On May 21, 2013, in the case of Hinojos v. Kohl’s Corporation, et al., the U.S. Court of Appeals for the Ninth Circuit held that “when a consumer purchases merchandise on the basis of false price information, and when the consumer alleges that he would not have made the purchase but for the misrepresentation, he has standing to sue under [California’s Unfair Competition Law and Fair Advertising Law] because he has suffered an economic injury.”
Plaintiff Antonio Hinojos sued Kohl’s under California’s Unfair Competition Law (“UCL”), Fair Advertising Law (“FAL”) and Consumer Legal Remedies Act (“CLRA”), alleging that he relied on deceptive advertisements in deciding whether to purchase certain items from the department store. Specifically, Plaintiff noted that the items were advertised as being significantly reduced (30%-50%) from their “original” prices, when in fact, the items were routinely sold by Kohl’s at the advertised sale prices. Plaintiff claimed that he would not have purchased the items but for the misrepresentations.
Agreeing with Kohl’s, the district court dismissed Plaintiff’s claims, holding that Plaintiff did not have standing to sue under either law because Plaintiff did not meet the “lost money or property” requirement since he acquired the purchased items at the price advertised. In reversing the district court’s dismissal, the Ninth Circuit relied on the California Supreme Court’s decision in Kwikset Corp. v. Superior Court, 246 P.3d 877 (Cal. 2011). The Kwikset court held that purchasers of goods falsely labeled “made in U.S.A.” had standing to sue under the UCL and FAL because the purchasers would not have purchased the goods but for the false labeling.
The Ninth Circuit explained that the Kwikset decision required a plaintiff to show, pursuant to Proposition 64, “some form of economic injury” in order to meet the “lost money or property” requirement under the UCL and FAL. The Ninth Circuit then emphasized that there are multiple ways for a consumer to demonstrate economic injury. Although Plaintiff paid the intended amount, he still suffered economic injury because he would not have spent money on the merchandise had the proffered discount not been as great as falsely advertised. In other words, Plaintiff never received his actual value in price discounts.
The Ninth Circuit further held that a plaintiff who has standing under the UCL’s and FAL’s ‘lost money or property’ requirement will have suffered damage for purposes of establishing CLRA standing.
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