Author Archives: Dan Alexander

Magnuson-Moss Claims in Federal Court: An Uphill Battle

Most product manufacturers and their defense attorneys will tell you that they prefer to litigate breach of warranty and other types of product liability claims in a federal forumThere are many sound reasons for this sentimentBut the Magnuson-Moss Act’s $50,000 amount-in-controversy requirement for federal jurisdiction makes having a breach of warranty action heard in a federal court particularly challenging. Continue reading

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Some Things You Should Know About New Jersey’s New Service Contract Legislation

On January 17, 2014, Governor Chris Christie signed NJ Senate Bill 854 into law. The new law, C.56:12-87, goes into effect July 16, 2014 (180 days after enactment). Things you should know about New Jersey’s new service contract law:

  • The law takes many of its provisions straight from the Model Act, and is consistent with the national trend in service contract legislation.
  • The statute exempts service contracts from regulation under New Jersey’s insurance laws.
  • New Jersey’s law covers all agreements that fall within its definition of “service contract,” without regard to class of product covered. (Some states regulate only agreements covering specific product types or categories, such as electronic devices, motor vehicles, appliances, etc.)
  • Service contract companies must demonstrate financial responsibility in one of three ways: obtain contract liability reimbursement insurance, establish a funded reserve, or show company net worth of at least $100,000,000.
  • Service contracts must include provisions explaining the consumer’s and the contractor’s cancellation rights, cancellation procedures, and refund policies.
  • Service contracts must be written in clear and understandable language.
  • A violation of the new law constitutes an unlawful practice under New Jersey’s consumer fraud act.

More information about service contract regulation, including the new New Jersey law, may be obtained from the author or another member of the Segal McCambridge Warranty and Service Contract Group.

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Illinois Proposes Expansion of “Service Contract” Definition

Illinois legislators have proposed an amendment to the Illinois Service Contract Act which would expand the definition of “service contract” to include contracts for a wide array of motor vehicle maintenance-related service.  Illinois House Bill 1460, formally titled the Motor Vehicle Ancillary Products Act, signals the continued evolution the Illinois Service Contract Act, Continue reading

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Quick Guide on How to Defeat A Warranty Class Action

Don’t overlook fundamental legal principles when formulating your response in complex class action litigaiton. A federal judge in Minnesota recently applied three seemingly simple and straight forward legal principles – or perhaps better described as common sense propositions – to dismiss a class action brought against Ford Motor Co. In sending the claimants on their way, the judge found that an express warranty should be construed and applied as written; that a plaintiff must act within the time limits placed on, and satisfy the statutory requirements associated with implied warranty claims, and that where a defendant receives no benefit, there can be no unjust enrichment.  Continue reading

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16 States Now Levy Significant Civil Penalties For Non-Compliance with Service Contract Acts

Thirty-three states have now enacted statutes regulating service contract providers (i.e., those persons or entities obligated pay claims under a service contracts or extended warranties). Sixteen of these 33 states have specifically provided civil penalties for a failure to comply with their respective service contract acts. A service contract provider can be fined even if the violation of the service contract act is not willful; a violation can be as innocent as failing to include proper disclosures and notices in the service contract or extended warranty. Continue reading

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Service Contract Legislation – New Jersey Assembly Bill 1740

The regulation of service contracts in New Jersey has been confusing and ambiguous for many years. Assembly Bill 1740, the state’s latest proposal for service contract regulation, is currently pending in the Assembly Consumer Affairs Committee.

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Illinois Proposes Special Tax on Service Contract Sale Proceeds

On February 15, 2013, State of Illinois Senator William R. Haine introduced Senate Bill 1731 – an amendment to the Illinois Service Contract Act. The proposed legislation includes a provision that service contract providers shall pay, for the privilege of doing business in Illinois, a tax equal to 0.5% of the gross consideration received. The bill provides that the tax shall be remitted to the Director of Insurance in accordance with the provisions of the Illinois Insurance Code concerning the annual privilege tax payable by companies and makes a corresponding change. The bill has been referred to the Assignments Committee.

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