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The New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA): A trap for the unwary seller.

Summary: While sellers seem to be familiar with the danger of being sued by a New Jersey consumer under the New Jersey Consumer Fraud Act, N.J.S.A. ...

While sellers seem to be familiar with the danger of being sued by a New Jersey consumer under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (the CFA), many sellers are woefully unaware of the far greater danger for potential exposure under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14, et seq. While traditionally the CFA has been a favorite go-to for plaintiffs and their counsel because of the availability of treble damages and attorney's fees and costs to successful litigants, businesses would be wise to take heed of the TCCWNA, which could expose them to far greater liability than the CFA. In contrast to the CFA, which requires proof of an ascertainable loss proximately caused by a seller's deceptive conduct (see Cox v. Sears Roebuck & Co., 138 N.J. 2, 24 (1994)), the TCCWNA affords standing to consumers who have suffered no financial loss or injury of any sort, against sellers who have acted in good faith and with no intent to mislead. All that is necessary for a plaintiff to prevail under the TCCWNA is that the plaintiff prove that he or she was provided with, or even shown, a warranty, contract, sign, or notice of virtually any sort pertaining to personal, family or household merchandise that includes language that violates New Jersey or federal law in some respect.

According to the TCCWNA, N.J.S.A. 56:12-15:

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.

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To prove a TCCWNA claim, a plaintiff must show that: (1) he or she is a consumer or potential consumer within the statute's definition; (2) the defendant is a seller; (3) the defendant (a) offers or enters into a written consumer contract, or (b) gives or displays any written consumer warranty, notice, or sign; and (4) the offer or written contract, warranty, notice or sign includes a provision that violates any clearly established legal right of a consumer or responsibility of a seller. MB Imps., Inc. v. T&M Imps., LLC, 2012 U.S. Dist. LEXIS 168693, *21 (D.N.J. Nov. 28, 2012) (citing Watkins v. DineEquity, Inc., 2012 U.S. Dist. LEXIS 122677, 6-7 (D.N.J. Aug. 28, 2012) and Smith v. Vanguard Dealer Servs., LLC., 2010 N.J. Super. Unpub. LEXIS 3052, 5-6 (App. Div. 2010)).

The definition of a "consumer" or "prospective consumer" under the TCCWNA is determined by the nature of the merchandise offered for sale, not by the consumer's reasons for making or considering making the purchase. Under the TCCWNA a "consumer" is "any individual who buys...any... property...which is primarily for personal, family or household purposes." N.J.S.A. 56:12-15. As long as the product offered for sale is used primarily for those purposes, the plaintiff has standing. It is of no moment how or why the consumer used or would have used the product; it is only important that the goods are offered for sale for such purposes.

Any business that plays a role in the creation, marketing, or dissemination of the consumer product can be a "seller" that displays a notice "in the course of his business" within the meaning of N.J.S.A. 56:12-15. "The ordinary meaning of the phrase 'in the course of' is broad." Smith, 2010 NJ. Super. Unpub. LEXIS 3052, 6. A business that is involved in the production of the consumer good, or is a link in chain of distribution, advertising, or sale of the consumer good arguably constitutes a "seller" for purposes of the TCCWNA if can be said that the business "was not a stranger" to the transaction, "lent its assistance to the transaction," or "obtained a benefit from the transaction." See id.

The third element of a TCCWNA claim can be dangerously easy for a plaintiff to satisfy. By its very terms, the TCCWNA grants standing to "prospective consumers" against sellers who "give or display" "any written consumer contract, warranty, notice or sign" that violates the law. In short, if a seller simply displays to a potential buyer a contract, sign, advertisement, or other sort of "notice" that includes some provision or statement that violates New Jersey or federal law in any respect, the seller could be liable to the consumer, regardless of whether the provision is illegal, void, unenforceable, or the like. Moreover, because the statute gives standing to "potential consumers," reliance is not necessary, and the seller can be liable to a consumer who has suffered no actual out-of-pocket loss or injury to their person or property, who has done no business with the seller, and who otherwise has done nothing in furtherance of taking the seller up on its offer. See McGarvey v. Penske Auto. Group, Inc., 639 F. Supp. 2d 450, 458 (D.N.J. 2009) (quoting Barrows v. Chase Manhattan Mortg. Corp., 465 F. Supp. 2d 347, 362 (D.N.J. 2006) and Watkins, 2012 U.S. Dist. LEXIS 122677, 15-16; Johnson v. Wynn's Extended Care, Inc., 2012 U.S. Dist. LEXIS 166527 (D.N.J. Nov. 20, 2012) ("Unlike the CFA, a plaintiff asserting a claim under TCCWNA need not have suffered any actual damages.").

