Class Action Defense

In another victory for retail and fashion clients, a federal court recently held that an online arbitration provision for a web-based application was enforceable, reversing a lower court decision and essentially blocking a proposed class action.

Based on recent federal court filings in the Central District of California, it appears that plaintiff lawyers have found a new way to threaten retailers with class action litigation. In January of this year, two class action complaints were filed on behalf of consumers who allegedly were charged shipping and handling fees “not reasonably related to Defendant’s actual costs of shipping or delivering the items to consumers but instead greatly exceeded those costs.” The complaints assert that the shipping and handling fees violate “established ethical principles” and California law.

Store credits not redeemable for cash are not unclaimed property under California's Unclaimed Property Law (UPL). In Bed Bath & Beyond Inc. v. Chiang, Case No. 37-2014-12491 (Super Ct. San Diego, Cal. Mar. 4, 2016), the Superior Court issued summary judgment in favor of the national retail chain, Bed Bath & Beyond Inc., holding that merchandise credits not redeemable for cash are not subject to the UPL and also qualify for an exemption under the UPL for gift certificates that do not expire.  

On Monday, November 30, 2015, Nordstrom and denim manufacturer AG Adriano Goldschmied filed a motion to approve a settlement in California federal court, agreeing to pay more than $4 million to settle a consumer class action suit that accused them of falsely labeling jeans as “Made in USA.” The settlement was agreed upon in October 2015 after over a year of intense litigation.  

In 2013, David and Katina Spade (the Spades) purchased a mattress from Select Comfort Corp. (doing business as Sleep Number) that featured remote control operation of the height of the foot and head portions of the mattress (the Mattress). After taking delivery of the Mattress, the Spades experienced several technical problems with the remote control feature. Select Comfort and Leggett & Platt, Inc. unsuccessfully tried to repair the Mattress for almost a year.

Consumer class actions against fashion retailers are on the rise, and the most recent target is Saks Fifth Avenue. Currently pending in the Central District of California is a putative class action case brought by named plaintiff Jennifer Shaouli, who claims that Saks’ failure to prominently post its return and refund policies in its store violated California’s Consumer Legal Remedies Act and False Advertising laws.

Two women’s apparel companies alleged to have systematically imported goods into the United States without declaring their full value recently settled a civil customs fraud lawsuit with the US Attorney for the Southern District of New York. The settlement required the companies — Dana Kay, Inc. and Siouni & Zar Corporation — to admit responsibility for fraudulent conduct and pay $10 million as damages and penalties under the False Claims Act.

In the year since the Massachusetts Supreme Judicial Court ruled that retailers cannot collect ZIP codes from consumers using credit cards, the number of class actions alleging that retailers have violated the law have soared.