The Second Amended Complaint, filed in March 2016, contained the following allegations:

• The use of “Compare At” is deceptive, as the higher, reference price is not a price at which substantial sales of the item were made in California.
• The higher, reference price is the price of similar, non-identical merchandise – a material fact that Ross fails to adequately disclose.
• A reasonable consumer would expect the reference price to refer to the price of an identical item.
• The retailer’s explanation of its comparison pricing is “buried” on the website and out of view in stores. Specifically, the explanation states that the comparison pricing “represents a recent documented selling price of the same or similar product in full-price department stores or specialty stores[, and w]here identical products are not available [Ross] may compare to similar products and styles.”

In May, Ross and the plaintiffs filed a motion for summary judgment and motion for class certification, respectively. With respect to the new, “Comparable Value” signal, the Court determined that the plaintiffs lacked standing to challenge these tags because they failed to present evidence that they actually relied on the phrase when making their purchases, or that they suffered any economic injury as a result of Ross’s use of the phrase. As a result, the Court granted the motion for summary judgment with respect to Ross’s use of “Comparable Value.”

With respect to the “Compare At” signal, the Court found that the phrase is not “obviously false or misleading on its face,” and the plaintiffs had not presented evidence, other than their own declarations and price tags, in support of their argument that the reasonable consumer would expect the reference price to refer to the price of an identical item. Regardless, the Court concluded, the plaintiffs also failed to demonstrate economic harm, and therefore lacked standing to pursue their claims. Importantly, the Court rejected the plaintiffs’ reliance on the Ninth Circuit decision in Hinojos v. Kohl’s Corp., noting that, “the standard of proof on a motion for summary judgment is higher” and demands proof that the items purchased were not worth as much as Ross claims, rather than vague averments of injury.

According to the complaint, in July 2012, the plaintiff, Patrick Camasta purchased six shirts for $167 after seeing an ad publicizing “sales prices” in a JAB Illinois retail store. Pursuant to the terms of the promotion, he purchased one shirt for $87.50 and one shirt for $79.50, and received two free shirts with each purchase. Camasta alleged that he later learned that the sale was not a temporary price reduction, but was the normal retail price at which JAB offers the items and advertises them as “sales” to Illinois consumers.

In July 2013, the U.S. District Court for the Northern District of Illinois dismissed the lawsuit in its entirety, with prejudice, determining that Camasta failed to adequately plead the circumstances constituting the alleged fraud and to demonstrate that he had suffered actual pecuniary loss as a result of the transaction – i.e., that he paid more than the value of the shirts he purchased. The court concluded that the complaint was predicated on speculative statements about the allegedly deceptive ad and JAB’s pricing practices, and that Camasta would not have purchased the shirts had he known the “sale” price was actually the normal retail price. The Seventh Circuit agreed, noting that Camasta had neither satisfied Rule 9(b)’s heightened pleading requirements for claims of fraud nor pled facts sufficient to support his claims for actual damages. Furthermore, the court concluded, “[s]ince Camasta is now aware of JAB’s sales practices, he is not likely to be harmed by the practices in the future . . . [and] not entitled to injunctive relief.”

While Jos. A. Bank emerged from this fight victorious, other retailers have not been so lucky. Kohl's, for example, was involved in a similar action in California, and, on appeal, the Ninth Circuit concluded that the plaintiff had adequately alleged economic injury under California law by claiming that the advertised discounts conveyed false information about the goods and that he would not have purchased them absent the misrepresentation. The Kohl's case, and others, serve as a reminder that promotional pricing is a hot topic for class action plaintiffs, and we recommend that retailers review their sale policies to make sure they are in compliance with applicable state laws.