The New Jersey Supreme Court on Monday delivered what appears to be largely good news to furniture companies defending federal consumer class actions, holding that actual harm is needed to make out claims under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act.
In a unanimous opinion issued in response to questions posed by the U.S. Court of Appeals for the Third Circuit, the court said sales or delivery contract terms that run afoul of regulations governing furniture delivery (such as “no refunds” language) can be the basis for claims under the TCCWNA. But in order to be considered an “aggrieved consumer,” a plaintiff must show there was actual monetary or other harm in order to become eligible for compensation.
“We hold that the inclusion of language prohibited [by regulations] in contracts of sale or sale orders for the delivery of household furniture may alone give rise to a violation of the … TCCWNA,” wrote Justice Anne Patterson for the court.
“We further hold that a consumer … who suffers no monetary or other harm … is not … entitled to a remedy under the TCCWNA,” she said.
The cases involved two consumers who claimed their sales contracts contained affirmative misrepresentations, prohibited by regulations contained in N.J.A.C. 13:45A-5.2 and -5.3. The first plaintiff, David Spade, filed a claim against Select Comfort Corp. The second, Christopher Wenger, filed a claim against Bob’s Discount Furniture.
The lawsuits originally were filed in state Superior Court, but were removed to the U.S. District Court for the District of New Jersey. The lawsuits were dismissed by U.S. District Judge Peter Sheridan, sitting in Trenton.
The plaintiffs appealed to the Third Circuit, and that court asked the state Supreme Court for an interpretation of what it said were two unresolved questions of New Jersey law.
Consumer-rights and plaintiff bar amici backed the plaintiffs’ position, while tort-reform and business groups supported the defendants, according to the decision.
On the first question, the court rejected the defendants’ argument that an administrative violation can’t give rise to a TCCWNA claim, The court concluded that “a furniture seller’s inclusion in a consumer sales contract or agreement of language prohibited by N.J.A.C. 13:45A-5.3(c) may alone constitute a violation of a ‘clearly established legal right of a consumer or responsibility of a seller’ under [TCCWNA], and thus may provide a basis for relief under the TCCWNA.”
On the second question, Patterson, referring to statutory language, said: “In the absence of evidence that the consumer suffered adverse consequences as a result of the defendant’s regulatory violation, a consumer is not an ‘aggrieved consumer’ for purposes of the TCCWNA.”
She added: “In the setting of these appeals, if a consumer has entered into a sales contract containing a provision that violated N.J.A.C. 13:45A-5.3, but his or her furniture was delivered conforming and on schedule, and he or she has incurred no monetary damages or adverse consequences, that consumer has suffered no harm.”
The court noted that it did not “view that harm to be limited to injury compensable by monetary damages,” Patterson wrote. “If, for example, a furniture seller fails to timely deliver a consumer’s furniture, and the consumer would have sought a refund had he or she not been deterred by the ‘no refunds’ language prohibited by N.J.A.C. 13:45A-5.3, that consumer may be an ‘aggrieved consumer’ entitled to a civil penalty under [TCCWNA].”
Spade is represented by Lewis Adler, who heads a firm in Woodbury. He could not be reached for comment. Wenger’s attorney, Andrew Wolf, who heads a firm in North Brunswick, said only that he was reviewing the ruling and could not comment.
Brett Carroll of the Boston office of Holland & Knight represented Bob’s Discount Furniture. He issued a brief statement. “We are grateful for the Supreme Court’s thorough consideration of this issue, which is of great importance to consumers and the retail industry alike,” Carroll said.
Select Comfort’s attorney, Andrew Hansen, of the Minneapolis office of Fox Rothschild, was away from his office and could not be reached.
The case now returns to the Third Circuit for consideration.