Kohl’s Can’t Ditch Fake Sale Class Action Lawsuit

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A federal judge in Wisconsin has rejected a motion by Kohl’s Corp. to dismiss a potential class action alleging the department store used deceptive advertising techniques to inflate original item prices to fool customers into thinking they were getting a better deal than they actually were.

U.S. District Judge J.P. Stadtmueller disagreed with Kohl’s when the company said that the only way the plaintiff would be entitled to restitution under California’s unfair competition laws and Consumers Legal Remedies Act is if he could prove there was a difference between the value of the items he purchased and the actual price paid for the products, known as the “price-to-value” method.

Judge Stadtmueller maintained that courts in California also use other methods to determine restitution when such laws are violated, invalidating the argument presented by Kohl’s and siding with the plaintiff.

The judge also rejected the argument by Kohl’s that the plaintiff’s proposed way of calculating restitution “will over-compensate [the plaintiff’s] financial loss and thereby will put him in a better position than if the alleged misconduct had not occurred,” saying it is too early in the litigation process to decide on such matters of calculation.

Plaintiff Victor Le filed the proposed Kohl’s class action lawsuit in September alleging that after shopping at several retail locations in Southern California, his receipt listed his total savings earned for the shopping trip, and the amounted to up to seven times more the actual amount he paid for his purchase.

Le alleged that the sales were deceptive and misleading because the original prices listed on the items were artificially inflated. Le argued that Kohl’s items rarely, if ever, are sold at the original price indicated on the tags.

The Kohl’s website states the following about their sales prices: “‘Sale’ prices and percentage savings offered by Kohl’s are discounts from Kohl’s ‘Regular’ or ‘Original’ prices. The ‘Regular’ or ‘Original’ price of an item is the former or future offered price for the item or a comparable item by Kohl’s or another retailer. Actual sales may not have been made at the ‘Regular’ or ‘Original’ prices, and intermediate markdowns may have been taken. ‘Original’ prices may not have been in effect during the past 90 days or in all trade areas.”

The plaintiff claims this information is buried in small print on the Kohl’s website in a section discussing the department store’s discounting policy. He argues, “Kohl’s knew, or should have known, that its pricing scheme was intended to convey false information to consumers, including plaintiff, about the goods, to cause consumers to purchase such goods believing they were obtaining items below their actual or regular prices.”

Le is seeking to represent a nationwide class of consumers as well as a California class of consumers who purchased sale items from Kohl’s between Jan. 29, 2011 and the present.

Kohl’s was hit with a similar proposed class action lawsuit last July that also alleged the company created artificial original prices for its merchandise to make the savings appear greater. The plaintiff in that lawsuit requested class certification for a group of California state residence who purchased exclusive branded items for a discount of thirty percent off or more of the indicated “original” price who have not received a full refund since July 21, 2011.

Le is represented by Jordan C. Loeb of Cullen Weston Pines & Bach LLP; John T. Jasnoch, Joseph Pettigrew, Joseph P. Guglielmo and Erin G. Comite of Scott & Scott LLP and E. Kirk Wood of Wood Law Firm LLC.

The Kohl’s Deceptive Sales Class Action Lawsuit is Le v. Kohl’s Corp. et al., Case No. 2:15-cv-01171, in the U.S. District Court for the Eastern District of Wisconsin.