Applying those principles, Judge Klausner found that the plaintiff’s proposed “actual discount” model—which determined the percentage of the discount between the sale price and the “Actual Retail Price,” applied that percentage discount to the prevailing retail price of the item, and then awarded plaintiffs the difference between what they paid and the price that the item would have sold for if the same discount was applied to the prevailing retail price—was deficient because it was “not actually a measure of restitution.”  Id. at *10.  Instead, he reasoned, it “seeks to award Plaintiff the full benefit of the transaction she thought she was entering into—a measure more akin to expectation damages than restitution.”  Id.  Judge Klausner likewise rejected the plaintiff’s argument that a full refund of the purchase price was an appropriate measure of restitution, as it failed to account for the value the plaintiff derived from the products she purchased.  Id. at *7-8.  And Judge Klausner rejected the plaintiff’s argument that disgorgement of Kohl’s profits was a proper remedy, as it focused on Kohl’s gains rather than the losses the plaintiff may have suffered as a result of Kohl’s conduct.  Id. at *9.  And because the value of the items exceeded the amount she paid, Judge Klausner concluded that the plaintiff was not entitled to restitution—even if Kohl’s had deceptively inflated the size of the discounts it had offered.  Id. at *11-13.  

The Ninth Circuit affirmed.  Beginning from the premise that “the appropriate calculation for restitution is the price [the plaintiff] paid for the articles versus the value of the articles she received,” the Ninth Circuit held that the plaintiff had not established an entitlement to restitution because she had provided no evidence that the clothes she purchased were worth less than she paid for them.  2018 WL 3016908, at *1.  Like Judge Klausner, the Ninth Circuit held that the plaintiff was not entitled to a full refund (because she “received some value from the articles of clothing”) or disgorgement (as “[n]onrestitutionary disgorgement is unavailable in UCL actions”).  Id. at *2.  Similarly, the Ninth Circuit held that the “actual discount” model of calculating restitution was improper because it “would effectively seek damages sounding in contract,” rather than the equitable remedy of restitution.  Id.

In issuing its opinion, the Ninth Circuit distinguished its earlier opinion in Pulaski & Middleman, LLC v. Google, Inc., which held that “restitution is based on what a purchaser would have paid at the time of purchase had the purchaser received all the information” and which approved a creative restitution model based on an internal algorithm Google used to discount per-click advertising prices “to the levels a rational advertiser would have bid if it had access to all of Google’s data about how ads perform on different websites.”  802 F.3d 979, 989 (9th Cir. 2015).  The Ninth Circuit reasoned that its holding here was broadly consistent with its holding in Pulaski, as both cases held that restitution was limited to the difference between what the plaintiff paid and what the plaintiff received.  Chowning, 2018 WL 3016908, at *1 n.3.  And to the extent Pulaski supported the plaintiff’s alternative models of restitution, the Ninth Circuit explained, it was inconsistent with the California Court of Appeal’s In re Tobacco Cases II opinion and was no longer good law.  Id. 

The decision is available here.