Lands’ End Agrees to Close the Loop on Necktie False Advertising Litigation

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A year and a half after it was sued for falsely claiming that its neckties were made in the USA, retailer Lands’ End has agreed to refund its California customers the full purchase price of the neckties as part of a class action settlement. Oxina v. Lands’ End, No. 14-cv-2577-MMA (S.D. Cal., complaint filed Oct. 29, 2014). See Plaintiff’s Motion for Preliminary Approval of Class Action Settlement (Feb. 12, 2016) here. In August 2014, Plaintiff Elaine Oxina purchased a “Kids To-Be-Tied Plaid Necktie” from the clothing retailer’s website. The plaintiff alleged that the website represented that the necktie was “Made in [the] USA,” but the tag on the necktie that Oxina received stated it was “Made in China.” Oxina sued Lands’ End for false advertising and violations of federal and state consumer protection laws.

Following eleven months of litigation on the pleadings alone, the parties agreed to settle Plaintiff Oxina’s claims in exchange for complete relief for the 38 California class members who purchased the neckties during the 4-year settlement period. Under the proposed settlement, Lands’ End will refund class members their purchase price, plus interest at the rate of ten percent per year from the date of purchase. The settlement also provides for $32,500 in attorneys’ fees and expenses.

Although the parties have agreed to settle, the plaintiff initially had lost the battle over the pleadings. Judge Michael Anello previously dismissed (without prejudice) Oxina’s originally pled false advertising claim on the ground that the allegedly false statement “Made in [the] USA” appeared on the website rather than on the necktie itself:

Section 17533.7 sets forth the following: It is unlawful for any person, firm, corporation or association to sell or offer for sale in this State any merchandise on which merchandise or on its container there appears the words “Made in U.S.A.,” “Made in America,” “U.S.A.,” or similar words when the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States. Plaintiff fails to state a claim under § 17533.7 because she fails to allege that the words “Made in U.S.A.,” or similar words, appeared on the Necktie itself, or on the Necktie’s container. . . . It is clear and unambiguous that the text of § 17533.7 only creates liability where the words “Made in U.S.A.,” or words to that effect, appear on the merchandise, or on the merchandise’s container. It does not create liability for a product that is misleadingly described on a website with the words “Made in U.S.A.” (internal citations and quotations omitted.)

Order Granting Defendant’s Motion to Dismiss, at 13 (available here). The court’s holding suggests that the drafters of Section 17533.7 did not specifically intend for the statute to apply to statements on a merchant’s website. While this cannot be denied, that is because Section 17533.7 was enacted in 1961. The statute’s silence on the issue of internet advertising therefore says nothing about the Legislature’s intent for it to apply to the Internet. Further, because Section 17533.7 applies to print catalogs (see O’Brien v. Camisasca Automotive Mfg., Inc., 73 Cal. Rptr. 3d 911 (2008)) and other forms of advertising, clearly the statute is not limited to statements on merchandise or containers. To rule otherwise is to vitiate the protections afforded by Section 17533.7 to California consumers, who, in greater numbers, purchase goods online rather than in stores. In short, the court’s holding on the necktie false advertising case is too restrictive.

The parties’ joint motion for preliminary approval of the class action settlement is scheduled to be heard by Judge Anello on March 21, 2016.

Authored by: 
Eduardo Santos, Associate