January 21, 2020
On January 16, 2020, in a unanimous decision, New Jersey’s Supreme Court partially reversed a 2018 decision of the Appellate Division, and dismissed two separate claims, consolidated on appeal, made under the Truth-in-Consumer Contract, Warranty and Notice Act (“TCCWNA”) as putative class actions. Those claims challenged the fees charged by private tow companies, in connection with the non-consensual towing of vehicles at the direction of local police. Plaintiffs alleged that these fees were in excess of those permitted under New Jersey’s “Towing Act,” and were unlawful and in violation of the Towing Act, TCCWNA, and the Consumer Fraud Act, despite the fact that the fees charged were based on contractual agreements and ordinances passed by the local municipalities in which the towing occurred.
The first issue considered by the Court was whether the Legislature’s amendments to the Towing Act, passed in 2018 after the decision of the Appellate Division, should apply retroactively, thus essentially resolving the dispute. The Towing Act required the Director of the Division of Consumer Affairs to establish a fee schedule for non-consensual towing and related storage services for which a towing company may charge a service fee, and to delineate which other related services could be the subject of separate charges. The Director complied with the statute, and issued such a fee schedule. After the Appellate Division reinstated Plaintiffs’ claims in these cases, the Legislature modified the Towing Act to state that towing companies could charge fees for non-consensual towing or related storage services in accordance with a duly-authorized fee schedule established by a municipality, or another political subdivision. On appeal, the towing company defendants contended that this modification of the Towing Act should be read retroactively, thus nullifying Plaintiffs’ claims. Based on the language of the statute itself, the Supreme Court declined to read the statute retroactively, and found that the pre-2018 amendments to the Towing Act still governed the dispute at issue. The Court affirmed the Appellate Division’s ruling on a number of issues, before turning to the question of whether the claims pursued by Plaintiffs were compensable under the TCCWNA.
The Court began its inquiry by noting that the TCCWNA was enacted “to prevent deceptive practices in consumer contracts.” Dugan v. TGA Fridays, Inc., 231 N.J. 24, 68 (2017). The elements of a TCCWNA claim are:
1. That the defendant was a seller, lessor, creditor, lender or bailee or assignee of any of the aforesaid;
2. That the defendant offered or entered into a written consumer contract or gave or displayed any written consumer warranty, notice, or sign;
3. That at the time that the written consumer contract is signed or the written consumer warranty, notice, or sign is displayed, that the writing contains a provision that “violates any clearly established legal right of a consumer or responsibility of a seller, lessor, creditor, lender, or bailee”; and,
4. That the plaintiff is an “aggrieved consumer.”
The Court noted that the owners of vehicles subjected to non-consensual towing “clearly were not buying, leasing, or borrowing any money, property or services from the towing companies,” and that “[i]t would distort the ordinary usage of such terms to view these defendant towing companies as sellers, lessors, creditors, or lenders.” The Appellate Division had agreed, but had found that the tow companies were bailees whenever they took a vehicle. The Supreme Court disagreed, noting that a bailment typically, but not always, requires a contract between the parties to the bailment. However, even if the Court were willing to agree that a non-consensual tow created an involuntary bailment, it would not be a “consumer contract” within the meaning of TCCWNA, and that the Legislature likely intended to only include contractual bailments for the purposes of the TCCWNA.
On the second element, whether defendants offered or entered into a written consumer contract, or gave or displayed any written consumer warranty, notice, or sign, the Court noted that the only writing exchanged between the parties was the list of charges, which was provided after the plaintiffs paid to retrieve their vehicles. The Court reasoned that after-the-fact “bills” did not constitute a contract or notice to plaintiffs, when plaintiffs had already paid the amount demanded to recover their cars. That could not constitute a “meeting of the minds,” and accordingly, the Court found that TCCWNA as “ill-suited as a vehicle for plaintiffs to assert claims relating to their non-consensual relationship with the towing companies.”
TCCWNA claims are frequent vehicles for asserted class actions in New Jersey, coupled with claims under the Consumer Fraud Act. If you’d like more information on these issues, please contact MK&C’s Tom Emala at temala@mkcilaw.us.com or at (973) 822-1110.