9-Dec-16 – The final cost to defend a losing federal lawsuit is still being decided, and new lawsuits with the same claim could still be filed, but Chicago-based Restaurant.com must pay two New Jersey residents just $1,100 for selling them gift certificates with fine print in violation of state law.

Six years and nine months after the lawsuit was filed, United States District Judge Michael Shipp granted a motion on November 30 for summary judgment, saying the $1,100 civil penalty, an amount Restaurant.com had suggested, is appropriate.

Larissa Shelton and Gregory Bohus had asked for an amount “in excess of $10,000” for each of eleven gift certificates they purchased that included text stating it “expires one year from date of issue, except in California and where otherwise provided by law” and is “void to the extent prohibited by law.”

The case had been argued before the U.S. Court of Appeals and New Jersey Supreme Court. It was a class action at one time – members of which could have included every resident of New Jersey who purchased a gift certificate from Restaurant.com between March 7, 2004, and February 16, 2010 – but after being dismissed twice and appealed twice, only Shelton and Bohus remained as plaintiffs.

Restaurant.com did not deny it was in violation of New Jersey’s “Truth-in-Consumer Contract, Warranty and Notice Act,” which prohibits giving notice to a consumer or entering into a contract that “violates any clearly established legal right of the consumer” or not specifying if a provision is void in New Jersey. What it was arguing, successfully, was that a New Jersey Supreme Court decision against it was a “new rule” that should apply to future cases only.

“This means that the former potential class members will not receive statutory penalties in this lawsuit and may not be able to seek them in federal court generally,” explained Henry Wolfe (right), an attorney for Shelton and Bohus. “However, the U.S. Court of Appeal’s ruling does not prevent the former class members from filing lawsuits for statutory penalties in New Jersey state court, where federal court rulings on state law issues are not binding.”

Judge Shipp is now deciding how much Restaurant.com must reinburse the other side for attorney’s fees and expenses. Wolfe has asked the court to consider an amount of more than $600,000.

An attorney for Restaurant.com declined to comment.

On May 19, 2010, Restaurant.com changed its policy, updating the terms and conditions page on its website to say their gift certificates do not expire. The company also sent an email to owners of unredeemed certificates to make sure they knew about the change.

Restaurant.com is owned by Dr. Kenneth Chessick, a lawyer who lives in Washoe County in Nevada and Marina City in Chicago. His wife, Ellen Chessick, is president of Marina Towers Condominium Association and is listed as vice president of Restaurant.com in a document filed with the Securities and Exchange Commission in 2012, though more recently, she has denied being an owner of the company.