710 F.Supp.3d 718
N.D. Cal.2024Background
- Plaintiff Nea Vizcarra alleges Michaels Stores, Inc. always advertises its products as being discounted at least 20% from a "regular" price, although products are never or rarely sold at that regular price.
- Vizcarra claims these discounts are misleading, as the actual prevailing market price is always at least 20% lower than the advertised "regular" price, making the sale presentation deceptive.
- The putative class includes all customers who purchased products from Michaels advertised as discounted, both online and in-store, within a relevant timeframe.
- Michaels filed a motion to dismiss all of Vizcarra’s claims under Rule 12(b)(6) and to strike class allegations under Rule 12(f).
- The opinion addresses whether the complaint plausibly alleges deceptive former price advertising in violation of the California False Advertising Law (FAL) and related claims, and whether class claims should be stricken at the pleading stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether perpetual discounts based on a regular price constitute deceptive former price advertising under FAL § 17501 | Michaels’ regular prices are never actually charged, so the advertised discounts are misleading as the items are always on sale | The regular price is always a current price; offering discounts via coupons or codes does not turn current price into a former price | Adopts plaintiff’s position; the scheme plausibly alleges former price advertising violations |
| Sufficiency of FAL, UCL, CLRA claims (false/misleading advertising) | Adverts and discounts create a deceptive impression as the regular price is never paid | Discounts and codes are not always known or used by all consumers; ads not actually misleading | Plaintiff states plausible claims; actual potential for consumer deception is a factual question |
| Whether the economic loss rule bars intentional misrepresentation claim | Fraudulently induced contract by misrepresentation; injury is from making the purchase at all | Remedies limited to contract damages, no independent tort claim for disappointed expectations | Plaintiff’s claim is not barred; fraudulent inducement is a recognized exception |
| Whether unjust enrichment and quasi-contract claims are viable | Michaels unjustly benefited by selling at a price premium via deceptive discounts | No separate cause of action for unjust enrichment under CA law; valid contract governs subject matter | Dismissed; unjust enrichment not viable alongside valid contract (leave to amend granted) |
Key Cases Cited
- Kasky v. Nike, Inc., 27 Cal. 4th 939 (Cal. 2002) (violation of FAL necessarily violates UCL and both are governed by the reasonable consumer test)
- Williams v. Gerber Prods. Co., 552 F.3d 934 (9th Cir. 2008) (deception under the UCL/FAL is usually a factual question, making dismissal inappropriate)
- Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979 (Cal. 2004) (exception to economic loss rule for contracts fraudulently induced)
- Belton v. Comcast Cable Holdings, LLC, 151 Cal. App. 4th 1224 (Cal. Ct. App. 1st Dist. 2007) ("unfair" UCL claims must be tethered to legislatively declared policy)