On March 25, 2024, the New Jersey Supreme Court held in a 4-3 decision that private plaintiffs could not sue a retailer, under consumer protection statutes, for advertising allegedly “illusory discounts” because the plaintiffs had no “ascertainable loss,” which the New Jersey Consumer Fraud Act requires. The case, Robey v. SPARC Group LLC, arose from in-store advertising at Aeropostale locations which allegedly showed, for example, a sweatshirt selling for $23.98 as being “60% off” a reference price of $59.95. Plaintiffs alleged, however, that these stores never actually sold the sweatshirt at that price. The Supreme Court majority found that the plaintiffs failed to allege an ascertainable loss because the plaintiffs paid the prices they expected to pay and received non-defective, conforming goods for that expected price. Nevertheless, all seven Justices agreed that the New Jersey Attorney General can police this conduct without needing to show that any consumer suffered a loss and exhorted the Attorney General to do so.

The defendant in Robey argued at the trial court level, but not to the Appellate Division or Supreme Court, that its conduct did not violate the applicable New Jersey regulations. Although N.J.A.C. § 13:45A-9.6(a) prohibits retailers from using a “fictitious former price,” subsection (b) states that retailers may use reference prices of “comparable merchandise of like grade or quality made within the advertiser’s trade area.” Similarly, another regulation, N.J.A.C. 13:45A-9.5(a)(2), states that percent-off advertisements may describe discounts relative to a “competitor’s price.” For goods prices under $100, moreover, the regulations permit retailers not to state the basis for comparison in their advertising. The Robey defendant argued to the trial court that its advertising complied with these regulations because the plaintiffs did not and could not allege that the defendant’s goods were not comparable to competitors’ goods sold at higher prices.

Because the defendant did not argue regulatory compliance at the appellate level, the Supreme Court did not consider the issue, even though NJCJI and the U.S. Chamber of Commerce, as amici curiae, asked the Court to do so. Instead, the Court assumed that the defendant’s conduct violated the regulations and upheld dismissal of the plaintiffs’ claims solely because of the lack of an ascertainable loss. Three dissenting Justices would have held the plaintiffs met their pleading burden, and all seven stressed that the Attorney General, who appeared as an amicus in support of the plaintiffs, should investigate and stop assertedly deceptive advertising practices.

The decision is a win for retailers in New Jersey in that class actions may not proceed on plaintiffs’ “illusory price” theory, but the possibility of future Attorney General enforcement actions tempers that win. Retailers may wish to read the opinion in full and consult counsel about how to ensure compliance with the relevant rules. The Supreme Court’s assumption that the Robey defendant violated the rules constitutes dicta, but retailers in future enforcement actions will have to overcome that dicta.

A link to the oral argument in this matter can be found here. Copies of NJCJI and the U.S. Chamber of Commerce’s joint amicus brief can be found hereNJCJI thanks Jeffrey S. Jacobson, national co-chair of the class action practice at Faegre Drinker, for his written and appellate advocacy on behalf of NJCJI and the U.S. Chamber of Commerce in this matter.