Filed 8/24/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

LINDA RUBENSTEIN,

Plaintiff and Appellant,

v.

THE GAP, INC.,

Defendant and Respondent.

 B272356

 (Los Angeles County

 Super. Ct. No. BC555010)

APPEAL from a judgment of the Superior Court of Los 

Angeles County. Kenneth R. Freeman, Judge. Affirmed.

Kirtland & Packard, Behram V. Parekh and Joshua A. 

Fields for Plaintiff and Appellant.

Xavier Becerra, Attorney General, Nicklas A. Akers, Senior 

Assistant Attorney General, Michele Van Gelderen, Supervising 

Deputy Attorney General, and Tina Charoenpong, Deputy 

Attorney General, for the State of California as Amicus Curiae on 

behalf of Plaintiff and Appellant.

Morgan, Lewis & Bockius, Joseph Duffy and Esther K. Ro 

for Defendant and Respondent.

____________________________________
2

Plaintiff and appellant Linda Rubenstein appeals from a 

judgment entered after the trial court sustained the demurrer of 

defendant and respondent The Gap, Inc. (Gap) without leave to 

amend. The trial court found that Rubenstein could not state 

claims under our state’s Unfair Competition Law (UCL), 

Business and Professions Code section 17200 et seq.; False 

Advertising Law (FAL), Business and Professions Code section 

17500 et seq.; or Consumers Legal Remedies Act (CLRA), Civil 

Code section 1750 et seq., because she failed to allege a 

misrepresentation or an actionable omission on the part of Gap. 

Instead, she alleged only that Gap deceptively sells lesser-quality 

Gap and Banana Republic clothing items at Gap and Banana 

Republic “Factory Stores,” items that are never sold at 

“traditional” Gap and Banana Republic stores. We affirm the 

judgment.

BACKGROUND

Rubenstein filed her operative second amended complaint 

(SAC) on August 31, 2015, purporting to allege causes of action 

under the FAL, UCL, and CLRA. The factual basis for all of the 

causes of action was identical: (1) Gap uses “Gap” and “Banana 

Republic” in naming its factory stores, which are located in outlet 

malls; (2) Gap also places “Gap” and “Banana Republic” labels in 

the clothing items Gap sells at the factory stores, even though the 

clothing is allegedly of lesser quality than clothing sold at 

traditional Gap and Banana Republic stores; and (3) Gap does 

not disclose to consumers that factory store items are not sold at 

traditional stores and are of lesser quality, but instead puts three 

geometrical symbols on factory store clothing labels to 

differentiate these items.
3

On the basis of these facts, Rubenstein alleges that she 

“was misled about the quality and authenticity of Defendant’s 

Products,” and this caused her to purchase products from Gap 

and Banana Republic Factory Stores. Rubenstein concludes that, 

like her, reasonable consumers expect factory stores to be outlet 

stores, and expect outlet stores to offer for sale at a discounted 

price items that were once for sale at retail stores. Thus, 

according to Rubenstein, “In using the names of the retail stores 

in the names of the Factory Stores and on the labels of the 

Factory Store Products, Defendant was communicating to the 

public that the Factory Store products are the same products and 

of the same quality that consumers have come to associate with 

the Gap and Banana Republic brands.”

Each cause of action of the SAC was based on Gap’s alleged 

misrepresentation in using the Gap and Banana Republic brand 

names for items that had never been sold in traditional Gap and 

Banana Republic stores and/or were of lesser quality, and also on 

Gap’s failure to disclose these facts to consumers. In the first 

cause of action, Rubenstein alleged that Gap “misled consumers 

by making untrue statements and failing to disclose what is 

required as stated in [the FAL].” The second cause of action 

alleged “[t]he material misrepresentations, concealment, and 

non-disclosures by Defendant . . . are unlawful, unfair, and 

fraudulent business practices prohibited by the UCL.” The third 

cause of action alleged that these same practices violated the 

CLRA by “[r]epresenting that goods . . . have sponsorship, 

approval, characteristics, ingredients, uses, benefits, or 

quantities that they do not have,” by “[r]epresenting that goods 

. . . are of a particular standard, quality, or grade, or that goods 

are of a particular style or model, if they are of another,” and by 
4

“[a]dvertising goods . . . with intent not to sell them as 

advertised.” (Civ. Code, § 1770, subd. (a)(5), (7), (9).) 

