The law firm of Kahn Swick & Foti is seeking information to determine if any “J.C. Penney’s officers and/or directors breached their fiduciary duty” to the company’s shareholders or otherwise have violated state or federal laws.
The lawyer heading up the “investigation” is Charles C. Foti Jr., a former attorney general of Louisiana. No lawsuit has been filed against anyone.
A spokeswoman for J.C. Penney declined comment due to “pending litigation.”
The idea of possible breaches of fiduciary duty stems from a lawsuit filed on Dec. 8, 2016, by the Los Angeles City Attorney’s Office against the principal operating subsidiary of the retailer. In that lawsuit, City Attorney Mike Feuer alleged that J.C. Penney engaged in an unlawful business practice referred to as “false reference pricing.” The lawsuit also noted a prior legal case in which the retailer settled a private class action that was approved in 2016. In that settlement, Penney’s agreed that a former price to which it refers in its price comparison advertising “will be the actual, bona fide price” that the item was actively offered for sale for a reasonable amount of time, and in the regular course of business.
According to Kahn Swick & Foti, J.C. Penney had represented to the federal district court overseeing the earlier private class action suit that it had implemented a new price-comparison advertising policy as of November 2015.
J.C. Penney Co. Inc.’s operating subsidiary that is the defendant in the L.A. city attorney’s suit is J.C. Penney Corp. Inc.
Feuer filed similar lawsuits against Macy’s, Kohl’s and Sears alleging the same cause of action against each retailer. Under California law, retailers can’t advertise the former price of an item unless that item was sold at that price within three months of the advertisement, or unless the date when the former price did prevail is stated clearly in the advertisement.
Both J.C. Penney and Kohl’s have settled cases for misleading pricing, J.C. Penney for $50 million and Kohl’s for $6.15 million.