Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Mass.: Kohl’s deceptive price tags caused no cognizable injury, (Feb 2, 2016)

By Edward L. Puzzo, J.D.

A consumer who was allegedly misled into purchasing merchandise at a Kohl’s department store by unfair and deceptive price tags nevertheless could not maintain a deceptive practice action because she did not suffer a cognizable injury as a result, the federal district court in Boston has ruled (Mulder v. Kohl's Department Stores, Inc., February 1, 2016, Saylor, F.).

Plaintiff Ellen Mulder brought a putative class action against Kohl's Department Stores, alleging that comparison prices listed on its merchandise price tags—purporting to offer specific dollar discounts from its own former retail prices, or manufacturer’s suggested retail prices—were in fact false, fabricated and inflated so that Kohl’s could offer phantom markdowns. Mulder alleged that these practices were unfair and deceptive and violated Chapter 93A of the Massachusetts General Laws. Kohl’s moved to dismiss.

Unfair or deceptive acts. Under the Code of Massachusetts Regulations rules governing retail advertising and price comparisons, the court noted, it is unfair or deceptive for a seller to “state or imply that it is offering any savings...by making a direct or indirect price comparison, unless the seller clearly and conspicuously describes the basis for the price comparison.” 940 Mass. Code Regs. 6.05(2). That same section does, however, permit a seller to make a price comparison without disclosing the basis for the comparison if the seller is comparing to its own former price. If the seller does so, the former price must be a bona fide, actual price at which the seller offered the product to the public. 940 Mass. Code Regs. 6.05(3).

Mulder’s alleged that she paid $17.99 for an item with a comparison price of $26, but no basis for the comparison was indicated. She also alleged that she purchased another item for $29.99 that had a manufacturer’s suggested retail price (MSRP) of $55, but that the MSRP was fabricated. The allegation sufficiently stated a claim for violations of the Code of Massachusetts Regulations that were unfair or deceptive conduct within the meaning of Chapter 93A of the Massachusetts General Laws, the court ruled.

Injury. Mulder alleged that the unfair and deceptive practices complained of caused an identifiable harm: a purchase that otherwise would not have been made. The question, the court stated is whether that harm is a sufficient “injury” to state a claim under Chapter 93A. The court concluded it was not. Mulder, the court noted, paid a total of $40.78 for merchandise in the belief she was getting a significant discount on her purchase. But, the court stated, the items she purchased were in fact worth the price that she paid, so she suffered no economic harm. She suffered no loss and there was no sum of money that could be awarded to her that could compensate her without providing a windfall. The fact that she may have been manipulated into purchasing the items because she believed she was getting a bargain did not necessarily mean she suffered economic harm, the court stated. Without a cognizable injury, she cannot maintain an action under Chapter 93A, the court ruled. Therefore the court dismissed her claim.

The case is Civil Action No. 1:15-cv-11377-FDS.

Attorneys: Konstantine W. Kyros (Kyros Law Offices, PC) for Ellen Mulder. Lauri A. Mazzuchetti (Kelley Drye & Warren LLP) for Kohl’s Department Stores, Inc.

Companies: Kohl’s Department Stores, Inc.

Cases: StateUnfairTradePractices Advertising MassachusettsNews