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TCCWNA Claim Dismissed in DNJ Against J. Crew for Lack of Standing

On March 29, 2017, the Honorable Freda L. Wolfson, U.S.D.J., dismissed a putative class action against J. Crew, Inc., alleging violations of New Jersey's Truth in Consumer Contract Warranty Notice Act,  N.J.S.A. 56:12-14 , et seq., ("TCCWNA" or the "Act"). See Rubin v. J. Crew Grp., Inc., No. 16-2167 (FLW), 2017 BL 101186 (D.N.J. Mar. 29, 2017). There, the plaintiff alleged that J. Crew, through its online terms and conditions, placed "impermissible limits its liabilities and obscures the effect of its disclaimers on New Jersey consumers." The plaintiff specifically challenged exculpatory and indemnification provisions contained on the J. Crew website. J. Crew moved to dismiss, inter alia, for lack of Article III and statutory standing, as the plaintiff had not alleged any specific injury or harm resulting from the contested provisions. The plaintiff contended that the bare violation alone was sufficient and, further, that she had suffered an "informational injury." Judge Wolfson disagreed and dismissed the complaint without prejudice.

Judge Wolfson provided a review of Article III standing following the 2016 Supreme Court decision, Spokeo v. Robins, 136 S. Ct. 1540 (2016), which held that standing did not exist based solely upon a bare allegation of a statutory violation. Spokeo confirmed that in the context of a statutory violation, allegations of a "bare procedural violation [under the statute], divorced from any concrete [or substantive] harm" cannot satisfy the injury-in-fact requirement. Spokeo, 136 S. Ct. at 1549. Turning to claims under TCCWNA, the Court provided an analysis of the few significant post-Spokeo holdings involving alleged violation of the Act without actual damages. See Hite v. Lush Internet Inc., No. 16-1533, 2017 U.S. Dist. LEXIS 40949 (D.N.J. Mar. 23, 2017); Hecht v. Hertz Corp., No. 16-1485, 2016 U.S. Dist. LEXIS 145589 (D.N.J. Oct. 20, 2016); Candelario v. RIP Curl, Inc., No. 16-963, 2016 U.S. Dist. LEXIS 163019 (C.D. Cal. Sept. 7, 2016). Relying upon and adopting the reasoning of these decisions, Judge Wolfson held:

"In short, what each of these courts has held is that without an underlying concrete harm, a plaintiff may not base his/her complaint solely on allegations of wrongdoing predicated on TCCWNA violations. To illustrate, if a consumer alleges that the terms and conditions of an online retailer's website violated the TCCWNA by excluding punitive damages in suits, that consumer would not have standing to bring a TCCWNA claim without also asserting an injury inflicted by the retailer that could entitle him/her to punitive damages at the outset. Absent that underlying harm, under  Spokeo, the consumer's alleged TCCWNA violation is merely procedural. Because Plaintiff's TCCWNA claims in this case are pled in such a without any claim of injury, I find that she lacks standing to sue.

Additionally, the Court indicated that TCCWNA did not reflect any congressional intent to create a concrete or substantive right. Rather, Judge Wolfson held that "TCCWNA does not "recognize any new consumer rights but merely impose[s] an obligation on sellers to acknowledge clearly established consumer rights." See Shelton v. Restaurant.com, 214 N.J. 419 , 432 , 70 A.3d 544 (2013). Thus, Judge Wolfson confirmed that a bare violation of the Act, absent a concrete and particularized injury, is insufficient to establish Constitutional standing.

As noted, Judge Wolfson dismissed the complaint without prejudice based upon Article III standing and declined to address J. Crew's alternative argument based upon the absence of statutory standing. The decision itself outlines the deficiencies within the pleading before the Court and notes at several points that the plaintiff had failed to plead specific acts that were later raised in opposition to the motion to dismiss. For example, nowhere in the complaint did the plaintiff even allege to have reviewed the actual terms and conditions. Given that the dismissal is without prejudice, it appears very likely that plaintiff will amend their pleading (for a second time) in order to address the deficiencies noted by Judge Wolfson. Even then, however, the plaintiff will need to plead some underlying harm.

A formerly obscure New Jersey statute, recent holdings in the past several years have raised the profile of TCCWNA claims and has rendered New Jersey state and federal courts as target for consumer class action lawsuits against national retailers. In fact, the statute has even been the subject or articles in international publications such as The Economist. The Supreme Court's holding in Spokeo has served as an impediment to the wave of suits under the Act but, as reflected in this recent matter, is is not an outright bar. Given the number of pending suits involving TCCWNA in both state and federal courts within New Jersey, there will certainly be additional jurisprudence and continued litigation regarding the Act.

A link to the Court's decision is available here.

  • Partner

    Andrew Sayles defends financial institutions and their service partners in complex litigation and class actions, with a particular emphasis on issues related to consumer financial services regulation. He also advises clients in ...

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