We have been writing for well over a year now (for example, in Law360 and Bloomberg Law), that the Ninth Circuit's decision in Chowning v. Kohl's could change the pricing litigation landscape – either by validating the opinions of the several district courts that have held that plaintiffs cannot receive restitution when they did not pay more than an item was actually worth (regardless of how good a deal they thought they were getting), or alternatively, by breathing new life into pricing claims by allowing alternative measures of restitution. The wait is over.
The Ninth Circuit's unpublished decision, issued June 18, 2018, takes the former approach, stating: "The proper calculation of restitution in this case is price paid versus value received." The decision explains that because the plaintiff admitted to receiving value from the clothing items she purchased, she would only be entitled to restitution if she could prove she paid more than the items were actually worth. The plaintiff failed to meet her burden – despite hiring multiple experts – she did not provide any evidence as to the actual value of the items she received.
The Ninth Circuit's decision specifically rejects the "full refund," profit disgorgement and "actual discount" restitutionary models proposed by the plaintiff, because none of these models would measure the plaintiff’s actual loss. As to the "actual discount" model – which involves applying the advertised discount percentage to the price being offered and then awarding the difference between that amount and the amount paid – the court explained that "this measure would effectively seek damages sounding in contract, not equity," and damages are not recoverable under the UCL.
The court also rejected the plaintiff's reliance on the Ninth Circuit's decision on Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 988-89 (9th Cir. 2015), which the plaintiff argued allowed for different models of restitution. The court disagreed, pointing out that in Pulaski, "[r]estitution is 'the return of the excess of what the plaintiff gave the defendant over the value of what the plaintiff received.' That is the same measure of restitution identified by In re Tobacco Cases II and is the same measure that applies here." The court further explained that to the extent Pulaski is inconsistent with the California Court of Appeal’s more recent decision in In re Tobacco Cases II, Pulaski is bad law.
Chowning provides an effective authority to the numerous retailers still enmeshed in pricing litigation and will hopefully dissuade plaintiffs’ attorneys from investing in future cases.