Lead Opinion
Opinion
Plaintiffs Cherilyn DeAguero, Sean Bose, and Rakhee Bose hied a putative class achon against Banana Republic, LLC, a clothing and accessories retailer with stores throughout California, alleging that signs in Banana Republic store windows advertising a 40 percent off sale were false or misleading because they did not disclose that the discount applied only to certain items. Plaintiffs alleged causes of action under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) (UCL), the false advertising law (Bus. & Prof. Code, § 17500 et seq.) (FAL)
BACKGROUND
I. The Complaint
As here relevant, plaintiffs alleged that they were lured to shop at Banana Republic stores (DeAguero in Nov. 2010, the Boses in Dec. 2011) by store window signs advertising a discount of 40 percent off purchases, with no apparent limit. Though they would not have entered the store but for the advertised discount, they ultimately purchased some (but not all) of their selected items after being informed by a store clerk at the cash register that none of the items they wished to purchase were on sale. They alleged that they had been damaged in the amount they overpaid for the items they bought, and that Banana Republic’s deceptive advertising violated the FAL, UCL, and CLRA.
II. Banana Republic’s Motion for Summary Judgment
In support of its summary judgment motion, Banana Republic submitted a declaration by a project manager, Debbie Cotton. Cotton described the various promotions offered at Banana Republic stores in December 2011. She explained that Banana Republic employees were instructed about which merchandise was excluded from the promotions and were given handouts to provide to customers about the promotions. According to Cotton, there were no 40 percent off promotions in any Banana Republic stores in California on November 7, 2010, the date DeAguero alleged she saw the sign.
Banana Republic attached copies of the handouts, the display easels (freestanding signs) and the so-called “window clings” that stores were instructed to display to advertise the various promotions in December 2011. Banana Republic also attached a copy of the displays of Banana Republic store windows on November 7, 2010.
III. Plaintiffs’ Opposition
In opposition to summary judgment, plaintiffs produced the following evidence.
A. Cherilyn DeAguero
Cherilyn DeAguero testified in her deposition that on November 7, 2010, she and her 14-year-old daughter were driving past a Banana Republic store on Ventura Boulevard in Studio City. DeAguero saw a large red sign in the store window stahng in black letters “40 percent off.” She pointed it out to her daughter, and they decided to stop and go shopping. Based on the 40 percent off discount, DeAguero thought she would be able to buy six to eight outhts for her daughter, who required a variety of outhts for auditions in her acting career.
As they entered the store, DeAguero saw another sign on a stand. This sign also was red and stated “40 percent off’ in black lettering. DeAguero did not recall if the sign said anything else. She did not recall seeing any signs inside the store while they were shopping, other than one advertising “New arrivals.”
After shopping and trying on outhts for approximately 40 minutes, DeAguero’s daughter chose eight pieces and wore one new outht out of the dressing room. They went to the register, and the sales clerk began ringing up the items. DeAguero was talking excitedly with the customer behind her, stating, “This is great, 40 percent off.” The clerk told her the items she was purchasing were not 40 percent off. DeAguero replied that the sign indicated everything was 40 percent off, but the clerk said the discount did not apply to the items she chose.
DeAguero became embarrassed, noticing that the line behind her was getting long. She found the experience “humiliating,” because she was trying to remain in a budget but did not want to make her daughter return to the dressing room to remove the outfit she was wearing.
She became angry and asked the clerk why the store had “waste[d] [her] time luring [her] in” and which items were 40 percent off. The clerk
DeAguero did not ask to speak with a manager because her daughter was embarrassed and was whispering to stop. She ultimately purchased the new items her daughter was wearing because she did not want to embarrass her. She did not buy the other items because they were not 40 percent off.
B. The Boses
Plaintiffs Sean and Rakhee Bose
Sean and Rakhee entered the store and began shopping. They both tried on clothes, selected some items to purchase, and took them to the register to pay. When the sales clerk began ringing up their items, the total seemed too high, so they asked her about the 40 percent discount. The clerk explained that the discount did not apply to everything in the store. They began to argue with her, pointing out that the signs did not state that the discount applied only to certain items.
