Over the past few years, class action plaintiffs have filed a slew of lawsuits against online retailers under the New Jersey Truth in Consumer Contract, Warranty and Notice Act (TCCWNA), which prohibits a seller from offering or entering into consumer contracts that contain any term that violates a “clearly established” New Jersey or federal law. Violations are punishable by a maximum civil penalty of $100, actual damages, or both, and private actions can be brought by “aggrieved consumers” (more on that later).

TCCWNA has been around for years, but class action plaintiffs started using the statute to sue online retailers based solely upon their website terms and conditions without suffering any other injury. From what many retailers can tell, the plaintiffs did this by searching for and then challenging indemnification clauses, limitations of liability, and disclaimers of warranties in website terms of use and terms of sale, merely for the purpose of filing lawsuits.

However, earlier this week, the New Jersey Supreme Court limited the circumstances in which uninjured plaintiffs can pursue TCCWNA claims. In Spade v. Select Comfort Corp and Wenger v. Bob’s Discount Furniture, LLC, the New Jersey Supreme Court found that including prohibited language in or omitting required language from a contract – without more – could constitute a violation of a “clearly established legal right of a consumer or responsibility of a seller” for purposes of liability under the TCCWNA. Thus, a seller’s inclusion of the language “no cancellations” or “no refunds” in a furniture sales contract violated a New Jersey Furniture Delivery Regulation, which, in turn, violated TCCWNA. The court found that a seller violates TCCWNA by including prohibited language or omitting of language required by statute or regulation.

However, the court also held that a consumer who has not suffered actual harm from an allegedly unlawful provision in a contract or notice is not “aggrieved” and therefore cannot sue under TCCWNA. Thus, a consumer cannot bring a TCCWNA suit unless she suffered harm from the unlawful language in a contract or writing – it is not enough to have merely been exposed to unlawful language in a contract or writing without any injury. This holding should help retailers defend claims brought by plaintiffs who suffer no harm, including plaintiffs who search for terms that violate TCCWNA for lawsuit purposes (although they rarely admit that is what they do).

The ruling certainly does not end TCCWNA claims. For example, if a furniture seller fails to deliver a consumer’s furniture in a timely manner, and the consumer would have sought a refund had she not been deterred by “no refunds” language (prohibited by New Jersey law), that consumer could be an “aggrieved consumer” entitled to a civil penalty under TCCWNA. The court made clear that the harm does not need to be monetary: for example, if an untimely delivery and misleading “no refunds” language leave a consumer without furniture needed for a family gathering, the consumer may be an “aggrieved consumer” under the meaning of TCCWNA. But the injury must be connected to the challenged contract in some way.