New Jersey Supreme Court rules that online purchases for gift certificates for restaurants are 'written consumer contracts' subject to state law; ruling could clear way for nationwide class-action lawsuit

TRENTON, New Jersey , July 11, 2013 () – In a decision that could clear the way for a nationwide class-action lawsuit dealing with online gift certificates for restaurants, the state Supreme Court today said such online purchases are "written consumer contracts" subject to state law.

Two New Jersey residents — Larissa Shelton of Lindenwold and Gregory Bohus of Cherry Hill — sued Illinois-based Restaurant.com because they bought coupons for discount meals from 2007 to 2009 that included wording that they would expire after one year. Under New Jersey law, gift certificates must be valid for two years.

While the company says its coupons never expire, the two residents’ attorney, Bruce Greenberg, said the court decision prevents individual restaurants from denying them after one year.

"It makes clear that consumer protection extends to transactions that occur in the 21st century in different ways perhaps than before, which should give consumers comfort that merchants they deal with can’t take advantage of technology to wipe out statutory protections," Greenberg said.

The federal Third Circuit Court of Appeals, which is considering the lawsuit, asked the New Jersey justices to dig into the state’s laws on consumer fraud protection and gift certificates and decide whether they extended to the online coupons, and whether those gift certificates could be defined as "property."

In a 7-0 decision, the court said they are in fact property governed by contracts, signaling that a few clicks on the Internet are as valid as handwritten signatures in some cases.

"The transaction has all the basic features of a contract: offer, acceptance, consideration, and performance by both parties," Judge Mary Catherine Cuff, who is temporarily assigned to the Supreme Court, wrote in the decision. "We reject the argument advanced by Restaurant.com that the transactions ... cannot be considered consumer contracts because they are not in writing."

The lawsuit now goes back to the Third Circuit, where Greenberg said he will file a motion for a class action that could affect potentially thousands of consumers who bought such online coupons from Restaurant.com since 2006.

"We believe (the class) will consist of hundreds or even thousands of people that we believe are in the same boat as these clients," Greenberg said.

Michael McDonald, the attorney for Restaurant.com, said the company was disappointed by the decision and added that "Restaurant.com certificates do not expire."

"We are confident that Restaurant.com will be completely vindicated on the claims asserted in the lawsuit," he said in a statement. "Restaurant.com certificates do not expire, can be used via our mobile app when dining at the restaurant, and can be exchanged for another participating restaurant either online or by calling customer service."

Cuff said the relevant state laws were all written and passed long before the advent of Internet coupons. But she added that the essence is the same as any other coupon or gift certificate, and consumers who buy them are entitled to the same protections they would get for other "tangible" or "intangible" property.

"We do not know whether the Legislature specifically envisioned certificates or coupons like the ones Restaurant.com offers," she wrote. "The statute as drafted, however, covers the certificates in question. The Legislature remains free to change the law should it so choose."

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