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The Supreme Court Narrows the TCCWNASusana Cruz  Hodge

As I indicated in my last blog, we’ve been awaiting the Supreme Court’s decision in Spade v. Select Comfort Corp., ___ N.J. ___ (2018), because it was expected to bring much needed clarity to the Truth-in-Consumer, Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 et seq. (“TCCWNA”). While I believe the Court got it wrong, it certainly met that goal.

The TCCWNA expressly prohibits businesses from

offer[ing] to any consumer or prospective consumer or enter into any written consumer contract or give or display any written consumer warranty, notice or sign after the effective date of this act which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller, lessor, creditor, lender or bailee as established by State or Federal law. . . ”
 
N.J.S.A. 56:12-15. For those who violate the TCCWNA, they are on the hook for a penalty, damages, and attorneys’ fees and costs:
 
Any person who violates the provisions of this act shall be liable to the aggrieved consumer for a civil penalty of not less than $100.00 or for actual damages, or both at the election of the consumer, together with reasonable attorneys’ fees and court costs. This may be recoverable by the consumer in a civil action in a court of competent jurisdiction or as part of a counterclaim by the consumer against the seller, lessor, creditor, lender or bailee or assignee of any of the aforesaid, who aggrieved him. A consumer also shall have the right to petition a court to terminate a contract which violates the provisions of [N.J.S.A. 56:12-15] and the court in its discretion may void the contract. 

N.J.S.A. 56:12-17. At issue in Spade were two certified questions:

1. Does a violation of the Furniture Delivery Regulations alone constitute a violation of a clearly established right or responsibility of the seller under the TCCWNA and thus provides a basis for relief under the TCCWNA?; and

2. Is 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, an “aggrieved consumer” under the TCCWNA?

The first question was relevant to whether defendant’s affirmative misrepresentations in sales documents, which violated a provision of the Furniture Delivery Regulations, could form the basis of a TCCWNA claim. The Court answered this question in the plaintiffs’ favor, finding that (1) “[n]othing in either the TCCWNA’s plain language or its legislative history suggests that the inclusion of language in a contract or other writing that violates a regulation cannot be the basis for a [TCCWNA] claim,” (2) “the Legislature did not limit the term “State of Federal law” to statutes,” and (3) “accepting regulations as a source of law” furthers the “consumer-protection objectives” of the TCCWNA.

The Court’s answer to the second question provided much-needed guidance on whether a plaintiff must have suffered harm in order to obtain relief under the TCCWNA. The Court, finding “ample evidence of the Legislature’s intent in the TCCWNA’s plain language to resolve this question,” reasoned that the Legislature’s use of both “consumer” and “aggrieved consumer” in separate provisions of the TCCWNA demonstrated the Legislature’s desire to differentiate between the two. As a result of that interpretation, the Court ruled the TCCWNA’s remedial provision provides relief to “a consumer who has suffered some form of harm as a result of the defendant’s conduct.” However, the Court set the bar for “harm” low, finding that it did not require a showing of monetary damage and stating that, for example, a consumer who is left “without furniture needed for a family gathering” as a result of an untimely delivery, would be entitled to a civil penalty under the TCCWNA.

The problem with this analysis, however, is that is completely contradicts the Legislature’s actual intent, which is clearly spelled out in the TCCWNA’s legislative history. And while the Court did not get into that legislative history because the Court found the statute’s plain language evidenced the Legislature’s intent, it should have nonetheless gone a step further to test its interpretation of the statute’s plain language. The Court recognized early in its opinion that it could “rely on extrinsic evidence of legislative intent [] ‘when the plain language leads to a result inconsistent with any legitimate public policy objective’” (quoting Shelton v. Restaurant.com, Inc., 214 N.J. 419, 429 (2013)). Yet, it never analyzed its interpretation of the plain language through this lens.

It is apparent that the Court’s restraint was purposeful. The TCCWNA is not popular with the courts, and the Supreme Court sought to narrow its scope. Had the Court delved into the legislative history, it would have to have confronted the Assembly report stating

Section 4 [now 17], as amended by the committee, provides that a business which violates the provision of this bill would be liable to the aggrieved consumer for a civil penalty of not less than $100.00 if the consumer was not injured by such a violation and for a civil penalty and actual damages if he was injured by such a violation.

Assemb. B. 1660, 199th Leg., 1st Sess. (N.J.) (as reported by Assemb. Commerce, Indus. & Professions Comm., June 9, 1980) (emphases added). The Court also would have had to acknowledge, as it did in Shelton, that the Assembly Commerce, Industry and Professions Committee amended the bill to change “one of the remedies from civil ‘damages’ of not less than $100 to a civil ‘penalty’ of not less than $100,” Shelton, 214 N.J. at 432 (emphases added), signifying a desire to entitle a consumer to a penalty where she has not suffered injury or actual damages.

Having submitted an amicus curiae brief with my partner, Bruce D. Greenberg, on this very point, I was eagerly awaiting the Court’s view of this enlightening legislative history. I expected that the Court might find a creative way to minimize its application or meaningfulness, but unfortunately, the Court stopped short in its analysis.

Ultimately, the Court’s ruling significantly affects consumer protection rights in New Jersey. The Court recognized that the Legislature’s objective was to prevent deceptive practices in consumer contracts. However, by finding that the Legislature intended to “shield” a “broad category of people” (including prospective consumers) but intended to entitle only certain consumers to a remedy, the Supreme Court effectively gutted the statute. That is because the TCCWNA was entirely premised upon the notion that it is the “very inclusion [of an illegal provision] in a contract, warrant, notice or sign [that] deceives a consumer into thinking that they are enforceable and for this reason the consumer often fails to enforce his rights." Statement, Bill No. A1660, 1981 N.J. Laws, Chapter 454, Assembly No. 1660, page 2. The Legislature’s deterrent objective is now unlikely to be met given there is now no dollar amount attached to the majority of the TCCWNA violations.