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Hyland v. Aquarian Age 2 000 Inc.

Decided: February 15, 1977.

WILLIAM F. HYLAND, ATTORNEY GENERAL OF NEW JERSEY, PLAINTIFF,
v.
AQUARIAN AGE 2,000, INC., T/A DOLLAR SAVERS OF AMERICA, A NEW JERSEY CORPORATION, AND FRANK CONTI, DEFENDANTS



Ciolino, J.s.c.

Ciolino

[148 NJSuper Page 189] From the stipulated facts the following is set forth as pertinent herein. Aquarian Age 2,000, Inc., t/a Dollar Savers of America (D.S.A.), is a New Jersey corporation and Frank Conti is D.S.A.'s founder, president, director of the corporation and its moving force. The basic business of D.S.A. consists of the sale of consumer memberships, in the form of a consumer discount card, to the consuming public. This membership entitles the consumer to obtain predetermined discounts on certain purchases at selected merchants. Participating merchants pay a fee to participate in D.S.A.'s program and the discounts which these merchants offer are listed in a periodic newsletter distributed to consumer members. The longest contract that D.S.A. has with any merchant is for ten years. While the length of the consumer memberships offered has varied over time, D.S.A.

has, at least since January 1, 1975, offered consumers a lifetime membership.

For purposes of the present disposition it is unnecessary to state in detail the marketing format for D.S.A.'s program. Briefly stated, D.S.A. consumer memberships are sold through a combination of group meetings and person-to-person sales efforts. The sales force is composed of a network of sales representatives and general managers who earn commissions based on the number of consumer memberships sold.

At a hearing on December 15, 1976 counsel indicated that all issues not presented at that argument would be deemed abandoned. The issues presented for determination are as follows:

1. Is the program and marketing plan of D.S.A. an unlawful chain referral selling plan?

2. Are the statements of D.S.A. concerning income to be earned by sales representatives in violation of N.J.S.A. 56:8-1 et seq.?

3. Does D.S.A.'s offer of a lifetime membership and D.S.A.'s conduct of their business meetings constitute the use and employment of an unconscionable commercial practice, a false promise or otherwise violate N.J.S.A. 56:8-1 et seq.?

4. What is the degree and burden of proof which must be met by plaintiff in order to prevail against D.S.A. on the various causes of action?

5. Is plaintiff's cause of action barred by the defenses of laches and estoppel?

6. What, if any, is the individual liability of defendant Frank Conti?

At the conclusion of the hearing the defenses of laches and estoppel were dismissed. However, those defenses were preserved for the limited purpose of possible consideration on the issue of mitigation of penalty in the event the court ultimately finds a violation of the Consumer ...


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