Safeway Loses Appeal, Ordered to Pay $42M

Safeway has lost an appeal of a $42 million judgement in a class action that claims the Pleasanton, Calif.-based grocer overcharged customers using its online delivery service.

The U.S. Court of Appeals for the Ninth Circuit upheld the ruling, discovering “extrinsic evidence” supporting the claim by Michael Rodman, according to a court document. In 2011, Rodman alleged that the grocer charged more for products sold online for its namesake, Vons and Genuardi’s divisions, while its terms of service agreement indicated that customers would pay the same as in-store buyers.

“The district court correctly determined that the modification clause in the special terms did not allow Safeway to unilaterally amend the special terms without notice," the document said. "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. What authority does exist counsels that California would not enforce a modification without notice.”

Additionally, the district court correctly held that Safeway wasn't entitled to mount a voluntary payment defense, the document noted. It's questionable whether such a defense is available in an action for breach of contract, rather than restitution.

“Safeway provides no authority that California has extended the defense from restitution to legal claims, but even assuming it is, the defense fails in this case,” the document read. “The defense requires full disclosure, and the undisputed evidence shows that Safeway did not make a full disclosure.”

The initial lawsuit resulted in Safeway’s argument being deemed insufficient and an order to pay $30.9 million for markup prices on online goods purchased between 2006 and 2014. 

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