Discount restaurant coupons fall within the province of a New Jersey law policing consumer-goods contracts, the state Supreme Court held Tuesday.
The justices said that customers have a remedy under the Truth-in-Consumer Contract, Warranty and Notice Act for coupon issuer's improper restrictions on consumer rights.
The opinion, in Shelton v. Restaurant.com, A-123-10, came in response to a request by the U.S. Court of Appeals for the Third Circuit, which is reviewing the dismissal of a class-action suit against Restaurant.com, an online coupon seller.
Lead plaintiffs Larissa Shelton and Gregory Bohus claim that the website, by stating the coupons were good for only a year, violated a state law requiring that gift certificates and gift cards be redeemable for two years.
They sued in Middlesex County Superior Court, seeking penalties under the TCCWNA. After the case was removed to federal court on diversity grounds, U.S. District Judge Joel Pisano dismissed it, finding the TCCWNA applies only to tangible property.
U.S. Circuit Judges Kent Jordan, Joseph Greenaway Jr. and Leonard Garth heard oral arguments in May 2012 but postponed a decision while asking the Supreme Court for guidance.
In response, the Supreme Court held that the TCCWNA is meant to encompass both tangible and intangible property. Gift certificates are considered to be intangible property, and Restaurant.com's coupons function the same way as gift certificates, the court said.
"Plaintiffs and other purchasers paid money to Restaurant.com, which in turn issued a certificate for use at a participating restaurant. Upon presentation, the purchaser receives goods, namely food and drinks, at a discounted price," Judge Mary Cuff wrote for the court.
She added that online transactions are covered by the 2001 Uniform Electronic Transaction Act, N.J.S.A. 12A:12-1 to -26. "The transaction has all the basic features of a contract: offer, acceptance, consideration, and performance by both parties," she said.
Cuff said the TCCWNA, enacted in 1982, was part of an area of law that was being "treated aggressively" by the Legislature. She noted Gov. Brendan Byrne's signing statement that the TCCWNA was meant to "strengthen the provisions" of the Consumer Fraud Act.
"In other words, the proposed legislation did not recognize any new consumer rights but merely imposed an obligation on sellers to acknowledge clearly established consumer rights and provided remedies for posting or inserting provisions contrary to law," she said.
The TCCWNA's legislative history also shows it was not intended to mirror the federal Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C.A. §§ 2301 to 2312, which applies only to tangible property.
Plaintiff lawyer Bruce Greenberg, of Newark's Greenberg Lite DePalma, says the ruling "vindicates the Legislature's intent to protect consumers."
Restaurant.com's attorney, Michael McDonald of Gibbons in Newark, said, "While we are disappointed in the decision, we are confident that Restaurant.com will be completely vindicated on the claims asserted in the lawsuit. Restaurant.com certificates do not expire, can be used via our mobile app when dining at the restaurant, and can be exchanged for another participating restaurant either online or by calling customer service."