ELLEN BASKIN VS. P.C. RICHARD & SON, LLC (L-0911-18, OCEAN COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2662-18T1
ELLEN BASKIN, KATHLEEN
O'SHEA, and SANDEEP TRISAL,
on behalf of themselves and all
APPROVED FOR PUBLICATION
others similarly situated,
March 2, 2020
Plaintiffs-Appellants, APPELLATE DIVISION
v.
P.C. RICHARD & SON, LLC,
d/b/a P.C. RICHARD & SON,
and P.C. RICHARD & SON, INC.,
d/b/a P.C. RICHARD & SON,
Defendants-Respondents.
______________________________
Argued January 22, 2020 – Decided March 2, 2020
Before Judges Yannotti, Hoffman and Firko.
On appeal from the Superior Court of New Jersey,
Law Division, Ocean County, Docket No. L-0911-18.
Chant Yedalian (Chant & Company) of the California
Bar, admitted pro hac vice, argued the cause for
appellants (Lite De Palma Greenberg LLC, and Chant
Yedalian, attorneys; Bruce Daniel Greenberg and
Chant Yedalian, on the briefs).
William Stephen Gyves argued the cause for
respondents (Kelley Drye & Warren LLP, attorneys;
William Stephen Gyves, Glenn T. Graham, and Robert
Nicholas Ward, on the brief).
The opinion of the court was delivered by
FIRKO, J.A.D.
Plaintiffs Ellen Baskin, Kathleen O'Shea, and Sandeep Trisal
commenced this putative class action matter, asserting claims against
defendants, P.C. Richard & Son, LLC and P.C. Richard & Son, Inc., 1 under the
Fair and Accurate Credit Transactions Act (FACTA) of 2003, 15 U.S.C. §§
1681 to 1681x, which prohibits retailers who accept credit or debit cards from
printing more than the last five digits of the card number or expiration date
upon any receipt. We affirm the trial court's order finding that plaintiffs failed
to establish that a class action was the superior means to resolve the claims, as
required by Rule 4:32-1(b)(3).
We also affirm the trial court's order insofar as it dismissed the claims
advanced by O'Shea and Trisal because they are New York residents and their
claims arise out of sales transactions that occurred in New York. However, we
reverse and remand the dismissal of the complaint as to Baskin because she is
a New Jersey resident and her individual claim arises out of a transaction that
occurred in this State.
1
We refer to P.C. Richard & Son, LLC and P.C. Richard & Son, Inc.
collectively as "defendants."
A-2662-18T1
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I.
We discern the following facts from the motion record. O'Shea and
Trisal initially filed their complaint as a class action lawsuit in the Southern
District of New York in 2015. 2 The New York complaint alleged O'Shea and
Trisal received receipts from one of defendants' New York stores around
November 17, 2013 and on May 2, 2016 respectively, which included their
credit or debit card's expiration dates and the last four digits 3 of their card
numbers in violation of FACTA. O'Shea and Trisal claimed defendants'
FACTA violations were willful because defendants:
1) knew of and were well informed about the law;
2) were informed by other entities of FACTA's
truncation requirements and the prohibition on
expiration dates;
3) knew their electric receipt printing equipment was
outdated, but [decided to forgo] proper updates to
avoid spending the money, time, and other resources
required; and
2
O'Shea v. P.C. Richard & Son, LLC, No. 15 Civ. 9069, 2017 U.S. Dist.
LEXIS 122424, at *2 (S.D.N.Y. Aug. 3, 2017).
3
Plaintiffs alleged only the last four digits of their card numbers were
disclosed, not five digits. Instead, their primary contention is defendants
unlawfully printed the expiration dates of their cards on store receipts.
A-2662-18T1
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4) were put on notice of their FACTA violations by
[p]laintiff O'Shea's letter and [c]omplaint.[4]
O'Shea and Trisal further alleged that printing their card expiration dates
subjected them to "an increased risk of identity theft and credit [and/or] debit
card fraud," even though neither one of them suffered identity theft or fraud.
Defendants filed a motion to dismiss the federal action, which was granted.
The federal court found O'Shea and Trisal could not prove a material risk of
harm and therefore, they lacked standing to assert FACTA claims against
defendants.
O'Shea and Trisal joined Baskin in filing the complaint under review in
the Law Division on April 27, 2018. Baskin alleged in her complaint that she
received two credit/debit card receipts from defendants "on May 24, 2016[,]
each of which contained, among other things, [her] card's expiration date, the
last four digits of her card number, the brand of her card, her full name, her
full physical address, and her telephone number[,]" from one of defendants'
retail stores located in Brick.5 Additionally, Baskin alleged she was exposed
4
O'Shea served affidavits with a cease and desist letter on November 2, 2015
demanding that defendants comply with FACTA. A draft copy of the
complaint was attached to the letter.
