A judge’s certification of a class-action lawsuit against J.C. Penney Co. Inc. could give a ding to the department store chain’s brand as it continues its turnaround.
The class was certified Monday for a case filed in 2012 that alleges the Plano, Tex.-based department store chain engaged in unfair and fraudulent business practices around its sale pricing strategy. The latest decision in the long-running case was made by the U.S. District Court, Central District of California.
A spokesperson for J.C. Penney reached Tuesday said the company does not comment on pending litigation. The lawsuit covers a period when Ron Johnson was Penney’s chief executive officer; he subsequently was dismissed and succeeded by current chairman and ceo Myron “Mike” Ullman 3rd.
Cynthia Spann, who is the lead plaintiff in the complaint, purchased more than $200 worth of apparel and accessories at J.C. Penney on March 5, 2011, across multiple transactions at the company’s Brea Mall store in northern Orange County. Spann, according to the complaint, was enticed to make those purchases based on in-store advertisements comparing the items’ regular prices against the discounted prices.
These items included five Worthington blouses that were advertised with an original price tag of $30, on sale for $14.99. However, the complaint goes on to say the price of those blouses never reached more than $14.99 in the three months before Spann made her purchase.
The claims are similar for the other purchases Spann made during her 2011 visit to the store and included additional blouses by East Fifth along with a Liz Claiborne purse and clutch.
The company’s advertising “has induced reasonable purchasers, including plaintiff, to buy such products from J.C. Penney, which they otherwise would not have purchased,” the court documents said.
The complaint estimates the size of the class to be in the hundreds of thousands of people, covering purchases of men’s, women’s or children’s merchandise from any of the company’s California stores made from Feb. 7, 2008 until now. The claims are expected to total more than $5 million for the class, the complaint said.
J.C. Penney is set to see a leadership change in August when Marvin Ellison assumes the ceo spot, succeeding Ullman. Ellison has set a goal to swing the company back to profitability by the end of 2017.
J.C. Penney revised its current quarter guidance on comparable sales to be up 4 to 5 percent, compared with previous guidance in the range of 3 to 5 percent.
The company’s shares were down slightly to $8.51 in after-hours trading Tuesday for a market value of $2.61 billion.