On February 24, 2017, the District Court for Northern District of California denied Gap’s 2nd motion to dismiss in the action Laurie Munning v. The Gap, Inc. et al., case number 3:16-cv-03804. In its Motion The Gap Inc. asked the Court to trim New Jersey consumer protection claims from a putative class action alleging its clothes are misleadingly labeled “marked down” from a price that never applied to them, arguing it would be impossible to ascertain damages as required by the New Jersey law. U.S. District Judge Thelton E. Henderson rejected Gap’s arguments. In addition, Judge Henderson also ruled Munning’s California Consumer Legal Remedies Act claim as well as her proposed breach of contract claims are valid are permitted to proceed. The case will now proceed with discovery to get the case ready for trial.
The gravamen of the class action lawsuit is that Gap and Banana Republic allegedly violated of federal pricing regulations and the consumer protection laws and common law of California and New Jersey. Specifically, it is alleged that Gap and Banana Republic (collectively referred to herein as “Gap”) engaged in a systematic scheme of false and misleading advertising, marketing, and sales practices with respect to the sale of apparel and other personal items via their online Gap Factory and Banana Republic Factory store websites. This scheme, which is set forth in more detail below, may be summarized as follows.
First, Gap had, and continued to have, a policy of listing an arbitrary base price for every item offered for sale on its factory websites, which purport to be each item’s “original” or “regular,” non-discounted price. This practice is false and misleading because most, if not all, items are never sold or offered for sale at the listed “original,” non-discounted prices, and no items are ever consistently sold or offered for sale at their non-discounted prices. Rather, the items on Gap’s websites are regularly sold at prices that are lower than the purported non-discounted prices.
Second, Gap perpetually advertises the items for sale on its factory websites at purported “discount” or “sale” prices, which Gap represents to be reduced or discounted by a specified percentage off the items’ “original” prices. For example, Gap offered a dress for sale at a “discount” price of $44.98, which it advertised as “50% off” the dress’s purported “original” price of $89.99. This practice is false and misleading because the advertised discount percentage and “sale” price do not represent an actual discount, as the items were never sold or offered for sale at their listed “original” prices.
Because the vast majority – if not all – of the items on Gap’s factory websites are allegedly never offered for sale at their listed “original,” non-discounted prices, but rather are perpetually offered for sale at purported “discount” or “sale” prices, the reduced prices advertised by Gap are not actually discounts at all, but rather the everyday, regular prices of the items.
Federal regulations prohibit the advertising of false, “phantom” price reductions and discounts off inflated, fictitious “regular” prices that never actually existed. See 16 C.F.R. § 233.1.
Moreover, the consumer protection laws and common law of California and New Jersey, prohibit deceptive advertising, marketing, and sales practices, including advertising and selling items at purported discounts and offering price advantages that do not exist.
By advertising these purported discounts, which were never actually provided to customers, and by selling items based on these non-existent discounts, Gap allegedly violated numerous state consumer protection laws as well as the common law and federal regulations.
Ms. Munning brings this lawsuit against Gap to stop this alleged unlawful practice, to recover for the proposed classes of customers of the online Gap Factory and Banana Republic Factory store websites the overcharges that they paid, and to obtain for customers the actual discounts they were entitled to receive but did not due to Gap’s deceptive practices.
If you believe you may have been a victim of a consumer fraud or falsing pricing scenario please call DeNittis Osefchen Prince, P.C. and one of our lawyers will be happy to discuss with you at 856-797-9951