District of Oregon Court Ruling Confirms That Reliance Is Not Required For Diminished Value Ascertainable Loss Under the UTPA

By Emily Templeton, Lewis & Clark Law School, 2021.

It’s been over two years since Oregon class action lawyers Michael Fuller and Kelly Jones filed a false advertising lawsuit against national food retailer Fred Meyer. Class members allege Fred Meyer violated Oregon’s Unlawful Trade Practices Act (UPTA) by charging customers hidden bottle deposit fees on exempt beverages that could not be refunded under Oregon law.

Specifically, the lawsuit alleges Fred Meyer made false misrepresentations and
omissions when it charged customers more than certain beverage items were
actually worth in violation of Oregon’s consumer protection laws.

In its motion to dismiss, Fred Meyer argued that (1) the district court lacked subject
matter jurisdiction; and (2) plaintiffs failed to state a claim upon which relief can be
granted. In support of the latter, Fred Meyer urged the court to require plaintiffs to
establish reliance in order to prove they incurred an ascertainable loss.

U.S. District Court Judge Michael Mosman made two important findings in his
opinion issued on November 20, 2020:

(1) The court found jurisdiction was proper in federal court because plaintiffs
were not seeking to “enjoin, suspend, or restrain” the collection of any state
“tax”; and
(2) The court found plaintiffs were not required to establish reliance when
alleging ascertainable loss under a diminished value theory.

Fred Meyer had argued that plaintiffs must demonstrate subjective reliance on a
representation, act, or omission that violates the UTPA in order to prove they
incurred an ascertainable loss.

In Pearson v. Philip Morris, Inc., 361 P.3d 3 (2015), the Oregon Supreme Court’s
majority opinion left open the question of whether a diminished value theory
requires “reliance to establish the requisite causal connection.” Judge Mosman,
citing Justice Walter’s concurrence in Pearson, affirmed plaintiffs’ assertion that
reliance is not required under a diminished value theory of liability.

Backed by the UPTA’s plain language and Justice Walter’s concurrence, the court
determined plaintiffs had adequately established ascertainable loss by showing
Fred Meyer had charged customers a price over and above the objective market
value of certain beverage items such that reliance was irrelevant. The court
reiterated, however, that a plaintiff may be required to show reliance to prove
ascertainable loss under a “refund of the purchase price” theory.