NJ Supreme Court Says Consumers Must Show Actual Harm in TCCWNA Suits

NJ Supreme Court Says Consumers Must Show Actual Harm in TCCWNA Suits

Class-action lawsuits under the Truth-in-Consumer Contract, Warranty & Notice Act (TCCWNA) can be devastating, even for large New Jersey businesses. Thankfully, a recent ruling by the Supreme Court of New Jersey will make it easier for businesses to defend these suits.

In David Spade v. Select Comfort Corp.; Christopher Wenger v. Bob’s Discount Furniture, LLC (A-57-16; 078611), the state’s highest court advised the Third Circuit Court of Appeals that aggrieved consumers must demonstrate that they suffered monetary or other harm in order to be eligible to claim damages under the TCCWNA.

TCCWNA Suit Based on Violation of Furniture Delivery Regulations

The TCCWNA lawsuits at issue premise their claims on alleged violations of regulations governing the sale and delivery of household furniture. The regulations impose a series of delivery and notice requirements on “[a]ny person who is engaged in the sale of household furniture for which contracts of sale or sale orders are used for merchandise ordered for future delivery.”

Under the Truth-in-Consumer Contract, Warranty & Notice Act, “No seller, lessor, creditor, lender or bailee shall in the course of his business 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 after the effective date of this act 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 at the time the offer is made or the consumer contract is signed or the warranty, notice or sign is given or displayed.” The statute defines a consumer as “any individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes.”

Plaintiffs David Spade and Katina Spade (Spade plaintiffs) allege that they purchased furniture from a retail store owned and operated by defendant Select Comfort Corporation (Select Comfort). They allege that Select Comfort’s sales contract included language prohibited by N.J.A.C. 13:45A-5.3(c): a statement that the sale of certain products “are final,” and a statement that as to certain categories of products, “[n]o returns will be accepted” or “[n]o returns or exchanges will be authorized or accepted.” The Spade plaintiffs also allege that the sales contract provided to them did not include language mandated by N.J.A.C. 13:45A-5.2(a) and N.J.A.C. 13:45A-5.3(a).

Plaintiffs Christopher D. Wenger and Eileen Muller (Wenger plaintiffs) allege that they ordered furniture from a store owned by defendant Bob’s Discount Furniture, LLC (Bob’s Discount Furniture). They allege that the “sales document” provided by Bob’s Discount Furniture included language that violates N.J.A.C. 13:45A-5.3(c), which mandates a full refund in the event of a late delivery of the furniture ordered. The Wenger plaintiffs also contend that the sales document did not entirely conform with N.J.A.C. 13:45A-5.2(a) and N.J.A.C. 13:45A-5.3(a) because language required by those provisions appeared in a font different from the “ten-point bold face type” that the regulations prescribe.

Both sets of plaintiffs originally filed their claims in the New Jersey Superior Court. The suits were subsequently removed to the U.S. District Court for the District of New Jersey. After the district court ruled in favor of the furniture companies, the consumers appealed. The Third Circuit asked New Jersey’s highest court for guidance on the following questions:

1. Does a violation of the Furniture Delivery Regulations alone constitute a violation of a clearly established right or responsibility of the seller under the TCCWNA and thus provides a basis for relief under the TCCWNA?
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?

NJ Supreme Court’s Advisory Opinion on TCCWNA

The New Jersey Supreme Court answered “yes” to the first question and “no” to the second. “We hold that the inclusion of language prohibited [by regulations] in contracts of sale or sale orders for the delivery of household furniture may alone give rise to a violation of the … TCCWNA,” Justice Anne Patterson wrote on behalf of the court. “We further hold that a consumer … who suffers no monetary or other harm … is not … entitled to a remedy under the TCCWNA,” she said.

With regard to the first question, the New Jersey Supreme Court rejected the companies’ contention that violation of the Furniture Delivery Regulations can’t serve as the basis for a TCCWNA claim. According to the court, “a furniture seller’s inclusion in a consumer sales contract or agreement of language prohibited by N.J.A.C. 13:45A-5.3(c) may alone constitute a violation of a ‘clearly established legal right of a consumer or responsibility of a seller’ under [TCCWNA], and thus may provide a basis for relief under the TCCWNA.”

As for the second question, the New Jersey Supreme Court sided with the defendants. “In 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.” Justice Patterson further explained: “In the setting of these appeals, if a consumer has entered into a sales contract containing a provision that violated N.J.A.C. 13:45A-5.3, but his or her furniture was delivered conforming and on schedule, and he or she has incurred no monetary damages or adverse consequences, that consumer has suffered no harm.”

The court highlighted that it did not “view that harm to be limited to injury compensable by monetary damages.” To clarify, Patterson provided the following hypothetical: “If, for example, a furniture seller fails to timely deliver a consumer’s furniture, and the consumer would have sought a refund had he or she not been deterred by the ‘no refunds’ language prohibited by N.J.A.C. 13:45A-5.3, that consumer may be an ‘aggrieved consumer’ entitled to a civil penalty under [TCCWNA].”

Key Takeaway for NJ Businesses

The opinion is good news for all consumer-facing businesses operating in New Jersey. In requiring that actual harm is needed to wage claims under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act, businesses will be able to more easily defend such suits and win dismissals earlier in the litigation process. 

If you have any questions, please contact us

If you have questions about whether your consumer contracts could result in liability under the TCCWNA or if you would like to discuss the matter further, please contact me, Robert Levy, or the Scarinci Hollenbeck attorney with whom you work at 201-806-3364.