Claims for consumer fraud against indirect sellers

NEW JERSEY LAW AND THE CONSUMER FRAUD ACT

NO DIRECT CONTACT IS REQUIRED BETWEEN THE DEFENDANT AND THE CONSUMER

 

THE DEFENDANT’S ASSERTION THAT THEY ARE NOT SUBJECT TO THE CONSUMER FRAUD ACT BECAUSE THEY DID NOT DIRECTLY SELL OR HAVE ANY DIRECT CONTACT WITH THE PLAINTIFF IS NOT SUPPORTED BY THE LAW, INCLUDING THE DEFINITION SECTION OF THE CONSUMER FRAUD ACT

A. NO DIRECT RELATIONSHIP OR CONTRACT IS REQUIRED BETWEEN THE PLAINTIFF AND DEFENDANT TO MAINTAIN A CLAIM UNDER THE CFA

The lack of a contractual relationship or privity does not automatically defeat a the plaintiff’s claim. The determination of whether a duty exists is generally considered a matter of law to be decided by the court. Carvalho v. Toll Bros. and Developers, supra, 143 N.J. at 572; S.P. v. Collier High School, 319 N.J.Super. 452, 467,(App.Div.1999). The assessment of fairness and policy “involves identifying, weighing, and balancing several factors-the relationship of the parties, the nature of the attendant risk, the opportunity and ability to exercise care, and the public interest in the proposed solution” Zielinsky v. Professional Appraisals 326 N.J.Super 219 (App.Div 1999).
There is no privity requirement to maintain a cause of action under the New Jersey Consumer Fraud Act. In Alloway v. General Marine Ind., 149 N.J. 620 (1997), the Supreme Court held that the New Jersey Consumer Fraud Act does not require privity to maintain a cause of action. In Alloway, the plaintiff purchased a defective boat, which was built by the (manufacturer) defendant. The plaintiff instituted suit against the manufacturer and other defendants for tort (negligence) and warranty claims. The Court dismissed the tort claims and permitted the plaintiff to proceed on the warranty claims, holding that privity was required for tort claims, but not for warranty type claims. The underpinnings of the decision were that the plaintiff had statutory avenues of remedy including, but not limited to, the Uniform Commercial Code (UCC) and the New Jersey Consumer Fraud Act to address economic injuries to property. Id. at 639 – 640. The Court specifically left unanswered whether or not tort or contract law applies to a product that poses a risk of causing personal injuries or property damage, but has caused only economic loss to the product itself.
The trend in the application of the Consumer Fraud Act has been to expand liability to those “upstream, in the chain of commerce,” including but not limited to remote suppliers of component parts whose products are passed on to a buyer and its representations are made to, or intended to be conveyed to the ultimate purchaser. Perth Amboy Iron Works v. Amhouse, 226 N.J. Super 200, 211 (App. Div. 1998).


There is no requirement that a potential consumer have actually purchased the goods directly from PassTime. If there is a requirement that a consumer directly purchase goods that would actually encourage defendants to engage in deceptive practices and false advertisements but to do so in an indirect manner.
The CFA Specifically defines, the term advertisement to include the attempts directly or indirectly by the publication, dissemination, solicitation, endorsement or circulation, or in any other way to induce directly or indirectly any persons to enter or not enter into any obligation or acquire any title or interest in any merchandise or to increase the consumption or to make any loan. The CFA defines the term sale to include any sale, rental or distribution offer for sale, rental or distribution or any attempt directly or indirectly to sell, rent or distribute. Again, a transaction does not have to be a direct transaction to fall under the New Jersey Consumer Fraud Act.
The CFA specifically account for and addresses indirect liability by upstream sellers of goods.
(a) The term “advertisement” shall include the attempt directly or indirectly by publication, dissemination, solicitation, indorsement or circulation or in any other way to induce directly or indirectly any person to enter or not enter into any obligation or acquire any title or interest in any merchandise or to increase the consumption thereof or to make any loan; N.J. Stat. Ann. § 56:8-1 (West)

(e) The term “sale” shall include any sale, rental or distribution, offer for sale, rental or distribution or attempt directly or indirectly to sell, rent or distribute; N.J. Stat. Ann. § 56:8-1 (West)

The Lamalledo Court addressed the CFA power to root out all sorts of fraud due to the unforeseeable varieties of abuses that are continually devised to take advantage of consumers, trial courts are instructed to interpret the CFA broadly in determining the range of endeavors that fall under its protective umbrella:

Given that “[t]he fertility of [human] invention in devising new schemes of fraud is so great . . .,” the CFA could not possibly enumerate all, or even most, of the areas and practices that it covers without severely retarding its broad remedial power to root out fraud in its myriad, nefarious manifestations. Lemelledo v. Beneficial Mgmt., 150 N.J. 255, 265, 696 A.2d 546 (1997) quoting Kugler v. Romain, 58 N.J. 522, 543 n. 4, 279 A.2d 640 (1971)(emphasis added)

For a plaintiff to recover under the CFA, the plaintiff need not prove that the defendant was directly involved in the original contract negotiations or sale. Courts have previously interpreted the CFA as not requiring direct contractual privity between the consumer and the seller of the product or service, thereby allowing indirect suppliers, whose products are passed onto a buyer and whose representations are made to or intended to be conveyed to the buyer to be sued under the CFA. Perth Amboy Iron Works, Inc. v. Am. Home Assur. Co., 226 N.J.Super. 200, 211, 543 A.2d 1020 (App.Div.1988), aff’d, 118 N.J. 249, 571 A.2d 294 (1990); see also Neveroski v. Blair, 141 N.J.Super. 365, 376, 358 A.2d 473 (App.Div.1976) (There is no provision in the CFA that the claimant must have a direct contractual relationship with the seller of the product or service). See Jefferson Loan v. Sessions 397 N.J.Super 520 (App.Div 2008).