Rubenstein v. The Gap, B272356

Background

Plaintiff Linda Rubenstein bought clothing at Gap and Banana Republic “Factory Stores” (outlet mall locations) and alleged the items were lower quality and never sold at traditional Gap/Banana Republic stores.
Gap uses its Gap and Banana Republic brand names on factory store signage and on labels of factory-store merchandise, plus small geometric symbols to denote factory items.
Rubenstein alleged Gap failed to disclose that factory-store items were not previously sold in traditional stores and were of lesser quality, and that this misled her into purchasing them.
She asserted claims under the False Advertising Law (FAL), Unfair Competition Law (UCL), and Consumers Legal Remedies Act (CLRA), seeking injunctive relief, restitution, damages, and class certification.
The trial court sustained Gap’s demurrer without leave to amend, finding no actionable misrepresentation or duty to disclose; Rubenstein appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Gap’s use of brand names on factory-store signage/labels constitutes false advertising under the FAL	Rubenstein: branding implies items are same quality/previously sold in retail stores; this is misleading	Gap: using its own brand on products it manufactures/sells is not deceptive even if quality differs	Held: No FAL violation — no affirmative advertising or misleading statement alleged; use of own brand not deceptive as matter of law
Whether Gap’s practice is "fraudulent" under the UCL (likely to deceive)	Rubenstein: reasonable consumers expect outlet items to have been sold at retail; omission of retail history misleads	Gap: no representations about retail history or quality; consumers still receive Gap/BR items and can inspect/return	Held: No UCL fraudulent claim — branding not likely to deceive reasonable consumers; no duty to disclose shown
Whether Gap’s practice is "unlawful" or "unfair" under the UCL (predicate violations and unfairness)	Rubenstein: conduct harms brand and consumers who expect retail-equivalent goods	Gap: no predicate statutory violation (FAL/CLRA) and no substantial, unavoidable consumer injury	Held: No UCL unlawful or unfair claim — no predicate violations proved and no substantial injury that consumers could not avoid
Whether Gap violated the CLRA by misrepresenting quality/characteristics	Rubenstein: labeling/branding implies characteristics/quality not present	Gap: no affirmative misrepresentations or actionable omissions about product characteristics or retail history	Held: No CLRA violation — complaint alleges no actionable representation or required disclosure
Whether leave to amend should have been granted	Rubenstein: did not specify additional facts she could plead to cure defects	Gap: dismissal without leave proper given deficiencies	Held: Trial court did not abuse discretion — plaintiff failed to show a reasonable possibility amendment could cure defects

Key Cases Cited

LiMandri v. Judkins, 52 Cal.App.4th 326 (1997) (circumstances creating affirmative duty to disclose)
Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011) (UCL protects consumers/competitors and defines unlawful, unfair, fraudulent practices)
Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (1999) (UCL’s unlawful prong borrows violations of other laws)
Klein v. Chevron U.S.A., Inc., 202 Cal.App.4th 1342 (2012) (deceptive practices and omission analysis under UCL)
Daugherty v. American Honda Motor Co., Inc., 144 Cal.App.4th 824 (2006) (omission actionable only when contrary to representations or duty to disclose)
Bardin v. DaimlerChrysler Corp., 136 Cal.App.4th 1255 (2006) (pleading expectations of consumers insufficient without supporting facts)
Collins v. eMachines, Inc., 202 Cal.App.4th 249 (2011) (examples of active concealment creating duty to disclose)