Court Opinion

ID: 6331727
Source: CourtListenerOpinion
Date Created: 2022-04-14 17:01:11.117251+00
Date Added: 2024-06-11T09:23:14.043014
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

SUSAN CLARK, for herself              No. 21-35334
and/or on behalf of all others
similarly situated,                      D.C. No.
           Plaintiff-Appellant,     2:20-cv-01106-JCC

              v.
                                   ORDER CERTIFYING
EDDIE BAUER LLC; EDDIE              QUESTION TO THE
BAUER PARENT, LLC,                 OREGON SUPREME
      Defendants-Appellees.             COURT

                   Filed April 14, 2022

Before: Jay S. Bybee, Carlos T. Bea, and Morgan Christen,
                     Circuit Judges.

                           Order
2                    CLARK V. EDDIE BAUER

                          SUMMARY *

                           Oregon Law

    The panel certified to the Supreme Court of Oregon the
following question:

        Does a consumer suffer an “ascertainable
        loss” under Or. Rev. Stat. § 646.638(1) when
        the consumer purchased a product that the
        consumer would not have purchased at the
        price that the consumer paid but for a
        violation of Or. Rev. Stat. §§ 646.608(1)(e),
        (i), (j), (ee), or (u), if the violation arises from
        a representation about the product’s price,
        comparative price, or price history, but not
        about the character or quality of the product
        itself?

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                   CLARK V. EDDIE BAUER                       3

                         COUNSEL

Paul Karl Lukacs (argued), Daniel M. Hattis, and Che
Corrington, Hattis & Lukacs, Bellevue, Washington, for
Plaintiff-Appellant.

Michael A. Vatis (argued), Steptoe & Johnson LLP, New
York, New York; Stephanie A. Sheridan, Anthony J.
Anscombe, and Meegan B. Brooks, Steptoe & Johnson LLP,
San Francisco, California; for Defendants-Appellees.

                           ORDER

     Susan Clark (“Plaintiff”) bought garments from Eddie
Bauer Outlet Stores advertising sales of 40–70% off. The
price tags of the garments included two numbers: a higher
price, which the parties call a “reference” or “list price,” and
a lower “sale” price. Plaintiff paid the “sale” price for the
clothes. She alleges that she relied on the representation that
she was getting the clothes on sale, but later discovered that
the “list prices” were misleading because Eddie Bauer never
sold some of the garments for the “list price” and that the
Eddie Bauer Outlet Stores have perpetual sales of 40–70%
off.

    Plaintiff brought a single count under Oregon’s
Unlawful Trade Practices Act, Or. Rev. Stat. § 646.605 et
seq. (“UTPA”), against Eddie Bauer’s controlling entities,
Eddie Bauer LLC and Eddie Bauer Parent LLC (collectively
“Defendants”), in the District Court for the Western District
of Washington, seeking money damages, equitable
restitution, a permanent injunction, and the certification of a
4                      CLARK V. EDDIE BAUER

class action. 1 The diversity action alleges that Plaintiff
would not have purchased the clothes at the prices that she
paid if she had not been reasonably misled into thinking that
the clothes she bought were usually sold by Eddie Bauer for
(and had a true worth of) the “list price” on their price tags.

    The district court granted Defendants’ Fed. R. Civ.
P. 12(b)(6) motion to dismiss with prejudice. The district
court held, as relevant here, that Plaintiff failed to plead that
she suffered an “ascertainable loss of money or property”
due to Defendants’ unlawful trade practices, as required by
§ 646.638(1) of the UTPA. The district court reasoned that
Plaintiff failed to provide any cases recognizing an
“ascertainable loss” under the UTPA “based solely on a
plaintiff’s failure to get as good of a deal as the plaintiff
anticipated.” Relying primarily on Pearson v. Philip Morris,
Inc., 361 P.3d 3 (Or. 2015), the district court concluded that
“[s]ome misstatement as to a characteristic, quality, or
feature of the product is required.” Plaintiff timely appealed.

    We conclude that the disposition of this appeal turns on
a question of Oregon law: whether a consumer suffers an
“ascertainable loss” under Or. Rev. Stat. § 646.638(1) when
the consumer purchased a product that the consumer would
not have purchased at the price that the consumer paid but
for a violation of Or. Rev. Stat. §§ 646.608(1)(e), (i), (j),
(ee), or (u), if the violation arises from a representation about
the product’s price, comparative price, or price history, but
not about the character or quality of the product itself.
Plaintiff has not presented any case recognizing an
“ascertainable loss” under § 646.638(1) in such
circumstances. But we are not persuaded that Pearson

     1
       Unless otherwise designated, citations to statutes in this order refer
to the Oregon Revised Statutes.
                    CLARK V. EDDIE BAUER                         5

requires us to reject Plaintiff’s theories of loss, as the district
court held. We therefore exercise our discretion to certify
the question to the Oregon Supreme Court.

