On July 27, 2018, the Appellate Division of the New Jersey Superior Court affirmed the dismissal of four separate plaintiffs’ claims under Section 16 of New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA).
Section 16 of the statute provides (among other things) that a consumer contract may not “state that any of its provisions is 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.” As our Class Actions and Consumer Contracts teams have explained in a series of alerts—which are available here and here—this statute has been invoked in a number of “gotcha” class actions challenging the wording of savings clauses, severability provisions, and other common components of consumer contracts.
Drinker Biddle has been at the forefront of the fight against the misuse of class actions generally and the TCCWNA specifically. Indeed, this is now the second significant victory to result directly from our team’s amicus curiae efforts in TCCWNA cases.
Earlier this year, the New Jersey Supreme Court adopted our team’s argument that, in light of the dictionary definitions that were contemporaneous with the statute’s enactment, plaintiffs are not “aggrieved” consumers—and thus do not have statutory standing to seek civil penalties—unless they have suffered a concrete harm. See Spade v. Select Comfort, 232 N.J. 504 (2018). And now the Appellate Division has confirmed that the concrete harm requirement applies not only to claims under Section 15 of the statute (which was at issue in Spade) but also to claims under Section 16 of the statute (which was at issue in Duke). See Opinion at 21 (“Concerning the Supreme Court’s holding in Spade, we discern no significant difference between Sections 15 and 17 on the one hand, and Sections 16 and 17 on the other. . . .”). Drinker Biddle’s client intervened in the appeal—well before the New Jersey Supreme Court’s decision in Spade—in order to assert the “aggrieved consumer” argument.
This is a significant victory for TCCWNA defendants because it confirms that—irrespective of the theory of liability—a plaintiff cannot state a claim for civil penalties merely by virtue of having received a contract that violates the statute.