Michael R. Darbee
On January 10, 2018, the New Jersey Supreme Court decided a case involving the enforceability of mandatory arbitration agreements in consumer contracts. In Kernahan v. Home Warranty Administrator of Florida, the Court held that a mandatory arbitration agreement in a home warranty contract was unenforceable because it lacked mutual assent.
The consumer sued her home warranty administrator and the home warranty administrator moved to dismiss, citing the mandatory arbitration provision in the parties’ contract. The trial court denied that motion and held the arbitration provision was unenforceable. The Appellate Division affirmed the trial court. The New Jersey Supreme Court affirmed the Appellate Division and held that the agreement was too contradictory and confusing to create mutual assent. Continue reading “New Jersey Supreme Court Weighs in on Arbitration Clauses in Consumer Contracts”
Adrienne C. Rogove
In Griffoul v. NRG Residential Solar Solutions, LLC and NRG Energy, Inc., the Appellate Division recently addressed the validity of an arbitration clause in a lease between the plaintiffs, residents of Elmwood Park and class representatives (“Plaintiffs”), and NRG Residential Solar Solutions (“NRG RSS”) doing business as NRG Home Solar (“NRG Residential”) and NRG Energy, Inc. (“NRG Energy”) (collectively, “Defendants”). A-5535-16T1 (App. Div. May 4, 2018). Plaintiffs filed a class action complaint against Defendants alleging violations of the New Jersey Consumer Fraud Act (“CFA”) and the Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) based on particular provisions in the lease. The lease required NRG Residential to install solar systems on Plaintiffs’ properties, which would provide electricity to their homes, and which would be connected to the utility’s electrical transmission grid.
Defendants filed a motion to compel arbitration pursuant to an arbitration clause in the lease. In pertinent part, the lease provided:
“[A]ny dispute, disagreement or claim between you and NRG RSS arising out of or in connection with this Lease, or the Solar System…shall be submitted to final and binding arbitration…YOU AND NRG RSS AGREE THAT BY ENTERING INTO THIS LEASE, YOU AND WE ARE WAIVING THE RIGHT TO A JURY TRIAL. IN ADDITION, EACH PARTY MAY BRING CLAMS AGAINST THE OTHER PARTY ONLY IN ITS INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING.”
Defendant NRG Energy also moved to dismiss the CFA claim for failure to plead it with particularity as required by Rule 4:5-8(a), and to dismiss the TCCWNA claim on the basis that NRG Energy was not a party to the lease agreement. Continue reading “Appellate Division Compels Arbitration of Consumer Fraud and TCCWNA Claims and Dismisses Class Claims”
Stephen M. Orlofsky and Ethan M. Simon
The Third Circuit certified to the New Jersey Supreme Court two questions about the interplay between New Jersey’s furniture delivery regulations and the state’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA). In Spade v. Select Comfort Corp., — A.3d —, 2018 WL 1790394 (N.J. Apr. 16, 2018), the court answered. In so doing, it expanded the reach of TCCWNA, which is intended to “prevent deceptive practices in consumer contracts.” Id. at *7. The act prohibits merchants from offering and entering into written contracts with consumers that include “any provision that violates any clearly established right of a consumer or responsibility of a seller … as established by State or Federal law at the time the offer is made or the consumer contract is signed.” Id. Continue reading “Must Consumer Suffer Adverse Consequence in Order to Sue under TCCWNA?”
Jeffrey N. Rosenthal and Ethan M. Simon
To quote classicist author Edith Hamilton from her book The Roman Way to Western Civilization, “The comedy of each age holds up a mirror to the people of that age, a mirror that is unique.” Nowhere is that statement truer than when discussing the comedic genius of the hit animated television series South Park, now approaching its twenty-second season.
In its 2006 Primetime Emmy Award-winning episode “Make Love, Not Warcraft,” South Park delved into video gamers’ obsession with the wildly-popular PC game World of Warcraft. One of the show’s plotlines focused on a player whose in-game character had become so powerful the game’s developer had to devise a way to stop him. The developer’s solution: give another player the legendary “Sword of a Thousand Truths,” a unique item that might even the odds.
