Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Consumer’s drip pricing allegations against World Market survive dismissal, (May 12, 2025)

By Wendy Biddle, J.D.

Presuming reliance at the pleading stage aligns with the legislative intent for a law that was designed to combat bait-and-switch advertising.

The federal district court in San Francisco denied World Market’s motion to dismiss a consumer’s claims under California’s new Honest Pricing Law provision of the Consumer Legal Remedies Act, which targets deceptive “drip pricing.” The court found that the consumer, who purchased chairs from the store’s website, sufficiently alleged reliance and damages, allowing her claims to proceed. The court also found that the consumer sufficiently alleged that the shipping costs were not actually incurred. Additionally, the court ordered limited discovery on the consumer’s reliance on initial pricing (Harvey v. World Market, LLC, No. 3:25-cv-01242-CRB (N.D. Cal. May 9, 2025)).

Background. The consumer alleged she purchased a set of chairs from World Market in September 2024. The store advertised the chairs on its website as $429.99 but after she added them to her cart, the website added two more charges; an oversized item surcharge, and a shipping and handling charge, that added nearly $100.00 onto the price. She alleged that the World Market did not include the charges in the product’s initial advertised price and by adding these undisclosed fees, World Market engaged in “drip pricing.” The consumer ultimately purchased the chairs even though she alleged that had she known upfront about the actual costs, she would not have purchased them or would have gone to a different website.

California passed the Honest Pricing Law in July 2024, which amended the Consumer Legal Remedies Act to ban drip pricing. Drip pricing occurs when businesses advertise products at artificially low prices then disclose additional charges later on in the buying process. The law prohibits advertising a price for goods or services that does not include all mandatory fees or charges other than taxes or actually incurred shipping costs.

The consumer filed her class action complaint initially in state court for fraudulent omission under the CLRA, California’s Unfair Competition Law, and False Advertising Law. World Market removed the case to federal court and then moved to dismiss the action for failure to state a claim.

Standing. World Market argued that the consumer failed to sufficiently allege both reliance and damages, which are required under the CLRA, UCL, and FAL.

Reliance. The court acknowledged that for a plaintiff to proceed with a fraudulent omission claim under these statutes, there must be an allegation of reliance on the defendant’s omission. Specifically, the plaintiff must allege that had the omitted information been disclosed, they would have acted differently. The court presumes reliance if the omission is considered “material,” meaning a reasonable consumer would find it important in making a purchasing decision.

The court emphasizes that whether an omission is material is generally a question of fact, unsuitable for resolution at the pleading stage. The court concluded that the consumer’s allegations, if true, demonstrated that the undisclosed fees were material to her purchasing decision, thus supporting a presumption of reliance.

The court distinguished the consumer’s situation from other cases cited by World Market, such as Charbonnet and Hall, where plaintiffs proceeded with purchases despite knowing of additional fees. The court found that applying the reasoning from these cases to section 1770(a)(29) would undermine the Honest Pricing Law’s purpose. The law was designed to combat bait-and-switch advertising, and presuming reliance at the pleading stage aligns with the legislative intent. The court highlighted that the Honest Pricing Law was enacted to address deceptive practices like drip pricing, which can impose economic harms on consumers. The presumption of reliance, therefore, supports the law’s overarching goal to protect consumers from unfair business practices.

The court instructed the parties to conduct limited discovery focused on whether the consumer actually relied on the initial display price when making her purchase. This step will determine if there is a genuine dispute of fact regarding her reliance, which is crucial for her standing in the case.

Damages. As to damages, the plaintiff must allege that she lost money or property as a result of her transaction with World Market. World Market contended that Harvey did not suffer harm because she received the chairs she purchased, implying she got the “benefit of the bargain.” However, the court found this argument unconvincing in this context, as the economic injury stems from paying fees not included in the advertised price, rather than dissatisfaction with the product itself.

The court referred to the legislative history of section 1770(a)(29), which indicated that “junk fees” can impose substantial economic harms on consumers. That supports the notion that consumers are harmed when they pay fees that were not part of the initially advertised price, regardless of their satisfaction with the product.

The court concluded that the consumer plausibly alleged economic harm because she paid additional fees that were not disclosed upfront. That satisfied the “lost money or property” requirement under the UCL and FAL, and the “any damage” requirement under the CLRA.

CLRA claim. World Market argued that the consumer failed to state a claim under the CLRA because she failed to allege with particularity any facts that showed World Market violated the Honest Pricing provision of the CLRA. That section does not require companies to include postage or carriage charges that will be reasonably and actually incurred to ship the goods in the product’s initially advertised price.

But the court noted that the consumer sufficiently alleged that World Market did not actually incur the shipping fees it charged. She alleged those fees were based on the sale price and under World Market’s policy “a 3-pound item that sells for $50 would incur a shipping cost far less than a 3-pound item that sells for $500.” Taken as true at this stage in the proceedings, the court found that the consumer’s allegations were sufficient to state a claim under Rule 9(b)’s standard.

The court therefore denied World Market’s motion to dismiss and instructed the parties to conduct limited factual discovery regarding reliance.

The Case is No. 3:25-cv-01242-CRB.

Judge: Breyer, C.

Attorneys: Christian Schreiber (Olivier & Schreiber PC) for Valerie Harvey. Anna Donald (Bryan Cave Leighton Paisner LLP) for World Market, LLC and Cost Plus World Market, LLC.

Companies: World Market, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews