A federal judge in Camden has eighty-sixed a suit charging that Applebee’s and International House of Pancakes illegally leave drink prices off their food menus.
U.S. District Judge Jerome Simandle held Wednesday that the N.J. Truth in Consumer Contract Warranty and Notice Act, which prohibits entering into a consumer contract that includes a provision violating federal or state law, does not cover omissions.
The class-action suit, Watkins v. DineEquity Inc., 11-cv-07182, was filed on behalf of customers who paid for soda, beer, mixed drinks, wine or coffee not priced on their menus at some 96 restaurants in New Jersey. The class was estimated to number several thousand members.
The defendant — DineEquity Inc. of Glendale, Calif., the owner of the Applebee’s and IHOP chains — allegedly violated established New Jersey law requiring point-of-purchase notice of an item’s price.
The plaintiffs contended that the practice of omitting prices was designed to encourage customers to make impulsive purchases and to allow the restaurants to charge excessive prices “based on undisclosed and arbitrary criteria.”
They claimed that the menus meet the definition of a contract, warranty, offer, notice or sign under the statute.
Simandle concluded that they fall under the statute’s definition of an offer, or, alternately, a notice or a sign. But he found the Legislature intended the law to apply only to including illegal provisions, not to omissions.
The Legislature sought to protect consumers who might be deceived by an illegal provision, Simandle said. The sponsor’s statement for the 1981 statute included no examples of deceptive omissions that would fall within its scope. Finding the statute to cover omissions “impermissibly reads in more prohibited conduct than is provided by the statute, even under a liberal construction approach,” he found.
The plaintiffs relied on Dugan v. TGI Friday’s Inc., A-3098-10, in which a customer was charged $2 for a Coors Lite at the bar and then $3.59 for the same beverage in the dining room. Drink prices were not listed on either menu. The appeals court affirmed a denial of a motion to dismiss TCCWNA and Consumer Fraud Act claims.
But Simandle found that in Dugan, the unconscionable practice was the disparity between prices at the bar and in the dining room. Omission of drink prices on the menu was evidence of the misleading practice, not the crux of it.
The plaintiffs in Watkins did not claim any disparity and did not include a Consumer Fraud Act claim, he said.
Simandle dismissed the case, without prejudice, for failure to state a claim on which relief may be granted, but he gave the plaintiffs 21 days to file a second, amended complaint addressing deficiencies he cited in the opinion.
John Kearney of Ballard Spahr in Cherry Hill, who represented DineEquity, IHOP and Applebee’s, declines to comment.
Lead plaintiff Candice Watkins is represented by Wesley Hanna and Sander Friedman, of Friedman’s firm in West Berlin, which also represented the plaintiff in Dugan. Friedman says he and his client have not decided whether to appeal. •