Rubenstein v. Gap, Inc.
14 Cal. App. 5th 870
Cal. Ct. App. 5th2017Background
- Plaintiff Linda Rubenstein bought clothing at Gap and Banana Republic "Factory Stores" (outlet malls) and alleged the items were lower quality and never sold at traditional Gap/Banana Republic stores.
- Gap labels factory-store garments with Gap/Banana Republic brand names and uses geometric symbols to denote factory-store items.
- Rubenstein alleged Gap’s use of its brand names and failure to disclose the products’ retail history/quality constituted deception under the False Advertising Law (FAL), Unfair Competition Law (UCL), and Consumers Legal Remedies Act (CLRA).
- Gap demurred, arguing no actionable misrepresentation or duty to disclose, and that plaintiff failed to allege how she paid more than the value received.
- Trial court sustained the demurrer without leave to amend; Rubenstein appealed.
- Court of Appeal affirmed, holding that using Gap’s own brand names on factory-store merchandise is not deceptive as a matter of law and no duty to disclose was shown.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| FAL: Did Gap make false or misleading advertising by labeling factory-store goods with Gap/Banana Republic brands? | Rubenstein: Use of brand names implied retail-quality goods previously sold in traditional stores; omission of that fact was misleading. | Gap: No advertising or affirmative misrepresentation that factory-store items were previously sold in retail stores or of particular quality; selling lower-quality goods under its own brand is not false advertising. | Held: Dismissed — brand use on Gap’s own goods is not deceptive as a matter of law; no alleged false/misleading statement. |
| UCL — Fraudulent prong: Was Gap’s practice likely to deceive reasonable consumers? | Rubenstein: Consumers reasonably expect outlets to sell retail leftovers; Gap’s naming/labels mislead those expectations. | Gap: No statements asserting prior retail sale or specific quality; consumers can inspect, ask employees, or return items; no likelihood of deception. | Held: Dismissed — no actionable deceptive practice; no duty to disclose shown under LiMandri circumstances. |
| UCL — Unlawful/unfair prongs (including whether predicate statutes were violated) | Rubenstein: Conduct violates FAL/CLRA, so unlawful; practice is unfair because consumers are harmed. | Gap: No predicate statutory violations (FAL/CLRA); any injury avoidable by inspection/returns; not substantial. | Held: Dismissed — no predicate violation of FAL or CLRA; unfairness not established. |
| CLRA: Did Gap misrepresent goods’ characteristics/quality or omit material facts? | Rubenstein: Representations by branding and non-disclosure fall within CLRA prohibitions on misrepresenting quality/characteristics and advertising contrary to sale. | Gap: No affirmative misrepresentations about quality/retail history; no duty to disclose; consumers could discover quality pre-purchase. | Held: Dismissed — no CLRA violation pleaded; no actionable omission or misrepresentation. |
Key Cases Cited
- LiMandri v. Judkins, 52 Cal.App.4th 326 (Cal. Ct. App. 1997) (identifies four circumstances creating an affirmative duty to disclose)
- Klein v. Chevron U.S.A., Inc., 202 Cal.App.4th 1342 (Cal. Ct. App. 2012) (discusses partial representations and duty to disclose where practices reinforce consumer assumptions)
- Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (Cal. 1999) (UCL framework and that section 17200 borrows violations of other laws)
- Daugherty v. American Honda Motor Co., Inc., 144 Cal.App.4th 824 (Cal. Ct. App. 2006) (omission actionable under CLRA only when contrary to an actual representation or when defendant had duty to disclose)
- Bardin v. DaimlerChrysler Corp., 136 Cal.App.4th 1255 (Cal. Ct. App. 2006) (insufficient to assume lay consumers expect particular component quality without factual support)