Filling The Gap With Coupons, Counsel Fees

Advertising Law

To settle a false advertising class action, The Gap will provide class members with 30 percent off coupons and make a $1 million payment to class counsel.

Separate suits filed in 2014 against The Gap and Banana Republic alleged that the national retail chains displayed window signs promising discounts that lured customers in, only to discover that the sale prices were limited to certain items.

After the cases, which asserted the defendants ran afoul of California’s Unfair Competition Law, False Advertising Law and Consumer Legal Remedies Act, were consolidated, the parties battled over summary judgment. A trial court judge granted the motion in favor of the retailers, but the ruling was reversed on appeal.

The plaintiffs then sought to certify a class of shoppers, and the parties reached a deal.

Pursuant to the proposed settlement agreement, the retailers agreed to pay for settlement administration costs, incentive awards of $8,000 for each of the three named plaintiffs and up to $1 million in attorneys’ fees and costs.

Class members will receive a coupon to purchase up to four items for 30 percent off the regular price, even on clothing items that “never go on sale.” To identify class members, Banana Republic and The Gap will provide records of customers who purchased an item that wasn’t 20 to 50 percent off on a day when the “sale” ads were on display in store windows.

To read the settlement agreement in Veera v. Banana Republic, LLC, click here.

Why it matters: After more than five years of litigation, the retailers reached a deal that features coupons for class members and up to $1 million in fees and costs for class counsel.