Pub. 12 2013-2014 Issue 4

N e w J e r s e y C o a l i t i o n O f A u t o m o t i v e R e t a i l e r s 29 new jersey auto retailer w w w . n j c a r . o r g on the inaccurate content in his or her purchase decision or get misled by the missing wording. Despite the fact that the conduct did no actual harm to the consumer, the business can be subject to liability to the consumer and legal fees for the consumer’s attorney. This problem is compounded where technical violations are in- volved. Under TCCWNA, the failure to fulfill the requirements in applicable statutes or regulations, even if technical, is a violation. For example, if a regulation requires certain information in a contract or notice to be in 10-point type, printing that information is less than 10-point type, even if bold and conspicuous, is a viola- tion. If a violation is shown, the retailer is liable for a $100 penalty under TCCWNA and the consumer’s legal fees. Likewise, under the CFA, a technical or regulatory violation gives a consumer the ability to sue and, even if the consumer can prove no actual dam- ages, secure attorney’s fees. Technical violations are also prime candidates for class actions. A technical violation in a standard form contract, notice or warranty that is given to many consumers, leaves each such consumer with a claim. Consumer lawyers love to aggregate these claims into class actions in which small individual damages or penalties are multiplied hundred or thousands of times and legal fees escalate. While logic suggests that a consumer who has a problem with a business should go to that business as a first step and try to work out the problem, under the CFA or TCCWNA, a consumer is not required to advise the business of his or her problem or try to work out the issue before filing suit. No advance notice is required. This encourages consumer attorneys to file suit first and talk to the business or its attorneys second, while the threat of treble damages looms over the business and legal fees are accumulating. Legal fees and treble damages under both CFA and TCCWNA are particularly troublesome because the threat they pose to a business often makes the risk of defending a CFA lawsuit too great for a small to mid-size business. A small claim can treble in amount and be compounded by out of control legal fees. The result is settlement of dubious claims which, itself, becomes an incentive for consumers and their attorneys to file more lawsuits. The legislative push to amend the CFA and TCCWNA is expected to focus on these troublesome features. Probable proposals will include: • requiring a consumer to show that he or she relied on a viola- tion to be able to prevail; • requiring the consumer to contact the business to work out the dispute before filing suit; • making treble damages discretionary for the judge, not auto- matic in every situation; and • limiting legal fees, especially where technical violations are all that is alleged. As an industry that deals with consumers in high price tag, emo- tionally-charged transactions, automotive retailers are susceptible to CFA and TCCWNA claims and have a particular interest in seeing those statutes reformed. As the legislative push progresses, dealers should take note and use available opportunities to partici- pate in the process by informing their legislators of the issues and the harm these statutes have on their businesses, particularly in their present form. Marvin J. Brauth is a shareholder with Wilentz, Goldman & Spitzer, Woodbridge, New Jersey. He has been representing automotive retailers for over 30 years in connection with issues affecting their dealerships, such as those discussed in this article. Mr. Brauth can be reached at 732-855-6084 or mbrauth@wilentz.com.