Rakhee told Sean, “Let’s not cause a scene, and let’s go.” According to Sean, there were at least 15 people in line and he was annoyed and very embarrassed. He ultimately purchased one item (a sweater) because “we had invested all that time and effort, and just to leave with nothing would be a complete and utter waste of energy and time.” They did not purchase any other items. They did not ask to speak to a manager or call Banana Republic to complain.
IV. Ruling
The trial court granted Banana Republic’s summary judgment motion on the ground that plaintiffs failed to establish any economic injury, reasoning that “[ljost shopping time” was not “money or property” as required to confer standing.
Plaintiffs contend that none of the grounds raised in Banana Republic’s motion justified summary judgment. For reasons explained below, we agree.
I. Standard of Review
“A court may grant a summary judgment only if there is no triable issue of material fact and the moving party is entitled to judgment in its favor as a matter of law. (Code Civ. Proc., § 437c, subd. (c).) A defendant moving for summary judgment must show that one or more elements of the plaintiffs cause of action cannot be established or that there is a complete defense. [Citation.] The defendant can satisfy its burden by presenting evidence that negates an element of the cause of action or evidence that the plaintiff does not possess and cannot reasonably expect to obtain evidence needed to establish an essential element. [Citation.] If the defendant meets this burden, the burden shifts to the plaintiff to present evidence creating a triable issue of material fact. [Citation.] [¶] We review the trial court’s ruling on a summary judgment motion de novo, liberally construe the evidence in favor of the party opposing the motion, and resolve all doubts concerning the evidence in favor of the opponent. [Citation.]” (Garrett v. Howmedica Osteonics Corp. (2013)
II. Statutory Framework
Before considering the merits of the issues presented, we briefly review the statutes underlying plaintiffs’ three causes of action, and the requirement of standing.
A. UCL and FAL
‘“The UCL prohibits, and provides civil remedies for, unfair competition, which it defines as ‘any unlawful, unfair or fraudulent business act or practice [and unfair, deceptive, untrue or misleading advertising and any act prohibited by the FAL].’ (§ 17200.) Its purpose ‘is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.’ [Citations.]” (Kwikset, supra,
‘“The [FAL] generally prohibits advertising that contains ‘any statement. . . which is untrue or misleading, and which is known, or . . . should be known, to be untrue or misleading ....’(...§ 17500.) . . . [¶] The UCL and the [FAL] ‘prohibit ‘“not only advertising which is false, but also advertising which[,] although true, is either actually misleading or which has a capacity, likelihood or tendency to deceive or confuse the public.” [Citation.] Thus, to
“The remedies available in a UCL or FAL action are generally limited to injunctive relief and restitution. [Citation.]” (Pfizer Inc. v. Superior Court (2010)
B. CLRA
“The CLRA makes unlawful, in Civil Code section 1770, subdivision (a) . . . , various ‘unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer.’ ” (Meyer v. Sprint Spectrum L.P. (2009)
The CLRA sets forth 27 proscribed acts or practices. (Civ. Code, § 1770, subd. (a)(1)—(27).) In the present case, the complaint alleged Banana Republic engaged in three of those unlawful practices: (1) “[advertising goods or services with intent not to sell them as advertised” (Civ. Code, § 1770, subd. (a)(9)); (2) “[m]aking false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions” (Civ. Code, § 1770, subd. (a)(13)); and (3) “[Representing that a transaction confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law” (Civ. Code, § 1770, subd. (a)(14)).
C. Standing Requirements
Proposition 64, passed by California voters in 2004, amended the UCL’s and FAL’s standing requirements for private actions for relief. (Kwikset, supra,
Thus, in order to establish standing under the UCL and the FAL, a private party must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset, supra,
For purposes of this appeal, plaintiffs concede that the standing requirements of the CLRA are essentially identical to those of the UCL and FAL. We therefore consider the standing requirements under ah three statutes together.
