Delivery pricing policy costs Safeway Inc. $42M

The U.S. Court of Appeals for the Ninth Circuit has upheld a ruling that will cost Safeway Inc. nearly $42 million in damages.

The original judgment, which was made by Judge Jon Tigar of the Northern District of California, found the Pleasanton, Calif.-based grocer accountable for pricing discrepancies stemming from the store’s e-commerce platform.

A class-action suit led by plaintiff and shopper Michael Rodman argued that Safeway inappropriately charged customers that used the store’s delivery service by upping prices by about 10% for items purchased through this method.

According to court documents, Rodman argued that delivery customers were promised “price parity between online and physical stores.”

Safeway countered, claiming that the following clause in their Special Terms section cleared them of wrongdoing: “The prices quoted on our web site at the time of your order are estimated prices only. You will be charged the prices quoted for Products you have selected for purchase at the time your order is processed at checkout. The actual order value cannot be determined until the day of delivery because the prices quoted on the web site are likely to vary either above or below the prices in the store on the date your order is filled and delivered.”

Safeway believed that customers were properly informed that final prices may vary from what was quoted immediately on the website.

The Ninth Circuit panel agreed that both Rodman and Safeway’s interpretation of the clause were “reasonably susceptible readings” and thus understandable conclusions.

Ultimately, it was determined that Safeway did not have the authority to bind the consumer to the new total due without proper notice. Thus, the retailer breached contracts.

“We are disappointed in the result, and have no further comment on the matter,” said Christine Wilcox, vice president of communications and public affairs at Safeway.

Safeway is owned by AB Acquisition LLC and has a presence in 19 states. It is part of a network of more than 2,200 stores that fly under multiple banners.