The New Jersey Supreme Court today issued a unanimous ruling strongly limiting the "New Jersey Truth in Menu Act," finding that it does not apply to all claims asserted under the New Jersey Consumer Fraud Act.
Today's ruling from the state's highest court reverses a ruling previously issued by a lower court.
The class action suit was brought by residents of Continuing Care Retirement Communities (CCRC) who alleged a bait-and-switch scheme by Princeton, NJ-based Springpoint Senior Living, formerly Presbyterian Homes & Services.
A lawsuit initially filed in 2014 accused the senior living operator of consumer fraud over allegations that it misrepresented the return of entrance fees once residents leave a CCRC.
In February 2009, William DeSimone and his siblings moved their mother, Evelyn DeSimone, into Springpoint Monroe Village, one of the CCRC's owned and operated by Springpoint.
In addition to monthly service fees and “other fees” relating to activities, incidentals, and medical care, Springpoint charges an entrance fee for residents. The amount of the entrance fee varies from $84,000 to over $700,000, depending on the Springpoint facility and living accommodation unit.
Springpoint offers two different “entrance fee refund” plans -- a “traditional plan” and the plan relevant to this appeal, a “90% refundable plan.” The “90% refundable plan” is available upon election to pay a higher entrance fee. Through oral statements, marketing, and sales materials, Springpoint represented that under the “90% refundable plan,” 90% of the entrance fee a resident paid, minus applicable deductions for medical care provided, would be refunded to the resident’s estate when the resident dies or moves out of the facility. In its disclosure statements, Springpoint likewise stated that the “90% refundable plan” “allows for up to 90% of the entrance fee to be refunded.” Those disclosures, however, also stated that the entrance fee refund policy is explained in greater detail in an attached “Residence & Care” agreement.
The additional information is found “buried” on page 20, in Section VI of that agreement. That discloses that “contrary to all other prior representations and descriptions by Springpoint, including the Disclosure Statement,” the language on page 20 provided “that the 90% refund would be paid without interest based on the lesser of the original entrance fee paid or the subsequent resident’s entrance fee,” subject to certain additional deductions.
The DeSimone family paid an entrance fee totaling $159,000 and selected the “90% refundable plan.” The DeSimone family believed that, if Evelyn moved out of the facility or passed away, 90% of the $159,000 paid entrance fee would be refunded, minus incurred medical costs.
After Evelyn passed away in April 2010, Springpoint sent William a check for $80,136, accounting for approximately 50% of the entrance fee paid. When William inquired about the amount of the refund, Springpoint responded that the refund had been calculated based on the entrance fee paid by the resident who subsequently moved into Evelyn’s unit. That resident paid an entrance fee of $127,000, and Springpoint calculated the refund based on that lesser amount in keeping with Section VI of the “Residence & Care” agreement.
William filed a complaint in New Jersey Superior Court, alleging that the DeSimone family was unaware of the “highly material ‘lesser than’ caveat” limiting the entrance fee refund policy because it was “buried on page 20 in the lengthy Residence and Care Agreement.” He asserted that had they known of the limiting provision, they would not have moved Evelyn into Springpoint.
William further alleged that Springpoint failed to disclose that it actively offered substantial entrance fee discounts to attract prospective residents -- discounts that, in turn, could affect the prior resident’s refund under the “90% refundable plan.”
His complaint asserted two counts of New Jersey Consumer Fraud Act violations: (1) “Misleading Advertisements/Marketing Collateral Materials” and (2) “Misleading Disclosure Statement[s].” On those two counts, and relying on N.J.S.A. 56:8-2.11, hr sought damages from Springpoint “to disgorge and make restitution . . . by repaying all monies received or collected from” him.
He filed the complaint as a class action suit on behalf of other people similarly situated.
He sought to recover not only the full refunds that they claim they were entitled to receive under the “90% refundable plan,” but also all money that each resident paid for the rental of a unit and for the services that Springpoint provided.
He further alleged that, pursuant to Section 2.11 of the Truth in Menus Act (“TMA”), he, as well as all class members, were entitled to a complete refund of all fees paid to defendants, without regard to the lesser of clause and without reductions for specified healthcare costs. The TMA, which is codified within the CFA and serves as a supplemental statute, permits restaurant patrons to recover a complete refund of the price they paid for meals where restaurants misrepresented the identity of food in menus. Applying Section 2.11’s refund remedy to the plaintiff’s and class members’ claims would dramatically increase the damages award, which would then be trebled under the CFA.
Justice Fasciale, writing for a unanimous Court, disagreed.
From its enactment in 1960, the CFA has imposed liability upon those who engage in certain “unlawful practice[s].” As consumer practices have evolved, the CFA has been repeatedly amended and expanded. In furtherance of its mission to protect consumers, in 1979, the Legislature enacted Chapter 347. Chapter 347 broadened protections for New Jersey consumers by expanding what constitutes an “unlawful practice” to include misrepresentations of the identity of food. Chapter 347 also created a refund remedy whereby “[a]ny person violating the provisions of the within act shall be liable for a refund of all moneys acquired by means of any practice declared herein to be unlawful.”
We hold that the refund provision in N.J.S.A. 56:8-2.11 is limited and provides relief only to victims of the unlawful acts dealing with food-related misrepresentations proscribed in N.J.S.A. 56:8-2.9. The refund remedy does not apply to other unlawful acts under the CFA, and it does not apply to the CFA generally.
Plaintiffs allege that Springpoint engaged in deceptive advertising practices and provided misleading disclosure statements regarding Springpoint’s return policy of resident entrance fees under its “90% refundable plan.” Those allegations pertain entirely to misrepresentations about fees charged by a senior living facility. None of plaintiffs’ allegations are related to misrepresentations of food. Thus, the claims are not governed by N.J.S.A. 56:8-2.9 and the refund provision in -2.11 does not apply.
Thus, plaintiffs are not entitled to the full refund of their entrance fees, or to a refund of the money that they paid for the rental of a unit, or for services provided to them during their residence at a Springpoint facility.
The winning attorneys are Bruce W. Clark, Christopher J. Michie, Stephanie R. Feingold, and Jamie Huffman Esq. of Clark Michie and Morgan Lewis & Bockius.
Attorneys Alex R. Daniel and Anthony M. Anastasio Esq. represented New Jersey Civil Justice Institute who joined as amicus curiae.
Attorneys Edward J. Fanning, Jr., David R. Kott, and Leroy E. Foster Esq. of McCarter & Englishe rpresented New Jersey Business & Industry Association, New Jersey Chamber of Commerce, and Commerce and Industry Association of New Jersey as amicus curiae.
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