New Jersey Supreme Court Unanimously Limits Scope of Consumer Protection Statute

The New Jersey Supreme Court issued an important decision on the scope of the New Jersey consumer protection statute called the Truth-in-Consumer Contract, Warranty and Notice Act or TCCWNA.

The two class action matters involved allegations that Select Comfort Corp. and Bob’s Discount Furniture violated the TCCWNA by failing to include, among other things, specific language regarding a consumer’s right to cancel an order as a result of delayed delivery. The Supreme Court held that a violation of this regulation could constitute a violation of a “clearly established legal right or responsibility of sellers” to constitute a violation of TCCWNA.

Separately, and of broader significance, the Supreme Court was asked whether a consumer must suffer an actual adverse consequence to be entitled to the statutory minimum penalty of $100 per person provided by the TCCWNA.  None of the plaintiffs in either of the cases had alleged that they suffered any actual harm, monetarily or otherwise, from the defendants’ technical violations of the regulations.   The question before the Court was whether these plaintiffs could be considered “aggrieved consumers” to qualify for TCCWNA’s statutory penalties.

Analyzing the statutory language, the unanimous Supreme Court noted that certain sections of the TCCWNA use the term “consumers” whereas the term “aggrieved consumer” was used in the section of the TCCWNA discussing damages. The addition of the term “aggrieved” before “consumer,” the Court held, must be given meaning and, under a plain reading of this word, denotes the plaintiff’s suffering some actual harm, even non-monetary harm.  As an example of the type of harm that may be sufficient to render a consumer “aggrieved” under the TCCWNA, the Supreme Court hypothesized a potential furniture seller customer who contends he would have sought a refund after a late furniture delivery but did not because of a company’s “no refund” statement (in violation of the regulation).

The Supreme Court’s decision will likely impact the uptick in putative class actions filed by consumers under TCCWNA. In addition to reducing the number of individuals who might be entitled to TCCWNA statutory damages, the decision will also make it more difficult for consumers to maintain class actions since each class member potentially must demonstrate that they suffered an “adverse consequence.”

For more information on the Supreme Court’s decision, the TCCWNA or consumer class actions, please contact Kathleen Barnett Einhorn, Esq., Chair of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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New Jersey Legislature Looking At Changes to Consumer Contract Disputes

The New Jersey Assembly’s Consumer Affairs Committee recently advanced several bills that would increase consumer protections in arbitration disputes. If passed into law, these bills would change the landscape for consumer disputes in the State and require companies to revisit their standard consumer contracts and arbitration practices.

The bills would prohibit companies from inserting language in consumer contracts requiring arbitration outside of New Jersey; bar neutral arbitrators or arbitration companies from ordering a losing party to pay the legal fees of the prevailing party; and bar arbitrators that have a financial interest in either party from presiding over the parties’ arbitration. A separate bill would restrict the use of “payment assurance” devices on vehicles designed to disable the ignition if the owner falls behind on payments, which could significantly impact the car sales industry in New Jersey.

The bills have several steps in the legislative process before being enacted into law and are likely to be amended to address business concerns. However, companies doing business in New Jersey should be aware that lawmakers are scrutinizing consumer contracts and reconsider any such form contracts.

For more information regarding consumer contracts and the arbitration process, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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