    Pursuant to Oregon Rule of Appellate Procedure
12.20(1)(a), we provide the following information for the
consideration of the Oregon Supreme Court.

        FACTUAL AND PROCEDURAL HISTORY

    Defendants sell “clothing, accessories, and gear” in
conventional retail stores, “Eddie Bauer Outlet Stores,” and
online. “Nearly all of the products” Defendants sell are
branded as “Eddie Bauer” and are exclusively sold by
Defendants.

    Plaintiff alleged that she visited the Eddie Bauer Outlet
Store in Oregon on March 22, 2017. She alleged she “saw
prominent signs” throughout the store “advertising large
percentage-off discounts and savings” and “reasonably
believed that Eddie Bauer was having a special store-wide
sale.” She then paid $19.99 for a Fleece Zip with a “product
tag” showing “a printed list price of $39.99” that was
accompanied by “signage” stating that it “was on sale for
50% off, at a selling price of $19.99.” She also paid $49.99
for a Microlight Jacket with a “product tag” showing “a price
of $99.99” that was accompanied by “signage” stating that it
“was on sale for 50% off, at a selling price of $49.99.” Her
receipt read, for the Fleece Zip: “1 @ 39.99,” “Item Discount
50.00%” of “(20.00)”; and for the Microlight Jacket: “1 @
99.99,” “Item Discount 50.00%” of “(50.00).”

    Later, on April 5, 2018, Plaintiff returned the Microlight
Jacket at a different Eddie Bauer Outlet Store in Oregon
because it had a broken zipper. She was given a $49.99
credit, which she applied to the purchase of a StormDown
6                 CLARK V. EDDIE BAUER

Jacket. The StormDown Jacket was located in the
“Clearance” section of the store and its product tag showed
a list price of $229.00 and a reduced price of $199.99 on a
red sticker. Adjacent signage indicated that it was for sale
50% off the lowest price marked on the tag. Plaintiff
purchased the jacket for a price of $99.99.

    Plaintiff alleged she relied on the discount
representations and advertised reference prices in making
her March 2017 and April 2018 purchases, which led her to
“reasonably believe[]” that “the list prices printed on the
product tags of Eddie Bauer’s products represented Eddie
Bauer’s usual and normal selling prices for the products”;
that the “Fleece Zip was thereby worth and had a value of”
and was “usually sold for, $39.99”; that the “Microlight
Jacket was thereby worth and had a value of” and was
“usually sold for, $99.99”; and that the StormDown Jacket
“had a value of, and was recently normally and usually sold
for, $199.99.”

    But Plaintiff alleged, based in part on her counsel’s
investigation, that “Eddie Bauer advertises perpetual store-
wide sales . . . typically ranging from 40% to 70% off”
Defendants “self-created list prices” on “all of its products”
in Eddie Bauer’s Outlet Stores. She alleged that the Fleece
Zip and Microlight Jacket were “Eddie Bauer Outlet-
exclusive items” that were never offered for the purported
prices of $39.99 and $99.99, but were “always offered at
discounts of between 40% and 70% off the list prices printed
on their tags.” She claims that the StormDown Jacket was
never sold in any Eddie Bauer retail, outlet, or website for
$199.99 or greater at any time in the 600 days preceding her
purchase. Plaintiff claims that she “first learned of Eddie
Bauer’s false advertising scheme, and that she was likely a
victim of the scheme, on March 13, 2020.”
                    CLARK V. EDDIE BAUER                         7

    Plaintiff filed a complaint against Defendants on July 16,
2020, alleging a single count under Oregon’s UTPA.
Section 646.638(1) of the UTPA authorizes the private right
of action under which Plaintiff sues:

        [A] person that suffers an ascertainable loss
        of money or property, real or personal, as a
        result of another person’s willful use or
        employment of a method, act or practice
        declared unlawful under ORS 646.608
        [henceforth an “unlawful trade practice”],
        may bring an individual action in an
        appropriate court to recover actual damages
        or statutory damages of $200, whichever is
        greater. The court or the jury may award
        punitive damages and the court may provide
        any equitable relief the court considers
        necessary or proper.