Virtually any form of writing shown to a prospective consumer in connection with the sake of offer for sale of a consumer product can be a "notice" under the TCCWNA. Watkins, 2012 U.S. Dist. LEXIS 122677, 17; see Smith, 2010 N.J. Super. Unpub. LEXIS 3052 (display under the TCCWNA means "[t]o put forth for viewing"). A host of writings have been found to constitute notices, including menus (Watkins), print and direct mail casino advertisements (Smerling v. Harrah's Entertainment, Inc., 389 N.J. Super. 181, 193 (App. Div. 2006)), loan reinstatement and payoff letters (DeHart v. U.S. Bank, N.A. ND, 811 F.Supp.2d 1038, 1051 (D.N.J. 2011)), gift cards (Delaney v. Landry's Restaurants, Inc., 2009 WL 3446807, at *2 (D.N.J. Oct. 21, 2009)), and direct mail credit card solicitations (Shah v. Am. Express Co., 2009 U.S. Dist. LEXIS 90562, 3 (D.N.J. Sept. 30, 2009)). It isn't a far stretch of the legal imagination to think that billboards, posters, mobile wrap advertising, and virtually any form of direct mail, electronic mail, or other readable media or social media advertisement could constitute an actionable notice under the TCCWNA if it is false or otherwise violates of the law.

A seller who violates the TCCWNA is liable "for a civil penalty of not less than $100.00 or for actual damages, or both at the election of the consumer, together with reasonable attorney's fees and court costs." N.J.S.A. 56:12--17; see Slack v. Suburban Propane Partners, L.P., 2010 U.S. Dist. LEXIS 135530 (D.N.J. Dec. 22, 2010)("any person who violates the TCCWNA is liable for a $100 civil penalty or actual damages, at the election of the consumer"); McGarvey, 639 F.Supp.2d at 450 (denying motion to dismiss TCCWNA claim finding that although the lack of actual damages was fatal to plaintiff's Magnuson Moss Warranty Act claim, plaintiff's challenge to defendant's allegedly unlawful tying arrangement was cognizable under the TCCWNA). In both Slack and McGarvey, the defendants argued that the plaintiffs failed to state a claim because they suffered no actual damages, but the courts rejected this argument on the grounds that the plain language of the TCCWNA statute provides for statutory damages regardless of injury.

When construing New Jersey laws, like the TCCWNA, New Jersey courts consider the legislative history of the law. N.J.S.A. 1:1-1; State v. Gandhi, 201 N.J. 161, 176 (2010); State v. Smith, 197 N.J. 325, 332 (2009); DiProspero v. Penn, 183 N.J. 477, 492 (2005). The intent of the Legislature to favor consumers by offering them a broad remedy as a means of deterring and punishing offending sellers is clear from the Legislative history of the TCCWNA. The Legislative Statement accompanying the introduction of the TCCWNA bill in the New Jersey General Assembly demonstrates this. The original bill was introduced in the New Jersey Senate on May 1, 1980 as Bill No. A1660. N.J.S.A. 56:12-14 et seq. The statement accompanying the version of the bill as edited by the Commerce, Industry & Professions Committee reads:

Section 4, as amended by the committee, provides that a business which violates the provisions of this bill would be liable to the aggrieved consumer for a civil penalty of not less than $100 if the consumer was not injured by such a violation and for a civil penalty and actual damages if he was injured by such a violation.

Statement to Assembly No. 1660, N.J.S.A. 56:12-14 et seq., June 9, 1980 (emphasis added). This shows that the legislature clearly intended consumers to have the ability to collect statutory damages for any violation of the TCCWNA regardless of whether they were actually injured by the violation.

Further, the legislative history reveals that while the original bill contained the phrase "civil damages" in Section 4, line 3, the final bill replaced that phrase with "civil penalty." N.J.S.A. 56:12-17. By imposing a civil penalty instead of granting recovery for damages, the Legislature signaled its intent for the TCCWNA to prohibit any of the described conduct by a seller regardless of whether the consumer relied on and was "damaged" by the offending notice.

Given that the TCCWNA allows a minimum civil penalty of $100 per violation to plaintiffs who have no reliance and no actual damages, it is easy to see how a seller's casual yet widely disseminated Facebook post, Tweet, or other social media "notice" that turns out to be unintentionally false or violative of the law in one or more respects can result in substantial civil penalties against the seller -- especially where a plaintiff brings a class action suit seeking penalties for each separate violation to each consumer and prospective consumer that saw the notice. Those civil penalties, coupled with the potential recovery of attorney's fees and costs, make TCCWNA litigation particularly attractive and lucrative for attorneys, and in turn, potentially very costly for sellers who make innocent mistakes.

New Jersey consumer protection statutes are among "the strongest consumer protection laws in the nation," and have "been propagated by an uninterrupted history 'of constant expansion of consumer protection.'" Dugan v. TGI Friday's, Inc., 2011 N.J. Super. Unpub. LEXIS 2649, 7 (N.J. Sup. Ct. App. Div. Oct. 25, 2011) (citing Gennari, 148 N.J. at 604 and Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 555 (2009)). Sellers would be wise to consider the far-reaching scope of TCCWNA in drafting any other form of written or electronic contract, sign, advertisement, display, or notice.

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Publication:Inside Counsel
Date:Sep 18, 2015
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