Safeway Fined $31 Million for Online Deceit

     SAN FRANCISCO (CN) – Safeway must pay $30.9 million for marking up prices after promising online customers they’d pay the same as in-store buyers, a federal judge ordered Monday.
     The judge rejected Safeway’s peculiar argument that online customers knew they were being overcharged because 1 in 7 of them told a survey they were “dissatisfied” or “very dissatisfied” about it.
     Lead plaintiff Michael Rodman’s 2011 class action claimed the grocery chain began marking up prices on Web purchases in April 2010, despite its terms of service contract that online prices would not differ from in-store deals.
     U.S. District Judge John Tigar on Monday found the class entitled to recover all the mark-ups for online purchases between 2006 and 2014, which a Safeway expert calculated at $31.18 million. Both parties agreed to deduct $209,000 in estimated refunds, reducing the award to $30.9 million.
     Tigar also granted the class 10 percent interest per year since Safeway started marking up prices, after its 2006 terms of service agreement.
     In requesting partial summary judgment, Safeway claimed that customers knew that online prices were higher than those charged in stores, based on responses to surveys in 2010 and 2011.
     In a 2010 survey of online customers, 14.2 percent of respondents said they were “dissatisfied” or “very dissatisfied” with “getting the same prices and promotions as in the local store,” according to Safeway.
     Tigar was not impressed. “A customer’s response that they were dissatisfied does not indicate that that customer knew of the existence of the markup or their right to price parity,” Tigar wrote in his 30-page ruling.
     Tigar also rejected Safeway’s argument that it was not liable due to mutual mistake, which would require Safeway to prove that class members “intended to contract for the markup at the time of registration.”
     Tigar also dismissed Safeway’s arguments of a waiver or voluntary payment of consent, which would require Safeway to show the plaintiffs had full knowledge of the facts and voluntarily relinquished their rights.
     The judge called out Safeway’s for actively concealing its online price markups from the public, and cited its failure to disclose as a major reason the grocery chain lacks evidence to prove class members were aware of the price differences.
     “Throughout this litigation, Safeway has likewise sought to seal from the public any reference to the manner in which the online shopping markup is calculated,” Tigar wrote. “A defendant who has vigorously guarded information from the public cannot cry foul when it is unable to marshal any evidence showing that the public had knowledge of that information.”
     But the judge denied plaintiffs’ motion for summary judgment on Safeway’s liability prior to 2006. Before 2006, Safeway outsourced its home delivery service to Grocery Works.
     “Plaintiff has not submitted evidence regarding the layout of the pre-2006 registration page and the placement of the link to special terms on that page,” Tigar concluded.

%d bloggers like this: