Gibbons Law Alert

Gibbons Law Alert

Author: Caroline E. Oks

ChatBot or Not: California Federal Courts Limit CIPA Applicability

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Posted in Class Action Defense

On September 3, 2024

The Northern District of California recently issued a decision further constraining plaintiffs’ ability to assert claims under the California Invasion of Privacy Act (CIPA). In Ambriz v. Google, LLC, the plaintiff filed a putative class action alleging that Google violated CIPA § 631(a) because its Cloud Contact Center AI software-as-a-service, a virtual customer service tool, wiretapped, eavesdropped on, and recorded his call to Verizon’s customer service center.

New Jersey Supreme Court Confirms the Enforceability of Class Action Waivers

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Posted in Class Action Defense

On July 25, 2024

The New Jersey Supreme Court issued a unanimous opinion on July 10, 2024, holding that class action waivers in consumer contracts are not per se contrary to public policy. While such waivers may be unenforceable if they are unconscionable or violate other tenets of state contract law, the opinion confirms that there is no blanket prohibition on them – a positive development for businesses in New Jersey. Pace v. Hamilton Cove concerned a putative class action filed by residential tenants of Hamilton Cove Apartments, a luxury apartment complex in a high crime area. In its advertisements, brochures, and oral statements to prospective tenants during tours, Hamilton Cove Apartments promised that the complex would have “elevated, 24/7 security,” with security personnel stationed round-the-clock near each building’s entrance. The plaintiffs alleged that the promises were knowingly false when made, and that they relied on those representations in deciding to sign the lease. The lease contained a “Class Action Waiver” Addendum, by which the lessee “expressly waive[d] any right and/or ability to bring, represent, join, or otherwise maintain a Class Action.” The defendants moved to dismiss the plaintiffs’ Consumer Fraud Act (CFA) claim, arguing in pertinent part that a class action was not necessary to vindicate the plaintiffs’ interests and, in any event, that the leases contained class...

New Jersey Supreme Court Holds “Illusory Discounts” Do Not Support a Claim of Ascertainable Loss Under the Consumer Fraud Act

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Posted in Class Action Defense

On April 25, 2024

In a 4-3 opinion, the New Jersey Supreme Court held that the mere purchase of a product falsely represented as “discounted” does not, without more, satisfy the “ascertainable loss” element under the New Jersey Consumer Fraud Act (NJCFA). In Robey v. SPARC Group LLC, the plaintiffs – a proposed class of shoppers at the retail clothing store Aéropostale – alleged that the store advertised clothing as being discounted when, in fact, the items had never been offered or sold at the higher prices off of which the “discount” was taken. The plaintiffs contend that this practice of so-called “illusory discounts” violated the NJCFA, the Truth in Consumer-Contract, Warranty and Notice Act (TCCWNA), and various common law contract rights. The trial court dismissed the complaint for failure to state a claim, determining that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed, noting some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The Supreme Court granted certification and reversed, finding that the plaintiffs’ NJCFA claim failed because they could show neither of the two recognized types of “ascertainable loss” for a claim based on a seller’s alleged deception: an out-of-pocket loss or a loss of the benefit-of-the-bargain. First, the plaintiffs...

Appellate Division Holds Plaintiffs Can State a Claim Under New Jersey’s CFA and TCCWNA Statutes Where an Advertised Discount Is Alleged to Be Illusory

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Posted in Class Action Defense

On March 22, 2023

A recent split decision from the New Jersey Appellate Division called into question whether the “ascertainable loss” requirement for pleading a claim under the New Jersey Consumer Fraud Act (NJCFA) is the same as the “aggrieved consumers” requirement under the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA). Without deciding that question, the court found that the pleading sufficiently alleged both in asserting that the defendant inflated its prices to offer an illusory discount. The plaintiffs alleged that the defendant, SPARC Group LLC, falsely advertised clothing at two of its Aeropostale stores as being discounted from a higher price when the clothing allegedly had never been sold in those stores at the higher price. The plaintiffs asserted that this “markup to markdown” practice violates both the NJCFA, the TCCWNA, and the common law. The trial judge dismissed the complaint for failure to state a claim and largely rested her decision on a determination that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed. The majority noted some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The New Jersey Supreme Court has held that an “ascertainable loss” must be “quantifiable and measurable” and not “hypothetical or illusory,” while the...

Second Circuit Holds Monetary Compensation for Survey Participation Not an “Unsolicited Advertisement” Under the TCPA; Disagrees with Third Circuit

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Posted in Class Action Defense

On January 20, 2022

The Second Circuit recently held, in Bruce Katz, M.D., P.C. v. Focus Forward, LLC, that an unsolicited faxed invitation offering $150 to participate in a market research survey does not constitute an “unsolicited advertisement” under the Telephone Consumer Protection Act of 1991 (the “TCPA”). The TCPA defines “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.” The Second Circuit reasoned that the subject fax transmissions “plainly do not advertise the availability of any property, goods, or services” and therefore “cannot reasonably be construed” as unlawful advertisements. The panel did note, however, that its holding may not necessarily extend to all “communications, including faxed surveys, offering the recipient both money and services,” as some such communications could incur liability under the TCPA depending on the specific content of the communication. The Second Circuit’s holding in Katz departed from the reasoning in the Third Circuit’s divided opinion in Fischbein v. Olson Research Group, Inc. The faxes at issue in Fischbein consisted of requests to doctors to participate in market research surveys in exchange for monetary compensation. The Third Circuit held that such faxes are advertisements, reasoning that “an offer of payment in exchange for participation...