III. Analysis
In granting summary judgment, the trial court agreed with Banana Republic that plaintiffs failed to satisfy the economic injury prong of the standing requirements—that is, they failed to produce evidence showing they lost money or property. On appeal, in addition to relying on that ground, Banana Republic reprises its argument that plaintiffs also failed to raise a triable issue of causahon. Reduced to their essence, these grounds rest on the premise that plaintiffs cannot demonstrate economic injury or causation because they made their purchases after they learned the 40 percent discount did not apply to the items they had chosen. For several reasons, we disagree.
First, we find our prior decision in Medrazo v. Honda of North Hollywood (2012)
The plaintiff sued, asserting claims under the UCL and the CLRA arising from the failure to display a hanger tag disclosing the total cost of the motorcycle she bought. The trial court, after hearing evidence in a bench trial, granted the defendant’s motion for judgment. As pertinent here, the trial court concluded that because the plaintiff was informed of the dealer-added charges before she signed the purchase contract, she was not misled by the alleged failure to display hanger tags, and suffered no injury as a result of it. Thus, she lacked standing. (Medrazo, supra,
In reversing, we explained: ‘“[T]he amended UCL requires a plaintiff to establish that he or she ‘has suffered injury in fact and has lost money or property as a result of the unfair competition.’ [Citation.] Thus, the plaintiff must establish both injury in fact and ‘some form of economic injury’ that has a causal connection to the unfair competition. [Citation.] [¶] Our Supreme Court has explained that ‘injury in fact is “an invasion of a legally protected interest which is (a) concrete and particularized, [citations]; and (b) ‘actual or imminent, not “conjectural” or “hypothetical,” ’ [citation].” [Citations.] “Particularized” in this context means simply that “the injury must affect the plaintiff in a personal and individual way.” [Citation.]’ (Kwikset, supra, 51 Cal.4th at pp. 322-323.) The court emphasized that ‘injury in fact is not a substantial or insurmountable hurdle .... [Citation.] Rather, it suffices ... to ‘ “allege[] some specific, “identifiable trifle” of injury.’ ” [Citations.]’ (Id. at pp. 324-325.)” (Medrazo, supra, 205 Cal.App.4th at pp. 12-13.)
Under this standard, we concluded that the plaintiff “presented evidence of injury in fact. She presented evidence that there was no hanger tag showing the dealer-added charges attached to the motorcycle that she and her boyfriend were interested in purchasing, and that she was not informed of the dealer-added charges or the total price of the motorcycle until she was presented with the sales contract. This evidence is sufficient to establish that she suffered a concrete, particularized, and actual invasion of an interest legally protected by [Vehicle Code] section[s] 11712.5 and . . . 24014, i.e.,
By analogy to Medrazo, plaintiffs’ evidence raised a triable issue whether plaintiffs suffered injury in fact. The UCL prohibits ‘“unfair, deceptive, untrue or misleading advertising,” and any act prohibited by the FAL. (§ 17200.) The FAL generally prohibits advertising that contains ‘“any statement . . . which is untrue or misleading, and which is known, or . . . should be known, to be untrue or misleading.” (§ 17500.) The CLRA prohibits, inter alia, ‘“[m]aking false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions.” (Civ. Code, § 1770, subd. (a)(13).) These provisions are designed in part to protect consumers such as plaintiffs by requiring businesses to disclose the actual prices of items offered for sale, and prohibiting businesses from using false and deceptive advertising to lure consumers to shop. In short, plaintiffs had a legally protected interest in knowing from the outset, when they started to shop, the true prices of the items they chose to buy. Assuming plaintiffs’ version of Banana Republic’s advertising occurred, there is a triable issue whether that legally protected interest was violated in the same way as the legally protected interest of the plaintiff in Medrazo, who had a right to know dealer-added charges as stated on a required hanger tag when deciding to buy a motorcycle. (Medrazo, supra,
We also find Medrazo instructive on the issue whether plaintiffs suffered economic harm. In Medrazo, we concluded that the plaintiff ‘“presented evidence of an economic injury caused by the alleged unfair competition. She testified that she made the first two months’ payments, and owes more than $12,000 on a motorcycle that [the defendant] allegedly was not legally allowed to sell (or at least was not allowed to sell at the price for which it was sold) because it failed to disclose the dealer-added charges on a hanger tag attached to the motorcycle. [¶] In short, the undisputed evidence before the trial court was sufficient to establish that [the plaintiff] ‘has suffered injury in fact and has lost money ... as a result of the [alleged] unfair competition.’ [Citation.]” (Medrazo, supra,
