NJ

In 2016, many retailers found themselves on the wrong end of class actions brought under New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”). The suits allege that these retailers’ website terms of service either contained provisions that violated some “clearly established” New Jersey or federal law, or else stated that violative terms might not apply in “some states” without saying which specific terms are ineffective in New Jersey.  The TCCWNA statute has major teeth, especially in class actions, with statutory penalties of $100 per “violation.”  Plaintiffs, however, must clear some equally major hurdles, including demonstrating that they were “aggrieved” by a violative contract and that the contractual terms they are attacking truly run afoul of a New Jersey or federal right that is “clearly established.”

Many retailers recently have scrutinized their website terms with the TCCWNA in mind, and the pace of new TCCWNA lawsuits has significantly slowed. As for past liability, major national retailers have had motions to dismiss TCCWNA cases fully briefed for several months now.  Both the plaintiffs’ and defense bar in New Jersey had hoped to end 2016 with some clarity about the TCCWNA’s contours.  Unfortunately, that clarity has not yet come.

Two judges have dismissed TCCWNA claims for lack of Article III standing, citing the Supreme Court’s recent decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), that a plaintiff cannot sue in federal court without having suffered “concrete and particularized” harm.  Neither court reached the merits of the plaintiffs’ TCCWNA claims.  The more recent of the two Spokeo dismissals came in October, and the plaintiff immediately appealed to the Third Circuit.

The Third Circuit already has another TCCWNA case before it, fully briefed. In November, the Third Circuit certified two questions arising from that appeal to the New Jersey Supreme Court that are relevant to several pending motions to dismiss:  (1) Is a consumer who received a contract that does not comply with a particular state regulation, but who has not suffered any adverse consequences from that noncompliance, an “aggrieved consumer” able to sue under the TCCWNA?  (2) Does a violation of that regulation alone constitute violation of a “clearly established legal right” and thus provide a basis for relief under the TCCWNA?

The New Jersey Supreme Court has not yet said whether it will rule on those questions, but that Court definitely will rule later this year on two other TCCWNA cases alleging that restaurants violated the law by not clearly posting prices on drink menus and, in one case, charging different prices for the same drink, depending upon whether the drink was served at a table or at the bar.

Those appellate goings-on may be impacting the District Court’s consideration of the other pending motions to dismiss. In early December, the judge presiding over a TCCWNA terms-of-use case against a major retailer “administratively terminated” that company’s motion to dismiss and effectively stayed the case pending the outcome of the two Third Circuit appeals.  No other district judges have taken that step, but motions to dismiss several other significant TCCWNA cases remain sub judice before them.

Decisions in those cases still could come at any time, but it also is possible that retailers must wait until the New Jersey Supreme Court and/or Third Circuit decides the TCCWNA cases before them — possibly not until late 2017 — before we learn how easy, or difficult, it is for plaintiffs to sue under this problematic law.