Antitrust Law Daily Wrap Up, ADVERTISING—D. Minn.: Claims against television shopping channel over jewelry value and descriptions fail, (Jan 5, 2015)

By Linda O’Brien, J.D., LL.M.

A consumer who purchased gems and jewelry items from a television shopping channel for the purpose of resale was a merchant and could not pursue Minnesota consumer protection and false advertising claims against the company, the federal district court in Minneapolis has decided. The consumer’s unfair and deceptive trade practices were also dismissed (Klinge v. Gem Shopping Network, Inc., December 31, 2014, Ericksen, J.).

Gem Shopping Network (GSN) sells gemstones and jewelry through its 24-hour television channel. Consumer Ann Klinge began watching and purchasing items from GSN in July 2009. After speaking with a customer service representative who told her about another customer that bought gemstones from GSN and resold them, Klinge decided to form a business in which she would purchase items from GSN and resell them. In January 2010, Klinge attended a trade show and was told by a vendor that she paid too much for some gems and some of GSN’s appraisals were too high. Klinge continued to purchase items from GSN until July 2010, although she never attempted to resell any of the items and periodically returned other gems under GSN’s return policy.

Subsequently, Klinge sued GSN, alleging violations of the Minnesota Consumer Fraud Act (CFA), False Statements in Advertising Act (FSAA), Unfair Trade Practices Act (MUPTA), and Deceptive Trade Practices Act (DTPA). Specifically, Klinge asserted that GSN made misrepresentations about the appraised values and the descriptions of the gems. GSN moved for summary judgment.

CFA and FSAA. The court determined that the plaintiff did not have a claim under either the CFA or FSAA. There was a private civil remedy for persons injured under the statutes if they could show a public benefit. Klinge’s allegations that she relied on misrepresentations that were made to the public at large on television were sufficient to show a public benefit. However, her claims were barred since she was a merchant with respect to the items at issue, in the court’s view.

Moreover, the plaintiff’s argument that she never held herself out as someone who had knowledge or skill peculiar to jewelry and gemstones was rejected. The court noted that specialized expertise was not necessary to become a merchant and the plaintiff became a merchant by her formation of a business dealing in gems and jewelry.

MUPTA. Additionally, the plaintiff’s claims under MUPTA failed. Kringe alleged that GSN violated the MUTPA by representing itself as a retailer that sells items wholesale or less than usual retail prices. The MUPTA defines “sale of merchandise at retail” to include any sale except a sale for the purpose of resale. Although the plaintiff purchased some items for personal use, her allegations concerned items that she purchased for the purpose of resale. Therefore, the transactions at issue were not in connection with sales of merchandise at retail under the MUPTA.

DPTA. The DPTA provides that a person likely to be harmed by a deceptive trade practice of another may be granted an injunction. The future harm must be to the plaintiff and it was not sufficient if the harm was to other purchasers or customers, the court explained. In this case, the plaintiff testified that her last purchase from GSN was in July 2010. Since the plaintiff did not assert that she had an ongoing business relationship with GSN or intended to purchase gems from GSN in the future, she had no remedy under the DPTA, the court concluded.

The case is No. 12-cv-2392.

Attorneys: Johnetta G. Paye (J. Paye & Associates, Attorneys at Law) for Ann Klinge. Haley L. Waller Pitts (Fredrikson & Byron, PA) for Gem Shopping Network, Inc.

Companies: Gem Shopping Network, Inc.

Cases: Advertising StateUnfairTradePractices MinnesotaNews