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Fenwick v. Kay American Jeep Inc.

Decided: February 28, 1977.

MILLICENT H. FENWICK, DIRECTOR OF THE NEW JERSEY DIVISION OF CONSUMER AFFAIRS, PLAINTIFF-APPELLANT,
v.
KAY AMERICAN JEEP, INC., RESPONDENT, AND JOSEPH FRIEDMAN, T/A FRIEDMAN ASSOCIATES, DEFENDANT-RESPONDENT. MILLICENT H. FENWICK, DIRECTOR OF THE NEW JERSEY DIVISION OF CONSUMER AFFAIRS, PLAINTIFF-APPELLANT, V. ARREL DATSUN, RESPONDENT, AND JOSEPH FRIEDMAN, T/A FRIEDMAN ASSOCIATES, DEFENDANT-RESPONDENT



For reversal -- Chief Justice Hughes, Justices Mountain, Sullivan, Pashman, Clifford and Schreiber and Judge Conford. For affirmance -- None. The opinion of the court was delivered by Sullivan, J.

Sullivan

The appeals herein, filed as of right by virtue of a dissent in the Appellate Division, were consolidated by order of this Court because they present a common issue and have the same party appellant in each case. Involved are alleged violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. and, in particular, implementing regulations adopted by the Attorney General.

The facts are undisputed. In February, 1974, complaints were filed by the Director of the New Jersey Division of Consumer Affairs charging two automobile dealers Kay American Jeep, Inc. and Arrel Datsun, with having violated an administrative regulation of the Division (N.J.A.C. 13:45A-2.2, (a), 2, ii, (4)). The regulation makes it an unlawful motor vehicle advertising practice to fail to disclose the bona fide odometer reading (mileage) in an advertisement for the sale of a used automobile.

Joseph Friedman, t/a Friedman Associates, is an advertising agency which prepared the advertisements in question for both dealers and had them placed in a newspaper. One of the Kay American Jeep ads and two of the Arrel Datsun ads placed by Friedman omitted the odometer reading for the used vehicles being advertised for sale. Friedman was named as a respondent in the Arrel complaint and consented to be joined as a respondent in the Kay American complaint.

At the administrative hearings before a hearing officer of the Division of Consumer Affairs, Friedman admitted that the odometer readings for the vehicles in question had been given to his office by the dealers, but explained that the failure to include the mileage in the ads was due to "human error," being the result of inadvertence or mistake on the part of a member of his staff. Since the omissions were unintentional it was claimed that violations of the Act and

regulations had not been shown. However, Friedman admitted knowledge of the regulation and testified that his staff had been told of its requirements. He also admitted that, in the past, he had received several warnings from the Division that ads placed by his agency were in violation of Consumer Affairs' advertising regulations.

The hearing officer in each case found the dealer and Friedman guilty. He held that the Act and implementing regulation imposed strict liability for such a violation and that it was not necessary that intent to commit the violation be shown. Fines of $150 and costs of $50 were assessed jointly and severally in each case, and the respondents were directed to cease and desist from future violations.

Kay American and Arrel Datsun did not appeal the administrative decisions. However, Friedman filed notices of appeal with the Appellate Division which by majority vote in each case reversed the Division's rulings, holding that intent was an essential element of the alleged violations and that the nondisclosure of a material fact unknowingly and by reason of inadvertence does not constitute an unlawful practice under the Act. The Appellate Division opinion in Kay is reported at 136 N.J. Super. 114 (1975). Its opinion in Arrel, which relies exclusively on Kay, is unreported.

Judge Kolovsky dissented in each case on the ground that intent was not an element of the violations charged and that the Act and implementing regulations imposed strict liability for such violations regardless of intent. Because of the dissent, the Director of the Division of Consumer Affairs has appealed as of right. R. 2:2-1(a)(2).

We think the dissent is correct. The Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., was passed in response to widespread complaints about selling practices which victimized consumers. Riley v. New Rapids Carpet Center, 61 N.J. 218, 224-225 (1972). The purpose of the Act was to prevent deception, fraud or falsity, whether by acts of commission or omission, in connection with the sale and

advertisement of merchandise and real estate. To accomplish the objectives of the Act, the Attorney General is empowered to promulgate such rules and ...


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