New Jersey Appellate Division Curtails Prior Holdings Exempting “Semi-Professionals” from the Consumer Fraud Act

In a recent published decision, Shaw v. Shand,¹ the New Jersey Appellate Division held that licensed semi-professionals are not “learned professionals” exempt from liability under the Consumer Fraud Act (“CFA”)² simply because they are subject to an independent statutory or regulatory scheme.  Shaw was an appeal from a trial court decision entering summary judgment on the plaintiffs’ CFA claims in favor of a home inspector, holding that home inspectors are “semi-professionals” exempt from the CFA.

The “semi-professional” exemption was articulated by the Appellate Division in a 2006 decision, Plemmons v. Blue Chip Insurance Services,³ which exempted insurance brokers from CFA liability.  The “semi-professional” exemption is an extension of the learned professional exemption, a judicially-created doctrine that generally applies to professions not permitted to advertise when the CFA was enacted in 1960, e.g., physicians and attorneys.  The rationale behind the exemption is that such professions are comprehensively and independently regulated, such that additional regulation under the CFA would be duplicative.  In Plemmons, the court extended the doctrine to “semi-professionals” who, like insurance brokers, are subject to testing, licensing, and regulation, including standards that delineate “unfair trade practices” under a separate statutory scheme.

Reversing course from Plemmons, the Shaw court took a hard line on the types of regulations that could supersede the CFA’s prohibition on unfair and deceptive conduct, and thus provide a shield to CFA liability.  The court held that for preemption to occur, application of the CFA standard for liability must give “rise to a direct and unavoidable conflict” with the governing statute or regulation. Finding that the CFA merely supplemented and furthered the remedies governing home inspectors, the court held home inspectors were not exempt.  Ultimately, the panel held that to the extent that the New Jersey Supreme Court “continues to recognize” the learned professional exemption, it should be limited to the historical professions like physicians and attorneys, and not broadly extended to “semi-professional” occupations. 

Though the Shaw court did not preclude occupations governed by statutory schemes from raising a preemption defense altogether, finding that the defense fact-intensive, it called into serious doubt whether Plemmons should remain good law.  The concurrence remarked that Shaw presented a “suitable opportunity” for the Supreme Court to outline the parameters of the learned professional exemption.  Pending further guidance however, Shaw calls into question the viability of the “semi-professional” defense to the CFA.  Thus, regulated and supervised consumer service providers should be wary of reliance on this defense and should not assume the CFA does not apply to them.

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¹ No. A-5868-17, 2019 WL 3819677 (N.J. App. Div. Aug. 15, 2019).

² N.J.S.A. 56:8-1 to -210.

³ Plemmons v. Blue Chip Ins. Servs., Inc., 387 N.J. Super. 551, 904 A.2d 825 (App. Div. 2006).