      Plaintiff alleged that Defendants committed unlawful
trade practices in the form of seven violations of Section
646.608:        (1) “represent[ing] [that] its goods had
characteristics or qualities that the goods did not have” in
violation of § 646.608(1)(e); (2) “advertis[ing] goods with
the intent not to provide the goods as advertised” in violation
of § 646.608(1)(i); (3) making “false or misleading
representations of fact concerning the reasons for, existence
of, or amounts of price reductions” in violation of
§ 646.608(1)(j); (4–6) “engag[ing] in price comparison
advertising” and violating the UTPA by, inter alia, using
terms such as . . . ‘regular,’ ‘reduced,’ ‘sale,’ . . . ‘formerly’
. . . ‘__ percent discount,’ . . . ‘__ percent off’ . . . where the
reference price was not in fact Eddie Bauer’s own former
price” in violation of § 646.608(ee) and §§ 646.883(2) or
885(1)–(2); and (7) engaging in any “other unfair or
8                  CLARK V. EDDIE BAUER

deceptive conduct in trade or commerce” in violation of
§ 646.608(1)(u).

    Plaintiff seeks for herself and a putative class of similarly
situated consumers the greater of statutory or actual
damages, punitive damages, and equitable relief in the form
of disgorgement or restitution and a permanent injunction,
prohibiting Defendants “from the unlawful conduct alleged”
in the complaint and requiring Defendants to maintain
records of its pricing and sales practices for auditing
purposes.

    The district court granted Defendants’ Fed. R. Civ. P.
12(b)(6) motion to dismiss on the grounds that Plaintiff had
failed to allege adequately an “ascertainable loss of money
or property” under the UTPA. The district court reasoned
that Plaintiff failed to provide any cases recognizing an
“ascertainable loss” under the UTPA “based solely on a
plaintiff’s failure to get as good of a deal as the plaintiff
anticipated . . . . Some misstatement as to a characteristic,
quality, or feature of the product is required.” The district
court then dismissed the complaint with prejudice because it
found “amendment would be futile given [Plaintiff’s]
inability to plead an ascertainable loss.”

                        DISCUSSION

    “A federal court sitting in diversity applies the
substantive law of the state . . .” Albano v. Shea Homes Ltd.
P’ship, 634 F.3d 524, 530 (9th Cir. 2011). “In determining
the law of the state for purposes of diversity, a federal court
is bound by the decisions of the highest state court.” Id.

    Plaintiff contends on appeal that she adequately pleaded
three different theories of “ascertainable loss” under
§ 646.638(1). We begin with Plaintiff’s argument that she
                    CLARK V. EDDIE BAUER                           9

suffered an “ascertainable loss” in the form of some or all of
the money she used to pay for the clothes because she would
not have purchased the clothes at all at the prices she paid
but for alleged violations of § 646.608 (“Purchase Price
Theory”). The district court rejected Plaintiff’s Purchase
Price Theory on the grounds that Plaintiff “fail[ed] to explain
how [Defendants’ alleged misrepresentations] amount[] to a
false representation as to the ‘character or quality’ of the
garments which, as discussed in [Pearson v. Philip Morris,
Inc., 361 P.3d 3 (Or. 2015)], is necessary to establish
reliance on the allegedly misleading claims.” Plaintiff
argues that the district court erred by reading Pearson too
narrowly.

      In Pearson, the plaintiffs alleged that a cigarette
company violated the UTPA by allegedly misrepresenting
that a “light” cigarette product would deliver less tar and
nicotine to smokers than regular cigarettes, even though the
amount of tar and nicotine a smoker would consume from
the “light” cigarettes “depend[ed] . . . upon the way the
cigarette is smoked.” 361 P.3d at 7–10, 9 n.5. The plaintiffs
claimed that they suffered an “ascertainable loss . . . as a
result of” the defendant’s violation of § 646.608(e)
(“[r]epresent[ing] that . . . goods . . . have . . . characteristics,
. . . benefits, . . . or qualities that the . . . goods . . . do not
have”) because “they paid for cigarettes that ‘they believed
were inherently lower in tar and nicotine than [the]
defendant’s regular cigarettes but received cigarettes that
would deliver lowered tar and nicotine only if smoked in
particular ways.’” Id. at 23, 26–27. The plaintiffs sought,
inter alia, “a refund of their purchase price as a remedy.” Id.
at 27.

