Debra Dugan v. TGI Friday’s, Inc. (077567) Ernest Bozzi v. OSI Restaurant Partners, LLC (077567) (Burlington County and Statewide)

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)
Debra Dugan v. TGI Fridays, Inc. (A-92-15) (077567)
Ernest Bozzi v. OSI Restaurant Partners, LLC (A-93-15) (077556)
Argued April 4, 2017 -- Decided October 4, 2017
PATTERSON, J., writing for the Court.
In these consolidated appeals, the Court applies the class action certification standard of Rule 4:32-1. The
plaintiffs allege that the defendant operators of New Jersey restaurants engaged in unlawful practices with respect to
the disclosure of prices for beverages and seek relief under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -206,
and the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18.
In the first of the two putative class actions, Dugan v. TGI Fridays, Inc., plaintiffs Debra Dugan and Alan
Fox (Dugan plaintiffs) claim that TGI Fridays, Inc. and Carlson Restaurants, Inc. (collectively, TGIF), maintained a
practice of offering certain beverages in menus without listing their prices in violation of the CFA and the
TCCWNA. The Dugan plaintiffs contend that market research TGIF produced in discovery demonstrates that
customers informed of beverage prices spent an average of $1.72 less on beverages than the customers to whom the
prices were not disclosed. On that basis, the Dugan plaintiffs stated their intention to prove that each member of
their putative class suffered the same ascertainable loss of $1.72 as a result of unconscionable commercial practices
and regulatory violations. They would use the $1.72 figure to calculate global damages for their entire class.
Dugan moved for class certification. The trial court granted the motion; an Appellate Division panel
reversed. 445 N.J. Super 59 (App. Div. 2016). The panel concluded that the Dugan plaintiffs had failed to meet
Rule 4:32-1’s requirement that common issues of fact predominate over issues that pertain to individual class
members as to either the CFA or the TCCWNA claim. The Court granted leave to appeal. 226 N.J. 543 (2016).
The second putative class action, Bozzi v. OSI Restaurant Partners, LLC, was filed by plaintiff Ernest
Bozzi against OSI Restaurant Partners, LLC (OSI), an entity that has allegedly owned, controlled and operated a
number of restaurants in New Jersey. Although Bozzi relied on the same statutes cited by the Dugan plaintiffs, he
focused more narrowly on OSI’s alleged practice of increasing the prices of beverages in the course of a customer’s
visit without disclosing that change. Bozzi’s individual factual allegations relate to a restaurant visit during which
he ordered two Peroni beers and discovered when he received his check that the first cost $3.25, and the second
$4.25. According to Bozzi, he protested the disparity to a staff member, who told him that “the computer changes
the price at certain times” and that it was the restaurant’s policy to charge customers accordingly.
Bozzi moved for certification of a class pursuant to Rule 4:32-1. The trial court granted the motion and
defined the class to include “[a]ll persons who: (a) visited any OSI Restaurant Partners, LLC or Bloomin’ Brands,
Inc. restaurant in New Jersey, from 12/23/04 to the present date; and (b) purchased an item offered on the menu or
table placards for which no price was disclosed on the menu or table placard.” OSI moved for leave to appeal. An
Appellate Division panel denied that motion. The Court granted leave to appeal. 226 N.J. 543 (2016).
HELD: Because CFA class action jurisprudence rejects “price-inflation” theories, such as the theory presented by the
Dugan plaintiffs, as incompatible with the CFA’s terms, the Dugan plaintiffs have not established predominance with
respect to their CFA claims. Bozzi’s allegations focus primarily on a specific pricing practice. If the Bozzi class is
redefined to include only customers who make that specific CFA claim, and the claim is limited accordingly, plaintiff
Bozzi has met the requirements of Rule 4:32-1 and may attempt to prove that claim on behalf of the class. As to the
TCCWNA claims in both appeals, plaintiffs have failed to satisfy the predominance requirement of Rule 4:32-1.
1. Rule 4:32-1 prescribes the standard for the determination of a motion to certify a class. Subsection (a) imposes four
initial requirements, frequently termed numerosity, commonality, typicality and adequacy of representation, in order for
1
a class to be certified. If the plaintiff satisfies Rule 4:32-1(a)’s requirements, the court then considers the standard of
Rule 4:32-1(b)(3), which allows class actions to be maintained if “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.” (pp. 22-28)
2. The CFA was enacted to provide relief to consumers from fraudulent practices in the market place. In addition to
generally alleging unconscionable commercial practices under N.J.S.A. 56:8-2, the Dugan plaintiffs and Bozzi
allege that the defendant restaurants committed a regulatory violation by contravening N.J.S.A. 56:8-2.5. Under that
section of the CFA, it is an “unlawful practice” “to sell, attempt to sell or offer for sale any merchandise at retail
unless the total selling price of such merchandise is plainly marked by a stamp, tag, label or sign either affixed to the
merchandise or located at the point where the merchandise is offered for sale.” To prevail under the CFA, a plaintiff
must not only prove that unlawful conduct by defendant, but must also demonstrate an ascertainable loss by plaintiff
and a causal relationship between the unlawful conduct and the ascertainable loss. (pp. 28-33)
3. The Dugan plaintiffs seek to predicate a uniform finding of ascertainable loss and causation on the difference
between what they contend would be “fair” or “reasonable” prices for beverages and the prices that TGIF actually
charged. New Jersey case law has consistently rejected “price-inflation” theories—closely related to fraud on the
market theories—as a substitute for proof of ascertainable loss or causation in CFA claims. A “fair” or “reasonable”
price derived from the per-visit expenditures of marketing research subjects is no substitute for proof of the actual
claimants’ ascertainable loss and causation. The Dugan plaintiffs failed to establish predominance with respect to
their CFA claim. The panel properly reversed the certification of a class with respect to that claim. (pp. 34-49)
4. Bozzi focused on a category of OSI restaurant customers: customers who, in the course of a single visit to an
OSI restaurant, were charged different prices for beverages of the same brand, type, and volume. Bozzi has met the
requirements for class certification with respect to his CFA claim, if the class is thus limited. The Court therefore
reverses the trial court’s class certification order and remands for the certification of a redefined class. (pp. 50-55)
5. The second claim asserted by the putative classes in both appeals is based on the TCCWNA. To obtain a remedy
under the TCCWNA, a plaintiff must be an “aggrieved consumer”—a consumer who satisfies the elements of the
TCCWNA. N.J.S.A. 56:12-17. To be found liable under the TCCWNA, a defendant must have violated a “clearly
established legal right” or “responsibility.” N.J.S.A. 56:12-15. Plaintiffs contend that by failing to list prices for
beverages on the menus, the restaurants failed to meet their “clearly established” legal responsibilities under
N.J.S.A. 56:8-2.5; they contend that the statute required defendants to “plainly mark” the beverages that they sold
“by a stamp, tag, label or sign” in the location where the beverages were offered for sale. (pp. 56-61)
6. Plaintiffs have not met the predominance requirement with respect to their TCCWNA claims in either appeal.
TCCWNA addresses “contract[s],” “warrant[ies],” “notice[s],” and “sign[s]” and does not apply when a defendant
fails to provide the consumer with a required writing. N.J.S.A. 56:12-15. Accordingly, a claimant who does not, at
a minimum, prove that he or she received a menu cannot satisfy the elements of TCCWNA and is not an “aggrieved
consumer.” The trial courts improperly granted class certification as to plaintiffs’ TCCWNA claims. (pp. 62-67)
In Dugan v. TGI Fridays Inc., the judgment of the Appellate Division is AFFIRMED and MODIFIED.
In Bozzi v. OSI Restaurant Partners, LLC, the trial court’s class certification determination is AFFIRMED in part
and REVERSED in part. The matters are remanded to the trial courts for proceedings consistent with this opinion.
JUSTICE ALBIN, DISSENTING, states that TGIF is in violation of the CFA, and the only remaining
issue is whether the CFA violation caused an ascertainable loss to the class of TGIF patrons. Justice Albin finds that
the $1.72 constitutes, on average, an ascertainable loss per person causally related to TGIF’s unlawful practice of
not disclosing prices. Justice Albin also disagrees that plaintiffs have failed to make out a claim under the
TCWWNA. According to Justice Albin, the majority’s decision will make it more difficult for a class of many
thousands of defrauded consumers to act collectively in pursuit of a common remedy against a corporate wrongdoer.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, FERNANDEZ-VINA, and TIMPONE
join in JUSTICE PATTERSON’s opinion. JUSTICE ALBIN filed a separate, dissenting opinion. JUSTICE
SOLOMON did not participate.
2
SUPREME COURT OF NEW JERSEY
A-92 September Term 2015
A-93 September Term 2015
077567 and 077556
DEBRA DUGAN, ALAN FOX, and
ROBERT CAMERON on behalf of
themselves and all others
similarly situated,
Plaintiffs-Appellants,
v.
TGI FRIDAYS, INC., CARLSON
RESTAURANTS WORLDWIDE, INC.,
on behalf of themselves and
all others similarly situated,
Defendants-Respondents.
ERNEST BOZZI, on behalf of himself
and all others similarly situated,
Plaintiff-Respondent,
v.
OSI RESTAURANT PARTNERS, LLC,
T/A CARRABBA’S ITALIAN GRILL, et al.,
Defendants-Appellants.
Argued April 4, 2017 – Decided October 4, 2017
Dugan v. TGI Fridays, Inc. (A-92-15): On
appeal from the Superior Court, Appellate
Division, whose opinion is reported at 445
N.J. Super. 59 (App. Div. 2016).
Bozzi v. OSI Restaurant Partners, LLC (A-93-
15): On appeal from the Superior Court,
Appellate Division.
1
Sander D. Friedman argued the cause for
appellants in Dugan v. TGI Fridays, Inc., (A-
92-15) (Law Office of Sander D. Friedman,
attorneys; Sander D. Friedman and Wesley G.
Hanna, on the briefs).
Stephen M. Orlofsky argued the cause for
respondents in Dugan v. TGI Fridays, Inc. (A-
92-15) (Blank Rome and LeClair Ryan, attorneys;
Stephen M. Orlofsky, David C. Kistler, Jeffrey
L. O’Hara, and Matthew S. Schultz, of counsel
and on the briefs).
David G. McMillin argued the cause for amicus
curiae Legal Services of New Jersey in Dugan
v. TGI Fridays, Inc. (A-92-15) (Legal Services
of New Jersey, attorneys; Melville D. Miller,
Jr. and David G. McMillin on the brief).
Michael A. Galpern argued the cause for amicus
curiae New Jersey Association for Justice in
Dugan v. TGI Fridays, Inc. (A-92-15) (Locks
Law Firm, attorneys; Michael A. Galpern,
Andrew P. Bell, and James A. Barry on the
brief).
Jeffrey S. Jacobson argued the cause for
amicus curiae New Jersey Civil Justice
Institute in Dugan v. TGI Fridays, Inc. (A-
92-15) (Lowenstein Sandler and Kelley Drye &
Warren, attorneys; Jeffrey S. Jacobson and
Gavin J. Rooney on the brief).
Stephen M. Orlofsky argued the cause for
appellants in Bozzi v. OSI Restaurant
Partners, LLC (A-93-15) (Blank Rome and Briggs
Law Office, attorneys; Stephen M. Orlofsky,
David C. Kistler, Michael A. Iannucci, Norman
W. Briggs, and Adrienne Chapman, of counsel
and on the briefs).
2
Donald M. Doherty, Jr. argued the cause for
respondent in Bozzi v. OSI Restaurant
Partners, LLC (A-93-15) (Law Office of Donald
M. Doherty, attorneys; Donald M. Doherty, Jr.
on the brief).
Jonathan Romberg argued the cause for amicus
curiae Seton Hall University School of Law
Center for Social Justice in Dugan v. TGI
Fridays, Inc. (A-92-15) and Bozzi v. OSI
Restaurant Partners, LLC (A-93-15) (Seton Hall
University School of Law Center for Social
Justice, attorneys; Jonathan Romberg on the
briefs).
David R. Kott argued the cause for amicus
curiae New Jersey Business & Industry
Association in Dugan v. TGI Fridays, Inc.
(A-92-15) and Bozzi v. OSI Restaurant
Partners, LLC (A-93-15) (McCarter & English,
attorneys; David R. Kott, Edward J. Fanning,
Zane C. Riester, and Elizabeth K. Monahan,
of counsel and on the briefs).
JUSTICE PATTERSON delivered the opinion of the Court.
In these consolidated appeals, the plaintiffs allege that
the defendant operators of New Jersey restaurants engaged in
unlawful practices with respect to the disclosure of prices
charged to customers for alcoholic and non-alcoholic beverages.
Based upon different theories of ascertainable loss and
causation, plaintiffs in the two actions demand damages and
other relief against defendants under the Consumer Fraud Act
(CFA), N.J.S.A. 56:8-1 to -206. They also seek damages, civil
penalties, and other relief under the Truth in Consumer
3
Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to
-18.
In each case, the trial court certified the action as a
class action pursuant to Rules 4:32-1 and 4:32-2. In Dugan v.
TGI Fridays, Inc., 445 N.J. Super. 59 (App. Div. 2016), an
Appellate Division panel reversed the trial court’s
certification of a class. The Appellate Division denied the
defendant’s motion for leave to appeal in Bozzi v. OSI
Restaurant Partners, LLC. We granted leave to appeal in both
actions.
Applying the class action certification standard of Rule
4:32-1 to the CFA claim asserted in Dugan v. TGI Fridays, Inc.,
we hold that plaintiffs have failed to show that common
questions of law and fact predominate over individual issues, as
Rule 4:32-1 requires. As an alternative to presenting proof of
ascertainable loss and causation as to each member of the class,
the Dugan plaintiffs propose to demonstrate, for a class
numbering in the millions, that TGIF charged each member of the
class $1.72 more than the “fair” or “reasonable” prices that it
would have charged had it disclosed its beverage prices on the
menu. Because our CFA class action jurisprudence rejects
“price-inflation” theories, such as the theory presented by the
Dugan plaintiffs, as incompatible with the CFA’s terms, we
4
conclude that the Dugan plaintiffs have not established
predominance with respect to their CFA claims. We accordingly
modify and affirm the Appellate Division’s determination that
the Dugan class was improperly certified for purposes of the CFA
claims asserted in that action and remand for a determination of
the individual plaintiffs’ CFA claims.
We reach a different conclusion with respect to the CFA
claims asserted by plaintiff Ernest Bozzi in Bozzi v. OSI
Restaurant Partners, LLC. Although Bozzi asserts general claims
that the defendant restaurants failed to disclose prices, his
allegations focus primarily on a specific pricing practice. He
alleges that the defendant restaurants violated the CFA by
increasing the price charged to a customer for the same brand,
type, and volume of beverage in the course of the customer’s
visit to the restaurant, without notifying the customer of the
change. Bozzi’s counsel represents that this price-shifting
claim is supported by claimant-specific receipts showing that
each customer making this claim was charged different prices for
the same brand, type, and volume of beverage in the course of a
single visit to one of the defendant’s restaurants.
