The Pink Tax: Litigation and Legislation Update | Kelley Drye & Warren LLP
We have previously reported on an emerging legislative and litigation trend regarding the “pink tax” – a gender-based pricing phenomenon that would result in higher prices for goods and services marketed to women compared to substantially similar alternatives. marketed to men. As expected, the past two years have seen an increase in litigation (which has been largely unsuccessful) and legislative action (some finalized and some pending).
Last year we discussed a first blow to the pink theory of fiscal responsibility in Schulte v. Conopco, d/b/a Unilever, et al. In Schulte, the plaintiffs alleged that various personal care manufacturers and retailers violated the Missouri Marketing Practices Act (MMPA) by charging more for deodorants marketed to women than for allegedly similar deodorants marketed to men. The product lines at issue contained similar but not identical ingredients, were of different sizes and were available in different flavors (fifteen “feminine” flavors in the women’s range and five “masculine” flavors in the men’s range ) . The Eastern District of Missouri dismissed the lawsuit, finding that “Missouri law does not require identical products to be sold at the same price” and that plaintiff’s remedy “is based on statute, not litigation.” The Eighth Circuit asserted on the grounds that the plaintiff had confused “gender-based marketing with gender-based discrimination.” In order to make a claim, the court held that the plaintiff had to allege that the alone difference between the products was the price and the intended target of marketing. Here, because the plaintiff admitted that the goods were, in fact, different, rejection was therefore appropriate.
In Lowe v Walgreens Boots Alliance, Inc., et al., the Northern District of California has dismissed another alleged pink tax class action lawsuit, albeit on different grounds. In Lowe, the plaintiffs alleged that the price of Walgreens hair regrowth treatment for women (a generic alternative to Rogaine) was almost 1.5 times higher than the alternative marketed by men. The plaintiff alleged that the products contained identical active ingredients and the only differences were the dosage instructions and the price tag. The court’s justification for the dismissal was twofold. First, the court ruled that plaintiff’s state consumer protection claims were preempted because, under the Federal Food, Drug, Cosmetic Act (“FDCA”), Walgreens’ generic product labels had to accurately reflect the brand label. Thus, to the extent that the applicant claimed that the product labels were misleading, these claims were dismissed. The court also denied the plaintiff’s claim under California’s Unruh statute because the statute does not apply to property, but rather “accommodations, benefits, facilities, privileges, or services.” Lowe appealed the decision to the Ninth Circuit.
While California’s Unruh law appears to be a dead end for product price discrimination claims (at least for now), courts have applied Unruh law to claims alleging gender-based price discrimination in services. For example, in Department of Fair Employment and Housing v. M&N Financing Corp., et al., the plaintiff alleged that M&N Financing purchased installment retail contracts from used car dealerships and that the sex of the car buyer was factored into the amount M&N would pay for the contract . The Court of Appeal concluded that this practice constituted a “per se” violation of the Unruh law justifying statutory damages even if the plaintiff had not demonstrated any actual harm.
In September 2020, New York passed a law prohibiting individuals and entities, including retailers, suppliers, manufacturers, or distributors, from charging a different price for two “substantially similar” goods or services based on gender for which the goods or services are marketed. . As in the context of litigation, this concept of “substantial similarity” is key. Substantially similar goods are defined as two goods which have no substantial differences in the materials used in production, the intended use of the good, the functional design and characteristics of the good, and the brand of the good, and substantially similar services are defined as two services that present no substantial difference in the time required to provide the service, the difficulty in providing the service and the cost of providing the service. A person or entity accused of breaking the law can avoid liability by proving that any price difference is based on a number of gender-neutral factors, including, but not limited to, additional time or cost manufacturing such goods or providing such services. Although the new law does not provide a private right of action for consumers, it does allow the Attorney General to obtain an injunction against such prohibited sales, as well as consumer restitution and civil penalties.
New Jersey also recently proposed a bill prohibiting discriminatory pricing of substantially similar consumer products and services. The definition of “substantially similar” is, on its face, almost identical to that adopted under the New York law. Under the proposed law, certain service providers (including tailors, barbers, hair salons and dry cleaners) would be required to clearly and prominently disclose to the customer in writing the price for each standard service provided, as well as a clearly visible sign informing customers that price discrimination on the basis of gender is prohibited by New Jersey law. This bill is currently being reviewed by the Assembly’s Consumer Affairs Committee.
A similar bill was introduced in Massachusetts creating a 15-member Gender Equity Task Force regarding the price of items marketed to women in Massachusetts. The group will report on its findings and recommend any changes to the current legislation by the end of 2022.
Federation of Legislation
In June 2021, California Congresswoman Jackie Speier reintroduced the Pink Tax Repeal Act, a bipartisan bill that seeks to end gender discrimination in the pricing of goods and services. The bill would prohibit the sale of substantially similar goods or services that are priced differently based on gender, allow the Federal Trade Commission to enforce violations, and allow state attorneys general to file civil suits on behalf of harmed consumers. Currently, the bill is before the Subcommittee on Consumer Protection and Commerce.
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We will be monitoring this issue closely in 2022 and reporting on new developments as they occur.