Supreme Court Confirms that the Consumer Fraud Act Can Apply in Business to Business Transactions

In a recent case decided on January 24, 2019, the New Jersey Supreme Court confirmed that the State's Consumer Fraud Act ("CFA") can apply in business to business transactions.  Noting that the CFA has been continuously expanded by the State's Legislature over the years, the Court found that the sale of a custom-manufactured all wheel drive truck and tow body was included in the definition of "Merchandise" under the CFA and therefore the CFA claim was wrongfully dismissed by the trial court.  The Court noted that so long as, "any member of the public could purchase the product or service," it would be covered under the CFA, "regardless of whether such a purchase is popular."  The Court also provided future guidance by setting forth four factors to consider in determining whether the nature of a business-to-business transaction would subject a seller to liability under the CFA.  The factors are as follows:

1. The complexity of the transaction, taking into account any negotiation, bidding, or request for proposals process;
2. The identity and sophistication of the parties, which includes whether the parties received legal or expert assistance in the development or execution of the transaction;
3. The nature of the relationship between the parties and whether there was any relevant underlying understanding or prior transactions between the parties; and
4. The public availability of the subject merchandise.

Given these factors, many transactions that do not involve what most business owners would understand as a traditional consumer will nevertheless be subject to the provisions of the Consumer Fraud Act.  (All The Way Towing, LLC v. Bucks County International, Inc. )