumer Warranty Act and UCL for malfunctioning video game); and Nunez v. Conagra Foods, Inc., No. 06-1012 (S.D. Cal. Oct. 3, 2006), ECF No. 20 (dismissing UCL and CLRA claims regarding chemical coating inside microwave popcorn bag).