We hold that if the Bozzi class is redefined to include
only customers who make that specific CFA claim, and the claim
is limited accordingly, plaintiff Bozzi has met the requirements
5
of Rule 4:32-1 and may attempt to prove that claim on behalf of
the class. We modify and affirm the trial court’s determination
as to the CFA claim in Bozzi and remand for the certification of
a class that is limited accordingly.
With respect to the claims based on the TCCWNA in both
appeals, we conclude that plaintiffs have failed to satisfy the
predominance requirement of Rule 4:32-1. We therefore reverse
the trial courts’ class certification determinations in both
cases with respect to those claims and remand for a
determination of plaintiffs’ individual TCCWNA claims.
I.
We base our summary of the factual allegations and
procedural history of each action on the complaints and the
class certification record presented to the trial court in each
case.
A.
In the first of the two putative class actions, Dugan v.
TGI Fridays, Inc., plaintiffs Debra Dugan and Alan Fox (Dugan
plaintiffs) assert claims against defendants TGI Fridays, Inc.
and Carlson Restaurants, Inc.1 (collectively, TGIF), owners and
operators of TGIF restaurants in New Jersey.
1 Carlson Restaurants Worldwide, Inc., which was named as a
defendant, is the former name of Carlson Restaurants, Inc.
6
The Dugan plaintiffs claim that TGIF maintained a practice
of offering certain beverages in New Jersey TGIF restaurants’
menus without listing the prices of those beverages.2 They
allege that TGIF violated the CFA by engaging in unconscionable
commercial practices contrary to N.J.S.A. 56:8-2. They also
assert, among other claims, that TGIF violated a regulatory
provision, N.J.S.A. 56:8-2.5, by selling, attempting to sell, or
offering for sale “merchandise that is not price marked at the
point of purchase.” The Dugan plaintiffs premise their claim
under the TCCWNA on the allegation that TGIF violated a “clearly
established legal right of a consumer or responsibility of a
seller” by offering beverages for sale “without notifying the
consumer of the total selling price at the point of purchase.”
(citing N.J.S.A. 56:12-15; N.J.S.A. 56:8-2.5). The Dugan
plaintiffs demand damages, civil penalties, and other relief
under the TCCWNA.
In the Dugan plaintiffs’ original complaint, Dugan was the
sole plaintiff and representative of the putative class. Dugan
2 The Dugan plaintiffs alleged there were thirty-eight TGIF
restaurants in New Jersey. TGIF’s answers to interrogatories
indicated that there were thirty-four TGIF restaurants in New
Jersey, twenty that were company-owned and fourteen that were
operated as franchises. In their complaint, the Dugan
plaintiffs alleged that TGIF controls the content of the menus
in all TGIF restaurants, whether those restaurants are company-
owned or franchises.
7
asserted that, during visits to a company-owned TGIF restaurant
in Mount Laurel, she purchased “unpriced soft drinks, mixed
drinks, and beer off Defendants’ otherwise comprehensively
priced menus.” Dugan alleged that on each visit she was not
made aware of the prices charged for the beverages until TGIF
staff presented her with a check. In her original complaint,
she claimed that during a visit to a TGIF restaurant she was
charged $2.00 for a beer at the bar and later charged $3.59 for
the same brand of beer after moving to a table.
Dugan alleged that her claims were typical of the claims of
the class and asserted that she met all of the requirements for
class certification under Rule 4:32-1. She sought certification
of a class consisting of “all customers of New Jersey TGI
Friday’s who purchased items from the menu that did not have a
disclosed price.”
TGIF moved before the trial court to dismiss Dugan’s
complaint for failure to state a claim pursuant to Rule 4:6-
2(e). The trial court denied the motion to dismiss. An
Appellate Division panel denied TGIF’s motion for leave to
appeal. We granted TGIF’s motion for leave to appeal and
summarily remanded the matter to an Appellate Division panel for
consideration of the merits of the appeal. In an unpublished
opinion, the panel concluded that Dugan had adequately pled her
8
CFA and TCCWNA claims and affirmed the trial court’s
determination. Dugan then filed a first amended complaint,
expanding her allegations regarding her visits to the TGIF
restaurant in Mount Laurel.
The parties conducted class certification discovery. In
her deposition, Dugan admitted that during the 2008 visit to a
TGIF restaurant in which she paid different prices for two
orders of identical beverages at the bar and at the table, she
did not read the beverage section of the menu. She stated that
she did not realize until she later reviewed her receipt that
she had paid $2.00 for a beer at the bar and later paid $3.59
for a beer at a table. Dugan later submitted a certification
stating that she had looked at the TGIF menu on many occasions
and expected to pay the same price at the bar that she paid when
she sat at a table.
Among the documents produced by TGIF in discovery were
documents characterized by the Dugan plaintiffs as training
materials for TGIF servers. Those documents stated that servers
seating customers should hand opened menus to customers.
TGIF also produced what the Dugan plaintiffs characterize as
“market research.” Plaintiffs’ counsel stated at oral argument
that those documents reflect a TGIF consultant’s analysis of
consumer behavior in the ordering of beverages in restaurants.
9
The Dugan plaintiffs contend that the market research
demonstrates customers’ tendency to order less expensive or
fewer beverages if beverage prices are listed on the menu than
they order if the prices are unlisted. As the research is
described by the Dugan plaintiffs, one group of customers
studied was informed of beverage prices when visiting a
restaurant and the other group was not. The customers informed
of beverage prices spent an average of $1.72 less per visit than
the customers to whom the prices were not disclosed. Relying on
the marketing research, the Dugan plaintiffs claim that TGIF is
in a position to charge a higher price for a beverage than the
price that it would be compelled by market forces to charge if
it were to disclose its beverage prices on restaurant menus.
On that basis, the Dugan plaintiffs stated their intention
to prove that each member of their putative class suffered the
same ascertainable loss of $1.72 as a result of unconscionable
commercial practices and regulatory violations committed by
TGIF. They indicated that they would use the $1.72 figure to
calculate global damages for their entire class.
Relying on that theory of classwide proof of ascertainable
loss and causation, Dugan moved for class certification.3
3 TGIF cross-moved for summary judgment, which was denied by the
trial court.
10
Between the filing and the determination of that motion, Dugan
filed a second amended complaint, further detailing her
allegations about her visits to the TGIF restaurant, omitting
references to the specific prices that TGIF charged her, and
naming Fox as an additional plaintiff and class representative.4
Fox described visits to TGIF restaurants and alleged that he
would have ordered different or fewer beverages during one of
those visits had he been informed about the prices that would be
charged.
The trial court concluded that the Dugan plaintiffs had
satisfied the requirements of Rule 4:32-1 and granted their
motion for class certification. The court included in the class
definition all persons who visited a company-owned TGIF
restaurant “from January 12, 2004 to June 18, 2014, relied upon
[TGIF]’s menu, and purchased an offered but unpriced soda, beer
or mixed drink.” The court later granted the Dugan plaintiffs’
motion to expand the class definition for purposes of providing
notice to the class. As expanded, the class defined by the
4 The second amended complaint also included claims asserted by
a third class representative plaintiff, Robert Cameron, whose
allegations related to a visit to a franchise-owned TGIF
restaurant. After excluding customers who exclusively visited
franchise TGIF restaurants, the trial court dismissed Cameron’s
claims.
11
trial court consisted of “[a]ll persons who visited a [TGIF]
restaurant in New Jersey that is owned by [TGIF] (i.e. company
owned store) from January 12, 2004 to July 14, 2014, and
purchased an offered but unpriced soda, beer or mixed drink.”5
After the trial court denied its motion for reconsideration
and/or to decertify the class, TGIF filed a motion for leave to
appeal class certification and to stay class notice pending
appeal. An Appellate Division panel denied the motions. TGIF
moved before this Court for leave to appeal and for a stay.
This Court granted leave to appeal, stayed class notice and
further proceedings before the trial court, and remanded the
matter to the Appellate Division for consideration of the merits
of the appeal.
An Appellate Division panel reversed the trial court’s
class certification determination. Dugan v. TGI Fridays, Inc.,
445 N.J. Super 59, 79 (App. Div. 2016).6 The panel concluded
5 TGIF represents that the company retained to provide notice to
the class certified by the trial court estimated that the class
consists of thirteen to fourteen million members. The Dugan
plaintiffs state that the number of class members may be
substantially less than that estimate, as the estimate may
reflect individual customers’ repeat visits to TGIF restaurants.
6 The panel noted that the Dugan plaintiffs filed a motion for
leave to file a cross-appeal, challenging the trial court’s
limitations on the scope of the class. Dugan, supra, 445 N.J.
Super. at 70-71. In light of its class certification decision,
the panel did not reach the cross-appeal.
12
that the Dugan plaintiffs had failed to meet Rule 4:32-1’s
requirement “that common issues of fact as to . . . TGIF’s
customers who purchased unpriced soda, beer or mixed drinks
predominate over issues that pertain to individual class
members.” Id. at 74. The panel held that the trial court had
improperly included in the class definition all persons who
purchased an unpriced soda, beer, or mixed drink “regardless of
whether they reviewed the menu before purchasing the beverages”
and had therefore included in the class customers who could not
establish an ascertainable loss as a result of unlawful conduct,
as the CFA requires. Ibid.
The panel also determined that the Dugan plaintiffs had
failed to establish predominance under Rule 4:32-1 with respect
to their TCCWNA claims. Id. at 77-79. The panel noted the need
for “[i]ndividualized inquiries . . . to determine whether each
class member was handed a menu that lacked beverage pricing” and
to assess actual damages under N.J.S.A. 56:12-17. Id. at 79.
Given its finding on the issue of predominance, the panel did
not reach Rule 4:32-1’s other class certification requirements.
We granted the Dugan plaintiffs’ motion for leave to
appeal. 226 N.J. 543 (2016). We also granted the motions of
Legal Services of New Jersey, the New Jersey Association for
Justice, the Seton Hall University School of Law Center for
13
Social Justice, the New Jersey Civil Justice Institute, and the
New Jersey Business and Industry Association to appear as amici
curiae.
B.
The second appeal before the Court arose from another
putative class action, Bozzi v. OSI Restaurant Partners, LLC.
The action was filed by plaintiff Bozzi against OSI Restaurant
Partners, LLC (OSI), an entity that, according to plaintiffs,
maintains control of Carrabba’s Italian Grill (Carrabba’s)
restaurants in New Jersey. In his initial complaint, Bozzi
asserted claims based solely on the pricing practices of OSI’s
Carrabba’s restaurants. In his amended complaint, Bozzi
expanded his claim to include other New Jersey restaurants that
OSI has allegedly owned, controlled, and operated, including
Outback Steakhouse, Bonefish Grill, Fleming’s Prime Steakhouse
and Wine Bar, and Cheeseburger in Paradise restaurants.
In his amended complaint, Bozzi asserted a CFA regulatory
violation claim based on OSI’s alleged contravention of N.J.S.A.
56:8-2.5 and a more general CFA claim based on OSI’s alleged
practice of “intentionally mislead[ing] customers through
stealth price adjustments.” He alleged an ascertainable loss
under the CFA based on a contention that customers who are
uninformed about beverage prices pay higher prices and are
14
“depriv[ed] . . . of their legitimate expectation of an
objectively reasonable price.” Bozzi sought an injunction,
treble damages, and other relief under the CFA, and a judgment
declaring that he satisfied the requirements of his CFA claim,
pursuant to the Declaratory Judgment Act, N.J.S.A. 2A:16-53. He
also pled a claim under the TCCWNA, based on OSI’s claimed
violation of N.J.S.A. 56:8-2.5, and sought damages and civil
penalties under that statute.
Although Bozzi relied on the same statutes cited by the
Dugan plaintiffs, he focused more narrowly on OSI’s alleged
practice of increasing the prices of beverages in the course of
a customer’s visit without disclosing that change to the
customer. Bozzi’s individual factual allegations relate
primarily to a 2010 visit to a Carrabba’s restaurant in Maple
Shade. He asserts that, during that visit, neither the
restaurant’s menu nor any placards or displays disclosed drink
prices and that there were no signs, notices, or displays
indicating that there was a discount on drink prices in effect.
He asserts that he ordered two Peroni beers during his meal and
discovered when he received his check that the first beer cost
$3.25, and the second cost $4.25. According to Bozzi, he
protested the pricing disparity to a restaurant staff member,
who told him that “the computer changes the price at certain
15
times” and that it was the restaurant’s policy to charge
customers accordingly.
Bozzi moved before the trial court for certification of a
class pursuant to Rule 4:32-1. Although Bozzi had proposed, in
his initial complaint, a subclass limited to “persons who were
charged different prices for the same drinks during a trip to
the Defendants’ establishment,” he sought certification of a
broader class of customers who visited an OSI restaurant and
purchased a beverage offered on the menu or table placard
without a price. Bozzi’s counsel represented to the trial court
that the expansive class definition was necessary for his TCCWNA
claim, which was premised on the general allegation that OSI
failed to disclose beverage prices on its restaurants’ menus.
He advised the trial court that for purposes of the CFA, the
claimed ascertainable loss was a “price differential loss,”
based on OSI’s alleged practice of charging different prices for
the same beverage on the same visit. Counsel did not explain to
the trial court how he intended to prove ascertainable loss and
causation on a classwide basis. He acknowledged that he
expected a later challenge to his claim that OSI’s alleged
practice of charging different prices for the same beverage gave
rise to a CFA violation.
16
The trial court granted Bozzi’s motion for class
certification. The court defined the class to include “[a]ll
persons who: (a) visited any OSI Restaurant Partners, LLC or
Bloomin’ Brands, Inc.7 restaurant in New Jersey, from 12/23/04 to
the present date; and (b) purchased an item offered on the menu
or table placards for which no price was disclosed on the menu
or table placard.”
The trial court also granted Bozzi’s motion for injunctive
relief. It ordered OSI to “list all prices in the menus for all
items contained in their menus,” and to “list prices for any
items displayed on a table placard or similar display available
to customers,” within ten days. The court granted a stay of
proceedings before it, including the injunction, in anticipation
of OSI’s motion for leave to appeal its orders.
OSI moved before the Appellate Division for leave to
appeal. An Appellate Division panel denied that motion and
denied OSI’s motion for reconsideration.
We granted OSI’s motion for leave to appeal. 226 N.J. 543
(2016). We also granted the motions of the Seton Hall
University School of Law Center for Social Justice and the New
7 The record does not reveal Bloomin’ Brands Inc.’s relationship
to OSI, or its alleged role in the conduct at issue.
17
Jersey Business and Industry Association to appear as amici
curiae.
II.
A.
In Dugan v. TGI Fridays, Inc., plaintiffs argue that the
Appellate Division panel’s decision diverged from this Court’s
class certification jurisprudence, which endorses the class
action device as a method of resolving disputes between
plaintiffs with small claims for damages and institutional
defendants. The Dugan plaintiffs argue that although there are
individualized questions that must be resolved to determine
their claims, common questions of law and fact predominate.
