On certification to the Superior Court, Appellate Division, whose opinion is reported at 369 N.J. Super. 402 (2004).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
The Court considers what constitutes an ascertainable loss under New Jersey's Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20.
This matter was filed as a class action complaint against Mercedes-Benz USA (Mercedes-Benz). The complaint alleged that fuel sending units in certain Mercedes-Benz vehicles contained a serious and hazardous latent design defect that caused the dashboard fuel gauge to reflect inaccurately the amount of gasoline in the fuel tanks. This defect allegedly placed consumers at a risk of unexpected operational failure of the vehicle due to sudden depletion of fuel. In part, the complaint asserted that the defect violated the CFA.
Plaintiffs Brian and Barbara Flaherty, New York residents, experienced difficulties with inaccurate fuel gauge readings on their 1999 Mercedes-Benz C-280, which they purchased from Helms Brothers Mercedes in Bayside, New York. On at least two occasions, they ran out of fuel while driving. After suing the dealer under Pennsylvania's lemon law, they turned in the 1999 C-280 and received a newer 2000 model at no additional out-of-pocket cost and subject to the same financing terms as the 1999 model, including credit for all payments made on the older vehicle. Flaherty conceded that he did not pay for the cost of repairs or for the loaner cars in connection with the repairs to the 1999 model. After the Flahertys began to experience inaccurate fuel gauge problems with the 2000 C-280 model, and after Mercedes-Benz made several repair attempts, they were permitted to upgrade their C-280 for a new E-320 by paying the difference in price between the suggested retail price for a new C-280 and a new E-320. Again, they incurred no out-of-pocket expenses in connection with the repairs and received a free loaner car during those repairs. Although the defect resurfaced in the E-320, Mercedes-Benz repaired it and since then the Flahertys have not reported another fuel-sensor problem.
Plaintiff Yuet Lan Lam leased a Mercedes-Benz ML-430 from Prestige Motors Inc. in Paramus, New Jersey in October 1999. On four occasions during the lease the vehicle stalled and she had to bring it to Mercedes-Benz for repairs. Each time, the warranty work was performed at no cost and she received a free loaner car for interim use.
A motion for class certification was filed. Mercedes-Benz opposed the motion and moved for dismissal of the individual claims of the putative class representatives. Although Mercedes-Benz admitted that there were 43,039 fuel sending unit failures prior to August 28, 2001, it contended that the company's actions to repair and replace problem units, taken in compliance with its warranty program, made it impossible to prove objectively verifiable damages. Mercedes-Benz asserted that because the plaintiffs failed to demonstrate an ascertainable loss that was prerequisite to their right to a private CFA action, the claims must be dismissed.
The trial court granted judgment to Mercedes-Benz. The Appellate Division reversed and reinstated plaintiffs' complaint. 369 N.J. Super. 402 (App. Div. 2004). According to the panel, the mere possibility that the fuel gauge defect may be present in replacement parts used in the repair of plaintiffs' vehicles rendered it likely that the problem could recur. The panel further took judicial notice of the likelihood that if the Flahertys were to advise a future buyer of their vehicle about the potential defect, they would receive less than if the defect was not present. The panel concluded that "common knowledge, indeed common sense, compels a conclusion that the value of the vehicle is impaired to a measurable, if presently unknowable degree." This Court granted certification to review whether plaintiffs had made out a case that could withstand Mercedes-Benz's motion for summary judgment in respect of the issue of ascertainable loss.
HELD: The putative class representatives failed to produce evidence from which a finder of fact could find or infer that they suffered a quantifiable or otherwise measurable loss as a result of the alleged Consumer Fraud Act violation, pursuant to N.J.S.A. 56:8-1 to -20; therefore, Mercedes-Benz is entitled to summary judgment.
1. The CFA was enacted to deter fraudulent practices in the marketplace. Violations under the CFA include affirmative acts such as unconscionable commercial practices, fraud, deception, and misrepresentation. In addition to the power conferred on the Attorney General to seek injunctive relief, the CFA permits a private right of action, pursuant to N.J.S.A. 56:81-9. The private right of action allows a successful plaintiff who suffers an "ascertainable loss" of money or property to recover treble damages, reasonable attorneys' fees, and costs. The private right of action, which was added by amendment in 1971, advances the CFA's purpose by compensating victims for actual losses, punishing wrongdoers through awards of treble damages, and offering incentives for attorneys to take a case even when only a relatively small loss may be involved. As this Court explained in Weinberg v. Sprint Corp., 173 N.J. 233 (2002), in order to proceed with a CFA claim, a private plaintiff only need present a bona fide claim for an ascertainable loss, defined as a loss that is capable of withstanding a motion for summary judgment because it raises a genuine issue of fact requiring resolution by the factfinder. (Pp. 13-17).
