Los Angeles partner Kate Gold and Philadelphia associate Meredith Slawe published an article titled, “Buyers’ Remorse: Outlet Stores Under Fire’ in Law360. The article discussed how a bevy of outlet stores are at the center of the latest wave of class actions against retailers. In the past few weeks, plaintiffs have sued prominent retailers including Michael Kors, Neiman Marcus, The Gap, Saks Fifth Avenue, Levi Strauss, Nordstrom and Ralph Lauren, each of the lawsuits alleging deceptive marketing practices at retail outlet and factory store locations. The theory underlying these new lawsuits is that outlet and factory stores should be strictly limited to selling merchandise that was manufactured and suitable for sale in non-outlet retail locations. Otherwise, consumers are misled because everyone assumes that a single product line cascades through branded retail stores before being offered at an outlet. These cases greatly oversimplify the current retail environment, make flawed assumptions about companies with distinct business models and threaten to limit choices for value shoppers who have come to depend on outlets for access to high end brands and popular styles.
Outlet stores are popular with prominent designers and consumers alike, generating an estimated $25 billion in 2013. Outlet malls have become vacation destinations with some premium malls offering “luxury shopping getaway packages,” “group tours” and “VIP Coupon Books.” Outlets offer consumers designer and name brand merchandise and the latest trends at reasonable prices.
This popularity has resulted in heightened scrutiny and, in January 2014, four members of Congress sent a letter to the Federal Trade Commission, requesting that the agency launch an investigation into potentially “deceptive and unfair marketing practices at outlet stores.”
Philadelphia partner Seamus Duffy and San Francisco partner Michael Stortz also contributed to this article.
To read the entire article in Law360, click here.