Tuesday, January 11, 2011

Bill Introduced in New Jersey Would Amend Consumer Fraud Act

The current incarnation of New Jersey's Consumer Fraud Act leaves commercial enterprises, from carpet installers to home improvement contractors, at the mercy of the courts. With remedies including refunds, treble damages, voiding of contracts, and mandatory attorneys fees, the Consumer Fraud Act (CFA) is, perhaps, among the strongest in the United States.

The CFA permits anyone who suffers an "ascertainable loss" resulting from the violation of the act to seek redress in court. Generally, if the Plaintiff's claims survive summary judgment or if the claims make it to trial, the plaintiff is entitled to attorneys fees, treble damages, and other damages depending on the type of case brought. According to Cox v. Sears Roebuck & Co, 138 N.J. 2 (1994) and Weinberg v. Sprint Corp., 173 N.J. 233 (2002), the awarding of attorneys fees is not even necessarily contingent on the Plaintiff winning the case. (See also Pron v. Carlton Pools, Inc., 373 N.J. Super. 103, 113 (App. Div. 2004).

Due to perceived inequities, though, a bill has been introduced in the New Jersey legislature that would curtail the severity of the statute. Introduced in the Assembly as A-3333, the proposed bill would modify many of the damages that consumers have used as weapons in garnering early settlements, but which companies contend result in windfalls for minor, often unintended, infractions.

Among the changes would be who can bring claims, what claims can be brought, the scope of the claims brought, and the level of proof required to succeed on consumer fraud claims. The damages arising out of a consumer fraud claim would also be affected by the amendment: attorneys fees would be capped and the feared treble damages would no longer be mandatory.

Some of the larger changes contained in the proposed amendment are as follows:
1) The CFA would be clarified to indicate that only individuals are allowed to sue on a CFA claim;
2) The Act would include language that states that Plaintiffs must prove they "relied to his detriment" on a defendant's unlawful practice or act;
3) Fee cap would be instituted, limiting them to obtaining fees only in the event of that consumer obtains a judgment, and then limiting the fees to the greater of one-third of the judgment or $150,000;
4) The language relating to treble damages would be changed from "shall ... award threefold the damages" to "may ... award up to threefold the actual damages";
5) Suit can only be instituted if the transaction took place in New Jersey.

The bill was introduced in the Assembly on Oct. 12 and sent to the Consumer Affairs Committee. The bill has not been introduced in the Sensate. The sponsors of the bill in the Assembly are John McKeon, D-Essex and Amy Handlin, R-Monmouth.

For more information on the proposed revisions to the New Jersey Consumer Fraud Act, including the full text of the proposed amendment, visit Tesser & Cohen's Website or call us at 201-343-1100. Tesser & Cohen is a law firm providing service in New Jersey, New York and Pennsylvania.

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