Safeway Ordered to Pay $31M for Online Overcharges

Safeway has been ordered to reimburse $31 million to customers who overpaid for online purchases, according to the ruling of a federal judge presiding over a class action lawsuit.

The judgment against Safeway by U.S. District Judge John Tigar stems from the class-action suit filed in 2011 by Michael Rodman, who alleged that the Pleasanton, Calif., grocery chain 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, according to a report on legal website Law360.

Although Safeway – which argued that customers were aware they were being overcharged while citing an online survey in which one in seven customers said they were "dissatisfied" or "very dissatisfied" about it – acknowledged "customers may have placed some value on the price-parity promise," the judge disagreed, stating that "the company’s proposed damages model does not square up with the facts of the case.

"A customer's response that they were dissatisfied does not indicate that that customer knew of the existence of the markup or their right to price parity," Tigar wrote in his 30-page ruling. He also reprimanded the chain for “actively concealing its online price markups from the public," according to Law360's report, which further noted the judge's view stating that "a defendant who has vigorously guarded information from the public cannot cry foul when it is unable to marshal evidence that the public had knowledge of that information."

In turn, Judge Tigar found Safeway’s argument insufficient and ordered it to pay $30.9 million for all mark-up prices on online goods purchased between 2006 and 2014.

The lawsuit is known as Rodman v. Safeway Inc., Civil Action No. 11-cv-03003-JST.