On this date in 1994, the Supreme Court decided Cox v. Sears Roebuck & Co., 138 N.J. 2 (1994). This unanimous opinion by Justice Clifford continues to be one of the leading cases on the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (“CFA”).
Cox had contracted with Sears for installation of a kitchen. He charged the amount due on his credit card. Contending that Sears’s work was incomplete and not in compliance with codes, Cox sued for breach of contract and consumer fraud. The jury found for Cox on both claims. The Law Division judge, however, granted Sears’s motion for judgment notwithstanding the verdict, resulting in a loss for Cox on both claims. The Law Division found no ascertainable loss to support either claim. That court also denied plaintiff attorneys’ fees.
On appeal, a 2-1 majority of the Appellate Division affirmed the rejection of the CFA claim, but found for plaintiff on breach of contract. The dissenter would have ruled for Cox on both claims, and would have awarded treble damages and attorneys’ fees. The dissent viewed the charge on Cox’s credit card as a “loss” under the CFA.
Cox appealed as of right, based on the dissent. Justice Clifford’s careful analysis of the CFA and its history, structure, and purpose is still cited today. He also laid out the three types of CFA violations: affirmative acts, for which intent is not required. omissions, for which intent is necessary, and violations of regulations promulgated under the CFA, which partake of strict liability.
The Court explained that breaches of warranty do not necessarily constitute CFA violations. “Aggravating circumstances” are required for that. Here, the jury validly found liability under the CFA based on the facts. Though Sears’s conduct did not rise to the level of an unconscionable commercial practice, Cox was not required to show unconscionable conduct in order to prevail.
Justice Clifford found that Cox had an ascertainable loss even though he had not spent any money to repair the work. Cox need only have offered “an estimate of damages, calculated within a reasonable degree of certainty. The victim is not required to actually spend the money for the repairs before becoming entitled to press a claim.” In an important additional ruling, the Court stated that there was ascertainable loss because Sears had counterclaimed for payment and had imposed a lien on Cox’s home, but Cox could not recover for that loss because it was not causally connected to Sears’s violation of the CFA
Finally, Justice Clifford made clear that treble damages and attorneys’ fees are mandatory for a successful CFA plaintiff. He added, for the sake of completeness, “that a consumer-fraud plaintiff reasonable attorneys’ fees, filing fees, and costs if that plaintiff can prove that the defendant committed an unlawful practice, even if the victim cannot show any ascertainable loss and thus cannot recover treble damages. The fundamental remedial purpose of the Act dictates that plaintiffs should be able to pursue consumer-fraud actions without experiencing financial hardship.
This was not the first case under the CFA, or the last. But it said an important mouthful, all in one place. It is a foundation stone of CFA law in the modern era, and will likely continue to be.