Rubenstein prayed for injunctive relief, restitution, 

damages, exemplary damages, attorney fees, and costs of suit, 

and for certification of a putative class of purchasers of Banana 

Republic Factory Store or Gap Factory Store clothing in 

California.

Gap demurred to the SAC. Gap argued that Rubenstein 

could not establish liability under any of her proposed causes of 

action because she did not allege a misrepresentation by Gap or 

any duty to disclose that clothing sold in factory stores had not 

been offered for sale in traditional Gap and Banana Republic 

stores. Gap argued that Rubenstein’s claims rested on the 

untenable position that it was unlawful for Gap to use its Gap 

and Banana Republic brand names when selling its own 

merchandise in factory stores because the brand names implied a 

certain level of quality that was allegedly lacking. Gap also 

argued that Rubenstein lacked statutory standing because she 

failed to allege how the items she purchased were not of the 

quality she expected or how the amount she paid exceeded the 

value she received.

Rubenstein opposed the demurrer, contending that 

reasonable consumers are likely to be deceived by Gap’s naming 

practices. According to Rubenstein, use of the Gap and Banana 

Republic brand names on factory stores and the clothing they 

carry leads consumers to believe they are purchasing items of a 

certain quality at a discount, when in fact they are buying lesserquality apparel. Rubenstein also argued that under LiMandri v. 

Judkins (1997) 52 Cal.App.4th 326 (LiMandri), Gap had a duty 

to disclose to consumers that factory store merchandise had never 
5

been offered for sale in traditional Gap stores. Finally, 

Rubenstein argued that she had standing because the SAC 

alleged that she would not have paid as much for the items she 

purchased, if she purchased them at all, had she known that they 

were not of the same quality she had come to expect from the Gap 

and Banana Republic brands.

The trial court sustained the demurrer without leave to 

amend, concluding that “[t]he mere labeling of the Defendant’s 

stores as the ‘Gap Factory Store’ or ‘Banana Republic Factory 

Store’ does not constitute any actionable misrepresentation about 

the quality or attributes of the products sold at those stores.” For 

the same reason, the trial court found that Rubenstein had not 

lost money or property as a result of an alleged violation of the 

UCL or the FAL, and therefore lacked statutory standing. The 

trial court entered judgment on March 18, 2016, and Rubenstein 

filed a notice of appeal on May 12, 2016.

DISCUSSION

1. Standard of Review

We review de novo the trial court’s order sustaining a 

demurrer. (Moore v. Regents of University of California (1990) 

51 Cal.3d 120, 125.) “In reviewing the sufficiency of a complaint 

against a general demurrer, we are guided by long-settled rules. 

‘We treat the demurrer as admitting all material facts properly 

pleaded, but not contentions, deductions or conclusions of fact or 

law. [Citation.] We also consider matters which may be 

judicially noticed.’ [Citation.] Further, we give the complaint a 

reasonable interpretation, reading it as a whole and its parts in 

their context. [Citation.] When a demurrer is sustained, we 

determine whether the complaint states facts sufficient to 
6

constitute a cause of action.” (Blank v. Kirwan (1985) 39 Cal.3d 

311, 318.)

2. The SAC Fails to State a Claim for Violation of the 

FAL.

The FAL makes it “unlawful for any . . . corporation . . . 

with intent directly or indirectly to dispose of real or personal 

property . . . or to induce the public to enter into any obligation

relating thereto, to make or disseminate or cause to be made or 

disseminated before the public in this state . . . in any newspaper 

or other publication, or any advertising device . . . or in any other 

manner or means whatever, including over the Internet, any 

statement, concerning that real or personal property . . . or 

concerning any circumstance or matter of fact connected with the 

proposed performance or disposition thereof, which is untrue or 

misleading, and which is known, or which by the exercise of

reasonable care should be known, to be untrue or misleading.” 

(Bus. & Prof. Code, § 17500.) “In short, [the FAL] ‘prohibits 

advertising property or services with untrue or misleading 

statements.’ ” (McCann v. Lucky Money, Inc. (2005) 129 

Cal.App.4th 1382, 1388.) An advertising statement is misleading 

if members of the public are likely to be deceived. (Ibid.)

