Including Profit in an Automaker’s “Destination Charge” Is Not Deceptive Under the NJCFA, and Manufacturers Owe No Disclosure Duty for Pass-Through Fees

Including Profit in an Automaker’s “Destination Charge” Is Not Deceptive Under the NJCFA, and Manufacturers Owe No Disclosure Duty for Pass-Through Fees

Introduction

In BCR Carpentry LLC v. FCA US LLC, the United States Court of Appeals for the Third Circuit affirmed the dismissal with prejudice of a putative class action challenging “destination charges” disclosed on vehicle window stickers. The plaintiffs alleged that FCA US LLC (FCA) violated the New Jersey Consumer Fraud Act (NJCFA) and committed common-law unjust enrichment and money had and received by embedding profit within the “destination charge” disclosed pursuant to the Automobile Information Disclosure Act of 1958 (AIDA).

Writing for the Court, Judge Matey concluded that, as a matter of New Jersey law, the inclusion of profit within a “destination charge” is not, by itself, an actionable affirmative misrepresentation or unconscionable practice under the NJCFA, and that any omissions-based theory fails absent a duty to disclose—particularly where, as here, the manufacturer’s charge is a pass-through to the dealer and there is no direct relationship with the consumer. The Court also rejected the plaintiffs’ unjust enrichment and money had and received claims.

Judge Krause dissented, emphasizing New Jersey’s “capacity to mislead” standard for affirmative acts under the NJCFA and arguing that the complaint plausibly alleged that reasonable consumers understand “destination charge” to reflect costs rather than profit. The case is designated “not precedential” under the Third Circuit’s Internal Operating Procedures, but it will be persuasive to courts confronting similar claims.

Summary of the Opinion

  • NJCFA affirmative-act claims: The Court held that the term “destination charge” is not misleading in a way that deprives consumers of an intelligent choice, and that “no reasonable consumer would be surprised” that a charge may include profit. The Court found no actionable FCA statement asserting that the charge excludes profit.
  • NJCFA omissions claims: An omissions claim requires a duty to disclose, which arises only in fiduciary or similar relationships, or to correct a prior statement. Because FCA’s destination charge is a “pass-through” paid to dealers and because there was no prior FCA statement requiring clarification, there was no duty to disclose.
  • Unconscionable practices: Including profit in a disclosed charge is not, without more, evidence of bad faith or dishonesty.
  • Common-law claims: Unjust enrichment and money had and received fail because plaintiffs did not plausibly allege a direct relationship, an expectation of remuneration from FCA, or enrichment beyond contractual rights.
  • Disposition: The Third Circuit affirmed the District of New Jersey’s dismissal with prejudice.
  • Dissent: Judge Krause would allow the NJCFA claims to proceed under New Jersey’s “capacity to mislead” standard, finding the complaint’s factual material sufficient at the pleading stage.

Analysis

Precedents Cited and How They Shaped the Decision

  • Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007): Reiterates the NJCFA elements—unlawful practice, ascertainable loss, and causation. The panel invoked Frederico for the pleading framework under the NJCFA.
  • Coba v. Ford Motor Co., 932 F.3d 114 (3d Cir. 2019): Distinguishes among affirmative acts, knowing omissions, and regulatory violations. The majority used this taxonomy to parse plaintiffs’ theories.
  • Gennari v. Weichert Co. Realtors, 691 A.2d 350 (N.J. 1997): Clarifies that omissions require knowledge; reliance is not required under the NJCFA. The majority cited Gennari to explain knowledge for omissions; the dissent cited it to stress NJCFA’s breadth (no reliance requirement).
  • Suarez v. Eastern International College, 50 A.3d 75 (N.J. App. Div. 2012): Underlies the majority’s standard that an affirmative misrepresentation must be so materially misleading that it effectively deprives a consumer of an intelligent decision. This heightened articulation is central to the majority’s rejection of the plaintiffs’ affirmative-act theory.
  • D’Agostino v. Maldonado, 78 A.3d 527 (N.J. 2012) (quoting Van Holt v. Liberty Mut. Fire Ins. Co., 163 F.3d 161 (3d Cir. 1998)): Defines “unconscionable commercial practice” as showing lack of good faith, fair dealing, and honesty. The majority held that including profit in a line-item charge does not reach this threshold.
  • Judge v. Blackfin Yacht Corp., 815 A.2d 537 (N.J. App. Div. 2003); N.J. Economic Development Authority v. Pavonia Restaurant, Inc., 725 A.2d 1133 (N.J. App. Div. 1998); and Berman v. Gurwicz, 458 A.2d 1311 (N.J. Ch. Div. 1981): These cases establish that a duty to disclose typically arises only in fiduciary contexts, fiduciary-like transactions, or where trust and confidence are expressly reposed. The majority found none of those circumstances present in an arm’s-length vehicle purchase involving a manufacturer–dealer–consumer chain.
  • Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir. 1993): Addresses when an omission becomes actionable to make a prior statement not misleading. The majority concluded no such corrective duty was triggered by FCA’s conduct.
  • Hartford Accident & Indemnity Co. v. Benevento, 44 A.2d 97 (N.J. 1945); United States ex rel. Doe v. Heart Solution, PC, 923 F.3d 308 (3d Cir. 2019); VRG Corp. v. GKN Realty Corp., 641 A.2d 519 (N.J. 1994); Thieme v. Aucoin-Thieme, 151 A.3d 545 (N.J. 2016); Iliadis v. Wal-Mart Stores, Inc., 922 A.2d 710 (N.J. 2007); and Callano v. Oakwood Park Homes Corp., 219 A.2d 332 (N.J. App. Div. 1966): These authorities define unjust enrichment and money had and received under New Jersey law, emphasizing the need for a benefit retained unjustly, an expectation of remuneration from the defendant at the time of conferral, enrichment beyond contractual rights, and typically some direct relationship or mistake. The majority found the pleadings wanting under this framework.
  • Beeney v. FCA US LLC, 2023 WL 6962116 (D. Del. Oct. 20, 2023), aff’d, No. 24-2519, 2025 WL 2556242 (3d Cir. Sept. 5, 2025); Gunn v. FCA US, LLC, 2023 WL 5418736 (N.D. Cal. Aug. 22, 2023); Romoff v. General Motors LLC, 574 F. Supp. 3d 782 (S.D. Cal. 2021), aff’d, 2023 WL 1097258 (9th Cir. Jan. 30, 2023): Cited by the majority to show a cross-jurisdictional trend rejecting claims challenging “destination charges” as deceptive, often on reasonable-consumer grounds. The dissent distinguished these cases as applying different state-law standards or involving conclusory pleadings.

The Court’s Legal Reasoning

1) Affirmative acts under the NJCFA

The majority framed the operative standard by citing Suarez: an affirmative misrepresentation must be “so misleading as to a fact material to the consumer’s decision that the consumer is effectively deprived of the ability to make an intelligent decision.” Against that yardstick, the opinion holds that the mere use of “destination charge” is not misleading. The key move is the Court’s premise that “no reasonable consumer would be surprised to learn that a ‘charge’ includes profit.” The plaintiffs’ reliance on public statements suggesting destination charges reflect only cost failed because the complaint did not identify any FCA statement explicitly asserting that profit was excluded. A 2013 statement by a Chrysler representative that charges are “based on costs” did not imply an absence of profit.

In a footnote, the majority characterized “destination charge” as “not inherently misleading, only inherently ambiguous,” and deemed ambiguity insufficient to state an NJCFA claim.

2) Unconscionable commercial practices

Relying on D’Agostino (and Van Holt), the Court rejected the idea that including profit in a disclosed line-item charge is indicative of a lack of “good faith, fair dealing, and honesty.” On that basis, the unconscionability theory could not stand.

3) Omissions under the NJCFA

Omissions liability requires knowledge and a duty to disclose. The Court found no such duty because:

  • No fiduciary or fiduciary-like relationship existed between FCA and the consumers.
  • The transaction was not fiduciary in nature, and consumers had not expressly reposed trust and confidence in FCA.
  • FCA’s “destination charge” is paid by the dealer and then passed through to consumers; FCA’s direct commercial relationship is with its dealerships, not the end buyer.
  • There was no prior FCA statement requiring corrective disclosure. The Court added that a reasonable consumer would not assume a “charge” omits profit, undermining any “half-truth” theory.

