Regulatory violations of the Consumer Fraud Act can result in individual liability.

The New Jersey Supreme Court further clarified when an individual owner or employee of a company may be liable under the Consumer Fraud Act (“CFA”). In Allen, the Court first held that it was “clear” that an individual who commits an affirmative act or knowing omission in violation of the CFA is subject to personal liability. In addition, the Court stated, “Individual liability for regulatory violations ultimately must rest on the language of the particular regulation in issue and the nature of the actions undertaken by the individual defendant. When considering whether there can be individual liability for regulatory violations, … principals may be broadly liable, as they are the ones who set the policies that the employees may be merely carrying out. Therefore, if the principals have adopted a course of conduct in which written contracts are never used, in clear violation of the regulation, there may be little basis on which to extend personal liability to the employee who complies with that corporate policy. However, if the employee unilaterally concludes that an inferior product should be used in place of one specified in a contract and does so without the knowledge of the homeowner, there is little reason to construe the CFA to limit liability to the corporate employer and permit that employee to escape bearing some individual liability.”

Case Law Alert, 1st Qtr 2012