They contend that they can prove their CFA and TCCWNA claims for
the class as a whole because TGIF subjected all customers to a
price-gouging strategy, and they need not present proofs of each
customer’s interaction with the server or motivation in
purchasing a beverage. The Dugan plaintiffs argue that damages
can be calculated for the class as a whole using the same
methodology as would apply to assess damages in an individual
plaintiff’s ordinary bad faith contract case.
TGIF contends that the Appellate Division panel properly
reversed the trial court’s grant of class certification. It
maintains that the Dugan plaintiffs cannot prove that the class
18
members suffered an ascertainable loss as a result of the
allegedly offending practices, as required by N.J.S.A. 56:8-19,
without demonstrating that loss for each individual claimant in
a class estimated to involve thirteen to fourteen million
beverage purchases. TGIF contends that to establish a claim
under the TCCWNA, each class member would be required to prove
that he or she was given a menu, and to individually prove
damages, and that common questions of law and fact do not
predominate over individual questions as to the TCCWNA.
B.
In Bozzi v. OSI Restaurant Partners, LLC, OSI asks the
Court to reverse the trial court’s grant of class certification.
OSI contends that, in finding that common questions predominate
over individual issues in the resolution of plaintiffs’ CFA
claim, the trial court ignored the requirement that plaintiffs
prove that OSI’s conduct caused an ascertainable loss in order
to prevail under N.J.S.A. 56:8-19. It argues that Bozzi’s claim
is predicated solely on OSI’s alleged “secret shift” of beverage
prices and that Bozzi’s individual theory of ascertainable loss
and causation diverges from the theory that applies to other
members of the class. OSI asserts that to establish liability
under the TCCWNA each claimant must show that he or she was
provided with a menu that violated the law and consequently
19
sustained damages and that the necessity of individual
determinations of the TCCWNA claims precludes effective
management of a class action in this case. Finally, OSI argues
that the trial court should not have granted injunctive relief.
Bozzi contends that the Court should construe N.J.S.A.
56:8-2.5 to mandate that restaurants post prices for beverages
on menus or placards and inform consumers if prices change. He
proposes three alternative class definitions: (1) an expansive
class asserting a TCCWNA claim, consisting of all customers who
visited an OSI restaurant and were presented with a menu; (2) a
more limited class, asserting a CFA claim, consisting of all
customers who purchased an unpriced beverage at an OSI
restaurant; and (3) the narrowest class, asserting a CFA claim,
consisting of customers who paid different prices for the same
beverage during a visit to an OSI restaurant. Bozzi represents
that to prove ascertainable loss for members of the latter
class, he intends to rely on receipts showing that customers
paid different prices for the same beverage during the same
restaurant visit.
C.
Amicus curiae Legal Services of New Jersey contends that
class certification is essential to the vindication of low-
income consumers’ small claims. It asserts that the Dugan
20
plaintiffs met the predominance requirement of Rule 4:32-1
because the CFA does not require reliance, that the omission of
prices from TGIF menus gave rise to an inference of causation
for purposes of the CFA, and that the offering of menus without
beverage prices satisfied the “provision” requirement of the
TCCWNA.
Amicus curiae New Jersey Association for Justice contends
that the practices of TGIF in Dugan generally violate the CFA
and the TCCWNA, thus satisfying the predominance requirement of
Rule 4:32-1 for purposes of the liability claim, and that
distinctions among the damages claims of class members should
not defeat class certification in that case.
Amicus curiae Seton Hall University School of Law Center
for Social Justice contends that because of TGIF’s alleged
practice of not including drink prices on the menu and the
marketing research disclosed in discovery, the Dugan plaintiffs
are in a position to present collective proof of ascertainable
loss and causation. It contends that the entire class may
demonstrate ascertainable loss based on the difference between
the price that TGIF charged and the price that it would have
charged had it not instituted a pricing scheme, or,
alternatively, based on the difference between the price charged
and a reasonable price. Seton Hall University School of Law
21
Center for Social Justice argues, in both Dugan and Bozzi, that
the plaintiffs’ TCCWNA claims are even more appropriate for
classwide resolution than their CFA claims because the TCCWNA
does not require proof of ascertainable loss or causation.
Amicus curiae New Jersey Civil Justice Institute argues
that a court should never certify a class action to pursue a
claim under the TCCWNA unless there is evidence that, at a
minimum, all class members received and reviewed the allegedly
offending contract. It contends that the TCCWNA contemplates
individual litigation and that the prospect of a civil penalty
and an award of attorneys’ fees under the TCCWNA provides a
sufficient incentive for aggrieved consumers to bring individual
actions.
Amicus curiae New Jersey Business and Industry Association
urges the Court to adopt a rule barring class certification for
the litigation of TCCWNA claims. It contends that the TCCWNA’s
civil penalty provisions provide ample incentives for individual
litigation and that those provisions are unduly punitive when
imposed on behalf of a large class of claimants.
III.
A “class action is ‘an exception to the usual rule that
litigation is conducted by and on behalf of the individual named
parties only.’” Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88,
22
103 (2007) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01,
99 S. Ct. 2545, 2557, 61 L. Ed. 2d 176, 192 (1979)). The class
action device “furthers numerous practical purposes, including
judicial economy, cost-effectiveness, convenience, consistent
treatment of class members, protection of defendants from
inconsistent obligations, and allocation of litigation costs
among numerous, similarly-situated litigants.” Id. at 104. In
light of those objectives, our courts have “consistently held
that the class action rule should be liberally construed.” Lee
v. Carter-Reed Co., 203 N.J. 496, 518 (2010) (quoting Iliadis,
supra, 191 N.J. at 103).
Pursuant to our court rules, a trial court considering a
putative class action “shall, at an early practicable time,
determine by order whether to certify the action as a class
action,” and, if certification is granted, enter an order
defining “the class and the class claims, issues or defenses”
and appointing class counsel. R. 4:32-2(a).
Rule 4:32-1 prescribes the standard for the determination
of a motion to certify a class. Subsection (a) of that Rule
imposes four initial requirements, frequently termed
“numerosity, commonality, typicality and adequacy of
representation,” in order for a class to be certified. Lee,
23
supra, 203 N.J. at 519 (citing In re Cadillac V8-6-4 Class
Action, 93 N.J. 412, 424-25 (1983)). The Rule provides:
(a) General Prerequisites to a Class Action.
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.
[R. 4:32-1(a).]
If the plaintiff satisfies Rule 4:32-1(a)’s requirements,
the court then considers the standard of Rule 4:32-1(b)(3):
(b) Class Actions Maintainable. An action
may be maintained as a class action if the
prerequisites of paragraph (a) are satisfied,
and in addition:
. . . .
(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) 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
24
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.
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.’” Iliadis,
supra, 191 N.J. at 108 (quoting Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 623, 117 S. Ct. 2231, 2249, 138 L. Ed. 2d 689, 712
(1997)). 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.’” Lee, supra, 203 N.J.
at 520 (alterations in original) (quoting Iliadis, supra, 191
N.J. at 108-09). Nor must a plaintiff demonstrate that the
number of common issues exceeds the number of individual issues.
Varacallo v. Mass. Mut. Life Ins. Co., 332 N.J. Super. 31, 45
(App. Div. 2000).
The predominance factor, however, is “‘far more demanding’
than Rule 4:32-1(a)(2)’s requirement that there be questions of
25
law or fact common to the class.” Castro v. NYT Television, 384
N.J. Super. 601, 608 (App. Div. 2006) (quoting Amchem Prods.,
supra, 521 U.S. at 624, 117 S. Ct. at 2250, 138 L. Ed. 2d at
713). As the Court observed in Lee, supra, the predominance
requirement mandates “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.”
203 N.J. at 519-20 (citing Iliadis, supra, 191 N.J. at 108). As
the Court has observed, “the answer to the issue of predominance
is found . . . in a close analysis of the facts and law.”
Iliadis, supra, 191 N.J. at 109 (alteration in original)
(quoting Cadillac, supra, 93 N.J. at 434). The Court has
stressed the importance of such an analysis in the context of a
CFA class action, rejecting the contention that the identity of
a defendant’s conduct toward each plaintiff class member
obviates the need for a searching inquiry into each plaintiff’s
particular response to that identical conduct. Int’l Union of
Operating Eng’rs Local No. 68 Welfare Fund v. Merck & Co., Inc.,
192 N.J. 372, 390-91 (2007).
A class action plaintiff must also demonstrate that “a
class action is superior to other available methods for the fair
and efficient adjudication of the controversy.” R. 4:32-
1(b)(3). A court analyzing that factor must undertake “(1) an
26
informed consideration of alternative available methods of
adjudication of each issue, (2) a comparison of the fairness to
all whose interests may be involved between such alternative
methods and a class action, and (3) a comparison of the
efficiency of adjudication of each method.” Iliadis, supra, 191
N.J. at 114-15 (quoting Cadillac, supra, 93 N.J. at 436); see
also Int’l Union, supra, 192 N.J. at 383 (holding that
“superiority” requirement mandates “‘a comparison with
alternative procedures’ to evaluate both fairness and efficiency
of the class action proceeding” (quoting Iliadis, supra, 191
N.J. at 114)).
In determining a motion for class certification, a court
“must ‘accept as true all of the allegations in the complaint,’
and consider the remaining pleadings, discovery (including
interrogatory answers, relevant documents, and depositions), and
any other pertinent evidence in a light favorable to plaintiff.”
Lee, supra, 203 N.J. at 505 (quoting Int’l Union, supra, 192
N.J. at 376); accord Iliadis, supra, 191 N.J. at 96.
The deferential standard by which the court views the facts
alleged, however, does not apply to a plaintiff’s assertion that
a given case is appropriate for class certification. To the
contrary, a court deciding class certification “must undertake a
‘rigorous analysis’ to determine if the Rule’s requirements have
27
been satisfied.” Iliadis, supra, 191 N.J. at 106-07 (quoting
Carroll v. Cellco P’ship, 313 N.J. Super. 488, 495 (App. Div.
1998)). “That scrutiny requires courts to look ‘beyond the
pleadings [to] . . . understand the claims, defenses, relevant
facts, and applicable substantive law.’” Id. at 107 (alteration
in original) (quoting Carroll, supra, 313 N.J. Super. at 495).
When an order granting or denying class certification is
reviewed on appeal, the “appellate court must ascertain whether
the trial court has followed” the class action standard set
forth in Rule 4:32-1. Lee, supra, 203 N.J. at 506. In general,
an appellate court reviews a trial court’s class action
determination for abuse of discretion. See Cadillac, supra, 93
N.J. at 438-39 (determining whether trial court abused its
discretion in certifying class); Muise v. GPU, Inc., 371 N.J.
Super. 13, 29 (App. Div. 2004) (reviewing trial court’s
determination that class certification was not warranted for
abuse of discretion); Pressler & Verniero, Current N.J. Court
Rules, comment 2.2.3 on R. 4:32-1(b)(3) (2017).
IV.
A.
In accordance with Rule 4:32-1 and our case law, we review
the trial court’s certification of a class for the determination
of the CFA claims asserted in each of the two appeals before the
28
Court. As an initial step in that inquiry, we review the
substantive law that governs the plaintiffs’ CFA claims. See
Iliadis, supra, 191 N.J. at 107 (finding that court determining
class certification must analyze claims and defenses); Lee,
supra, 203 N.J. at 506 (noting need to review substantive law).
The CFA was enacted to “provide[] relief to consumers from
‘fraudulent practices in the market place.’” Lee, supra, 203
N.J. at 521 (quoting Furst v. Einstein Moomjy, Inc., 182 N.J. 1,
11 (2004)). Originally, the CFA permitted no private right of
action; rather, it authorized “the Attorney General to combat
the increasingly widespread practice of defrauding
the consumer.” Cox v. Sears Roebuck & Co., 138 N.J. 2, 14
(1994) (quoting S. Comm. Statement to S. 199 (1960) (L. 1971, c.
247, § 7)). In 1971, the Legislature amended the CFA “to permit
individual consumers to bring private actions to recover
refunds, N.J.S.A. 56:8-2.11 to -2.12, and treble damages for
violations, N.J.S.A. 56:8-19.” Weinberg v. Sprint Corp., 173
N.J. 233, 248 (2002) (citing Lemelledo v. Beneficial Mgmt. Corp.
of Am., 150 N.J. 255, 264 (1997); Riley v. New Rapids Carpet
Ctr., 61 N.J. 218, 226 (1972)).
The CFA’s private cause of action is an
“efficient mechanism to: (1) compensate the
victim for his or her actual loss; (2) punish
the wrongdoer through the award of treble
damages; and (3) attract competent counsel to
29
counteract the ‘community scourge’ of fraud by
providing an incentive for an attorney to take
a case involving a minor loss to the
individual.”
[D’Agostino v. Maldonado, 216 N.J. 168, 183-
84 (2013) (quoting Weinberg, supra, 173 N.J.
at 249).]
N.J.S.A. 56:8-2 expansively defines the conduct that
violates the CFA:
The act, use or employment by any person of
any unconscionable commercial practice,
deception, fraud, false pretense, false
promise, misrepresentation, or the knowing[]
concealment, suppression, or omission of any
material fact with intent that others rely
upon such concealment, suppression or
omission, in connection with the sale or
advertisement of any merchandise or real
estate, or with the subsequent performance of
such person as aforesaid, whether or not any
person has in fact been misled, deceived or
damaged thereby, is declared to be an unlawful
practice.
An “unlawful practice” contravening the CFA may arise from
(1) an affirmative act; (2) a knowing omission; or (3) a
violation of an administrative regulation. Thiedemann v.
Mercedes-Benz USA, LLC, 183 N.J. 234, 245 (2005); Cox, supra,
138 N.J. at 17. A showing of intent is not essential if the
claimed CFA violation is an affirmative act or a regulatory
violation, but such a showing is necessary if the claimed
violation is an omission pursuant to N.J.S.A. 56:8-2. Bosland
v. Warnock Dodge, Inc., 197 N.J. 543, 556 (2009); Gennari v.
30
Weichert Co. Realtors, 148 N.J. 582, 605 (1997); Cox, supra, 138
N.J. at 17-18.
In addition to generally alleging unconscionable commercial
practices under N.J.S.A. 56:8-2, the Dugan plaintiffs and Bozzi
allege that the defendant restaurants committed a regulatory
violation by contravening N.J.S.A. 56:8-2.5. Under that section
of the CFA, it is an “unlawful practice” “to sell, attempt to
sell or offer for sale any merchandise at retail unless the
total selling price of such merchandise is plainly marked by a
stamp, tag, label or sign either affixed to the merchandise or
located at the point where the merchandise is offered for sale.”
N.J.S.A. 56:8-2.5; see also In re Johnny Popper, Inc., 413 N.J.
Super. 580, 588-89 (App. Div. 2010) (concurring with Division of
Consumer Affairs’ determination that used car dealer’s practice
of listing vehicle prices only on price list in its building,
rather than affixing prices to vehicles or listing them near
vehicles, violated N.J.S.A. 56:8-2.5). That provision is
central to plaintiffs’ CFA and TCCWNA claims in these appeals.
