Courts Deal Blow To New Jersey Class Action Suits

In the past year, we have blogged (read the Client Alert here) about the rising number of class actions filed in New Jersey against online retailers. These lawsuits allege the retailers’ online terms of use violated an obscure New Jersey statute, the TCCWNA, or more formally, the Truth in Consumer Contract, Warranty and Notice Act.  However, in the past few days, two court rulings have dealt a serious blow to attorneys who file these class-action claims and then seek a quick settlement.

In Rubin v. J. Crew, decided on March 29, 2017 in federal court in the District of New Jersey, clothes retailer J. Crew won dismissal of a class-action lawsuit on the basis that even if the website contained illegal limitations of liability, the plaintiff suffered no injury whatsoever.

Judge Freda L. Wolfson wrote, “The Court is aware that there are numerous class actions filed in this district based upon similar TCCWNA violations […]. While the intent of the New Jersey legislature in enacting the TCCWNA is to provide additional protections for consumers in this state from unfair business practices, the passage of the Act is not intended, however, for litigation-seeking plaintiffs and/or their counsel to troll the internet to find potential violations under the TCCWNA without any underlying harm.”

In Hite v. Lush Internet Inc., decided on March 22, 2017, also in the District of New Jersey, the defendant argued that even though the plaintiff made purchases from the defendant’s website, there was no indication she had been harmed, or even read the terms in question.  Therefore, ruled the Court, she was not an “aggrieved consumer” as required to have standing to sue under the TCCWNA.

“Based upon the allegations in the Amended Complaint,” wrote Judge Jerome B. Simandle in his order of dismissal, “the harm that Plaintiff has suffered from the allegedly unlawful limitations of liability in the Terms of Use is metaphysical at best.”

TAKEAWAY: While these two decisions certainly represent a victory for online retailers, there are two important limitations: (a) neither court decided whether the online terms were legal or not, so the door is open for future plaintiffs if they can allege some actual form of harm; and (b) in the Rubin v. J. Crew case, the plaintiff was permitted to refile her case and try to show that she suffered some form of damage.

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