Legal Newsline

Tuesday, October 22, 2019

Court denies Hobby Lobby's motion to dismiss pricing lawsuit

By Dee Thompson | Nov 14, 2017

SAN DIEGO (Legal Newsline) – A class action suit over Hobby Lobby’s pricing policies will continue despite Hobby Lobby moving to dismiss.

On Oct. 2, in the case of Christina Chase v. Hobby Lobby Stores Inc., an order granting in part and denying in part defendant’s motion to dismiss and denying motion to strike was filed in the U.S. District Court for the Southern District of California and signed by Judge Gonzalo P. Curiel.  

The order states that on March 1, Chase was shopping at the Hobby Lobby on Grossmont Boulevard in La Mesa, California. After walking down a store aisle displaying photo frames, she bought a Green Tree Gallery Shadow Box Display Case Photo Frame for approximately $8.99. Allegedly, there was a white tag on the back of the frame that listed the price as $17.99. A placard near the frame display said “Photo Frames 50 percent off the marked price.”

According to the court’s order, “After examining the 'marked' price of $17.99, plaintiff asserts that she believed the photo frame had been previously sold for $17.99 at Hobby Lobby and that she was purchasing a photo frame with significant value above the $8.99 purchase price. Plaintiff contends that this product was never offered for sale at the $17.99 price, and that this product was never offered for sale or sold at that price within the 90-day period preceding her purchase.”

Plaintiff also purchased a paintbrush that she believed had been marked down 50 percent. 

The complaint filed by the plaintiff alleges three causes of action: violation of California’s Unfair Competition Law, violation of California’s False Advertising Law and violation of California’s Consumers Legal Remedies Act.

The complaint seeks an order certifying the class and designating Chase as the class representative and her counsel as class counsel, damages, restitution and disgorgement of profits and unjust enrichment, declaratory and injunctive relief, an order directing Hobby Lobby to engage in a corrective advertising campaign and attorney’s fees and costs.

Defendant Hobby Lobby filed a motion to dismiss. Hobby Lobby submitted to the court documents not included in the court pleadings to support dismissal. The court’s order notes that it will accept the extrinsic evidence.

“The court must analyze whether defendant’s extrinsic evidence can be considered at the motion to dismiss stage. Defendant has submitted the declaration of Theresa Webster and exhibits portraying what defendant asserts to be relevant advertising templates for the paintbrush and photo frame (Webster Decl., Exs. A-B), and templates for what Defendant asserts are for categories of 'sale,' 'clearance' and 'non-discounted items.”

Hobby Lobby moved to strike paragraphs one and two and 28 of the complaint, which state that “comparative pricing” is inherently deceptive. 

According to the order filed Oct. 2, “Here, the allegations based on the attorney conducted investigation are found in the complaint. They are directed at the 90-day period preceding the plaintiff’s purchases to support the claim that the 'marked' prices of the purchased items were not the prevailing market prices for the items and were thus continuously discounted former prices in violation of California’s consumer protection statutes.” 

The court ruled that the evidence is relevant and denied the motion to strike. 

Hobby Lobby also argued for dismissal of portions of the complaint, claiming that its pricing policies did not harm plaintiff. 

The court denied that, noting in its order, “Accepting as true the allegations that plaintiff was misled because of Hobby Lobby’s discounting scheme, plaintiff would satisfy the injury-in-fact requirement for standing to pursue claims related to defendant's paintbrush and photo frame products under the UCL, FAL and CLRA. Plaintiff would necessarily have lost money if she was misled into purchasing a product based on the belief that Hobby Lobby had previously sold that product at a higher 'marked' price.”

The court also denied defendant’s arguments that plaintiff had no standing to bring her claims, saying “Plaintiff has standing on behalf of others who purchased Hobby Lobby products who were similarly misled by Hobby Lobby’s in-store advertisements.”

In concluding, Curiel notes in the order that “The court hereby grants defendant’s motion to dismiss in part and denies the motion in part. Further, the court denies the defendant’s motion to strike.” 

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