NJ Court Clears Way For Class Actions Seeking Mandatory Statutory Penalties In Consumer Disputes

On July 9, 2013, the New Jersey Supreme Court issued a decision broadly interpreting a longstanding, but previously little-used, consumer protection statute that exposes companies to substantial mandatory statutory penalties for mere technical violations of a wide array of federal and state laws. The decision and the underlying statute are virtually certain to play a key role in shaping the future of consumer class action litigation against companies that sell, lease, lend or bail products, services, property or money in New Jersey, including those that do so over the internet.

At issue in Shelton v. Restaurant.com, Inc., was the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18, a broad consumer protection statute that, with limited exception, applies to contracts, notices, warranties, and signs related to the purchase, lease, borrowing, or bailment of any money, property, or service that is primarily for personal, family or household purposes. Although enacted over 30 years ago, case law interpreting the TCCWNA is sparse. And until fairly recently, the TCCWNA largely was ignored by plaintiffs' lawyers in consumer class actions in favor of the New Jersey Consumer Fraud Act (CFA). That likely will change in the wake of Shelton. Indeed, in the context of a class action, the TCCWNA's mandatory $100 statutory penalty can quickly add up to potentially extraordinary liability, something the Shelton Court was indifferent to and content to leave for the Legislature to fix.

The TCCWNA makes it unlawful to "offer to any consumer or prospective consumer or enter into any written consumer contract or give or display 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, lessor, creditor, lender or bailee as established by State or Federal law ...." The TCCWNA also prohibits use of standard disclaimers in consumer contracts, notices, and signs (but not warranties), which state certain provisions are or may be "void, unenforceable or inapplicable in some jurisdictions without specifying which provisions are or are not void, unenforceable or inapplicable within the State of New Jersey." Anyone who violates the TCCWNA is "liable to the aggrieved consumer for a civil penalty of not less than $100.00 or for actual damages, or both," plus reasonable attorneys' fees and costs.

Plaintiffs in Shelton...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT