NJ Supreme Court Narrowly Defines “Aggrieved Consumer.” End Of The Road For One Type Of “No Injury” Class Action?

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Contract(pd)
I have written a number of times about New Jersey's Truth in Consumer Contract, Warranty and Notice Act (TCCWNA). (Here, here, and here for example.) This statute, which was largely ignored after it was enacted in 1981, became increasingly popular in recent years as part of so-called no injury class actions. (So-called mostly by defense counsel, not plaintiff's counsel.) Its popularity may now have come to an end, however, because the New Jersey Supreme Court recently issued its opinion in the highly-anticipated case, Spade v. Select Comfort Corp., which answered two questions certified to it by the U.S. Circuit Court of Appeals for the Third Circuit, one of which appears to hamper, at the very least, the ability of plaintiffs to sue for alleged violations of the act.

By way of brief background, the TCCWNA was enacted to prevent deceptive practices in consumer contracts by prohibiting the use of illegal terms or warranties. It provides:

No seller . . . shall in the course of his business offer to any consumer or prospective consumer or enter into any written  consumer contract  .  .  .  or display any written . . . notice or sign . . . which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller . . . as established by State or Federal law at the time the offer is made . . . or the . . . notice or sign is given or displayed.

To state a claim under the TCCWNA, a plaintiff must prove four elements: (1) that it is a consumer; (2) that defendant is a seller; (3) that the seller offered a consumer contract containing a provision that violated a legal right of the consumer or a responsibility of the seller; and (4) that it was an "aggrieved consumer." Any party found to have violated the TCCWNA is liable for a civil penalty of not less than $100, actual damages, or both, and reasonable attorneys' fees and court costs.

The questions certified to the Supreme Court in Spade arose out of two cases that had been consolidated by the district court. Each involved plaintiffs who ordered furniture pursuant to contracts that violated certain regulations promulgated by New Jersey's Division of Consumer Affairs. The regulations require, among other things, that furniture sellers deliver furniture to customers by or before the promised delivery date or provide written notice that they will not be able to do so. Sellers must also provide notice to the purchaser that if the delivery is late, the consumer has the option of canceling the order and receiving a full refund, or agreeing to accept delivery at a specified later date. The regulations also prohibit sellers from including certain language in their contracts, such as "all sales final," "no cancellations," and "no refunds." In Spade, plaintiffs alleged that the contracts they entered into with defendants did not contain language required by these regulations, contained language prohibited by these regulations, or both. Notably, however, plaintiffs received their furniture deliveries on time.  

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In Lawsuit Over Allegedly Defective Baccarat Cards, Casino’s Damages Capped At Little More Than One Green Chip

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Chips (pd)The running battle between the Borgata and world renowned poker player Phil Ivey (among others) continues, and, fortunately, continues to be interesting. As I wrote about here and here, the Borgata sued Ivey and an associate, Cheng Yin Sun, after the two men won more than $9.6 million playing Baccarat at the casino. The Borgata claimed that the two men used an impermissible "edge sorting" scheme  to win the money, and therefore breached their implicit contract with the casino to abide by the terms of the Casino Control Act. The scheme relied, in part on an alleged defect in the playing cards, which Ivey and Sun knew about and exploited. The Third Circuit described it as follows:

The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.

The Borgata successfully moved for summary judgment against Ivey and Sun, and was awarded more than $10 million in damages.

In addition to suing the players, the casino also sued the manufacturer of the cards that were used in the edge-sorting scheme. Both moved for summary judgment, and both motions were initially denied without prejudice. After the district court's decision on the casino's summary judgment motion against Ivey and Sun, both renewed their motions. The district court again denied both, but in doing so, threw cold water on the casino's claims against the manufacturer, including holding that the most the casino could recover against the manufacturer was $26.88, the cost of the allegedly defective cards.

Continue reading “In Lawsuit Over Allegedly Defective Baccarat Cards, Casino’s Damages Capped At Little More Than One Green Chip”

Phil Ivey Ordered to pay Borgata $10 million (presumably not in chips) for “Edge-Sorting” Scheme

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Chips and cardsA few weeks back, I wrote a post about a lawsuit between the Borgata Casino and world renowned poker player and gambler, Phil Ivey. In the lawsuit, the Borgata accused Ivey and a partner, Cheng Yin Sun, of engaging in an "edge sorting" scheme, which allowed them to shift the odds of Baccarat in their favor and win more than $9.6 million over several visits to the casino. The U.S. Court of Appeals for the Third Circuit described their actions as follows:

The scheme is called "edge sorting," where Sun would identify minute asymmetries on the repeating diamond pattern on the backs of the playing cards to identify certain cards' values, and would have the dealer turn those strategically important cards so that they could be distinguished from all other cards in the deck. Ivey and Sun would then be able to see the leading edge of the first card in the shoe before it was dealt, giving them 'first card knowledge,' and Ivey would bet accordingly.

The Borgata successful moved for summary judgment against both men. It held that casinos and players enter into an implicit contract to, among other things, abide by New Jersey's Casino Control Act ("CCA"). The court determined that, by employing the edge-sorting scheme, Ivey and Sun were using marked cards to play the game, which is prohibited by the CCA. As a result, they breached their contract with the casino. After finding in the casino's favor on liability, the court ordered supplemental briefing on damages. After considering those briefs, the court awarded the casino $10,130,000.

The court held that the appropriate method to assess damages was to restore the status quo ante — i.e., to return the parties to their positions prior to the formation of the contract. It held that Ivey's and Sun's use of marked cards violated the CCA and voided the contract between them and the casino. Because the contracts were void, restoring the parties to their pre-contract position was the appropriate remedy. The casino was, therefore, entitled to the return of all of Ivey's winnings, including the money he won playing craps because "those winnings were directly traceable to his prior Baccarat winnings — i.e., he used Baccarat winnings to play craps."

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Failure To Launch! Bride’s Post-Wedding Cold Feet = Equitable Fraud = Annulment

Divorce(2)
In a case involving facts that could have been the plot of a soap opera episode or Lifetime Original Movie, a New Jersey court recently held that a husband could annul his marriage due to his wife's equitable, not actual, fraud.

In Easton v. Mercer (names were changed by the court to protect the innocent), plaintiff began dating defendant and, two years later, proposed to her. Defendant's parents objected because they "disapproved of [plaintiff] as a suitable husband for their daughter." True love, however, would not be denied. Without telling defendant's parents, plaintiff and defendant scheduled a small wedding to take place three weeks after plaintiff's proposal. Prior to the wedding, they applied for a marriage license, which was issued seven days later. They then got married in a small ceremony, administered by a reverend, and attended by approximately 15 guests. All of the guests were invited by plaintiff. Defendant did not invite any guests, including her parents, with whom she still lived and who were still unaware that the wedding was taking place. This, as they say, is when the plot thickens.

 

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