PHOENIX - Retailers can be penalized thousands of dollars for failing to post correct prices on their merchandise even if there is no proof they intended to deceive their customers, the Arizona Court of Appeals ruled Thursday.
In a unanimous decision involving AutoZone, the judges ruled that the simple fact that a price on a shelf is wrong does not, by itself, violate the state's Consumer Fraud Act. They said there has to be some showing that the mispricing was "voluntary."
But the judges said that once the state shows that prices were missing or wrong, then it is up to the retailer to prove it did not voluntarily violate the law.
That conclusion disappointed attorney Tim Berg, who represented the Arizona Retailers Association.
"That seems backwards to us," he said. For example, Berg said that puts a company accused of failing to post prices in the position of having to present evidence that a particular store has a perennial problem with customers removing the price tags from the shelves.
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Berg said the retailers got involved because of the implications of the dispute for all Arizona merchants.
An attorney for AutoZone would not comment on the ruling.
At the root of the dispute is a 1993 law requiring price posting.
Arizona used to require that prices be stamped on each item. But state legislators, responding to retailer complaints of costs and noting the availability of scanners, agreed to scrap that mandate.
In exchange, however, stores agreed to abide by new laws that require the price of every item to be posted on the shelf or near each display. Also, the prices that are run up by the scanners must match those shelf prices.
During a five-year period beginning in 2001, the state Department of Weights and Measures levied fines of $170,000 against AutoZone after finding repeated violations at its more than 90 stores in Arizona.
In 2006, though, then-Attorney General Terry Goddard filed suit. He said the fines apparently have failed to motivate the firm to comply with the law, with the company considering the penalties a "cost of doing business."
His ammunition was the state's Consumer Fraud Act, which carries penalties of $10,000 per violation. That could add up to real money, with the state alleging 806 incidents of mispriced items and 2,814 items with no price at all, something Goddard called "systematic fraud against the consumer."
Attorneys for AutoZone persuaded a Maricopa County Superior Court judge to throw out the case based on the failure of the state to prove the company intended to misprice items.
But Judge Patricia Norris, writing for the Court of Appeals, said that's not what the law requires.
On one hand, Norris said a company cannot be found guilty of violating the Consumer Fraud Act based simply on the fact that prices were wrong or missing entirely.
But the judge said that once the state offers that evidence, the burden shifts to the retailer to prove that the violation was not voluntary.
In this case, she said, the state met its minimum requirement. Now it is up to AutoZone to prove otherwise, something that requires going to trial.
The judges also rejected the contention by AutoZone that the failure to post a price - versus posting a wrong one - cannot be considered fraud.