A business scored a victory when a New Jersey appellate court recently dismissed a consumer claim under the state’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA).

Companies across the country are becoming familiar with the statute as plaintiffs have filed dozens of suits under the formerly unknown law, which states that a seller may not enter into a written contract that “includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller … as established by [s]tate or [f]ederal law at the time the offer is made or the consumer contract is signed or the warranty, notice or sign is given or displayed.”

A plaintiff-friendly interpretation of the TCCWNA from a state appellate panel triggered a rash of suits under the law, but a recent decision from a state appellate court could prove beneficial to companies.

Debra Smerling received a coupon in the mail from Harrah’s Casino titled “$15 Birthday Cash.” The coupon detailed the dates, times, and locations to redeem the coupon. When Smerling attempted to claim her birthday cash after midnight and was informed she had to wait until the stated business hours, she sued.

A trial court judge certified a damages class and granted summary judgment in favor of Smerling on her statutory claims, ordering judgment in the amount of $100 per person for each class member, plus counsel fees and expenses. The parties entered into a stipulation and the casino appealed.

Harrah’s argued that the TCCWNA did not apply because Smerling was not a “consumer” as defined by the law, nor was the promotion offer a “consumer contract” under the statute. Reversing the trial court, the appellate panel agreed.

The law defines a “consumer” as “any individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes.” The trial court determined that Smerling “bought” the coupon by traveling to Harrah’s to redeem it but the appellate court rejected this position.

“This expansive interpretation of ‘buy’ would render the Act’s conditions for applications, i.e., that the individual must ‘buy[], lease[], borrow[], or bail[] any money, property or service,’ virtually meaningless,” the panel wrote. Simply stating that the TCCWNA is a remedial statute that should be interpreted liberally in favor of consumers was insufficient. “[T]he remedial nature of the Act is not threatened by applying the plain language of the statute to the threshold determination of whether a party is a consumer under the Act.”

For further support, the court turned to the definition of “consumer contract” in the TCCWNA. The statute defines the term as “a written agreement in which an individual: [p]urchases real or personal property; … for cash or on credit and the … property … [is] obtained for personal, family or household purposes.”

In reversing the damages award and summary judgment order in favor of Smerling, the court concluded that, “The Birthday Cash offer did not require the payment of any cash and plaintiff did not ‘buy’ the offer with cash or on credit” “Because plaintiff is not a ‘consumer’ and the offer is not a ‘consumer contract’ under the TCCWNA, that Act did not apply to the claims based upon the Birthday Cash offer.”

To read the decision in Smerling v. Harrah’s Entertainment, Inc., click here.

Why it matters: While unpublished, the Smerling decision provides some peace of mind for businesses operating in New Jersey by making it clear that the TCCWNA does not apply to coupons and that a consumer must actually “buy, lease, borrow, or bail a product or service” to bring suit.