DeSimone v. Springpoint Senior Living, Inc.

On September 26, 2023, Alex Daniel, counsel for NJCJI, appeared for oral argument before the New Jersey Supreme Court to oppose efforts to expand the scope of consumer fraud liability for businesses and service providers throughout the State. In this matter, the plaintiff alleged that he and his deceased mother were defrauded by the defendant—a collection of continuing care retirement communities—who advertised to potential residents and their families that they would receive a 90 percent refund of a deceased resident’s entrance fee, less specific healthcare costs, in the event a resident passed. The defendants’ resident and care agreement included a provision, however, expressly stating that the 90 percent refund was limited to the “lesser of the original entrance fee or the subsequent resident’s entrance fee.”

After the plaintiff’s mother died, he filed a class action complaint alleging, among other things, that the defendants’ “lesser of” provision constituted consumer fraud pursuant to the New Jersey Consumer Fraud Act (“CFA”). The plaintiff maintained that he and his mother were falsely led to believe that her family would receive a 90 percent refund based on their mother’s entrance fee, rather than a refund based on the lower entrance fee paid by a subsequent resident. The plaintiff 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. Nevertheless, the plaintiff argued that prior New Jersey Supreme Court precedent supported application of the TMA to continuing care retirement communities.

At oral argument, Daniel maintained that the Legislature never intended Section 2.11’s refund provision to apply outside the narrow context of misrepresentations in restaurant menus and that the statute does not create a generally applicable refund remedy in all CFA cases. Daniel rebutted the plaintiff’s claim that the New Jersey Supreme Court previously ruled that Section 2.11 created a generally applicable refund remedy by parsing through the history and records of the Court’s prior opinions to demonstrate that the New Jersey Supreme Court never actually addressed the scope of Section 2.11 in those prior cases. Moreover, Daniel argued that the plaintiff’s expansive interpretation of Section 2.11 would upset the balance struck by the Legislature in enacting the CFA and grant consumer fraud plaintiffs unprecedented windfall recoveries. Juxtaposing Section 2.11 and its legislative history to other statutes that permit limited refund remedies against continuing care retirement communities, Daniel argued that when the Legislature wants to create a refund remedy in the context of highly regulated industries, it does so through finely tuned legislation, which is not the case with Section 2.11.

During oral argument, members of the Court expressed skepticism concerning the plaintiff’s interpretation of the Section 2.11 of the TMA. Several Justices acknowledged that the Court had never directly addressed the scope of Section 2.11’s refund remedy in prior decisions, and strongly suggested that the Court’s prior references to Section 2.11 in other cases appeared to be non-binding dicta. Moreover, several Justices noted that the legislative history of the TMA revealed that those who drafted it specifically identified misrepresentations in food menus as the driving force behind the adoption of the refund remedy. Furthermore, members of the Court observed that the plaintiff struggled to identify consistent principles for interpreting Section 2.11 that would not also create pitfalls for the Court in future cases.

Chief Justice Rabner, alongside Associate Justices Patterson, Solomon, Pierre-Louis, Fasciale, Wainer Apter, and Noriega sat for oral argument. NJCJI anticipates a decision in the coming months.

A copy of NJCJI’s amicus curiae brief can be found here. A video recording of Daniel’s oral argument in DeSimone v. Springpoint Senior Living, Inc, can be found here under arguments held on September 26, 2023, beginning at time stamp 35:38.