Similarly here, plaintiffs presented evidence raising a triable issue whether they suffered economic harm. They bought certain items at full price, even though (assuming plaintiffs’ evidence of misleading advertising is true) Banana Republic sold those items to them in violation of the UCL, FAL, and CLRA. The economic harm thus suffered is the difference between the advertised price plaintiffs should have been charged, and the full price plaintiffs actually paid. (See Kwikset, supra,
Medrazo has been criticized by some federal district courts because we stated that ‘“an actual reliance requirement does not apply to UCL actions that are not based upon a fraud theory. [Citation.]” (Medrazo, supra,
However, in the instant case, the evidence raises a triable issue whether plaintiffs’ reliance on the allegedly deceptive advertising resulted in their economic loss. “While a plaintiff must show that the misrepresentation was an immediate cause of the injury-producing conduct, the plaintiff need not demonstrate it was the only cause. ‘ “It is not . . . necessary that [the plaintiff’s] reliance upon the truth of the fraudulent misrepresentation be the sole or even the predominant or decisive factor in influencing his conduct. ... It is enough that the representation has played a substantial part, and so has been a substantial factor, in influencing his decision.” [Citation.]’ ” (Tobacco II, supra,
Here, construing plaintiffs’ evidence in the light most favorable to their case, there is a triable issue whether, in all reasonable probability, in the absence of the allegedly false advertising, they would have engaged in the injury-producing conduct, i.e., would have bought certain items at full price despite the advertised discount. According to DeAguero, having been lured
Similarly, according to Sean Bose, when he and Rakhee were told at the register that the discount did not apply, he protested. There were at least 15 people in line and he was annoyed and very embarrassed. Rakhee told him not to make a scene and to just leave. He purchased one item (a sweater) because “we had invested all that time and effort, and just to leave with nothing would be a complete and utter waste of energy and time.”
On these facts, the question of reliance and causation does not rest as a matter of law on whether plaintiffs knew the actual price of the items they purchased at the moment money was exchanged. To isolate that point in time as solely determinative of reliance and causation ignores the true nature of those elements. If the reliance on the misleading advertising was a substantial factor in causing plaintiffs decision to buy, the requirements of reliance and causation are met. (Tobacco II, supra,
If such a scheme is unsuccessful—that is, if the consumer is able to resist the influence of the momentum to buy created by the chain of events flowing from the false advertising—the consumer has no standing to bring a private action under Proposition 64, because the consumer has suffered no economic injury. That result is consistent with the purpose of Proposition 64, which was intended to curb “use [of the UCL] by unscrupulous lawyers who exploited the generous standing requirement ... to file ‘shakedown’ suits to extort money from small businesses.” (Tobacco II, supra,
But under Banana Republic’s theory, if the scheme is successful—that is, if the consumer is influenced by the momentum to buy created by the false advertising, and therefore buys at the inflated price—the consumer, as a matter of law, also has no standing, because just before money changed hands, when the deception was finally revealed, the consumer learned the full price of the item bought. Under this theory, only in the very rare case when the advertiser surreptitiously charges an inflated price, which the consumer
In sum, we conclude that plaintiffs have raised a triable issue whether they lost “money or property sufficient to qualify as injury in fact, i.e., economic injury,” and whether “that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset, supra,
Besides arguing that plaintiffs have no standing, Banana Republic also contends that it presented undisputed evidence that defeats plaintiffs’ claim on the merits. The contention overstates Banana Republic’s showing. Although project manager Debbie Cotton declared that there were no 40 percent off promotions in any Banana Republic stores on November 7, 2010, DeAguero testified in her deposition that she saw a sign advertising such a promotion on that date. Thus, whether DeAguero observed such a sign is a disputed issue of fact.