Eight years later, South Park lambasted so-called “freemium” games in its Primetime Emmy Award-nominated episode “Freemium Isn’t Free.” This episode, too, took a hard look at gaming culture, paying particular attention to “freemium games”—in which players can play a videogame for free, but to obtain certain desirable upgrades or items they must pay real-world money. In this episode, an eight-year-old character spent thousands of dollars on freemium upgrades, much to his father’s chagrin.
Not surprisingly, South Park’s observations about videogame culture were right: gamers will place a premium on certain virtual items, and are eager to spend big money to get them.
To read the full article, please click here.
“Loot Boxes in Videogames: Gambling by Any Other Name?” by Jeffrey N. Rosenthal and Ethan M. Simon was published in The Legal Intelligencer on April 24, 2018.
David C. Kistler, Michael A. Iannucci, and Richard Wolf
In deciding a motion to dismiss under Rule 12(b)(6) in a putative class action, the United States District Court for the District of New Jersey recently addressed, among other things, what is quickly becoming a hot button issue: whether claims under the New Jersey Consumer Fraud Act (“CFA”) and New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) can be asserted by non-New Jersey residents. In Morcom v. LG Electronics USA, Inc., Judge Claire C. Cecchi answered this question in the negative, dismissing the CFA and TCCWNA claims asserted by a class representative from Washington State while allowing the same claims asserted by a New Jersey class representative to proceed. Continue reading “District of New Jersey Allows Consumer Fraud Act Claim to Proceed for New Jersey Resident, Dismisses Claim for Non-Resident”
In a March 16, 2017 decision, the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a putative consumer class action against Anheuser-Busch Companies, LLC. In this action, plaintiffs alleged that the labeling on defendant’s “Rita” malt beverages (including Bud Light Lime-a-Rita) was misleading and asserted claims for false advertising, omission, and breach of warranty under California law. Plaintiffs alleged that use of the word “Light” was misleading because the products contained considerably more calories and carbohydrates per ounce than other Budweiser products. The Ninth Circuit was called upon to review the District Court’s dismissal of the action with prejudice under Rule 12(b)(6).
In affirming the District Court, the Ninth Circuit held that “no reasonable consumer would be deceived by the label on the carton into thinking that ‘Bud Light Lime Lime-a-Rita,’ which the label calls a ‘Margarita With a Twist,’ is a low calorie, low carbohydrate beverage, or that it contains fewer calories or carbohydrates than a regular beer.” The Ninth Circuit noted that the label makes clear that the product is “not a normal beer” and that the label picture shows a bright green drink served over ice in a margarita glass. According to the Ninth Circuit, comparable products would include a hypothetical Budweiser Lime-a-Rita product (as opposed to a Bud Light) or a tequila margarita, both of which would contain more calories and carbohydrates than the product at issue. For these reasons, the Ninth Circuit dismissed both the false advertising and omission claims.
While this decision is not binding in New Jersey, New Jersey businesses should take note of the Ninth Circuit’s reasoning regarding what constitutes a comparable product for purposes of consumer deception.
Jaret N. Gronczewski
The New Jersey Appellate Division in Garmeaux v. DNV Concepts, Inc. t/a The Bright Acre, No. A-1400-14T1, held that a prevailing plaintiff in a Consumer Fraud Act (“CFA”) case is entitled to recover attorneys’ fees expended to defend an intertwined counterclaim. The opinion, which addressed an issue of first impression for the court, has been approved for publication. The court also reaffirmed that New Jersey law does not impose a proportionality requirement on fee awards.
The plaintiffs in Garmeaux sued Bright Acre in connection with services rendered to replace their gas fireplace in 2010. According to the plaintiffs’ testimony, Bright Acre introduced them to co-defendant James Risa, who was slated to perform the installation services for the new fireplace. At the time, Risa had worked at Bright Acre for approximately 20 years. Risa, however, also owned and operated his own independent company called Professional Fireplace Services. In March 2010, Risa provided a $3,700 estimate to the plaintiffs for installation services. And Bright Acre provided a sales order for $2,450 in August 2010. In September 2010, the plaintiffs made a payment to Professional Fireplace Services toward the $3,700 installation fee. Work began in late October 2010. Continue reading “Appellate Division Holds That Consumer Fraud Act Plaintiffs Can Recover Attorneys’ Fees Expended in Defense of Counterclaim”