Tag Archives: New Jersey Consumer Fraud Act

Unconscionable Commercial Practice

By Suzanne M. Bradley, Esq.

In an opinion analyzing what constitutes an “unconscionable commercial practice” under the New Jersey Consumer Fraud Act (“NJCFA”), the United States District Court for the District of New Jersey recently dismissed a putative class action brought under the Act and New Jersey common law regarding defendant Novartis AG’s pricing of its Excedrin Migraine product.  In Yingst v. Novartis AG, 2-13-cv-07919, District Judge Claire Cecchi determined that Novartis’ pricing of the product, while strategic, was not illegal under the NJFCA, and therefore dismissed Plaintiff’s claims.

Plaintiff Kerri Yingst alleged that Novartis sells Excedrin Migraine and a pharmacologically equivalent product, Excedrin Extra Strength, at different wholesale prices which in turn caused Yingst and other consumers to pay a premium for Excedrin Migraine, despite the fact that the two products consisted of “identical ingredients in identical quantities.”  Compl. ¶21.  Yingst alleged that at the time she purchased Excedrin Migraine, she believed that because Excedrin Migraine was sold at a higher price, it was a more effective product for migraine relief.  Novartis moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6), and the court granted the motion.

As Judge Cecchi explains, New Jersey’s strong Consumer Fraud Act provides that a plaintiff is entitled to treble damages, reasonable attorneys’ fees, and reasonable costs if she proves that the defendant engaged in an unlawful practice that caused an ascertainable loss.  In this case, Plaintiff did not argue that Novartis committed any affirmative act of deception, fraud, false pretense, false promise, or misrepresentation, and did not argue that Novartis knowingly concealed, suppressed or omitted any material fact with intent to induce reliance.  Instead, Plaintiff contended that Novartis engaged in an “unconscionable commercial practice” within the meaning of the NJFCA by using the U.S. Food & Drug Administration (“FDA”)’s requirement that Excedrin Migraine and Excedrin Extra Strength have separate packaging as a means to extract a premium from consumers while providing no extra benefits.  The New Jersey Consumer Fraud Act does not define the phrase “unconscionable commercial practice.”  However, Judge Cecchi noted that the New Jersey Supreme Court has defined the term as an act lacking good faith, honesty in fact and observance of fair dealing.  Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 655 A.2d 417, 429 (N.J. 1995) (citing Meshinsky v. Nichols Yacht Sales, Inc., 541 A.2d 1063, 1066 (N.J. 1988)).  As with the broader Act, New Jersey case law provides that the phrase “unconscionable commercial practice” should be interpreted liberally to effectuate the Act’s public purpose.

In the case at hand, Judge Cecchi noted that there was no dispute that both Excedrin Migraine and Excedrin Extra Strength were properly labeled and contained no misinformation regarding the medications.  Therefore, because Plaintiff had conceded that there was no dishonesty by Novartis, Judge Cecchi determined that its pricing of Excedrin Migraine was not an act that lacked good faith or honesty in fact.  Further, Judge Cecchi found that Plaintiff could  not establish that Novartis’ pricing of Excedrin Migraine lacked fair dealing; Plaintiff did not cite any cases, and the Court was aware of none, in which an “unconscionable commercial practice” was found under the Act based solely upon disparate pricing of substantively identical products manufactured by the same defendant.  Although the dearth of case law was not itself fatal to Plaintiff’s claim, the fact that Plaintiff paid, at most, $1.05 more for a 300-count package of Excedrin Migraine than for a 300-count package of Excedrin Extra Strength was a “minor detriment” that did not “rise to the level of unfair dealing.”  While Novartis’ creation of a pricing structure in which migraine sufferers paid a higher price for pills pharmacologically identical to Excedrin Extra Strength in order to obtain the directions and warnings mandated by the FDA was “strategic,” Judge Cecchi held that such behavior was not proscribed by the NJCFA and dismissed Plaintiff’s NJFCA claim.[1]  As Judge Cecchi’s opinion demonstrates, slight price differentials in otherwise identical products, absent any evidence of misrepresentation or misinformation, are “within the bounds of reasonableness and concomitantly outside the ambit of the NJCFA.”

