In Robey v. SPARC Group LLC (A-50-22/087981) (Decided March 25, 2024), the Supreme Court of New Jersey held that a class of shoppers at the retail clothing store Aéropostale failed to sufficiently plead a claim under the Consumer Fraud Act (CFA).
According to the divided Court, the shoppers didn’t demonstrate that they sustained an ascertainable loss caused by the alleged “illusory discounts” offered by defendant SPARC Group LLC, the owner and operator of Aéropostale.
Facts of Robey v. SPARC Group LLC
Plaintiffs, a class of shoppers at the retail clothing store Aéropostale, allege that the store advertised clothing as being discounted when, in fact, the items had never been offered or sold at the non-discounted prices, or reference prices, listed. Plaintiffs contend that this practice of “illusory discounts” violates the Consumer Fraud Act (CFA), the Truth in Consumer-Contract, Warranty and Notice Act (TCCWNA), and various common law contract rights.
The Defendant moved to dismiss the Plaintiffs’ complaint. The trial court granted the Defendant’s motion, observing that the CFA “unmistakably makes a claim of ascertainable loss a prerequisite for a private cause of action.”
The court found that the Plaintiffs failed to plead sufficient facts to establish ascertainable loss — either an “out-of-pocket” loss or a loss of the “benefit of [their] bargain” — under the CFA or the violation of a “clearly established legal right” under TCCWNA.
The Appellate Division reversed. The majority found that the Plaintiffs were denied the benefit of their bargain because they “received no value for the offered discount.”
The court further held that, because the Plaintiffs had adequately alleged that they suffered an ascertainable loss for CFA purposes, they had also sufficiently pled that they were “aggrieved consumers” for purposes of TCCWNA and that their other claims should proceed as well. The concurrence agreed that the Plaintiffs’ claims should survive but under a theory of out-of-pocket loss.
NJ Supreme Court’s Decision in Robey v. SPARC Group LLC
The New Jersey Supreme Court reversed by a vote of 4-3. Justice Lee A. Solomon wrote on behalf of the majority.
In reaching its decision, the New Jersey Supreme Court confirmed that to state a claim under the CFA, an individual must plead an unlawful practice, an ascertainable loss, and a causal relationship between the two. In addition, an asserted “ascertainable loss” must be quantifiable or measurable, not hypothetical or illusory.
The New Jersey Supreme Court found that the Appellate Division correctly found that the Plaintiffs adequately pled allegations of deceptive conduct that violates the CFA because the complaint sufficiently asserts that the discounts offered were illusory and the Defendant utilized a fictitious former price in violation of N.J.S.A. 13:45A-9.6(a). However, it disagreed that the Plaintiff established an ascertainable loss by demonstrating either an out-of-pocket loss or a deprivation of the benefit of one’s bargain.
“We do not find either type of ascertainable loss applicable here. Plaintiffs cannot assert a ‘quantifiable or measurable’ loss because they purchased non-defective, conforming goods with no objective, measurable disparity between the product they reasonably thought they were buying and what they ultimately received,” Justice Solomon wrote. “Plaintiffs’ CFA claim therefore fails.”
The New Jersey Supreme Court also determined that the Plaintiffs’ TCCWNA claims failed. In support, it noted that a consumer must have suffered adverse consequences as a result of the Defendant’s regulatory violation to be “aggrieved” within the meaning of TCCWNA.
In this case, the Plaintiffs’ alleged harm is premised on the same allegations as their CFA claim – use of a fictitious former price. “[A]bsent an ascertainable loss pursuant to the CFA, plaintiffs are not ‘aggrieved consumers’ under TCCWNA, cannot show injury or damages under their common law claims, and are without claims entitling them to equitable relief,” Justice Solomon explained.