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Spade v. Select Comfort Corp.

Supreme Court of New Jersey

April 16, 2018

DAVID SPADE and KATINA SPADE, H/W, individually and as a class representative on behalf of others similarly situated, Plaintiffs-Appellants,
v.
SELECT COMFORT CORP., d/b/a SLEEP NUMBER, LEGGETT & PLATT INC., Defendants-Respondents. CHRISTOPHER D. WENGER and EILEEN MULLER, on behalf of themselves and those similarly situated, Plaintiffs-Appellants,
v.
BOB'S DISCOUNT FURNITURE, LLC, Defendant-Respondent.

          Argued November 8, 2017

          On certification of questions of law from the United States Court of Appeals for the Third Circuit.

          Lewis G. Adler argued the cause for appellants David Spade and Katina Spade (Lewis G. Adler and Law Office of Paul DePetris, attorneys; Lewis G. Adler and Paul DePetris, on the briefs).

          Andrew R. Wolf argued the cause for appellants Christopher D. Wenger and Eileen Muller (The Wolf Law Firm, attorneys; Andrew R. Wolf and Henry P. Wolfe, on the briefs).

          Andrew S. Hansen of the Minnesota bar, admitted pro hac vice, argued the cause for respondent Select Comfort Corp. (Fox Rothschild, attorneys; Karen A. Confoy, on the brief, and Heidi A.O. Fisher, of the Minnesota bar, admitted pro hac vice, and Andrew S. Hansen, of the Minnesota bar, admitted pro hac vice, of counsel and on the briefs).

          Brett D. Carroll of the Florida and Massachusetts bars, admitted pro hac vice, argued the cause for respondent Bob's Discount Furniture, LLC (Holland & Knight, attorneys; Brett D. Carroll, Sean C. Sheely and Duvol M. Thompson, on the briefs).

          James A. Barry argued the cause for amicus curiae New Jersey Association for Justice (Locks Law Firm and Law Offices of Charles N. Riley, attorneys; James A. Barry, Michael A. Galpern, Andrew P. Bell, and Charles N. Riley, on the brief).

          David R. Kott argued the cause for amicus curiae New Jersey Business & Industry Association (McCarter & English, attorneys; David R. Kott, Edward J. Fanning, and Zane C. Riester, of counsel and on the brief).

          Gavin J. Rooney submitted a brief on behalf of amicus curiae the New Jersey Civil Justice Institute (Lowenstein Sandler, attorneys; Gavin J. Rooney and Naomi D. Barrowclough, of counsel and on the brief).

          Bruce D. Greenberg submitted a brief on behalf of amicus curiae Consumers League of New Jersey (Lite DePalma Greenberg, attorneys; Bruce D. Greenberg, of counsel and on the brief, and Susana Cruz Hodge, on the brief).

          Christopher J. Michie and Christopher J. Dalton submitted a brief on behalf of amicus curiae Commerce and Industry Association of New Jersey (Clark Michie and Buchanan Ingersoll & Rooney, attorneys; Christopher J. Michie, Bruce W. Clark, Christopher J. Dalton, and Jinkal Pujara, on the brief).

          Drew Cleary Jordan submitted a brief on behalf of amicus curiae New Jersey Retail Merchants Association (Morgan, Lewis & Bockius, attorneys; Drew Cleary Jordan and Kristin M. Hadgis on the brief, and Gregory T. Parks, of the Pennsylvania bar, admitted pro hac vice, on the brief).

          Michael P. Daly and Matthew J. Fedor submitted a brief on behalf of amicus curiae The Retail Litigation Center, Inc. (Drinker Biddle & Reath, attorneys; Michael P. Daly, Matthew J. Fedor, Meredith C. Slawe, Kathryn E. Deal, Jenna M. Poligo, and Andrew B. Joseph, of counsel and on the brief).

          Benjamin D. Morgan submitted a brief on behalf of amicus curiae Tailored Brands, Inc. (Archer & Greiner and Armstrong Teasdale, attorneys; Benjamin D. Morgan, on the brief, Charles W. Steese, of the Colorado, Arizona and Iowa bars, admitted pro hac vice, and Douglas N. Marsh, of the Colorado and Illinois bars, admitted pro hac vice, of counsel and on the brief).

          PATTERSON, J., writing for the Court.

         In this appeal, the Court addresses two questions of law certified by the United States Court of Appeals for the Third Circuit.

         The Third Circuit's certified questions arise from two putative class actions brought under the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18. The plaintiffs in both actions premise their TCCWNA claims on defendants' alleged violations of N.J.A.C. 13:45A-5.2 and -5.3. Those regulations, promulgated by the Attorney General under the authority of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -210, address the content of contracts of sale or sale orders for the delivery of household furniture.

