After the New Jersey Supreme Court raised the bar for claims under the state’s consumer protection law, one of the cases giving rise to the appeal has been voluntarily dismissed, while plaintiffs in the other case on appeal have said their case is still viable.
On Monday the U.S. Court of Appeals for the Third Circuit vacated the dismissal of Spade v. Select Comfort and remanded it to U.S. District Court for further proceedings. The appeals court said the plaintiffs are free to amend their pleadings, if they wish, to comply with the New Jersey Supreme Court’s April 16 ruling in the case.
The Supreme Court said consumer contract terms that run afoul of state laws or regulations can be the basis for claims under the Truth in Consumer Contract, Warranty and Notice Act. But the Supreme Court also said a plaintiff must show there was actual monetary or other harm in order to become eligible for compensation.
A Third Circuit panel composed of Judges Thomas Ambro, Patty Shwartz and Julio Fuentes remanded the Select Comfort case to District Court “because the New Jersey Supreme Court had not previously provided such guidance, and thus Plaintiffs did not have an opportunity to consider it when they drafted their complaint.”
The Supreme Court issued its ruling in response to the Third Circuit’s direct certification of the federal appeals court’s questions on TCCWNA.
In the Select Comfort case, which is still pending, plaintiffs David and Katina Spade claimed that their $9,378 bed was defective, and efforts to fix it were unavailing. Their sales contract said sales are final and returns or exchanges were not allowed. The couple also spent another $4,000 on a replacement bed plus $2,500 in legal fees.
Besides the Direct Comfort case, the Third Circuit questions to the state Supreme Court on TCCWNA were prompted by an appeal in Wenger v. Bob’s Discount Furniture. The plaintiffs in that case voluntarily dismissed their appeal on May 3, conceding that the New Jersey Supreme Court interpretation of TCCWNA “leaves them without legal basis to continue to seek reversal of the district court’s dismissal order,” their lawyer, Henry Wolf of the Wolfe Law Firm in North Brunswick, New Jersey, wrote to the Third Circuit.
In the Wenger case, plaintiffs Christopher Wenger and Eileen Muller claimed a TCCWNA violation because the space for a delivery date was left blank on the sales contract for their love seat. Their suit claimed the state Furniture Delivery Regulations required the delivery date to be filled in on the contract at the time of sale.
“The Wenger case did not allege that the consumer suffered harm from the unlawful provisions in the furniture sale/delivery contract, and so the Supreme Court’s decision construing the TCCWNA to preclude private actions in the absence of alleged harm and causation left the Wenger plaintiffs without any good faith basis to continue the lawsuit,” Wolf said in an email.
The lawsuits were dismissed by U.S. District Judge Peter Sheridan, sitting in Trenton. The plaintiffs appealed to the Third Circuit, prompting that court to ask the state Supreme Court for an interpretation of what it said were two unresolved questions of New Jersey law.
The Third Circuit sought guidance from the Supreme Court on whether a violation of the Furniture Delivery Regulations alone constitutes a violation of a clearly established right or responsibility of the seller under TCCWNA, and thus provides a basis for relief under the TCCWNA. The federal appeals court also sought guidance on whether a consumer who receives a contract that does not comply with the Furniture Delivery Regulations but has not suffered any adverse consequences from the noncompliance is an aggrieved consumer under TCCWNA.
In a unanimous opinion issued in response to the questions, 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.
Lewis Adler, the Woodbury, New Jersey, attorney representing the Spades, said he was “pleased the Third Circuit gave us an opportunity to amend. He said his clients’ damages were with the bed itself, and not the delivery, but he believes he can meet the heightened standard. He was more concerned, however, with if he could meet the court’s heightened standard on behalf of a class of consumers, since his case was brought as a class action.
Brett Carroll of Holland & Knight in Boston, who represented Bob’s, and Andrew Hansen of Fox Rothschild in Minneapolis, representing Select Comfort, did not return calls about the case.