On Tuesday, a federal appeals court ruled that California consumers can sue retailers over misleading advertising.
The class action lawsuit was filed against Kohl’s (KSS) by a store customer who claimed that he purchased merchandise that was advertised as having been dramatically marked down in price. He alleges that the item prices had actually not been reduced and that he would not have made the purchases if he had known that, the Los Angeles Times noted.
A U.S. District Court judge had previously ruled that the customer did not have grounds to sue because he didn’t suffer a financial loss as a result of the purchases.
However, the U.S. 9th Circuit Court of Appeals reversed the decision, holding that pricing information was critical to customer purchases and that false advertising could compel shoppers to make purchases they otherwise would not have. Under California law, that was sufficient grounds to file a lawsuit, the court found.
Kohl’s disputes the allegations in the case, rejecting claims of false advertising.
Shares of Kohl’s slipped fractionally in Wednesday morning trading.