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Supreme Court to the Rescue?Susana  Cruz Hodge

This post is about the Truth-in-Consumer, Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 et seq. [As an initial matter, I’m going to support the Appellate Division’s effort to shed the tongue twister acronym and go with the “Truth Act” here. See Smerling v. Harrah’s Entm’t, Inc., No. A-4937-13T3, 2016 WL 4717997 (App. Div. Sept. 9, 2016).]

Our state and federal courts continue to tackle the Truth Act. First, the New Jersey Supreme Court has announced that it will answer two questions about the Truth Act:
1. Is a consumer who receives a contract that does not comply with the Delivery of Household Furniture and Furnishings Regulations (Furniture Delivery Regulations), N.J.A.C. 13:45A-5, but has not suffered any adverse consequences from the noncompliance, an “aggrieved consumer” under the Truth-in-Consumer Contract Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-17; and,

2. 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 provide a basis for relief under the TCCWNA?
The answers to these questions are not only key to the Third Circuit’s forthcoming decisions in Spade v. Select Comfort Corp. and Wenger v. Bob’s Discount Furniture, LLC, but will also help clarify the breadth of the Truth Act for the parties involved in the host of Terms of Use cases filed in 2016.

Defendants in those Terms of Use cases raised numerous arguments, but front and center were arguments that the Truth Act claims failed where (1) plaintiffs had not purchased products and (2) plaintiffs had not suffered damages. In an earlier post , I suggested that these defense arguments would fail because the Truth Act expressly states that it applies to “offers” and “prospective buyers,” and because the legislative history reveals the Legislature purposefully omitted the words “whom he aggrieved or injured” from Section 17.

Two recent rulings have gone against my suggestion. Rubin v. J. Crew Grp., Inc., No. CV 16-2167, 2017 WL 1170854 (D.N.J. Mar. 29, 2017); Hite v. Lush Internet Inc., No. 16-1533, 2017 WL 1080906 (D.N.J. Mar. 23, 2017).

In Hite, the plaintiff purchased the product at issue. However, the District Court found that (1) the Terms of Use “simply do not bind [plaintiff] as a matter of contract law” because she had not assented to them; (2) plaintiff did not have Article III standing to sue because she had not sought “to vindicate any underlying rights secured by the TCCWNA”; and (3) plaintiff could not claim harm from the existence of terms since she did not see them when making the purchase.

Likewise, in Rubin, which quoted Hite, the District Court found that Plaintiff lacked standing because she had not suffered injury from the alleged Truth Act violation:

[T]here is no indication that Plaintiff had a claim against Defendant which the Terms and Conditions prevented her from bringing. In that regard, the genesis of Plaintiff's lawsuit ‘is seeking only to bring the Terms [and Conditions] into accord with what she believes New Jersey law requires, not to actually bring a suit or recover damages which she believes are unlawfully barred’ by those Terms.

The District Court also rejected plaintiff’s argument that she suffered “information injury” because (aside from not alleging same in the Complaint), she could not have suffered that harm since she failed to see the Terms of Use. Finally, the District Court rejected plaintiff’s argument that the mere presence of illegal provisions causes injury, finding that “[t]his is exactly the type of non-particularized and hypothetical injury against which Spokeo [, Inc. v. Robins, 194 L. Ed. 2d 635 (2016)]  cautioned.”

Both of these opinions fail to acknowledge key language in the statute, its legislative history, and that the Supreme Court acknowledged that “risk of real harm,” is sufficient to confer standing under Spokeo, as I explained in this post.  I expect that the Supreme Court will do what it did in Shelton v., 214 N.J. 419 (2013), and provide some much needed guidance on the Truth Act.