Plaintiffs Win Against Towing Companies in the Supreme Court, Except on Their TCCWNA Claims

Pisack v. B&C Towing, Inc., 240 N.J. 360 (2020). This matter involved multiple consolidated consumer class actions challenging the fees charged by the defendant towing companies, which towed plaintiffs’ vehicles at the direction of the police without plaintiffs’ consent. As discussed here, after trial level proceedings produced differing results, the Appellate Division issued a published opinion, reported at 455 N.J. Super. 225 (App. Div. 2018), that resolved, largely in plaintiffs’ favor, a number of issues under the Predatory Towing Prevention Act, N.J.S.A. 56:13-7 et seq. (“Towing Act’), the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (“CFA”), and the Truth in Consumer Contract, Warranty, and Notice Act, N.J.S.A. 56:12-14 et seq. (“TCCWNA”).

Defendants sought and were granted certification by the Supreme Court. In a unanimous opinion by Justice LaVecchia, the Court affirmed in part and reversed in part.

Most of the Appellate Division’s rulings were upheld. Those included that “[1] the Towing Act does not require a preliminary exhaustion of administrative remedies prior to filing a complaint in Superior Court,” “[2] defendants [did not] have derivative immunity under the TCA because the private towing companies were directed by the local police to tow plaintiffs’ vehicles,” “[3] the Towing Act expressly contemplates a CFA action,” and “[4] the pre-2018 Towing Act limited the types of services for which a towing company can charge a fee and … towing charges must be consistent with the limitations provided by the Act and its regulations.” The Supreme Court also upheld the Appellate Division’s ruling that, depending on the record to be made on remand, the cases might be able to proceed on a class action basis.

The reversal involved the Appellate Division’s decision that plaintiffs’ TCCWNA claims could proceed. Additionally, since the Legislature amended the Towing Act after the Appellate Division ruled, the Supreme Court had to address the question of whether that amendment applied retroactively. The Court held that it did not.

The retroactivity ruling came first, because if the Towing Act amendment were retroactive, defendants’ conduct could not have been challenged. Prior to late 2018, towing fees that were not contained in a schedule promulgated by the Director of the Division of Consumer Affairs were unlawful. Legislation passed in 2018 and codified at N.J.S.A. 56:13-16(i), however, permitted towing companies to charge “fees for non-consensual towing or related storage services in accordance with a duly-authorized fee schedule established by a municipality or other political subdivision,” regardless of the Director’s schedule of fees. That is what occurred here.

Justice LaVecchia observed that “[s]ettled rules of statutory construction favor prospective rather than retroactive application of new legislation.” But the key issue is whether the Legislature intended retroactivity. She cited “three scenarios that justify retroactive application of a legislative amendment: “(1) when the Legislature expresses its intent that the law apply retroactively, either expressly or implicitly; (2) when an amendment is curative; or (3) when the expectations of the parties so warrant.” None of those were present here.

The Legislature provided that the 2018 amendment “shall take effect immediately.” That evidenced “an intent contrary to, and not supportive of, retroactive application,” Justice LaVecchia said, citing prior Supreme Court cases.

The amendment was not curative. A statute is curative if it is “designed to remedy a perceived imperfection in or misapplication of the statute.” In contrast, an amendment is not curative “merely because the Legislature has altered a statute so that it better serves public policy objectives.”

Here, the pre- and post- amendment Towing Act were “stark[ly]” different. ” “Prior to the amendment, it was unlawful for a towing company to charge a fee not included within the Director’s schedule. N.J.S.A.56:13-16(f)(1) (2017). After the amendment, towing companies may charge fees not included in the Director’s schedule if the fee is authorized by a municipal ordinance.” That “significant change,” Justice LaVecchia said, rendered the amendment non-curative.

Defendants argued that a remark in the Sponsor’s Statement to the amendment that referred to the legislation as “clarif[ying]” called for a ruling that it was curative. Justice LaVecchia disagreed. “The descriptor ‘clarifying’ on which defendants seek to rely, moreover, is insufficient on its own to render the amendment curative: the substantial change we have detailed here cannot become something less than it is by use of the descriptor ‘clarifying’ when describing the amendment.”

Finally, the expectations of the parties did not come into play. “The evidence and briefing submitted to the trial court and Appellate Division indicated that all parties expected the issues in this appeal to be governed by the prior version of N.J.S.A. 56:13-16, which provided that the Director’s schedule controls the universe of permitted fees for non-consensual towing and related storage services.”

Up to that point, it was a good day for plaintiffs. But they lost on their attempt to bring TCCWNA claims.

The TCCWNA covers any “seller, lessor, creditor, lender or bailee or any assigned of any of the aforesaid.” The only potential eligible category there was that of bailee. But there was no contract between the towing companies and plaintiffs. Instead, “the privately owned towing companies contracted with the municipalities to perform towing services,” and the Court did not view that “as creating, in essence, an express or implied contract between the vehicle owners and the companies for purposes of a TCCWNA analysis.”

Justice LaVecchia recognized that New Jersey law “is not fully settled with respect to whether, in addition to possession and control, a contract is essential to the existence of a bailment.” She noted “a trend toward deemphasizing the contractual feature of the transaction and to emphasize the nature of the relationship between the parties when one transfers possession of goods to another.” But it was “far from clear that a non-consensual or involuntary bailment is what the Legislature had in mind for purposes of authorizing a TCCWNA action.”

Had the Court applied the “broad interpretation” to which the TCCWNA is entitled, as the Court’s opinion recognized, the “trend” in bailee law that the opinion cited would have enabled plaintiffs to surmount the “bailee” hurdle. But Justice LaVecchia also concluded that there was no written consumer contract, and no written consumer warranty, notice, or sign, as required for a TCCWNA claim.

The only writing between plaintiffs and the towing companies was the list of charges, which was provided only after plaintiffs retrieved their vehicles. The Court could not “accept that such after-the-fact “bills” constituted a contract or notice to plaintiffs when plaintiffs had already paid the amount demanded to recover their cars. That could not constitute a ‘meeting of the minds.’ The vehicle owners had no choice but to pay the fee in order to retrieve their cars.”

The Court’s ruling on TCCWNA seems, at the very least, counterintuitive. Parties whose power over consumers is so great as to deprive consumers of choice would seem to fit squarely within the Legislature’s intent to supplement the CFA with the TCCWNA. But ever since Shelton v., Inc., 214 N.J. 419 (2013) [Disclosure: I argued that case for the successful plaintiffs], where the Supreme Court gave the TCCWNA a properly broad interpretation, the Court has been reluctant to read the TCCWNA as expansively. See Spade v. Select Comfort Corp., 232 N.J. 504 (2018), for another example of that. Going forward, those who seek to rely on the TCCWNA must pick their spots carefully.