5
15 U.S.C. § 1681c(g)(1) provides: "Except as otherwise provided in this
subsection, no person that accepts credit cards or debit cards for the
transaction of business shall print more than the last [five] digits of the card
A-2662-18T1
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to an increased risk of identity theft and credit/debit card fraud, although she
did not sustain any such damages.
The class plaintiffs sought to represent was described as: "All consumers
to whom [d]efendants, after November 17, 2013, provided an electronically
printed receipt at the point of a sale or transaction at any of [d]efendants '
physical store locations, on which receipt [d]efendants printed the expiration
date of the consumer's credit card or debit card." The complaint alleged:
Defendants have willfully violated [FACTA] and
failed to protect [p]laintiffs and others similarly
situated against identity theft and debit card fraud by
printing the expiration date of the card and the last
four digits of the card number on receipts provided to
credit card and debit card cardholders transacting
business with [d]efendants. This conduct is in direct
violation of FACTA.
Defendants filed a motion to dismiss on September 5, 2018, claiming
plaintiffs could not satisfy the requirements for class action certification, and
that New Jersey courts lacked personal jurisdiction over them in this matter.
In support of their motion to dismiss, defendants also argued plaintiffs ' New
Jersey action was an attempt at "a second bite [of] the FACTA class action
apple." Specifically, defendants contend that the federal court dismissed
O'Shea and Trisal's complaint because the alleged FACTA violations were
number or the expiration date upon any receipt provided to the cardholder at
the point of the sale or transaction." (Emphasis added).
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technical in nature and did not result in actual injury. Similarly, in this case,
defendants contend that plaintiffs did not sustain any harm, such as identity
theft, credit or debit card fraud, or that any third party ever came into
possession of the sales receipts or credit card information. Defendants argued
that under New Jersey law, technical violations of FACTA should not be
adjudicated as a class action. They therefore sought to have plaintiffs '
complaint dismissed.
Plaintiffs opposed the motion. On November 30, 2018, the trial court
conducted oral argument on defendants' motion to dismiss. The court
addressed the motions in a written opinion dated January 17, 2019. The court
determined, "certifying a class for these [p]laintiffs—persons who have alleged
no concrete harm and yet are seeking a robust remedy in the form of a class
action suit for technical violations of a federal statute—would be contrary to
relevant New Jersey law."
Accordingly, the trial court concluded that plaintiffs failed to satisfy the
numerosity requirement under Rule 4:32-1(a) because they did not assert a
potential class number "except to contend that there could be 'thousands of
people whose credit card information was exposed on improper receipts.'"
Additionally, the court stated "[p]laintiffs have also not provided sufficient
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evidence to support a claim that the class is so numerous that joinder of all
members is impracticable . . . ."
In finding plaintiff failed to establish any harm, the trial court stated:
Plaintiffs allege that it is the violation of FACTA
itself that has caused damage to the consumer, but
[p]laintiffs fail to allege that they were victims of
identity theft, credit or debit card fraud, or that any
third party ever came into possession of the sales
receipts or the credit card information contained on
the receipts, which puts [p]laintiffs' claims at odds
with the legislative purpose of FACTA and points to
an overall lack of demonstrable damages in the case of
these particular [p]laintiffs. As a result, the alleged
liability of [d]efendants would need to be determined
on the facts on an individual basis, especially if other
consumers who received the allegedly violative
receipts actually were victims of identity theft or other
instances of fraud.
In addition, the trial court found New Jersey lacked personal jurisdiction
over O'Shea and Trisal's claims because they are New York residents, P.C.
Richard & Son, LLC, is a New York limited liability company, and P.C.
Richard & Son, Inc., is a Delaware corporation, having a principal place of
business in New York. The court further reasoned that since defendants
maintained their principal place of business in New York, the court had no
basis to exercise personal jurisdiction over defendants with regard to the
claims asserted in the complaint. On January 17, 2019, the court entered a
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memorializing order granting defendants' motion to dismiss as to all three
plaintiffs.
On appeal, plaintiffs argue that: (1) the trial court erred in finding that
plaintiffs could not meet the requirements of class certification under Rule
4:32-1; (2) the trial court erred in finding that plaintiffs could not satisfy the
predominance or superiority requirements of Rule 4:32-1(b)(3) and the
numerosity requirement of Rule 4:32-1(a); (3) the trial court erred in
dismissing the action in its entirety; and (4) the trial court erred in finding it
lacked personal jurisdiction over defendants.
II.
