Gibbons Law Alert

Gibbons Law Alert

Tagged: Consumer Class Action Defense

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...

Lack of Plaintiff Article III Standing Proves Fatal to Eleventh Circuit in FACTA Class Action Settlement

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Posted in Class Action Defense

On January 25, 2021

In a 7-to-3 en banc decision, the Eleventh Circuit vacated a high-stakes $6.3 million class settlement on standing grounds. In James Price v. Godiva Chocolatier, Inc., et al, the court held that a named plaintiff lacked standing to bring a claim under the Fair and Accurate Credit Transactions Act (FACTA) on behalf of a proposed settlement class. The plaintiff, Dr. David Muransky, filed a class action complaint against Godiva claiming a violation of FACTA, which prohibits “merchants from printing more than the last five digits of the card number (or the card’s expiration date) on receipts offered to customers.” After visiting a Godiva retail store in Florida, the plaintiff was handed a receipt that contained the first six and the last four digits of his credit card number–a technical violation of FACTA. The plaintiff claimed that the violation was “statutory in nature” and did “not intend[] to request any recovery for personal injury.” The plaintiff further framed the class’s harm from violations as “irreparable harm as a result of the defendant’s unlawful and wrongful conduct,” and that “Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft.” The putative class was so large that Godiva could have faced statutory damages, punitive damages, and costs of more than $342...

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...

Guidance for Consumer Product Manufacturers, Distributors, and Sellers

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Posted in Class Action Defense

On March 25, 2020

Wide-ranging issues are arising in the aftermath of the COVID-19 crisis and will continue to impact our clients in a growing number of ways. The Gibbons Consumer Class Action Defense Team is here to help and can work with you to address these critical concerns. Communication with consumers is critically important for consumer product manufacturers, distributors, and sellers, whether in the form of product labeling, advertising, or direct communications through telephone, text, and email. These communications are fraught with class action hazards that should be addressed in advance. Particularly in our present environment, product statements or advertising that, for example, promote the ability to stave off infection, increase the body’s immune system functions, or disinfect surfaces, may become subject to challenge in class action lawsuits by entrepreneurial class action attorneys. Sellers that contact their customers using text messaging platforms or dialing systems need to be particularly wary given the proliferation of TCPA class actions which cause great harm to small and large business alike. Also, companies seeking to recoup losses may over-aggressively promote their own products in a manner that is illegal and anti-competitive. Franchisors and franchisees may be faced with economic circumstances that make their current arrangements impractical. If you have any questions or would like more information about potential class actions in connection...

Third Circuit Rejects Buyer’s Remorse as a Cognizable Injury Under Article III

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Posted in Class Action Defense

On November 20, 2018

In In Re: Johnson & Johnson Talcum Powder Products Marketing, Sales Practices and Products Liability Litigation, the United States Court of Appeals for the Third Circuit held that buyer’s remorse, without more, does not constitute an economic injury sufficient to establish standing under Article III of the United States Constitution. Plaintiff brought a putative class action against defendant Johnson & Johnson, alleging that perineal use of defendant’s baby powder by women could lead to an increased risk of ovarian cancer. Plaintiff did not allege that she had developed or was at an increased risk of developing ovarian cancer. Nor did she allege that the product was defective in performing the functions for which it was advertised. Furthermore, Plaintiff had used all the product and, thus, was not seeking reimbursement for a product she cannot use. Rather, Plaintiff alleged that she would not have bought the baby powder had she known that it could lead to an increased risk of cancer. The District Court of New Jersey dismissed her complaint for lack of Article III standing. The Third Circuit affirmed. It relied on its analyses in Finkelman v. Nat’l Football League and Cottrell v. Alcon Laboratories to determine that Plaintiff’s allegations were too conjectural to establish standing. It explained that, although a plaintiff need not allege the exact...

Third Circuit Affirms Remand of Class Action to State Court Under “Local Controversy” Exception

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Posted in Class Action Defense

On July 25, 2018

In a decision that may broaden application of the “local controversy” exception to removal under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(4), the Third Circuit recently affirmed the remand of a putative class action to New Jersey state court holding a corporate defendant with New Jersey citizenship could be considered a “local defendant” because it did not fully divest itself of liability after previously transferring its potential liabilities to a Delaware entity and, thus, remained a real party in interest. In Walsh v. Defenders, Inc., putative class members filed their complaint in New Jersey Superior Court alleging that the contracts they entered into with Defendants related to the class members’ purchase of home security equipment and monitoring services violated New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) and the New Jersey Consumer Fraud Act (“NJCFA”). Defendants removed the matter to federal court asserting CAFA jurisdiction, and Plaintiff moved to remand under CAFA’s local controversy exception. After initially denying Plaintiff’s motion to remand, the District Court granted Plaintiff’s motion for reconsideration when additional discovery showed that the only defendant with New Jersey citizenship, ADT SSI-Tyco, had contracted with 35.3% of the putative class members. Defendants appealed and argued that ADT SSI-Tyco should have been ignored in the District Court’s diversity of citizenship...