Rubenstein’s SAC alleges no advertising or promotional 

materials or any other statements disseminated by Gap to 

consumers that its factory store clothing items were previously 

for sale in traditional Gap stores or were of a certain quality. 

Instead, Rubenstein alleges only that Gap’s use of its own brand 

names—Gap and Banana Republic—in naming factory stores and 

on the labels of factory store clothing items was deceptive 

because the apparel is not of the brand name quality that 

Rubenstein has come to expect. As a matter of law, Gap’s use of 
7

its own brand name labels on clothing that it manufactures and 

sells at Gap-owned stores is not deceptive, regardless of the 

quality of the merchandise or whether it was ever for sale at 

other Gap-owned stores. Retailers may harm the value of their 

brands by selling inferior merchandise at factory stores, but 

doing so does not constitute false advertising. Under these 

allegations, the trial court properly dismissed the FAL cause of 

action.

3. The SAC Also Fails to State a Claim for Violation of 

the UCL.

“The UCL prohibits, and provides civil remedies for, unfair 

competition, which it defines as ‘any unlawful, unfair or 

fraudulent business act or practice.’ ([Bus. & Prof. Code,] 

§ 17200.) Its purpose ‘is to protect both consumers and 

competitors by promoting fair competition in commercial markets 

for goods and services.’ ” (Kwikset Corp. v. Superior Court (2011) 

51 Cal.4th 310, 320.)

a. Selling Nonidentical Brand Name Clothing in a 

Factory Store is not Fraudulent.

“A business practice is ‘fraudulent’ within the meaning of 

[the UCL] if it is ‘likely to deceive the public. [Citations.] It may 

be based on representations to the public which are untrue, and 

“ ‘also those which may be accurate on some level, but will 

nonetheless tend to mislead or deceive. . . . A perfectly true 

statement couched in such a manner that it is likely to mislead or 

deceive the consumer, such as by failure to disclose other relevant 

information, is actionable under’ ” the UCL. [Citations.] The 

determination as to whether a business practice is deceptive is 

based on the likely effect such practice would have on a 
8

reasonable consumer.’ ” (Klein v. Chevron U.S.A., Inc. (2012) 202 

Cal.App.4th 1342, 1380–1381.)

Although the likelihood of deception is often too factintensive to decide on the pleadings, courts can and do sustain 

demurrers on UCL claims when the facts alleged fail as a matter 

of law to show such a likelihood. (See, e.g., Nolte v. Cedars-Sinai 

Medical Center (2015) 236 Cal.App.4th 1401, 1409; Hill v. Roll 

Internat. Corp. (2011) 195 Cal.App.4th 1295, 1307; Berryman v. 

Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 

1556–1557; Daugherty v. American Honda Motor Co., Inc. (2006) 

144 Cal.App.4th 824, 838; Bardin v. DaimlerChrysler Corp.

(2006) 136 Cal.App.4th 1255, 1275.)

This is such a case. As explained in discussing the FAL 

cause of action, the SAC alleges no statement by Gap about the 

quality of factory store merchandise or that it was previously for 

sale in traditional Gap-owned stores. Gap’s use of its own brand 

names in factory store names and on factory store clothing labels 

is not likely to deceive a reasonable consumer for the simple 

reason that a purchaser is still getting a Gap or Banana Republic 

item. The SAC states that “[r]easonable consumers believe outlet 

stores sell products that were previously available for purchase at 

retail stores,” but alleges no facts showing this to be true. 

