Developing Defenses to Class Actions Arising from the New Jersey TCCWNA

The New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA” or the “Act”) contains potentially powerful language protecting consumers in their contracts and in certain communications with sellers and some others who deal in consumer goods and services.  The Act makes it a violation for a seller in certain dealings to “enter into any written consumer contract or give or display any written consumer warranty, notice, or sign *** which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller *** as established by State or Federal law ***.”  In addition, the Act provides “aggrieved consumer[s]” with “a civil penalty of not less than $100.00 or for actual damages, or both at the election of the consumer, together with reasonable attorney's fees and court costs.”

Until recently, New Jersey State courts have provided little guidance on what constitutes a “clearly established legal right of a consumer or responsibility of a seller, *** as established by State or Federal law,” and who can be an “aggrieved consumer” to make a civil claim.  As a result, Plaintiffs have tried to construe both provisions broadly, and have attempted to bring class actions on behalf of all related consumers.  An overly broad interpretation of the Act could result in a crippling trap for well-meaning businesses and extra fees for attorneys representing plaintiffs in these actions.  This was not the intent of the legislature.  Fortunately, the New Jersey Supreme Court has begun to weigh in and provide businesses with some significant defense arguments and strategies.

In order for a court to allow a lawsuit like this one to proceed as a class action, the Court must find, among other things, that common issues among the potential plaintiffs “predominate” over individual issues.  In other words, the proposed class members can easily and fairly be treated by the Court as having identical, common claims.  Courts do not want to lump apples together with oranges in class actions.

Recently, the New Jersey Supreme Court provided guidance on the hotly-debated issues of who can be an “aggrieved consumer” under the Act, why that issue can affect the predominance prong of the class certification standard, and what type of right might be considered “clearly established” under the Act.  There, plaintiffs claimed that a restaurant failed to provide diners with drink prices. To be an “aggrieved consumer,” the consumer, at minimum, would need to have been presented by the restaurant with a menu that omitted drink prices.  Since the issue of whether each class member received a menu presented individual fact issues “regarding the interaction between the customer and the server,” the Court held that the TCCWNA claims could not proceed as a class action.

The plaintiffs also argued that the restaurant’s posting of drink prices was their “clearly established legal right.”  However, the New Jersey Supreme Court observed that, although a New Jersey statute requires the marking of prices on merchandise, no published court opinion had held that the statute prohibits restaurants from offering beverages without listing prices on the menu.  Moreover, despite it being a common practice in the restaurant industry, there was no evidence that the attorney general has ever taken a position against it.  Lastly, the Court indicated that “[n]othing in the legislative history of the TCCWNA, which focuses on sellers’ inclusion of legally invalid or unenforceable provisions in consumer contracts, suggests that when the Legislature enacted the statute, it intended to impose billion-dollar penalties on restaurants that serve unpriced food and beverages to customers.”

These concepts are significant developments that can be used, among others, to defend against TCCWNA class actions under the right circumstances.  If your business finds itself the subject of one of these lawsuits, there are now some established defenses that might help you win or minimize your case.  And more help is on the way - the New Jersey Supreme Court is poised to decide another important TCCWNA case that should provide additional guidance.

To learn more about this post or any other litigation matter, feel free to contact me, Steven A. Karg, at sakarg@nmmlaw.com.