LOS ANGELES — A California appellate
court has added a new wrinkle to the complications surrounding honest
The 2nd District Court of Appeals in California ruled in Veera
v. Banana Republic that
Competition Law (UCL), False Advertising Law (FAL) and
Legal Remedies Act (CLRA)
apply even if the plaintiff is aware of the facts behind an
advertisement under the concept of “momentum to buy.”
to their complaint, the plaintiffs made the choice to shop at a Banana
Republic because they saw signs advertising 40 percent off. Neither plaintiff recalled seeing any information explaining the
limits of the sale. The defense countered saying the store staff had
made the rules available.
selecting their items, the plaintiffs said when they went to pay for
their items they learned that none of their selections was on sale.
The plaintiffs told the court this made them feel pressured to make
their purchase since they were at the front of a long line and
because of the time they had already invested shopping. They made the
choice to purchase several of their selected items at full price.
plaintiffs filed a class-action lawsuit in Los Angeles Superior Court,
alleging violations of the UCL, FAL and CLRA. The initial trial
court ruled that the plaintiffs had not established the requisite
standing. The California Court of Appeals reversed this ruling,
arguing there was a triable issue of fact both on the question of
whether plaintiffs had suffered injury and whether that injury had
been caused by plaintiffs’ reliance on the 40 percent off signs.
basis of the appeals court's ruling was its argument that it is
possible for a plaintiff to meet the reliance requirement of a UCL,
FAL or CLRA claim when they know all of the true facts, such as the
inapplicability of the sale, before the purchase.
store owners, this ruling could further murky the waters of what is
considered unfair adverting, John Doherty, president and CEO, Civil
Justice Association of California, told the Northern
v. Banana Republic does
significantly reduce a common-sense threshold for litigation,” he
said. “Namely that a consumer should not be able to prove harm
when they completed a commercial transaction with full and accurate
knowledge of the terms of the sale.”
addition the ruling implies that plaintiffs preparing a a
lawsuit under the "momentum to buy" theory
will have a lighter burden evidence, as they will not have to
demonstrate actual harm Doherty explained.
is worth noting that the appellate decision was a review of summary
judgment, which requires the court to assume the truth of the
plaintiffs assertions.” he said. “In that light, there is a
process bias for allowing the case to proceed."
In the long, run retailers will have to be more careful in their
“Ultimately, retailers will need to make sure that
every piece of information advertised, clearly declares limits on an
offer, which would significantly limit the ability of a plaintiff to
effectively allege deception,”