Moreover, the evidence of the easels and window clings displayed in Banana Republic stores in December 2011 is not sufficient to defeat plaintiffs’ evidence of deceptive advertising. True, the easel for December 8 through December 15 states, “Save 40% on select styles*” and the easel for December 16 through December 18 states, “Save 40% on your purchase.*” The asterisks indicate material in small print at the bottom of the easel concerning limitations (it is illegible in the record). Regardless, the window clings for December 16 through December 18, seen in exhibits 5 and 6, state “Last Chance” in large letters, followed in smaller letters by “Four Days Only. December 15-18,” then “40%” in large type, followed by “off your purchase” in small type. There are no other words and no asterisks.
Thus, at best, Banana Republic’s evidence shows that for at least a few days in December 2011,
DISPOSITION
The judgment in favor of Banana Republic is reversed. Plaintiffs shall recover their costs on appeal.
Notes
Undesignated statutory cites are to the Business and Professions Code.
In order to distinguish between Sean Bose and Rakhee Bose, we refer to them by their first names when necessary.
We note only that the CLRA does not require lost injury or property, but does require damage and causation. “Under Civil Code section 1780, subdivision (a), CLRA actions may be brought ‘only by a consumer “who suffers any damage as a result of the use or employment” of a proscribed method, act, or practice. . . . Accordingly, “plaintiffs in a CLRA action [must] show not only that a defendant’s conduct was deceptive but that the deception caused them harm.” ’ [Citation.]” (Hale v. Sharp Healthcare (2010)
Banana Republic argues that under Chern v. Bank of America (1976)
In Chem, the named plaintiff called a bank to arrange a loan and was told the interest rate would be 9 percent. When she arrived at the bank, she was shown a promissory note showing a 9 percent interest rate but also a federal truth in lending statement showing an interest rate of 9.25 percent, based on a different method of calculating the rate. “[Although she protested that
The Boses did not recall the date they shopped in Banana Republic.
In light of our decision, we need not address plaintiffs’ arguments regarding their' request for injunctive relief or leave to amend.
Dissenting Opinion
Dissenting.—I respectfully dissent. I do not believe plaintiffs have raised a triable issue of fact as to reliance; therefore I would affirm the trial court judgment.
In Kwikset Corp. v. Superior Court (2011)
In addition, when the case is based on a fraud theory involving false advertising and misrepresentation, the plaintiff must plead and prove “ ‘actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions’ [citation]. Consequently, ‘a plaintiff must show that the misrepresentation was an immediate cause of the injury-producing conduct . . . .’ [Citation.]” (Kwikset, supra, 51 Cal.4th at pp. 326-327, fn. omitted, citing In re Tobacco II Cases (2009)
The only legally cognizable economic injury plaintiffs in this case allege they suffered was the money they spent on full-priced clothes.
