Consumer Fraud Class Action Dismissed With Prejudice: Law Enforcement Tows Are Not Covered by the New Jersey Predatory Towing Prevention Act
On June 14, 2021, Judge Thomas J. Walsh of the Superior Court of New Jersey put an end to the long-running putative class action lawsuit in Kiley v. Tumino’s Towing, which sought to exploit regulations promulgated under the Predatory Towing Prevention Act (PTPA) by the Director of the Division of Consumer Affairs (DCA). The action was removed to federal court under the Class Action Fairness Act, where the magistrate judge initially denied a motion to remand and permitted jurisdictional discovery, but the district court judge later remanded back to state court. Finally addressing the merits, the Superior Court granted the defendants’ motion to dismiss the complaint, with prejudice, agreeing with Tumino’s Towing that the PTPA was not applicable to the towing services requested by law enforcement and performed in accordance with a duly-authorized municipal ordinance. As such, the plaintiff’s sole remaining cause of action for alleged violation of the Consumer Fraud Act (CFA) could not stand.
In Kiley, the complaint alleged that the plaintiff’s vehicle was towed by Tumino’s Towing, at the request of the Ridgefield Park Police Department, because his vehicle was illegally parked during a snow emergency. After paying his parking ticket at police headquarters, the plaintiff was given a vehicle release authorization, which he brought to Tumino’s Towing to obtain the release of his vehicle after paying for the towing services and storage of his vehicle. Four years later, the Kiley class action complaint was filed, alleging that Tumino’s Towing routinely charges its customers fees prohibited by PTPA regulations for administration, labor, and storage for non-accident, nonconsensual tows. Since Section 21 of the Act expressly provides that a violation of the PTPA is a violation of the CFA, the complaint asserted that the fees charged by Tumino’s Towing violated the PTPA regulations and therefore, violated the CFA.
Municipalities in New Jersey are specifically authorized by Title 40 to enact ordinances to regulate towing services that are requested by local law enforcement officials, including regulating those towing and storage fees. See N.J.S.A. 40:48-2.49(a)-(d). Over last few years, several towing companies serving municipalities found themselves caught between a rock and a hard place as they were bound by fee schedules in local ordinances, but were sued in class action lawsuits claiming that the fees charged were not permitted by PTPA regulations, which restricts the types of services that may be charged for non-accident, non-consensual tows.
The New Jersey Supreme Court first addressed the PTPA and its regulations last year in Pisack v. B & C Towing, Inc., a consolidated appeal involving three separate class actions against towing companies. While the appeals were pending, the Legislature amended the PTPA in December 2018, clarifying that towing services ordered by municipalities or law enforcement officers and performed in accordance with duly-authorized fee schedules established by the municipalities are not subject to the PTPA and the fee schedule in PTPA regulations. See N.J.S.A. 56:13-16(i) (2018). Specifically, the Legislature added new sub-paragraph (i) to N.J.S.A. 56:13-16, which, in pertinent part, provides:
Nothing contained in any provision of the [PTPA] shall be construed to prevent a towing company from charging fees for non-consensual towing or related storage services in accordance with a duly-authorized fee schedule established by a municipality…with respect to a vehicle that has been subject to non-consensual towing authorized by a law enforcement officer of this State… [N.J.S.A. 56:13-16(i).]
Tumino’s Towing appeared in Pisack as amicus curiae and, along with numerous defendants, argued that the Legislature intended the 2018 Amendments to clarify or cure provisions of the Act and, therefore, should be applied retroactively. The Supreme Court disagreed. However, the Legislature thereafter amended the Act again (signed into law April 19, 2021) expressly making the 2018 PTPA Amendments retroactive to the date of enactment of the PTPA, i.e., October 18, 2008.
In Kiley, Tumino’s Towing argued that the clear effect of Section 16(i) in the 2018 PTPA Amendments was to “carve–out” from the PTPA towing services requested by law enforcement and performed in accordance with a duly-authorized ordinance and fee schedule. The court agreed and held that “the towing services performed by Tumino’s Towing were authorized by a law enforcement officer of this State and were charged in accordance with a duly authorized fee schedule established by the Village of Ridgefield Park…The PTPA does not apply to the present matter because the subject tow was requested or ordered by a municipal police department and performed in accordance with a duly-authorized municipal ordinance and fee schedule.” Indeed, the Superior Court noted that the Supreme Court in Pisack previously explained that under the 2018 PTPA Amendments, “towing companies may charge fees not included in the Director’s schedule if the fee is authorized by a municipal ordinance.”
The plaintiff argued that, notwithstanding Section 16(i), the fee schedule in the PTPA regulations still applied to law enforcement tows because the complaint alleged a violation of the ordinance. The Kiley court was unpersuaded. In fact, the court rejected the plaintiff’s wholly unfounded position that the complaint’s allegations that Tumino’s Towing did not comply with the Ridgefield Park fee schedule were sufficient to state a per se violation of the CFA. Likewise, the court rejected as flatly contrary to Section 16(i) the plaintiff’s position that Title 40 required all municipal towing ordinances to comply with the fee schedule in the PTPA regulations.
TUMINO’S TOWING IS A CLIENT OF GIBBONS P.C. THE FIRM, AND SPECIFICALLY THE AUTHORS OF THIS BLOG POST, WERE ACTIVELY INVOLVED IN THE LITIGATION