         The certified questions are:

1. Does a violation of the Furniture Delivery Regulations alone constitute a violation of a clearly established right or responsibility of the seller under the TCCWNA and thus provides a basis for relief under the TCCWNA?
2. Is a consumer who receives a contract that does not comply with the Furniture Delivery Regulations, but has not suffered any adverse consequences from the noncompliance, an "aggrieved consumer" under the TCCWNA?

         In 1995, the Division of Consumer Affairs proposed and adopted regulations governing the delivery of household furniture and furnishings, N.J.A.C. 13:45A-5.1 to -5.4. The regulations impose a series of delivery and notice requirements on "[a]ny person who is engaged in the sale of household furniture for which contracts of sale or sale orders are used for merchandise ordered for future delivery." N.J.A.C. 13:45A-5.1(a).

         Plaintiffs David Spade and Katina Spade (Spade plaintiffs) assert that they purchased furniture from a retail store owned and operated by defendant Select Comfort Corporation (Select Comfort). They allege that Select Comfort's sales contract included language prohibited by N.J.A.C. 13:45A-5.3(c): a statement that the sale of certain products "are final, " and a statement that as to certain categories of products, "[n]o returns will be accepted" or "[n]o returns or exchanges will be authorized or accepted." The Spade plaintiffs also allege that the sales contract provided to them did not include language mandated by N.J.A.C. 13:45A-5.2(a) and N.J.A.C. 13:45A-5.3(a).

         Plaintiffs Christopher D. Wenger and Eileen Muller (Wenger plaintiffs) allege that they ordered furniture from a store owned by defendant Bob's Discount Furniture, LLC (Bob's Discount Furniture). They allege that the "sales document" provided by Bob's Discount Furniture included language that violates N.J.A.C. 13:45A-5.3(c), which mandates a full refund in the event of a late delivery of the furniture ordered. The Wenger plaintiffs also contend that the sales document did not entirely conform with N.J.A.C. 13:45A-5.2(a) and N.J.A.C. 13:45A-5.3(a) because language required by those provisions appeared in a font different from the "ten-point bold face type" that the regulations prescribe.

         HELD: (1) The inclusion of language prohibited by N.J.A.C. 13:45A-5.3(c) in contracts of sale or sale orders for the delivery of household furniture may alone give rise to a violation of a "clearly established legal right of a consumer or responsibility of a seller" for purposes of the TCCWNA. N.J.S.A. 56:12-15. (2) A consumer who receives a contract that includes language prohibited by N.J.A.C. 13:45A-5.3(c), but who suffers no monetary or other harm as a result of that noncompliance, is not an "aggrieved consumer" entitled to a remedy under the TCCWNA. N.J.S.A. 56:12-17.

         1. The TCCWNA is intended "to prevent deceptive practices in consumer contracts." Dugan v. TGI Fridays, Inc., 231 N.J. 24, 67 (2017). When it enacted the TCCWNA, the Legislature sought to require sellers to acknowledge clearly established consumer rights, and to provide remedies for posting or inserting provisions contrary to law. A plaintiff pursuing a TCCWNA cause of action must prove: that the defendant was a "seller, lessor, creditor, lender or bailee or assignee of any of the aforesaid"; that the defendant offered or entered into a "written consumer contract or [gave] or display[ed] any written consumer warranty, notice or sign"; that at the time that the written consumer contract is signed or the written consumer warranty, notice or sign is displayed, that writing contains a 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; and that the plaintiff is an "aggrieved consumer." N.J.S.A. 56:12-15, -17. (pp. 13-15)

