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Thiedemann v. Mercedes-Benz, USA, LLC

183 N.J. 234, 872 A.2d 783 (2005)

CONSUMER FRAUD; DAMAGES—Proof of an ascertainable loss cannot be based upon one that is hypothetical or illusory; it must be presented with some certainty demonstrating that it is capable of calculation.

A class action was filed against a automobile manufacturer alleging that fuel sending units in certain of its vehicles “contained a serious and hazardous latent design defect that caused the dashboard fuel gauge to reflect inaccurately the amount of gasoline in the fuel tanks.” In part, the complaint asserted that the defect violated the Consumer Fraud Act (CFA). Although the complaining car owners never paid for repairs or for the cost of loaner cars, they did receive the right to upgrade earlier models by paying the difference in price between the newer car and the older car. One complaining car owner was forced on multiple occasions to return to the dealer for repairs, but all of the work was performed at no cost and that owner received a free loaner car. The vehicle manufacturer admitted to thousands upon thousands of fuel sending unit failures, but contended that its “actions to repair and replace problem units, taken in compliance with its warranty program, made it impossible to prove objectively verifiable damages.” The manufacturer “asserted that because the plaintiffs failed to demonstrate an ascertainable loss that was prerequisite to their right to private CFA action, the claims must be dismissed.”

The lower ruled in favor of the vehicle manufacturer. The Appellate Division and reversed and reinstated the complaint. According to the Appellate Division, “the mere possibility that the fuel gauge defect may be present in replacement parts used in the repair of [the customers’] vehicles rendered it likely that the problem would recur.” The Appellate Division also “took judicial notice of the likelihood” that if one of the complaining car owners “were to advise a future buyer of their vehicle about the potential defect, they would receive less than if the defect were not present.” As a consequence, the Appellate Division concluded that “common knowledge, indeed common sense, compell[ed] a conclusion that the value of the vehicle [was] impaired to immeasurable, if presently unknowable degree.”

The vehicle manufacturer appealed further to the New Jersey Supreme Court. Unfortunately for the car buyers and lessees, the Supreme Court held that they “failed to produce evidence from which a finder of fact could find or infer that they suffered a quantifiable or otherwise measurable loss as a result of the alleged Consumer Fraud Act violation.” The CFA grants a private right of action to a successful plaintiff who suffers an “ascertainable loss of money or property to recover treble damages, reasonable attorneys’ fees, and costs.” The Act itself “was enacted to deter fraudulent practices in the marketplace.” The private right of action has the purpose of “compensating victims for actual losses, publishing wrongdoers through awards of treble damages, and offering incentives for attorneys to take a case even when only a relatively small loss may be involved.” The Court pointed out that there was “little that illuminate[d] the precise meaning that the Legislature intended in respect of the term ‘ascertainable loss’ in the CFA. Essentially, a consumer must prove that a fact finder could find or infer that [it] suffered an actual loss. In cases involving breach of contract or misrepresentation, either out-of-pocket loss or a demonstration of loss in value will suffice to meet the ascertainable loss hurdle and will set the stage for establishing the measure of damages. ... The [consumer] must proffer evidence of loss that is not hypothetical or illusory and it must be presented with some certainty demonstrating that it is capable of calculation.” That requirement “operates as an integral check upon the balance struck by the CFA between the consuming public and sellers of goods.”

In this case, however, after examining the proofs, the Court found that none presented “a quantifiable for otherwise measurable loss. ... The argument that there [was] a future hypothetical diminution in value due to a fuel gauge that at one time did not read properly [was] too speculative to satisfy the CFA requirement.” The plaintiffs in question made no attempts to sell their vehicles and presented no expert evidence that would support an inference of loss of value. Further, “payment for the gas used during technicians’ efforts to diagnosis [the car’s] problem [did] not constitute a ‘loss’ of the sort that would support a CFA private claim.”

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