Judge Dismisses Nike Outlet Class Action Alleging Deceptive Pricing

A plaintiff challenging the pricing tactics at Nike outlet stores will have a chance to amend her pleadings following a federal judge’s recent dismissal.

On February 17, U.S. District Judge Michael W. Mosman determined that plaintiff Monika Taylor’s allegations of a fraudulent Nike outlet deceptive pricing scheme aren’t specific enough to satisfy applicable court rules. The judge also determined that without alleging a risk of future harm, Taylor has no standing to seek injunctive relief.

Taylor alleges in her Nike deceptive pricing class action lawsuit that Nike has been fraudulently pricing merchandise at its outlet stores with fictional “suggested retail” prices that are higher than the items’ actual sale prices.

The difference between the two prices deceives consumers into thinking they’re getting a bargain that doesn’t actually exist, she claims.

On Nike’s motion for dismissal, Judge Mosman found that Taylor had not raised allegations that are specific enough to state claims under several California consumer protection laws. Claims like these, which are all based on fraud, must be made with greater specificity according to federal court rules.

The judge noted that Taylor did provide many specifics, such as “(1) the date on which the items were purchased, (2) the number, types, and product codes for each item, and (3) the location of the outlet store.”

But Judge Mosman found she failed to specify what about the alleged Nike deceptive pricing scheme was false. She did not show how the marked “suggested retail” price would be mistaken for a former price, or that the merchandise at Nike outlet stores was “outlet-exclusive” – i.e., purposely made for outlet store sales only.

On Taylor’s claim for injunctive relief, Judge Mosman determined that since Taylor is now aware of the alleged Nike deceptive pricing scheme, she is not at risk for being harmed by it again in the future. Without a risk of future harm, she has no standing to seek injunctive relief, the judge said.

“By virtue of her past injury, however, Ms. Taylor is now aware of any false pricing scheme in which Nike might be engaged,” the judge wrote. “Therefore, she cannot demonstrate ‘the imminent prospect of future jury’ because she can no longer be deceived.”

Judge Mosman issued the dismissal with leave to amend, giving Taylor a chance to amend the deficiencies in her pleadings and re-submit them.

Taylor claims she was harmed by the alleged Nike deceptive pricing scheme in the summer of 2015. At a Nike outlet store in Orange, Calif., she found and purchased merchandise tagged with a higher “Sugg. Retail Price” and a lower “Our Price,” believing she was getting the benefit of a discount.

Taylor now claims this Nike deceptive pricing would deceive reasonable consumers. She is bringing claims under California’s False Advertising Law, Consumer Legal Remedies Act, and Unfair Competition Law.

Taylor is represented by attorneys J. Matthew Donohue and Shannon L. Armstrong of Markowitz Herbold PC and by Jeffrey D. Kaliel of Tycko & Zavareei LLP.

The Nike Deceptive Pricing Class Action Lawsuit is Monika Taylor v. Nike Inc., Case No. 3:16-cv-00661, in the U.S. District Court for the District of Oregon.