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NewsMay 31, 2016
© 2016 Brownstein Hyatt Farber Schreck, LLP
www.bhfs.com
410 17th Street, Suite 2200
Denver, Colorado 80202
Previously Overlooked New Jersey Consumer Protection Statute Prompts
Surge in Class Action Suits
Companies that do business online often use broad, boilerplate language to govern both use of websites and transactions with customers. Such language usually includes waivers, limitations on liability, and indemnity clauses, among others. This practice is both common across industries and usually unobjectionable. However, a previously overlooked consumer protection statute in New Jersey has recently become a favorite tool of the New Jersey plaintiff’s bar, resulting in a flurry of putative class actions.
The statute, New Jersey’s Truth in Consumer Contract, Warranty and Notice Act, N.J.S.A. §56:12-18 (“TCCWNA”), is a broadly worded statute that forbids offers, displays, and contracts directed at consumers that “violate[] any clearly established legal right . . . or responsibility.” N.J.S.A. 56:12-15. Under this language, a retailer could be liable simply for displaying a sign containing clearly unlawful terms. The statute further provides that any entity that violates the statute is “liable to the aggrieved consumer for a civil penalty of not less than $100 or for actual damages, or both,” as well as attorney fees and costs. Id.
The breadth of the statute’s language has emboldened the class action bar to allege violations of the TCCWNA whenever they are able to find case law suggesting any contract term might be invalid. This can include such usually benign terms as disclaimers of liability and waivers of attorney fees. And given the national nature of most online and electronic services, lawyers have started filing class action lawsuits alleging violations of the TCCWNA on the basis of boilerplate contracts terms used by companies with no physical presence in New Jersey but who do maintain an online presence accessible by New Jersey residents. Recent targets under the TCCWNA have included Samsung, J.Crew, Avis Rent-a-Car, and Intuit.
Always aggressive and creative, plaintiffs’ counsel have recently attempted to allege classes of plaintiffs that include both actual and prospective customers. Under this conception of the TCCWNA, if a company operates a website that contains impermissible terms of use, the company could be held liable for penalties and attorneys’ fees every time a New Jersey resident visits the website, even if they leave without doing any business. Additionally, plaintiffs’ counsel have attempted to include in putative classes more than just actual New Jersey residents that have visited a website. Demand letters frequently quantify damage figures using possible New Jersey patronage by relying on unverified data provided by Google Analytics and comparable web traffic tools to estimate how many New Jersey residents accessed the website in question. It is not hard to imagine putative classes multiplying substantially when prospective customers are included along with actual customers. This area of the law is still developing. However, there exists case law holding that only actual customers can sue under theTCCWNA. The deterrent effect of this case law may have not yet had an impact on plaintiffs’ counsel because the opinion was unreported.
NewsMay 31, 2016
© 2016 Brownstein Hyatt Farber Schreck, LLP
www.bhfs.com
410 17th Street, Suite 2200
Denver, Colorado 80202
The U.S. District Court for the District of New Jersey, in Shah v. American Express Co., No. 09-00622, 2009 WL 3234594 (D.N.J. Sept. 30, 2009), considered this issue directly and held that the TCCWNA does not apply to prospective consumers: “In question here is the interpretation of the phrase ‘aggrieved consumer.’ Plaintiffs’ claim depends on TCCWNA’s language of ‘aggrieved consumer’ encompassing an ‘aggrieved prospective consumer.’ There is no support, however, in the statutory language, legislative history or case law that supports this interpretation.” 2009 WL 3234594 at *3. “The plain language of TCCWNA only grants a remedy to aggrieved consumers and not to aggrieved ‘prospective consumers.’”Id.
Richard B. [email protected]
Joshua A. [email protected]
This document is intended to provide you with general information regarding New Jersey’s Truth in Consumer Contract, Warranty and Notice Act. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.
