Opinion ID: 807798
Heading Depth: 3
Heading Rank: 2

Heading: False Advertising Claim Against Best Buy

Text: Turning to the claims in the FAC, Davis first alleges that Best Buy’s advertising was misleading because it failed to disclose the existence of an annual fee. We agree with the district court that no reasonable consumer would have been deceived by these advertisements into thinking that no annual fee would be imposed. [4] California’s False Advertising Law makes it unlawful for any person to “induce the public to enter into any obligation” based on a statement that is “untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading.” Cal. Bus. & Prof. Code § 17500. Whether an advertisement is “misleading” must be judged by the effect it would have on a reason- able consumer. Williams, 552 F.3d at 938; see also Lavie v. Procter & Gamble Co., 129 Cal. Rptr. 2d 486, 494 (Ct. App. 2003) (“[U]nless the advertisement targets a particular disad10378 DAVIS v. HSBC BANK NEVADA vantaged or vulnerable group, it is judged by the effect it would have on a reasonable consumer.”). A reasonable consumer is “the ordinary consumer acting reasonably under the circumstances.” Colgan v. Leatherman Tool Group, Inc., 38 Cal. Rptr. 3d 36, 48 (Ct. App. 2006) (internal citation and quotation marks omitted). To prevail under this standard, Davis must “ ‘show that members of the public are likely to be deceived’ ” by the advertisement. Williams, 552 F.3d at 938 (quoting Freeman v. Time, Inc., 68 F.3d 285, 289 (9th Cir. 1995)). In applying this test, we are mindful that “whether a business practice is deceptive will usually be a question of fact not appropriate for decision on [a motion to dismiss].” Id. As an initial matter, we note that Davis does not allege that Best Buy’s advertisement contained any statements that were actually false. He does not suggest, for example, that the advertisement stated that the RZMC would be free, or that it would generate a profit. Nor can Davis be heard to argue that the advertisement’s failure to mention the annual fee, standing alone, supports a reasonable belief that there was no annual fee. Given the advertisement’s legible disclaimer that “[o]ther restrictions may apply,” no reasonable consumer could have believed that if an annual fee was not mentioned, it must not exist. This does not end our inquiry, however, because California courts construe Section 17500 to extend beyond literal falsities. The statute has been interpreted broadly to encompass “ ‘not only advertising which is false, but also advertising which[,] although true, is either actually misleading or which has a capacity, likelihood or tendency to deceive or confuse the public.’ ” Williams, 552 F.3d at 938 (quoting Kasky v. Nike, Inc., 45 P.3d 243, 250 (Cal. 2002)). Consequently, even “[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 DAVIS v. HSBC BANK NEVADA 10379 th[is] section[ ].” Day v. AT&T Corp., 74 Cal. Rptr. 2d 55, 60 (Ct. App. 1998). [5] Davis contends that the omission of the annual fee was misleading because the promise of reward certificates beginning with the first purchase implied that no offsetting charges would operate to “nullify” those rewards. This argument fails. While it is true that an annual fee could offset the cash value of any rewards, the same tradeoff exists with respect to numerous other costs of owning a credit card, such as monthly interest charges, late-payment fees, and over-thelimit fees. It defies common sense to claim that this tradeoff would lead a rational consumer to conclude that any credit card that offers rewards for spending must therefore not have associated costs of ownership. [6] Of course, it is possible that some consumers might hazard such an assumption. But “[a] representation does not become ‘false and deceptive’ merely because it will be unreasonably misunderstood by an insignificant and unrepresentative segment of the class of persons to whom the representation is addressed.” Lavie, 129 Cal. Rptr. 2d at 494 (internal citation and quotation marks omitted). We therefore hold that Best Buy’s advertising was not likely to deceive a reasonable consumer; the district court’s dismissal of the false advertising claim was proper.