443 F.Supp.3d 1107
N.D. Cal.2020Background:
- Plaintiff Jeffrey Freeman bought a made-to-measure suit from Indochino in August 2017 and alleges widespread "reference pricing" advertising (crossed-out higher prices, "Sale", "You save $_", limited-time banners) across Indochino's website, showrooms, emails, and social media.
- Freeman alleges the crossed-out reference prices falsely implied the items were formerly sold at those higher prices, when in fact the goods were sold at or near the advertised "sale" price; he claims CLRA, FAL, UCL, breach of contract, and unjust enrichment.
- Defendants moved to dismiss for: inadequate pre-suit notice; failure to state claims under the UCL/FAL/CLRA; defective breach-of-contract pleading; lack of standing for equitable relief; and insufficiency of punitive-damages allegations.
- The court found Freeman provided timely and sufficient pre-suit notice and that his factual allegations (including images of advertisements and allegations that the products are Indochino private-label items) plausibly plead deceptive reference pricing that could mislead a reasonable consumer.
- The court denied dismissal of the UCL/FAL/CLRA claims, breach of contract, requests for equitable relief (including injunctive relief and unjust enrichment), and the punitive damages prayer; defendants were ordered to answer the FAC.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Pre-suit notice for CLRA and contract claims | Freeman sent demand letters in June/July 2019 after learning of the claims; notice sufficed | Notices were insufficient under Cal. Civ. Code §1760 and UCC §2607 | Court: notice was timely and sufficient based on FAC allegations |
| Reasonable-consumer deception under UCL/FAL/CLRA | Advertising (struck-through prices, % off, "You save", limited-time banners) would mislead reasonable consumers | No reasonable consumer would interpret reference prices as former prices of identical items | Court: plausibility exists; dismissal inappropriate—deceptiveness usually a fact question |
| Nature of reference prices (private-label / deceptive basis) | Indochino sells private-label, made-to-measure clothing exclusively; consumers would infer reference prices are Indochino's former/regular prices | Reference prices simply show market comparisons or retailer cross-retail comparisons and are not deceptive | Court: FAC plausibly alleges reference prices were presented as former/regular Indochino prices and therefore deceptive |
| Availability of restitution under UCL/FAL | Freeman seeks restitution; amount/model premature at pleading stage | Restitution barred because plaintiff received some value or class-wide model is unworkable | Court: restitution is not barred categorically; measurement issues are factual and premature |
| Breach of contract pleading | Contract incorporated order confirmation; struck-through prices and discounts formed part of the bargain and Defendants failed to deliver promised value | Complaint lacks specific contract terms, breach details, and damages calculation | Court: FAC sufficiently alleges contract formation, breach (no "benefit of the bargain"), and damages pleading suffices at this stage |
| Standing for injunctive relief | Freeman alleges a continuing desire to buy if ads are truthful and a risk of recurrence | No real threat of future harm; speculative | Court: allegation of likely future reliance is sufficient for standing for prospective injunctive relief |
| Unjust enrichment claim | Alternative equitable claim for restitution and disgorgement | Claim is duplicative of contract or statutory claims and not cognizable | Court: Ninth Circuit permits quasi-contract/unjust enrichment claims in this context; claim survives |
| Punitive damages | Plaintiff pleads fraudulent/misleading conduct sufficient to seek punitive damages | Punitive damages require substantial evidence of malice/oppression/fraud | Court: dismissal premature; punitive allegation remains for later proof |
Key Cases Cited
- Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496 (2003) (reasonable-consumer standard for deceptive advertising under state law)
- Freeman v. Time, Inc., 68 F.3d 285 (9th Cir. 1995) (reasonable-consumer standard context)
- Ebner v. Fresh, Inc., 838 F.3d 958 (9th Cir. 2016) (deception may be resolved as a matter of law if no reasonable consumer would be misled)
- Williams v. Gerber Prod. Co., 552 F.3d 934 (9th Cir. 2008) (deceptive-practice allegations generally present factual questions unsuited to dismissal)
- In re Tobacco II Cases, 240 Cal. App. 4th 779 (2015) (trial courts have broad discretion to fashion equitable relief and multiple measures of restitution)
- Colgan v. Leatherman Tool Grp., Inc., 135 Cal. App. 4th 663 (2006) (restitution awards under consumer statutes must be supported by substantial evidence)
- Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753 (9th Cir. 2015) (quasi-contract/unjust enrichment claims cognizable and not necessarily duplicative)
- Hinojos v. Kohl's Corp., 718 F.3d 1098 (9th Cir. 2013) ("benefit of the bargain" theory supports contract/consumer claims)
- Davidson v. Kimberly-Clark Corp., 889 F.3d 956 (9th Cir. 2018) (standing for injunctive relief requires plausible allegation of a real and immediate threat of future harm)