Moreover, a consumer for whom the retail history of factory store 

items is material can ask Gap employees about this. A 

reasonable consumer would also inspect the quality of factory 

store clothing items before buying them and could return items 

after purchase if they turn out to be unsatisfactory. In the end, 

the allegation that Gap is not living up to the quality standards it 

has set for Gap and Banana Republic brands fails to state a cause 

of action for a fraudulent business practice under the UCL.
9

Rubenstein nevertheless argues that Gap had a duty to 

disclose to consumers that factory store clothing items were not 

previously sold in traditional Gap stores and were of lesser 

quality. She notes in her opening brief that under LiMandri, 

supra, 52 Cal.App.4th 326, “four circumstances exist where a 

defendant has an affirmative duty to disclose: (1) when a 

defendant is in a fiduciary relationship with plaintiff; (2) when a 

defendant had exclusive knowledge of material facts not known 

to plaintiff; (3) when a defendant actively conceals a material fact 

from plaintiff; or (4) when a defendant makes partial 

representations but also suppresses some material facts.” (See 

LiMandri, at p. 336.) Rubenstein argues that Gap had a duty

under circumstances (2), (3), and (4).

Rubenstein first argues Gap had a duty to disclose that its 

factory store clothing was not previously for sale at traditional 

Gap stores because Gap made partial representations while 

suppressing material facts. She again argues that use of Gap 

and Banana Republic in the names of factory stores and on 

clothing labels constituted representations that the items were of 

brand name quality, yet they were not. This argument fails. As 

a matter of law, Gap’s use of its own brand names to market less 

expensive clothing lines in factory stores is not a partial 

representation, even if the products are alleged to be inferior to 

other brand name products. Nor is Gap’s placement of geometric 

symbols on factory store clothing labels a partial representation, 

as Rubenstein argues, because the most these symbols represent 

is that the clothing is sold in factory stores.

Moreover, as in Bardin v. DaimlerChrysler Corp., 

Rubenstein alleges no facts showing that reasonable consumers 

expect Gap and Banana Republic factory store items to have been 
10

previously offered for sale in traditional Gap stores. (Bardin, 

supra, 136 Cal.App.4th at p. 1262 [insufficient for plaintiffs to 

plead that they “are lay persons and consumers, who reasonably 

rightfully assumed that the manifolds in [defendant’s] vehicles 

were quality components”]; id. at p. 1275.) 

Next, Rubenstein argues that Gap had a duty to disclose 

under the third LiMandri circumstance because Gap “actively 

conceal[ed] a material fact from the plaintiff.” Active 

concealment occurs when a defendant prevents the discovery of 

material facts. (5 Witkin, Summary of Cal. Law (10th ed. 2005) 

Torts, § 798, p. 1155.) Rubenstein relies on Collins v. eMachines, 

Inc. (2011) 202 Cal.App.4th 249, in which the plaintiff alleged 

active concealment of a product defect by a computer 

manufacturer “through corporate directives to continue selling 

the defective computers, and through a customer service 

campaign designed to preclude consumer discovery of the . . . 

Defect.” (Id. at p. 256.) Here, by contrast, the fact Gap is 

supposed to have concealed is that Gap made factory store 

clothing items exclusively for factory stores, yet neither the SAC 

nor Rubenstein’s opening brief on appeal point to any facts 

showing active concealment by Gap or that the nondisclosed fact 

was material to consumers.

Finally, Rubenstein argues that Gap had a duty to disclose 

that factory store products were not previously sold in traditional 

Gap stores because Gap had exclusive knowledge of this material 

fact. This argument is unavailing. As noted, the SAC does not 

allege facts showing that the sales history of factory store items is 

material to reasonable consumers. Furthermore, any quality 

issues with factory store merchandise were not in Gap’s exclusive 

knowledge because consumers had the ability to examine and try 
11

on the apparel prior to purchase and to read garment labels for 

information on fabrics and materials used in manufacture.