To prevail under the CFA, a plaintiff must not only prove
“unlawful conduct by defendant,” but must also demonstrate “an
ascertainable loss by plaintiff” and “a causal relationship
between the unlawful conduct and the ascertainable loss.”
31
D’Agostino, supra, 216 N.J. at 184 (quoting Bosland, supra, 197
N.J. at 557). The statute provides that
[a]ny person who suffers any ascertainable
loss of moneys or property, real or personal,
as a result of the use or employment by another
person of any method, act or practice declared
unlawful under this act . . . may bring an
action . . . . In any action under this section
the court shall, in addition to other
appropriate legal or equitable relief, award
threefold the damages sustained by any person
in interest. In all actions under this
section . . . the court shall also award
reasonable attorneys’ fees, filing fees and
reasonable costs of suit.
[N.J.S.A. 56:8-19.]
Although “the Attorney General does not have to prove that
the victim was damaged by the unlawful conduct, a private
plaintiff must show that he or she suffered an ‘ascertainable
loss.’” Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464,
473 (1988) (quoting N.J.S.A. 56:8-2); see also Weinberg, supra,
173 N.J. at 251 (“[T]he plain language of the Act unmistakably
makes a claim of ascertainable loss a prerequisite for a private
cause of action . . . .”); Lee, supra, 203 N.J. at 522 (“To
establish causation, a consumer merely needs to demonstrate that
he or she suffered an ascertainable loss . . . .”). As this
Court has noted, “[t]o raise a genuine dispute about [an
ascertainable loss claim], the plaintiff must proffer evidence
32
of loss that is not hypothetical or illusory.” Thiedemann,
supra, 183 N.J. at 248.
N.J.S.A. 56:8-19’s causation element -- the requirement
that plaintiff prove that he or she suffered an ascertainable
loss “as a result of” the defendant’s unlawful “method, act or
practice” -- is “not the equivalent of reliance.” Lee, supra,
203 N.J. at 522; accord Gennari, supra, 148 N.J. at 607.
Instead, the CFA requires a showing of “a causal relationship
between the unlawful conduct and the ascertainable loss.”
Bosland, supra, 197 N.J. at 557; see also N.J. Citizen Action v.
Schering-Plough Corp., 367 N.J. Super. 8, 12-13 (App. Div.),
certif. denied, 178 N.J. 249 (2003). “The limiting nature of
the requirement allows a private cause of action only to those
who can demonstrate a loss attributable to conduct made unlawful
by the CFA.” Thiedemann, supra, 183 N.J. at 246 (citing
Meshinsky, supra, 110 N.J. at 473).
The CFA elements of ascertainable loss and causation are
the focus of the parties’ dispute regarding Rule 4:32-1
predominance in these appeals.
B.
1.
Guided by the statutory language and jurisprudence defining
a private cause of action under N.J.S.A. 56:8-19, we review the
33
Appellate Division panel’s determination that the Dugan
plaintiffs failed to demonstrate predominance under Rule 4:32-
1(b)(3) with respect to their CFA claims.
For purposes of our analysis, we assume the truth of the
Dugan plaintiffs’ allegation that TGIF, prompted by its market
research, declined to list prices for its beverages on its menus
in order to increase its revenue from beverage sales. See Lee,
supra, 203 N.J. at 505; Iliadis, supra, 191 N.J. at 96. We also
assume the truth of the Dugan plaintiffs’ allegation that during
visits to TGIF restaurants, the class members purchased
beverages for which prices were not listed on the menus. Ibid.
We accept as true for purposes of the appeal the testimony of
class representatives Dugan and Fox that, during their visits to
TGIF restaurants, they would not have ordered the beverages that
they ordered, or they would have ordered fewer or less expensive
beverages, had they been informed of the beverage prices. Ibid.
In our “qualitative assessment of the common and individual
questions,” Lee, supra, 203 N.J. at 519, we note that
plaintiffs’ pricing claims are inherently different from the CFA
claims in our prior CFA class action case law. Here, plaintiffs
do not allege that they purchased defective or deficient goods,
as the claimants contended in several of this Court’s CFA class
certification decisions. See, e.g., id. at 526-28 (stating that
34
if plaintiffs proved allegations that defendants made false
claims about dietary supplement, product is worthless “bottle of
broken promises” and each purchase, unless refunded, “is an out-
of-pocket loss”); Furst, supra, 182 N.J. at 9 (“[W]hen a
merchant violates the [CFA] by delivering defective goods and
then refusing to provide conforming goods, a customer’s
ascertainable loss is the replacement value of those goods.”);
Cadillac, supra, 93 N.J. at 434-35 (concluding that predominance
requirement was met by class of claimants who purchased vehicles
with allegedly defective engines). The beverages at issue in
these appeals were not defective; instead, it appears that those
beverages were precisely what the customers ordered.
Accordingly, plaintiffs do not contend that they are entitled to
a refund of money spent on a worthless or deficient item.
Instead, the Dugan plaintiffs contend that they were
charged an excessive price for the alcoholic and non-alcoholic
beverages that they purchased at defendants’ restaurants. Their
predominance claim is complicated by the fact that the products
at issue are beverages sold in restaurants at a range of prices
and purchased by consumers with divergent motivations, beverage
preferences, and budgetary constraints.
The Dugan plaintiffs do not represent that they can present
individualized proof that every claimant in their multi-million-
35
member class would have purchased fewer or less expensive
beverages, or none at all, had TGIF informed him or her of the
beverage prices.8 Instead, citing breach of contract law, they
propose classwide proofs of ascertainable loss and causation.
They seek to predicate a uniform finding of ascertainable loss
and causation on the difference between what they contend would
be “fair” or “reasonable” prices for beverages and the prices
that TGIF actually charged. Although TGIF’s market research
involved only a small number of consumer subjects, plaintiffs
seek to extend the results of that research to the beverage
8 We do not share our dissenting colleague’s conclusion that
plaintiffs have proven a CFA violation in the Dugan case. See
post at ___ (slip op. at 7) (attributing to TGIF a “cynical
corporate policy of profiteering from violating” the CFA); post
at 13 (contending that TGIF maintains a “corporate policy of
willful disregard of the CFA”); post at ___ (slip op. at 16)
(citing TGIF’s apparent “business decision not to list beverage
prices for the sake of higher profits, notwithstanding that its
policy violated the CFA”); post at ___ (slip op. at 24) (citing
a “corporate policy of ignoring provisions of the CFA”). TGIF
has not stipulated that it violated the CFA. No jury has
considered the Dugan plaintiffs’ claims, let alone rendered a
verdict for plaintiffs. No trial court has entered summary
judgment in plaintiffs’ favor in the Dugan case. Only a motion
to dismiss was denied by the trial court, and that action was
affirmed by the Appellate Division. We do not review that
determination in these appeals. Our role in this case is to
review the trial courts’ class certification decisions, not to
act as a factfinder with respect to plaintiffs’ substantive
claims.
36
purchases of their entire class.9 The Dugan plaintiffs urge the
Court to conclude, based on that theory of ascertainable loss
and damages, that common issues of law and fact predominate over
individual issues, as Rule 4:32-1(b)(3) requires.
In some settings in which a contract’s price term is
undefined, our law authorizes the court to determine what would
constitute a reasonable price and calculate damages accordingly.
See N.J.S.A. 12A:2-305(1) (stating factors to determine “a
reasonable price” when “[t]he parties conclude[d] a contract for
sale even though the price [was] not settled”); Wilson v.
Amerada Hess Corp., 168 N.J. 236, 240, 254 (2001) (remanding to
allow more discovery on issue of good faith in case in which
price term was left open); Truex v. Ocean Dodge, Inc., 219 N.J.
Super. 44, 50-52 (App. Div. 1987) (finding lack of price
9 The Dugan plaintiffs suggest that a figure set forth in TGIF’s
marketing research, $1.72, would represent the difference
between the average price charged by TGIF for a beverage and a
“fair” or “reasonable” price that should have been charged for
that beverage, and would therefore be the measure of a class
member’s ascertainable loss. The Dugan plaintiffs misconstrue
the import of the figure of $1.72 that appears in TGIF’s
marketing research. Based on the limited record on that market
research, it does not appear that the $1.72 figure set forth in
the research documents related to the price charged for a single
beverage. Instead, that figure evidently represented the
difference between the average amount of money that the research
subject customers, who were not informed about beverage prices,
would spend on a given restaurant visit and the average amount
that the research subject customers, who were informed about
beverage prices, would spend on a visit.
37
agreement did not indicate lack of contract and remanding for
determination of damages).
Those principles, however, cannot simply be extrapolated
from a specific contract dispute, in which a court hears
evidence of the parties’ intent, to a class action CFA claim
involving millions of beverage purchases. Significantly, the
able counsel for the parties and amici cite no decisions in
which a theory analogous to that proposed by the Dugan
plaintiffs has been accepted as a method of proving
ascertainable loss and causation in a CFA class action. To the
contrary, our case law has consistently rejected “price-
inflation” theories -- closely related to fraud on the market
theories -- as a substitute for proof of ascertainable loss or
causation in CFA claims.
We first considered a “fraud-on-the-market” theory in a
class action setting in Kaufman v. i-Stat Corp., 165 N.J. 94
(2000). In Kaufman, the plaintiff class allegedly “purchased
securities in the secondary markets at attractive prices that
had been artificially affected by an issuer’s misrepresentations
and omissions.” Id. at 97. The plaintiffs sought to prove
reliance, an element of their common-law fraud claim, by
demonstrating that the defendant’s misrepresentations and
38
omissions resulted in an inflated share price that all class
members had paid for the securities. Ibid.
Rejecting the Kaufman plaintiffs’ fraud-on-the-market
theory, we noted that plaintiffs in certain federal securities-
fraud class actions may collectively prove reliance based on
evidence that the defendant’s fraudulent conduct affected the
price of the securities at issue. Id. at 103-08 (citing Basic
Inc. v. Levinson, 485 U.S. 224, 108 S. Ct. 978, 99 L. Ed. 2d 194
(1988)). We analyzed the extensive federal and state case law
and academic research rejecting the fraud-on-the-market theory
outside of the securities-fraud context in which the theory
arose. Id. at 113-18. We concluded that
[a]ccepting fraud on the market as proof of
reliance in a New Jersey common-law fraud
action would undercut the public interest in
preventing forum-shopping, weaken our law of
indirect reliance, and run contrary to the
policy direction of the Legislature and
Congress. We decline to expand our law
regarding satisfaction of the reliance element
of a fraud action on the basis of a complex
economic theory that has not been
satisfactorily proven.
[Id. at 118.]
In International Union, supra, we applied that principle in
the setting of a CFA claim in which plaintiffs had the burden of
proving ascertainable loss and causation, but not reliance. 192
N.J. at 392. There, the class representative plaintiff asserted
39
that the putative class of third-party pharmaceutical benefit
payors had paid more for the prescription drug Vioxx because the
defendant’s allegedly fraudulent marketing had driven up the
price of the drug. Id. at 390. The plaintiffs proposed to
prove ascertainable loss and causation for the class as a whole
by demonstrating the extent of that price inflation. Id. at
392.
Noting that, in Kaufman, a fraud-on-the-market theory was
“rejected . . . as being inappropriate in any context other than
federal securities fraud litigation,” we declined to accept, as
a method of classwide proof, the plaintiffs’ theory “that the
price charged for Vioxx was higher than it should have been as a
result of defendant’s fraudulent marketing campaign.” Ibid. We
observed that
[p]laintiff argues that it should be permitted
to demonstrate classwide damages through use
of a single expert who would opine about the
effect on pricing of the marketing campaign in
which defendant engaged. To the extent that
plaintiff intends to rely on a single expert
to establish a price effect in place of a
demonstration of an ascertainable loss or in
place of proof of a causal nexus between
defendant’s acts and the claimed damages,
however, plaintiff’s proofs would fail. That
proof theory would indeed be the equivalent of
fraud on the market, a theory we have not
extended to CFA claims.
[Id. at 392.]
40
Other courts have similarly rejected class representatives’
contentions that ascertainable loss and causation could be
proven for a class in a CFA case on the theory that the
defendants’ unlawful practices enabled them to charge more for
the goods sold, affecting every member of the class. In N.J.
Citizen Action, supra, the panel affirmed the dismissal of a
putative class action in which plaintiffs asserted a “fraud on
the market or price inflation theory,” based on the allegation
that defendant’s allegedly fraudulent direct-to-consumer
marketing caused class members to pay “artificially inflated
prices.” 367 N.J. Super. at 12-14. The court noted that the
plaintiffs’ theory would effectively eliminate the ascertainable
loss and causation requirements that differentiate consumer CFA
claims from Attorney General enforcement actions under the
statute. Id. at 16.
In Dabush v. Mercedes-Benz USA, LLC, 378 N.J. Super. 105,
123 (App. Div.), certif. denied, 185 N.J. 265 (2005), another
Appellate Division panel rejected a class plaintiff’s theory
that all members of the class of lessors had paid an inflated
price for a vehicle model’s navigation system, and that this
inflated price constituted the entire class’s ascertainable
loss:
41
Though couched in different terms, plaintiff
advances the same “price-inflation” theory
that we rejected in [N.J. Citizen Action]. He
claims he paid for the lease of a vehicle that
he expected to contain a navigation system
that had all roads and highways and,
therefore, he must have paid a higher price
for the less effective product which did not
contain full coverage of every road. Adopting
this theory of ascertainable loss would
“fundamentally alter the concept of causation
in the CFA context,” and would effectively
afford private citizens rights that the
Legislature has expressly reserved for the
Attorney General.
[Id. at 123 (citing N.J. Citizen Action,
supra, 367 N.J. Super. at 16).]
In Fink v. Ricoh Corp., 365 N.J. Super. 520, 537, 545-47
(Law Div. 2003), the court declined to certify a nationwide
class to pursue CFA and other claims against the manufacturer of
a digital camera that was allegedly marketed with misleading
promotional materials. The court rejected the plaintiffs’
suggestion that they could prove ascertainable loss and
causation for all class members -- whether or not they had ever
viewed the promotional materials -- based on the promotional
materials’ alleged impact on the demand for and price of the
camera. Id. at 551-55. The court noted the lack of case law
“approv[ing] the ‘price inflation’ theory as an accepted means
of proving proximate cause or an ascertainable loss under the
[CFA] or any comparable consumer fraud statute,” and concluded
42
“that the price inflation theory is not relevant to the issue of
proximate cause and is too speculative to establish an
ascertainable loss.” Id. at 554.
Applying the CFA and its Delaware counterpart, the United
States Court of Appeals for the Third Circuit recently rejected
a putative class’s price-inflation theory of ascertainable loss
and causation. In Harnish v. Widener University School of Law,
833 F.3d 298, 309-13 (3d Cir. 2016), the proposed class
consisted of law students claiming that they paid higher tuition
because of the defendant law school’s allegedly misleading
graduate employment statistics. Id. at 302. The plaintiffs
sought to avoid the necessity of proving the impact of the
allegedly false statistics on individual class members’
educational choices by arguing that “the misrepresentations
empowered [the law school] to charge more across the entire
market.” Id. at 312.
