• Blood in the Water: Courts Evaluate Standing in Three Recent TCCWNA Class Actions
  • April 7, 2017 | Authors: Wilson G. Barmeyer; Kymberly Kochis; Francis X. Nolan; Lewis S. Wiener
  • Law Firms: Eversheds Sutherland (US) LLP - Washington Office; Eversheds Sutherland (US) LLP - New York Office; Eversheds Sutherland (US) LLP - Washington Office
  • The rising tide of class actions alleging violations of New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA, pronounced “tic-wun-uh”) has been a cause of concern for companies advertising and selling to New Jersey consumers. TCCWNA’s damages and attorneys’ fees provisions have resulted in an increase in case filings but the statute’s broad and vague language has kept corporate defendants guessing. Fortunately, three recent federal court decisions offer guidance for companies embroiled in TCCWNA litigation, as well as companies struggling to understand and comply with the law.

    TCCWNA, enacted by the New Jersey legislature more than 30 years ago, allows for statutory damages, plus attorneys’ fees and costs on behalf of “aggrieved consumers.” Section 15 of the law allows for recovery arising from any violation of any legal right, even if that right does not have an independent remedy. TCCWNA’s Section 16 prohibits companies from including in any “contract, warranty, notice or sign” broad language that suggests that the contract is void in certain jurisdictions without expressly stating the applicability of New Jersey law. The statute provides for damages of up to $100 per violation. For the past few years, enterprising plaintiffs’ lawyers have frequently used TCCWNA as a vehicle to challenge a wide range of practices on a class-wide basis.

    Luca v. WyndhamWorldwide Corp.

    In Luca v. Wyndham Worldwide Corp., et al., No. 2:16-cv-00746, 2017 WL 623579 (W.D. Pa. Feb. 15, 2017), the putative class representative alleged that the defendants’ hotel booking website failed to disclose certain taxes charged to him after he booked a room. The plaintiff brought claims under New Jersey’s Consumer Fraud Act (CFA) and TCCWNA. In a February 2017 decision, the Western District of Pennsylvania denied the defendants’ motion to dismiss the CFA claim, finding that the plaintiff had adequately pled the elements of that statutory claim.

    Turning to the TCCWNA claim, however, the court considered two standing challenges. First, the court held that the plaintiff properly pled Article III standing sufficient to survive the motion to dismiss the challenge. The TCCWNA claim was based on allegations that the Terms and Conditions (T&Cs) precluded the plaintiff (and putative class members) from asserting claims under the CFA. The defendants argued that the TCCWNA claim constituted nothing more than a naked procedural violation, without any allegation of an independent concrete harm. The court reasoned, however, that if the plaintiff was in fact precluded (or would be precluded in the future) by the T&Cs from bringing a claim under the CFA, the plaintiff would suffer precisely the type of harm that TCCWNA was enacted to prevent under Section 15’s “any legal right” language. Accordingly, the plaintiff adequately alleged a concrete and redressable concrete injury-in-fact sufficient to confer Article III standing. Notably, the court pointed out in a footnote that its decision was “not intended to suggest that standing is per se established because a plaintiff pairs a TCCWNA claim with another claim for relief; likewise it is not intended to suggest that a TCCWNA claim alone can never confer standing.”

    Second, and relatedly, the court found that the plaintiff had alleged statutory standing; that is, the plaintiff sufficiently pled that he was an “aggrieved consumer” under the express language of TCCWNA. The court pointed out that the US Court of Appeals for the Third Circuit certified the question of how to interpret the “aggrieved consumer” language of TCCWNA’s Section 17 to the New Jersey Supreme Court. The court allowed the suit to survive, at least until the New Jersey Supreme Court rules on that question.

    Hite v. Lush Internet, Inc.

    A few weeks after the Luca decision, the District of New Jersey dismissed a TCCWNA putative class action for lack of standing in Hite v. Lush Internet, Inc., 2017 WL 1080906 (D.N.J. Mar. 22, 2017). In Hite, the plaintiff alleged that she purchased products from the Lush website, but did not bring any claims arising from or related to the product itself. Instead, the plaintiff alleged that the T&Cs violated Sections 15 and 16 of TCCWNA because they prospectively disclaimed liability and limited the plaintiff’s rights of recovery under other New Jersey statutory laws.

    The T&Cs on the website were contained in a “browsewrap agreement,” meaning that in order to review them, the website user needed to find and access the T&Cs through a link at the bottom of the website’s page. This also meant that the customer did not actively agree to the T&Cs as one would in a “clickwrap agreement” where a customer would need to affirm that he or she had read and understood the agreement.

    The defendant’s browsewrap T&Cs included language requiring the parties to arbitrate any disputes individually. Consistent with the T&Cs, the defendant filed a motion to compel arbitration in conjunction with a motion to dismiss the complaint. The District of New Jersey denied the defendant’s motion to compel arbitration, relying in part on the plaintiff’s allegation that she never noticed, much less read and assented to, the T&Cs.

    The defendant seized on the plaintiff’s argument in opposition to the motion to compel arbitration, arguing that if the plaintiff had not read the T&Cs, she couldn’t qualify as an “aggrieved consumer” under Section 17 of TCCWNA. The court agreed and dismissed the complaint. In doing so, the court distinguished the allegations from those in the Luca case. Commenting on Luca, the Hite court pointed out the plaintiff’s TCCWNA violation was based on a violation of an underlying right which the statute was designed to protect. Here, on the other hand, the plaintiff “is seeking only to bring the Terms of Use 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 the Terms of Use.” The alleged damages in Luca were potentially real; in Hite, they were “metaphysical.”

    Rubin v. J. Crew Group, Inc.

    More recently, in Rubin v. J. Crew Group, Inc., 2017 WL 1170854 (D.N.J. Mar. 29, 2017), the plaintiff alleged that the T&Cs on J. Crew’s website violated Sections 15 and 16 of TCCWNA, for essentially the same reasons alleged in Hite. But just as in Hite, the plaintiff did not allege any concrete injury arising from the presence of the T&Cs on the website. In fact, the plaintiff did not even allege that she saw or read the T&Cs, despite making multiple online purchases from J. Crew over a six-year period. The defendant’s naked procedural violation of TCCWNA, without attendant concrete harm to the plaintiff, was not enough to confer Article III standing. Accordingly, the court found that it did not have subject matter jurisdiction and dismissed the complaint. J. Crew also argued that the plaintiff failed to allege statutory standing because the plaintiff was not an “aggrieved consumer” as defined by TCCWNA. This argument has been successful for other defendants, but the court did not need to reach this question in Rubin.

    Given the increasing number of state and federal TCCWNA complaints filed over the last few years, courts will continue to have the opportunity to define and comment on this area of law. These decisions offer nuanced analyses of when and how plaintiffs can adequately plead claims under the operative sections of TCCWNA, and provide useful guidance for companies formulating defenses in class action lawsuits. For those companies not (yet) named in TCCWNA lawsuits, the case law is a useful guide when reviewing websites and documents for compliance with the far-reaching statute.

    See prior Eversheds Sutherland Legal Alerts for more analysis of TCCWNA: