C.A. 2nd;
B272356

The Second Appellate District affirmed a judgment. The court held that a well-known clothing manufacturer did not violate either the False Advertising Law (FAL) or the Unfair Competition Law (UCL) by selling lesser-quality clothing at its factory outlet stores.

Linda Rubenstein allegedly purchased items at Gap and Banana Republic factory stores, believing them to be of the same quality as items found at Gap and Banana Republic retail stores. Finding them to be of lesser quality, she filed suit, stating claims under the FAL, the UCL, and the Consumers Legal Remedies Act (CLRA). According to Rubenstein, Gap also places “Gap” and “Banana Republic” labels in the clothing items Gap sells at the factory stores, and does not disclose to consumers that factory store items are items not sold at traditional stores and are of lesser quality. Rubenstein alleged that, like her, reasonable consumers expect factory stores to offer for sale at a discounted price items that were once for sale at retail stores, and are likely to be deceived by Gap's use of identical store names and identical labeling.