On April 16, 2018, the New Jersey Supreme Court issued a significant ruling interpreting the state’s Truth in Consumer Contract Warranty and Notice Act (“TCCWNA”), a 35-year old consumer protection statute that has received increasing attention from the plaintiffs’ bar in recent years. In an important case to New Jersey businesses, the Court found that to qualify as an “aggrieved consumer” who is eligible to collect actual damages or a civil penalty under the statute, the plaintiff must suffer some “adverse consequences” from the defendant’s violation of a “clearly established” right of a consumer.
The decision, Spade v. Select Comfort Corp., involved alleged violations by furniture sellers of the New Jersey Delivery of Household Furniture and Furnishings Regulations, N.J. Admin. Code § 13:45A-5 (“Furniture Delivery Regulations”), which contain various rules about timely delivery of furniture and require certain language to be included in ten-point type on furniture contracts or sales documents. While the plaintiffs’ furniture was all timely delivered, the language of the sales documents they received allegedly did not fully comply with the Furniture Delivery Regulations.
The plaintiffs used the alleged violations of the Furniture Delivery Regulations to bring claims under TCCWNA, which prohibits sellers, in the course of their business, from “offer[ing]” or “enter[ing] into any written consumer contract” or from “giv[ing] or display[ing] any written consumer warranty, notice or sign which 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, the consumer contract is signed, or the warranty, notice or sign is given or displayed. N.J.S.A. 56:12-15. TCCWNA further provides that any person who violates the statute shall be liable to an “aggrieved consumer” for a civil penalty not less than $100, actual damages, or both, at the election of the consumer, in addition to reasonable attorney’s fees and court costs. N.J.S.A. 56:12-17.
The plaintiffs’ claims were initially dismissed by the U.S. District Court for the District of New Jersey, which concluded that the plaintiffs had suffered no adverse impact from the defendants’ violations of the Furniture Delivery Regulations, and, accordingly, plaintiffs were not “aggrieved consumers” under Section 17 of TCCWNA. On appeal, the Third Circuit certified two questions of law to the New Jersey Supreme Court: (1) does a violation of the Furniture Delivery Regulations constitute a violation of a “clearly established” right of a consumer for purposes of TCCWNA and thus provides a basis for relief under the TCCWNA; and (2) 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?
As to the first question, the Supreme Court confirmed that violation of a regulation, alone, can form the basis of a TCCWNA violation, because regulations carry the “force of law” and can effectively void a contract if violated.
More significantly, however, the Court concluded that to qualify as an “aggrieved consumer” under Section 17 of TCCWNA, a consumer must suffer some actual harm. Using basic principles of statutory construction, the Court noted that the Legislature had used the terms “consumer” and “prospective consumer” in Section 15 of the statute, whereas a more “precise” term – “aggrieved consumer” – was utilized in Section 17 of the statute. By using the word “aggrieved,” the Court stated, the drafters of TCCWNA intended to distinguish consumers who had suffered harm because of a violation of Section 15 of the statute “from those who have merely been exposed to unlawful language in a contract or writing, to no effect.”
The Court thus rejected the plaintiffs’ proposed “expansive” definition of an “aggrieved consumer” as any consumer who is offered or enters into a contract or other writing that violates a statute or regulation – either by inclusion of an offending provision or omission of a required provision – “whether or not he or she has consequently suffered harm.” Instead, the Court held that “[i]n the absence of evidence that the consumer suffered adverse consequences as a result of the defendant’s regulatory violation, a consumer is not an ‘aggrieved consumer’ for purposes of the TCCWNA.”
The Spade decision promises to have far-reaching consequences, as it will likely end the flood of “no impact” TCCWNA class action lawsuits filed in New Jersey in recent years, in which plaintiffs have sought relief under TCCWNA for mere technical violations of statutes and regulations, without any accompanying proof of actual harm. The decision therefore provides an important new defense to businesses defending against TCCWNA claims.
A copy of the Supreme Court’s opinion may be downloaded here.