Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Claims that bedding thread count was deceptively advertised partially put to rest, (Aug 16, 2016)

By Michael Menzhuber, J.D., LL.M.

A consumer could pursue claims that Williams-Sonoma deceptively advertised the thread count of bedding he purchased, the federal district court in San Francisco has ruled. The court also granted the plaintiff’s request for injunctive relief because he alleged that he would purchase bedding from the defendants in the future (Rushing v. Williams-Sonoma, Inc., August, 15, 2016, Orrick, W.).

William Rushing filed a class action complaint, which challenged allegedly deceptive advertising practices for bedding sold by Williams Sonoma, Inc., Williams-Sonoma DTC, Inc., Williams-Sonoma Advertising, Inc., Williams-Sonoma Stores, Inc., Pottery Barn, Inc., Pottery Barn Kids, Inc., Pottery Barn Teen, Inc., and West Elm, Inc. The complaint alleged causes of action for violations of California’s Consumer Legal Remedies Act (CLRA), False Advertising Law (FAL), and Unfair Practices Law (UCL). The complaint also sought injunctive relief. The defendants responded by filing a motion to dismiss.

Rushing asserted that the bedding he purchased from Williams-Sonoma Inc.’s website: (1) was falsely advertised as having a 600 thread count and (2) did not comply with the industry standard of having a plus or minus 5 percent of the threads advertised because each two-ply yarn was improperly counted as two threads. He also asserted that, similar to the bedding that he purchased, William Sonoma, Pottery Barn, and West Elm, Inc. advertised and sold 31 additional products with misleading thread counts at or about 350.

Unpurchased products. The court dismissed Rushing’s CLRA, FAL, and UCL claims against all the defendants, except the Williams-Sonoma defendants, for lacked of standing because the alleged deception as to the thread count of the bedding that Rushing purchased from Williams-Sonoma was materially different than the alleged deception involving the unpurchased products. Because Rushing lacked standing for the unpurchased products, the court concluded that the defendants’ argument that Rushing could not assert a breach of contract or an unjust enrichment cause of action based on quasi-contract was moot.

The court also determined that Rushing lacked standing to pursue claims against the defendants who did not sell or advertise Williams-Sonoma products because he failed to allege facts to support a claim against any defendants other than the Williams-Sonoma defendants.

Purchased product. The court denied the defendants’ safe harbor argument to Rushing’s CLRA, FAL, and UCL claims because the regulation they relied upon as a safe harbor does not expressly permit their advertising conduct and, therefore, could not bar Rushing’s consumer protection claims.

The defendants also argued that Rushing’s claims that sounded in fraud did not meet the Federal Rule of Civil Procedure 9(b) particularity standard. However, the court found that Rushing alleged the deceptive and fraudulent nature of his claim sufficiently for Rule 9(b) purposes.

The court did, however, dismiss Rushing’s active concealment claims under the CLRA. Although he adequately alleged an omission contrary to the affirmative statement claim, he did not allege "affirmative acts" to support an "active concealment claim".

UCL claims. With respect to the product that he purchased, the court determined that Rushing adequately stated a claim under: (1) the "unlawful prong" because he alleged what was deceptive and fraudulent in the defendants’ advertising: (2) the "unfair prong" because he alleged unfair conduct under both standards for determining what is "unfair competition" under the UCL; and (3) the "fraudulent prong" because he alleged that reasonable consumers would be misled by the defendants’ failure to disclose an accurate thread count.

Injunctive Relief. Finally, Rushing had standing in his claim for injunctive relief because he alleged that he would in fact purchase bedding from the defendants in the future if the defendants accurately disclosed the thread count.

The case is No. 3:16-cv-01421-WHO.

Attorneys: George Richard Baker (Baker Law PC) for William Rushing. Eric James Diiulio (Sheppard Mullin Richter & Hampton LLP) for Williams-Sonoma, Inc., Williams-Sonoma Advertising, Inc. and Williams-Sonoma DTC, Inc.

Companies: Williams-Sonoma, Inc.; Williams-Sonoma Advertising, Inc.; Williams-Sonoma DTC, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews