Safeway to Face Class Action on Price Disparity

SAN FRANCISCO (CN) - A federal judge has partially granted class certification in a lawsuit that alleges Safeway "secretly" overcharges for online groceries.

Safeway Inc., one of the largest grocery chains in the U.S., offers home delivery in select metropolitan areas for groceries purchased online through Safeway.com, Genuardes.com and Vons.com.

In order to use the service, consumers must accept a delivery agreement when they register online, and are also asked to click on a "special terms" agreement that lays out Safeway's pricing structure for delivered items.

The fee for delivery ranges between $7 and $13 "depending on order size and delivery options," the complaint says.

According to lead plaintiff Michael Rodman, online shoppers are told they will pay the same prices for products as they would if they bought them at a brick and mortar store.

In reality, he says, the grocer uses a "scaled system" to mark up prices on items that are delivered.

Rodman claims 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," the complaint states.

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 says.

He sued Safeway in June 2011 for breach of contract and violation of the California Consumers Legal Remedies Act, Unfair Competition Law and False Advertising Law.

Rodman filed a motion for class certification on all claims in September 2013. Last week, U.S. District Judge Jon S. Tigar granted the motion in regard to the breach of contract claim only.

"The court does not yet reach the question of how the alleged contract should be interpreted, but it can determine, after rigorous analysis, that there is no obstacle to commonality or predominance," Tigar wrote. "The scope and proper interpretation of the objective words of the parties' agreement is a common question that applies commonly to all members of the class, is an issue whose resolution will drive resolution of the litigation, and will predominate over any individualized issues."

Safeway argued that some customers kept shopping through Safeway.com after learning of the additional charges, opening the door for "affirmative defenses of waiver/affirmation, consent and estoppel," which would require individual inquiries, but Tigar disagreed.

"Here, there is no reason to suspect that it is likely that a predominant number of class members might have knowingly and willingly chosen to pay an additional fee that they were under no obligation to pay under the terms of the contract," he wrote. "With no evidence to suggest that inquiry into particular issues will predominate over the common issues driving the litigation forward, a defendant cannot defeat predominance that a plaintiff has otherwise established."

Tigar denied class certification for Rodman's statutory claims.

He said "the fact less than five percent of Safeway.com registrants actually clicked through to view the Special Terms is likely to be fatal to most of the proposed class members' statutory claims. To the extent that plaintiff's statutory claims rest on representations of the 'Payment & Receipt' FAQ page ... an even smaller number of website visitors viewed that page. It therefore appears certain that, in determining liability on the statutory claims, individualized issues will predominate over the common issues."

Tigar scheduled a case management conference for April 23, 2014.

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