Californiafying New Jersey’s Consumer Protection Laws


Starting now, national advertisers and retailers may want to pay the same attention to legislative and judicial developments in New Jersey that they long have paid in California.

New Jersey’s Governor, Phil Murphy, came into office in 2018 explicitly promising to remake New Jersey into “the California of the East Coast.”  Recently reelected and holding leadership posts in both the National Governors Association and Democratic Governors Association, Governor Murphy is building a national profile.

During Governor Murphy’s first term, his Californiafying ambitions were somewhat checked by legislative leaders, particularly in the State Senate.  The 2021 election left both houses of the Legislature firmly in Democratic control, but caused a significant shift in leadership on both sides of the aisle.  Several key leaders, including the newly minted Senate President, are members of the plaintiffs’ bar.  Consumer-friendly, business-unfriendly bills that might not previously have moved through the Senate are more likely to do so now.

Immediately after the 2021 election, the Legislature quickly passed, and Governor Murphy has signed, the “New Jersey Insurance Fair Conduct Act,” a sweeping law allowing lawsuits against automobile insurers for any “unreasonable delay or unreasonable denial of a claim.”  The law does not define either term, which means insurance companies will face considerable uncertainty.  Plaintiffs will argue for very broad interpretations of these terms, and we will have to see how those arguments fare before a state Supreme Court that soon will have a majority of Murphy appointees (more about which below).  This is the kind of measure that we may see more of from the New Jersey Legislature in the current term.

Proposals are pending in the Legislature to expand New Jersey’s already broad Consumer Fraud Act (“CFA”).  One bill was introduced that would add California-style “unlawful” and “unfair” prongs to the CFA, terms that have been used to greatly expand the sweep of consumer fraud laws in California.  Another bill would make it unlawful to require any New Jersey consumer to agree in a form contract to resolve disputes outside the consumer’s home county, shorten a limitations period, waive punitive damages, or pay more to arbitrate a claim than it would cost to sue in court.  The bill would define those and other terms as presumptively unconscionable and as violations of the CFA.  Similar proposals are likely to follow, and at least some are likely to pass.

New Jersey briefly captured the business tort spotlight several years ago with a boomlet of cases under the state’s unique Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”).  The TCCWNA makes it unlawful for any contract offered to a New Jersey customer to contain “any provision that violates any clearly established legal right.”  The TCCWNA allows any “aggrieved consumer” to recover “a civil penalty of not less than $100,” so its appeal to the class action bar was obvious.  Lawyers brought suits challenging everything from warranty waivers in form contracts to the absence of prices in restaurant menus.

Hundreds of TCCWNA cases were filed in a multi-year span, many of which companies elected to settle.  The TCCWNA mill kept spinning until New Jersey’s Supreme Court, in two decisions from 2017 and 2018, largely defanged the law.  The Court construed the term “aggrieved consumer” narrowly and erected a high hurdle to bringing TCCWNA claims as class actions.  Those decisions pretty much ended TCCWNA as a stand-alone class action threat.

Importantly, however, the New Jersey Supreme Court makeup has changed since Governor Murphy took office in 2018, and will change further in the near future due to mandatory retirements.  By this time next year, Governor Murphy will have appointed a majority of the seven-member Court.  These changes are very likely to make New Jersey an even more favorable venue for the plaintiff’s bar, and businesses hoping for future Supreme Court decisions like those in the TCCWNA cases may be disappointed.

New Jersey’s federal bench, too, has become a more challenging jurisdiction for the business community.  President Joseph R. Biden Jr., inherited vacancies to six of the District of New Jersey’s 17 authorized judgeships.  He already has filled four of them and has nominees pending for the final two.  Seven others are appointees of President Barack Obama.  And although the Third Circuit Court of Appeals currently has a 7-6 majority of judges appointed by Republican Presidents, a vacancy is pending with more expected.

Business trade groups like the New Jersey Civil Justice Institute (“NJCJI”) monitor legislative and litigation developments in the state.  (We sometimes write friend-of-the-court briefs to the New Jersey Supreme Court on behalf of NJCJI.)  We would be happy to speak with any clients who have operations or sales in New Jersey and may be concerned about these issues.

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About the Author: Jeffrey S. Jacobson

With experience at the highest levels of the New Jersey Attorney General’s Office, as well as two decades defending clients in their most significant claims, Jeffrey Jacobson provides a multifaceted and strategic perspective. He has led both the defense and prosecution of major consumer fraud, privacy and securities litigation, and he has represented both sides of investigations conducted by state attorneys general. With this insight, Jeff crafts litigation strategies to resolve matters as beneficially, efficiently and cost-effectively as possible.

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