Spokeo impact remains to be seen as lawsuits over N.J. law advance

By Carrie Salls | Oct 4, 2016

NEWARK, N.J. (Legal Newsline) - A recent class action lawsuit filed against Facebook Inc. in connection with the social media site’s requirement that users agree to the company’s conditions is one of many suits being filed under New Jersey’s Truth-in-Consumer, Contract Warranty and Notice Act (TCCWNA).  

The TCCWNA was enacted in 1981, but its popularity among plaintiffs’ attorneys has increased recently, often with online retailers as its targets. The act was designed to curb a practice under which consumer contracts, warranties, notices and signs include “provisions which clearly violate the rights of consumers.”


Loly G. Tor, a partner at K&L Gates LLP, said companies named as defendants in the recent spate of class actions brought against online retailers are filing motions to dismiss.


Tor said the companies are arguing that the claims should be dismissed because of lack of standing under the U.S. Supreme Court's decision in Spokeo Inc. v. Robins, because the plaintiff is not an aggrieved consumer, because TCCWNA does not apply to a website’s terms and conditions, because there is no violation of clearly established law, and because New Jersey law does not apply under a choice-of-law provision in the terms and conditions, among other reasons.

Spokeo required plaintiffs to prove a concrete and particularized harm.


Tor said defendants have had some success in getting TCCWNA lawsuits dismissed, although the motions to dismiss in some of the website cases are still pending.


“In recent motions decided in non-website cases, defendants have been successful in arguing that the plaintiff was not a consumer (Smerling v. Harrah’s Casino), and that an omission cannot form the basis of a TCCWNA claim (Matijakovich v. PC Richard & Son),” Tor told Legal Newsline.


Whether the Spokeo decision actually helps a defendant’s case is less clear.


The plaintiff in the lawsuit filed against Spokeo alleged that the company violated the Fair Credit Reporting Act. After an initial dismissal was overturned, Spokeo appealed to the Supreme Court, which remanded the case to decide whether the harm allegedly suffered by plaintiff Thomas Robins was enough for the case to proceed.


“(Whether Spokeo will help defendants’ cases) remains to be seen,” Tor said. “Plaintiff and defense attorneys both declared victory after Spokeo was decided. This issue is pending in several cases, so we will have an answer (or several answers soon)."


Tor said defendants argue that a statutory violation with no actual harm to the plaintiff does not confer standing because there is no concrete harm, while plaintiffs say the exact opposite -- that the violation of the statute itself is the concrete harm that confers standing.


“However, if actions are dismissed based on Spokeo, the victory for defendants may be short-lived because plaintiffs will be able to refile their suits in state court,” she said. “A dismissal for lack of standing is not a dismissal on the merits and Spokeo addresses only Article III standing, not standing in New Jersey state court.”


Depending on how the New Jersey Supreme Court rules on the class certification issues in the two TCCWNA cases pending before it, including Dugan v. TGI Fridays Inc. and Bozzi v. OSI Restaurant Partners LLC, Tor said defendants in a less desirable situation than if they had remained in federal court.


In addition, the nature of potential awards for plaintiffs may be a driving factor behind the recent upswing in TCCWNA lawsuits.


“TCCWNA provides statutory damages of $100 per violation plus actual damages and attorneys’ fees,” Tor said.

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