Judge slams LA city attorney’s expert in suit against retailers

A judge has done serious damage to a lawsuit by Los Angeles City Attorney Michael N. Feuer that accuses national retailers of misleading consumers about discounts on their online sales.

In a Tuesday ruling following the first phase of the city attorney's trial against Kohl's and Macy's, Los Angeles County Superior Court Judge Ann I. Jones slammed the city's expert witness.

Plaintiff's firm Lieff Cabraser Heimann & Bernstein LLP, representing the city, claims the retail chains violated the state's unfair competition and false advertising laws by listing false "reference prices" on their websites accompanied by pitches saying an item was 30% or 40% off.

The city is seeking an injunction and a $5,000 fine for each of what could add up to millions of violations, raising the prospect of a huge damage award.

But in a withering opinion, Jones wrote the plaintiff's expert, Clarkson University professor emeritus Larry Compeau, failed to conduct a consumer survey to determine if customers interpreted the advertisement that way.

"He performed no interviews nor did he convene any consumer focus groups," Jones wrote, adding that Compeau "lacked competent scientific support for his opinions."

The judge contrasted Compeau's testimony unfavorably with that of defense expert Ran Kivetz, a professor at Columbia University Business School.

Kivetz, whose testimony Jones praised as supported by recent scholarship, told the judge the internet and social media has "spurred a paradigm shift," allowing consumers to easily compare prices among different retailers and brands online.

The best news for the city and its outside lawyers is that Jones denied the retail stores' motion to dismiss the case outright, saying the plaintiff deserved another chance to prove the advertising is deceptive.

But the judge said the limited trial "does unravel the underlying premise upon which the people brought this case." People v. Kohl's, BC643037 (LA County Sup. Ct, filed Dec. 8, 2016).

Feuer and the city attorney's office could not be reached for comment Wednesday. Attorneys with Lieff Cabraser also could not be reached.

The attorney representing Kohl's Corp., James F. Speyer of Arnold & Porter Kaye Scholer LLP, declined to comment. The attorney for Macy's Inc., Stephanie A. Sheridan of Steptoe & Johnson LLP, could not be reached.

Two other retailers in the case are in bankruptcy.

Lieff Cabraser is acting as contingency lawyers for the city. Defense attorneys objected to that arrangement, arguing it creates a "disabling conflict of interest" by encouraging the firm to maximize its payday and comparing the suit to a criminal prosecution.

Los Angeles County Superior Court Judge Carolyn B. Kuhl denied the motion in 2017. The city cited a 2010 state Supreme Court case that allows such arrangements as long as they are controlled by government officials.

Jones, who cautioned the city not to try to "reinvent" the lawsuit against the retailers based on her decision, will set a briefing schedule for further motions.