On these undisputed facts, plaintiffs cannot establish they would not have purchased the items they bought absent the misleading signs, or that because of the misrepresentation they parted with more money than they otherwise would have, or that they believed the 40 percent off representation to be true and in reliance thereon entered into the purchase. (Kwikset, supra,
While reliance on the truth of the defendant’s misrepresentation need not be the sole or decisive cause of the plaintiff’s injury, that reliance must be at least a substantial factor in influencing the decision that causes the injury. (In re Tobacco II Cases, supra,
Indeed, “ ‘well-settled principles regarding the element of reliance in ordinary fraud actions’ ” require this conclusion. (Kwikset, supra, 51 Cal.4th at pp. 326-327, quoting In re Tobacco II Cases, supra,
In such cases, the plaintiff’s claim of reliance fails. “ ‘If after a representation of fact ... the party to whom it was made . . . actually learns the real facts, he cannot claim to have relied upon the misrepresentation and to have been misled by it. Such claim would simply be untrue.’ ” (Oppenheimer v. Clunie (1904)
I also do not believe the majority’s momentum to buy analysis can be applied consistently, while adhering to principles of reliance in ordinary fraud actions. For example, as I understand the majority’s reasoning and momentum to buy theory, any of the following scenarios could arguably establish actual reliance so long as the consumer is drawn into the store by a misleading discount advertisement: (a) a consumer is told as soon as he picks up an item in the store that it is not in fact discounted. He is frustrated or embarrassed and buys the item anyway; (b) a consumer learns the “true price” when he is in line to buy the item, but not yet at the front of the line; (c) a consumer, upon learning at the cash register that the discount will not apply, is not too embarrassed or frustrated to simply walk away from the sale. However, she decides she wants one of the items she selected, even at full price, and therefore buys it; or (d) a consumer is at home shopping on the Internet when she sees a misleading advertisement for a 40 percent discount at an online retailer’s website. She visits the site and places items in her online shopping cart, only to learn right before she clicks “buy” that the items in her cart are not, in fact, 40 percent off.
I expect the court’s decision will invite exhaustive litigation as parties attempt to work out just how little momentum to buy is required to establish actual reliance. Rather than opening the door to suits that veer ever farther away from establishing actual reliance, this court should adopt the bright-line rule that if the plaintiff learns the “truth” about an item’s price before executing a purchase, he or she cannot establish actual reliance on a misleading price advertisement.
In a classic bait and switch, the merchant actively conceals the fact of the misrepresentation from the consumer, resulting in the consumer buying an item he did not enter the store to purchase. Further, the consumer continues to rely on the merchant’s misrepresentations through the consummation of the purchase of the “unwanted” item, believing the advertised item is not actually available, or that it is inferior in a meaningful way to the item the merchant actually wants to sell to reap greater profit margins.
In such schemes, the consumer’s awareness that she or he is buying a product different from what was advertised does not necessarily mean the consumer has ceased relying on the merchant’s continuing deception regarding the advertised product. In contrast, here, there was no evidence any salesperson attempted to convince plaintiffs to purchase items they did not want. Everything about the allegedly misleading 40 percent off sale sign was revealed to plaintiffs before they consummated their purchases. I therefore disagree that any decision in this case is necessarily applicable to other bait and switch cases.
Under the language of section 17204 as amended by Prop. 64, and the California Supreme Court’s interpretation of the law, actual reliance is required. To have standing, plaintiffs must suffer concrete economic injury as a result of the defendant’s allegedly misleading or deceptive conduct. (Californians for Disability Rights v. Mervyn’s, LLC (2006)
As stated in Kwikset, “a UCL fraud plaintiff must allege he or she was motivated to act or refrain from action based on the truth or falsity of a defendant’s statement, not merely on the fact it was made.” (Kwikset, supra,
For these reasons I would affirm the trial court judgment.
Respondent’s petition for review by the Supreme Court was denied March 29, 2017, S239685.
Assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
All further undesignated statutory references are to the Business and Professions Code. Section 17204 provides, in relevant part: “Actions for relief pursuant to this chapter shall be prosecuted ... by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” Section 17535 includes similar language.
To the extent plaintiffs claim their economic injury consisted of lost opportunity costs and time, they have cited no legal authority supporting the claim that such harm alone is sufficient to establish standing in a UCL or FAL claim. As noted in Troyk v. Farmers Group, Inc. (2009)
There are exceptions to this rule, none of which apply here. (See, e.g., Jue v. Smiser (1994)
In a variety of consumer protection contexts, a plaintiff’s actual or imputed knowledge of the falsity or misleading character of a defendant’s statement or conduct has been a factor in defeating claims based on the defendant’s allegedly misleading or deceptive conduct. (See, e.g., Chern v. Bank of America (1976)