Opinion ID: 2767325
Heading Depth: 2
Heading Rank: 1

Heading: Specific Damages

Text: Ciser first argues that Nestle’s late fee violates New Jersey’s public policy against unreasonable specific damages clauses. We reject this argument. Specific damage clauses, when unreasonably large, constitute unfair penalties. Wasserman’s Inc. v. Township of Middletown, 645 A.2d 100, 105–07 (N.J. 1994). Generally, the party challenging the enforcement of a specific damages clause has the burden to prove the fee unreasonable as an affirmative defense against the fee’s enforcement. Metlife Capital Fin. Corp. v. Washington Ave. Assocs. L.P., 732 A.2d 493, 499–500 (N.J. 1999); Wasserman’s Inc., 645 A.2d at 108 (N.J. 2013). Permissible specific damages—deemed “liquidated damages”—must be reasonable under the totality of the circumstances. Metlife, 732 A.2d at 499. This test includes several non-exclusive factors, such as the Class Action Fairness Act of 2005. We have jurisdiction under 28 U.S.C. § 1291 to review the final decision of a district court. 5 anticipated or actual harm caused by the breach, the difficulty in proving such loss, the feasibility of alternative remedies, the intention of the parties, and the bargaining power of the parties. Id. at 498–99. Ciser’s Second Amended Complaint alleges that Nestle’s fees constitute a penalty under the totality of the circumstances test outlined in Metlife for (1) not having a reasonable relationship to Nestle’s actual costs and (2) being excessive relative to late fees charged by competitors. (Second Am. Complaint, at ¶ 4). However, we are aware of no case—and Ciser provides no authority—that allows a plaintiff to bring an offensive claim to recover paid but allegedly unconscionable late fees, as opposed to an affirmative defense to their enforcement. See MetLife, 732 A.2d at 499–500 (explaining that liquidated damages provisions between commercial parties are presumptively reasonable).2 The absence of such cases is in accord with New Jersey’s adherence to the common law voluntary payment doctrine, which prevents the recovery of payments made in the absence of fraud, duress, or similar compulsion. In re Fees of State Bd. of Dentistry, 423 A.2d 640, 643 (N.J. 1980). Ciser cites Green v. Morgan Properties for the proposition that consumers have an affirmative right of action at common law to challenge specific damages clauses. 73 A.3d 478 (N.J. 2013). In Green, however, the New Jersey Supreme Court held that attorneys’ fees in a residential lease, which were variable depending on the nature of litigation resulting from breach, constituted an “additional rent term” and not a liquidated damages 2 In Metlife, the defendant argued, as a defense against enforcement, that the bank’s fixed percentage late fee provision was unreasonable. 732 A.2d 493. 6 provision. Id. at 491.3 Likewise, the New Jersey Superior Court did not treat the lease term as a specific damages clause but as a “fee-shifting provision” for which the liquidated damages framework was “inapt.” Green v. Morgan Props., No. L–4158–10, 2011 WL 5212388 at  (N.J. Super. Ct. 2011). Any extension of Green’s recognition of an affirmative cause of action into consumer law is unwarranted based upon the New Jersey Supreme Court’s recognition of the unique nature of both landlord-tenant law and the rules of professional conduct for attorneys. Id. at 486, 492. Effectively, Ciser attempts to combine the CFA’s statutory cause of action against unconscionable practices with the MetLife affirmative defense, but the claims remain distinct. Accordingly, Ciser has not plead a cognizable common law claim. Ultimately, however, our decision rests upon the insufficiency of Ciser’s pleading. Even assuming a cognizable claim at common law, Ciser has failed to state a plausible claim for relief, as discussed below in Section Four.