We begin by addressing plaintiffs' contention that the trial court erred by
finding that class certification is not the superior means of adjudicating the
technical violations of FACTA alleged in the complaint, an issue that the New
Jersey courts have not yet addressed. In reviewing the grant or denial of a
class action certification, an appellate court must ascertain whether the trial
court followed the applicable standards set forth in Rule 4:32-1 and whether it
abused its discretion in doing so. Lee v. Carter-Reed Co., 203 N.J. 496, 505
(2010).
An abuse of discretion "arises when a decision is 'made without a
rational explanation, inexplicably departed from established policies, or rested
A-2662-18T1
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on an impermissible basis.'" Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571
(2002) (quoting Achacoso-Sanchez v. Immigration and Naturalization Serv.,
779 F.2d 1260, 1265 (7th Cir. 1985)). In determining whether the trial court
has abused its discretion, we "'must ascertain whether the trial court has
followed' the class action standard set forth in Rule 4:32-1." Dugan v. TGI
Fridays, Inc., 231 N.J. 24, 50 (2017) (quoting Lee, 203 N.J. at 506).
In order to proceed as a class action, plaintiffs must satisfy the general
prerequisites of Rule 4:32-1(a), which state:
One or more members of a class may sue or be sued as
representative parties on behalf of all only if (1) the
class is so numerous that joinder of all members is
impracticable, (2) there are questions of law or fact
common to the class, (3) the claims or defenses of the
representative parties are typical of the claims or
defenses of the class, and (4) the representative parties
will fairly and adequately protect the interests of the
class.
[Ibid.]
These four prerequisites are commonly "referred to as 'numerosity,
commonality, typicality, and adequacy of representation.'" Laufer v. U.S. Life
Ins. Co. in the City of New York, 385 N.J. Super. 172, 180 (App. Div. 2006).
Plaintiffs that satisfy subsection (a) of Rule 4:32-1 must also fulfill one
of the three requirements of subsection (b), which examine the interests of the
class members and the "effect of class certification on efficient judicial
A-2662-18T1
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management . . . ." Myska v. N.J. Mfrs. Ins., 440 N.J. Super. 458, 475 (App.
Div. 2015) (quoting In re Cadillac V8-6-4 Class Action, 93 N.J. 412, 436
(1983)).
Rule 4:32-1(b) states that a class action may be certified if:
(1) the prosecution of separate actions by or against
individual members of the class would create a risk
either of:
(A) inconsistent or varying adjudications
with respect to individual members of the
class that would establish incompatible
standards of conduct for the party
opposing the class, or
(B) adjudications with respect to
individual members of the class that
would as a practical matter be dispositive
of the interests of the other members not
parties to the adjudications or
substantially impair or impede their
ability to protect their interests; or
(2) the party opposing the class has acted or refused to
act on grounds generally applicable to the class,
thereby making appropriate final injunctive relief or
corresponding declaratory relief with respect to the
class as a whole; or
(3) the court finds that the questions of law or fact
common to the members of the class predominate over
any questions affecting only individual members, and
that a class action is superior to other available
methods for the fair and efficient adjudication of the
controversy. The factors pertinent to the findings
include:
A-2662-18T1
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(A) the interest of members of the class in
individually controlling the prosecution or
defense of separate actions;
(B) the extent and nature of any litigation
concerning the controversy already
commenced by or against members of the
class;
(C) the desirability or undesirability in
concentrating the litigation of the claims
in the particular forum; and
(D) the difficulties likely to be
encountered in the management of a class
action.
"In short, 'the movant must demonstrate both the predominance of the common
issues and the "superiority" of a cause of action over other available trial
techniques.'" Myska, 440 N.J. Super. at 475 (quoting Saldana v. City of
Camden, 252 N.J. Super. 188, 196 (App. Div. 1991)).
On appeal, plaintiffs argue that the trial court erred by denying class
certification. Plaintiffs contend that the court erred by finding that they did
not satisfy the superiority and predominance requirements of Rule 4:32-
1(b)(3). They also contend that the court erred by dismissing the matter at the
pleading stage. We disagree. We conclude that the trial court properly applied
the requirements in Rule 4:32-1 and did not err by denying class certification
at the pleading stage.
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In this case, plaintiffs are asserting claims under FACTA. The purpose
of FACTA "is to ensure that consumers suffering from any actual harm to their
credit or identity are protected while simultaneously limiting abusive lawsuits
that do not protect consumers but only result in increased cost to business and
potentially increased prices to consumers." Credit and Debit Card Receipt
Clarification Act of 2007, Pub. L. No. 110-241, § (2)(b), 121 Stat. 1565, 1566
(2008). The Act's further purpose is "to prevent criminals from obtaining
access to consumers' private financial and credit information in order to reduce
identity theft and credit card fraud." Id. at § (2)(a)(1), 121 Stat. at 1565.
