California retailers may be liable for large money
awards if they falsely advertise that their products are on sale.
A federal appeals court Tuesday revived a potential class-action lawsuit alleging that Kohl's Department Stores Inc. misstated in advertising that items had been marked down.
The U.S. 9th Circuit Court of Appeals said California consumer laws permit such lawsuits if the customer would not have made the purchase but for the perceived bargain.
"Price advertisements matter," Judge Stephen Reinhardt wrote for a three-judge panel. "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."
Kohl's has denied the underlying allegations that its ads were false or misleading.
Antonio S. Hinojos filed the lawsuit, alleging he would not have made several purchases at Kohl's had he known the prices did not represent actual markdowns.
Hinojos said he bought Samsonite luggage that was advertised as 50% off its "original" price of $299.99, Chaps Solid Pique polo shirts that were marked down 39% from their "original" price of $36, and other items that were advertised as substantially reduced in price.
The lawsuit, intended to be certified as a class action, was dismissed by a lower court. A U.S. District Court judge in Los Angeles had ruled that Hinojos did not have the right, or standing, to sue because he had not lost money as a result of the alleged false advertising.
In overturning that decision, the 9th Circuit relied on a previous California Supreme Court ruling that said consumers lose money if they buy a product only because it was falsely advertised as made in the U.S.
An attorney for Kohl's declined to comment.
Matthew Zevin, a lawyer for Hinojos, said the suit also is seeking an order to prevent Kohl's from engaging in the alleged practice in the future.
"The law is designed to protect consumers, and the decision will give us our day in court," Zevin said. "That is all we can ask for, and I think that is appropriate."
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