SAN FRANCISCO — A federal appeals court has upheld a $41.8 million judgment against Safeway Inc. in a lawsuit claiming the grocery chain overcharged customers who used its online delivery service.
The U.S. Court of Appeals for the Ninth Circuit upheld a ruling from U.S. District Judge Jon Tigar of the Northern District of California that found “extrinsic evidence” in the case supported the customers’ reading of an ambiguously worded product pricing clause in an agreement governing online grocery sales.
“Safeway cites no authority from California law suggesting that a merchant may modify a consumer contract and bind the consumer without any form of notice,” the Ninth Circuit panel wrote Aug. 4 in a four-page unpublished decision. “What authority does exist counsels that California would not enforce a modification without notice.”
The decision is a win for lawyers at Chimicles & Tikellis and Shepherd, Finkelman, Miller & Shah who have litigated on behalf of Safeway customers since 2011. They initially filed suit on behalf of Pennsylvania Safeway customer Michael Rodman and a class of online shoppers who used the company’s Safeway.com delivery service. The suit claimed Safeway breached the terms of its agreement with online customers in April 2010 when it increased prices for the delivery service by about 10 percent over the rates charged at the brick-and-mortar stores where the orders were filled. The markups, the plaintiffs claimed, were higher than delivery fees allowed under the terms of their contract.
Steven Schwartz of Chimicles & Tikellis in Haverford, Pennsylvania, emailed a statement on behalf of himself, his partner Tim Mathews and their co-counsel, James Shah of Shepherd Finkelman.
“It is very rare for class action plaintiffs to win and sustain a final judgment,” Schwartz wrote. “The judgment was the result of more than six years of hard-fought litigation involving many complex issues and represents a significant victory for our clients in this case and consumers generally.”
Schwartz said the plaintiffs where “thrilled” with the decision upholding Tigar’s ruling below and look forward to wrapping up the case promptly so customers can be reimbursed for their losses.
Reed Smith’s Brian Sutherland, who argued Safeway’s appeal at the Ninth Circuit, referred questions to a company representative. Chris Wilcox, a spokeswoman for Safeway parent Albertsons Companies, said the company was “disappointed in the result,’ but declined further comment.