Case Law Summaries

Leon v. Rite Aid Corporation

• Opinion Date: May 30, 2001
• Business Law
• E-Mail

CONSUMER FRAUD ACT; ADVERTISING—Advertising a “lowest and best price” policy may go beyond mere puffery and it may be a violation of the Consumer Fraud Act to advertise such a policy while charging different prices to different customers.

A consumer complained that a pharmacy advertised that it had “the lowest and best prices on pharmaceuticals” and also actively promoted a best-price guaranty, whereby it would “meet or beat” competitors’ prescription prices. Further, the consumer alleged that the pharmacy’s employees were encouraged to, and did, charge more than the pharmacy’s stated retail price to uninsured customers and other pharmacy customers who were unlikely to challenge its prices. According to the Court, those allegations constituted a cause of action under the Consumer Fraud Act. “The goal of the Act is to ‘protect the consumer against imposition and loss as a result of fraud and fraudulent practices by persons engaged in the sale of goods and services.’” Any unconscionable commercial practice is prohibited and, where the “alleged violation is an affirmative act, [a consumer] need not prove [the store’s] intent nor even necessarily actual deceit of fraud.” The consumer did not allege a regulatory violation under false advertising rules. Nonetheless, “[a]dvertisements allegedly in violation of the Act, but not the subject of specific regulation, are best left for jury determination.” The test is “whether the ad itself is misleading to the average consumer.” Prior case law noted that certain slogans were not violative of the Consumer Fraud Act because they were mere “puffery” and therefore “not false, deceptive, misrepresentative, or ‘any other unlawful practice within the ambit of the Consumer Fraud Act.’” On the other hand, a consumer need not prove a misstatement of general fact when claiming an affirmative act of misrepresentation. Therefore, according the Court, to the extent that the consumer’s complaint could be construable as alleging that the phrase “lowest and best” price offended the Consumer Fraud Act because the pharmacy failed to explain the “actual import of the slogan,” then the complaint might be upheld on the ground that failure to explain what the slogan meant could be an act of omission. “The statutory and regulatory scheme is also designed to promote the disclosure of relevant information to enable the consumer to make intelligent decisions in the selection of products and services.” In this case, the pharmacy “allegedly advertised that it [sold] merchandise, including its pharmaceuticals, for the lowest and best price. At the same time [it] allegedly had a two-tier pricing system for its own customers that was not only undisclosed, but was actively covered up.” Also, according to the Court, the pharmacy “had a set of prices that was increased for certain customers. It also had a policy of rounding prices up by a designated amount. While these practices may not be illegal in and of themselves, when they are held up to the ‘best and lowest’ price advertisement, they could very well constitute a violation of the Consumer Fraud Act in the eyes of a jury.” Therefore, whether such advertising is, in fact, deceptive is not to be determined as a matter of law. Based on the foregoing, the Appellate Division reversed the dismissal of the consumer’s cause of action and reinstated the consumer’s complaint in its entirety.

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