Bid to revive consumer class action against Gap and Old Navy falls flat at Eighth Circuit

ST. LOUIS (CN) — The Eighth Circuit on Tuesday refused to revive a consumer’s class action against The Gap Inc. and its subsidiary Old Navy, finding that the plaintiff did not suffer an ascertainable loss due to her disappointment over not receiving an advertised discount at the time of purchase.

Plaintiff Jill Hennessey filed a class action in 2019 in the Eastern District of Missouri against the retail giants. The lawsuit claimed the Gap and Old Navy advertise false and misleading price comparisons for their products.

Central to Hennessey’s claim is the Missouri "benefit of the bargain" rule, under which she claims damages measured by the difference between the value of Old Navy’s artificially inflated ticket prices and the lower value of the products she received.

Central to the appeals court’s decision was whether Hennessey sustained an ascertainable loss.

“Hennessey’s amended complaint alleges no facts supporting her information-and-belief allegations and provides no insight into what the actual value of these products was at the time of the transactions or how she might determine it,” U.S. Circuit Judge James Loken, a George H.W. Bush appointee, wrote in the unanimous opinion. “Nor does the complaint identify which products were worth less than the sale price. And as the district court noted, there is little reason to believe that facts establishing the fair market value of a certain item of clothing would be peculiarly in defendants’ possession.”

Hennessey’s lawyer, Matthew Zevin of Kitner Woodward in Encinitas, California, did not immediately respond to an email seeking comment on the ruling.

The three-judge panel also rejected Hennessey’s unjust enrichment claim and her argument that the lower court erred in dismissing her claim with prejudice, without giving her an opportunity to amend her claim.

“Hennessey’s unjust enrichment claim is based on the same facts as her MMPA [Missouri Merchandising Practices Act] claim,” Loken wrote. “It fails for the same reason — she received the products she intended to purchase and paid the advertised sale price.”

The appeals court affirmed the federal court’s dismissal, noting that Hennessey failed to file a motion for leave to amend in the nearly 2 1/2 years between the filing of her initial complaint and defendants’ filing of the motion to dismiss, or in the nearly nine months between the filing of that motion and the trial court’s memorandum and order.

“Instead, Hennessey’s attorneys first raised the issue on appeal, asserting an amended complaint would not be futile but not submitting a proposed amended complaint,” Loken wrote. “The issue was not properly preserved.”

George W. Bush appointees Raymond W. Gruender and Duane Benton rounded out the three-judge panel.

The decision mirrors the tone during oral arguments before the panel in September.

During that 30-minute hearing, Loken especially seemed skeptical of what Zevin himself characterized as a novel application to Missouri’s consumer fraud statutes.

“It’s novel and scary is the word that comes to mind,” Loken said during Zevin’s argument. “I mean every retailer now contemplating a discount has to worry about whether some consumer that you represent could find an expert who would say it wasn't worth that much.”

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