Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Colo.: Grocery customers stated valid Colorado Consumer Protection Act claim, (Sep 27, 2013)

By Peter Reap, J.D., LL.M.

Five individual customers of Avanza grocery stores in Colorado adequately stated a valid Colorado Consumer Protection Act (CCPA) claim against wholesale food distributor Nash Finch Company, who operated the specialty foods stores geared toward Hispanic shoppers, the federal district court in Denver has decided (Martinez v. Nash Finch Company, September 26, 2013, Krieger, M.). Those five plaintiffs came forth with sufficient evidence of causation; however, plaintiff Eva de la Cruz and the remaining 56 plaintiffs who failed to come forward with any evidence whatsoever on the element of causation did not. Thus, summary judgment was granted to Nash with respect to those individuals on the CCPA claim.

Background. From June 2008 to April 2009, Nash ran a pricing program in its Avanza stores called “Shelf Plus 10.” Some of Nash’s promotional materials for the program included the phrase, “A Great Way to Save - Plus 10% at the Register.” The plaintiffs alleged that they understood the promotional material to mean that the posted prices would be reduced by 10% at the register, resulting in a 10% savings. The reality, however, was precisely the opposite—at the register, the posted or advertised prices were increased by 10%, the court noted.

CCPA. To state their CCPA claims, the plaintiffs had to establish the following elements: (1) Avanza engaged in a practice deemed deceptive under the statute; (2) the practice occurred in the course of Avanza’s business; (3) the practice significantly impacted the public as actual or potential consumers of Avanza’s goods; (4) the plaintiffs suffered an injury in fact; and (5) the deceptive trade practice was the cause of the injury.

A CCPA claim would only lie if the plaintiff could show that the defendant knowingly engaged in a deceptive trade practice. Thus, liability depended on knowledge or intent existing at the time of the advertising conduct and the damage that resulted from the conduct. The CCPA did not create liability for those who intended to live up to the pronouncements of their advertisements, but were negligent in action despite those intentions, the court noted.

It was undisputed that Nash implemented a “Shelf Plus 10” pricing program and that some of its promotional materials during the program included the phrase “A Great Way to Save - Plus 10% at the Register.” It was also undisputed that during the program, Nash charged Avanza customers 10% more than the prices posted on the shelf. On this evidence alone, a reasonable jury could find that Nash’s practices were misleading as to what it would actually charge for its products. A plausible reading of the “Great Way to Save — Plus 10%” language was that Nash was promising an additional 10% savings, in the court’s view. Further, a reasonable jury could find that the pricing program and advertisements were implemented with the intent to gain more customers and revenue.

It could be inferred from Nash’s use of an unorthodox pricing model, coupled with promotional language that tended to obscure that policy, that Nash expected and intended for its customers to misunderstand the nature of the policy. Thus, when viewing the evidence in the light most favorable to the plaintiffs, the issues of whether Nash’s conduct constituted a “deceptive trade practice,” and whether Nash acted with the necessary intent, both required a trial. Summary judgment was therefore inappropriate on those bases.

Reliance often provided a key causal link between a consumer’s injury and a defendant’s deceptive practice, the court noted. Here, the plaintiffs collectively asserted that they relied on either the promotional signage or the posted shelf prices when shopping at Avanza. However, only six plaintiffs came forward with evidence, consisting of their own deposition testimony, of their reliance on Nash’s practices.

Viewing the evidence submitted in the light most favorable to the plaintiffs, Alfredo Ledezma, Mauricio Caccia, Maria Nieblas, Pedro Medina, and Refugio de la Cruz came forth with sufficient evidence of causation, and therefore a trial on their CCPA claims was required, the court ruled. Based on their testimony that they believed they were receiving a 10% discount when they shopped at Avanza, a reasonable jury could infer that Nash’s alleged practices influenced these plaintiffs’ shopping decisions, and therefore caused their injuries.

As to Plaintiff Eva de la Cruz, on the evidence she submitted, a reasonable jury could not conclude that Nash’s alleged practices caused her injuries, according to the court. Indeed, de la Cruz admitted that she always knew she was being charged 10% more, and that she continued to shop at Avanza because it was convenient. She also testified that she understood the signage to mean that she would be charged 10% more, and therefore she never believed that she would save 10% at the register. Because de la Cruz failed to come forward with sufficient evidence of causation, she did not establish every element of her claim. Thus, Nash was entitled to judgment in its favor on her CCPA claim. Similarly, Nash was entitled to judgment in its favor on the CCPA claims of the remaining 56 plaintiffs who failed to come forward with any evidence whatsoever on the element of causation.

The case is Civil Action No. 11-cv-02092-MSK-KLM.

Attorneys: William Richard Kroeger (Bachus & Schanker, LLC) for Mauricio Caccia. Catherine Rittenhous Ruhland (Wheeler Trigg O’Donnell, LLP) for Nash Finch Company.

Companies: Nash Finch Company

Cases: StateUnfairTradePractices ColoradoNews