In July 2012, Massachusetts enacted legislation which significantly amended the state’s item pricing statute for grocery stores and food departments. The new law allows food retailers to install price scanners throughout the store so consumers can determine the price of individual items, rather than requiring the retailers to place a price tag on each food and grocery item. The Division of Standards of the Massachusetts Office of Consumer Affairs and Business Regulation (OCABR) has signaled its intention to actively enforce the new law by proactively inspecting food stores and levying fines against those who do not comply. While the fines themselves have not been large, the enforcement actions can have significant collateral consequences: given that the violations are prosecutable under the state consumer protection law, they can provide a foundation for private class action plaintiffs to separately file suit for the same pricing activities which prompted the enforcement action.
The New Massachusetts Grocery Pricing Law
As reported in a prior legal alert, in July 2012, Massachusetts amended the grocery pricing statute significantly by allowing food stores and other food retailers to utilize a price scanner system instead of individually tagging food and grocery items.1 Prior to the 2012 amendment, food stores and other retailers with a “food department” were required to individually price tag all food and grocery items. The 2012 amendment changed that by providing retailers with the option of employing either (1) an individual pricing system, or (2) a consumer price scanner system. Food departments and stores opting for the individual pricing system must individually price tag food and grocery items, though certain classes of items are exempt from the tagging requirement. Food departments and stores opting for the consumer price scanner system may, upon obtaining a waiver, place consumer-accessible scanners in their stores instead of individually tagging each food and grocery item.
In January 2013, the Division of Standards issued proposed regulations and forms for those stores seeking a waiver from the item pricing requirements by installing scanners in their stores. Those regulations became final in April 2013.2
The OCABR’s Inspection and Enforcement Efforts
In June 2013, the Division of Standards conducted its first compliance inspection since the amended grocery item pricing statute became effective. Inspectors reviewed select items in five major supermarket chains across the Commonwealth to confirm accurate pricing information on shelves and at the scanners. For stores utilizing a consumer price scanner system, inspectors looked for price accuracy between the shelf prices and the consumer-accessible scanner prices. For stores utilizing an individual pricing system, the inspectors looked for price accuracy between the prices on each item, shelf prices and scanned prices at the register.
The inspections showed 100 percent accuracy for all consumer-accessible and register scanners reviewed, but they did identify statutory violations at one of the chains, Shaw’s Supermarkets, which had chosen not to opt for a waiver allowing it to utilize a consumer price scanner system instead of individually pricing its items. The grocery pricing statute provides for fines of up to $200 for each missing price label; the Division of Standards fined Shaw’s $8,000 and announced that the store will be subjected to expanded inspections at other locations.
Implications of OCABR’s Inspection Efforts
While the fines levied by the Division of Standards after its inspection were not particularly onerous, food retailers should be aware of the potential for far more serious consequences should they be the subject of enforcement efforts under the grocery pricing statute: the risk of being sued in a consumer class action for the activities for which they are fined by the Division. In particular, violations of the statute also may be considered violations of the state consumer protection statute, Mass. Gen. Laws c. 93A § 9.3 The consumer protection statute, in turn, carries a four-year limitations period and a minimum statutory damage of $25 per violation. As we have highlighted in prior alerts, this means that consumers who can prove they were injured by a violation of the new grocery item pricing statute may attempt to bring a class action under the consumer protection statute asserting injuries to members of the class over the prior four years, for which each injured member of the class would receive $25.
In that vein, the Massachusetts Supreme Judicial Court recently issued guidance as to what constitutes an “injury” under the consumer protection act. In Tyler v. Michaels Store, Inc., 464 Mass. 492 (2013), the SJC held that consumers must show a “separate, identifiable harm” arising from the violation in order to obtain $25 minimum statutory damages. At the same time, the SJC noted that an invasion of privacy “causing injury or harm worth more than a penny” — as measured by any profits made by the retailer as a result of the violation — will satisfy the statute.
As such, all food retailers should remain attentive to the possibility that violations of the item pricing law may become the subject of inspections by the Division of Standards, and possibly private litigation as well. The Division clearly states it “consistently checks item pricing and pricing methods at retailers throughout Massachusetts”; these inspections should be expected to continue as more retailers seek waivers and transition to consumer price scanner systems. Retailers should regularly take self-assessment measures to ensure compliance with the statute: as at least one grocer has now experienced, failure to do so may result in fines and/or litigation.
This article was originally published by Bingham McCutchen LLP.