On March 25, 2024, the New Jersey Supreme Court held in a 4-3 decision that private plaintiffs could not sue a retailer under consumer protection statutes for advertising allegedly “illusory discounts” because the plaintiffs had no “ascertainable loss,” which the New Jersey Consumer Fraud Act requires. The case, Robey v. SPARC Group LLC, arose from in-store advertising at Aeropostale locations which allegedly showed, for example, a sweatshirt selling for $23.98 as being “60% off” a reference price of $59.95. Plaintiffs alleged that these stores never actually sold the sweatshirt at that price.
The Supreme Court majority found that the plaintiffs failed to allege an ascertainable loss because they paid the prices they expected to pay and received non-defective, conforming goods for that expected price. Nevertheless, all seven Justices agreed that the New Jersey Attorney General can police this conduct without needing to show that any consumer suffered a loss and exhorted the Attorney General to do so.
The defendant in Robey argued at the trial court level, but not to the Appellate Division or Supreme Court, that its conduct did not violate applicable New Jersey regulations. Although N.J.A.C. § 13:45A-9.6(a) prohibits retailers from using a “fictitious former price,” subsection (b) states that retailers may use reference prices of “comparable merchandise of like grade or quality made within the advertiser’s trade area.” Similarly, another regulation, N.J.A.C. 13:45A-9.5(a)(2), states that percent-off advertisements may describe discounts relative to a “competitor’s price.” For goods priced under $100, moreover, the regulations permit retailers not to state the basis for comparison in their advertising.
The Robey defendant argued to the trial court that its advertising complied with these regulations because the plaintiffs did not and could not allege that the defendant’s goods were not comparable to competitors’ goods sold at higher prices.
Because the defendant did not argue regulatory compliance at the appellate level, the Supreme Court did not consider this issue even though NJCJI and the U.S. Chamber of Commerce asked it to do so as amici curiae. Instead, the Court assumed that the defendant’s conduct violated regulations and upheld dismissal of plaintiffs’ claims solely due to lack of an ascertainable loss.
Three dissenting Justices would have held that plaintiffs met their pleading burden and all seven stressed that Attorney General should investigate and stop deceptive advertising practices.
The decision is considered a win for retailers in New Jersey since class actions cannot proceed on plaintiffs’ “illusory price” theory; however, potential future enforcement actions by Attorney General tempers this victory. Retailers are advised to read full opinion and consult counsel on compliance with relevant rules as Supreme Court’s assumption regarding rule violation constitutes dicta but will need overcoming in future enforcement actions.
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