(CN) – That Kate Spade handbag you thought you saved a bundle on by buying it at the outlet store may not have been a bargain after all – at least if the claims of two Southern California shoppers are to be believed.
Marilu Calderon says she visited the Kate Spade outlet in Commerce, California, in May 2018, buying a wallet, purse, backpack, charm pendant and some clothing for $490. Calderon says she thought she had saved roughly $450 on the seven items based on signs promoting them as up to 70% off their original retail price, a deal she now believes was “grossly overstated.”
Kristen Schertzer describes a similar experience at the outlet in Carlsbad. She bought a small accessory bag and a handbag totaling $82.89. The items were advertised in the store as “70% off the reference price,” so Schertzer thought at the time that she was saving $263.00.
The women sued Kate Spade in April 2019 and after some investigation, their attorneys found the merchandise they bought was exclusively sold at Kate Spade outlets – never at a regular Kate Spade store and never at the “reference price."
Kate Spade is the latest in a long string of retailers hit with lawsuits over deceptive discount pricing. Macy’s and Bloomingdales were accused of the same practice in a 2016 class action. Kohl’s was sued twice in federal court over bogus sale prices, in 2015 and 2019. Stores offer supposedly deep discounts on items never meant to be sold at the higher “retail" price listed on the sale tag, or so the shoppers filing the lawsuits claim.
Kate Spade actually faced a federal class action in San Francisco against the same pricing strategy in 2015, but the case was voluntarily dropped two years later by lead plaintiffs Gaylia Pickles and Donna Vandiver.
On Thursday, U.S. District Judge Anthony Battaglia found Calderon and Schertzer stated a plausible case for deception under California consumer law and ruled Kate Spade must face a proposed class action.
“In particular, plaintiffs have plausibly described how the pricing scheme was misleading because defendant allegedly never sold its merchandise at the ‘Our Price’ prices, and so, the advertised discounts of '50% off’ to ‘70% off’ created the illusion that plaintiffs were getting a bargain,” Battaglia wrote in a 14-page order.
Battaglia also found the women have adequately alleged that Kate Spade made false or misleading statements about its price reductions, given that it makes its outlet products solely for its outlet stores, as well as claims that it schemed to defraud its customers.
Attorneys for both sides did not return phone calls and Kate Spade’s communications department did not return an email seeking comment.
Follow @MariaDinzeo
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.
