Karen Kidd Oct. 4, 2016, 10:53am


LOS ANGELES (Legal Newsline) - A Los Angeles man may have a tough time proving deception in his class action lawsuit against a Spanish clothing manufacturer, but may have a better shot in California than in other jurisdictions, a Palo Alto attorney said in a recent interview.

Zara, one of the world's most-recognizable clothing brands, is fighting a putative class action lawsuit filed in August by a Los Angeles man who claims he was deceived by prices listed in euros and then was subjected to artificially high exchange rates. Devin Rose is seeking more than $5 million for Zara's allegedly deceptive bait-and-switch pricing practices.

California courts lately have taken a dim view of deceptive advertising cases, Kent J. Schmidt, a partner at Dorsey & Whitney, told Legal Newsline in an email.

"Courts in California, including our district courts, are with increasing frequency dismissing cases based on the notion that consumers are not of average intelligence and are easily confused or deceived by a business practice such as this," Schmidt said. "If one presumes a reasonably intelligent and inquisitive shopper is making the purchase at the Zara store, there is no real deception."

Whatever difficulties Rose might face in proving his case, he may have an easier time in California, Schmidt said.

"Certainly whatever probabilities this case may have for success are greater here in California than in many other jurisdictions that would view this claim as lacking any basis whatsoever," the attorney said.

In his case filed in U.S. District Court for California's Central District, Rose claims Zara intentionally confuses customers with price tags on its clothing that list the denomination in euros rather than U.S. dollars.

"Since the euro is a larger unit of currency than the American dollar, these euro prices lead shoppers in the United States to believe that Zara’s products are less expensive than they actually are," Rose said in his lawsuit. "Customers are lured in by the brand’s seemingly low prices, and it is only upon bringing the items they intend to purchase to the register that these customers discover their true costs."

Rose also alleges that the U.S. dollar exchange described on the same price tags doesn't reflect an accurate rate or exchange.

"In this context, the dollar amount similarly is far in excess of the true converted amount if the euro price printed on the tag were properly converted to dollars," the lawsuit states.

Rose's lawsuit described his own shopping experience when he visited one of Zara's stores in May, when Rose claims he purchases three shirts that were priced at €9.95 each.

"At the time that Mr. Rose made his purchases, the actual euro-dollar exchange rate would have resulted in his €9.95 shirts costing approximately $11.26," the lawsuit states. "However, Zara charged Mr. Rose $17.90 per garment, a markup of nearly 60 percent."

Zara did not return a Legal Newsline request for comment but a spokesperson for the clothing line was quoted by theFashionLaw.com denying the allegations and calling them baseless.

"Zara USA vehemently denies any allegations that the company engages in deceptive pricing practices in the United States," the fashion legal news outlet quoted from a Zara USA statement. "While we have not yet been served the complaint containing these baseless claims, we pride ourselves in our fundamental commitment to transparency and honest, ethical conduct with our valued customers."

In an update posted by theFashionLaw, Rose's legal counsel had sharp words about Zara's own counsel.

"Zara's response so far has been beyond bizarre and desperate," that update said. "Their unlawful conduct is not up for debate, as anyone who goes into a Zara store in the United States can see with their own two eyes that Zara is pricing clothing in Euros and charging consumers drastically above the lowest tag price in dollars which is illegal. U.S. laws require that a retailer charge the consumer the lowest tag price -- not grossly inflated amounts using fake conversion rates. If Zara wants to double down on its duplicity, instead of acting like a responsible corporate citizen and fixing the mess of its own making, they should be prepared to face the wrath of the American consumer and the full force of the law."

Rose's case differs from what could be considered a typical suit of its type, Schmidt noted.

"This lawsuit is unusual in that, in the typical consumer deception case, the consumer is allegedly confused or deceived by the business practice that is revealed after transaction has been completed," Schmidt said. "For example, the consumer learns that the product he or she bought did not perform as the seller intended or had a quality or characteristic that was not disclosed at time of sale; a recurring charge is assessed that was not disclosed at the time of the transaction."

In Rose v. Zara U.S. Inc., it didn't happen that way, Schmidt said.

"Here, the claim against Zara appears to be that there was confusion prior to the transaction at the sales counter," the attorney said. "The problem for the plaintiff is that any confusion can be easily cleared up and the customer is presumably told the U.S. dollar amount charged at the time of the transaction. The customer has the 'last clear chance' to either proceed with the transaction or decide to show elsewhere."

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U.S. District Court for the Central District of California
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