In a victory for defendants, the New Jersey Supreme Court ruled that a plaintiff must suffer actual harm from an allegedly unlawful provision in a contract or notice to be an “aggrieved” party under the state’s Truth in Consumer Contract, Warranty and Notice Act (TCCWNA).

Businesses have faced a rash of consumer class actions after an appellate court in the state released a plaintiff-friendly interpretation of the statute in December 2015. The new opinion, answering certified questions from the U.S. Court of Appeals, Third Circuit, may help turn the tide.

Two cases involving married couples suing furniture companies were consolidated after both sets of plaintiffs alleged violations of the TCCWNA. Specifically, the plaintiffs purchased furniture and claimed that the sales contracts provided by the retailers did not include language regarding the delivery of household furniture as mandated by regulations promulgated under the state’s Consumer Fraud Act.

Although both couples had their furniture delivered in a timely fashion, they pointed to the deficient contracts as the basis of their TCCWNA lawsuit. The statute, found at N.J.S.A. Section 56: 12-14, 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 State or Federal law at the time the offer is made or the consumer contract is signed or the warranty, notice or sign is given or displayed.” The law provides a penalty of $100 per violation.

A district court judge granted the defendants’ motion to dismiss the suits and the plaintiffs appealed to the Third Circuit, which certified two questions to the state’s highest court. First, does a violation of the Furniture Delivery Regulations alone constitute a violation of a clearly established right or responsibility of the seller under the TCCWNA and thus provide a basis for relief under the TCCWNA?

Second, is a consumer who receives a contract that does not comply with the Furniture Delivery Regulations, but has not suffered any adverse consequences from the noncompliance, an “aggrieved consumer” under the TCCWNA?

The New Jersey Supreme Court answered the first question in the affirmative and the second in the negative. While a violation of an underlying regulation may trigger a cause of action for a consumer, he or she must be “aggrieved” in order to obtain a remedy under the TCCWNA, the court explained.

The statute does not define the term “aggrieved consumer,” but the court said the legislature clearly intended to differentiate the term from a “consumer,” which is defined and used separately in the TCCWNA. The court interpreted the word “aggrieved” “so as to give it significance; it distinguishes consumers who have suffered harm because of a violation of [the TCCWNA] from those who have merely been exposed to unlawful language in a contract or writing, to no effect.”

The term “aggrieved consumer” denotes “a consumer who has suffered some form of harm as a result of the defendant’s conduct,” the unanimous court wrote, although the harm is not limited to injury compensable by money damages. In the context of furniture delivery, this harm could be leaving a consumer without the furniture needed for a family gathering, for example.

“In the setting of these appeals, if a consumer has entered into a sales contract containing a provision that violated [the Furniture Delivery Regulations], but his or her furniture was delivered conforming and on schedule, and he or she has incurred no monetary damages or adverse consequences, that consumer has suffered no harm,” the court said. “Such a consumer is not an ‘aggrieved consumer’ under [the TCCWNA].”

To read the opinion in Spade v. Select Comfort Corp., click here.

Why it matters: For defendants coping with the onslaught of TCCWNA litigation, the decision could prove to be a boon. While the court found that a regulatory violation may form the basis for a claim under the statute, it eliminated the prospect of cases based simply on missing contract language when it made clear that a consumer must suffer some form of harm as a result of the defendant’s conduct.