Affirming the district court’s decision not to certify the
class, the Third Circuit concluded that the district court had
improperly labeled the plaintiff’s theory of classwide proof a
“fraud-on-the-market” theory and that plaintiffs’ contention was
more accurately described as a “price-inflation theory.” Id. at
312-13. Citing International Union and other New Jersey and
Delaware consumer-fraud case law, the Third Circuit found the
43
distinction “immaterial because the state courts have refused to
recognize either theory outside the federal securities fraud
context.” Id. at 313.
The Dugan plaintiffs similarly seek to predicate a
classwide finding of ascertainable loss and causation on a
“price-inflation” theory, premised on the contention that TGIF’s
unlawful pricing practices empowered it to overcharge its
customers. They postulate that by virtue of its policy of
leaving beverage prices off its menu, TGIF was able to inflate
beverage prices across its market without reducing customer
demand.
As we determined in International Union and the Third
Circuit decided in Harnish, the proposed price-inflation theory
does not establish ascertainable loss and causation in this CFA
class action case. Individual plaintiffs may be able to
establish ascertainable loss and causation by showing that they
would not have purchased the beverages or would have spent less
money on them had they been informed of their cost. The Dugan
plaintiffs cannot establish ascertainable loss and causation,
however, by demonstrating that TGIF’s beverage prices were
higher than they would have been had TGIF listed its prices on
its restaurant menus. A “fair” or “reasonable” price derived
from the per-visit expenditures of marketing research subjects
44
is no substitute for proof of the actual claimants’
ascertainable loss and causation. Plaintiffs’ price-inflation
theory does not globally establish those elements of the CFA for
the vast and varied class of restaurant customers for which the
Dugan plaintiffs seek certification.10
Other than to distinguish these appeals from this Court’s
decision in International Union because the plaintiffs relied on
a single expert in that case, post at (slip op. at 18), our
dissenting colleague does not address the authority clearly
establishing that plaintiffs’ price-inflation theory cannot give
rise to classwide proof of ascertainable loss and causation.
Int’l Union, supra, 192 N.J. at 391-92; N.J. Citizen Action,
supra, 367 N.J. Super. at 12-14; Dabush, supra, 378 N.J. Super.
at 123; see also Harnish, supra, 833 F.3d 298, 309-13. Instead,
our colleague mischaracterizes our holding as a global rejection
of statistical evidence in class actions, thus refuting a
10 The Dugan plaintiffs suggest that members of the class who
cannot establish ascertainable loss and causation can be
identified and excluded from the class in the post-verdict
claims process. However, plaintiffs’ burden is to demonstrate
that the class members’ CFA claims can be proven with common
issues predominating over individual questions of fact and law,
and they cannot rely on the post-verdict claims process as a
substitute for competent proof in a fair trial. See R. 4:32-
1(b)(3) (requiring finding that class action is superior method
“for the fair and efficient adjudication of the controversy”).
45
proposition that we simply do not assert. Post at ___ (slip op.
at 13-16).
In that regard, our dissenting colleague relies on three
decisions: the United States Supreme Court’s opinion in Tyson
Foods, Inc. v. Bouaphakeo, 577 U.S. ___, ___, 136 S. Ct. 1036,
1046, 194 L. Ed. 2d 124, 134-35 (2016), and two federal district
court decisions, In re Scotts EZ Seed Litigation, 304 F.R.D. 397
(S.D.N.Y. 2015) and Goldemberg v. Johnson & Johnson Consumer
Cos., 317 F.R.D. 374 (S.D.N.Y. 2016). Post at (slip op. at
13-16). None of those decisions bears the slightest
relationship to the issues presented by these appeals.
Tyson Foods was an appeal of a judgment in favor of a class
of meat processing plant employees who alleged that the
defendant employer violated the Fair Labor Standards Act, 29
U.S.C.A. § 201 to -209, by failing to pay the employees overtime
for the time that they spent donning and doffing protective
equipment. 577 U.S. at ___ 136, S. Ct. at 1045, 194 L. Ed. 2d
at 133. Rejecting the defendant’s challenge to the jury’s
verdict, the Supreme Court held that the trial court had
properly permitted the plaintiffs to rely on employee testimony,
video recordings and an expert’s study regarding the average
time that “various donning and doffing activities took” in the
defendant’s plant. Id. at ___, 136 S. Ct. at 1043, 194 L. Ed.
46
2d at 132. The plaintiffs’ use of fact and expert testimony in
Tyson Foods to demonstrate the time consumed by the donning and
doffing activities at issue is simply unrelated to the price-
inflation theory that the Dugan plaintiffs seek to assert as a
classwide substitute for that proof of ascertainable loss and
causation that the CFA requires.
The federal district court’s decision in Scotts EZ Seed
arose in a setting very different from that of Dugan: consumer
claims premised on New York and California false advertising
law. There, the plaintiffs asserted two contentions against the
defendant manufacturer of grass seed advertised as capable of
growing grass “50% Thicker with Half the Water”: that “nobody
was able to grow grass using EZ Seed,” and that the plaintiffs
had “paid an inappropriate premium for EZ Seed based on Scotts’
allegedly false 50% thicker claim.” 304 F.R.D. at 408-09. The
district court held that the alleged falsity of the contested
advertising claim was subject to generalized proof, and that
under the governing New York statute harm could be proven
classwide based on plaintiffs’ alleged purchase of a “worthless
product” or payment of a premium “based on the false 50% thicker
claim.” Id. at 409. The district court construed the
California false advertising statute not to require
individualized proof of causation “because causation as to each
47
class member is commonly proved more likely than not by [the]
materiality” of the false claim. Id. at 410 (quoting Guido v.
L’Oreal, USA, Inc., 284 F.R.D. 468, 482 (C.D. Cal. 2012)).
Thus, the district court’s determination that common issues of
fact and law predominated in Scotts EZ Seed derived from the
contention that every member of the class was damaged by an
economic decision that he or she would not have made but for the
false advertising: the purchase of a product alleged to be, at
a minimum, incapable of performing as advertised, or entirely
worthless. Ibid. That uniform consumer choice -- allegedly
prompted by a single false advertising claim directly material
to the value of the product -- stands in stark contrast to the
class members’ disparate decisions to purchase beverages at
restaurants in the Dugan case.
Finally, our dissenting colleague relies on a decision
involving alleged mislabeling, Goldemberg, supra, 317 F.R.D. at
385-94. There, the district court applied New York, California
and Florida law to the plaintiffs’ claims that the defendant’s
Aveeno products were falsely labeled “Active Naturals®” because
they “contain unnatural, synthetic ingredients.” Id. at 382.
The court premised its class action predominance determination
on New York, California, and Florida case law addressing a
method of proving damages for all claimants in a false-
48
advertising class: a computation of the “price premium” of
mislabeling, measured as “the difference between the cost of the
second best product in the product class (without a deceiving
label) and the cost of the product at issue (with the label).”
Id. at 394. Even under the law of the states at issue in
Goldemberg, the “price premium” theory of classwide proof
addressed by the district court would have no place in a CFA
claim premised on the claimants’ purchases of millions of
beverages, none of which is alleged to have been mislabeled or
falsely advertised. The Goldemberg case is simply irrelevant
here.
In short, the decisions cited by our dissenting colleague
do not in any respect undermine the authority on which we rely
to reject the Dugan plaintiffs’ price-inflation claims.
Accordingly, we concur with the Appellate Division panel
that the Dugan plaintiffs failed to establish, with respect to
their CFA claim, that “the questions of law or fact common to
the members of the class predominate over any questions
affecting only individual members.” R. 4:32-1(b)(3). We do not
reach the question whether the Dugan plaintiffs satisfied the
remaining requirements of Rule 4:32-1. We hold that the panel
properly reversed the trial court’s certification of a class
with respect to that claim.
49
2.
We apply the standard of Rule 4:32-1 to the CFA claims
asserted in Bozzi v. OSI Restaurant Partners, LLC. For purposes
of that inquiry, we assume the truth of Bozzi’s allegations
regarding OSI’s alleged practices and his testimony regarding
his beverage purchases at an OSI restaurant. See Lee, supra,
203 N.J. at 505; Iliadis, supra, 191 N.J. at 96.
Before this Court, Bozzi did not assert that he could prove
ascertainable loss and causation on behalf of his proposed class
through the use of a price-inflation theory such as the theory
asserted in Dugan. Instead, he focused on a category of OSI
restaurant customers identified as a subclass in his original
complaint: customers who, in the course of a single visit to an
OSI restaurant, were charged different prices for beverages of
the same brand, type, and volume. Bozzi represents that, in
discovery, OSI produced receipts documenting the prices paid by
each class member who makes the price-shifting claim and that he
is therefore in a position to prove that OSI charged each
claimant two different prices for the same beverage in a single
visit. Bozzi also states that he can demonstrate that class
members were unaware that after purchasing a beverage at one
price, they would be charged more for a second or subsequent
beverage.
50
For purposes of class certification analysis, we do not
determine whether Bozzi’s price-shifting allegations, if proven,
would give rise to a CFA violation. That claim has not yet been
challenged in a motion to dismiss or summary judgment motion,
and the merits of that claim are not before the Court in these
appeals. Iliadis, supra, 191 N.J. at 107; Olive v. Graceland
Sales Corp., 61 N.J. 182, 189 (1972). We consider only whether
Bozzi’s proposed class for purposes of his CFA claim, as limited
to customers who ordered more than one beverage on a visit to an
OSI restaurant and were charged a higher price for the second or
subsequent beverage of the same brand, type, and volume,11 meets
the standard of Rule 4:32-1.
With respect to Bozzi’s price-shifting CFA claim, the
proposed class satisfies the four requirements of Rule 4:32-
1(a). The class clearly includes numerous claimants.12 In
Bozzi’s CFA claim, there are common questions of fact relating
to OSI’s pricing practices and at least one common question of
11 The “volume” of a beverage may be measured in ounces, in
pints or half-pints, or in other units.
12 During oral argument, Bozzi’s counsel stated that the
proposed class consists of two hundred sixty-three thousand OSI
restaurant customers. It is unclear whether that estimate
applies to the entire class certified by the trial court or to
the more limited class of claimants who assert the price-
shifting CFA claim.
51
law -- whether increasing the price of a beverage during a
customer’s restaurant visit without informing the customer
constitutes an unlawful practice under N.J.S.A. 56:8-2. When
the class’s allegations are limited to the price-shifting CFA
claim, Bozzi’s claim is typical of the claims asserted by the
class; supported by a receipt, Bozzi contends that during a 2010
visit to the Carrabba’s restaurant in Maple Shade, he was
charged two different prices for Peroni beers, the second price
higher than the first. Finally, the record indicates that “the
representative parties will fairly and adequately protect the
interests of the class.” R. 4:32-1(a).
As limited, Bozzi’s CFA claim also satisfies Rule 4:32-
1(b)(3)’s predominance requirement.13 With the assistance of
claimant-specific records, both parties will be in a position to
determine the dates and locations of the visits at issue and may
be able to identify the reasons for the inconsistent prices.
Even if discovery proves that the price disparity alleged by the
class derived not from a single corporate policy but from
restaurant-specific happy hour or other pricing practices, the
13 Bozzi’s contention regarding predominance is limited to
claimants who can demonstrate that they paid different prices
for the same brand, type, and volume of beverage in the same
visit to an OSI restaurant. He has not identified any method of
proving ascertainable loss and causation for other members of
the class certified by the trial court.
52
trial court may be in a position to evaluate the disputed
practices on a restaurant-by-restaurant basis. If plaintiffs
prove an unlawful practice under the CFA, the receipts, in
combination with other evidence, may support a finding of
ascertainable loss and causation. The trial court would clearly
be confronted with the task of adjudicating individual
questions, but the existence of individual questions does not
preclude a finding of predominance. See Lee, supra, 203 N.J. at
526-28 (finding predominance notwithstanding existence of
individual questions); Cadillac, supra, 93 N.J. at 430-35
(same).
Such a class would also satisfy the requirement that a
class action provide a superior method “for the fair and
efficient adjudication of the controversy.” R. 4:32-1(b)(3);
see also Iliadis, supra, 191 N.J. at 114-15 (noting superiority
inquiry involves informed consideration of alternative available
methods of adjudication of each issue, comparison of fairness of
class action and alternative methods, and comparison of
efficiency of each method). Bozzi’s price-shifting CFA claim
involves modest individual claims that are unlikely to be
brought in an alternative forum. See Iliadis, supra, 191 N.J.
at 104 (“[T]he class action’s equalization function opens the
53
courthouse doors for those who cannot enter alone.”). Those
claims would not be efficiently resolved on an individual basis.
Importantly, the certification of the class as limited will
not deprive OSI of the opportunity to evaluate and respond to
plaintiffs’ allegations. Based on Bozzi’s representation, it
appears that the parties have documents indicating where and
when each class member was charged disparate prices for the same
brand, type, and volume of beverage on the same restaurant
visit. OSI will be in a position to contest plaintiffs’
allegations of unlawful practices under the CFA with respect to
the prices imposed by individual restaurants at various times.
It may argue in a summary judgment motion, and/or at trial, that
a given restaurant’s beverage pricing or the restaurants’
practices as a whole did not violate the CFA. A limited class
may be certified without compromising the fairness of the
proceeding. Bozzi’s proposed CFA class action meets Rule 4:32-
1’s requirement of superiority.
In sum, Bozzi has met the requirements for class
certification with respect to his CFA claim, if the class is
limited to claimants who were charged different prices for
beverages of the same brand, type, and volume in the course of
the same restaurant visit. We therefore reverse the trial
court’s class certification order and remand for the
54
certification of a redefined class. See Muise, supra, 371 N.J.
Super. at 19, 64 (affirming trial court’s decertification of
class and remanding for certification of “more limited . . .
class of customers [of electrical utility] whose outages
directly resulted from the alleged negligence in delaying the
replacement of transformers at the [utility’s] Red Bank
substation”).
The trial court should define the class as follows:
All persons who ordered more than one beverage
of the same brand, type, and volume during a
single visit to an OSI Restaurant Partners,
LLC, or Bloomin’ Brands, Inc., restaurant in
New Jersey from January 23, 2004 to the
present date, and were charged a higher price
for a second or subsequent beverage of the
same brand, type, and volume ordered during
the same visit, without notice of the change
in prices.
On remand, the trial court should certify the class solely
for the purpose of pursuing CFA claims based upon the defendant
restaurants’ alleged practice of charging a customer different
prices for beverages of the same brand, type, and volume during
the same restaurant visit.14
14 The trial court should also vacate the injunction, requiring
OSI restaurants to include prices for all beverages on its
menus, that was entered following its certification of the class
based on the claims of that entire class. OSI challenged that
injunction in this appeal, and Bozzi offered no argument in
support of the trial court’s injunctive relief. Following
certification of the more limited class set forth above, the
55
V.