A. Numerosity
Although plaintiffs argue that the trial court erred in declaring that they
did not establish the numerosity requirement of Rule 4:32-1(a), the federal
courts indicate that "[a]s a general rule, . . . classes of [twenty] are too small,
classes of [twenty to forty] may or may not be big enough depending on the
circumstances of each case, and classes of [forty] or more are numerous
enough[,]" to satisfy the numerosity factor for class actions. In re Toys "R"
Us, 300 F.R.D. 347, 367-68 (C.D. Cal. 2013) (quoting Ikonen v. Hartz
Mountain Corp., 122 F.R.D. 258, 262 (S.D. Cal 1988)). Plaintiffs failed to
name the number of potential class members, and only vaguely stated that
there could be "thousands of people whose credit card information was
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exposed on improper receipts." Because plaintiffs here failed to sufficiently
articulate the size of the class, they did not meet this prerequisite to forming a
class action.
B. Superiority
Analysis of the superiority requirement "necessarily implies a
comparison with alternative procedures, and mandates assessment of the
advantages and disadvantages of using the class[]action device in relation to
other methods of litigation." Local Baking Prods., Inc. v. Kosher Bagel
Munch, Inc., 421 N.J. Super. 268, 275-76 (App. Div. 2011) (quoting Iliadis v.
Wal-Mart Stores, Inc., 191 N.J. 88, 114 (2007)).
Recognizing that there is no controlling precedent on FACTA class
action claims in New Jersey, the trial court applied the reasoning in Local
Baking to the current case. In Local Baking, we granted the defendant's
motion to dismiss an action brought under the Telephone Consumer Protection
Act (TCPA) of 1991, 47 U.S.C. § 227, which prohibits the use of facsimile
machines, computers, or other devices to send unsolicited advertisements. Id.
at 271.
The TCPA allows a claimant to recover actual damages, or $500 for each
technical violation of the Act, whichever is greater. 47 U.S.C. § 227(b)(3). In
determining whether the plaintiffs met the superiority prong of Rule 4:32-
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1(b)(3), we held that "a class action suit is not a superior means of adjudicating
a TCPA suit[,]" agreeing with the trial court's analysis that small claims courts
eliminate the need for class action treatment of TCPA claims. Local Baking,
421 N.J. Super. at 280.
On appeal, plaintiffs argue that Local Baking is inapposite because the
TCPA does not require a violation to be willful in order to seek recovery under
the TCPA. However, FACTA provides for attorney fee-shifting, thereby
indicating that Congress did not intend for such claims to be brought by pro se
litigants in small claims courts. Moreover, plaintiffs argue that FACTA allows
for claims to be brought for willful and negligent violations of the law.
15 U.S.C. § 1681n(a) authorizes claimants to recover for any willful
violation of the act "in an amount equal to the sum of[:]"
(A) any actual damages sustained by the
consumer as a result of the failure or
damages of not less than $100 and not
more than [$1000]; or
(B) in the case of liability of a natural
person for obtaining a consumer report
under false pretenses or knowingly
without a permissible purpose, actual
damages sustained by the consumer as a
result of the failure or [$1000], whichever
is greater;
(2) such amount of punitive damages as the court may
allow; and
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(3) in the case of any successful action to enforce any
liability under this section, the costs of the action
together with reasonable attorney's fees as determined
by the court.
[(Emphasis added).]
15 U.S.C. § 1681o provides, regarding negligent noncompliance:
(a) In general. Any person who is negligent in failing
to comply with any requirement imposed under this
title . . . with respect to any consumer is liable to that
consumer in an amount equal to the sum of[:]
(1) any actual damages sustained by the
consumer as a result of the failure; and
(2) in the case of any successful action to
enforce any liability under this section,
the costs of the action together with
reasonable attorney's fees as determined
by the court.
[(Emphasis added).]
In comparing FACTA with the TCPA, the former, according to 15
U.S.C. §1681n(a)(1)(A), limits plaintiffs' claims to $1000 individually,
allowing them to recover in our small claims section, where the jurisdictional
limit is $3000. See R. 6:1-2(a)(2). In the Local Baking analysis of the TCPA,
we noted that "by imposing a statutory award of $500, a sum considerably in
excess of any real or sustained damages, Congress has presented an aggrieved
party with an incentive to act in his or her own interest without the necessity of
class action relief." 421 N.J. Super. at 280.
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The reasoning in Local Baking applies here, because the $1000 damage
limit for willful violations of FACTA is comparable to the limited damages
available under the TCPA. As we noted in Local Baking, litigants can file
complaints in the small claims court, and they can do so without an attorney.
