Applying Aggrieved Consumer Standard, Court Tosses TCCWNA Suit

Advertising Law

A new decision from a Pennsylvania federal court signals that the tide has turned on the recent wave of cases filed under the New Jersey Truth in Consumer Contract, Warranty and Notice Act (TCCWNA).

Businesses faced a rash of consumer class actions after a New Jersey appellate court released a plaintiff-friendly interpretation of the statute in December 2015. Last year, answering certified questions from the U.S. Court of Appeals, Third Circuit, the New Jersey Supreme Court attempted to rein in the fad.

In that case, Spade v. Select Comfort Corp., the court ruled that while a violation of an underlying regulation may trigger a cause of action for a consumer, he or she must be “aggrieved” in order to obtain a remedy under the TCCWNA.

The term “aggrieved consumer” as used in the statute denotes “a consumer who has suffered some form of harm as a result of the defendant’s conduct,” the unanimous New Jersey Supreme Court wrote, although it noted harm is not limited to injury compensable by money damages.

In the Pennsylvania case, Thomas Luca alleged that a Wyndham hotel reservation website failed to adequately disclose the total costs associated with booking a hotel room, in its Terms of Use (Terms), in violation of the TCCWNA and the New Jersey Consumer Fraud Act (CFA).

Consumers who use the booking site are automatically deemed to agree to the Terms, Luca argued, which contain limitations on Wyndham’s liability. This deceives consumers into thinking that the provisions are enforceable and deters them from enforcing rights that are otherwise provided under the law, he told the court.

Wyndham moved to dismiss the complaint. The court initially denied the motion, albeit without prejudice. After the New Jersey Supreme Court issued the Spade opinion, the hotel chain doubled down on its prior motion.

U.S. District Judge Mark R. Hornak granted the motion, dismissing the case. Since Luca did not allege that he suffered any actual harm in his hotel booking process, his hotel stay or the events leading up to the filing of his complaint, the court pointed out, he failed to satisfy the “aggrieved consumer” requirement of the TCCWNA.

The plaintiff’s CFA assertions are “divorced from the allegedly unlawful Terms of Use provisions,” the court wrote. “Plaintiff’s claim lacks any link between the challenged provisions of the Terms of Use and the harm he claims to have suffered. Plaintiff fails to allege a suffered harm that flows from the allegedly unlawful provision. He does not plead that he was prevented from or deterred from vindicating his rights in this or any lawsuit because of the language of those provisions.”

For example, Luca did not claim that he failed to seek specific damages or add a specific defendant because he believed those moves were foreclosed by the Terms, the court said. Nor did he plead that he delayed in bringing his lawsuit or that he would have crafted his claims or class description differently.

“He does not plead that the Terms of Use had any effect on his hotel selection, booking process or hotel experience,” the court added. “There is simply no harm alleged to have occurred in his Complaint that can be plausibly traced to the provisions within the Terms of Use.”

The New Jersey Supreme Court interpreted the TCCWNA “to only extend the right to sue to a consumer who is harmed by a non-conforming term, thus becoming ‘aggrieved,’” the court wrote. “The reality is that the New Jersey Supreme Court considered the TCCWNA’s purpose of preventing deceptive practices and applied a narrower definition of ‘aggrieved consumer’ than that advanced by Plaintiff here, and limited the right to sue to only consumers ‘who ha[ve] suffered some sort of a harm as a result of the defendant’s conduct.’”

Judge Hornak dismissed the plaintiff’s complaint with prejudice.

To read the opinion in Luca v. Wyndham Worldwide Corporation, click here.

Why it matters: The New Jersey Supreme Court’s decision to narrow the scope of an “aggrieved consumer” under the TCCWNA has proven beneficial for defendants, including Wyndham. The Pennsylvania federal court concluded that Spade “simply did not extend ‘aggrieved consumer’ status to those who could in theory realize harm from deceptive contract terms but do not suffer any actual harm (monetary or otherwise) flowing from the asserted deceptive terms.”