Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D.N.J.: Late fees by bottled water distributor not unconscionable commercial practice, (Oct 25, 2013)

By Edward L. Puzzo, J.D.

Fees imposed by a bottled water distributor for late payment of monthly charges were neither unreasonable nor an unconscionable commercial practice under the New Jersey Consumer Fraud Act, the federal district court in Newark, New Jersey, has ruled (Ciser v. Nestle Waters North America, October 24, 2013, Martini, W.).

Gary Ciser contracted with Nestle Waters North America for the delivery of bottled water to his business. Each month that monthly charges were not paid on time, Nestle charged Ciser a flat late fee of $15. As a percentage of the monthly charges, Ciser presented evidence that these late fees could be as much as 133 percent of the monthly charges themselves. As the representative of a purported class, Ciser brought a lawsuit alleging that the late fees charged by Nestle violated the New Jersey Consumer Fraud Act (NJCFA).

Plausibility of unreasonableness claim. Ciser alleged that Nestle’s competitors charged lower rates for late fees and further claimed that the interest lost and collection costs incurred by Nestle for an unpaid monthly bill were substantially less than the late fee it charged. The court found Ciser’s presumptions about the cost to Nestle of unpaid bills to be implausible because they were based on estimates and not actual costs. The court also opined that because a company charges higher late fees than competitors, that alone does not make those fees unreasonable. A $15 late fee was not grossly disproportionate to the $10 late fee competitors charged. The court concluded that the claim of unreasonableness was implausible.

Unconscionable commercial practice. Stating a claim under the NJCFA, the court explained, requires the plaintiff to allege unlawful conduct by the defendants, an ascertainable loss by the plaintiff and a causal relationship between two. Unlawful conduct under the NJCFA includes “unconscionable commercial practice” generally interpreted by the courts as some form of misleading conduct.

Here, Nestle’s invoices and website clearly indicated that late fees not to exceed $20 per month would be assessed. Consequently, the court concluded, Ciser cannot plausibly allege that Nestle acted in a misleading fashion when it came to charging him $15 late fees. The court opined that Nestle’s conduct was up-front, in good faith, and not in violation of a broad business ethic; consequently Nestle could not have engaged in unconscionable commercial practice. Consequently, the court dismissed Ciser’s NJCFA claims with prejudice.

The case is Civil Action No. 2:11-05031 (WJM).

Attorneys: Steven L. Wittels (Law Offices of Steven L. Wittels, PC) for Gary Ciser. Jeffrey M. Garrod (Orloff, Lowenbach, Stifelman & Siegel, PA) for Nestle Waters North America Inc.

Companies: Nestle Waters North America, Inc.

Cases: StateUnfairTradePractices NewJerseyNews