2-May-15 – Selling gift certificates with terms and fine print in violation of New Jersey law could be costly for a Chicago company owned by two River North residents.

A United States Court of Appeals ruled on Thursday that previous rulings against Restaurant.com can be applied retroactively and RDC is exposed to a $100 penalty for every certificate – in violation of New Jersey law – sold in the past. The penalties could total $1 million.

Two New Jersey residents, Gregory Bohus and Larissa Shelton, sued RDC in 2010 over certificates they bought on the company’s website that had expiration dates and a disclaimer in violation of New Jersey law. Three years, one dismissal, and an appeal later, the New Jersey Supreme Court decided the suit, by then a class action lawsuit, could continue. The dismissal was reversed, the case dismissed again, and an appeal filed last July.

Two attorneys, Bruce Greenberg for Shelton and Bohus, and Michael McDonald for RDC, got 15 minutes each before three federal appellate judges in Philadelphia on February 12.

Greenberg argued the Supreme Court of New Jersey said the rulings apply retroactively and if there is any doubt, they should be asked again. RDC argued they should not be penalized as long as their certificates continue to be in compliance.

“The end, one may hope, is finally near,” wrote Kent A. Jordan (left), one of the three judges, in the decision in favor of Shelton and Bohus. Jordan says while rulings against RDC are not fully retroactive, they are not fully proactive, either.

“Under New Jersey law, judicial decisions that adopt new rules are generally given retroactive effect. Courts may, however, depart from that general rule when they determine that retroactive application could produce substantial inequitable results.”

Applying the ruling retroactively, writes Jordan, could potentially affect any business anywhere in the world that markets intangible property to consumers in New Jersey.

“Common sense reveals that its impact will be truly far-reaching.”

Dr. Kenneth Chessick, a lawyer, and his wife, Ellen Chessick, who is president of Marina Towers Condominium Association, own Restaurant.com.