by Customers, former employees keeping Wayfair busy in the courts
BOSTON Wayfair filed its second-quarter financials in early August, and most of the numbers were either good or promising. In terms of growth, the quarter proved the strongest since 2020, when COVID had people shopping for furniture in droves. The day after the 10-Q filing, the Street rewarded those good numbers by lifting Wayfair stock by almost 30%.
As is typical for 10-Qs, Wayfair’s mentions as one of its disclaimers the fact that from time to time, “Wayfair is involved in litigation matters and other legal claims that arise during the ordinary course of business.” In other words, stuff happens, and some of that stuff ends up in court. The company also brushed this stuff off, stating that it does not believe that the outcome of any of the litigation will have a materially adverse effect on its “results of operations or financial condition,” according to the 10-Q.
Because none of these “litigation matters” is mentioned in the 10-Q with any specificity, I got curious. How many lawsuits is Wayfair facing, and just what is the nature of these actions? What follows is a catalog of what I found, though I make no claims about how comprehensive it might be. Another disclaimer: Anyone can sue anyone else for anything, and a civil law filing only presents the plaintiff’s side of the dispute. Because of its profile and, not insignificantly, its easily searched name, Wayfair simply makes a convenient case study for looking at the legal risks of doing business in our industry, particularly in digital spaces. One last disclaimer: It’s difficult to track if or when a civil suit has been settled, tossed or advanced.
Looking at the docket
As we reported just a few weeks ago, about two months ago, AF Newco, the company that acquired American Freight stores out of bankruptcy, filed a complaint against Wayfair in federal court in Delaware accusing the e-commerce giant of using American Freight’s brand names to lure shoppers to its own site.
AF Newco filed a trademark infringement and unfair competition lawsuit citing trademark law in the U.S. District Court for the District of Delaware regarding American Freight’s Stewart & Hamilton mattress line, alleging that Wayfair has been quietly coding its site to hijack searches for the S&H brand.
In its home state of Massachusetts, Wayfair lost a “landmark” $4.75 million employee retaliation claim back in April. The company also faces consumer class actions over misleading sale pricing and return policies, a data privacy wiretapping suit, and wage and hour claims from remote workers, among other litigation in the courts.
In Boyle v. Wayfair, a jury awarded a former senior manager, Mary Boyle, $4.75 million, including $4 million in punitive damages, after finding that Wayfair had unlawfully retaliated against her for taking medical leave under the Paid Family and Medical Leave Act and for complaining of age discrimination.
News outlets called the decision “landmark” because it is the first known verdict in Massachusetts that validates a PFMLA retaliation claim.
The decision in Suffolk Superior Court can be read as a warning to employers that any negative change in the seniority, status, employment benefits, pay or other terms or conditions of employment made within the first six months of an employee returning from PFMLA leave could be seen as retaliatory. Importantly, the decision appears to shift the burden of proof onto the employer, who must provide clear and convincing evidence that its actions were, in fact, not retaliatory.
“It’s easier to litigate because we’re in the unusual circumstance of having the burden lifted off of us at trial,” John Koury, who represented Boyle, told Massachusetts Lawyers Weekly during the litigation.
Busy in California
Just a few weeks ago, a federal judge in California ruled that a consumer class action against Wayfair can proceed, a case that alleges that the company used unauthorized tracking technologies from third-party platforms like Meta, TikTok, Pinterest and others to disclose customers’ personal data without the customers’ knowledge or, therefore, consent.
Filed in the United States District Court for the Central District of California, Limas v. Wayfair, involves the California Invasion of Privacy Act and methods Wayfair uses to collect information about its website’s users, according to the complaint. Customer interactions with the Wayfair website include what they view, what they purchase and the search terms they use, all of which is typical in digital spaces. But, the plaintiff, Joseph Limas, claims that cookies and other identifiers could be used to match a website visitor with an existing social media account, allowing the tracking entities to connect a user’s Wayfair activity with the person’s identity.
According to CIPA World, which tracks litigation concerning the California privacy law, the Limas case is worth watching for how courts interpret a decades-old wiretapping statute and applies it to modern website technology. As CIPA World describes Limas’ claims, it’s as if Limas went to the store to shop for a lamp without knowing that six other companies would be in the store with him watching and recording his every move.
In its attempt to win a motion to dismiss, Wayfair brought “everything,” according to coverage in the National Law Review. “Nine or 10 separate theories, some of them genuinely creative, stacked one on top of the other in the hope that one would land,” according to the article, which analyzes in some detail the judge’s ruling. “The Court walked down the line and knocked over almost every single one.”
Wayfair’s answer to the complaint filed Aug. 26 basically denies everything except the fact that it operates a website. Denying knowledge of Limas’ specific visits, Wayfair’s response denies the tracking amounted to illegal wiretapping and that CIPA applies to routine web analytics.
Included in Wayfair’s response is also a First Amendment claim to protection for the data collection, according to the filing.
Phantom discounts?
Wayfair faces a pair of false advertising and pricing claims, also in California courts. They were filed this year and each as a class action. The claimants accuse Wayfair of misleading shoppers by displaying fake strike-through prices and advertising items as limited-time “sales” when those products are permanently or almost always sold at those same “discounted” prices.
Prakash v. Wayfair was filed in January in the U.S. District Court for the Eastern District of California. Wayfair moved to dismiss the case or compel arbitration in April. As of Sept. 4, no decision had been made on that motion, with the court warning parties that it is inundated with emergency immigration cases, so they should not expect immediate action by the court.
The second case, Rodriguez v. Wayfair, is similar, with the plaintiff accusing Wayfair of advertising fictitious prices and phantom discounts, according to Top Class Actions. Filed in July of last year in state superior court, the claim cites California’s False Advertising Law and the Consumers Legal Remedies Act. In September, Wayfair’s motion to compel arbitration was granted, but the case was reassigned three months ago, so the final outcome here isn’t clear.
Lastly, in Los Angeles Superior Court, plaintiff Edward Stansfield filed a breach-of-contract class action against Wayfair alleging that the company misleads consumers about its return policy specific to certain items. Stansfield accuses Wayfair of failing to inform consumers when specific items are non-returnable, despite the company advertising its return policy as a “key feature.”
“A return policy is a material term of a consumer transaction, and Wayfair’s advertising misrepresents a material term of sale for non-returnable items,” according to the March 2026 filing, which cites California’s Unfair Competition Law, Consumer Legal Remedies Act and False Advertising Law.
According to the court’s docket, a hearing on Wayfair’s motion to dismiss was scheduled for Sept. 10.
So, like a lot of publicly traded companies, and private ones, too, Wayfair is litigating on several different fronts. And while it might be true that none of these actions will have a material effect on the multichannel platform’s fiscal health, they do offer a peephole into how courts are navigating laws in areas germane to the industry, including data privacy, advertising and marketing, return policies and employee termination.
One last note, on Wayfair’s advertising: According to a report in Advertising Age, Wayfair is among the brands beta testing ChatGPT’s new advertising model that invites online shoppers to chat with the advertiser. Called “conversational,” the new ads represent a huge break from traditional advertising.
According to the trade publication, the “conversational” ad program operates on ChatGPT’s free and Go tiers, which represent the bulk of its users. Conversational ads give brands the opportunity to connect with a consumer when buying decisions are beginning to take shape, and in high-context circumstances, according to reporting in Inc.
This strikes me as a really significant way to break out of the scrum of competition for attention in online furniture shopping and buying.
