Hinojos v. Kohl’s Corp.

Under California law, a plaintiff has standing to sue under the Unfair Competition Law and Fair Advertising Law if he purchased merchandise in reliance on the false price and if he would not have purchased the product but for the misrepresentation.

Antonio Hinojos alleged that he purchased items from Kohl’s Department Stores (“Kohl’s”) that were advertised as being significantly reduced from their “original” prices, when in reality they were routinely sold at the “sale” price. Hinojos filed a putative class action complaint asserting causes of action under California’s Unfair Competition Law (“UCL”), Fair Advertising Law (“FAL”), and Consumer Legal Remedies Act (“CLRA”). The district court dismissed Hinojos’s UCL and FAL claims for lack of standing because he had not “lost money or property” as a result of the false advertising. Shortly thereafter, the California Supreme Court published its opinion in Kwikset Corp. v. Superior Court, which held that in order to establish injury in fact in a case involving false advertising, the plaintiff must show: “(1) the defendant made a false representation about a product, (2) the consumer purchased the product in reliance on the misrepresentation, and (3) he would not have purchased the product otherwise.” The Ninth Circuit rejected the district court’s limitation of Kwikset to only apply to “factual misrepresentations about the composition, effects, origin, and substance of advertised products.” Additionally, the “benefit of the bargain” defense is only permissible if the alleged misrepresentation was not “material.” Because the “original” price was a false representation, Hinojos bought the products based on the misrepresentation, and he would not have purchased them had Kohl’s not falsely advertised, the panel reversed the district court’s dismissal of Hinojos’s claims, holding that Hinojos did have standing to sue under the UCL and FAL. The panel also held that Hinojos adequately alleged an injury under the CLRA. Further, the panel rejected Kohl’s motion to certify Kwikset to the California Supreme Court because Kohl’s removed the case to federal court and did make the motion at the proper time. REVERSED and REMANDED; Motion to Certify DENIED.