         2. The Third Circuit's first certified question asks whether a violation of N.J.A.C. 13:45A-5.2 or -5.3 alone constitutes a violation of a clearly established legal right of a consumer or a responsibility of a seller under the TCCWNA, and therefore provides a basis for relief under the TCCWNA. In these appeals, all plaintiffs allege that defendants included in their sales documents language constituting an affirmative misrepresentation, contrary to N.J.A.C. 13:45A-5.3(c). Because those allegations are present in both appeals, the Court does not reach the question of whether a seller's omission of a provision required by N.J.A.C. 13:45A-5.2 or -5.3 would give rise to a TCCWNA claim. Nothing in either the TCCWNA's plain language or its legislative history suggests that the inclusion of language in a contract or other writing that violates a regulation cannot be the basis for a claim under N.J.S.A. 56:12-15. Moreover, accepting regulations as a source of law in the application of N.J.S.A. 56:12-15's "clearly established" standard furthers the TCCWNA's consumer-protection objectives. Although the CFA generally describes unlawful commercial practices that give rise to a cause of action, the Legislature envisioned that the Attorney General would specifically identify unlawful practices in particular commercial markets, and that such regulations would constitute law. New Jersey decisions also acknowledge that a TCCWNA violation may be premised on the violation of a regulation. N.J.A.C. 13:45A-5.3(c) is plainly the source of a "clearly established legal right of a consumer or responsibility of a seller" within the meaning of N.J.S.A 56:12-15. The regulation carries the force of law; indeed, a violation "shall be subject to the sanctions contained in" the CFA. N.J.A.C. 13:45A-5.4. Moreover, N.J.A.C. 13:45A-5.3(c)'s prohibition on misleading refund terms in furniture-sales contracts provides unambiguous direction to furniture sellers. Accordingly, a furniture seller's inclusion in a consumer sales contract or agreement of language prohibited by N.J.A.C. 13:45A-5.3(c) may alone constitute a violation of a "clearly established legal right of a consumer or responsibility of a seller" under N.J.S.A. 56:12-15, and thus may provide a basis for relief under the TCCWNA. (pp. 16-20)

         3. The Third Circuit's second certified question asks whether a consumer who receives a contract containing provisions that violate one of the regulations at issue, but who has suffered no adverse consequences as a result of the contract's noncompliance with the regulation, constitutes an "aggrieved consumer, " as that term is used in N.J.S.A. 56:12-17. "The TCCWNA does not specifically define what makes a 'consumer' an 'aggrieved consumer' for purposes of N.J.S.A. 56:12-17, " Dugan, 231 N.J. at 69, and the Third Circuit's request to define an "aggrieved consumer" raises a question of first impression for the Court. In the provision of the TCCWNA that defines a statutory violation, the word "consumer"-unmodified by the term "aggrieved"-broadly denotes "any individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes." N.J.S.A. 56:12-15. In the TCCWNA's remedial provision, however, the Legislature chose a more precise term: "aggrieved consumer." N.J.S.A. 56:12-17. The Legislature clearly intended to differentiate between "consumers and prospective consumers"-the broad category of people whom the Legislature seeks to shield from offending provisions-and "aggrieved consumers" entitled to a remedy under the TCCWNA. If "aggrieved consumer" were construed to mean nothing more than a "consumer" to whom a contract or other writing is offered, given or displayed, the term "aggrieved" would be superfluous. That word distinguishes consumers who have suffered harm because of a violation of N.J.S.A. 56:12-15 from those who have merely been exposed to unlawful language in a contract or writing, to no effect. That harm is not limited to injury compensable by monetary damages. Proof of harm resulting from contract language prohibited by N.J.S.A. 56:12-15 may warrant a civil penalty under N.J.S.A. 56:12-17, even if the harm is not compensable by damages. In the setting of these appeals, if a consumer has entered into a sales contract containing a provision that violated N.J.A.C. 13:45A-5.3, but his or her furniture was delivered conforming and on schedule, and he or she has incurred no monetary damages or adverse consequences, that consumer has suffered no harm. Such a consumer is not an "aggrieved consumer" under N.J.S.A. 56:12-17. (pp. 20-27)

          CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE PATTERSON's opinion.

          OPINION

          PATTERSON JUSTICE

         In this appeal, we address two questions of law certified by the United States Court of Appeals for the Third Circuit to this Court. The Third Circuit's certified questions arise from two putative class actions brought under the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18. The plaintiffs in both actions premise their TCCWNA claims on defendants' alleged violations of N.J.A.C. 13:45A-5.2 and -5.3. Those regulations, promulgated by the Attorney General under the authority of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -210, address the content of contracts of sale or sale orders for the delivery of household furniture.

         The certified questions are:

1. Does a violation of the Furniture Delivery Regulations alone constitute a violation of a clearly established right or responsibility of the seller under the TCCWNA and thus provides a basis for relief under the TCCWNA?
2. Is a consumer who receives a contract that does not comply with the Furniture Delivery Regulations, but has not suffered any adverse consequences from the noncompliance, an "aggrieved consumer" under the TCCWNA?

         We answer the first certified question in the affirmative and the second certified question in the negative. We hold that the inclusion of language prohibited by N.J.A.C. 13:45A-5.3(c) in contracts of sale or sale orders for the delivery of household furniture may alone give rise to a violation of a "clearly established legal right of a consumer or responsibility of a seller" for purposes of the TCCWNA. N.J.S.A. 56:12-15. We further hold that a consumer who receives a contract that includes language prohibited by N.J.A.C. 13:45A-5.3(c), but who suffers no monetary ...


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