The California Supreme Court has upheld the application of the state’s consumer protection laws in cases involving mislabeled goods. In Kwickset v. Superior Court (Benson), the Court determined that a consumer who has purchased a mislabeled product – for example, one proclaiming it was “Made in the USA” when it was not – may bring suit and recover damages under California’s Unfair Competition Law (“UCL”) and False Advertising Law (“FAL”).
A referendum passed in 2004, entitled Proposition 64, required a consumer to have “lost money or property” to recover under with the UCL or FAL. Accordingly, if a consumer purchased a functional product they arguably did not “lose money or property” merely because the product was mislabeled. Indeed, the California Court of Appeal held that since the item received was of equal value to the price paid, a consumer had not “lost money or property” and could not maintain a claim under the UCL or FAL.
However, in the Kwickset decision, the state Supreme Court reversed concluding that neither the statutes nor Proposition 64 precluded consumers from bringing actions where they, effectively, did not get what they paid for. The Supreme Court required consideration of a consumer’s individual “subjective valuation” of the product, rather than an objective valuation which might conclude that the product’s worth was equal to what the consumer paid. In doing so, the Court held that: “Plaintiffs who can truthfully allege they were deceived by a product’s label into spending money to purchase the product, and would not have purchased it otherwise, have ‘lost money or property’ within the meaning of Proposition 64 and have standing to sue.”
The Court expressly recognized that consumers often purchase products based on representations on the label that do not directly impact on the product’s functionality or use, for example: “Organic,” “Union-Made,” and “Pesticide Free.” The Court explained: “Simply stated: labels matter. The marketing industry is based on the premise that labels matter, that consumers will choose one product over another similar product based on its label and various tangible and intangible qualities they may come to associate with a particular source.”
If you, or someone you know, have been deceived by a mislabeled product in California, please contact us to discuss your possible legal claims.