The Attorney General as amicus curiae urges that even 

absent a false or misleading representation or a duty to disclose 

material information, a defendant may be liable for a fraudulent 

business practice under the UCL. The Attorney General argues 

that courts should not apply LiMandri, supra, 52 Cal.App.4th 

326, to analyze whether UCL defendants have a duty to disclose 

material information, but should instead examine the context of a 

business practice to determine whether it is likely to deceive 

consumers by reinforcing their misleading expectations or 

assumptions.1

1 The Attorney General points to Klein v. Chevron U.S.A., 

Inc. as concluding that an alleged failure to disclose was 

potentially deceptive without performing a LiMandri analysis to 

determine whether a duty to disclose existed. Yet in Klein a duty 

to disclose existed because the defendant was alleged to have 

made partial representations that were misleading. Among other 

things, the defendant sold gasoline in non-temperature-adjusted 

“gallons” even though consumers received less than a gallon of 

fuel, and the defendant charged “taxes” on the greater number of 

non-temperature-adjusted “gallons” even though it remitted taxes 

to the government on the basis of the smaller number of 

temperature-adjusted gallons. (Klein v. Chevron U.S.A., Inc., 

supra, 202 Cal.App.4th at p. 1351 [“Because Chevron and other 

retailers do not compensate for temperature increases in motor 

fuel at the retail level, California consumers pay ‘hundreds of 

millions dollars’ more in purported ‘taxes’ than the retailers 

actually pay to the government”]; id. at p. 1382 [“because 

Chevron advertised motor fuel in ‘gallon’ units without disclosing 

the effects of thermal expansion, members of the public expected 
12

We decline to adopt the Attorney General’s position, which 

is contrary to a good deal of Court of Appeal precedent on the 

importance of a duty to disclose.2 Moreover, even if we did adopt 

this position, it would not change the result in this case because 

Rubenstein’s SAC does not allege sufficient facts to show that a 

reasonable consumer expects or assumes that Gap Factory Store 

merchandise was previously offered for sale in traditional Gap 

stores.

In sum, the trial court correctly ruled that Rubenstein had 

not alleged a “fraudulent” violation of the UCL.

b. Selling Nonidentical Brand Name Clothing in a 

Factory Store is not Unlawful.

“By proscribing ‘any unlawful’ business practice, ‘[Business 

and Professions Code] section 17200 “borrows” violations of other 

laws and treats them as unlawful practices’ that the unfair 

competition law makes independently actionable.” (Cel-Tech 

Communications, Inc. v. Los Angeles Cellular Telephone Co.

(1999) 20 Cal.4th 163, 180.) “Thus, a violation of another law is a 

predicate for stating a cause of action under the UCL’s unlawful 

and assumed that they would receive a standardized amount of 

motor fuel in each purchase and that the stated price reflected 

the actual cost of that fuel”].)

2 See, e.g., Graham v. Bank of America, N.A. (2014) 226 

Cal.App.4th 594, 613–614; Brakke v. Economic Concepts, Inc.

(2013) 213 Cal.App.4th 761, 772; Levine v. Blue Shield of 

California (2010) 189 Cal.App.4th 1117, 1136; Buller v. Sutter 

Health (2008) 160 Cal.App.4th 981, 987; Berryman v. Merit 

Property Management, Inc., supra, 152 Cal.App.4th at pages 

1556–1557; Daugherty v. American Honda Motor Co., Inc., supra, 

144 Cal.App.4th at page 838.
13

prong.” (Berryman v. Merit Property Management, Inc., supra, 

152 Cal.App.4th at p. 1554.) We have rejected Rubenstein’s claim 

that Gap’s alleged conduct violated the FAL, and below we 

conclude the SAC fails also to allege a violation of the CLRA. As 

these two statutes are the bases for Rubenstein’s allegations of 

unlawful practices by Gap, she cannot state a cause of action 

under the “unlawful prong” of the UCL.

c. Selling Nonidentical Brand Name Clothing in a 

Factory Store is not Unfair.

In this court, the test for determining whether a business 

practice is unfair in consumer cases arising under the UCL is the 

same as that used under section 5 of the Federal Trade 

Commission Act (15 U.S.C. § 45(n)). (Camacho v. Automobile 

Club of Southern California (2006) 142 Cal.App.4th 1394, 1403; 

Klein v. Chevron U.S.A., Inc., supra, 202 Cal.App.4th at p. 1376 

& fn. 14.) “[A] business practice is ‘unfair’ if (1) the consumer 

injury is substantial; (2) the injury is not outweighed by any 

countervailing benefits to consumers or competition; and (3) the 

injury could not reasonably have been avoided by consumers 

themselves.” (Klein, at p. 1376 & fn. 14 [applying and following 

Camacho].)

