Lack of Injury Dooms Deceptive Pricing Suit

Advertising Law

Finding that Burberry outlet shoppers suffered no injury, a New York federal court judge tossed a deceptive pricing class action.

Thomas Belcastro purchased five shirts from Burberry outlet stores in Florida between 2014 and 2015. Since marked with a “was” price, he believed each of the shirts were deeply discounted. Belcastro later sued, alleging that he was injured because he would not have purchased the shirts, or paid the price he did, if he “had known he was not truly receiving a bargain.”

The court granted the defendant’s motion to dismiss, explaining that the plaintiff’s theory of injury was inadequate because neither Florida nor New York law recognized a consumer’s subjective disappointment at not receiving a promised bargain as a cognizable injury.

Belcastro filed an amended complaint, pleading two new theories: that he was deceived into purchasing made-for-outlet products because he was led to believe that the products were “designed and manufactured for ‘real,’ mainline Burberry stores or for sale at mainline retailers.” In the alternative, he told the court he overpaid because the deceptive reference prices induced him to overvalue and thus overpay for the shirts.

In spite of the updated pleadings, U.S. District Court Judge Valerie Caproni reached the same conclusion. The plaintiff’s “‘but-I-thought-I-got-a-bargain’ theory impermissibly combines deception (the appearance of a bargain) with injury (there was no actual bargain),” the court explained.

“In order to allege a price premium injury based on overpayment, a plaintiff must allege that he overpaid by some objective measure, and not just that he felt, subjectively, that he overpaid,” the court said. “Belcastro does not allege that he purchased products that normally retail for less than he actually paid. Rather, Belcastro’s theory is that he paid a price premium because he did not receive a shirt that is objectively worth more than what he paid. This is nothing more than a slightly repackaged version of the ‘but-I-thought-I-got-a-bargain’ injury the Court has rejected already.”

While the court found the plaintiff’s attempt to plead an injury based on the quality of the goods he purchased “more promising,” Judge Caproni determined it was inadequately pleaded. Belcastro didn’t allege how the outlet-only goods he purchased differed from the retail products he believed he was purchasing.

“If the goods were really inferior, Plaintiff ought to be able to specify objective ways in which that is so,” the court said. “The Amended Complaint leaves Burberry guessing whether Belcastro’s theory is that the shirts he purchased are inferior because they are made of different and less luxurious materials (for example, the shirts have plastic buttons instead of horn or are made of a cashmere-lamb’s wool blend instead of pure cashmere); or because Burberry outlet products are sold in bulk, making them less exclusive; or because Burberry outlet products are made in particular patterns and cuts, which differentiate them from Burberry retail goods, thereby making them less valuable.”

Absent factual allegations of an objective nature, the court rejected the amended complaint for lack of an “actual injury” cognizable under Florida or New York law. This time, Judge Caproni dismissed the suit with prejudice.

To read the opinion and order in Belcastro v. Burberry Limited, click here.

Why it matters: Could the wave of deceptive pricing litigation be tapering off as courts start to crack down? The U.S. Court of Appeals for the First Circuit led the way with a pair of opinions in August when it dismissed the suits for a lack of injury. The decisions were cited by the New York federal court as support in reaching a similar outcome in the Burberry case.