The Third Circuit of the United States Court of Appeals issued its decision in late April in the case of Spade v. Select Comfort Corp. This case arose from class actions pending in New Jersey that were based on the state’s Truth in Consumer Contract, Warranty and Notice Act (otherwise coined the “TCCWNA law”). The self storage industry has obviously been waiting for this decision since the implications of this decision were expected to impact, either positively or negatively, those class action cases pending in New Jersey filed against self storage companies including Public Storage, CubeSmart, Life Storage and Extra Space based on those companies’ alleged violations of TCCWNA. Those class actions are based on the rental agreements being used by these self-storage operators and whether the language in those agreements violate the Act.
The Court of Appeals was considering the question of whether a consumer who receives a “non-compliant” contract, but does not actually suffer any adverse consequences from the noncompliance, is an “aggrieved consumer” under TCCWNA? Although the Court acknowledged that a company’s use in a consumer sales contract of certain language prohibited by governing statutes would meet the first test of TCCWNA (that is whether using any such provisions constitute a violation of a “clearly established legal right of a consumer or responsibility of a seller”), the Court held that “a consumer who receives a contract that includes language prohibited by [statute], but who suffers no monetary or other harm as a result of that noncompliance, is not an “aggrieved consumer” entitled to a remedy under the TCCWNA”. The Court stressed the fact that the legislature would not have used the word “aggrieved” in the statute unless it intended to address consumers who have suffered harm (a loss or injury) because of a violation of the particular governing statute. The Court stated, “We interpret [the statute] to require a consumer to show that he or she has suffered harm, even if that harm does not warrant an award of damages, as a result of a violation of [the statute], in order for that consumer to constitute an “aggrieved consumer” for purposes of the TCCWNA”.
This decision therefore will have an immediate and positive ripple effect on the TCCWNA cases that are currently pending against the largest self storage companies in New Jersey since the claims in those cases primarily arise from the assertions that certain language in the rental agreements was prohibited by law, but not necessarily that the tenants who signed those contracts ever suffered any real “harm”. The Third Circuit decision will also impact the likelihood of future cases against self storage companies in New Jersey since the plaintiffs will now need to prove harm rather than simply assert allegations of unfair contract language.