Consumer-facing businesses that advertise and sell to New Jersey consumers, whether through brick and mortar operations or over the Internet, are being targeted in class action lawsuits under New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA, pronounced “tic-wun-uh”). (See Sutherland’s earlier analysis of TCCWNA.) TCCWNA provides for statutory damages and attorneys’ fees, making these class actions attractive to plaintiffs’ lawyers and potentially crippling for defendant companies. Plaintiffs have used TCCWNA’s broad language to target a variety of contracts, agreements and sales practices. As discussed more fully below, Sections 15 and 16 of TCCWNA outline the prohibited practices. Section 17 allows for recovery of $100 per violation, along with attorneys’ fees. The following examples of putative class actions brought under Sections 15 and 16 demonstrate TCCWNA’s scope.
TCCWNA Claims Under Section 15
Section 15 is particularly broad (and vague): it prohibits the violation of “any clearly established legal right” under state or federal law. This allows a consumer to bring a suit in conjunction with another claim, for example, or simply for an alleged violation of a regulation that otherwise provides no private remedy.
For example, in a complaint filed in early November 2016, a plaintiff linked a TCCWNA class action against a large bank with what would otherwise be a straightforward Fair Debt Collection Practices Act (FDCPA) claim against a collection agency. The plaintiff and putative class representative in Scibetta v. TD Bank, N.A., et al., alleged that the defendant bank hired the co-defendant collection agency, which was not licensed in New Jersey, to pursue debts against the plaintiff. The FDCPA claim, available only against the collection agency, was based on the allegation that the notices sent by the agency violated New Jersey law that requires state licensing for debt collectors. The TCCWNA claim was brought against both the collection agency and the bank, under the theory that the collection notices were unlawful, and thus the bank as well as the collection agency violated a “clearly established legal right” as prohibited by TCCWNA. Originally filed in New Jersey state court, the case is now pending in the District of New Jersey after being removed by the defendant bank pursuant to the federal Class Action Fairness Act.
TCCWNA Claims Under Section 16
Section 16 prohibits companies from compelling consumers to waive rights in contracts, advertisements, notices and other documents. For example, in Shelton v. Restaurant.com, Inc., 214 N.J. 419 (2015), the plaintiff alleged a violation of Section 16 of TCCWNA after purchasing gift certificates redeemable at participating restaurants in New Jersey. The face of the certificates contained a series of terms and conditions, including a standard boilerplate statement that the certificate is “[v]oid to the extent prohibited by law.” The plaintiff alleged that the certificates violated Section 16 because the general “void” language in the terms and conditions did not explicitly state “which provisions are void, inapplicable, or unenforceable in New Jersey.” In denying the defendant’s motion to dismiss, the New Jersey Supreme Court in Shelton held that TCCWNA is “entitled to broad interpretation.”
Shelton involved the terms and conditions set forth in gift certificates that had been purchased by the plaintiff, but Section 16 class actions have been filed against other companies for language simply posted on their websites. Indeed, plaintiffs have attempted to stretch TCCWNA to cover terms and conditions on websites even when the plaintiffs do not make a purchase. Some federal courts have recently indicated they are willing to dismiss these suits for lack of actual injury. While that is a promising development, companies using terms and conditions language online would be wise to make straightforward revisions to online language in contracts and advertisements. Minor changes will often cure potential loopholes targeted by plaintiffs’ attorneys.
Companies doing business in New Jersey or with New Jersey residents directly, through intermediaries, or online, are susceptible to TCCWNA claims. Simple compliance steps may be enough to avoid some lawsuits under TCCWNA, but companies should conduct a fulsome review of their contracts and consumer-facing business practices to avoid getting caught in the rising tide of these class actions.