ST. LOUIS (CN) — An attorney seeking to revive a class action against Old Navy and The Gap Inc. was met with some pushback from a member of the Eighth Circuit on Thursday morning.
U.S. Circuit Judge James Loken referred to his decades of representing retailers such as Target when questioning attorney Matthew Zevin during the 30-minute hearing, taking issue with what Zevin had characterized as a novel application to Missouri’s consumer fraud statutes.
“It’s novel and scary is the word that comes to mind,” said Loken, a George H.W. Bush appointee. “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.”
Zevin is representing Jill Hennessey, who filed a class action in 2019 in the Eastern District of Missouri against Old Navy and the Gap. The lawsuit claimed the retail giants 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.
“As long as they follow the law, they don't have to worry about anything,” replied Zevin, of Kitner Woodward in Encinitas, California.
But the judge did not seem swayed.
“I can tell you that if your theory of the world applied in anywhere they did business, which obviously includes Missouri, they say 'we're not discounting here,'” Loken said. “And that’s a sad thing for consumers. You always post a comparison price when you're bragging about a discount.
"You got to have a jury trial to defend every comparative price you post," Loke continued. "And I'm telling you, that's in my view, the absolutely guaranteed impact of your theory in the retail world.”
Hennessey claims the federal court’s decision to dismiss improperly resolves a disputed fact at the pleading stage, and it disregards her allegations, academic research and legislative intent showing it was reasonable and plausible for Hennessey to rely on Old Navy’s ticket prices as a representation of value at the time of sale.
Stephanie Schuster of Morgan, Lewis & Bockius in Washington, D.C., represented the retailers. Schuster noted that Hennessey took home the exact product she was promised.
“The benefit of the bargain rule uses the word bargain in the contractual sense, meaning what the parties in the transaction agreed to exchange, not in the colloquial sense of a good deal or a cut rate price,” Schuster said.
Schuster noted that in the 100 years the rule has been on the state statutes, it has never been interpreted in the way Hennessey and her attorneys are doing.
“Every example of the benefit of the bargain case in the Missouri courts has found an ascertainable loss involves some actual difference between products, not between price, but between the products that were promised and the product that was received,” Schuster said.
She offered an example of a store-bought box of candy. Schuster said that a consumer could be misled by the amount of candy offered on the advertising on the box, when in reality the box was half-filled with air.
Since Hennessey got exactly what was advertised, Schuster said she doesn’t have a claim.
In his rebuttal, Zevin held firm to his client’s interpretation of the benefit of the bargain rule.
“Just because this is a novel application of a law doesn't make it wrong,” Zevin said.
George W. Bush appointees Raymond W. Gruender and Duane Benton rounded out the three-judge panel, which took the case under advisement.
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