Over the course of a few weeks this spring, Boohoo, Nasty Gal, and PrettyLittleThing were each individually sued and accused of fraud for allegedly inflating the original prices of their fast fashion wares in order to “deceive customers into a false belief that the sale prices [that they advertise on their e-commerce sites] are deeply discounted bargain prices.” Plaintiffs Farid Khan, Haya Hilton, and Olivia Lee argued in their respective complaints that the Boohoo Group brands are actively engaging in a “scam” to “lure unsuspecting customers into jumping at a fake ‘bargain.’”
In the first of such suits, all of which were filed in the U.S. District Court for the Central District of California, Khan claimed that “on a typical day, Boohoo prominently displays on its landing page some form of a sale where all products or a select grouping of products are supposedly marked down by a specified percentage—for example, 40, 50, or 60% off.” The problem with that, he asserted, is that such a “sale” is “not really a sale at all” and that “all the reference prices on Boohoo’s website are fake” since the retailer never offered up the garments at issue for their original, pre-sale prices.
Given that he and others consumers have “relied on Boohoo’s representation that each of the products” they purchase “was truly on sale and being sold at a substantial markdown and discount” when that was not true, Khan alleged that Boohoo is on the hook for damages of more than $5 million in connection with its violations of California Unfair Competition Law, California False Advertising Law, and California Consumer Legal Remedies Act.
A month after Khan filed suit, Hilton and Lee filed virtually identical cases of their own, accusing fellow Boohoo Group-owned PrettyLittleThing and Nasty Gal of engaging in such price fraud.
In response to the three lawsuits, the Boohoo Group defendants – which generated $1.55 billion in revenue in 2019 with their trendy and cheap wares – filed a combined motion, seeking to have the cases dismissed in their entirety, or at least, to have an array of the plaintiffs’ claims struck down.
According to the combined motion that they filed early this month, Boohoo, PrettyLittleThing and Nasty Gal (the “defendants”) argue that Khan, Hilton, and Lee (the “plaintiffs”) fail to make their case on a number of grounds, including that they “do not allege that the defendants failed to ship the products, that the products [they] received were not as represented, or that [they] lost any money” in connection with their purchases. The latter point is “not surprising,” the retailers claim, “given the prices that the plaintiffs paid for the handful of products they purchased.”
The defendants argue that despite claiming that they “fell victim to the deception” of the retailers’ various sale events, they do not allege any tangible harm. Khan, for instance, claims that he was duped by Boohoo’s “50% Off Everything” advertising, but “does not allege that he is out-of-pocket anything, e.g., that his $6 t- shirts were worth less than the rock-bottom price he paid for them.” With that in mind, Boohoo and co. argue that the plaintiffs lack standing to bring their suits since “they do not plausibly allege that they suffered any damages, i.e., that the price they paid was more than the value received.”
Beyond the plaintiffs’ failure to establish that they were harmed by the defendants’ “false advertising,” the defendants claim that the court should strike down the sweeping class allegations for products that Kahn, Hilton, and Lee never actually purchased. “For example, although she only bought one $24-pair of shoes on the Nasty Gal website, Lee seeks to serve as a class representative for claims covering every product sold on the Nasty Gal website to every customer in the U.S. over the past four years,” the defendants assert. The same for Hilton, who only “bought seven items,” and Khan, who bought twelve items, seven of which were “the same $6 t-shirt.” As such, they “do not have standing to assert claims related to products they never purchased and online advertising they never saw or relied upon,” according to counsel for Boohoo, PrettyLittleThing and Nasty Gal.
Still yet, the retailer defendants claim that the plaintiffs have filed to “satisfy [the] ‘heightened’ pleading standard that must ‘state with particularity the circumstances surrounding fraud.’” Citing an earlier decision by the U.S. District Court for the Southern District of California (Rael v. New York & Company), which refused to side with a plaintiff that alleged price fraud on the basis that it is not enough to merely allege that a product was sold was “not sold at the [original, pre-sale] price in the three months before [the plaintiff’s] purchase,” the defendants argue that the “same theory – and the same allegations – [are] advanced by the plaintiffs here” and should similarly be dismissed by the court.
With the foregoing in mind, and given that plaintiffs alleged failure to adequately plead their unjust enrichment claim (“When a plaintiff fails ‘to sufficiently plead an actionable misrepresentation or omission, his [or her] restitution claim must be dismissed.’”), the defendants ask the court to grant their motion to dismiss and strike
Prior to being hit with the lawsuits at hand, Boohoo was found to have engaged in “misleading” promotions in its native UK by the British Advertising Standards Authority on more than one occasion in 2018 and 2019. In the United Kingdom, misleading consumers, including in connection with product pricing, represents an infringement of the Consumer Protection from Unfair Trading Regulations 2008, with such seemingly “small claims for refunds from individual consumers” capable of “quickly adding up for businesses shifting substantial volumes of stock,” according to Fox Williams LLP attorneys Stephen Sidkin and Lucy Coffey.
The same is true in the U.S., where various state laws and the Federal Trade Commission Act prohibit deceptive trade practices. In the cases at hand, the plaintiffs claims could set the fast fashion group back by tens of millions of dollars, as a steady stream of individual consumers have filed similar suits against retailers ranging from Kohls to Coach over the past several years on the basis of false sale prices, oftentimes in connection with the brands’ outlets.
*The cases are Farid Khan v. Boohoo, Haya Hilton v. PrettyLittleThing.com, and Olivia Lee v. NastyGal.com, 2:20-cv-03332 (C.D.Cal.),