Recently, the Superior Court of New Jersey, Appellate Division issued an opinion which gives greater insight as to which transactions are covered and not covered by the New Jersey Consumer Fraud Act.

The central issue the Court addressed in Papergraphics International, Inc. v. Juan “J.J” Correa, Jr., et. al., was whether or not the New Jersey Consumer Fraud Act applied to the wholesale purchase of ink cartridges which were later discovered to be counterfeits.

The facts of the case are simple. Papergraphics purchased what it believed to be Epson Inkjet cartridges from the defendants. First, the Plaintiff purchased 5,000 ink cartridges from the defendant. Later, the Plaintiff purchased an additional 4,714 cartridges from the defendants. Sometime after receiving the ink cartridges the Plaintiff learned that they were not “Epson Inkjet” cartridges as was represented. Rather, they were counterfeits. The Plaintiff commenced litigation against the defendant alleging breach of contract, breach of Uniform Commercial Code warranties, unjust enrichment, fraud, conversation and violations of the New Jersey Consumer Fraud Act.

The Trial Court found that the defendant violated the New Jersey Consumer Fraud Act. The defendants appealed that decision. In support of their appeal, the defendants argued that the Plaintiff did not have standing to assert a Consumer Fraud Claim as a matter of law because commercial transactions are not a covered “consumer transaction.”

There has been significant case law regarding whether or not a business can be a “consumer” under the New Jersey Consumer Fraud Act. A review of those cases reveals that the New Jersey Consumer Fraud Act does not cover every sale in the market place. The earlier cases hinge on the nature of the transaction which requires a case by case analysis.

The Papergraphics Court found that the Plaintiff was not a consumer. The Court gave additional guidance as to what transactions are covered by the New Jersey Consumer Fraud Act. The Court considered the following elements when it decided that the Plaintiff was not a consumer under the Act:

     • the quantity of the purchase;

     • the intended use of the purchased goods (use versus resale); and

     • the sophistication of the complaining party;

The Papergraphics decision is extremely important because it provides additional guidance as to the applicability of the New Jersey Consumer Fraud Act. Recently, the Superior Court of New Jersey, Appellate Division issued an opinion which gives greater insight as to which transactions are covered and not covered by the New Jersey Consumer Fraud Act.

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