The SAC fails to allege an unfair business practice. The 

injury alleged is not substantial because consumers are getting 

Gap and Banana Republic brand name items for low prices, and 

there is no allegation that Gap ever made any representations 

about the retail history or quality of factory store merchandise. A 

consumer who cared about whether the items were identical to 

other Gap merchandise could have asked a sales associate 

whether this is true. As for any quality issues, consumers could 

have examined factory store apparel before purchasing it, read 
14

the clothing labels for materials used in manufacture, and 

returned merchandise after purchase if it was unsatisfactory. 

Indeed, Rubenstein does not allege that any of the clothing items 

she purchased at Gap and Banana Republic Factory Stores had 

any quality issues.3

4. Rubenstein’s CLRA Claim Fails As Well.

“The CLRA makes unlawful, in Civil Code section 1770, 

subdivision (a) . . . various ‘unfair methods of competition and 

unfair or deceptive acts or practices undertaken by any person in 

a transaction intended to result or which results in the sale or 

lease of goods or services to any consumer.’ ” (Meyer v. Sprint 

Spectrum L.P. (2009) 45 Cal.4th 634, 639.) The CLRA proscribes 

27 specific acts or practices. (Civ. Code, § 1770, subd. (a)(1)–(27).) 

In the SAC, Rubenstein alleges that Gap violated the CLRA by 

“[r]epresenting that goods . . . have . . . characteristics . . . that 

they do not have,” “[r]epresenting that goods . . . are of a 

particular standard, quality, or grade . . . if they are of another,” 

and “[a]dvertising goods . . . with intent not to sell them as 

advertised.” (Id., § 1770, subd. (a)(5), (7), (9).) In her opening 

brief, Rubenstein also argues that Gap violates the CLRA’s 

prohibition on “[r]epresenting that a transaction confers or 

involves rights, remedies, or obligations that it does not have or 

involve, or that are prohibited by law.” (Id., § 1770, subd. 

(a)(14).)

3 Because we decided that Rubenstein cannot state a claim

under the FAL or the UCL, we need not decide whether the trial 

court properly ruled that Rubenstein also lacks statutory 

standing under the UCL and the FAL. (See Bus. & Prof. Code, 

§§ 17204, 17535.)
15

Rubenstein’s CLRA cause of action fails because the SAC 

alleges no advertising or representation of any kind that Gap 

made about the characteristics or quality of its factory store 

merchandise. Indeed, the SAC does not allege a single 

affirmative representation by Gap regarding factory store 

clothing other than a true one—the brand of the clothing is Gap 

or Banana Republic. Nor did Gap have a duty to disclose the 

retail history of factory store clothing or that it was of lesser 

quality than clothing sold in other Gap stores. (See Daugherty v. 

American Honda Motor Co., Inc., supra, 144 Cal.App.4th at 

p. 835 [to be actionable under the CLRA, an omission “must be 

contrary to a representation actually made by the defendant, or 

an omission of a fact the defendant was obliged to disclose”].) 

Because the facts as alleged show no violation of the CLRA, the 

trial court properly sustained Gap’s demurrer to the third cause 

of action.

5. The Trial Court Acted Within Its Discretion in 

Denying Leave to Amend.

When a demurrer to a complaint is sustained without leave 

to amend, “we decide whether there is a reasonable possibility 

that the defect can be cured by amendment: if it can be, the trial 

court has abused its discretion and we reverse; if not, there has 

been no abuse of discretion and we affirm. [Citations.] The 

burden of proving such reasonable possibility is squarely on the 

plaintiff.” (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) “While 

such a showing can be made for the first time to the reviewing 
16

court [citation], it must be made.” (Smith v. State Farm Mutual 

Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 711; see Code Civ. 

Proc., § 472c.)

Rubenstein has not carried her burden of demonstrating 

how her complaint might be amended. Neither in her trial court 

demurrer opposition papers nor in her appellant’s opening brief 

did Rubenstein explain how she would further amend her 

complaint if given leave or offer any additional facts she could 

allege in a third amended complaint. Accordingly, the trial court 

properly sustained Gap’s demurrer without leave to amend. 

There was no error. (See Hill v. Roll Internat. Corp., supra, 195 

Cal.App.4th at p. 1307.)

DISPOSITION

The judgment is affirmed. Each party to bear its own costs 

on appeal.

CERTIFIED FOR PUBLICATION.

LUI, J.

We concur:

CHANEY, Acting P. J.

JOHNSON, J.