A Government Approved Vendor is Immune from the NJ Consumer Fraud Act…Sometimes

HNWConsumer Fraud

consumer fraudHere’s an unlikely (and probably unbelievable) plaintiff seeking economic restitution after being released from jail and having purchased items at the Bergen County Jail’s commissary operated by a Commissary Network. Believing the prices charged were unconscionable, the inmate sued under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20.

Plaintiff was incarcerated at the jail for nearly five (5) years during which he purchased numerous items from the jail’s commissary. In asserting his claims, plaintiff argued the prices were unconscionable. Here’s the problem with his case: The defendant commissary was the lowest responsible bidder to the publicly bid contract. Its bid listed the sale prices of specified items it would supply if awarded the contract. The Bergen County Sheriff’s Department maintained control over the prices charged inmates by approving the prices.

The company played no part in deciding the quantity of the items distributed to inmates or the distribution of those items. Its only role was to supply the products sold at the commissary, which were sold at approved prices. It did not supply employees to operate the commissary.

The court in this case found the commissary was entitled to derivative immunity. Derivative immunity means that a private, independent contractor is entitled to the immunity of public entities with whom they contract. The court explained that “[w]hen a public entity provides plans and specifications to an independent contractor (bidder), the public contractor will not be held liable for work performed in accordance with those plans and specifications.

This policy of extending sovereign immunity in tort matters to an independent contractor for performing its contract and taking actions in accordance with a public entity’s directions, applies with equal force when considering a consumer fraud claim, like that asserted in this case, where the prices charged by an independent contractor – alleged to be unconscionable – are imposed with the approval of a public entity. It likewise applies to a plaintiff’s unjust enrichment claim. In this circumstance, the judge correctly held the commissary was entitled to the benefit of derivative immunity and dismissed all of the plaintiff’s claims.

To discuss NJ consumer fraud, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Consumer Fraud Attorney

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