Contractual Limitations Period Bars TCCWNA Class Action

Class actions brought under the New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”) are on the rise. This year alone, Wal-Mart, J. Crew, Avis, Toys R Us, and Apple – among many others – have been sued under this unique state statute that prohibits certain types of unlawful provisions in consumer contracts and other documents. In the past decade, courts have continued to expand the scope of this law – from the New Jersey Supreme Court, which, in 2013, instructed lower courts to construe the statute broadly, to the District of New Jersey, which, in 2014, allowed a TCCWNA class action to go forward against contracts containing commonly-worded exculpatory and indemnification provisions.

This fertile ground has led to a skyrocketing number of TCCWNA cases brought by plaintiffs hoping to further expand the bounds of this statute. On June 22, 2016, however, the District of New Jersey dismissed a TCCWNA class action, showing that the law indeed does have its limits.

In Bowen v. Hyundai Motor Am., 15-cv-6942 (D.N.J. June 22, 2016), plaintiff Deedra Bowen sued Hyundai in relation to her car’s “Blue Link Telematics System,” which is “a communications system that connects the vehicle with emergency services when requested and provides subscribers with routing and location information, as well as security features.” The plaintiff bought her vehicle in October 2013 and was at that time provided a “Blue Link Subscription Agreement,” which, according to Ms. Bowen, contained provisions that violated the TCCWNA.

Hyundai moved to dismiss, arguing that – whatever the TCCWNA implications of the targeted provisions – the agreement separately contained a one-year limitations provision that barred lawsuits after the expiration of this period. Meaning, Hyundai asserted the plaintiff would have had to bring her TCCWNA claims by October 2014, which she failed to do.

In agreeing with the defendant and dismissing the case, the District Court emphasized several points. First, New Jersey permits “reasonable” contractual limitations provisions – and this provision was neither unreasonably short nor contrary to public policy. The Court distinguished a recent New Jersey Supreme Court case, Rodriguez v. Raymours Furniture Co., which invalidated a contractual limitations provision that had shortened the statutory limitations period for lawsuits under the New Jersey Law Against Discrimination (“LAD”). According to the District Court in Bowen, “that case is clearly distinguishable because of the ‘unique importance’ of the LAD. Absent such a uniquely important public policy concerns, courts should uphold the right of freedom to contract.”

Additionally, despite the plaintiff’s protestations that this agreement was unconscionable, the Court disagreed. First, the Court easily determined that the limitations provision was not at all substantively unconscionable. Then, although the plaintiff complained that the agreement was a “contract of adhesion,” the court held that it was not so unconscionable as to render its limitations period unenforceable. On this point, the court went so far as to emphasize that “it is clear that Defendant possessed superior bargaining power and was the more sophisticated party in this transaction.” Nevertheless, “that level of procedural unconscionability does not, by itself render a contract unenforceable.”

In fact, the court found these conclusions so clear – and the plaintiff’s claims so unambiguously time-barred – that it dismissed the case with prejudice, and did not allow her to amend her complaint.

Although this decision may not abate the current wave of TCCWNA litigation, Bowen at least reinforces the notion that a contractual limitations-period defense to the TCCWNA is alive and well. The impact of this defense on the current wave of class actions targeting website terms and conditions is unclear, at best. Still, where these agreements contain limitations provisions, Bowen demonstrates that courts are receptive to barring litigation that comes too late.

Michael R. McDonald is a Director in the Gibbons Business & Commercial Litigation Department. Joshua S. Levy, an Associate in the Gibbons Business & Commercial Litigation Department, co-authored this post.
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