Class Action Lawsuits Under the New Jersey Consumer Fraud Act

Class action lawsuits are becoming an increasingly popular means for consumers to hold businesses accountable for fraudulent and deceptive practices, and to gain leverage in a lawsuit. Under the New Jersey Consumer Fraud Act (N.J.S.A. 56:8-1 et seq.), consumers may file a class action lawsuit against a business that has engaged in deceptive or misleading practices.

The New Jersey legislature passed the Consumer Fraud Act (CFA) in 1960. The act defines consumer fraud as any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact. It applies to any person who engages in business in New Jersey, whether or not the person or business is based in the state.

New Jersey Court Rule 4:32-1 sets forth the requirements for the filing of a class action lawsuit. In summary, the rule requires:

• One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are common questions of law or facts, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
• An action may be maintained as a class action if the prerequisites of the above paragraph are met and:
• The prosecution of separate actions by or against individual members of the class would create a risk either of inconsistent or varying adjudications with respect to individual members of the class or adjudications regarding individual members of the class that would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests:
• The court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members and believes a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The factors pertinent to the findings include:

– The interest of members of the class in individually controlling the prosecution or defense of separate actions;

-The extent and nature of any litigation concerning the controversy already commenced by or against members of the class;

-The desirability or undesirability in concentrating the litigation of the claims in the particular forum; and lastly:

-The difficulties likely to be encountered in the management of a class action.

See the Rule for the complete text.

One of the most significant features of the CFA is its provision for treble damages. This means that if a consumer prevails in a CFA case, the jury may award him damages three times the amount of their actual damages. This provision serves as a powerful deterrent to businesses engaging in fraudulent practices.

In addition to treble damages, the CFA also allows for the recovery of attorneys’ fees and costs. This makes it easier for consumers to pursue claims for violations of the CFA, even though the legal costs may exceed the amount of any recovery or verdict.

To pursue a viable class action lawsuit under the CFA, the plaintiff must first establish that there is a class of individuals who have been similarly affected by the defendant’s fraudulent or deceptive practices. This means that the plaintiff must show that there are enough individuals the defendant’s actions harmed to justify a class action lawsuit.

Once the plaintiff has established a class, he must then show that the defendant engaged in a fraudulent or deceptive practice that caused harm to the members of the class. This can be done through a variety of means, such as presenting evidence of false advertising, misrepresentations, or omissions of material information.

Not all consumer complaints will qualify as a class action lawsuit under the CFA. The plaintiff must show that the defendant’s actions were widespread and affected numerous individuals.

If the plaintiff cannot establish a class, he or she may still pursue an individual claim under the CFA.

Recent Notable Class Action Lawsuits Under the New Jersey Consumer Fraud Act

In recent years, there have been several high-profile class action lawsuits filed under the CFA in New Jersey. For example, in 2016, plaintiffs filed a class action lawsuit against Volkswagen over its diesel emissions scandal. The lawsuit alleged that Volkswagen had engaged in deceptive advertising and false claims regarding the emissions of its diesel vehicles.

The parties settled the case for $69 million, with each affected consumer receiving compensation for his or her damages.

Another notable class action lawsuit filed under the CFA was against Apple in 2018. The lawsuit alleged that Apple had engaged in deceptive practices by intentionally slowing down older iPhones. The parties settled the case for $500 million, with affected consumers receiving compensation for their damages.

Defending Class Action Lawsuits Under the New Jersey Consumer Fraud Act

However, it is also important to note that not all class action lawsuits are successful. In fact, there are several defense strategies available to contest the allegations of class action plaintiffs:

Attack the class certification

One of the most effective ways to defend against a CFA class action is to challenge the certification of the class itself. Under New Jersey law, the court will only certify a class if the plaintiffs can show that there are common questions of law or fact that are shared by all members of the class and that the class action is a superior method for resolving the dispute. If you can successfully argue that they do not meet these requirements, the class may not be certified, which can significantly reduce your exposure to liability.

Challenge the standing of the named plaintiff

In order to bring a class action, the named plaintiff must have standing to sue under the CFA. This means that the plaintiff must have suffered an actual loss because of the defendant’s alleged deceptive or fraudulent conduct. If you can show that the named plaintiff does not have standing, you may defeat the class action entirely.

Attack the plaintiff’s evidence

In CFA class actions, the plaintiffs will typically rely on expert testimony and other forms of evidence to support their claims of deception or fraud. Defense counsel will carefully scrutinize this evidence to identify any weaknesses or flaws. Defense counsel may challenge the admissibility of the evidence, or undermine its probative value by presenting contrary evidence or cross-examining the plaintiff’s experts.  Counsel may move before the Court to bar an expert’s report as a net opinion.

Argue that the alleged conduct is not deceptive or fraudulent

Under the CFA, businesses can be liable for engaging in conduct that is an “unconscionable, commercial or business practice[s]… deceptive, fraudulently misleading or misrepresent[ing].” If you can successfully argue that the conduct in question does not meet this standard, you may avoid liability altogether. For example, you may show the alleged misrepresentations were not material, or the defendant’s conduct did not actually deceive the plaintiffs.

As another example, the class action complaint may allege your standard contract for sale is “unconscionable” because of exculpatory clauses or restrictions or rights to sue the business/seller, etc.

However, if the business can show that it did not coerce the consumer into the transaction or signing the contract, the claim may fail.

Likewise, if the business can show its contract for sale was not against public interest and/or the consumer had other options, such as purchasing the product or service from other sellers, the claim may fail. See, for example, Abel Holding Co., Inc. v. American Dist. Tel. Co., 138 N.J.Super. 137 (1975).

For instance, auto dealers can make sure their sales agents do not make promises or offers not reflected in the sales contracts. All paperwork to be signed by the customer should be in clear and unambiguous language.

Each page should have a space for the customer to initial, signifying she read the entire agreement.

Argue that the damages are not ascertainable or were not caused by the conduct of the defendant.

In CFA class actions, plaintiffs will typically seek damages based on the alleged losses suffered by the entire class. If you can successfully argue that the damages are not ascertainable or that they cannot be attributed to the defendant’s conduct, you may limit your liability. For example, you may show that factors outside the defendant’s control caused the plaintiffs’ losses.

Alternatively, you may argue that the damages are too speculative to be quantified.

Defending against CFA class actions in New Jersey can be challenging, but there are effective strategies that can help businesses limit their exposure to liability. By carefully scrutinizing the evidence, challenging the certification of the class, and arguing that the conduct in question is not deceptive or fraudulent, you can build a powerful defense and protect your interests.

Experienced New Jersey Business Attorneys

The business litigation attorneys at Schiller, Pittenger and Galvin, P.C., have extensive experience successfully representing businesses, owners and their employees who are facing claims and suits brought by dissatisfied customers or government regulators.

We have also represented consumers financially injured by unscrupulous businesses.

Therefore, if a customer or client has filed a claim or lawsuit against your business over a disputed transaction, or you feel a business has victimized you, contact the civil litigation attorneys in their Scotch Plains office at 908-490-0444 for help. You can also email them here.