4) Common-law quasi-contract claims

The unjust enrichment and money had and received counts failed because the complaint did not plausibly allege:

  • That plaintiffs expected remuneration from FCA at the time any benefit was conferred.
  • That FCA’s retention of any benefit exceeded its contractual rights.
  • A sufficient direct relationship with FCA or a mistake in conferring the benefit, especially given the pass-through nature of the charge via dealers.

5) Procedural posture and standard

The Court reviewed the Rule 12(b)(6) dismissal de novo, applied Twombly/Iqbal’s plausibility standard, and accepted all well-pleaded facts as true while drawing reasonable inferences in plaintiffs’ favor. Even so, the Court held plaintiffs failed to state any claim.

The Dissent: An Alternative Roadmap Under New Jersey Law

Judge Krause’s dissent reframes the case under the New Jersey Supreme Court’s articulation that, for affirmative acts, “the capacity to mislead is the prime ingredient” of consumer fraud, and that the NJCFA must be construed liberally in favor of consumers. The dissent underscores several points:

  • Standard: New Jersey’s “capacity to mislead” standard is intentionally lower than the “likely to deceive” or reasonable-consumer tests used elsewhere; it does not require a false statement, actual reliance, or proof that consumers were in fact misled.
  • Pleading sufficiency: The complaint alleged detailed, concrete facts suggesting that reasonable consumers understand “destination charge” to reflect actual transportation and processing costs, not profit. The allegations included:
    • Statements by industry figures (e.g., J.D. Power executive) calling the destination charge “profit neutral” and “not supposed to hide profit.”
    • Automaker statements (including FCA’s predecessor) describing the charge as cost-based.
    • Consistent messaging by consumer-facing outlets (Consumer Reports, Newsweek, Kelley Blue Book, Cars.com, Autolist) explaining the charge as a pass-through cost set by averaging transportation costs.
    • Legislative history of AIDA documenting congressional concern over “phantom freight” and an industry shift to cost-based averaging, reinforcing consumer expectations that the line item reflects costs rather than profit.
  • Distinguishing contrary cases: The dissent observed that Gunn applied California law’s higher “likely to deceive” and reliance requirements; Beeney surveyed laws of many states with different standards and applied a reasonable-consumer test; and Romoff involved conclusory pleadings. In contrast, this complaint, under New Jersey’s capacious NJCFA, was sufficient.

In short, the dissent would deny dismissal because the complaint plausibly alleged conduct with the capacity to mislead under New Jersey law.

Practical Impact and Forward-Looking Implications

Although nonprecedential, the decision is likely to have significant persuasive force in NJ federal courts and among litigants confronting “destination charge” challenges and similar line-item pricing disputes.

  • Automotive pricing litigation:
    • This opinion aligns with decisions in other jurisdictions rejecting attacks on destination charges as deceptive merely because they include profit, especially where the line item is fully disclosed on the Monroney window sticker.
    • To survive dismissal under this reasoning, plaintiffs may need to identify concrete manufacturer statements promising cost-only charges, or show specific contextual representations that turn the disclosure into a misleading half-truth.
  • NJCFA doctrine:
    • The majority’s use of a “reasonable consumer would not be surprised” lens and its insistence that ambiguous terminology is not enough indicates a tightening of what qualifies as an affirmative act at the pleading stage in federal court applying New Jersey law.
    • The dissent spotlights a genuine doctrinal tension: whether New Jersey’s “capacity to mislead” standard should permit ambiguous but plausibly misleading phrasing to proceed past a motion to dismiss. Expect litigants to seize on this divide in future NJCFA cases.
  • Omissions and duty to disclose:
    • The pass-through nature of manufacturer charges to dealers significantly undercuts omissions claims absent fiduciary duties or prior statements that require correction. Plaintiffs should anticipate arguments that no manufacturer–consumer duty exists in indirect sales models.
  • Unjust enrichment claims against manufacturers:
    • New Jersey’s quasi-contract doctrine, as applied here, will make it difficult for end consumers to pursue unjust enrichment absent a direct relationship, a mistaken payment, or particularized facts indicating an expectation of remuneration from the manufacturer.
  • Compliance and disclosure strategies:
    • Manufacturers can rely on this decision to defend the inclusion of profit within disclosed line items that are common in the industry, especially when those charges are uniform and pass-through in nature.
    • Nevertheless, clearer consumer-facing disclosures about the nature of the charge (e.g., that it may include transportation-related overhead and margin) would further mitigate litigation risk, particularly given the dissent’s emphasis on consumer expectations.
  • Open questions and potential for state-court clarification:
    • New Jersey state courts are not bound by this federal interpretation of state law. The dissent invites a “course correction” on the appropriate “capacity to mislead” standard and its application to the “destination charge” context.
    • If presented in state court or via certification, the New Jersey Supreme Court could refine how ambiguity, consumer expectations, and industry practice interact under the NJCFA at the pleading stage.

