The New Jersey Supreme Court has ruled that terms-of-service agreements with incorrect or potentially harmful information can't be held against a company in the absence of actual harm to a consumer.
The state Truth in Consumer Contracts, Warranties and Notices Act allows “aggrieved consumers” to collect $100 for such verbiage, but the state high court noted the law was written before such agreements were distributed so widely on the internet. The U.S. Third Circuit of Appeals court had brought the case to the state Supreme Court, seeking its guidance.
In a unanimous 7-0 option, the high court accepted an argument – advanced by McCarter & English attorneys on behalf of New Jersey Business and Industry Association as a friend of the court – that “aggrieved consumer” should be defined as someone who suffered actual harm.
Two class action suits based on the Act – David Spade v. Select Comfort Corp. and Wenger v. Bob’s Discount Furniture LLC – were returned to the federal circuit court for rulings based on the high court decision.
“This is a big blow to these ridiculous no-injury class actions that we’ve seen lawyers over the last few years threatening businesses with,” said Ed Fanning, part of the three-person team from McCarter & English. “A number of these firms jumping on this bandwagon were just trying to take advantage of an old statute that was vague and trying to use that vagueness to their advantage.”
Fanning authored the brief presented to the court with partners David Kott and Zane Riester. Kott argued the case in front of the Supreme Court.
“This puts a final nail in the coffin of these ridiculous no injury TCCWNA cases,” Fanning said. “It puts some common sense limits on the statute. You’re not going to have opportunistic lawyers or consumers trying to take advantage of it.”
Spade was represented by attorneys Lewis Adler and Paul DePetris. Adler was unavailable, and DePetris declined comment.
Wenger was represented by Andrew Wolf and Henry Paul Wolf of The Wolf Law Firm.
“We’re still evaluating the decision and its impact on our cases going forward,” Andrew Wolf said.