Chester v. TJX Cos.

STACI CHESTER; DANIEL FRIEDMAN; ROBIN BERKOFF;and THERESA METOYER,individually and o/b/o those similarly situated, Plaintiffs, v. THE TJX COMPANIES, INC.; TJ MAXX OF CA, LLC; MARSHALLS OF CA, LLC;HOMEGOODS, INC; and DOES 1-100, inclusive, Defendants.

Case No. 5:15-cv-01437-ODW (DTB)

United States District Court Central District of California

August 18, 2016

ORDER DENYING DEFENDANTS' MOTION TO DISMISS [36]

"You keep using that word. I don't think it means what you think it means."¹

I. INTRODUCTION

Currently pending before the Court is Defendants' Motion to Dismiss Plaintiffs' Consolidated Complaint ("Compl."). (ECF No. 36.) For the reasons discussed below, the Court DENIES Defendants' Motion.

II. FACTUAL BACKGROUND

A. General Allegations

Plaintiffs, both individually and on behalf of those similarly situated, bring suit against TJX Companies, Inc. and three off-price retailers under its umbrella: TJ Maxx, Marshalls, and HomeGoods (collectively, "Defendants"). (Compl. ¶ 6, ECF No. 28.) Plaintiffs raise claims under the California Business & Professions Code § 17200, et seq. ("Unfair Competition Law," "UCL"), § 17500, et seq. ("False Advertising Law," "FAL"), and California Civil Code § 1750, et seq. ("California Consumer Legal Remedies Act," "CLRA"). (Id. ¶ 2.)

At issue is the mechanism by which Defendants advertise the price of items at each TJX Companies store. The price tags Defendants use list (1) the price the retailer is selling the item for; and (2) a higher, comparative reference price accompanied by the phrase, "Compare At." (Id. ¶ 24.) No additional information is provided on the tag or near the advertisement itself that defines the term "Compare At" or otherwise offers context for the pricing provided. (Id. ¶ 25.) Some of Defendants' products also have a second price tag noting a purported manufacturer's suggested retail price, or "MSRP," for an item. (Id. ¶ 26.) The price tags are materially identical across all TJX Companies stores. (Id. ¶ 7.)

Defendants' definition of "Compare At" can be found only by scouring the TJ Maxx website or by noticing a sign near the customer service and returns counter atone of its retailer stores. (Id. ¶ 85; TJX "Compare At" Definition Signs (hereinafter "Definition Signs"), Def. Req. for Judicial Not., Exs. C-D, ECF No. 37.) The "compare at pricing" link on the TJ Maxx website is found amongst the fine print, on the bottom-left of the page, alongside links to the stores' privacy policies, terms of use, and a site map. (Id. ¶ 60.) Only after clicking on this link would a consumer find a definition:

What do we mean by "compare at"? The "compare at" price is our buying staff's estimate of the regular, retail price at which a comparable item in finer catalogs, specialty or department stores may have been sold. We buy products from thousands of vendors worldwide, so the item may not be offered by other retailers at the "compare at" price at any particular time or location. We encourage you to do your own comparison shopping as another way to see what great value we offer.

(Id. ¶ 61 (emphasis added).)

Plaintiffs contend that they, like other reasonable consumers, "do not interpret a 'Compare At' reference price to be merely an 'estimate' of what a 'comparable' product 'may' have sold for." (Id. ¶ 82.) Instead, they assume that the "Compare At" tags list "prices at which the 'principal retail outlets' in California have sold, or are selling, those products in any 'substantial volume.'" (Id. ¶ 52.) Because Defendants reach their "Compare At" pricing by relying on unverified comparative prices that are mere "estimates" of prices that retailers "may" have sold a similar item, and where "as here, the retailer and the consumer do not share the same meaning of the semantic cue ('compare at'), [] the phrase is open to more than one interpretation, [and] the use of that phrase is misleading and deceptive," Plaintiffs argue that Defendants are in violation of Federal Trade Commission ("FTC") Guidelines.² (Id. ¶¶ 37-53, 86.)

B. Plaintiff-Specific Allegations

Plaintiffs bring this action against Defendants on behalf of themselves and all other consumers who have purchased items at a TJX Companies store in California between July 17, 2011, and present day. (Compl. ¶ 7.) Plaintiffs allege that:

[They] reasonably believed, like all reasonable consumers, that the "Compare At" prices represented the prices that they would expect to play for those same products at other retailers in their general area. In other words, Plaintiffs reasonably believed that the "Compare At" prices referred to the then prevailing retail prices for those same items—that if they left Defendants' stores and shopped around for those same products, they would likely find them elsewhere at the higher "Compare At" prices provided by Defendants.