A.
The second statutory claim asserted by the putative classes
in both appeals is based on the TCCWNA. That statute was
enacted in 1981 “to prevent deceptive practices in consumer
contracts.” Kent Motor Cars, Inc. v. Reynolds & Reynolds Co.,
207 N.J. 428, 457 (2011). The Legislature observed that
[f]ar too many consumer contracts, warranties,
notices and signs contain provisions which
clearly violate the rights of consumers. Even
though these provisions are legally invalid or
unenforceable, their very inclusion in a
contract, warranty, notice or sign deceives a
consumer into thinking that they are
enforceable, and for this reason the consumer
often fails to enforce his rights.
[Sponsor’s Statement to A. 1660 2 (1980).]
As TCCWNA’s legislative history reflects, the Legislature
“did not recognize any new consumer rights but merely imposed an
obligation on sellers to acknowledge clearly established
consumer rights and provided remedies for posting or inserting
provisions contrary to law.” Shelton v. Restaurant.com, Inc.,
214 N.J. 419, 432 (2013) (citing N.J.S.A. 56:12-15 to -16); see
also Alloway v. Gen. Marine Indus., L.P., 149 N.J. 620, 641
(1997) (setting forth purpose and provisions of TCCWNA).
trial court may consider any application for injunctive relief
made on behalf of that class.
56
The TCCWNA provides in part:
No seller, lessor, creditor, lender or bailee
shall in the course of his business offer to
any consumer or prospective consumer or enter
into any written consumer contract or give or
display any written consumer warranty, notice
or sign after the effective date of this act
which includes any provision that violates any
clearly established legal right of a consumer
or responsibility of a seller, lessor,
creditor, lender or bailee as established by
State or Federal law at the time the offer is
made or the consumer contract is signed or the
warranty, notice or sign is given or
displayed.
[N.J.S.A. 56:12-15.]
The TCCWNA imposes a range of remedies against a defendant
who violates the statute:
Any person who violates the provisions of this
act shall be liable to the aggrieved consumer
for a civil penalty of not less than $100.00
or for actual damages, or both at the election
of the consumer, together with reasonable
attorney’s fees and court costs. This may be
recoverable by the consumer in a civil action
in a court of competent jurisdiction or as
part of a counterclaim by the consumer against
the seller, lessor, creditor, lender or bailee
or assignee of any of the aforesaid, who
aggrieved him. A consumer also shall have the
right to petition the court to terminate a
contract which violates the provisions of
[N.J.S.A. 56:12-15] and the court in its
discretion may void the contract.
[N.J.S.A. 56:12-17.]
Two requirements of the TCCWNA are relevant to the class
certification issues raised on these appeals. First, in order
57
to obtain a remedy under the TCCWNA, a plaintiff must be an
“aggrieved consumer” –- a consumer who satisfies the elements of
the TCCWNA. N.J.S.A. 56:12-17. The TCCWNA defines “consumer”
as “any individual who buys, leases, borrows, or bails any
money, property or service which is primarily for personal,
family or household purposes.” N.J.S.A. 56:12-15.
The TCCWNA does not specifically define what makes a
“consumer” an “aggrieved consumer” for purposes of N.J.S.A.
56:12-17. In several settings, however, courts have examined
the interaction between the parties and the nature of the
contract or other writing in order to determine whether a
plaintiff is entitled to relief under the TCCWNA. See, e.g.,
Manahawkin Convalescent v. O’Neill, 217 N.J. 99, 125-26 (2014)
(analyzing TCCWNA claim in case involving nursing home and
third-party payment guarantors); Shelton, supra, 214 N.J. at
436-42 (concluding that TCCWNA applies to transactions between
plaintiffs and internet seller of restaurant coupons and
certificates based on detailed analysis of transactions); United
Consumer Fin. Servs. Co. v. Carbo, 410 N.J. Super. 280, 306
(App. Div. 2009) (applying TCCWNA when retail installment sales
contract contravened provisions of Retail Installment Sales
Act); Bosland v. Warnock Dodge, Inc., 396 N.J. Super. 267, 278-
58
79 (App. Div. 2007) (applying TCCWNA to dealership’s
registration overcharges), aff’d, 197 N.J. 543, 562 (2009).
Second, in order to be found liable under the TCCWNA, a
defendant must have violated a “clearly established legal right”
or “responsibility.” N.J.S.A. 56:12-15. To make that
determination, courts assess whether the CFA or another consumer
protection statute or regulation clearly prohibited the
contractual provision or other practice that is the basis for
the TCCWNA claim. See, e.g., Mladenov v. Wegmans Food Mkts.
Inc., 124 F. Supp. 3d 360, 380 (D.N.J. 2015) (holding that
plaintiffs who failed to state viable claims under CFA or
federal food labeling regulation established no violation of
“clearly established legal right” under TCCWNA); United Consumer
Fin. Servs., supra, 410 N.J. Super. at 306-07 (applying TCCWNA
based on violation of “clearly established” right under Retail
Installment Sales Act, N.J.S.A. 17:16C-50); Bosland, supra, 396
N.J. Super. at 278-80 (holding that plaintiff presented prima
facie proof that defendant dealership that overcharged car
buyers for vehicle registration fee in contravention of consumer
regulation violated “clearly established” right).
The “clearly established” standard accordingly requires a
case-specific evaluation whether a “written consumer contract[,]
. . . warranty, notice or sign” violates a legal right or
59
responsibility that was “clearly established” by “State or
Federal law at the time the offer is made or the consumer
contract is signed or the warranty, notice or sign is given or
displayed.” N.J.S.A. 56:12-15. That inquiry may give rise to
different results, depending on the timing of the offer,
contract, or warranty. Ibid.; see, e.g., Mattson v. Aetna Life
Ins. Co., 124 F. Supp. 3d 381, 393 (D.N.J. 2015) (ruling that
plaintiff’s asserted statutory right not to be subjected to
subrogation claim was not “clearly established” when allegedly
offending notices were sent).
B.
Against that backdrop, we consider whether the trial courts
properly applied Rule 4:32-1’s predominance requirement when
they certified the classes proposed by the Dugan plaintiffs and
by Bozzi for adjudication of their respective TCCWNA claims.15
We do not determine whether a defendant restaurant’s
15 We do not reach the broader issue, raised by amici curiae New
Jersey Civil Justice Institute and New Jersey Business and
Industry Association but not by any party, whether class
certification should ever be granted as a method of adjudicating
a TCCWNA claim. See State v. Lazo, 209 N.J. 9, 25 (2012) (“As a
general rule, an amicus curiae must accept the case before the
court as presented by the parties and cannot raise issues not
raised by the parties.” (quoting Bethlehem Twp. Bd. of Educ. v.
Bethlehem Twp. Educ. Ass’n, 91 N.J. 38, 48-49 (1982))); accord
State v. O’Driscoll, 215 N.J. 461, 479 (2013); State v. Gandhi,
201 N.J. 161, 191 (2010).
60
presentation of a menu that omits beverage prices gives rise to
a TCCWNA claim. In the predominance inquiry, however, we look
beyond the pleadings and examine the factual and legal bases of
plaintiffs’ TCCWNA claim. See Lee, supra, 203 N.J. at 526-28
(applying predominance standard to CFA claim); Iliadis, supra,
191 N.J. at 107 (establishing requirements of predominance in
class certification analysis); see also In re Hydrogen Peroxide
Antitrust Litig., 552 F.3d 305, 310-12 (3d Cir. 2008) (analyzing
predominance in context of antitrust case).
In these appeals, plaintiffs contend that by failing to
list prices for beverages on the menus, the defendant
restaurants violated plaintiffs’ “clearly established” legal
rights and defendants failed to meet their “clearly established”
legal responsibilities under N.J.S.A. 56:8-2.5; they contend
that the statute required defendants to “plainly mark” the
beverages that they sold “by a stamp, tag, label or sign” in the
location where the beverages were offered for sale. Plaintiffs
assert that when the defendant restaurants’ employees presented
menus to members of the putative TCCWNA class, they “offer[ed]”
contracts that violated N.J.S.A. 56:8-2.5 to those consumers.
Plaintiffs seek an award of damages and the imposition of $100
per violation civil penalties on defendants for each alleged
TCCWNA violation.
61
We conclude that plaintiffs have not met the predominance
requirement of Rule 4:32-1 with respect to their TCCWNA claims
in either appeal. First, the requirement that a plaintiff be an
“aggrieved consumer” in order to pursue a TCCWNA claim gives
rise to a range of individual questions regarding the
interaction between the customer and the server in this case.
By its very terms, the TCCWNA addresses “contract[s],”
“warrant[ies],” “notice[s],” and “sign[s]” and does not apply
when a defendant fails to provide the consumer with a required
writing. N.J.S.A. 56:12-15; see also Jefferson Loan Co. v.
Session, 397 N.J. Super. 520, 540-41 (App. Div. 2008). Here,
the writing on which plaintiffs rely is the restaurant menu.
Plaintiffs concede that, at a minimum, a claimant must prove
that he or she was presented with a menu during his or her visit
to the defendants’ restaurant in order to establish the
defendant’s liability under the TCCWNA. That critical inquiry
cannot be resolved by customer receipts or other documents.
Even if we accept plaintiff’s theory of liability under the
TCCWNA, the testimony of the individual claimant or another
witness would be necessary to prove that the plaintiff satisfies
the statute’s requirements and is thus an “aggrieved consumer.”
Contrary to plaintiffs’ suggestion, they cannot meet their
burden under TCCWNA by presenting evidence that TGIF servers
62
were instructed to hand menus to customers.16 The training
documents on which plaintiffs rely do not prove that any
individual consumer received a menu, much less demonstrate the
critical interaction between any single member of the putative
class and the allegedly offending menu. Moreover, we do not
agree with the Dugan plaintiffs that the post-verdict claims
process provides an appropriate forum for determining an element
that is essential to liability under the TCCWNA. Under the
TCCWNA, plaintiffs have the burden to prove the statute’s
elements at trial. N.J.S.A. 56:12-15, -17.
Accordingly, a claimant who does not, at a minimum, prove
that he or she received a menu cannot satisfy the elements of
TCCWNA and is not an “aggrieved consumer.” In that critical
16 Our dissenting colleague contends that plaintiffs are
entitled to an inference “that TGIF’s servers complied with
corporate policy and that patrons received menus.” Post at ___
(slip op. at 21). In the predominance inquiry, we do not simply
accept a class plaintiff’s contention that an element of their
claim can be proven for the class as a whole with a single piece
of evidence; instead, we subject that claim and other aspects of
the case to a “rigorous analysis.” Iliadis, supra, 191 N.J. at
106-07 (citations omitted). Here, not even plaintiffs contend
that an indication in training documents that servers were
instructed to hand customers menus is proof of a universal
practice; they concede that not all customers received the menu
that is the foundation of their TCCWNA claims. TGIF’s training
documents do not obviate the need for plaintiffs to prove -- for
each claimant -- the contention at the core of their TCCWNA
claim: the customers’ receipt of a writing that violated that
statute. N.J.S.A. 56:12-15.
63
regard, individual questions would predominate over common
issues at trial.
Second, the question whether the defendant restaurants
violated a “clearly established legal right” or a “clearly
established . . . legal responsibility” raises the specter of
disparate results for different members of the class. The sole
published decision construing the source of plaintiffs’ asserted
“right,” N.J.S.A. 56:8-2.5, addresses a used car dealership’s
sale of vehicles without posting their prices on or near them in
the dealership’s lot. In re Johnny Popper, Inc., supra, 413
N.J. Super. at 583. No published opinion holds that N.J.S.A.
56:8-2.5 prohibits restaurants and other food service businesses
from offering food or beverages to customers without listing the
prices for those items on their menu. Moreover, as plaintiffs
acknowledge, many food-service businesses in New Jersey --
ranging in size from corporate chain restaurants to family-owned
delicatessens and diners -- routinely offer customers food and
beverage specials and other items without designating in writing
the prices for those items. Although N.J.S.A. 56:8-2.5 has been
in effect for several decades, there is no evidence that the
Attorney General, charged to enforce the CFA, has ever taken the
position that N.J.S.A. 56:8-2.5 requires the prices of all food
and beverages served in restaurants to be listed on menus. In
64
short, nothing in the record suggests that N.J.S.A. 56:8-2.5 was
previously invoked against the restaurant practices at issue in
this case.
The Dugan plaintiffs maintain that even if their legal
rights and TGIF’s responsibilities under N.J.S.A. 56:8-2.5 were
not “clearly established” before they brought their claims,
those rights and responsibilities were confirmed when an
Appellate Division panel affirmed the trial court’s denial of
TGIF’s motion to dismiss in an unpublished decision. They
contend that, in the wake of that decision, N.J.S.A. 56:8-2.5’s
application to restaurant menus was “clearly established” for
purposes of TCCWNA.
In its 2011 decision, however, the Appellate Division did
not hold that TGIF violated the Dugan plaintiffs’ “clearly
established” right within the meaning of TCCWNA. The panel
determined only that plaintiff Dugan adequately pled violations
of the CFA and TCCWNA under the lenient standard of Rule 4:6-
2(e); it properly noted that “[w]hether [Dugan] can prove any,
or all, of that is not before us.” Even if that decision could
fairly be construed to clearly establish plaintiffs’ rights
under N.J.S.A. 56:8-2.5, it would not apply to all members of
the Dugan plaintiffs’ class, which at plaintiffs’ request was
defined to include claimants who visited restaurants from 2004
65
to the present. Plaintiffs have not established predominance
with respect to that element of their TCCWNA claim.
Moreover, even if a menu lacking beverage prices were to
constitute a “contract,” “warranty,” “notice” or “sign” within
the meaning of TCCWNA, it is far from clear that the statute was
intended to apply as plaintiffs contend that it should. As the
Dugan plaintiffs concede, if plaintiffs were to prove that each
of the thirteen to fourteen million restaurant visits by a
member of the plaintiff class gave rise to a TCCWNA violation
warranting a civil penalty of $100, TGIF would be liable for
penalties amounting to more than a billion dollars. Plaintiffs
assert that the court could reduce that penalty by remittitur.
See R. 4:49-1; see generally Cuevas v. Wentworth Grp., 226 N.J.
480 (2016) (clarifying appropriate use of remittitur). Nothing
in the legislative history of the TCCWNA, which focuses on
sellers’ inclusion of legally invalid or unenforceable
provisions in consumer contracts, suggests that when the
Legislature enacted the statute, it intended to impose billion-
dollar penalties on restaurants that serve unpriced food and
beverages to customers. See Sponsor’s Statement to A. 1660,
supra (noting legislative objective to deter sellers from
including unlawful provisions in contracts, warranties, notices,
and signs).
66
Accordingly, we hold that in both Dugan v. TGI Fridays Inc.
and Bozzi v. OSI Restaurant Partners, LLC, plaintiffs have not
met Rule 4:32-1’s class certification standard for purposes of
the TCCWNA claims, and that the trial courts improperly granted
class certification as to those claims.
