What Impact Does Spokeo Have on TCCWNA?

The U.S. Supreme Court’s recent decision in Spokeo, Inc. v. Robins has, rightfully, attracted much attention in the world of class action litigation. The court reaffirmed that plaintiffs must possess Article III standing to bring suit in federal courts, clarifying that plaintiffs must allege a concrete injury as opposed to a mere statutory/procedural violation by a defendant. Defendants will rely on the decision to argue that plaintiffs are not able to allege or show any concrete injury with respect to many of the statutory based claims frequently asserted in support of class actions, such as the Fair Credit Reporting Act (FCRA) or the Telephone Consumer Protection Act (TCPA). However, the impact of the decision with respect to class actions based on the New Jersey’s Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) is much murkier.

In Spokeo, the statute at issue was the FCRA, which requires consumer reporting agencies to “follow reasonable procedures to assure maximum possible accuracy of” reports, 15 U.S.C. § 1681 e(b), and imposes liability on those who willfully fail to comply. § 1681 n(a). Robins accused Spokeo of violating the FCRA by reporting information about him that was not true: specifically, that he was married, had children, a job, a graduate degree, and was relatively affluent. While the incorrect information may have been troubling to Robins and may have shown that Spokeo did not comply with the FCRA, the District Court dismissed Robins’ complaint, concluding that he did not adequately plead an injury and therefor did not have standing to sue in federal court. The Ninth Circuit disagreed, finding that Robins’ claim that Spokeo violated his statutory rights was a sufficient allegation of an injury in fact. The Supreme Court reversed and remanded the case to the Ninth Circuit to further reconsider whether, pursuant to Supreme Court’s guidance, Robins’ had sufficiently pled an injury that was particularized and concrete, as opposed to conjectural or hypothetical. The court did leave the door slightly ajar for plaintiffs to continue to argue standing in cases dealing with statutory violations, commenting that in some cases intangible injuries may nevertheless be determined to be concrete, and that Congress is capable of defining specific injuries and chains of causation in legistlation.

The Spokeo decision is quite significant, obviously, because plaintiffs are often are incapable of identifying any injury in fact resulting from alleged statutory violations, and, in class action litigation, many purported class members are not even aware of an alleged violation of their statutory rights.

New Jersey’s TCCWNA (N.J.S.A. 56:12-14, et seq.) is a unique statute, fraught with minefields for almost anyone conducting business with New Jersey consumers. TCCWNA prohibits sellers from entering into contracts with consumers that include any provisions violating a “clearly established right” under federal or state law. N.J.S.A. 56:12-15. TCCWNA provides for minimum statutory penalties of $100 even where the consumer has no actual damages. In United Consumer Fin. Servs. v. Carbo, 410 N.J. Super. 280 (App. Div. 2009), the court held that plaintiffs need not show an ascertainable loss. The fact that minimum statutory penalties can be awarded regardless of any loss to plaintiffs effectively allows for substantial punitive type damages against a defendant when applied in a class context.

Seemingly, TCCWNA runs afoul of Spokeo inasmuch as TCCWNA provides a basis for claims in the absence of any concrete injury. However, Spokeo only concerns standing to sue in federal courts. TCCWNA applies to interactions with NJ consumers and claims can be brought in NJ State Court, where NJ law with respect to standing to sue is more liberal. A defendant choosing to remove a TCCWNA case to federal court on the basis of, for instance, diversity jurisdiction, would likely have to waive the defense of lack of standing. If a defendant who removed the case did ultimately pursue the defense, the case would likely be remanded to state court.

Accordingly, while it is possible that Spokeo could cause NJ courts to revisit their interpretation of standing to sue, barring changes in New Jersey law the Spokeo decision will not significantly impact class action claims brought under TCCWNA.

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