Ibid. An answer is not needed, and the trial court can address the complaint
promptly. Ibid.
We further concluded that "[t]he combination of the TCPA's design and
New Jersey's procedures suggests that the benefit of a class action has been
conferred on a litigant by the very nature of the procedures employed and
relief obtained. The cost of litigating for an individual is significantly less
than the potential recovery." Id. at 280-81.
Plaintiffs argue, however, that the potential to recover punitive damages
under 15 U.S.C. § 1681n(a)(2) elevates their FACTA claims beyond the
jurisdictional limit of small claims court because discovery and witnesses
would be necessary in order to determine punitive damages. Plaintiffs also
assert that litigants may file in small claims court "without an attorney," but
the potential allowance for attorney's fees and punitive damages removes
FACTA claims from the small claims court $3000 jurisdictional recovery
limit.
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We are also mindful of our decision in United Consumer Fin. Servs. Co.
v. Carbo, 410 N.J. Super. 280, 294 (App. Div. 2009). In that case, we
concluded that a class action was the superior method of adjudicating claims
alleging violations of the Truth-in-Consumer Contract, Warranty, and Notice
Act, N.J.S.A. §§ 56:12-14 to -18. Carbo involved 16,845 class members, who
were each awarded a civil penalty of $100, for an aggregate civil penalty of
$1,664,500. Carbo, 410 N.J. Super. at 292, 308.
The issue in Carbo, however, was whether class certification should be
denied because "the potential for a large award [was] based upon aggregated
civil penalties." Id. at 309. Accepting reasoning from the federal courts, we
declined to allow dismissal of the class action on such a theory. Ibid.; see
Murray v. GMAC Mortg. Corp., 434 F.3d 948, 953 (7th Cir. 2006); Parker v.
Time Warner Entm't Co., 331 F.3d 13, 22 (2d. Cir. 2003).
Here, the trial court did not deny class certification based on the
potential for a large award of aggregate damages. Rather, the court held that a
class action is not a superior means of adjudicating plaintiffs' FACTA claims.
Thus, plaintiffs' reliance on Carbo is misplaced.
Plaintiffs also rely on Lee and Delgozzo v. Kenny, 266 N.J. Super. 169
(App. Div. 1993), to support their position that a class action is the superior
mode of litigation. In Lee, a New Jersey Consumer Fraud Act (CFA) case, our
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Court rejected defendant's "argument that its refund policy provided every
dissatisfied purchaser a superior alternative to a lawsuit." 203 N.J. at 529.
The Court found that it was unlikely that thousands of claimants would file
individual actions regarding a product that costs about $40. Id. at 528.
"[M]ost importantly," the Court found class action was superior to the
company's refund policy and thousands of individuals' small claims because
the Court previously held that "a refund policy–particularly in the case of
small claims–would not immunize a merchant from a CFA claim." Id. at 529
(citing Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 561 (2009)).
In Delgozzo, another CFA case, we reversed the trial court's denial of
class certification because the trial court failed to explain why the proposed
class of 35,000 individuals "would be 'unruly' to an extent beyond that which
would exist in any class action[,]" and it never addressed the factors expressly
listed in Rule 4:32-1(b)(3). Id. at 193, 195. In a CFA case, trial courts must
consider "the very real possibility that failure to certify the class could result in
the end of the litigation," and should "be of particular concern with respect to"
the superiority inquiry. Id. at 192 (citing In re Cadillac, 93 N.J. at 435-36).
Both Lee and Delgozzo present legal and factual issues not present in
this case. Here, defendants do not assert that any company policy provides a
superior method of resolving plaintiffs' claims, as in Lee, and instead argue
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that individual actions in the small claims section is the appropriate means to
resolve the claims. Moreover, in Delgozzo, the trial court did not analyze the
factors under Rule 4:32-1(b)(3), and class certification will not prevent
plaintiffs or any other member of the putative class from pursuing an
individual claim.
In support of their argument that a class action would be the superior
means to adjudicate the FACTA claims of the putative class, plaintiffs rely on
several federal cases. Toys "R" Us, 300 F.R.D. at 365 (finding class action
was superior where defendant printed more than 29,000,000 noncompliant
receipts nationwide, including, 2,074,428 noncompliant receipts in California);
Engel v. Scully & Scully, Inc., 279 F.R.D. 117, 130 (S.D.N.Y. 2011) (finding
class action was superior where 3000 to 5000 noncompliant receipts were
issued).
