The critical issue right now is for consumers to keep themselves informed about the products that they purchase.
In September 2014, a California woman named Linda Rubenstein sued Neiman Marcus over allegedly misleading price tags at their “Last Call” line of stores. In the case, Rubenstein alleged that the company misled consumers at its Last Call stores with prices tags that listed a cost “compared to” a fictitious higher price, designed to lure shoppers into thinking they are getting a deal.
In December of 2014, U.S. District Judge S. James Otero dismissed Rubenstein’s suit with leave to amend, for failure to state a claim and failure to allege fraud with particularity. Just last week, her putative class action revived when a Ninth Circuit panel agreed that a lower court prematurely tossed her case. The panel found that Rubenstein had sufficiently alleged her false advertising and unfair business practices claims by showing that Neiman Marcus may have made misleading statements about its Last Call merchandise.
Char Pagar, partner at VLP Law Group, sat down with IPWatchdog in a recent interview to shed some light on this particular case and how customers can protect themselves from false advertising in general.
These days, false advertising allegations can come from federal regulators like the FTC, state regulators like the State Attorneys General, competitors, or class action attorneys purporting to act on behalf injured customers.
“For advertisers, responding to allegations of false advertising can be an expensive task that consumes resources the advertiser would often prefer to use in other ways,” she explained. “The final resolution of such cases may require the advertiser to make financial payments and to change its business practices in specific ways on a go-forward basis.”
As of late, according to Pagar, there have been many factors of false advertising, including federal and state regulators, plaintiffs’ class action attorneys, and competitors – who are active and willing to challenge advertising conduct that they believe is inappropriate.
In the Neiman Marcus case, the plaintiff asserts that the “compare-to” price tags on items in Neiman Marcus’ Last Call stores are deceptive because they believe that the retailer can’t show that the same or similar items were offered by either Neiman Marcus stores or competitor stores at that compare-to price. So, the District Court dismissed the case because it agreed with Neiman Marcus that the plaintiffs’ complaint didn’t describe the alleged deception in sufficient detail.
On April 18, the Ninth Circuit reversed the District Court and held that the plaintiffs did include sufficient detail about the alleged deception in their complaint. “It appears that this case will now go back to the District Court for litigation of the substantive issues asserted the complaint,” Pagar said.
“Many other retailers are already currently facing putative class action cases as well as regulatory challenges alleging that the retailers’ discount/sale pricing claims are deceptive,” she explained. “This decision provides more support to the challengers in those cases, and is likely to cause concern among those retailers who currently face such challenges as well as among other retailers who haven’t (yet) faced such a challenge.”
So, how can customers protect themselves from false advertising?
From a consumer perspective, in Pagar’s opinion, the critical issue is for consumers is to keep themselves informed about the products that they purchase. Consumers should research the products they want to buy and understand what the quality issues are, what the pricing range is, and where the items are available for purchase.
She added, “Pricing issues are one area where consumers have an excellent ability to make prudent marketplace decisions for themselves. All they need to do is comparison shop – online, offline, with a comparison shopping app, or via other mechanisms – to understand what item they are purchasing and how they personally want to value each item.”