   The Oregon Supreme Court reviewed the Oregon Court
of Appeals’ reversal of the trial court’s denial of the
10                CLARK V. EDDIE BAUER

plaintiffs’ motion to certify a class. Id. at 13. The Oregon
Supreme Court held that the trial court correctly found that
the plaintiffs failed to carry their burden to show that
common issues prevailed over individual ones on the
element of reliance. Id. at 33. The court recognized that a
“purchaser may have suffered a loss in the form of buying
something he or she would not have otherwise bought.” Id.
at 25. But the court explained that although “reliance is not,
in and of itself, an element of a UTPA claim,” because
§ 646.638(1) requires that a plaintiff show an “ascertainable
loss . . . as a result of” an unlawful trade practice, when a
plaintiff’s theory of loss is that the plaintiff lost the money
he paid for the product because “without the
misrepresentation [that constitutes the unlawful trade
practice] the purchaser would not have bought the product
and thus should be entitled to a refund,” the plaintiff must
plead reliance on the misrepresentation “[a]s a function of
logic, not statutory text.” Id. at 27. But proving reliance
would require assessing each class member’s motives for
purchasing the defendant’s cigarettes. Accordingly, the
court found that the “plaintiffs failed to show that the
reliance required to prove their refund theory of economic
loss could be litigated through common evidence.” Id. at 32.

    In so holding, the court appeared to acknowledge that a
plaintiff could satisfy the “ascertainable loss” requirement of
§ 646.638(1) by proving that the plaintiff would not have
purchased a product from the defendant but for a
misrepresentation that amounts to a violation of § 646.808.
However, the court framed its discussion of the plaintiff’s
purchase price theory of “ascertainable loss” in terms of a
consumer’s reliance on a misrepresentation that a “product
had a character or quality” because the plaintiffs alleged in
Pearson that the defendant violated, specifically,
§ 646.808(1)(e). Id. at 27.
                      CLARK V. EDDIE BAUER                            11

    Here, Plaintiff argues that the district court erred in
applying the standard of § 646.808(1)(e), which addresses
misrepresentations about the “characteristics” or “qualities”
of goods, in assessing whether Plaintiff pleaded an
“ascertainable loss” premised on violations of other
subsections of § 646.608(1). Plaintiff alleged that she would
not have purchased goods from Defendants but for the
alleged violations of not only § 646.608(1)(e), but also
§§ 646.608(1)(i), (j), (ee), or (u). Subsection (1)(j) (making
“false or misleading representations of fact concerning the
reasons for, existence of, or amounts of price reductions”)
and subsection (1)(ee) (engaging in certain kinds of price
comparison in violation of §§ 646.883 or 885), in particular,
do not involve misrepresentations about a product itself, but
about the product’s price, comparative price, or price
history. 2

    We agree with Plaintiff that Pearson does not require, as
the district court held, that that a plaintiff must always prove
a “misstatement as to a characteristic, quality, or feature of
the product” to establish an “ascertainable loss” under
§ 646.638(1). The court in Pearson held that if a consumer
alleges that the purchase price of a product he purchased
satisfies the “ascertainable loss” requirement of
§ 646.638(1), on the theory that the consumer would not
have purchased the product but for a misrepresentation about
the “characteristics” of the product in violation of
§ 646.608(1)(e) (prohibiting misrepresentations about the

    2
      We note that the Oregon Supreme Court has stated en banc: “[n]o
doubt the primary target of [§ 646.608(1)(j)] was the practice of luring
customers with dubious representations that prices have been ‘slashed’
by large percentages, sometimes said to be forced by ‘going out of
business,’ ‘removal,’ or ‘fire sales.’” Sanders v. Francis, 561 P.2d 1003,
1006 (Or. 1977).
12                    CLARK V. EDDIE BAUER

“characteristics” of a product), then the consumer must
establish that he relied on the misrepresentation about the
“characteristics” of the product when he purchased it.
361 P.3d at 10–11, 26–28. But this does not mean that
Oregon law necessarily would recognize Plaintiff’s Purchase
Price Theory: that a plaintiff may satisfy the “ascertainable
loss” requirement of § 646.608(1) by proving that but for a
misrepresentation that amounts to a violation of any
subsection of § 646.808, the plaintiff would not have
purchased a product from the defendant, and therefore
suffered a “loss” in the form of the purchase price, even if
the misrepresentation does not concern the “character or
quality” of the item the plaintiff purchased. 3 Accordingly,
we invite the Oregon Supreme Court to determine in the first
instance whether Oregon law recognizes such a theory of
“ascertainable loss.”

    Plaintiff also argues that she adequately pleaded an
ascertainable loss under two additional theories. Under an
“Advantageous Bargain Theory,” Plaintiff claims that she
suffered an “ascertainable loss” because she lost out on the
“advantageous bargain” that Plaintiff would acquire by
purchasing clothes at a significant discount of their regular
selling price, as Defendants represented in alleged violation
of § 646.608. 4 Additionally, Plaintiff alleges that she paid

     3
      Plaintiff has not identified any cases standing for this proposition.
See Oral Argument at 37:58–38:40, Clark v. Eddie Bauer, No. 21-35334
(9th Cir. February 9, 2022), https://www.ca9.uscourts.gov/media/video/
?20220209/21-35334/.

