Class Certification of TCCWNA Claims Dealt a Serious Blow by NJ Supreme Court in Dugan v. TGI Fridays and Bozzi v. Restaurant Partners, LLC

On October 4, 2017, the Supreme Court of New Jersey dealt a subtle but serious blow to “no injury” TCCWNA class actions. In consolidated appeals, Dugan v. TGI Fridays and Bozzi v. Restaurant Partners, LLC, the plaintiffs had argued that the defendant restaurant operators violated the plaintiffs’ clearly established rights by failing to list prices for beverages on their menus, that the restaurants were required to plainly mark the prices, and that when the restaurants’ employees presented menus to customers (class members), they “offered” contracts that violated the New Jersey Consumer Fraud Act (“CFA”) and the Truth-in Consumer Contract, Warranty and Notice Act (“TCCWNA”). However, the Court concluded that class certification was not appropriate because individual, rather than common, issues would predominate in proving TCCWNA’s “aggrieved consumer” and “clearly established legal right” requirements.

The fundamental take-away from the Supreme Court’s analysis of TCCWNA’s “aggrieved consumer” requirement is that simply demonstrating that a consumer contract offends TCCWNA does not establish liability under the Act, because “[b]y its very terms, TCCWNA . . . does not apply when a defendant fails to provide the consumer with a required writing.” Rather, “at a minimum, a claimant must prove that he or she was presented with a menu” (i.e., the allegedly offending writing). Using the word “critical” three times, the Court emphasized that to establish that a consumer was “aggrieved” would involve “a range of individual questions regarding the interaction” between the consumer and the allegedly offending writing, i.e., not simply that a consumer was presented with the document itself and not circumstantial evidence that customers were supposed to receive the document. This “critical inquiry cannot be resolved by customer receipts or other documents.” Thus, Dugan/Bozzi held that “[e]ven if we accept [plaintiffs’] theory of liability under the TCCWNA, the testimony of the individual claimant or another witness would be necessary to prove that the plaintiff satisfies the statute’s requirements and is thus an ‘aggrieved consumer.’” That is, testimony would have been necessary to explore the interaction between each consumer and the document in question to prove that the consumer (1) “satisfies the statute’s requirements” and (2) is an “aggrieved consumer.”

Though Dugan/Bozzi involved class certification issues, and did not make definitive rulings regarding the meaning of TCCWNA’s “aggrieved consumer” requirement, the opinion arguably foreshadows the forthcoming decision from the Supreme Court in Spade v. Select Comfort Corp., where the New Jersey Supreme Court, on April 4, 2017, accepted certification of a question of law from the Third Circuit to decide whether a consumer who receives a contract that violates certain state regulations is “an ‘aggrieved consumer’ under the TCCWNA” even if he or she “has not suffered any adverse consequences from the noncompliance.”

The Dugan/Bozzi Court also concluded that individual questions would predominate on the “clearly established legal right” element of TCCWNA. To determine whether the “legal right” claimed to have been violated by the writing was, in fact, “clearly established,” “courts assess whether the CFA or another consumer protection statute or regulation clearly prohibited the contractual provision or other practice that is the basis for the TCCWNA claim.” Even if the plaintiffs had demonstrated that some regulation, published decision, or Attorney General enforcement action had created a “legal right,” the Court found that the very question “raised[d] the spectre of disparate results for different members of the class.”

Finally, although not specifically addressing the superiority element of Rule 4:32-1(b)(3), the Dugan/Bozzi Court questioned whether TCCWNA was intended to apply as plaintiffs had urged. “Nothing in the legislative history of the TCCWNA . . . suggests that when the Legislature enacted the statute, it intended to impose billion-dollar penalties on restaurants that serve unpriced food and beverages to customers.” This reference to the Legislative intent harkens back to the Supreme Court’s comment in Shelton v. Restaurant.com, noting that the electronic gift certificates at issue were “the product of commercial ventures enabled by technology that developed after the Legislature adopted the TCCWNA,” and thus, the Court did “not know whether the Legislature specifically envisioned certificates or coupons like the ones Restaurant.com offers and meant to impose a $100 penalty per occurrence in such cases.”

While the New Jersey high court may provide further clarity in the coming months, Dugan/Bozzi at least provides a solid framework for opposing and defeating class certification of TCCWNA claims.

Michael R. McDonald is a Director in the Gibbons Business & Commercial Litigation Department.
Restaurant.com is a client of Gibbons P.C. The firm and specifically, the author of this blog, were actively involved in the litigation mentioned. Prior results do not guarantee a similar outcome.
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