Retailer Buys $6M Deal Over Outlet Pricing

Advertising Law

In the latest deceptive pricing class action resolution, Ann Taylor has agreed to pay more than $6 million to settle a challenge to the sales tags at its outlet stores.

A pair of New Yorkers filed suit alleging that the sales tags at Ann Taylor Factory and LOFT Outlet stores misrepresented that the products were originally or regularly sold at much higher prices to trick consumers into thinking they were purchasing products that were now being offered at significantly lower prices.

The suit—which claimed violations of California’s False Advertising Law, Unfair Competition Law and Consumers Legal Remedies Act, among other counts—survived the retailer’s motion to dismiss, and the parties began negotiating a settlement.

In their unopposed motion in support of preliminary approval of the deal, the plaintiffs explained that the defendant would establish a $6.1 million settlement fund to pay for notice and administration fees up to $500,000 and two incentive awards of $1,500 for the named plaintiffs.

The remainder of the fund would provide payment to class members (those who purchased one or more items from the Factory or Outlet stores between May 5, 2012, and May 4, 2016) in the form of a $12 voucher or $5 cash (with $5.1 million of the fund allotted for the vouchers and $500,000 for the cash payments). Class members will be required to submit a claim form with their payment option, and those who pick cash must identify the date and store location of their purchase.

Class counsel could request up to 25 percent of the settlement fund, or $1,525,000, as well as reimbursements of costs and expenses.

Ann Taylor also promised to make pricing and labeling changes by complying with applicable state and federal pricing laws, and to take steps to label its merchandise as being for Ann Taylor Factory or LOFT Outlet.

The settlement “is an excellent result for members of the Settlement Class,” the plaintiffs argued in the motion.

To read the memorandum of law in support of the plaintiffs’ unopposed motion for preliminary approval of the settlement in Morrow v. ANN Inc., click here.

Why it matters: The court granted the motion for preliminary approval in the latest settlement in a deceptive pricing class action. Retailers have faced a wave of litigation challenging pricing claims in recent years, with deals ranging from $6.8 million to $27.5 million.



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