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LEGAL NEWSLINE

Thursday, March 28, 2024

N.J. Supreme Court gives win to class action lawyers

State Court
Classaction

TRENTON, N.J. (Legal Newsline) – Class action lawyers have scored a win in New Jersey, with the state Supreme Court extending the reach of a consumer protection law past what two lower courts ruled.

On May 28, the Supreme Court decided that the Retail Installment Sales Act applies to a class action filed by a gym user who is upset he chose a payment option that included a $30 initiation fee. As the case progressed, the scope of RISA widened.

The trial court and the Appellate Division found that RISA only applies to contracts with financing and that the monthly gym membership fee included no financing.

However, the Supreme Court says RISA can apply to services contracts because there is no requirement that a contract include a financing arrangement to be covered by the law.

The decision could have an impact on companies that previously didn’t think the law applied to them. And it could be a tool for class action lawyers looking to punish companies that charge certain fees.

“The Legislature may determine that our reading today does not comport with its original intentions,” Justice Faustino Fernandez-Vina wrote.

“If it so chooses, the Legislature may address this issue in the future. For now, we are left to fulfill our role of interpreting the text before us. We find that the plain text of RISA indicates that it applies to services contracts without financing arrangements, including Fitness Factory’s membership contract.”

The language of RISA included no “financing” requirement, the court ruled, an argument supported by the Consumers League of New Jersey and the National Association of Consumer Advocates, which were represented by Motley Rice.

The New Jersey Department of Banking and Insurance noted in its amicus brief that installment contracts like the gym membership charge no interest that could be raised without notification, and thus consumers face very little risk, as opposed to financing arrangements that include interest.

Henry Sanchez’s case over the Fitness Factory’s initiation fee will now continue to determine if the gym contract violated RISA.

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