    4
      Plaintiff relies primarily on Simonsen v. Sandy River Auto, LLC,
413 P.3d 982 (Or. Ct. App. 2018). In Simonsen, the Oregon Court of
Appeals found that a car purchaser suffered an “ascertainable loss” when
he bought a car advertised to be in working order but received a car with
undisclosed material defects, even though a jury found that the purchaser
                      CLARK V. EDDIE BAUER                            13

more for the clothes than she otherwise would have because
Defendants’ alleged violation of § 646.608 caused
“inflate[d] consumer demand, thereby shifting the demand
curve and increasing the prices that Eddie Bauer is able to
command and charge for its products” (“Inflated Consumer
Demand Theory”). 5       Although we discuss Plaintiff’s
Purchase Price Theory at the greatest length, we invite the
Oregon Supreme Court to consider whether Plaintiff
advances any viable theories of “ascertainable loss” under
the UTPA.

                        CERTIFICATION

    In light of the foregoing discussion, we certify the
following question to the Oregon Supreme Court:

paid the fair market value for the malfunctioning car he received. Id. at
987–89.      Simonsen recognized that a purchaser can suffer an
“ascertainable loss” even when he pays the fair market value for the
product he receives if the product was advertised as being in a better
condition than it really was. Similarly, in Weigel v. Ron Tonkin
Chevrolet Co., 690 P.2d 488 (Or. 1984), the Oregon Supreme Court
recognized that a car purchaser suffered an “ascertainable loss” when he
purchased a car that was advertised as new when in fact it was previously
“conditionally sold and delivered” to a third person who put 200 miles
on the odometer before returning the car, because the defendant’s
salesman admitted that if the vehicle were used it would have depreciated
in market value. Id. at 490. These holdings do not require us to find that
a consumer suffered an ascertainable loss when the consumer purchased
a product that was advertised as discounted from a higher price but not
otherwise advertised as any different from the product the consumer
received. Accordingly, it appears that Plaintiff’s Advantageous Bargain
Theory, if recognized, would constitute an extension of Oregon law.
    5
      The Oregon Supreme Court stated in Pearson that no other court
had found an inflated consumer demand theory viable. 361 P.3d at 26.
14                    CLARK V. EDDIE BAUER

         Does a consumer suffer an “ascertainable
         loss” under Or. Rev. Stat. § 646.638(1) when
         the consumer purchased a product that the
         consumer would not have purchased at the
         price that the consumer paid but for a
         violation of Or. Rev. Stat. §§ 646.608(1)(e),
         (i), (j), (ee), or (u), if the violation arises from
         a representation about the product’s price,
         comparative price, or price history, but not
         about the character or quality of the product
         itself?

   We acknowledge that, as the receiving court, the Oregon
Supreme Court may reformulate the certified question.

    The Clerk shall forward copies of this certification order
and the appellate docket for this case to the Oregon Supreme
Court. Or. R. App. P. 12.20(1)(b). 6 The Clerk is further
directed to forward a copy of the Excerpts of Record,
Supplemental Excerpts of Record, and the appellate briefs
filed by the parties. If requested by the Administrator of the
Oregon Supreme Court, the Clerk shall provide all or part of
the district court record not included in the Excerpts of
Record or Supplemental Excerpts of Record. Or. R. App. P.
12.20(5)(c).

    Submission of this appeal for decision is vacated and
deferred pending the Oregon Supreme Court’s final response
to this certification order. The Clerk is directed to close this
docket administratively, pending further order. The parties
shall notify the Clerk of this court within fourteen days of

     6
      If the docket does not show the names and addresses of the parties
or their attorneys, the Clerk is ordered to provide that information to the
Oregon Supreme Court. Or. R. App. P. 12.20(1)(b).
                    CLARK V. EDDIE BAUER                        15

the Oregon Supreme Court’s acceptance or rejection of
certification, and again, if certification is accepted, within
fourteen days of the Oregon Supreme Court’s issuance of a
decision.

  QUESTION              CERTIFIED;            PROCEEDINGS
STAYED.

                             Signed:     /s/ Judge Christen
                                               Judge Christen
                                              Presiding Judge7

    7
       Oregon Rule of Appellate Procedure 12.20(1)(b) provides that
“certification order[s] shall be signed by the presiding judge.”