Complex Concepts Simplified

  • AIDA and the Monroney sticker: A federal statute requires automakers to affix a window sticker to new cars that discloses standardized information, including the “destination charge” (the amount charged to the dealer for transportation to the dealer’s location).
  • NJCFA “unlawful practices”:
    • Affirmative acts: Express statements or conduct alleged to mislead. Under New Jersey law, the “capacity to mislead” is the touchstone, though the majority here demanded more than mere ambiguity.
    • Omissions: Failures to disclose material facts. These generally require the defendant’s knowledge and a duty to speak (e.g., fiduciary relationship, transaction of trust, or the need to correct a half-truth).
    • Regulatory violations: Conduct that violates consumer-protection regulations can also suffice, though no such regulatory violation was alleged here.
  • “Capacity to mislead” versus “likely to deceive”:
    • Capacity to mislead (New Jersey): A comparatively low bar focusing on whether the conduct could mislead consumers, without requiring proof of actual deception or reliance.
    • Likely to deceive (e.g., California or FTC-derived standards): A higher bar requiring that a reasonable consumer would likely be misled; often paired with reliance requirements in private actions.
  • Pass-through charges: A fee the manufacturer charges the dealer that the dealer passes on to the consumer. The absence of a direct transaction between the manufacturer and the consumer can defeat disclosure duties and some quasi-contract claims.
  • Unjust enrichment and money had and received (New Jersey): Quasi-contract claims requiring that the defendant received a benefit, that retention would be unjust, and, typically, that the plaintiff expected payment from the defendant at the time of conferring the benefit and that enrichment exceeded contractual rights. A direct relationship or a mistake often strengthens such claims.

Conclusion

The Third Circuit’s decision delivers two central takeaways for consumer-fraud and pricing litigation under New Jersey law. First, a manufacturer’s use of the “destination charge” line item—without an express representation that it is a cost-only pass-through—does not, standing alone, state an affirmative misrepresentation or unconscionable practice under the NJCFA. Ambiguity in the term “charge” is not enough; the Court stressed that a reasonable consumer should not be surprised that a charge may embed profit. Second, omissions-based NJCFA claims falter absent a duty to disclose, which is typically absent in indirect manufacturer–consumer arrangements featuring pass-through fees. Those same structural features defeat common-law unjust enrichment and money had and received claims in the absence of a direct relationship or an expectation of remuneration.

The dissent, however, highlights a live doctrinal tension: New Jersey’s “capacity to mislead” standard is notably lenient, and the complaint’s detailed allegations about consumer understanding, industry practice, and legislative history might suffice under that standard to proceed beyond the pleadings. While this opinion is not precedential, it aligns with a growing body of authority rejecting destination-charge claims and will likely shape how NJCFA suits over line-item pricing are pled and defended. Whether New Jersey’s state courts will adopt the majority’s approach or the dissent’s more expansive view remains an open and consequential question for consumer-protection litigation in the Garden State.

Case Details

Year: 2025
Court: Court of Appeals for the Third Circuit

Comments