Jersey and Cali consumers hit J. Crew with false pricing class action 

Stereotypes

Some states have reputations for allowing plaintiffs to be particularly litigious and having demanding laws that regulate numerous types of businesses. In particular, New York, New Jersey and California are known to be some of the top states for providing platforms for plaintiffs to bring claims that would not be feasible in other states. Recently, this was demonstrated through a class action complaint filed against J. Crew (and numerous J. Crew affiliates and subsidiaries, collectively “J. Crew”) by two California residents and one New Jersey resident. The complaint alleged that J. Crew engaged in false pricing and violated numerous other aspects of the California Unfair Competition Law and other state-specific laws.

Creative Outlets

The complaint was filed in the Ventura County Superior Court of California in late May 2018 and alleged that J. Crew engaged in false reference pricing. False reference pricing is the practice of listing an inflated “regular” price of an item that is currently “on sale.” Then, the discount taken off the regular price appears steeper than it otherwise would have been, leading consumers to believe that they are getting a great deal (and perhaps make a purchase they otherwise might not have made). The plaintiffs in this case claim that J. Crew was carrying out this practice for the past six years on women’s, men’s and children’s apparel sold in its “outlets” – J. Crew Factory stores, Mercantile stores and the company website. The plaintiffs also alleged that J. Crew designed clothes specifically for these outlets and then discounted them as if they had once been sold in the company’s mainline retail stores. It was a “massive, years-long, pervasive campaign,” the complaint alleges.

The Takeaway

The suit alleges that J. Crew is liable for violations of the California Unfair Competition Law in all its flavors (unfair, unlawful, fraudulent practices), the California False Advertising Law and the California Consumer Legal Remedies Act; unfair or deceptive practices under the Federal Trade Commission Act; violations of New York’s General Business Laws and New Jersey’s Consumer Fraud Act and its Truth in Consumer Contract, Warranty, and Notice Act; and general charges of breach of contract, breach of warranty, unjust enrichment and negligent misrepresentation. Based on this broad swath of claims against J. Crew for this alleged false reference pricing practice, it will be interesting to see how J. Crew responds to each claim. J. Crew’s defense, and the success of its arguments, will be important guidance for other companies engaged in similar pricing practices.