However, "[o]n questions of federal constitutional law and statutory law,
only decisions of the United States Supreme Court are binding on the courts of
this state." Pressler & Verniero, Current N.J. Court Rules, cmt. 3.5 on R. 1:36-
3 (2020). State courts are not bound by lower federal court opinions, including
the Circuit Court of Appeals. Ibid.; see generally Ryan v. Am. Honda Motor
Co., 186 N.J. 431, 436 (2006). "Nonetheless, [reported] federal opinions,
including district court decisions, may have significant persuasive effect. For
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example, as a matter of comity, a [s]tate court will give weight to a lower
federal court's interpretation of federal law." Ibid.; see, e.g., Royster v. N.J.
State Police, 439 N.J. Super. 554, 570 n.7 (App. Div. 2015). 6
Far more persuasive is the reasoning of the federal court that held
O'Shea and Trisal failed to state a claim under FACTA and dismissed their
complaints seeking class certification. O'Shea, 2017 U.S. Dist. 122424 at *16.
The federal court relied on Crupar-Weinmann v. Paris Baguette Am., Inc., 861
F.3d 76, 81 (2d. Cir. 2017), which held that the printing of a credit or debit
card expiration date did not "pose a material risk of harm." The Crupar-
Weinmann court reasoned:
Congress expressly observed that the inclusion of
expiration dates did not raise a material risk of
identity theft, presumably to curtail the hundreds of
lawsuits [that] were filed [after FACTA's passage]
alleging that the failure to remove the expiration date
was a willful violation . . . even where the account
number was properly truncated[, and n]one of these
lawsuits contained an allegation of harm to any
consumer's identity. Congress could not have been
clearer in stating that [t]he purpose of this Act is to
ensure that consumers suffering from any actual harm
to their credit or identity are protected while
simultaneously limiting abusive lawsuits that do not
protect consumers but only result in increased cost to
6
Moreover, "[w]here there is no New Jersey case law relevant to a class
certification issue, 'our courts have consistently looked to the interpretat ions
given the federal counterpart for guidance.'" Laufer, 385 N.J. Super. at 183
(quoting Delgozzo, 266 N.J. Super. at 188).
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business and potentially increased prices to
consumers.
[Id. at 81-82 (alterations in original) (internal citations
and quotations omitted).]
"[T]he printing of an expiration date on an otherwise properly redacted receipt
does not constitute an injury in fact sufficient to establish . . . standing to bring
a claim alleging a bare procedural violation of FACTA." Id. at 82.
C. Predominance
Plaintiffs next argue that the trial court erred by determining sua sponte
they failed to meet the predominance requirement of Rule 4:32-1(b)(3). "To
determine predominance under Rule 4:32-1(b)(3), the court decides 'whether
the proposed class is "sufficiently cohesive to warrant adjudication by
representation."'" Dugan, 231 N.J. at 48.
The "predominance requirement" of Rule 4:32-1(b)(3) "is more
demanding than the commonality requirement." Muise v. GPU, Inc., 371 N.J.
Super. 13, 37 (App. Div. 2004). It "requires an evaluation of the legal issues
and the proof needed to establish them." In re Cadillac, 93 N.J. at 430. "As a
matter of efficient judicial administration, the goal is to save time and mone y
for the parties and the public and to promote consistent decisions for people
with similar claims." Ibid.
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Plaintiffs correctly point out that "Rule 4:32-1(b)(3) does not demand a
showing 'that there is an "absence of individual issues or that the common
issues dispose of the entire dispute," or "that all issues [are] identical among
class members or that each class member [is] affected in precisely the same
manner."'" Ibid. (alterations in original) (quoting Lee, 203 N.J. at 520).
Additionally, plaintiffs need not "demonstrate that the number of common
issues exceeds the number of individual issues." Ibid. (citing Varacallo v.
Mass. Mut. Life Ins., 332 N.J. Super. 31, 45 (App. Div. 2000)).
This factor, however, requires "a qualitative assessment of the common
and individual questions rather than a mere mathematical quantification of
whether there are more of one than the other." Ibid. (quoting Lee, 203 N.J.
519-20). Whether the issue of predominance is found involves "a close
analysis of the facts and law." Ibid. (quoting Iliadis, 191 N.J. at 109). The
courts must first consider "the number and, more important[ly], the
significance of common questions must be considered." Iliadis, 191 N.J. at
108.
Next, the "court must decide whether the 'benefit from the determination
in a class action [of common questions] outweighs the problems of individual
actions.'" Ibid. (alteration in original) (quoting In re Cadillac, 93 N.J. at 430).
