No Harm, No Civil Penalty, and No More “No Injury” Class Actions: New Jersey Supreme Court Issues Landmark TCCWNA Decision
April 16, 2018
In one of the most eagerly-anticipated consumer protection decisions in the last decade, the New Jersey Supreme Court has held that a claim for civil penalties under the Truth in Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 et seq. (“TCCWNA”), requires a plaintiff to demonstrate some form of injury, although the requisite injury need not be a traditional injury compensable by money damages.
This decision will be welcomed by defendants, particularly in the class action context, where plaintiffs and some courts have cited the absence of causation and injury requirements in TCCWNA as a major reason for granting class treatment in cases seeking only civil penalties.
Enacted in 1982, TCCWNA was intended to address the increasingly prevalent problem of provisions in consumer contracts, warranties, notices and signs that violated the clearly established rights of consumers. Even though these provisions were invalid or unenforceable, the Legislature was concerned that their very inclusion in a contract, warranty, notice or sign deceived consumers into thinking that they were valid and enforceable, and thereby prevented the consumer from enforcing his or her legal rights.
The TCCWNA statute itself did not actually establish any new rights for consumers. Instead, it required sellers to acknowledge and respect consumer rights that were clearly established by other laws, and provided remedies against sellers who posted or inserted contrary provisions.” Those remedies were set forth in N.J.S.A. 56:12-17:
“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 attorney’s fees and court costs …”
A Conflicted Legal Landscape
TCCWNA does not define the term “aggrieved consumer.” For several years, courts have reached conflicting conclusions on whether a plaintiff has standing to seek civil penalties (rather than actual damages) under the statute if they have not suffered injury or harm. Some decisions have been interpreted to suggest that there is no such requirement and a statutory violation by itself is sufficient. Other courts have held that injury or harm in the traditional sense is required.  Yet other courts have ploughed a third, middle road, holding that something short of actual damage or injury – an “adverse consequence” or “negative effect” – is needed to trigger the statute’s civil penalty provision.
Spade and Wenger: The Background
New Jersey’s Furniture Delivery Regulations address the content of sales contracts and orders for the delivery of household furniture. The defendants in Spade and Wenger delivered the furniture on time and without incident, but their contracts failed to include the mandatory language. The plaintiffs filed putative class actions alleging violations of TCCWNA. Rejecting their claims, the federal district court held while the contract language did indeed violate the regulations, the plaintiffs were not “aggrieved consumers,” which the court defined as someone “who has suffer[ed] the effects of a violation.”
After the plaintiffs appealed the decision to the Third Circuit, the federal appeals court certified two questions to the New Jersey Supreme Court under Rule 2:12A-1: (1) 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? and (2) Does a violation of the Furniture Delivery Regulations alone constitute a violation of a clearly established right of a consumer or responsibility of the seller under the TCCWNA and thus provide a basis for relief under the TCCWNA? The Supreme Court accepted these questions for review in April of last year.
The Supreme Court Decision
The Supreme Court addressed the Third Circuit’s questions in reverse order and spent little time disposing of the regulations issue. Noting that “the content of contracts and other writings used in commercial transactions is typically addressed in regulations, rather than statutes,” the Court held that a TCCWNA violation may be premised on the violation of a regulation. The only question is whether the regulation in question “clearly prohibited the contractual provision or other practice that is the basis for the TCCWNA claim.”
Turning to the issue of injury or harm, the Court concluded first that the meaning of the term “aggrieved consumer” could be resolved by examining the plain language of the statute. This rendered irrelevant the parties’ arguments focusing on the statute’s legislative history, all of which were predicated upon the assumption that the phrase “aggrieved consumer” was an ambiguous one. Applying ordinary principles of statutory interpretation, the Court then highlighted the difference in language between the statute’s definition of a TCCWNA violation, which prohibits a seller from including an unlawful provision in a contract offered to “any consumer or prospective consumer,” and the remedies section, which uses what the Court described as the “more precise” term “aggrieved consumer.” By using different words, the Legislature “clearly intended to differentiate between the broad category of people whom the Legislature sought to shield from offending provisions and the group of people entitled to a remedy under TCCWNA.” Next, the Court cited the well-established principle that legislative language should not be construed in a manner that renders words superfluous or meaningless. If, as the plaintiffs had argued, the phrase “aggrieved consumer” was interpreted to mean nothing more than a “consumer” to whom an illegal contract or other writing is offered, given or displayed, then the word “aggrieved” would have no meaning. By contrast, the Supreme Court held that the word “aggrieved” “distinguishes consumers who have suffered harm because of a violation of [TCCWNA] from those who have merely been exposed to unlawful language in a contract or writing, to no effect.
While basing its decision on the plain language of the statute, the Court noted that this holding was consistent with the meaning of the word “aggrieved” at the time the statute was passed. It cited dictionaries from the late 1970s and early 1980s that defined the word “aggrieved” in terms of injury and harm, or the diminution of pecuniary interests. The plaintiffs had sought to introduce more recent definitions that defined the word more broadly, in terms of the invasion of legal rights.
Finally, the Court held that the term “harm” in this context was not to be limited to the kinds of injuries that are compensable by monetary damages. As the Court explained, the meaning of the term is broader:
If, for example, a furniture seller fails to timely deliver a consumer’s furniture, and the consumer would have sought a refund had he or she not been deterred by the “no refunds” language prohibited by [the regulation], that consumer may be an “aggrieved consumer” entitled to a civil penalty under N.J.S.A. 56:12-17. If an untimely delivery and misleading “no refunds” language leave a consumer without furniture needed for a family gathering, the consumer may be an “aggrieved consumer” for purposes of N.J.S.A. 56:12-17. Proof of harm resulting from contract language prohibited by N.J.S.A. 56:12-15 may warrant a civil penalty under N.J.S.A. 56:12-17, even if the harm is not compensable by damages.
