Opinion ID: 2797758
Heading Depth: 3
Heading Rank: 2

Heading: Propriety of Statutory Damages for the

Text: Named Plaintiffs Even though full retroactivity is not appropriate here, it does not follow that the new rule should be applied purely prospectively. Instead, New Jersey courts generally apply a new rule at least to the litigants whose efforts helped produce it. The Supreme Court of New Jersey has explained that, [b]alanced against [the factors of reasonable reliance, the purpose of the rule, and the rule’s impact] is our belief that those responsible for effecting a change in the law should benefit from their efforts. Accordingly, we have recognized that purely prospective rulings fail to reward litigants for their efforts and fail to further the broader goal of providing an inducement to challenge existing interpretations of the law. It has long been our position that fundamental fairness generally requires that champions of the cause should be rewarded for their effort and expense in challenging existing law. Rutherford Educ. Ass’n, 489 A.2d at 1158; accord James v. Bd. of Trustees of Pub. Emps.’ Ret. Sys., 753 A.2d 1061, 1072 22 (N.J. 2000); Kibble v. Weeks Dredging & Const. Co., 735 A.2d 1142, 1150-51 (N.J. 1999). For example, in Henderson v. Camden County Municipal Utility Authority, the court determined in a putative class action that a new rule prohibiting utilities from charging compound interest should not be given full retroactive effect because charging compound interest was a widespread, long-standing, established practice. 826 A.2d at 620. Nevertheless, the court decided that, even though the class would not receive the benefit of the new rule, the named plaintiff would, “because of her efforts in litigating [the] appeal.” Id. at 621. Here, the District Court rejected that approach. It decided that, because the Plaintiffs had suffered no “ascertainable loss” and there had been reasonable reliance on a contrary interpretation of the law, it would be unjust for Restaurant.com to have to pay “windfall statutory damages and attorneys’ fees.” (App. at 13.) The Court quite rightly was concerned with whether the purpose of the new rule would be best served by something less than full retroactive effect. Coons II, 476 A.2d at 767. But the Court’s emphasis on what it deemed the “windfall” nature of the Plaintiffs’ recovery was misplaced. As explained in Shelton III, “the TCCWNA is a remedial statute, entitled to a broad interpretation to facilitate its stated purpose,” 70 A.3d at 558, and the New Jersey legislature decided to impose a civil penalty as a “deterrent,” id., to effectuate that purpose – “to prevent deceptive practices in consumer contracts by prohibiting the use of illegal terms or warranties in consumer contracts,” id. at 549 (quoting Kent Motor Cars, Inc. v. Reynolds & Reynolds Co., 25 A.3d 1027, 1044 (N.J. 2011)). We cannot disregard the legislature’s choice to award statutory damages in the absence of actual damages. See 23 Tigner v. Texas, 310 U.S. 141, 148 (1940) (“How to effectuate policy – the adaptation of means to legitimately sought ends – is one of the most intractable of legislative problems. Whether proscribed conduct is to be deterred by qui tam action or triple damages or injunction, or by criminal prosecution, or merely by defense to actions in contract, or by some, or all, of these remedies in combination, is a matter within the legislature’s range of choice.”). If it is a windfall, it is one purposefully and lawfully provided. It is true that New Jersey law indicates there may be cases where a defendant’s reliance interests and other equities are such that a new rule should be applied purely prospectively. See Tax Auth., Inc. v. Jackson Hewitt, Inc., 898 A.2d 512, 522-23 (N.J. 2006) (applying new rule prospectively, with the result that a settlement agreement that plaintiff was trying to void was enforced). But whatever those circumstances may be, this is not such a case. That does not mean, however, that the District Court could not limit the extent of the windfall. The approach taken by the New Jersey Supreme Court in Henderson is instructive. Retroactive application was limited to the named plaintiffs, and that option is available here. By following that approach, the otherwise significant financial impact on Restaurant.com and other potential defendants would be more limited and change the calculus of the equities. III. Conclusion Although the District Court correctly determined that the new rule announced in Shelton III is not fully retroactive, it erred by failing to apply that new rule to the Plaintiffs, Shelton and Bohus. We will therefore reverse the judgment 24 and remand the case for entry of an order giving the two named plaintiffs the benefit of the new rule of law that their efforts helped to create. 25