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Safeway Class Wins Summary Judgment

SAN FRANCISCO (CN) - Safeway Inc. broke its own service contract by marking up prices on groceries ordered online, a federal judge ruled.

U.S. District Judge Jon Tigar granted summary judgment on Wednesday to a class of consumers who allege Safeway, one of the largest grocery chains in the U.S., "secretly" marked up prices for home delivered groceries that were purchased online.

Safeway's terms of agreement for online purchases discloses delivery fees and states that online shoppers will pay the same prices for products as they would if they bought them at a brick and mortar store, according to a 2011 class action brought by lead plaintiff Michael Rodman.

"Safeway adds $.10 for every dollar of the in-store price. So, for items that cost $.01 to $0.99 in the store, Safeway adds an extra $.10 for the same item delivered," according to the complaint. "The percentage goes up to $.20 for items over a dollar and $.30 for items over two dollars. Since Safeway uses $.10 increments for every dollar of in-store cost, consumers are overcharged at least 10 percent extra for most home-delivered items."

Rodman sued Safeway for breach of contract and violation of the California Consumers Legal Remedies Act, Unfair Competition Law and False Advertising Law.

Only the breach of contract claim survived. Tigar dismissed Safeway's arguments that its terms of agreement for online purchases did not mean to imply that prices would be the same as those in the physical stores, rather the same as prices in the "online stores."

Tigar, however, concluded the language suggests Safeway was indeed referring to prices at brick and mortar locations.

"The special terms promise that, with the exception of the actually disclosed special charges and delivery fees, the prices charged for safeway.com products will be those charged in the physical store where the groceries are delivered," he said in Wednesday's order. "Since Safeway actually marked up the charges for the in-store prices beyond the disclosed delivery and special charges, the court grants summary judgment that Safeway breached its contract with its customers."

Tigar added that consumers are entitled to damages "even for purchases which occurred after the special terms were amended on Nov. 15, 2011," and that "Safeway is liable to plaintiff and the class for the aggregate amount of the online mark-up from April 12, 2010 through the present."

A case management conference has been set for Jan. 21, 2015.

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