Put another way, the consumer must suffer some form of “adverse consequence” in order to recover civil penalties under TCCWNA.
Impact of the Decision
The most significant impact of the Spade opinion will be felt in the class action arena, which has witnessed an explosion of cases seeking civil penalties based on statutory violations that cause no injury. Some courts have certified these cases on the ground that, absent requirements of injury and causation, the only real issue is the legality of the defendant’s conduct, which is a common issue. Those conclusions will have to be revisited. Defendants in such cases have a very strong argument that, absent some method of proving injury and causation on a class-wide basis, a class cannot be certified.
TCCWNA was well on the way to developing a reputation as one of the most challenging statutes in the country for corporate defendants, a statute that could wreak devastating consequences upon a business, sometimes in circumstances where its transgression was relatively minor and the harm to consumers was non-existent. This decision removes that risk from the equation, while preserving TCCWNA’s intended purpose of deterring unlawful conduct and compensating consumers injured by illegal acts.
 Sponsors’ Statement to N.J. Assembly Bill No. 1660 (May 1, 1980).
 Watkins v. DineEquity, Inc., 591 F. App’x 132, 134 (3d Cir. 2014).
 Shelton v. Restaurant.com, 214 N.J. 419, 432 (2013).
 See, e.g., Bosland v. Warnock Dodge, Inc., 396 N.J. Super. 267, 278 (App. Div. 2007), aff’d in part, 197 N.J. 543 (2009) (“TCCWNA establishes liability whenever a seller offers a consumer a contract, the provisions of which violate any legal right of a consumer”) (emphasis added); United Consumer Fin. Servs. Co. v. Carbo, 410 N.J. Super. 280, 306-07 (App. Div. 2009) (affirming $1.6 million judgment awarding class members civil penalties despite finding that no class member suffered traditional injury or harm).
Initially some courts went even further, holding that a plaintiff need not even enter into a transaction with the defendant, so long as the plaintiff was exposed to a TCCWNA violation. See Wenger v. Cardo Windows, Inc., 2012 WL 280254, at *8 (N.J. Super. Ct. App. Div. Feb 1, 2012) (“An actual purchase is not a prerequisite to the application of any of these laws”). The Supreme Court has since clarified that a TCCWNA plaintiff must “buy, lease, borrow or bail … money, property or [a] service.” Shelton, 214 N.J. at 429.
 See, e.g., Hite v. Lush Internet Inc., 244 F. Supp. 3d 444 (D.N.J. 2017) (appeal pending) (dismissing TCCWNA claims because the plaintiff had not suffered any injury or harm); Cameron v. Monkey Joe’s Big Nut Co., 2008 WL 6084192, at *5 (N.J. Super. Ct. Law Div. Aug. 4, 2008) (plaintiff “[did] not qualify as an ‘aggrieved’ consumer … because he was not injured or even unhappy”); Walters v. Dream Cars Nat’l, LLC, 2016 WL 890783, at *6 (N.J. Super. Ct. Law Div., Mar. 7, 2016) (“the Legislature intended that TCCWNA … only punish those vendors that in fact deceived the consumer, causing harm to the consumer”).
 See, e.g., Friest v. Luxottica Grp. S.p.A., 2016 WL 7668453, at *9 (D.N.J. Dec. 16, 2016) (plaintiff must have “suffered the effects of a TCCWNA violation”); Russell v. Croscill Home, LLC, No. 16-1190 (Transcript) at 8-9 (D.N.J. Oct. 11, 2016) (appeal pending) (same); Wenger v. Bob’s Discount Furniture, Inc., No. 14-7707 and Spade v. Select Comfort Corp., No. 15-1826 (Transcript) at 14 (D.N.J. Feb. 29, 2016) (same).
 See N.J.A.C. 13:45A-5 et seq.
 Spade v. Select Comfort Corp., 2018 WL 1790394, at *4-5 (N.J. April 16, 2018).
 Id. at *5-6.
 Id. at *6.
 Pursuant to N.J. Ct. R. 2:12A-1, the Supreme Court may answer a question certified to it by the Third Circuit “if the answer may be determinative of an issue in litigation pending in the Third Circuit and there is no controlling appellate decision, constitutional provision, or statute in this State.”
 Spade, 2018 WL 1790394, at *3.
 Id. at *6.
 Id. at *8-9.
 Id. at *9.
 Id. at *10.
 As the Court noted, it relies on extrinsic evidence of legislative intent “only when the statute is ambiguous, the plain language leads to a result inconsistent with any legitimate public policy objective, or it is at odds with a general statutory scheme.” Id. at *7 (quoting Shelton, 214 N.J. at 429).
 Id. at *10.
 Id. (emphasis added).
 Id. at *11.
 See, e.g., Korrow v. Aaron’s Inc., 2013 WL 5811496, at *9 (D.N.J. July 31, 2013) (granting class certification of TCCWNA claims because “a single determination of the legality of the fees charged by Defendant will determine liability for the entire class”); Jackeline Martinez-Santiago v. Public Storage, 2015 WL 7253819, at *7 (D.N.J. Nov. 16, 2015) (“resolving the question of whether these provisions violate clearly established law would resolve the TCCWNA claims of all class members”).
 See, e.g., Reyes v. Netdeposit, LLC, 802 F.3d 469, 481 n.12 (3d Cir. 2015) (“predominance requires that plaintiffs show that their individual injuries are capable of proof at trial through common evidence”) (citation omitted); Muise v. GPU, Inc., 371 N.J. Super. 13, 37 (App. Div. 2004) (decertification “justified by the predominance of individual causation issues”).