In the last two weeks, two federal district court judges in New Jersey dismissed putative class actions brought under New Jersey's Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA). The decisions, in Hite v. Lush Internet, Inc. (D. N.J. March 21, 2017) and Rubin v. J. Crew Group, Inc. (D. N.J. March 29, 2017), are key wins for retailers who are facing a slew of TCCWNA cases as the plaintiffs' class action bar has seized on TCCWNA, a once relatively dormant statute, to target online terms and conditions used on e-commerce websites. In both cases the plaintiffs did not allege that they had read the terms and conditions prior to making their purchases and both cases were thus dismissed because the plaintiffs lacked standing.

TCCWNA states that "No seller, lessor, creditor, lender or bailee shall in the course of his business offer to any consumer or prospective consumer or enter into any written consumer contract or give or display any written consumer warranty, notice or sign after the effective date of this act which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller, lessor, creditor, lender or bailee as established by State or Federal law..." TCCWNA permits an award of $100 in statutory damages for each violation, which explains its attractiveness to the plaintiffs' class action bar.

The plaintiff in Hite alleged that she made a purchase on the Lush website, subject to its Terms of Use. As many TCCWNA plaintiffs do, she asserted that provisions in the Terms of Use violated TCCWNA because they stated that Lush was not liable for virtually any claim arising out of the use of the site or Lush's products, and because they barred claims under the New Jersey Product Liability Act and other New Jersey statutes. She further alleged that Lush violated TCCWNA because the Terms of Use shortened the time period in which consumers could pursue claims. The plaintiff brought the action despite the fact that she had not read the Terms of Use at the time she made her purchase and had no claim against Lush, such as one based on product liability or fraud, which was actually limited by the Terms of Use.

Lush moved to compel arbitration and to strike the class allegations, pointing to an arbitration and class action waiver provision. The court found that the website did not give reasonable notice of the Terms of Use because they were linked to via an easily missed link in small print at the bottom of the page. In addition, a consumer could complete a purchase without assenting to the Terms of Use. The court found that under these facts the Terms of Use did not bind the plaintiff and therefore denied the motion.

But while the finding that the Terms of Use were a "nullity" lost the battle on arbitration and class action waiver for Lush, it helped Lush win the war because it meant that the plaintiff lacked standing:

Whether or not the nullified contract contained terms that would have violated New Jersey law does not matter to this Plaintiff as a matter of law because she cannot allege that such terms have harmed her. Fundamentally, where the facts and the law compel the finding that Plaintiff did not assent to these Terms, she lacks standing to contest the actual provisions of the non-agreement because there is no concrete harm to Plaintiff.

The court further found that the plaintiff lacked standing for the additional reasons that she had not read the Terms of Use, and because she had no claim actually barred by the Terms of Use. Pointing to the U.S. Supreme Court's 2016 decision on standing in Spokeo, Inc. v. Robins, the court said that the plaintiff was only seeking to bring the Terms of Use "into accord with what she believes New Jersey law requires."

The plaintiff in Rubin made similar allegations and the court there reached the same result on standing. Rubin alleged that the J Crew website's Terms and Conditions contained overly broad exculpatory and indemnification clauses that deprived her of established legal rights, in violation of TCCWNA. The court stated that the case was "no different than Hite" because there were "no allegations that Plaintiff actually read the allegedly violative terms on the Website, relied on them, and felt the resultant effects." Judge Wolfson also had a parting shot for anyone eyeing a TCCWNA suit:

While the intent of the New Jersey legislature in enacting the TCCWNA is to provide additional protections for consumers in this state from unfair business practices, the passage of the Act is not intended, however, for litigation-seeking plaintiffs and/or their counsel to troll the internet to find potential violations under the TCCWNA without any underlying harm.

Many TCCWNA cases are currently winding their way through the courts and case law on TCCWNA should grow quickly in the coming months. To retailers defending TCCWNA cases, Hite and Rubin are reason for some optimism.

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