Restaurant.com Owes Damages to 2 Customers

PHILADELPHIA (CN) - Closing the book on a lawsuit over Restaurant.com certificates, the 3rd Circuit awarded retroactive relief to the two consumers behind the case.

Gregory Bohus and Larissa Shelton had taken aim at the website over the one-year expiration date on gift certificates they purchased in 2009.

New Jersey law imposes a 24-month expiration window, and the plaintiffs claimed that they were entitled to a civil penalty or damages under the Truth-in-Consumer Contract, Warranty, and Notice Act (TCCWNA)

The case has had a rollercoaster ride through the courts over the years, with the 3rd Circuit previously reviving the TCCWNA claim upon certification of a question about "intangible property" to the New Jersey Supreme Court.

On remand, U.S. District Judge Joel Pisano agreed with Restaurant.com that the plaintiffs were not entitled to retroactive relief from the court's holding about intangible property.

Finding that the issue of first impression established a new rule of law, Pisano said retroactive application - even limited just to Bohus and Shelton - would be unfair.

He said the plaintiffs "have not suffered any actual, non-theoretical damages," and that there was "no allegation that plaintiffs were unable to enjoy the bargained-for discounts at the third-party restaurants that they selected."

As such they should not be entitled to "windfall statutory damages and attorneys' fees" under the TCCWNA, Pisano found.

For Pisano, "common sense" dictated that the many "unsuspecting companies" that would be subject to the new law should be given a chance to change their conduct before being exposed to "extraordinary statutory penalties."

The 3rd Circuit reversed on April 30, finding that merely scolding Restaurant.com and applying a new rule prospectively produces its own inequity.

Pisano "quite rightly was concerned with whether the purpose of the new rule would be best served by something less than full retroactive effect," Judge Kent Jordan wrote for a three-person panel. "But the court's emphasis on what it deemed the 'windfall' nature of the plaintiffs' recovery was misplaced. ... We cannot disregard the legislature's choice to award statutory damages in the absence of actual damages. If it is a windfall, it is one purposefully and lawfully provided. It is true that New Jersey law indicates there may be cases where a defendant's reliance interests and other equities are such that a new rule should be applied purely prospectively. But whatever those circumstances may be, this is not such a case."

Restaurant.com probably didn't make a repeat customer out of Bohus. Calico Grill, the seafood restaurant to which he purchased a gift card six years ago, closed one year into the lawsuit.

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