Hunton Retail Law Resource

The first blow to the recent expansive application of the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) was struck by a federal court in California last month. In Candelario v. Rip Curl, Inc., the Central District of California granted a motion to dismiss a complaint alleging a TCCWNA violation of website terms and conditions because the plaintiff lacked Article III standing. The plaintiff has appealed the decision to the Ninth Circuit.

In her first amended complaint, the plaintiff alleged that she had bought a shirt from the defendant’s website and that the website included terms and conditions that violated TCCWNA under a host of different theories. She alleged that the terms and conditions impermissibly barred causes of action for risk of harm, products liability, violation of a duty to protect consumers from illegal acts of third parties and punitive damages. The plaintiff alleged that she was an “aggrieved” consumer, as required by TCCWNA, because the shirt was not the “quality or cut” that was described on the website.

The district court cited Spokeo, Inc. v. Robins for the proposition that “[a] concrete injury must be de facto; that is, it must actually exist.” The district court held that the plaintiff did not plead an injury-in-fact because she did not allege that the clothing was dangerous, that she was harmed by the clothing or that her information was stolen, and did not allege that the terms and conditions prevented her from bringing a cause of action for the above. So even though the plaintiff alleged that she was dissatisfied with her purchase, the district court found no injury-in-fact because she did not suffer the type of harm that could have been impacted by the terms and conditions.

The district court similarly dismissed the plaintiff’s argument that she suffered “intangible information injuries,” because the plaintiff did not explain what those informational injuries were. The district court further indicated that such informational injury may still be insufficient because “Spokeo recognized that ‘Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right...’”

Article III standing only applies in federal courts, meaning this opinion may have limited impact in New Jersey state court. But, in dicta, the Central District of California provided a roadmap for New Jersey courts to follow its Article III logic using the statutory text, noting: “the TCCWNA only grants a remedy to aggrieved consumers and not to aggrieved ‘prospective’ consumers.”

The Central District of California’s reasoning in Candelario is fact-dependent. However, similar reasoning could apply in many of the cases filed in the recent wave of TCCWNA litigation, as the plaintiffs generally do not allege that they suffered harm other than having been presented with terms and conditions that allegedly violate TCCWNA. The reasoning in this case could spell the end for TCCWNA class actions that target terms and conditions where the terms were not actually used to prevent a plaintiff from filing suit after being harmed by a product or the website, especially if the Ninth Circuit agrees.