VI.
In Dugan v. TGI Fridays Inc., we affirm and modify the
Appellate Division’s judgment concerning class certification.
We remand the matter to the trial court for the determination of
the individual CFA and TCCWNA claims asserted by plaintiffs
Dugan and Fox.
In Bozzi v. OSI Restaurant Partners, LLC, we affirm in part
and reverse in part the trial court’s class certification
determination. We remand the matter to the trial court for the
certification of a class with a revised class definition, as set
forth in this opinion, solely for purposes of plaintiffs’ CFA
claim based on OSI’s alleged price-shifting practice, and for
the determination of the individual TCCWNA claim asserted by
plaintiff Bozzi.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, FERNANDEZ-
VINA, and TIMPONE join in JUSTICE PATTERSON’s opinion. JUSTICE
ALBIN filed a separate, dissenting opinion. JUSTICE SOLOMON did
not participate.
67
SUPREME COURT OF NEW JERSEY
A-92 September Term 2015
A-93 September Term 2015
077567 and 077556
DEBRA DUGAN, ALAN FOX, and
ROBERT CAMERON on behalf of
themselves and all others
similarly situated,
Plaintiffs-Appellants,
v.
TGI FRIDAYS, INC., CARLSON
RESTAURANTS WORLDWIDE, INC.,
on behalf of themselves and
all others similarly situated,
Defendants-Respondents.
ERNEST BOZZI, on behalf of himself
and all others similarly situated,
Plaintiff-Respondent,
v.
OSI RESTAURANT PARTNERS, LLC,
T/A CARRABBA’S ITALIAN GRILL, et al.,
Defendants-Appellants.
JUSTICE ALBIN, dissenting.
Today’s decision denying plaintiffs the right to proceed
with a class-action lawsuit against TGI Fridays, Inc. and
Carlson Restaurants, Inc. (collectively, TGIF) is at odds with
decades of this Court’s jurisprudence and steepens the path to
justice for consumers with small claims. The decision will make
it more difficult for a class of many thousands of defrauded
1
consumers to act collectively in pursuit of a common remedy
against a corporate wrongdoer.
In knowing violation of the New Jersey Consumer Fraud Act
(CFA), N.J.S.A. 56:8-1 to -206, TGIF does not list beverage
prices on its menus. TGIF pursues this policy because it knows
-- through its own study -- that a consumer will pay, on
average, $1.72 more per meal if beverage prices are not placed
on menus. Plaintiffs allege that TGIF, by not listing beverage
prices in violation of N.J.S.A. 56:8-2.5, reaped an illicit
benefit while TGIF patrons suffered an ascertainable loss. To
be sure, TGIF is free to charge whatever it wishes. But if it
does so, it must comply -- like all restaurants -- with the law.
A single consumer does not have the economic wherewithal to
litigate against a corporate giant over a $1.72 claim. However,
thousands of similarly defrauded consumers banding together in a
class action gain “a measure of equality against” a defiant
corporate adversary. Lee v. Carter-Reed Co., 203 N.J. 496, 517-
18 (2010).
Unlike the majority, I believe that plaintiffs have
presented a viable legal theory under the CFA and our class-
action jurisprudence. Looking at the evidence in the light most
favorable to plaintiffs, as we must at this stage, TGIF engaged
in an unconscionable commercial practice that caused an
ascertainable loss to its patrons. TGIF has calculated that
2
loss to be $1.72 per meal when beverage prices are not listed on
menus. TGIF has concluded that uninformed consumers make
purchases exceeding the “fair” price they otherwise would have
paid. Thus, each class member’s ascertainable loss is the
difference between what the patron in fact paid and what the
patron would have paid had TGIF listed beverage prices at the
point of sale, as required by N.J.S.A. 56:8-2.5.
In the setting before us lies a stark reality. There is no
reasonable substitute for a class action to vindicate the rights
of TGIF’s victimized patrons. There will not be individual
complaints filed in small claims court to recover a loss of
$1.72. The majority’s decision to overthrow the trial court’s
certification of the class ensures that there will be no
judicial action holding TGIF accountable for its wrongdoing.
The majority also has given TGIF a perverse incentive to
continue violating the CFA and an undeserved advantage over
competitor restaurants that comply with our consumer-fraud laws.
I therefore respectfully dissent.
I.
A.
Plaintiffs filed a class-action lawsuit against TGIF,
alleging that the chain restaurant engaged in a systematic
scheme to violate the Consumer Fraud Act in pursuit of higher
3
profits.1 Plaintiffs claim that TGIF deliberately does not list
beverage prices on its menus “to induce[] consumers to pay
higher than reasonable prices for those beverages.” TGIF does
not list beverage prices on its menus, notwithstanding N.J.S.A.
56:8-2.5, which requires that the “selling price” of
merchandise, including food and beverages, be “plainly marked
. . . at the point where the merchandise is offered for sale.”2
In a per curiam opinion issued on October 25, 2011, the
Appellate Division declared, as a matter of law, that TGIF’s
failure to list beverage prices on its menus violates the CFA.
In rejecting TGIF’s argument, the Appellate Division stated:
“TGIF engages in legal gymnastics in a futile attempt to
convince us that beverages are not embraced within the
definition of merchandise in N.J.S.A. 56:8-2.5.” At oral
argument before this Court, TGIF conceded that it was bound by
the Appellate Division’s ruling. Because that ruling is the
controlling law and is not contested before this Court, TGIF is
in violation of the CFA. The only remaining issue is whether
1 At this stage, the allegations in the complaint and evidence
of record must be viewed in the light most favorable to
plaintiffs, who are seeking class certification. Lee, supra,
203 N.J. at 505.
2 The CFA defines “merchandise” as “any objects, wares, goods,
commodities, services or anything offered, directly or
indirectly to the public for sale.” N.J.S.A. 56:8-1(c).
4
the CFA violation -- the failure to list beverage prices --
caused an ascertainable loss to the class of TGIF patrons.
TGIF does not pretend to be in compliance with the law;
rather, its defense is that a class action is not a proper
vehicle to be used by the patrons victimized by TGIF’s
practices. However, a single consumer, even if defrauded,
cannot engage in costly litigation over a sum involving, at
most, several dollars. Only through a class action that
aggregates thousands of small claims of similarly defrauded
patrons can a viable lawsuit proceed.
B.
In support of its application for class certification,
plaintiffs rely on marketing studies commissioned by TGIF that
analyzed consumer responses to menu pricing.3 In one study, TGIF
tested pricing decisions made by patrons in thirty restaurants -
- fifteen that listed beverage prices on menus and fifteen that
did not. TGIF’s statistical study revealed that when alcohol
prices are placed on menus, TGIF loses on average $1.72 per
customer on a meal. In the study, the informed patrons “traded
down” to the optimal price they could afford.
3 TGIF consulted with Simon-Kucher & Partners, a firm that
specializes in pricing strategies and refers to itself as “the
world’s leading pricing consultancy.” Pricing, Simon-Kucher &
Partners, http://www.simon-kucher.com/en/pricing (last visited
Sept. 14, 2017).
5
In other studies, TGIF determined the “fair” price and
“think-twice” price for the purchase of meals with and without
alcoholic beverages. The “think-twice” price, apparently, is
the price at which bells go off in patrons’ heads and purchases
decline because consumers do not want to exceed their “check
thresholds.” From TGIF’s perspective, the beauty of not placing
beverage prices on menus in violation of the CFA is that
uninformed patrons do not know when their purchases have
exceeded the “fair” price and reached the “think-twice” price.
TGIF learned through the study what is commonly known --
that an informed consumer will make rational pricing decisions.
Because restaurants “with alcohol pricing on the menu
experienced a [$]1.72 [per-person average] decline as guests
traded down,” TGIF made the corporate decision that “alcohol
pricing will not be placed on the menu.”4 In other words, TGIF
determined that it did not pay to conform to the law and that it
was more profitable to capitalize on the ignorance of its
patrons. From TGIF’s own statistical analysis comes the
calculation of ascertainable loss to its patrons and the gain to
itself.
In passing N.J.S.A. 56:8-2.5 and requiring that the price
4 The study also included an analysis of non-alcoholic beverage
pricing, indicating that customers will trade down when the cost
of a meal exceeds a certain threshold.
6
of an item be “plainly marked,” the Legislature intended to
empower consumers with knowledge. TGIF has pursued, and
continues to pursue, a cynical corporate policy of profiteering
from violating that statute.
II.
The Consumer Fraud Act makes it unlawful for a business to
engage in an “unconscionable commercial practice,” N.J.S.A.
56:8-2, such as selling merchandise, including food and
beverages, without listing the price when it is offered for
sale, N.J.S.A. 56:8-2.5.5 The Act “provides a private cause of
action to consumers who are victimized by fraudulent practices
in the marketplace.” Gonzalez v. Wilshire Credit Corp., 207
N.J. 557, 576 (2011). The statutory scheme empowers citizens
“to act as ‘private attorneys general’ in bringing civil actions
to enforce the Act.” Steinberg v. Sahara Sam’s Oasis, LLC, 226
N.J. 344, 361 (2016). This private right of action is
particularly important when the Attorney General -- perhaps due
to inadequate resources -- does not exercise his enforcement
powers, see N.J.S.A. 56:8-3 to -8, -11, -15 to -18, -20, as
here, to compel chain restaurants to comply with price-listing
5 N.J.S.A. 56:8-2.5 makes it unlawful “for any person to sell
. . . or offer for sale any merchandise at retail unless the
total selling price of such merchandise is plainly marked by a
stamp, tag, label or sign either affixed to the merchandise or
located at the point where the merchandise is offered for sale.”
7
requirements mandated by statute.
A plaintiff must satisfy three elements to prove that a
business is liable for consumer fraud. The plaintiff must show
that the business engaged in “an unlawful practice,” that she
suffered an “ascertainable loss,” and that the “ascertainable
loss” is causally related to the unlawful practice. Gonzalez,
supra, 207 N.J. at 576 (quoting Lee, supra, 203 N.J. at 521);
see also N.J.S.A. 56:8-19. If the plaintiff succeeds in her
proofs, she is entitled to legal and/or equitable relief, treble
damages, and reasonable attorneys’ fees. N.J.S.A. 56:8-19.
TGIF’s own commissioned study establishes that, on average,
TGIF patrons who purchased beverages paid $1.72 more per meal
than they would have if prices had been listed on TGIF menus.
That $1.72 constitutes, on average, an ascertainable loss per
person, per meal, causally related to TGIF’s unlawful practice
of not disclosing prices. See Lee, supra, 203 N.J. at 522; see
also N.J.S.A. 56:8-19.6
6 In plaintiffs’ second amended complaint, they allege that
TGIF’s
practice of offering certain beverages without
prices . . . is designed to . . . enable [TGIF]
to charge slightly excessive prices on some
drinks without losing sales; facilitate
[TGIF’s] practice of charging grossly
excessive prices on other drinks; and
facilitate price discrimination and/or
charging different prices for the same product
based on undisclosed and arbitrary criteri[a].
8
According to the study, TGIF will lose money if it complies
with the CFA by listing beverage prices on its menus. If TGIF
conforms to the law, then it has two options. It can maintain
its current pricing, and informed consumers will trade down
rather than purchase drinks that exceed what TGIF has pegged as
the “fair” price patrons will pay per meal. Or it can set
prices for beverages and meals at rates at which patrons will
not trade down. Under either scenario, the consumer benefits if
TGIF follows the mandate of the CFA.
Thus, TGIF’s patrons who purchase drinks are victimized by
the unlawful omission of beverage prices on menus. TGIF sets
the overall pricing of its meals and beverages based on its
decision not to list beverage prices on menus. Importantly,
under the CFA, plaintiffs merely have to show that the unlawful
practice caused the ascertainable loss. See Lee, supra, 203
N.J. at 522; Int’l Union of Operating Eng’rs Local No. 68
Welfare Fund v. Merck & Co., 192 N.J. 372, 389 (2007).
III.
A class action is the only vehicle that will permit the
large number of patrons defrauded by TGIF to band together and
prosecute a lawsuit on equal terms with TGIF. See Lee, supra,
203 N.J. at 517-18. The trial court correctly certified the
class of customers who purchased unpriced alcoholic and non-
alcoholic beverages at company-owned New Jersey TGIF restaurants
9
between January 12, 2004 and July 14, 2014 because the
requirements for class certification under Rule 4:32-1 have been
met.
Certain issues are not in dispute: the class of TGIF
beverage-purchasing consumers is too numerous for joinder of all
members, R. 4:32-1(a)(1); “there are questions of law or fact
common to the class,” R. 4:32-1(a)(2); there are claims and
defenses “typical” to the class, R. 4:32-1(a)(3); and the
representative party “will fairly and adequately protect the
interests of the class,” R. 4:32-1(a)(4). The parties disagree,
however, on whether “the questions of law or fact common to the
members of the class predominate over any questions affecting
only individual members” and whether “a class action is superior
to other available methods for the fair and efficient
adjudication of the controversy.” See R. 4:32-1(b)(3).
Under our court rule, predominance does not mean that “all
issues [must] be identical among class members.” Iliadis v.
Wal-Mart Stores, Inc., 191 N.J. 88, 108 (2007). To satisfy the
predominance requirement, plaintiffs do not have to show “the
absence of individual issues or that the common issues dispose
of the entire dispute.” Ibid. Nor is it necessary to show that
“each class member [is] affected in precisely the same manner.”
Id. at 108-09. Indeed, it is almost certain that individual
questions will remain after the resolution of the common
10
questions of law and fact. See id. at 108. The heart of the
matter is whether the common issues are “qualitatively” more
significant than the individual ones. See Lee, supra, 203 N.J.
at 519-20.
The common issue of law among all class members is that
TGIF does not list its beverage prices in violation of N.J.S.A.
56:8-2.5. The common issue of fact is that all members of the
class suffer from TGIF’s unlawful practice of not listing
beverage prices. The loss suffered by patrons resulting from
TGIF’s violation of the CFA is dispersed over the entire class
of beverage purchasers, with individual patrons incurring
greater or lesser losses.
That individual loss determinations must be made is not
unusual in class actions. For example, in Lee, supra, the
class-action lawsuit alleged that a dietary supplement pill
called Relacore was sold to thousands of New Jersey consumers
through various mass-marketing deceptions in violation of the
CFA. 203 N.J. at 504. We found that common issues of law and
fact predominated, notwithstanding that individual questions
concerning each class member’s ascertainable loss had to be
addressed. Id. at 528. We recognized that the individual
questions would include “[t]he number of bottles of Relacore
purchased by a class member, the price of each bottle, and
whether a refund was received.” Ibid. That information could
11
come from the corporate defendant’s records or through a
customer’s proof of purchase. Ibid. We concluded that “the
individual questions posed” did not present an “insuperable
obstacle.” Ibid.