The trial court found that plaintiffs did not provide "sufficient evidence to
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support a claim that . . . the alleged class has been damaged in such a way that
would be representative of the whole." This lack of information "puts
[p]laintiffs' claims at odds with the legislative purpose of FACTA and points
to an overall lack of demonstrable damages in the case of these particular
[p]laintiffs." Finally, there must be a "common nucleus of operative facts[,]"
to establish predominance. Ibid. (quoting In re Cadillac, 93 N.J. at 431).
Here, the trial judge found that plaintiffs had not pled sufficient facts to
establish the predominance factor because
[t]he potential disparate nature of damages that may or
may not have been suffered by consumers who
received [noncompliant] receipts would require courts
to adjudicate [d]efendants' liability on a case by case
basis as such claims may not be representative of the
entire class. It is this type of indispensable case by
case determination that cuts directly against the
purpose of Rule 4:32-1's class certification
predominance and superiority prongs.
We agree with the trial court that the sheer amount of uncertainties in
respect of the amount of potential FACTA claims against defendants, and any
harm that arose from such violations, renders it difficult to determine a
common nucleus of operative facts. Therefore, we conclude that the trial court
did not err in finding plaintiffs failed to establish the predominance factor of
Rule 4:32-1(b)(3).
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III.
Next, plaintiffs argue that the trial court erred by finding it did not have
personal jurisdiction to entertain the complaints of Baskin, O'Shea, and Trisal.
We conclude the court correctly found that it could not exercise general
jurisdiction over defendants and lacked specific jurisdiction to consider the
claims of O'Shea and Trisal. We also conclude that the court erred by finding
it did not have specific jurisdiction to consider Baskin's claims against
defendants.
Our state's "long-arm statute 'provides for jurisdiction coextensive with
the due process requirements of the United States Constitution.'" Koch v.
Pechota, 744 Fed. Appx. 105, 110 (3d. Cir. 2018) (quoting Miller Yacht Sales,
Inc. v. Smith, 384 F.3d 93, 96 (3d. Cir. 2004)). Rule 4:4-4(b)(1), our long-arm
statute, "has been construed as vesting New Jersey's courts with jurisdiction
over non-residents to the outer limits permitted by due process." Pressler &
Verniero, Current N.J. Court Rules, cmt. 3.1.1 on R. 4:4-4 (2020).
Accordingly, New Jersey state courts refer "to federal law to interpret the
limits on personal jurisdiction." Koch, 744 Fed. Appx. at 110 (citing IMO
Indus., Inc. v. Kiekert AG, 155 F.3d 254, 259 (3d. Cir. 1998)).
Personal jurisdiction over a defendant may be exercised through general
jurisdiction or specific jurisdiction. Plaintiffs contend the trial court only
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addressed the issue of specific jurisdiction, not whether general jurisdiction
applied. Our review of the record shows the trial court did address general
jurisdiction:
In this case, [d]efendant P.C. Richard & Son, LLC is a
New York limited liability company. Defendant P.C.
Richard & Son, Inc. is a Delaware corporation. Both
entities maintain their principal place[s] of business in
New York. Thus, [d]efendant P.C. Richard & Son,
LLC is subject to general jurisdiction in New York
and [d]efendant P.C. Richard & Son, Inc. is subject to
general jurisdiction in both Delaware and New York.
As general jurisdiction does not exist in this case, this
[c]ourt would need to be able to exercise specific
jurisdiction over [d]efendants.
General jurisdiction over a corporation exists where "the corporation is
fairly regarded as at home[,]" such as its domicile, place of incorporation, or
principal place of business. Goodyear Dunlop Tires Operations, S.A. v.
Brown, 564 U.S. 915, 924 (2011). "[A] corporation's operations in a forum
other than its formal place of incorporation or principal place of business may
be so substantial and of such a nature as to render the corporation at home in"
another state. Daimler AG v. Bauman, 571 U.S. 117, 139 n.19 (2014).
A court that has general jurisdiction over a defendant "may hear any
claim against that defendant, even if all the incidents underlying the claim
occurred in a different state." Bristol-Myers Squibb v. Superior Court, 137 S.
Ct. 1773, 1780 (2017) (quoting Goodyear, 564 U.S. at 919). "'[O]nly a limited
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set of affiliations with a forum will render a defendant amenable to' general
jurisdiction in that state." Ibid. (quoting Daimler, 571 U.S. at 137).
Plaintiffs argue that defendants conduct more than twenty-five percent
of their business in New Jersey, and generate nearly twenty-five percent of
their revenue from sales in New Jersey, thereby establishing general
jurisdiction. While Goodyear did not hold that the only forums in which a
corporation may be subjected to general jurisdiction are where it is
incorporated, or where it maintains its principal place of business, the United
States Supreme Court also rejected the premise of "approv[ing] the exercise of
general jurisdiction in every [s]tate in which a corporation 'engages in a
substantial, continuous, and systematic course of business.'" Daimler, 571
U.S. at 138. The proper inquiry is, therefore, "whether that corporation's
'affiliations with the [s]tate are so "continuous and systematic" as to render [it]
essentially at home in the forum State.'" Ibid. (alteration in original) (quoting
Goodyear, 564 U.S. at 919).
