Are outlet malls illegal under Oregon consumer law?

In Clark v. Eddie Bauer, the Ninth Circuit has certified a commercial law case for the Oregon Supreme Court that could find Oregon law bans the ever-present sale. The plaintiff, Susan Clark, sued Eddie Bauer for never actually selling a product at its list price.

Are you familiar with facts like these?

Plaintiff alleged that she visited the Eddie Bauer Outlet Store in Oregon on March 22, 2017. She alleged she “saw prominent signs” throughout the store “advertising large percentage-off discounts and savings” and “reasonably believed that Eddie Bauer was having a special store-wide sale.” She then paid $19.99 for a Fleece Zip with a “product tag” showing “a printed list price of $39.99” that was accompanied by “signage” stating that it “was on sale for 50% off, at a selling price of $19.99.” She also paid $49.99 for a Microlight Jacket with a “product tag” showing “a price of $99.99” that was accompanied by “signage” stating that it “was on sale for 50% off, at a selling price of $49.99.” Her receipt read, for the Fleece Zip: “1 @ 39.99,” “Item Discount 50.00%” of “(20.00)”; and for the Microlight Jacket: “1 @ 99.99,” “Item Discount 50.00%” of “(50.00).”

Later, on April 5, 2018, Plaintiff returned the Microlight Jacket at a different Eddie Bauer Outlet Store in Oregon because it had a broken zipper. She was given a $49.99 credit, which she applied to the purchase of a StormDown Jacket. The StormDown Jacket was located in the “Clearance” section of the store and its product tag showed a list price of $229.00 and a reduced price of $199.99 on a red sticker. Adjacent signage indicated that it was for sale 50% off the lowest price marked on the tag. Plaintiff purchased the jacket for a price of $99.99.

Plaintiff alleged she relied on the discount representations and advertised reference prices in making her March 2017 and April 2018 purchases, which led her to “reasonably believe[]” that “the list prices printed on the product tags of Eddie Bauer’s products represented Eddie Bauer’s usual and normal selling prices for the products”; that the “Fleece Zip was thereby worth and had a value of ”and was “usually sold for, $39.99”; that the “Microlight Jacket was thereby worth and had a value of” and was “usually sold for, $99.99”; and that the StormDown Jacket “had a value of, and was recently normally and usually sold for, $199.99.”

But Plaintiff alleged, based in part on her counsel’s investigation, that “Eddie Bauer advertises perpetual storewide sales . . . typically ranging from 40% to 70% off” Defendants “self-created list prices” on “all of its products” in Eddie Bauer’s Outlet Stores. She alleged that the Fleece Zip and Microlight Jacket were “Eddie Bauer Outletexclusive items” that were never offered for the purported prices of $39.99 and $99.99, but were “always offered at discounts of between 40% and 70% off the list prices printed on their tags.” She claims that the StormDown Jacket was never sold in any Eddie Bauer retail, outlet, or website for $199.99 or greater at any time in the 600 days preceding her purchase. Plaintiff claims that she “first learned of Eddie Bauer’s false advertising scheme, and that she was likely a victim of the scheme, on March 13, 2020.”

Of course, the sales technique commonly called “anchoring” is prevalent throughout many sales platforms, not just outlet stores. Furniture is always being liquidated, for example.

The law Susan Clark’s lawyers’ site is Oregon Revised Statute 646.608(1)(e),(i),(j),(u),or (ee):

(1) A person engages in an unlawful practice if in the course of the person’s business, vocation or occupation the person does any of the following:

(e) Represents that real estate, goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, quantities or qualities that the real estate, goods or services do not have or that a person has a sponsorship, approval, status, qualification, affiliation, or connection that the person does not have.

(i) Advertises real estate, goods or services with intent not to provide the real estate, goods or services as advertised, or with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity.

(j) Makes false or misleading representations of fact concerning the reasons for, existence of, or amounts of price reductions.

(u) Engages in any other unfair or deceptive conduct in trade or commerce.

(ee) Violates ORS 646.883 (Price comparison in advertisement prohibited) or 646.885 (Use of terms in advertisement containing price comparison).

Does a consumer suffer an “ascertainable loss” if a product is permanently on sale, such that no one ever pays the list price? From the perspective of economics, no. An alternative price that the buyer doesn’t pay can never impose a cost. But does this violate Oregon law? The Oregon Supreme Court will soon decide if it does.

Eric Shierman lives in Salem and is the author of We were winning when I was there.