Employees Who Participate in a Corporation’s Inadvertent Violation of a Consumer Fraud Regulation May Be Held Liable

September 20, 2010Articles New Jersey Law Journal
The Appellate Division recently addressed, for the first time, the standard governing whether an employee or officer of a corporation may be held liable under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -184 (“NJCFA”) for the corporation’s violation of a New Jersey consumer protection regulation in Allen v. V and A Brothers, Inc., 997 A.2d 1067 (App. Div. 2010). The court concluded that the standard for imposition of NJCFA liability on any officer or employee is “personal participation in the regulatory violation.” In light of the ambiguity inherent in the term “participation,” the number and scope of consumer protection regulations, the serious consequences of liability under the NJCFA and the fact that intent is not a necessary element of NJCFA liability based on a regulatory violation, the decision in Allen v. V and A Brothers may have far-reaching impact for employees of a wide variety of corporations.