Defendants are neither incorporated in New Jersey, nor do they have
their principal place of business here. This court has noted the incredible
difficulty of establishing "general jurisdiction [over a corporation] in a forum
other than the place of incorporation or principal place of business." Dutch
Run-Mays Draft, LLC v. Wolf Block, LLP, 450 N.J. Super. 590, 608 (App.
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26
Div. 2017) (alteration in original) (quoting Chavez v. Dole Food Co., 836 F.3d
205, 223 (3d. Cir. 2016)).
The proper inquiry for general jurisdiction is "'an appraisal of a
corporation's activities in their entirety'; '[a] corporation that operates in many
places can scarcely be deemed at home in all of them.'" Id. at 603 (alteration
in original) (quoting BNSF Ry. v. Tyrell, 137 S. Ct. 1549, 1559 (2017)).
Continuous activity within a state is insufficient "to support the demand that
the corporation be amenable to suits unrelated to that activity." Id. at 599.
As previously stated, P.C. Richard & Son, LLC is a New York limited
liability company and P.C. Richard & Son, Inc. is a Delaware corporation.
Plaintiffs' assertion that defendants' New Jersey locations are "very close" to
their New York headquarters is unconvincing. Defendants certified that they
conduct business in New York, New Jersey, Pennsylvania, and Delaware.
They clearly cannot be considered to be "at home" in all four states.
Moreover, defendants also certified that more than three-quarters of their
business is conducted outside of the State of New Jersey. Thus, the trial court
correctly found the New Jersey courts could not exercise general jurisdiction
over defendants.
The trial court also held that New Jersey state courts do not have specific
jurisdiction over defendants in this matter. The court found:
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O'Shea and Trisal are New York [r]esidents. . . .
O'Shea and Trisal's claims arise out of receipts they
each received at [d]efendants' New York stores.
While [d]efendants do operate numerous retail stores
in New Jersey, this fact by itself does not meet the
requirements of specific jurisdiction under Bristol-
Myers. Specifically, . . . O'Shea and Trisal fail to
allege that the claims they have asserted against
[d]efendants "aris[e] out of or relat[e]" to
[d]efendants' operations in New Jersey. See Bristol-
Myers, 137 S. Ct. at 1780. Thus, specific jurisdiction
is also lacking because the claims alleged do not have
any connection with [d]efendants' contacts in New
Jersey as the forum state. Therefore, notwithstanding
this [c]ourt's principal ruling that class certification in
this matter is not appropriate under Rule 4:32-1, the
[c]ourt finds that it may not properly exercise personal
jurisdiction over the non-resident [p]laintiffs' claims.
In order for specific jurisdiction to exist, "there must be 'an affiliation
between the forum and the underlying controversy, principally, [an] activity or
an occurrence that takes place in the forum [s]tate and is therefore subject to
the [s]tate's regulation.'" Bristol-Myers, 137 S. Ct. at 1780 (alteration in
original) (emphasis added) (quoting Goodyear, 564 U.S. at 919). When no
such connection exists, specific jurisdiction is not achieved "regardless of the
extent of a defendant's unconnected activities in the [s]tate." Id. at 1781; see
Goodyear, 564 U.S. at 931 n.6.
The trial court correctly found that O'Shea and Trisal's claims are wholly
unrelated to any action or injury caused by defendants in New Jersey. O'Shea
and Trisal are New York residents who made purchases at defendants' New
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York stores allegedly in violation of FACTA. We discern no error in the trial
court's dismissal of the complaint as to O'Shea and Trisal.
IV.
Finally, plaintiffs argue, and defendants concede, that Baskin's
complaint should be reinstated and proceed as an individual action. Rule 4:32-
2(f)(4) permits the court to "make appropriate orders" to amend pleadings "to
eliminate therefrom allegations as to representation of absent persons, and that
the action proceed accordingly . . . ."
Baskin is a New Jersey resident with an alleged FACTA claim
emanating from one of defendants' New Jersey stores. Hence, the trial court
erred in dismissing Baskin's complaint and barring her from proceeding
individually.
Accordingly, we conclude that the trial court correctly denied class
certification and properly dismissed O'Shea and Trisal's claims. However, we
reverse the dismissal of Baskin's claims and reinstate the complaint as to her
individual claims only.
Affirmed in part, reversed and remanded in part. We do not retain
jurisdiction.
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