A deceptive pricing suit against Hobby Lobby will move forward after a California federal court judge denied the company’s motion to dismiss.
Christina Chase accused the company of tricking consumers into believing they were getting a better deal than they actually received, by displaying posters that read “50% off” in large letters with the word “always” in much smaller print below.
Chase purchased a photo frame with a price sticker that stated a “Marked” price of $17.99. She alleged that she did not read or notice the “always” disclaimer and believed that the frame had previously been sold for $17.99 and that she was purchasing a frame with significant value above the actual $8.99 price she paid. In fact, the frame was never offered for sale at the $17.99 price, she alleged.
Hobby Lobby moved to dismiss the suit, arguing that the word “always” indicated the store’s prices are 50% lower than prices at comparable stores.
But U.S. District Judge Gonzalo P. Curiel denied the motion. Recalling the defendant’s first motion to dismiss, when Chase failed to adequately allege the “how” of the defendant’s alleged misconduct, the court said her second attempt redressed those deficiencies.
Specifically, the plaintiff alleged that she noticed only the large, boldfaced “50% off” language, did not notice the word “always” because it was in a substantially smaller font, and did not notice and did not read any disclaimer or other language on the placard.
“Accordingly, the remaining question is whether—under these facts—a ‘reasonable consumer’ would have been misled to believe that the discounted price represented a ‘reduction from Hobby Lobby’s own former price for an article,’” the court wrote. “Taking Plaintiff’s alleged facts as true and drawing all reasonable inferences in favor of the plaintiff, the Court concludes that it is plausible that a ‘reasonable consumer’ could have been misled by plaintiff’s advertising.”
“It is plausible that a reasonable consumer—viewing the ad from a distance—could have failed to take note of the word ‘ALWAYS’ and ignored disclaimers in light of the size and bolded font of the ‘50% off’ language in the overall context of the advertisement,” Judge Curiel said, leaving the plaintiff with the impression that the frame and other products had previously been sold at Hobby Lobby at a reduced price.
In addition, given the factual inquiry required to adequately address the merits of the reasonable consumer standard, the benefit of extrinsic evidence would help a decision maker, the court concluded, denying the motion to dismiss and moving the suit forward.
To read the order in Chase v. Hobby Lobby Stores, Inc., click here.
Why it matters: The court was hesitant to grant the defendant’s motion to dismiss given the early stage of the litigation as well as its finding that a reasonable consumer could have been misled by the defendant’s advertising, particularly as the disclaimer was in a much smaller, lighter font than the “50% off” language.