Another TCCWNA “Website” Terms & Conditions Class Action Dismissed

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Posted in Class Action Defense

On April 3, 2017

Over the last year – and as we have previously reported – online retailers have repeatedly been targeted by threatened or filed class actions, premised on their website terms and conditions purportedly containing unlawful terms that violate the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”). Many of these cases have been dismissed by trial courts on state law grounds and, in federal court actions, for failure to demonstrate “injury in fact,” a fundamental requirement for Article III standing. Continuing this trend, the District of New Jersey recently dismissed yet another website terms and conditions class action grounded in the TCCWNA, Hite v. Lush Internet Inc. In Hite – as in so many of these lawsuits – “Plaintiff visited Defendant’s website . . . and purchased one of Defendant’s cosmetic products.” Yet, she “[d]id not allege she has any claim about the product that she purchased, such as fraud, product liability or tort.” Instead, “[h]er quarrel [was] with the provisions of the terms of use of the website” in that she “generally allege[d] that the exculpatory clauses contained in the Terms of Use violate . . . the TCCWNA because they unlawfully disclaim all tort liability.” Chief Judge Simandle dismissed the case, however, holding that “Plaintiff has not alleged an injury sufficient to confer standing...

Seventh Circuit Affirms Dismissal of Data Privacy Class Action on Article III Standing Grounds

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Posted in Class Action Defense

On March 31, 2017

Since the United States Supreme Court decided Spokeo, Inc. v. Robins in May 2016, lower courts have struggled to consistently determine whether a plaintiff has standing to sue in federal court, which, as the Spokeo court explained, “requires a concrete injury even in the context of a statutory violation.” That is, even when Congress has made something unlawful and authorized an award of statutory damages for the unlawful act, the mere violation of that law is not itself sufficient to confer standing to sue under Article III of the U.S. Constitution. But precisely what is required to demonstrate sufficient “injury” under Article III remains unclear after Spokeo, especially in the data-breach and data-privacy contexts. In Gubala v. Time Warner Cable, Inc., however, a unanimous Seventh Circuit decision, authored by Judge Posner, held that the defendant’s possible failure to comply with a requirement contained in the Cable Communications Policy Act (requiring the destruction of personally identifiable information (“PII”) if the information is no longer necessary for the purpose for which it was collected) did not afford the plaintiff Article III standing to sue for violation of the statute where his personal information was not released or disseminated in any way. The plaintiff in Gubala had subscribed to Time Warner cable services in 2004, which required him to...

California District Court Dismisses Facebook’s TCCWNA “Website Terms and Conditions” Lawsuit in Light of Valid Choice-of-Law Provision

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Posted in Class Action Defense

On February 6, 2017

New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) ushered in a wave of class actions last year, targeting various provisions in retailers’ websites “terms and conditions.” Broadly speaking, the TCCWNA prohibits “consumer contracts” from containing language that violates any “clearly established legal right[s].” New Jersey courts have not been alone in adjudicating these cases, however, as a number of similar lawsuits have been brought in other jurisdictions, including California federal district courts. For example, on September 7, 2016, the Central District of California dismissed the complaint in Candelario v. Rip Curl, Inc. on standing grounds, holding that because the plaintiff’s “only connection to the Terms and Conditions appears to be her decision to read them” and because her complaint essentially alleged only “bare procedural violation[s]” of the TCCWNA – without more – she could not satisfy “the injury-in-fact requirement of Article III.” Even more recently, although on different grounds, the Northern District of California dismissed a “website terms and conditions” class action against Facebook. In Palomino v. Facebook, Inc., as in Candelario, the plaintiffs alleged that the social media company’s website terms and conditions violated the TCCWNA because of “provisions that purport to ‘1) disclaim liability for claims brought for Defendant’s negligent, willful, malicious and wanton misconduct; 2) bar claims for personal and economic injury...

In Suit Alleging Misleading Employment Rates, Third Circuit Rejects Class Certification Premised Upon Invalid Damages Theory

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Posted in Class Action Defense

On September 26, 2016

The Third Circuit recently affirmed a decision from the District Court of New Jersey denying class certification in an action alleging that Widener University School of Law defrauded its students by publishing and marketing misleading statistics about graduates’ employment rates. In its precedential opinion adjudicating plaintiffs’ interlocutory appeal pursuant to Fed. R. Civ. P. 23(f), the Third Circuit concluded that although the District Court misconstrued plaintiffs’ damages theory, the error was harmless because the Court would have nonetheless concluded that plaintiffs failed to satisfy the predominance requirement. This opinion, authored by Circuit Judge Chagares, is an example of defendants defeating class certification when plaintiffs cannot proffer a valid method of proving class-wide damages, as required by the U.S. Supreme Court in Comcast v. Behrend several years ago.

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