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History of the NJCFA
The New Jersey Legislature enacted the NJCFA in 1960, with the goal of curbing deceptive and shady practices among door-to-door salesmen and home-repair contractors. Since that time, NJCFA jurisprudence has traveled far from those origins, with class actions asserting NJCFA violations for the advertising and marketing of pharmaceuticals, telecommunications services, and just about every product or service used by consumers today. In fact, in some recent cases plaintiffs’ lawyers were able to certify nationwide class actions against New Jersey-based companies under the NJCFA.
Plaintiffs' lawyers are interested in expanding the reach of the NJCFA because there are many advantages particular to consumer fraud claims for the plaintiffs' bar, including mandatory award of treble damages and attorney's fees; relief from the requirement, applicable to other types of fraud claims, of proving reliance; and lenient standards favoring the certification of class action consumer fraud claims.
Lowenstein Sandler's lawyers know how to defeat the certification of consumer fraud claims for class-wide treatment. For example, in many cases, our lawyers have demonstrated why consumer fraud claims cannot be adjudicated on a class-wide basis because of important differences in how and why consumers bought the product or subscribed to the service at issue.
In addition to the firm's civil litigation practice, our lawyers also represent clients who need to respond to regulatory investigations by the Division of Consumer Affairs and the New Jersey Attorney General’s Office in connection with possible NJCFA violations.
Highly Regulated Industries
Our attorneys also have considerable experience working with companies in highly regulated industries. We have defeated many of these efforts against utilities, pharmaceutical companies and dietary supplement companies.
Generally, our lawyers work to prove that consumer fraud is inappropriate in cases where the actions of the regulated company are already scrutinized and governed by a regulatory body. For example, consumer fraud cases have been brought against pharmaceutical companies based on their advertising, of which every word has already been reviewed and approved by the U.S. Food and Drug Administration (FDA). Lowenstein Sandler’s consumer fraud team has considerable experience working to defeat these cases, which could potentially result in class actions involving millions of people.
Noteworthy Successes
Gained dismissal of a consumer fraud claim against a sunscreen manufacturer because sunscreen is regulated as an over-the-counter pharmaceutical product under the Federal Food, Drug & Cosmetic Act.
Defeated an effort by the plaintiffs' bar to establish a "fraud-on-the-market" theory of causation and loss under the NJCFA. If accepted by the New Jersey courts, this theory would have permitted a plaintiff to certify a class on an allegation that deceptive advertising caused an increase in the market price for a product—irrespective of which particular consumers allegedly were misled by the advertising.
Gained the dismissal of NJCFA claims pertaining to a tariffed telecommunications product based on the argument that the tariff system under the Federal Communication Act preempts any attempt to vary the price of tariffed services.
On an interlocutory appeal, overturned the certification of a class after an adverse ruling in lower courts against an art gallery accused of manipulating art auctions on cruise ships.
Won summary judgment on NJCFA claims against a public utility and obtained a ruling that exempts utilities from the reach of such claims when they arise from the state-granted franchise for electrical or gas service.
Won a threshold dismissal of a nationwide class action against a pharmaceutical manufacturer alleging consumer fraud violations in the direct-to-consumer advertising of a prescription drug. We premised our strategy on the regulatory jurisdiction of the FDA and the plaintiffs’ failure to plead a viable theory of loss causation.
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