IN February 2011, Michael Rodman signed up on Safeway.com to buy his groceries online and have them delivered to his home for an additional delivery fee and fuel surcharge. After reading Safeway’s online FAQs and terms and conditions, Rodman believed that prices on items he selected online would be coming from a specific brick-and-mortar close to him and that he would pay the same prices as if he were shopping at that store. However, after making two separate online purchases, he found that the items he bought online had higher prices than what was marked at the actual store.
Rodman sued Safeway.com and its affiliates in a class action, for false advertising, violation of California’s consumer laws, unfair business practice, and breach of contract. In his court complaint, Rodman claimed that in its advertising and in the delivery agreement that consumers consent to when they register online for home delivery, Safeway states that consumers will be charged the same prices for products as those charged in the local store where the groceries are selected on the date of delivery. In other words, except for the delivery fee and any fuel surcharge, Safeway represented to consumers that they will pay the same prices for grocery items as they would pay if they went to the local store.
However, Rodman claims that in reality, Safeway secretly adds approximately 10% to the in-store price of most of the groceries it sells online. Safeway uses a scaled system, where it adds $.10 for every dollar of the in-store price. For example, a box of microwave popcorn may cost $3.39 in the store, but Safeway charges $3.79 for the same box ordered online and delivered from that store. Since Safeway uses $.10 increments for every dollar of in-store cost, consumers are overcharged at least 10% extra for most home-delivered items. Other than visiting the store to check prices on the day of delivery, consumers have no way of knowing that Safeway has overcharged them.
Safeway initially asked the court to dismiss the case, but the court refused to do so. Instead the litigation went forward, with the court ruling that the consumers can proceed to trial as a class based on its breach of contracts claim only. The court, however, said that the consumers cannot proceed to trial as a class on its false advertising and violations of consumer law claims. The court noted that California’s consumer protection laws required that consumers must demonstrate that they actually viewed a misleading misrepresentation in order to win the false advertising and consumer law claims.
However, the court said that the consumers can go ahead and make claims regarding Safeway’s possible breach of its terms and conditions when it represented that consumers will pay the same prices for grocery items online and in its local store – which wasn’t the case. While the lawsuit was ongoing, Safeway attempted to revise its terms and conditions by sending emails to its customers stating that grocery delivery prices, promotions, discounts, and offers may differ from the local store. However the court rejected Safeway’s attempt to impose changes to the online terms without providing proper notice to customers.
On November 30, 2015, the court ordered Safeway to pay approximately $42 million to its online customers, ruling that “Despite [Safeway’s] promise that online prices were the same as those charged in store, beginning in April 2010, the online store in fact mechanically applied a markup to the prices charged in the physical store from which the customer’s order was picked and delivered.”
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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. Atty. Sayas’ Law Office is located at 500 N. Brand Blvd. Suite 980, Glendale, CA 91203. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com.
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C. Joe Sayas, Jr., Esq. is trial attorney who has obtained several million dollar recoveries for his clients against employers and insurance companies. He has been selected as a Super Lawyer by the Los Angeles Magazine, featured in the cover of Los Angeles Daily Journal’s Verdicts and Settlements, and is a member of the Million Dollar-Advocates Forum.