Similarly, in Iliadis, supra, we addressed the
certification of a class of hourly employees of Wal-Mart Stores,
Inc. who alleged that they were denied their contractual and
statutory right to rest and meal breaks. 191 N.J. at 96. We
held that the predominance prong was met, even though certain
individual questions persisted, including: how much time each
employee worked off-the-clock; “whether employees worked off-
the-clock with the expectation of compensation; and how much in
damages employees suffered.” Id. at 112. The presence of those
issues did not defeat the certification of the class because the
common issues were qualitatively more significant. Id. at 112-
13.
The individual questions that would remain in this case
surely are no more difficult or weighty than those faced in Lee
and Iliadis. As was true in those cases, the common issues of
law and fact predominate over any individual ones.
In addition, a class action unquestionably is “superior” to
any other means of fairly adjudicating the claims against TGIF.
The many defrauded patrons will not file actions in small claims
court to recover their minor monetary losses. See Lee, supra,
12
203 N.J. at 528. As we noted in Lee, “[t]he discovery and
litigation costs, including expert-witness fees, make a lawsuit
against a determined corporate adversary a costly undertaking.”
Ibid. A class action “provide[s] a diffuse group of persons,
whose claims are too small to litigate individually, the
opportunity to engage in collective action and to balance the
scales of power.” Id. at 528-29. Moreover, TGIF will not
likely reverse its corporate policy of willful disregard of the
CFA if just a few patrons seek relief for the small amounts they
overpaid. Here, there will be a class action or no action at
all.
IV.
A.
The statistical evidence establishing that patrons suffer a
common ascertainable loss by TGIF’s nondisclosure of beverage
prices on menus comes from TGIF’s own files. The type of
statistical evidence offered here is not foreign to our
jurisprudence.
In Tyson Foods, Inc. v. Bouaphakeo, the United States
Supreme Court approved of the use of a statistical or
representative sample of members of a class of workers, who
claimed that they were shorted on their wages, to establish the
basis for a class-action lawsuit. 577 U.S. ___, ___, 136 S. Ct.
1036, 1046, 194 L. Ed. 2d 124, 134-35 (2016). In that case,
13
employees of Tyson Foods brought a class action under the Fair
Labor Standards Act (FLSA), 29 U.S.C.A. §§ 201 to 219, claiming
that their employer denied them their rightful overtime wages
for the time they expended donning and doffing protective
equipment. Id. at ___, 136 S. Ct. at 1041, 194 L. Ed. 2d at
129. Tyson Foods contended that the variance in protective gear
worn by employees rendered impossible any uniform calculation of
time each employee spent putting on and taking off the gear, and
therefore “the employees’ claims were not sufficiently similar
to be resolved on a classwide basis.” Id. at ___, 136 S. Ct. at
1042-43, 1046, 194 L. Ed. 2d at 131, 134-35.
The Supreme Court disagreed. The Court permitted
plaintiffs to rely on expert statistical analysis that
determined the average time taken for employees to change into
the necessary protective gear. Id. at ___, 136 S. Ct. at 1044-
45, 194 L. Ed. 2d at 133. Because “each employee worked in the
same facility, did similar work, and was paid under the same
policy,” the experiences of a representative subset of employees
was “probative as to the experiences of all of them.” Id. at
___, 136 S. Ct. at 1048, 194 L. Ed. 2d at 137.
Courts have allowed market research analysis to calculate
damages for a class of plaintiffs based on the price premium
consumers paid resulting from a company’s misrepresentation
about its product. One such example in the class action setting
14
is In re Scotts EZ Seed Litigation, 304 F.R.D. 397 (S.D.N.Y.
2015). In that case, consumers in California and New York
brought a class action under their respective state consumer
laws, alleging that Scotts’ description of their grass as “50%
thicker with half the water compared to ordinary seed” was
misleading. Id. at 404-5 (internal quotations omitted). At the
class certification stage, the plaintiffs’ expert presented a
damages model to specifically isolate the additional amount of
money -- or “price premium” -- that consumers paid based on the
alleged misrepresentation. Id. at 414. The United States
District Court held that the proposed model satisfied the
standard for showing that damages could be measured on a
classwide basis. Id. at 415. Moreover, while the Scotts Court
emphasized that under the federal standard an expert was not
required to “perform his analyses at the class certification
stage,” it did point to compelling evidence that had been
provided in support of the actual existence of a price premium,
including “internal documents suggesting the existence of a
premium based on the [allegedly false claim].” Id. at 414. See
also Goldemberg v. Johnson & Johnson Consumer Cos., 317 F.R.D.
374, 396-97 (S.D.N.Y. 2016) (holding damages measurable on
classwide basis where plaintiffs had presented model that
isolates portion of price attributable to company’s alleged
misrepresentations about its products).
15
Here, TGIF’s internal documents determined the loss
attributable to consumers when it did not list beverage prices.
The market analysis conducted by the experts in Scotts and
Goldemberg are comparable to the market research used by TGIF to
justify its not listing beverage prices.
B.
Based on its marketing studies, TGIF apparently made a
business decision not to list beverage prices for the sake of
higher profits, notwithstanding that its policy violated the
CFA. Certainly, statistical evidence that was sufficiently
clear and compelling to guide TGIF in shaping its business
policy is equally relevant in this class-action suit to
establish that TGIF’s unlawful practice caused an ascertainable
loss on average of $1.72 per person, per meal.
Plaintiffs have established that common issues of law and
fact predominate over individual ones and that a class action is
not only a superior vehicle but is the only vehicle for
vindicating the rights of the aggrieved class of patrons.
V.
Plaintiffs are not advancing a “fraud-on-the-market” theory
-- a theory that typically applies in securities cases. Ante at
___ (slip op. at 44). In an open securities market, the price
of stocks depends on all available material information. Peil
v. Speiser, 806 F.2d 1154, 1160 (3d Cir. 1986). The fraud-on-
16
the-market theory recognizes that the issuance of a material
misleading statement by a company will influence the pricing of
its stock. See Basic Inc. v. Levinson, 485 U.S. 224, 241-42,
108 S. Ct. 978, 989, 99 L. Ed. 2d 194, 215 (1988). Based on
that premise, in a securities-fraud case, stock purchasers can
pursue a fraud claim without showing that they relied on the
misrepresentations. Ibid. Under the fraud-on-the-market
approach, a rebuttable presumption of reliance applies to
satisfy the causal requirement between a defendant’s
misrepresentation and plaintiff’s purchase of the stock at the
fraudulently inflated price. Id. at 243, 244-47, 109 S. Ct. at
989-92, 99 L. Ed. 2d at 216-18. In Kaufman v. i-Stat Corp., we
did not allow the plaintiffs in a common-law fraud action to
“prove the element of reliance through the presumption of a
fraud on the market.” 165 N.J. 94, 97, 118 (2000) (emphases
added).
In this case, plaintiffs do not seek to satisfy an element
of their claim through a presumption of fraud on the market.
First, “the CFA ‘does not require proof of reliance,’ but only a
causal connection between the unlawful practice and
ascertainable loss.” See Lee, supra, 203 N.J. at 528 (quoting
Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604, 607
(1997)). Second, plaintiffs here do not seek the benefit of a
presumption to satisfy their burden of proving a causal nexus
17
between TGIF’s statutory violation and the ascertainable loss
suffered by TGIF’s patrons.
The present case is unlike International Union, supra, in
which the plaintiff sought “to be relieved of the usual
requirements that plaintiff prove an ascertainable loss” by
showing only that the price charged for Vioxx was higher than it
should have been as a result of defendant’s fraudulent marketing
campaign.” 192 N.J. at 392. There, the plaintiff intended to
use “a single expert who would opine about the effect on pricing
of the marketing campaign in which defendant engaged.” Ibid.
(emphasis added).
Here, plaintiffs do not rely on a “single expert” to
establish the price effect of TGIF’s statutory violation. See
ibid. Instead, plaintiffs have presented the study commissioned
by TGIF that calculates the ascertainable loss to its patrons
when beverage prices are not listed on menus. TGIF’s own study
is offered as direct evidence and, at this procedural stage, is
entitled to deference as a statistically accurate calculation of
the loss incurred by patrons. Although the evidence must be
viewed in the light most favorable to plaintiffs, the majority
draws negative inferences to cast doubt on the validity of
TGIF’s study. Significantly, this case is merely at the class-
certification stage, and plaintiffs are entitled to introduce
expert-witness testimony to further bolster their claims of
18
ascertainable loss based on TGIF’s study.
Moreover, the majority is mistaken if it is suggesting that
the CFA does not protect consumers from price gouging. See,
e.g., N.J.S.A. 56:8-33(b) (prohibiting ticket scalping at
exorbitant rates).7 The purpose of requiring that the price of
merchandise be listed at the point of sale pursuant to N.J.S.A.
56:8-2.5 is to allow consumers to make informed decisions in
making purchases. Indeed, the legislative history of N.J.S.A.
56:8-2.5 makes this very point. See Sponsor’s Statement to A.
1172 (1972) (“Consumers have a right to know the price of all
items they wish to purchase . . . . Clear indication of the
price of all merchandise will aid in preventing discriminatory
sales practices and capricious pricing by merchants.”).
Additionally, the greater the number of victims of a CFA
violation should not diminish the right to a remedy. The fact
that plaintiffs have presented a large discrete class of
7 N.J.S.A. 56:8-33(b) provides:
No person other than a registered ticket
broker shall resell or purchase with the
intent to resell a ticket for admission to a
place of entertainment at a maximum premium in
excess of 20% of the ticket price or $3.00,
whichever is greater, plus lawful taxes. No
registered ticket broker shall resell or
purchase with the intent to resell a ticket
for admission to a place of entertainment at
a premium in excess of 50% of the price paid
to acquire the ticket, plus lawful taxes.
19
victimized patrons makes this case a more, not less, compelling
case for class certification.
VI.
I also disagree with the majority’s conclusion that
plaintiffs have failed to make out a claim under the Truth-in-
Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A.
56:12-14 to -18.8 Plaintiffs have presented evidence to satisfy
the four elements of a TCCWNA claim.9 Plaintiffs have
established that (1) they are consumers; (2) TGIF is a seller;
(3) TGIF displays menus, which constitute a written notice or
sign for purposes of the TCCWNA; and (4) the omission of
beverage pricing on the menus violates state law -- N.J.S.A.
56:8-2.5. See N.J.S.A. 56:12-15.
The majority contends that plaintiffs are not “aggrieved
8 Although the discussion here is directed toward the Dugan
case, the reasoning and conclusion apply equally to the Bozzi
case.
9 N.J.S.A. 56:12-15 provides:
No seller . . . shall in the course of his
business offer to any consumer or prospective
consumer . . . or display any written . . .
notice or sign . . . which includes any
provision that violates any clearly
established legal right of a consumer or
responsibility of a seller . . . as
established by State or Federal law at the
time the offer is made or the consumer
contract is signed or . . . notice or sign is
given or displayed.
20
customer[s]” pursuant to N.J.S.A. 56:12-17, positing that
plaintiffs have not met the evidentiary threshold of showing
that TGIF patrons were given menus before purchasing their
meals. Ante at ___ (slip op. at 59-60). To reach that
conclusion, the majority denies plaintiffs the benefit of the
most favorable inferences to be drawn from TGIF’s corporate
policy of requiring its servers to hand each customer a menu.
At this stage, the fair inference is that TGIF’s servers
complied with corporate policy and that patrons received menus.
Plaintiffs have satisfied their burden of showing that the class
of patrons here meets the definition of aggrieved customers.
Additionally, the majority has erred in finding that TGIF’s
obligation to display beverage pricing was not clearly
established by the CFA’s point-of-sale statute, N.J.S.A. 56:8-
2.5. Ante at ___ (slip op. at 61-62). The plain and simple
statutory language clearly indicates that TGIF is required to
list beverage prices on its menus. N.J.S.A. 56:8-2.5 prohibits
the sale of “merchandise” without a price at the point of sale.
Merchandise “include[s] any objects, wares, goods, commodities,
services or anything offered, directly or indirectly to the
public for sale.” N.J.S.A. 56:8-1(c). Clearly, beverages are
goods, and at the very least, beverages meet the description of
“anything offered . . . to the public for sale.” Ibid.
(emphasis added). TGIF did not have to wait for a published
21
opinion by this Court to reach this common-sense conclusion.
In this case, the Appellate Division expressed its
confidence that “if the legislature intended to excise beverage
sales at restaurants from the sweep of the CFA . . . , it would
have done so in plain language without the necessity of an
advanced degree in either logic or linguistics.” In other
words, divining the meaning of “merchandise” is not rocket
science. Significantly, no party has argued before us that
N.J.S.A. 56:8-2.5 does not mandate that a restaurant list
beverage prices on its menus.
Incredibly, the majority hints that N.J.S.A. 56:8-2.5 may
not apply to the sale of beverages by restaurants. If that were
true, N.J.S.A. 56:8-2.5 would not require restaurants to post
any meal prices. Under the statutory definition of merchandise,
there is no logical distinction between food and beverage served
in restaurants. It cannot be that a hamburger is merchandise
but a milkshake is not.
The majority notes that it is unaware of whether the
Attorney General has taken action to compel restaurants to list
beverage pricing on menus pursuant to N.J.S.A. 56:8-2.5. Ante
at ___ (slip op. at 60). The failure of the Attorney General to
enforce a CFA provision, however, is not evidence that a
restaurant is complying with the law. Indeed, the CFA vests
individuals with the power to act as private attorneys general
22
as a separate enforcement mechanism. Steinberg, supra, 226 N.J.
at 361. This Court, moreover, has the ultimate authority to
construe the meaning of N.J.S.A. 56:8-2.5, and if there is any
doubt about the Appellate Division’s interpretation, the
majority should have certified that issue separately. Why has
the majority remanded the Bozzi class-certification case for
further proceedings if there is a question about whether
restaurants must place beverage prices on their menus? Judicial
economy certainly is not advanced by letting a class action
proceed if there is no statutory authority to support a claim.
Additionally, the majority does not explain why in the
Bozzi case it vacated the trial court’s injunction, which
mandated that OSI restaurants list beverage prices on menus.
The right to equitable relief compelling those restaurants to
comply with the price-listing requirements of N.J.S.A. 56:8-2.5
was not dependent on class certification. See N.J.S.A. 56:8-19.
The right to equitable relief depended only on whether N.J.S.A.
56:8-19 requires disclosure of beverage prices on menus, an
issue that the majority refuses to address even though it
overturns the trial court’s injunction. Last, if the
application of TCCWNA to small claims in this case is too blunt
an instrument, as argued by amici curiae, the Legislature is the
proper forum to address this issue.
VII.
23
The majority’s decision is a major blow to consumer rights
advanced in both the CFA and TCCWNA. The decision ensures that
thousands of patrons victimized by TGIF’s violation of our
consumer-fraud laws have no meaningful remedy. Additionally,
TGIF now has little incentive to alter its corporate policy of
ignoring provisions of the CFA. TGIF’s compliance with N.J.S.A.
56:8-2.5’s requirement that beverage prices be listed at the
point of sale may well depend on whether the Attorney General
exercises his powers to enforce our consumer-fraud laws.
For the reasons expressed, I respectfully dissent.
24