2. There is little that illuminates the precise meaning that the Legislature intended in respect of the term "ascertainable loss" in the CFA. To give effect to the legislative language describing the requisite loss for private standing, and to be consistent with Weinberg, a private plaintiff must produce evidence from which a factfinder could find or infer that the plaintiff suffered an actual loss. At the time of summary judgment that evidence must be sufficient to present a genuine issue for the factfinder. In cases involving breach of contract or misrepresentation, either out-of-pocket loss or a demonstration of loss in value will suffice to meet the ascertainable loss hurdle and will set the stage for establishing the measure of damages. However, a claim of loss in value must be supported by sufficient evidence to get to the factfinder. The plaintiff must proffer evidence of loss that is not hypothetical or illusory and it must be presented with some certainty demonstrating that it is capable of calculation. (Pp. 17-19).
3. The ascertainable loss requirement operates as an integral check upon the balance struck by the CFA between the consuming public and sellers of goods. Defects can, and do, arise with complex instrumentalities such as automobiles. But such defects do not establish, in and of themselves, an actual and ascertainable loss to the purchaser. The warranty provided as part of the contract of sale or lease is part of the benefit of the bargain between the parties. Defects that arise and are addressed by warranty, at no cost to the consumer, do not provide the predicate loss that the CFA expressly requires for a private claim. (Pp. 19-23).
4. Here, examination of the proofs advanced in respect of the purported class representatives reveals that neither presents a quantifiable or otherwise measurable loss. In respect of the Flahertys, the defects did not result in any out-of-pocket monetary losses, despite the inconvenience the Flahertys experienced. The argument that there is a future hypothetical diminution in value due to a fuel gauge that at one time did not read properly is too speculative to satisfy the CFA requirement. The Flahertys made no attempt to sell their vehicle, nor did they present any expert evidence to support an inference of loss of value. The absence of any such evidence was fatal to the claim. The Court is not persuaded as to the correctness or appropriateness of the Appellate Division's resort to common knowledge or common sense. Lam also had no out-of-pocket loss attributable to the alleged defect. Her payment for the gas used during technicians' efforts to diagnose her car's problem does not constitute a "loss" of the sort that would support a CFA private claim in this setting. Moreover, because Lam leases her vehicle, she is unable to advance an argument that she might be able to demonstrate loss in future resale value due to alleged, potentially defective parts, assuming some proof to support that claim. In sum, the trial court correctly dismissed the individual claims of the putative class representatives. (Pp. 23-26).
5. The Court notes that the Legislature has provided more than the CFA as a remedy for automobile defects. New Jersey's Lemon Law Act, N.J.S.A. 56:12-29 to -49, applies to new cars during their first 18,000 miles of operation or during the period of two years following the date of original delivery to a consumer. The Lemon Law allows a car manufacturer three opportunities to cure a defect pursuant to a warranty program before the remedies attach. The CFA and the Lemon Law would be in conflict if the CFA were to accept as proof of an ascertainable loss the occurrence of a defect in an automobile, even when the defect is addressed by the manufacturer or dealer at no cost to the purchaser pursuant to the warranty program.
The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the trial court for entry of judgment in favor of Mercedes-Benz.
CHIEF JUSTICE PORITZ and ASSOCIATE JUSTICES LONG, ZAZZALI, WALLACE, and RIVERASOTO join in JUSTICE LaVECCHIA's opinion. JUSTICE ALBIN did not participate.
The opinion of the court was delivered by: Justice LaVECCHIA
The New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to --20, authorizes a private cause of action when a plaintiff has suffered an "ascertainable loss of moneys or property, real or personal" as a result of a practice in violation of the CFA.
N.J.S.A. 56:8-19. This appeal focuses on the enigmatic requirement of an "ascertainable loss" and, specifically, on what a plaintiff must demonstrate in order to survive a motion for summary judgment when challenged on that issue. We hold that when a plaintiff fails to produce evidence from which a finder of fact could find or infer that a plaintiff suffered a quantifiable or otherwise measurable loss as a result of the alleged CFA unlawful practice, summary judgment should be entered in favor of defendant, as the trial court here correctly held. We therefore reverse the contrary judgment of the Appellate Division. Thiedemann v. Mercedes-Benz USA, LLC, 369 N.J. Super. 402 (App. Div. 2004).