Nike lived up to its “just do it” tagline with a victory in Oregon federal court when a judge granted the company’s motion to dismiss a deceptive pricing suit.
Monika Taylor claimed that Nike outlet stores ran afoul of California consumer protection laws by using fictional “suggested retail” prices that are higher than the items’ actual prices to scam consumers into thinking they are getting a bargain. The store used tags with two prices: a “Sugg. Retail Price” and a lower “Our Price,” leading her to believe that the items with tags were discounted, she said.
The court granted Nike’s motion to dismiss. Although her complaint listed the date on which she purchased her items, the location of the outlet store, and the type of product she purchased, Taylor failed to state her claims with sufficient specificity, the court said, finding it “unclear what exactly Ms. Taylor is alleging.”
She provided no meaning to the terms “former,” “original,” or “regular,” which U.S. District Court Judge Michael W. Mosman said represent three different concepts even though the complaint treated them as if they were indistinguishable, leaving it hard to determine the exact theory upon which Taylor claims she and other consumers were deceived by the dual price tags.
“Did she believe the Sugg. Retail Price to be one at which the same items were previously offered at Nike retail stores or other, non-outlet retailers?” the court asked. “Or, did she believe the Sugg. Retail Price to be one at which the same items were being currently offered by other stores in the relevant market? Or, did she believe the Sugg. Retail Price to be one at which an independent manufacturer determined the items to be worth? Without answering these or similar questions, it is difficult to identify Ms. Taylor’s theory of fraud in a way that allows Nike to adequately defend against the allegations.”
The court also struggled with the plaintiff’s allegations that Nike’s items were “outlet exclusive,” and was unclear if Taylor was alleging the products were never sold anywhere but Nike Outlet stores or that they did not sell at the suggested retail price within 90 days of being marked.
Lacking clarity, Judge Mosman dismissed the complaint’s fraud allegations, also finding that Taylor lacked standing to seek injunctive relief. Her “economic injury is rooted in Nike’s alleged deception; without such deception, she would not have purchased the merchandise or paid as much as she did,” the court said. “By virtue of her past injury, however, Ms. Taylor is now aware of any false pricing scheme in which Nike might be engaged. Therefore, she cannot demonstrate ‘the imminent prospect of future injury’ because she can no longer be deceived.”
To read the opinion and order in Taylor v. Nike, Inc., click here.
Why it matters: The court’s order eliminates liability based on Nike’s outlet store pricing model—for now, as Taylor was granted leave to amend her complaint. The shoe giant is only the latest retailer facing a deceptive pricing suit, joining the likes of Kohl’s and Columbia Sportswear Company.