[1] Judge Cecchi also dismissed Plaintiff’s unjust enrichment claim.  In New Jersey, a constructive or quasi-contract is a vehicle by which a plaintiff may enforce a public duty to prevent unjust enrichment or unconscionable benefit.  To state a claim for unjust enrichment, the plaintiff must allege (1) at plaintiff’s expense (2) the defendant received benefit (3) under circumstances that would make it unjust for the defendant to retain the benefit without paying for it.  Judge Cecchi again noted that Plaintiff did not allege any misrepresentation or misinformation by Novartis, and also did not allege that Excedrin Migraine failed to relieve her ailment or that Excedrin Extra Strength performed better than Excedrin Migraine; Plaintiff “deliberately purchased the higher-priced product and received exactly what she paid for.”  See Def.’s Reply p. 6.  Therefore, the Court found nothing “unjust” about Plaintiff’s transaction, and granted Novartis’ motion to dismiss with respect to Plaintiff’s unjust enrichment claim.



Dealership Scams and the Consumer Fraud Act – What You Need to Know

By Janie Byalik, Esq.

Have you ever seen an advertisement for a new or used car?  Does the deal sound too good to be true?  What about when you get to the dealership – the car you were promised is nowhere to be found, the price you were quoted suddenly jumps by thousands of dollars, or you are offered a car that you didn’t want, something the dealers called bait and switch.  And what if everything up until the sale goes smoothly, you buy a car that the dealership assured you was in excellent condition only to later discover that car has sustained previous damage, that it was a showroom demonstrator, that it was used as a rental car, or that it was totaled and rebuilt, and none of this information was disclosed to you.

The law in New Jersey protects innocent consumers from unscrupulous actions such as these.  The New Jersey Consumer Fraud Act prohibits the use of any unconscionable commercial practice, deception, fraud, false pretense, false promise, or misrepresentation in connection with the sale or advertisement of any merchandise, including new and used cars.  The Act further prohibits sellers from knowingly concealing or omitting any material fact with the intent that the consumer rely upon the concealment in his or her decision to make a purchase.

The law also prohibits dealership conduct such as:

  • offering a vehicle for sale without disclosing its prior use (such as a rental car)
  • offering for sale a used motor vehicle without disclosing the prior damage to the vehicle;
  • failing to disclose the actual odometer reading
  • overcharging for registration/title fees

This list is by no means exclusive.  There are numerous restrictions placed on dealerships and host of guidelines by which they must abide in advertising and selling cars.  For detailed information, please see the full text of the New Jersey Consumer Fraud Act, the Motor Vehicle Advertising Regulations, and information on New Jersey’s Lemon Law, which can be found on the Division of Consumer Affairs’ website.

Two extremely common schemes by dealerships are overcharging for title and registration fees and selling damaged vehicles.  By law, dealerships are not allowed to charge more for title and registration fees than they pay to the Department of Motor Vehicles.  If there are ancillary fees charged in connection with processing  a title or registration, those fees must be itemized and disclosed to the customer.  A common scheme among dealerships is to charge a set amount as a title/registration fee and note in the sales agreement that the customer may be entitled to a partial refund after it pays the DMV fees, and then to never issue a refund in the hopes that the customer will have forgotten about it.  Just recently,  in 2012, a class action alleged that two Morris County car dealerships were charging customers unlawful fees, including registration fee overcharges.   The case resulted in more than a $3 million settlement.

The most common scam by dealerships is to sell a vehicle that sustained previous damage without disclosing that information to the consumer.  By law, a seller of a vehicle must not misrepresent the mechanical condition of the vehicle and should disclose all material defects in the mechanical condition of the vehicle which is known to the dealer.  The best way to protect yourself against purchasing a previously damaged car is to run a CarFax and if possible, ask the dealers to have an independent mechanic inspect the car before purchasing it.  If you already purchased the car that is later discovered to have sustained accident damage, you may have a claim against the dealership if this information was not disclosed to you.

New Jersey has some of the strictest consumer protection laws in the country.  The Consumer Fraud Act not only is a useful means of providing consumers with a vehicle to bring forth these claims, but also permits the consumer to recover triple damages and attorney’s fees if the case is successful.  For dealership scams, the Consumer Fraud Act is just one of the many tools at your disposal.  You may also have a claim for breach of various warranties, breach of contract, fraud, and possible relief afforded through the New Jersey Lemon Law.