What is TCCWNA?
New Jersey enacted TCCWNA in 1981 to prohibit companies from including provisions in their consumer contracts and notices that violate the legal rights of consumers. The New Jersey Legislature felt that such provisions, while unenforceable in court, could nevertheless mislead consumers and dissuade them from asserting their rights vis-a-vis companies from whom they purchased products or services.
TCCWNA has two operative provisions: sections 15 and 16. Section 15 bars a seller from including in a consumer contract or notice a provision that violates a consumer's "clearly established" legal rights. Section 16 recognizes that many contracts state that the enforceability of certain provisions may vary by state (e.g., "void where prohibited by law"). Except in the case of warranties, section 16 requires sellers including such qualifying language in their contracts to also state whether such provisions are enforceable in New Jersey. If a contract or notice violates either sections 15 or 16, TCCWNA allows "aggrieved" consumers to sue for "minimum" civil penalties of $100, even in the absence of compensable injury.
TCCWNA largely sat forgotten on the statute books until a decade ago, when plaintiffs' lawyers married its civil penalty provision to the class action device to multiply the $100 penalty by each consumer who saw or signed the challenged notice or contract. TCCWNA has thereby joined other statutes that provide fertile soil for class actions -- such as the Telephone Consumer Protection Act, the Fair and Accurate Credit Transaction Act, and the Fair Credit Reporting Act, which similarly impose civil penalties for receipt of "junk" faxes, unwanted robocalls, and certain kinds of privacy violations, even in the absence of any compensable injury.
What is this new wave of TCCWNA class actions?
TCCWNA class actions initially focused on sales physically made in New Jersey, either through door-to-door sales calls or at brick-and-mortar stores located in the State. Many of these cases were inspired by the successful result achieved by the plaintiff in United Consumer Financial Services Company v. Carbo, 410 N.J. Super. 280 (App. Div. 2009), where a New Jersey appellate court affirmed a judgment awarding $100 to each of 16,845 class members who signed contracts for the installment sale of vacuum cleaners ($1,685,000 in total) and directed the trial court to consider an additional award of nearly $1,000,000 in attorney's fees and costs. Similar TCCWNA class actions were then filed against businesses that employ standard-form contracts signed by thousands of customers -- such as self-storage unit providers, health clubs, and rental car companies. Many of these cases resulted in class settlements and lucrative fees for class counsel, and thereby served to encourage further filings.
TCCWNA plaintiffs typically contend that the following provisions either violate a consumer's "clearly established right" under section 15 or suggest that enforceability varies by jurisdiction, in violation of section 16:
1. Broad limitation-of-liability provisions. The most common TCCWNA claim is a contention that the seller over-reached in purporting to exculpate itself from all liabilities to the consumer or website user -- including claims for products sold through the website, claims for reckless or intentional wrongdoing, or claims allowed by consumer protection statutes (such as the New Jersey Consumer Fraud Act).
2. Provisions waiving claims for punitive damages or product liability. TCCWNA plaintiffs challenge provisions that waive the user's right to seek punitive damages, which they say violates public policy and the New Jersey Punitive Damages Act. Similarly, plaintiffs challenge provisions that, they say, limit the company's liability for defective or unsafe products, which plaintiffs contend is unenforceable under the New Jersey Product Liability Act.
3. Provisions limiting available damages. Plaintiffs argue that broadly worded provisions seeking to limit the website provider's liability for incidental, consequential, indirect, or direct damages run afoul of TCCWNA because they purport to limit a consumer's ability to recover such damages under consumer protection statutes (such as the Consumer Fraud Act).
5. Provisions which might suggest jurisdictional differences in enforcement. TCCWNA plaintiffs commonly challenge phrases such as "void where prohibited law," "except where prohibited by law," "to the fullest extent allowed by law," "as permitted by law," or "unless prohibited by law." Plaintiffs contend that any such provisions violate TCCWNA section 16.
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|Publication:||Inside Counsel Breaking News|
|Date:||Jun 6, 2016|
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