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J.R. Tobacco of America, Inc. v. ADT Security Systems, Inc.

98-2252 (U.S. Dist. Ct. D. N.J. 1999) (Unpublished)

CONSUMER FRAUD ACT—Although the Consumer Fraud Act is designed to provide broad protection to New Jersey consumers, it was not designed to remedy a party’s disappointments.

A tobacco products company contracted for an alarm system for its warehouse. Among other provisions, the agreement provided that: “[c]ustomer also understands that [alarm company] does not receive signals when the transmission mode is or becomes non-operation [sic] and that signals from the digital communicator cannot be received if the transmission mode is cut, interfered with or otherwise damaged.” The alarm system was connected to regular telephone lines and the telephone lines were deliberately severed when the warehouse was subsequently burglarized. As a result, no monitoring signals were transmitted to the alarm company to indicate the breach of security. The tobacco company brought suit against the alarm company under the New Jersey Consumer Fraud Act. It claimed that the alarm company’s representatives made misrepresentations concerning the quality and capability of the alarm system. It asserted that regardless of the fact that it had read the contract, including the provision informing it of the possibility of a disruption in security monitoring in the event of an interruption of telephone services, it nevertheless believed that it would receive continuous security from the alarm system. The tobacco company further asserted that it was not made aware of the availability of a back-up cellular system which would cure the potential problem of cut telephone wires. Under the Consumer Fraud Act, a person violates the Act when committing an “unlawful act” as defined in the statute. “Unlawful practices fall into three general categories: affirmative acts, knowing omissions, and regulation violations.” When the alleged consumer fraud violation consists of an affirmative act such as a misrepresentation, a plaintiff need not prove that the defendant intended to commit an unlawful act. The Court found the tobacco company’s submissions completely lacked any reference to a specific representation made by the alarm company’s personnel about the operation of the alarm system if the telephone wires were compromised. Instead, those submissions were carefully crafted in an attempt to persuade the Court that the case concerned affirmative misrepresentations on the part of the alarm company. At best, the submissions showed that the tobacco company had an expectation that service would remain uninterrupted. But no such representation was actually made. In contrast, the contract was quite clear that service might be disrupted if the telephone lines were severed. While the Court recognized that the Consumer Fraud Act was designed to provide broad protection to the consumers of New Jersey, the Court also pointed out that it was not designed to remedy the disappointments of parties who had freely contracted. Consequently, the relief sought by the tobacco company was denied.


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