Businesses engaged in advertising and sales practices involving New Jersey consumers have been contending with an increase in the number of class action lawsuits brought under New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA, pronounced “tic-wun-uh”). TCCWNA lawsuits have targeted a broad range of consumer-facing practices under its two operative Sections. These cases are particularly appealing to plaintiffs’ lawyers, because the statute allows for recovery of damages of $100 per violation plus attorneys’ fees. (Legal Alert: Hit ‘em Where They Ain’t – TCCWNA Class Actions Target Broad Range of Consumer-Facing Practices) 

Prior Eversheds Sutherland legal alerts have focused on when—and how—to attack TCCWNA claims for failing to plead a concrete and particularized injury, as plaintiffs must do to establish standing under Article III of the Constitution. (Legal Alert: Seller Beware? Rise of Consumer Class Actions Under New Jersey’s TCCWNA Statute) Fortunately, defendants in federal and state court have other tools at their disposal to defend against claims brought under both Sections 15 and 16 of the plaintiff-friendly statute. 

Section 15 and the “Plain Meaning” of TCCWNA Language

To state a claim under Section 15 of TCCWNA, a plaintiff must allege that: (1) it is a consumer; (2) the defendant is a “seller, lessor, creditor, lender or bailee”; (3) the defendant offered or entered into a contract with the plaintiff (or displayed a written sign or notice); which (4) violated a “clearly established legal right.” The established legal right can be state or federally based, and does not need to have its own private remedy. Although TCCWNA’s terms are not defined, defendants have successfully defended Section 15 claims by showing they fall outside the plain meaning of those terms. 

For example, the court in Boyko v. Am. Int’l Grp., Inc., No. CIV. 08-2214 RBK/JS, 2009 WL 5194431, at *5 (D.N.J. Dec. 23, 2009), dismissed a TCCWNA claim against a debt collector, finding that the defendant collector was not, under the plain language of the statute, engaged in the selling, leasing, lending or bailing to the consumer. The court further found that the defendant debt collector could not be held liable for the alleged acts of its co-defendants, which were covered under the statute. Looking again to the plain meaning of the statutory language, the court held that even if the debt collector had been found to be an agent of the “covered entity” co-defendant, it could not be liable without violating TCCWNA on its own.

The defendants in Shah v. Am. Express Co., et al., No. CIV.A.0900622(JAP), 2009 WL 3234594, at *3 (D.N.J. Sept. 30, 2009), attacked the plaintiffs over whether they satisfied the plain meaning of “consumer.” The putative class action plaintiffs alleged that they received solicitations from the defendants to apply for credit cards. According to the plaintiffs, the solicitations violated TCCWNA because they did not specify whether certain fees that would be charged by the credit card companies were applicable in New Jersey. The court dismissed the complaint, finding that because the plaintiffs had not purchased anything from the defendants (nor signed up for the credit cards), they did not fall within the definition of “consumers” under the plain language of TCCWNA. 

Similarly, in Friest v. Luxottica Grp. S.p.A., No. 216CV03327SDWLDW, 2016 WL 7668453, at *9 (D.N.J. Dec. 16, 2016), the court held that an aggrieved consumer ought to be “one who is suffering the effects of a violation.” In Friest, because the plaintiff never made a purchase from the defendant, and thus could not have been harmed, he was not “aggrieved” as required to state a claim under the plain language of TCCWNA’s Section 15. 

Section 16 and the Contract Terms at Issue

Under Section 16 of TCCWNA, a successful plaintiff must plead the existence of: (1) a contract, notice or sign that is or can be used across multiple jurisdictions; (2) which states that some of its terms may not be enforceable in some jurisdictions, but (3) does not explicitly state which terms are not enforceable in New Jersey. In other words, if a multi-jurisdictional contract includes broad waiver language applicable generically to unidentified states, it must also specifically identify which terms do not apply in New Jersey. Numerous lawsuits invoking Section 16 have attacked companies’ online terms and conditions. Section 16 also has been asserted in suits targeting various kinds of consumer contracts and notices. (Note: Section 16 does not apply to warranties.) 

The defendants in Kendall v. Cubesmart L.P., No. CV156098FLWLHG, 2016 WL 1597245, at *7 (D.N.J. Apr. 21, 2016), faced claims under Sections 15 and 16 of TCCWNA, along with other statutory claims. The putative class action plaintiff filed suit when he learned that the terms of his storage space lease, and its accompanying rider, failed to cover water damage to his belongings. Among other things, the plaintiff alleged that the terms of the lease and the rider violated Sections 15 and 16 of TCCWNA. The majority of the plaintiff’s Section 15 claims survived the defendants’ motion to dismiss, but the court dismissed his Section 16 claims. 

With respect to the lease, the court found that although the lease document could be used across multiple jurisdictions and did not explicitly state which of its terms were unenforceable in New Jersey, the claim failed because the lease did not state that some of its terms would be unenforceable in some jurisdictions. The plaintiff argued that terms like “or otherwise available at law” and “to the extent permitted by law” implied that some terms may be unenforceable in certain jurisdictions. The court found that the opposite was true: those terms were included in order to conform to New Jersey law and avoid waiving any legal rights not explicitly set forth in the lease. With respect to the rider, the court found that the document was New Jersey-specific, and therefore could not be used across multiple jurisdictions. Thus, the rider did not violate TCCWNA’s Section 16.

Defendants facing TCCWNA class actions face potential liability, particularly because the value of these lawsuits can easily reach into the millions of dollars. The good news is that a variety of defenses are available for these suits, and not only at the Rule 12 (or its state law equivalent) motion to dismiss stage discussed here. That said, the best way to avoid TCCWNA liability is to be proactive. Simple compliance steps—changes to contract language and online terms and conditions, for example—will often allow companies to avoid the risk of costly litigation.