Weinberg v. Sprint Corp: Getting a Better Understanding of the New Jersey Consumer Fraud Act

Understanding the New Jersey Consumer Fraud Act typically requires the professional services of a qualified attorney in this field. In Weinberg v. Sprint Corp., for example, the New Jersey Supreme Court rendered a decision in which the plaintiff’s attorneys in a class-action lawsuit were allowed to recover their attorneys’ fees even in the absence of a provable loss on the part of their client. This has been used as precedent for other cases in the New Jersey court system.

The Facts of the Case

In December 1995, a class-action lawsuit was brought by Martin Weinberg against the communications and long-distance telephone service provider Sprint Corporation. As the plaintiff, Weinberg alleged that Sprint’s commercials advertising the company’s long-distance telephone services were fraudulent, misleading, deceptive and constituted false advertising. Weinberg and his attorneys based these allegations on Sprint’s practice of rounding up to the next highest minute when calculating the time used by its end users.

For example, if Weinberg was connected for 22 minutes and 5 seconds to Sprint long-distance services, he would be charged for 23 minutes in every case. If he was connected for only five seconds, he would be charged for an entire minute under Sprint’s policy of rounding up to the next minute.

Weinberg asserted that nothing about this practice was disclosed in Sprint’s advertisements. As a result, Weinberg and the other parties to the class-action lawsuit alleged three specific causes of action against Sprint Corporation:

1. The plaintiffs asserted that Sprint Corporation committed common-law fraud by misrepresenting their services, omitting important matters related to their services and knowingly engaging in deceptive marketing practices.
2. The plaintiffs also argued that the marketing strategies employed by Sprint Corporation amounted to violations of the New Jersey Consumer Fraud Act.
3. Finally, the plaintiffs alleged that Sprint Corporation was guilty of negligent representation. This means that Sprint had a duty to inform consumers about the way in which it billed long-distance calls and that failing to do so constituted negligence.

For these three causes of action, the plaintiffs in the class-action lawsuit requested the following remedies:

1. The plaintiffs sought an injunction forcing Sprint to cease and desist from its former questionable advertising strategies and business practices and to repay any profits and revenues unlawfully received through these methods.
2. The plaintiffs also requested an accounting of all revenues received by Sprint through this unlawful practice.
3. The damages sought included statutory damages, which include attorneys’ fees and legal costs, compensatory damages and punitive damages.

The Court Ruling

The trial, appellate and Supreme Court of New Jersey found for Sprint Corporation, noting that the plaintiff had not suffered any provable loss because the Federal Communications Commission (FCC) had already approved telephone billing on a per-minute basis. There was no evidence that Weinberg could have selected a long-distance telephone service provider that would have offered per-second billing or, in fact, any billing scheme that worked on a sub-minute basis. Thus, Weinberg could not be said to have incurred any ascertainable loss.

The Supreme Court ruled that attorneys’ fees may be recoverable even in cases like Weinberg’s where no provable loss occurred. This finding has been used in similar class-action cases to allow for the recovery of attorney’s fees and court costs in cases where unconscionable conduct is present. This could pose a serious threat for business owners who may be facing a class-action suit that, while not sustainable on its own merits, may come with significant attorneys’ fees and court costs that may have to be paid by the business owners and stakeholders.

At the Di Lauri & Hewitt Law Group, our team is committed to providing you with the right help and representation for defending yourself and your company against legal actions and civil litigation. We will work with you to determine the facts of your case and to present the best possible defense for you. Call us today at 973-354-5783 to schedule an appointment with us. We are here to serve you.