Eleventh Circuit Holds That Administrative Feasibility is Not a Precondition for Class Certification

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Posted in Class Certification Opinions

On July 19, 2021

The Eleventh Circuit Court of Appeals recently analyzed a “hotly contested issue in class action practice” – whether administrative feasibility is a requirement for class certification under Federal Rule of Civil Procedure 23. Breaking from the First, Third, and Fourth Circuits and agreeing with the Second, Sixth, Seventh, Eighth, and Ninth Circuits, the Eleventh Circuit held putative class representatives need not prove the existence of an administratively feasible method to identify absent class members as a precondition for certification of a class action.

Following Duguid, South Carolina District Court Limits Reach of TCPA’s Autodialer Definition

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Posted in Class Action Defense / Privacy Class Actions

On July 8, 2021

In April 2021, the U.S. Supreme Court resolved a circuit split interpreting the Telephone Consumer Protection Act’s (TCPA) definition of “automatic telephone dialing system” or (ATDS). In Facebook, Inc. v. Duguid, the Court held that the clause “using a random or sequential number generator” in the statutory definition of ATDS, 47 U.S.C. § 227(a)(1), modifies both “store” and “produce,” thereby “specifying how the equipment must either ‘store’ or ‘produce’ telephone numbers.” Accordingly, “a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called.” Duguid thus reversed the Ninth Circuit’s interpretation that the clause “using a random or sequential number generator” modifies only “produce,” such that a device could be an autodialer if it has the capacity to store and automatically dial numbers, even if the numbers are not generated by a random or sequential number generator. Under Duguid, equipment that makes calls to “targeted…numbers linked to specific accounts” are excluded from liability under the TCPA. In June, the U.S. District Court for the District of South Carolina had the opportunity to apply the Supreme Court’s decision. In Timms v. USAA Federal Savings Bank, the plaintiff sought to recover damages from the defendant for alleged violations of the Fair...

Consumer Fraud Class Action Dismissed With Prejudice: Law Enforcement Tows Are Not Covered by the New Jersey Predatory Towing Prevention Act

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Posted in Class Action Defense

On June 21, 2021

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...

Third Circuit Affirms That CFA and PLA Claims Can Coexist Independently

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Posted in Class Action Defense

On March 4, 2021

We recently blogged about a New Jersey Supreme Court decision in which the court held that claims under New Jersey’s Consumer Fraud Act (CFA) may be brought in the same action as claims under the Products Liability Act (PLA). In a follow-up to that case, the Third Circuit in Sun Chemical Corporation v. Fike Corporation and Suppression Systems, Inc. applied the New Jersey Supreme Court’s guidance on the interplay between the CFA and PLA. The Third Circuit affirmed in part and reversed in part a District Court judgment, finding that some of the claims were “absorbed by the PLA” and some could be brought independently pursuant to the CFA. Sun sued defendant Fike under the CFA for alleged misrepresentations related to Sun’s purchase of an explosion-suppression system. Sun alleged that Fike “misrepresented various aspects of the suppression system in its pre-purchase conversations” and that Fike was therefore liable for injuries and property damages suffered by Sun from an explosion that occurred at Sun’s facility. The District Court of New Jersey determined that Sun’s CFA claims were precluded and absorbed by the PLA because “Sun was seeking damages because various features of the suppression system failed and that failure caused personal injury to Sun’s employees.” The CFA, the District Court reasoned, could not be used to...

New Jersey Supreme Court Holds That CFA and PLA Claims Can Be Pleaded in the Same Action

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Posted in Class Action Defense

On October 21, 2020

In a recent decision answering a question certified to it by the Third Circuit, the New Jersey Supreme Court held that claims brought under New Jersey’s Consumer Fraud Act (CFA) may be brought in the same action as claims brought pursuant to the Products Liability Act (PLA), provided each claim is based on distinct conduct. In Sun Chemical Corporation v. Fike Corporation and Suppression Systems, Inc., the Court explained that it is the nature of the actions—not the resulting damages—that determines when claims may be brought under either the CFA or the PLA. The Court clarified that CFA claims may be brought in instances where a party alleges “express misrepresentations — deceptive, fraudulent, misleading, and other unconscionable commercial practices,” while PLA claims are reserved for claims based upon “product manufacturing, warning, or design defects.” The claims in Sun Chemical arose out of the plaintiff’s purchase of an explosion isolation and suppression system from the defendant to be used to “prevent and contain potential explosions” in the plaintiff’s new dust collection system. Plaintiff’s federal court complaint alleged that on the first day it used the suppression system, a fire broke out in the dust collection system and while the alarm in the suppression system was activated, it was inaudible. Plaintiff alleged that, as a result, several...

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