This week saw a watershed opinion from the New Jersey Supreme Court that should stem the tide of purported class actions brought under New Jersey’s Truth-in-Consumer Contract Warranty and Notice Act (or “TCCWNA”). We have written previously about TCCWNA litigation here and here. Since our last update, a number of courts have issued opinions favorable to defendants, but this most recent decision in Spade v. Select Comfort Corp., Op. No. A-57-16 (078611) (N.J. Apr. 16, 2018) is a significant victory for a nation of potential defendants and should bring a sigh of relief to those doing business in New Jersey.

TCCWNA makes it unlawful in New Jersey to offer an agreement or display a warranty or notice to a consumer or perspective consumer if that agreement, warranty, or notice includes any provision that violates a clearly established legal right of a consumer or responsibility of a seller. It also makes it unlawful for a consumer contract to indicate that some provisions may be inapplicable or unenforceable in some jurisdictions without clarifying which provisions are and are not unenforceable or inapplicable in New Jersey. After decades of relative dormancy, TCCWNA became a darling of the plaintiffs’ bar in recent years, particularly in cases applying it to internet-age contracts like standard website Terms of Use. TCCWNA claims are especially tantalizing as they allow aggrieved consumers to recover a civil penalty of $100, actual damages, or both, as well as attorneys’ fees.

In the Spade case decided this week, the New Jersey Supreme Court addressed two questions certified to it by the Third Circuit, holding that:

(1) A regulation (as opposed to a state or federal law) can establish a clear legal right and form the basis for a TCCWNA claim where a contract includes language in violation of that regulation; and

(2) To qualify as an “aggrieved” consumer eligible to recover under TCCWNA, a consumer must have suffered some harm as a result of the TCCWNA violation.

Notably, the Court went on to clarify that the harm suffered by an aggrieved consumer need not be monetary: “A consumer may be ‘aggrieved’ for purposes of [TCCWNA] if he or she has suffered harm as a result of the defendant’s inclusion of prohibited language in a contract or other writing even if that harm is not a basis for a damages award.” However, “[i]n the absence of evidence that the consumer suffered adverse consequences as a result of the defendant’s regulatory violation, a consumer is not an ‘aggrieved consumer’ for purposes of the TCCWNA.”

The Spade holding should put to bed the spate of recent cases seeking recovery based on allegations that a consumer was merely presented with an agreement that purportedly violated TCCWNA, without any additional allegations of harm.