Nordstrom, Kohl’s Pricing Doesn’t ‘Injure’ Customers

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By Perry Cooper

Nordstrom Inc. and Kohl’s Department Stores Inc. don’t “injure” their customers when they use potentially deceptive “compare at” pricing, the First Circuit held July 26 ( Shaulis v. Nordstrom, Inc. , 2017 BL 259104, 1st Cir., No. 15-2354, 7/26/17 ; Mulder v. Kohl’s Dep’t Stores, Inc. , 2017 BL 259033, 1st Cir., No. 16-1238, 7/26/17 ).

The pricing schemes are deceptive under Massacusetts law, but don’t cause a compensable injury, the U.S. Court of Appeals for the First Circuit said in two opinions by Judge Kermit Victor Lipez.

Retailers have faced a wave of comparison pricing class actions in recent years. These opinions effectively shut the door on such suits in the First Circuit. The Ninth Circuit has taken a friendlier approach.

77% Savings!

Judith Shaulis bought a sweater at a Nordstrom Rack outlet store. The price tag had a $49.97 purchase price and a “compare at” price of $218—"77%" worth of savings. Ellen Mulder bought items at Kohl’s with similar “manufacturer’s suggested retail price” and “comparison price” promises.

The women bought class actions against the retailers under Massachusetts law, alleging the comparison prices are entirely fictional to mislead customers about the quality of the products.

The Massachusetts Consumer Protection Act provides a cause of action to any consumer who “has been injured” by “unfair or deceptive act or practices in the conduct of any trade or commerce.”

The pricing schemes qualify as unfair or deceptive practices, the First Circuit said. But the women’s “disappointed expectations of value” don’t constitute “real economic loss” for recovery under the statute, the court affirmed.

Judges Juan R. Torruella and Sandra Lea Lynch joined the opinions.

Boumil Law Offices, and Law Offices of Konstantine W. Kyros represented the customers.

Ropes & Gray LLP; Sheppard Mullin Richter & Hampton LLP; and Morgan Lewis & Bokius LLP represented Nordstrom.

Kelly Drye & Warren LLP represented Kohl’s.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

For More Information

Full text of the Nordstrom decision at http://src.bna.com/q89. Full text of the Kohl's decision at http://src.bna.com/q9a.

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