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 Supreme Court Holds that Consumers Cannot Pursue Class Action Claims Against TGI Fridays for Inflated Drink Prices, But May Do So Against Carrabba’s Italian Grill

The New Jersey Supreme Court issued a decision on two consumer class actions under the New Jersey Consumer Fraud Act (“CFA”) and the Truth in Consumer Contract, Warranty and Notice Act (“TCCWNA”).  In two separate cases, consumers sought damages against TGI Fridays and the operator of several Carrabba’s Italian Grill, respectively, alleging unlawful practices with respect to the disclosure of prices for alcoholic and non-alcoholic beverages to customers.

With respect to TGI Fridays, the Court held that the named plaintiffs failed to show that common questions of law and fact predominate over individual issues.  The plaintiff had advanced a “price inflation” theory – that the fraudulent marketing drove up the cost of the drinks – but the Court rejected it noting that its prior decisions had found this theory did not support a claim under the CFA.

With respect to Carrabba’s, on the other hand, the plaintiff’s allegations focused on specific pricing practices, which plaintiff claimed are supported by receipts showing that each customer making this claim was charged different prices for the same brand, type, and volume of beverage in the course of a single visit. Because the proposed class had been redefined to only include customers who make that specific CFA claim, they met the predominance requirement for class certification.

In both cases, the Court found that the plaintiffs had failed to meet the standards for a class action as to their TCCWNA claims. Under TCCWNA, a claimant must prove that they received a written sign (here, a menu), which contained information in violation of a consumer law.  Because each individual claimant would have to prove that they received a menu, the Court held, the cases were not suitable for resolution as a class action.

For more information on class actions, the CFA or TCCWNA, 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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NJ Appellate Division Decertifies Class in Suit Over TGI Friday’s Menus and Drink Prices

New Jersey bar patrons alleging that the chain restaurant, TGI Friday’s, Inc. (TGIF), violated consumer protection laws by omitting drink prices from its menus will have to proceed with their claims as individual plaintiffs after the New Jersey Appellate Division decertified their class.

The Panel reversed the trial court’s class certification in a lawsuit against TGIF that began more than six years ago, when a woman claimed that she was charged $2.00 for a beer at the restaurant’s bar and later charged $3.59 for the same beer at a table in the restaurant. The woman claimed that the price discrepancy and the fact that TGI Friday’s does not print drink prices on its menus were in violation of the New Jersey Consumer Fraud Act (NJCFA), N.J.S.A. 56:8-1, et seq., and the Truth in Consumer Contract Warranty and Notice Act (TCCWNA), N.J.S.A., 56:12-11, et seq.  Two additional plaintiffs joined the lawsuit and the trial judge granted class certification to anyone who ordered unpriced drinks at any corporate owned TGI Friday’s in New Jersey from 2004 through 2014.

The Panel’s decision to decertify the class relied on the requirement of New Jersey Court Rule 4:32-1(b)(3), the class action rule, which requires that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.”  In a published decision dated March 24, 2016, the Panel held that the plaintiffs did not meet the “predominance” requirement for class action certification because “individualized inquiries” would be necessary to establish whether individual plaintiffs received a TGIF menu that violated the law and whether the lack of pricing on the menu caused plaintiffs’ damages.  Dugan v. TGI Fridays, Inc., 2016 WL 1136486, at *4 (N.J. Super. Ct. App. Div. Mar. 24, 2016).

With respect to the NJCFA claim, the Panel concluded that people who either were not given menus or did not ask for the price before ordering a drink could not prove causation, while those who relied upon the stated price could conceivably have claims. Therefore, claims for damages would necessarily involve inquiries to determine whether or not individual class members were provided a menu in order to determine whether each class member sustained a loss caused by the absence of prices on the menus.

Similarly, with respect to the TCCWNA claim—which  does not contain the NJCFA’s fee shifting or treble damages provisions but does provide for statutory and actual damages—each individual class member would be required to demonstrate that they were actually provided with a menu that contained technical violations of state or federal law.  Id. at *9-10.

Significantly, the Panel’s decision may slow the sudden rush of class actions brought under the TCCWNA by eliminating cases based on technical violations where consumers cannot actually prove that they received the material that forms the basis for thein violation.

For more information regarding the NJ Consumer Fraud Act, TCCWNA, or the Court’s decision in Dugan, 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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