Antitrust Law Daily Wrap Up, ADVERTISING—9th Cir.: Ninth Circuit certifies question on elevated list price advertising to Washington state Supreme Court, (May 12, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Nationwide clothing brand retailer alleged to have deceived consumers by representing its normal prices as discounted compared to inflated "list prices."

The Ninth Circuit has certified to the Washington Supreme Court the question of whether a consumer who purchases a product based upon "misrepresentation about the product’s discounted price, comparative price, or price history" incurs injury within the meaning of the Washington Consumer Protection Act. The putative class action had been dismissed with prejudice by a federal district court, and the plaintiff had appealed. In adjudicating the matter, the answer to the question was determinative. The Washington Supreme Court had not directly ruled on the question, and analysis of decisions from other courts did not lead to a definitive answer. The Ninth Circuit found the Washington Supreme Court better qualified than itself to" determine its own law in the first instance" (Montes v. SPARC Group, LLC, No. 23-35496 (9th Cir. May 9, 2025)).

Background. SPARC Group, LLC d/b/a Aéropostale (SPARC) retails the Aéropostale brand of denim clothing and specialty apparel through hundreds of brick-and-mortar stores in the United States and worldwide, and also through its online website. Shawnna Montes filed a putative class action lawsuit in the Eastern District of Washington federal court, alleging that SPARC deceives consumers by touting an artificially high "list price" as comparison to the actual sales price, which is represented to the consumer as a significant discount from the "list price. According to Montes's complaint, SPARC actually charges the inflated "list price" on a small number of isolated occasions, while advertising its effective normal selling prices for the items as special discounts for the consumer. The example specified in Montes's complaint is a particular pair of leggings she had purchased on a particular day, touted as being on sale for $6.00, while having a "list price" of $12.50.

Montes alleged causes of action under Washington State consumer protection statutes [Wash. Rev. Code §§ 19.86.020 and 19.86.090]. The Washington statute requires Montes to prove, among other elements, (1) an unfair or deceptive act or practice; (2) such practice occurring in trade or commerce; and (3) she incurred injury from the act or practice. Although SPARC did not dispute its acts and practices as alleged, it did assert that Montes did not plead that she had incurred injury as a result. The federal district court dismissed the complaint with prejudice for failure to state a cause of action [Montes v. SPARC Group, LLC, case No. 2:22-cv-00201-TOR (E.D. Wash., June 22, 2023)].

Montes appealed the dismissal to the Ninth Circuit.

State law and the Erie doctrine. Per the Erie doctrine [Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938)], federal courts are required to apply the relevant state law unless a federal statute or Constitutional question is at issue. The federal courts are required to apply the state law as it has been or would be applied by the highest court in the state. Where the highest state court has not directly ruled on the matter, the federal courts can "predict" how the highest court would rule on the matter through analysis of the state statutes, the rulings of lower courts in the state, and other relevant authorities. Also available to the federal courts is the so-called "certified question" option of formally requesting the relevant state's highest court to apprise the federal court on how it would rule on the issue. The Washington State statutes specifically provide for certified questions to the Washington Supreme Court [Wash. Rev. Code § 2.60.020].

Certification to the state court. The Ninth Circuit federal appellate court formally requested the Washington Supreme Court to certify a Washington State law question. Here, in order to decide Montes's appeal, the Ninth Circuit needed to know whether a person incurs injury "[w]hen a seller advertises a product’s price, coupled with a misrepresentation about the product’s discounted price, comparative price, or price history." It was necessary for the Ninth Circuit to know Washington state law because the outcome of the case hinged solely upon whether Montes incurred monetary or property "injury" within the meaning of the statute.

The Washington Supreme Court has not ruled directly on the issue, and applying rulings by Washington State's lower courts and courts of other states on related issues would yield ambiguous results. Moreover, the Ninth Circuit had already certified a similar question regarding an analogous Oregon statute to the Oregon Supreme Court [Clark v. Eddie Bauer LLC, 30 F.4th 1151 (9th Cir. 2022)].

The Case is No. 23-35496.

Judge: Collins, D.

Attorneys: Stephen P. DeNittis (DeNittis Osefchen, PC) for Shawnna Montes. Meegan Brooks (Benesch Friedlander Coplan & Aronoff, LLP) for Sparc Group, LLC.

Companies: Sparc Group, LLC

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