Gregory Bohus v. Restaurant.Com Inc
2015 U.S. App. LEXIS 7145
| 3rd Cir. | 2015Background
- Plaintiffs Shelton and Bohus bought Restaurant.com gift certificates that carried standard terms (one-year expiration, "void to the extent prohibited by law") and restaurant-imposed restrictions; they sued under New Jersey Gift Certificate Statute, NJCFA, and TCCWNA.
- District Court initially dismissed TCCWNA claim, finding gift certificates were not "property" and plaintiffs lacked ascertainable loss; Third Circuit certified questions to the New Jersey Supreme Court.
- New Jersey Supreme Court (Shelton III) held the TCCWNA covers intangible property (including the challenged coupons), that the coupons were for personal purposes, and that the certificates/terms constituted a "written consumer contract" and "notice."
- On remand, Restaurant.com moved to limit Shelton III to prospective effect; the District Court applied the new rule prospectively only, citing equitable concerns and potential widespread reliance.
- Third Circuit reviews retroactivity: concludes Shelton III announced a new rule of first impression, agrees full retroactivity would be inequitable, but holds the District Court erred by denying the named plaintiffs the benefit of the new rule and remands for judgment in their favor only.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Shelton III already resolved retroactivity | Shelton: NJ Supreme Court’s opinion was addressed to these parties and thus applies retroactively | Restaurant.com: Shelton III did not decide retroactivity | Court: Shelton III did not adjudicate retroactivity; federal court must apply NJ retroactivity law |
| Whether the Shelton III rule is "new" | Shelton: Law was silent, so rule isn't "new" | Restaurant.com: Shelton III decided an issue of first impression | Court: Shelton III announced a new rule (issue of first impression) |
| Whether reasonable reliance justifies prospective application | Shelton: No developed record showing reliance; retroactivity appropriate | Restaurant.com: Businesses reasonably relied on prior interpretation; broad retroactivity would be inequitable | Court: Reasonable reliance by similarly situated businesses justified denying full retroactivity |
| Whether named plaintiffs are entitled to benefit of new rule | Shelton: Litigants who secure a change should get the new rule applied to them | Restaurant.com: Applying rule to plaintiffs would produce "windfall" statutory damages and fees | Court: Named plaintiffs must receive benefit of new rule; remand for judgment solely for them |
Key Cases Cited
- Shelton v. Restaurant.com, Inc., 70 A.3d 544 (N.J. 2013) (New Jersey Supreme Court: TCCWNA covers intangible consumer property such as coupons)
- Coons v. Am. Honda Motor Co., 476 A.2d 763 (N.J. 1984) (framework for retroactivity and new-rule analysis)
- Selective Ins. Co. of Am. v. Rothman, 34 A.3d 769 (N.J. 2012) (retroactivity may be denied when application would produce substantial inequitable results)
- Rutherford Educ. Ass'n v. Bd. of Educ. of Borough of Rutherford, 489 A.2d 1148 (N.J. 1985) (courts should reward litigants who effect change in the law; retroactivity balancing factors)