Why J.Crew Could Settle New Class-Action Lawsuit Over Factory Outlet Pricing
A class action lawsuit filed in January in California Superior Court that was kicked up to the U.S. District Court of Northern California accuses J. Crew (JC) of misleading customers of its J. Crew Factory (JCF) brand into believing they are getting the same quality of clothing as the original J. Crew line at a discounted price.
“In an effort to give off the appearance of a bargain, Defendant intentionally misleads consumers as to the quality and value of the merchandise available on its website and in its retail stores through its deceptive sales tactics,” the complaint reads.
More from Sourcing Journal
Judge Dismisses Amazon Lawsuit But Plaintiffs Can Still Fight Back
'Goodbye For Now': Isto Explains Why it Won't Make Women's Fashion Anymore
Plaintiffs point out that the labels on J. Crew and J. Crew Factory items are strikingly similar, with clothing tags distinguished by just “two small dots” on the Factory version of the tags. On the price tags, this potential confusion is further exacerbated by a “comparable value” showing reduced prices in dollars, or by percentages.
“Defendant fails to provide consumers with any information upon which such ‘comparable value’ prices and savings are based,” the complaint reads. “… the ‘comparable values’ displayed correspond to prices for other, higher quality products at JC, not JCF. JCF clothing is never sold at the ‘comparable value’ price listed.”
A J. Crew Group spokesperson rejected the allegations, telling Sourcing Journal via email, “We deeply value transparency and providing our customers with the best shopping experience possible. These allegations are entirely meritless, and we will defend ourselves vigorously against them.”
The original plaintiffs in the class action, expected to swell to well more than 100, hence the move to U.S. District Court, are Californians Dani Calderon and Evguenia Babaeva, who tell similar stories of believing they were getting significant bargains on J. Crew clothing, only to realize afterward they had purchased lower-quality J. Crew Factory clothing.
The 36-page initial filing in Superior Court in Santa Clara includes five counts, including violation of the Consumer Legal Remedies Act under California law, false advertising, fraud, unfair competition and unjust enrichment.
The value of the class action is deemed to be at $5 million or higher, the standard amount listed in such a suit, and plaintiffs are asking the court to order the company to change its marketing practices.
Of note, Ann Taylor’s parent company settled a similar deceptive pricing lawsuit in 2018 for $6.1 million after plaintiffs complained that the retailer’s outlet product prices and quality didn’t reflect what consumers find in the chain’s mainline stores.
J. Crew, which acquired the Madewell brand in 2006, had filed for Chapter 11 bankruptcy protection in May of 2020 but emerged just six months later under the holding company Anchorage Capital Group.
Meanwhile, Calderon is also the plaintiff in a class-action wiretapping lawsuit filed on Feb. 15 against Target. The complaint, asking for at least $5 million in damages, accuses the Minneapolis-based retail chain of contracting “with Salesforce to provide the software that secretly runs the chat function on Defendant’s Website” in violation of the California Invasion of Privacy Act. Similar complaints have been lodged against companies including Foot Locker and Bloomingdale’s as well Crocs, Adidas and Lacoste.
Additional reporting by Jessica Binns.
