New Jersey Supreme Court’s One-Two Punch with Spade/Wenger and Dugan Decisions Scores Knockout of TCCWNA Class Actions

by McGuireWoods LLP
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For years, companies doing business in New Jersey have been plagued by an archaic statute— the Truth-in-Consumer-Contract-Warranty-and-Notice-Act (“TCCWNA,” pronounced Tick-wa-nah)—adored only by consumer class action lawyers.  Among other things, the statute prohibits companies from inserting provisions in their customer contracts and other notices that include harmless phrases like “void where prohibited by law” without also disclosing whether the provision is void in New Jersey.  To be fair, the statute also prohibits companies from including provisions that are clearly prohibited by law (think of a contract with a furniture dealer that tells the customer no refunds are allowed or a chainsaw manufacturer’s warranty that says it won’t be liable for sawing off your arm even in the event of a chainsaw malfunction).

The problem with the statute, however, is that it provides for a minimum $100 penalty per violation.  While the statute garnered little attention in the first 25 or so years of its enactment, an opportunistic plaintiffs’ bar began having a field day with this seemingly strict-liability statute.  Countless businesses fell victim to class action lawsuits and believed that they had no choice but to settle, lest they risk the substantial penalty multiplied thousands of times over based on the number of customers they had.  What’s more, the plaintiffs’ bar believed that they could bring suit regardless of any actual injury to a consumer, even though the statute allows recovery only for “aggrieved consumers.”  The word “aggrieved” should mean hurt, harmed, injured, etc., right?  But that word for a long time was overlooked.

No more.  On April 16, 2018, the New Jersey Supreme Court squarely held in Spade v. Select Comfort Corp. and Wenger v. Bob’s Discount Furniture LLC that a plaintiff must prove harm to move forward with a TCCWNA claim. While you don’t actually have to saw off your arm to prove harm, the Supreme Court made clear that you have to suffer some sort of adverse consequence to state a claim.  In the furniture example above, if you were misled into believing you weren’t allowed to return defective furniture, that too would qualify as harm.

A few months earlier, the same court issued another helpful ruling, specifically deciding in Dugan v. TGI Fridays, Inc. the proof required to bring a TCCWNA class action.  There, the Supreme Court said that TCCWNA class actions could not be certified because the requirement that a plaintiff be an “aggrieved consumer” gives rise to individual issues that predominate over any common ones.  More specifically, the court found that a plaintiff is not an “aggrieved consumer” unless he or she—at a minimum—received and “interacted” with the document at issue (in that a case a restaurant menu that did not provide drink prices).  Thus, to sustain a class action under the TCCWNA, the plaintiff must now show not only that every class member interacted with the document (i.e., actually read it), but also that they were somehow harmed by reading it.

These cases are essentially the one-two punch the defense bar was hoping for.  No longer can plaintiffs bring these no-injury class actions and expect to hold hostage companies who do business in New Jersey.  While plaintiffs can still bring TCCWNA cases, those will be reserved for the truly injured and deserving, and not the plaintiffs’ class action bar.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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