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August 18, 2011
Topic: Consumer Rights
The summer heat is certainly upon us and what better way to cool down then in your own backyard pool. William and Vivian Allen had the right idea when they hired V & A Brothers, Inc. to prepare their backyard and install a pool. Their desire to keep cool will now also help all consumers. In their lawsuit against V & A, the Allens had an appeals court rule that corporate owners and employees who violate the New Jersey Consumer Fraud Act may be held personally liable for actions taken on behalf of their company.
The Consumer Fraud Act ["CFA"] is intended to protect consumers from unlawful affirmative acts, knowing omissions, and regulatory violations of the CFA. In the Allen case, the claims were that V & A: (1) failed to make a written contract; (2) accepted final payment before getting final approval for the construction; (3) failed to get approval for design and project modifications. Now, while a corporate entity may certainly be liable alone for its CFA violations, so will its owners and employees. When affirmative acts and knowing omissions by a corporation dealing with these consumers is involved, the Court decided that holding corporate individuals personally liable was within the CFA's definition of "person."
The Allen case is a major victory in consumer protection and a strong wake-up call to corporations, its owners and employees. It should make them more careful in dealing with customers and consumers, since the CFA now has more "bite."
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