Consumer class actions under statutes that allow recovery of penalty damages, without any showing of harm or economic loss, present grave risks to businesses in the form of potentially devastating class-wide liability for technical statutory violations. For example, the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227(b)(3), allows recovery of $500 (potentially trebled to $1,500) and attorney fees against one who sends a “junk fax” or unsolicited prerecorded telephone advertising message; the New Jersey Truth in Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. § 56:12-14, et seq., allows recovery of not less than $100 and attorney fees where a consumer contract violates a clearly established right; and the Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. § 1681(g); (n), allows recovery of between $100 and $1,000, punitive damages, and attorney fees, if the last five digits of a credit card number and the card’s expiration date are not deleted on a receipt. Class actions pursuant to these statutes often require little or no investment from plaintiffs or their attorneys, but provide the prospect of enormous windfall statutory-penalty awards and fee awards. The clear potential for abuse calls into question the superiority of the class-action device in these circumstances.

That common questions predominate is not itself sufficient to justify class certification because, pursuant to Fed. R. Civ. P. 23(b)(3) (and N.J. Ct. R. 4:32-1(b)(3)), a court must also find that “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Indeed, Rule 23(b)(3) should test whether the class action procedure is superior “without sacrificing procedural fairness or bringing about other undesirable results.” Advisory Note to Amended Fed. R. Civ. P. 23. For several reasons, the “superiority” prong of Rule 23(b)(3) should remain a significant hurdle to certification of statutory-penalty class actions.

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