New Jersey Supreme Court Holds Professionals Are Not Subject To Consumer Fraud Act
January, 2004
In Joseph Macedo and Rosemary Leksy v. Josesph Dello Russo, M.D., 2004 WL 193159 (N.J.), the Supreme Court of New Jersey reversed an appellate court decision and held that professionals are shielded from the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to 56:8-116, so long as they are acting in their professional capacities. Under the CFA, a prevailing plaintiff is entitled to treble damages and reasonable attorney fees.
Facts
Plaintiffs Joseph Macedo and Rosemary Lesky filed a class action complaint against Dr. Dello Russo, a laser eye surgeon, his corporate entities, and his employee Dr. Kellogg, alleging a violation of the CFA. Plaintiffs did not allege that their treatment fell below the standard of care resulting in any personal injuries. Rather, plaintiffs alleged that the defendants’ advertisements touted their physicians’ credentials, making them subject to the CFA. Further, since Dr. Kellogg’s license was subject to restrictions which were not disclosed to patients, an untruthful advertisement was made, which constitutes a cause of action under the CFA.
Plaintiffs further alleged the misrepresentation should be a class action because the licensure issue was affirmatively misrepresented to thousands of patients. They claimed that each potential class member was entitled to a return of most of the money paid since services performed by Dr. Kellogg were worth substantially less, given his restricted licensure. Plaintiffs had not yet sought class certification.
Analysis
Whether the CFA applied to professionals was an unsettled area of law. The leading case was Blatterfein v. Larken, 323 N.J. Super. 167, 732 A.2d 555 (N.J. App. Div. 1999), in which an architect selling real estate was deemed to have availed himself to the CFA. In that case, the architect was not acting in his professional capacity and was instead selling real estate. The court ruled that professionals could avail themselves to the CFA.
The Dello Russo trial court relied upon the Blatterfein decision in ruling that the CFA did not apply to the instant case. The appellate court reversed -- again relying on Blatterfein -- to hold that the CFA did apply. The Supreme Court rejected the appellate court’s view, reasoning that Blatterfein had been over-read, and held that professionals are shielded from the CFA so long as they are acting in their professional capacity.
Learning Point:
A professional is shielded from the CFA unless they engage in activity outside of their professional capacity. If a plaintiff’s attorney pleads the CFA, there is now case law from New Jersey’s highest court holding that it is inapplicable. Thus, the defense can now move to dismiss. ¨
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