(Id. ¶ 58.) Each Plaintiff also alleges that, but for the perceived bargain implied by the "Compare At" pricing, they would not have purchased the items. (Id. ¶¶ 146, 155, 165, 175, 184.)

Plaintiff Staci Chester is a resident of Riverside County, California and alleges that, on at least two occasions, she purchased products from the Palm Desert, California TJ Maxx store. (Id. ¶ 8.) In June 2015, Plaintiff Chester "purchased 2 Jessica Simpson handbags . . . for $24.99 each, for a total payment, including sales tax, of $53.98." (Id. ¶ 139.) Each bag was advertised with two prices on the tag: a sale price of $24.99 and a "Compare At" reference price of "$48.00+UP." (Id. ¶ 140.) Each bag also included the purported original price tag, which listed an MSRP of $68.00. As such, Chester alleges that the "Compare At" price and the MSRP price were not accurate representations of the prices at which a "substantial volume of sales" of the Jessica Simpson handbag where made in principal retail outlets in California in June 2015. (Id. ¶¶ 141-42.)

Plaintiff Daniel Friedman is a resident of Los Angeles County, California who, at least ten times during the class period, purchased items from a TJ Maxx store in Westlake Village, California. (Id. ¶ 9.) On October 18, 2014, Friedman purchased men's clothing items; the prices of these items ranged from $5.99 to $49.99. (Id. ¶ 147.) One item listed a selling price of $5.99 alongside a "Compare At" price of $10.00. (Id. ¶ 147.) Similarly, on July 3, 2015, Friedman purchased a clothing item at Defendants' Westlake Village store that sold for $6.99 but offered a "Compare At" price of $14.00. (Id. ¶ 149.)

Plaintiff Robin Berkoff is a resident of Riverside County, California. She alleges that she purchased items from a Palm Desert, California Marshalls store at least five times and, at least ten times, made purchases at HomeGoods stores in Palm Desert and Bermuda Dunes. (Id. ¶ 10.) She purchased tee-shirts and other items from Marshalls and home décor, storage items, and candles from HomeGoods. (Id. ¶¶ 19-20.) On May 28, 2015, Berkoff purchased a "Missy" tee shirt from a Marshalls store that advertised a selling price of $12.99 alongside a "Compare At" price that, as she alleges, was a deceptive, untrue, and misleading price representation. (Id. ¶ 157.) On May 3, 2015, Berkoff purchased several items at a HomeGoods store, and these items ranged in price from $9.99 to $24.99. (Id. ¶ 167.) One such item listed a selling price of $24.99 as well as a "Compare At" price of $40.00. (Id.)

Plaintiff Theresa Metoyer is a resident of Riverside County, California who, on over ten occasions, purchased products from a Mira Loma, California HomeGoods store. (Id. ¶ 11.) She purchased bath rugs, lamps, and dinnerware. (Id. ¶ 21.) On April 11, 2015, she spent $99.33 on HomeGoods items. (Id. ¶ 177.) One such item listed a selling price of $29.99 and a "Compare At" reference price of $75.00. (Id.)

III. PROCEDURAL BACKGROUND

Plaintiffs Staci Chester and Daniel Friedman filed their original Complaint on July 17, 2015. (ECF No. 1.) Chester, Friedman, and the Plaintiffs in two relatedactions (Robin Berkoff and Theresa Metoyer), along with Defendants, then stipulated to consolidate all three actions. (ECF No. 23.) After the Court granted the consolidation, Plaintiffs filed their Consolidated Complaint with this Court on September 3, 2015. (ECF Nos. 23, 28.) Defendants then moved to dismiss the Consolidated Complaint on October 19, 2015. (ECF No. 36.) Plaintiffs filed a timely opposition, and Defendants tendered a timely reply. (ECF Nos. 38, 40.) The Court held a hearing on the matter on January 11, 2016. (ECF No. 54.) The matter is now before the Court for decision.

IV. REQUEST FOR JUDICIAL NOTICE

Both Plaintiffs and Defendants filed Requests for Judicial Notice in conjunction with the motion at bar. (ECF Nos. 37, 39.) Both parties also filed several Notices of Recent Authority. (ECF Nos. 42, 59-61.) The Court GRANTS the parties' requests and hereby takes judicial notice of the recent, applicable case law, administrative opinions, and photographic evidence.

When considering a motion to dismiss, courts typically do not look beyond the complaint so as to avoid converting a motion to dismiss into a motion for summary judgment. See Mack v. S. Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), overruled on other grounds by Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104 (1991). Notwithstanding this principle, a court may properly take judicial notice of (1) material which is included as part of the complaint or relied upon by the complaint and (2) matters in the public record. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). A court may also take judicial notice pursuant to Federal Rule of Evidence 201(b). Under the rule, a judicially noticed fact must be one that is "not subject to reasonable dispute because it: (1) is generally known within the trial court's jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid....