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A Good Deal: Gift Card Lawsuit Over Restraurant.com Moves Forward

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By Casey C. Sullivan, Esq. on May 04, 2015 10:01 AM

Personally, I've never understood the draw of gift certificates. Unlike cash, they're filled with restrictions, limitations, and prohibitions. But, they often come with deals, and people love a good deal.

That love of a deal may result in a windfall for some New Jersey litigants. After suing Restaurant.com for selling gift certificates which failed to comply with New Jersey consumer protection laws, in a case that has resulted in six published opinions, plaintiffs may finally have the go ahead to pursue a class action lawsuit against the website.

Except Where Prohibited By Law

We're all familiar with the rushed, hushed announcement at the end of a commercial: "other terms and conditions may apply; void where prohibited by law." A similar message was included in Restaurant.com's fine print as well. In New Jersey, though, such disclaimers aren't enough.

New Jersey law requires that, if a consumer notice states that its provisions may be void, it must also specify which ones are or are not -- a blanket, ambiguous disclaimer is not allowed. Under the consumer notice law, an "aggrieved consumer" is allowed to collect civil penalties of at least $100 or actual damages, along with attorney's fees. That law, the Truth-in-Consumer Contract, Warrant, and Notice Act (TCCWNA), applies to consumer contracts regarding property which is "primarily for personal, family or household purposes."

The New Jersey Supreme Court Weighs In

Are gift certificates property for the purposes of the TCCWNA? According to the New Jersey Supreme Court, who answered that certified question from the Third Circuit, they are. The certificates constituted intangible property and were primarily for personal use. Their sale constituted a consumer contract, meeting all the requirements of the act.

Though it seemed like that would be bad news for Restaurant.com, it wasn't -- yet. The website successfully convinced the district court on remand that the Jersey Supreme's explanation should only be applied prospectively. The district court seemed unsympathetic to the litigious certificate holders, finding that equity required prospective application only, since the plaintiffs had not suffered "any actual, non-theoretical" damages and should not be entitled to a statutory "windfall."

Enjoy the Fruits of Your Labor

For a putative class action, that's a highly individualized ruling to make. After all, the class, should it get certified, would end up including many more members, many of whom would have suffered some real loss.

That didn't mean the plaintiffs were out of luck, however. Under the laws of New Jersey, a new rule of law which is not fully retroactive is generally applied to the litigants whose suit produced it, allowing them to benefit from the fruits of their legal labor. Whether that results in a "windfall" doesn't matter, the Third ruled, since the statutory penalties were put in place exactly so that consumers could enforce the act, actual damages or not.

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