In a legal victory for New Jersey businesses, the New Jersey Supreme Court ruled on Wednesday that a refund provision of the New Jersey Truth in Menu Act does not apply to all claims asserted under the New Jersey Consumer Fraud Act.
NJBIA, the Commerce and Industry Association of New Jersey, and the New Jersey State Chamber of Commerce all served as amicus on the case filed and won by McCarter & English.
The Supreme Court’s decision was unanimous.
“If this decision had not been reversed, any violation of the Consumer Fraud Act would entitle plaintiffs to full refunds of all past charges, unrelated to what the violation was,” said NJBIA Vice President of Government Affairs Ray Cantor. “This potentially would have had had tremendous impact on many businesses fighting litigation in the future.
“We thank McCarter & English for their outstanding and diligent work on this case.”
The decision stems from a 2013 lawsuit brought against five Springpoint retirement communities in New Jersey.
The plaintiffs claimed that Springpoint’s advertising and statements were misleading when the company said in marketing plans that entrance fees would be 90% refundable for residents who chose the refundable deposit plan.
Lead plaintiff William DeSimone claimed his mother paid a $159,000 entrance fee when she moved into a Springpoint facility in 2009. But after his mother died in 2010, he said the refund was only 50% of the entrance fee.
The trial court held that the refund provisions applied not only to the state Consumer Fraud Act, but also the New Jersey Truth in Menu Act, which prohibits food-related misrepresentations.
If that had been held, the defendant would not only be liable for the specific violation – in this case, an entry fee – but also responsible for reimbursing all the money spent during the mother’s time at the retirement community.
The Supreme Court, however, reversed the trial court’s decision and said the Truth in Menu Act provisions provides relief to only victims of food-related fraud and does not extend to all CFA violations.
A copy of the decision can be found here.
