Shelton v. Restaurant.com, A-123 September Term 2010; opinion by Cuff, P.J.A.D., temporarily assigned; decided July 9, 2013. On certification of questions of law from the U.S. Court of Appeals for the Third Circuit. DDS No. 11-1-0570 [34 pp.]
Restaurant.com Inc. is an Internet business that markets, advertises and sells discount certificates redeemable at participating restaurants. Customers select and pay for the certificates online and then print the certificates for redemption at the restaurant.
Each certificate provides on its face its value in dollars, the name and address of the restaurant where the certificate may be redeemed, any limitations on redemption imposed by the restaurant, and a standard set of provisions imposed by Restaurant.com.
Plaintiffs Larissa Shelton and Gregory Bohus filed a class action alleging that the certificates they purchased from Restaurant.com violate, inter alia, the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act, 56:12-14 to -18. Restaurant.com removed the matter to the U.S. District Court and filed a motion to dismiss. District Judge Joel Pisano determined that, inter alia, the certificates provide a contingent right for discounted services that does not constitute the purchase of property or service that is primarily for personal, family or household purposes and, therefore, that plaintiffs are not "consumers" under the TCCWNA and the certificates are not "consumer contracts." He dismissed the action.
Plaintiffs appealed, and the Third Circuit Court of Appeals certified two questions to the New Jersey Supreme Court pursuant to Rule 2:12A-1. Those questions were reformatted pursuant to 2:12A-2 to be (1) whether Restaurant.com's coupons constitute "property" under the TCCWNA; (2) if "property," are they "primarily for personal, family or household purposes"; and (3) whether sale of the coupons constituted a written consumer contract and whether the coupons gave or displayed any written consumer warranty, notice or sign under N.J.S.A. 56:12-15.
Held: The TCCWNA applies to tangible and intangible property and certificates purchased through an Internet marketer for use at restaurants participating in its network are within the scope of the statute. Such certificates are intangible property primarily for personal, family or household use, thereby qualifying plaintiffs, who purchased the certificates online, as consumers. The certificates are "consumer contracts" and the standard terms they contain are "notices" subject to the TCCWNA.
The purpose of the TCCWNA is to prevent deceptive practices in consumer contracts by prohibiting the use of illegal terms or warranties. It provides that no seller shall in the course of his business offer to any consumer or enter into any written consumer contract or give any written consumer warranty, notice or sign which includes any provision that violates any clearly established legal right of a consumer.
Thus, the TCCWNA is not applicable unless plaintiffs are consumers. N.J.S.A. 56:12-15 provides that a "consumer" is "any individual who buys … any money, property or service which is primarily for personal, family or household purposes." It does not define "property" but does expressly exclude real property. Restaurant.com argues that the TCCWNA applies only to tangible property.
The court says N.J.S.A. 1:1-1 provides general rules of construction and 1:1-2 to -2b includes definitions of commonly used terms that are to be applied unless otherwise expressly provided or there is something in the subject or context of the statute repugnant to such construction. Thus, because the TCCWNA does not define "property," under 1:1-2, the default definition of property applies.
As generally defined, "property" includes personal property, which expressly includes tangible and intangible property. Other than the exclusion of real estate, the TCCWNA does not expressly exclude personal property. Thus, the court says the TCCWNA does not exclude intangible property.
As to whether including personal property within the meaning of property is repugnant to the TCCWNA, the court looks to the act's legislative history. The act was designed to prohibit businesses from offering or using provisions in consumer contracts, warranties, notices and signs that violate any clearly established right of a consumer. It was informed to some extent by federal regulatory action, including the Magnuson-Moss Act. However, unlike the federal act, the TCCWNA does not expressly limit its scope to tangible property. Rather, the Legislature's exclusion of real property from the TCCWNA strongly suggests that it intended to include personal property, which in turn includes intangible property. As such, there is nothing repugnant to the terms or history of the TCCWNA about construing "property" to include intangible property.
Restaurant.com argues that "primarily for personal, family or household purposes" excludes intangible property from the TCCWNA. The court notes that while many New Jersey statutes use the phrase in describing tangible property, several statutes use it in the context of intangible property. These examples reveal that the Legislature uses the phrase to describe the use of the property rather than its nature. Thus, its use in 56:12-15 cannot be interpreted to exclude intangible property from the TCCWNA's scope.
The court next rejects Restaurant.com's argument that the certificates confer only an intangible, inchoate and contingent right to a discount that does not fall under the TCCWNA. It says neither the terms and conditions of use nor the contingent element of whether a purchaser will use the certificate negates the nature of the certificate as personal property.
Moreover, the very nature of the certificates underscores that they are acquired for personal, family, or household use. since dining out and pursuing entertainment are quintessential personal, family or household pursuits.
The court holds that the certificates are "written consumer contracts." In doing so, it reads the TCCWNA in pari materia with the Plain Language Act, N.J.S.A. 56:12-1 to -13, which defines "consumer contract" as a written agreement in which an individual purchases personal property for personal, family or household purposes, and concludes that the certificates fall under that definition. It also notes that the transaction has all the basic features of a contract: offer, acceptance, consideration and performance by both parties. Further, under the Uniform Electronic Transactions Act, contract status cannot be denied solely because the transaction was electronic. Nor does the involvement of a third-party restaurant alter this conclusion.
Finally, applying the ordinary meaning of "notice," the court concludes that the announcement on the certificates' face conditioning their use is a notice given by the seller in the course of acquisition of property that brings the transaction under the TCCWNA.
Chief Justice Rabner, Justices LaVecchia, Albin, Hoens and Patterson, and Judge Rodriguez, temporarily assigned, join in Judge Cuff's opinion.
For appellants — Bruce D. Greenberg (Lite DePalma Greenberg, The Wolf Law Firm and Christopher J. McGinn; Greenberg, McGinn, Andrew R. Wolf, Henry P. Wolfe, Katrina Carroll and Elliot M. Gardner on the briefs). For respondents — Michael R. McDonald (Gibbons; McDonald and Damian V. Santomauro on the briefs). For amicus curiae Consumers League of New Jersey — Mark R. Cuker (Williams Cuker Berezofsky).