CITY SELECT AUTO SALES, INC. v. DAVID RANDALL ASSOCIATES, INC. et al

Filing 17

OPINION. Signed by Chief Judge Jerome B. Simandle on 2/7/2012. (dmr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

CITY SELECT AUTO SALES, INC.
individually and as the
representative of a class of
similarly situated persons,

Civil Action
No. 11-2658 (JBS/KMW)

Plaintiff,
OPINION
v.
DAVID RANDALL ASSOCIATES, INC.
& RAYMOND MILEY, III,
Defendants.

APPEARANCES:
Alan C. Milstein, Esq.
SHERMAN, SILVERSTEIN, KOHL, ROSE & PODOLSKY, PC
Eastgate Corporate Center
308 Harper Drive
Suite 200
Moorestown, NJ 08057
Counsel for Plaintiff
F. Emmett Fitzpatrick, III, Esq.
FLAMM BOROFF & BACINE PC
794 Penllyn Pike
Blue Bell, Pa 19422
Counsel for Defendants
SIMANDLE, Chief Judge:
I.

INTRODUCTION
This putative class action raises claims under the Telephone

Consumer Protection Act, and is before the Court on Defendants’
motion to dismiss.

[Docket Item 8.]

Defendants, David Randall

Associates, Inc. and Raymond Miley, III, argue that this Court

lacks subject matter jurisdiction over the dispute because state
courts have exclusive jurisdiction over Telephone Consumer
Protection Act claims; that Plaintiff’s claims are barred by the
statute of limitations; that Plaintiff’s claims are barred by New
Jersey’s entire controversy doctrine; and that the Complaint
cannot be certified as a class action.

As explained further in

today’s Opinion, the subject matter jurisdiction and res judicata
arguments for dismissal are foreclosed by settled law, and the
contentions regarding the class claims do not provide a basis for
dismissal of the Complaint pursuant to Rule 12(b)(6), Fed. R.
Civ. P.

The principal issue is therefore whether Plaintiff’s

claims are timely.

Because, as detailed below, it appears from

the face of the Complaint that the statute of limitations was
tolled for at least fourteen months, the motion to dismiss will
be denied.
II.

BACKGROUND
With some exceptions, the Telephone Consumer Protection Act

prohibits the sending of unsolicited advertisements to a fax
machine.

47 U.S.C. § 227(b)(1)(C).

The statute provides a

private right of action to recover actual damages or $500,
whichever is greater.

§ 227(b)(3)(B).

Prior to the Supreme

Court’s recent decision in Mims v. Arrow Financial Services, LLC,
132 S.Ct. 740, 753 (2012), there was some uncertainty about the
scope of the federal courts’ jurisdiction over Telephone Consumer
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Protection Act claims.

However, it is now clear that state and

federal courts share concurrent jurisdiction over the claims,
which arise under federal law.

Id.

According to the Complaint, between March and May of 2006,
Defendants sent unsolicited faxes to Plaintiff and 29,112 other
unique fax numbers advertising roofing services.
15.

Compl. ¶¶ 13-

The parties agree that a four-year statute of limitations

applies to actions under the Telephone Consumer Protection Act.
See 28 U.S.C. § 1658(a).1
[Docket Item 1.]

This case was filed May 10, 2011.

Thus, unless the statutory period is extended

by nearly a year, all of Plaintiff’s claims – and those of any
other putative class member – would be barred.
Plaintiff contends that its claims were tolled by the
pendency of a state court putative class action.

Compl. ¶ 6.

On

May 4, 2009, G. Winter’s Sailing Center, Inc. filed suit against
David Randall Associates, Inc. in New Jersey Superior Court
“individually and as the representative of a class of similarlysituated persons,” complaining of this same Spring 2006 round of
unsolicited faxes allegedly sent by David Randall Associates,
Inc.

Compl. ¶ 6; Defs.’ Ex. 2 (state complaint).

1

That state

"Except as otherwise provided by law, a civil action
arising under an Act of Congress enacted after the date of the
enactment of this section [which is Dec. 1, 1990] may not be
commenced later than 4 years after the cause of action accrues."
28 U.S.C. § 1658(a); Telephone Consumer Protection Act of 1991,
Pub. L. No. 102-243, § 3(a), 105 Stat. 2395 (Dec. 10, 1991).
3

pleading alleged that “On information and belief, Defendant faxed
the same and similar advertisements to Plaintiff and more than 39
other recipients without first receiving the recipients' express
permission or invitation.”

Ex. 2 ¶ 12.

No motion for class certification was ever filed in the
Superior Court action.

Pls.’ Opp. Br. Ex. (letter order).

Instead, when the plaintiff in that action finally moved for
leave to file that motion nearly two years into the action, the
state court determined that the motion had come too late and that
trial would proceed with the single plaintiff.

Id.

The case

then settled shortly after that, and was closed on April 27,
2011.

III.

Defs.’ Ex. C (state court docket).

SUBJECT MATTER JURISDICTION
As mentioned above, after Defendants had filed their motion

to dismiss for lack of jurisdiction, the United States Supreme
Court clarified that federal courts may hear claims under the
Telephone Consumer Protection Act as a matter of federal question
jurisdiction pursuant to 28 U.S.C. § 1331, squarely rejecting
Defendants’ argument for exclusive state court jurisdiction.
Mims v. Arrow Financial Services, LLC, 132 S.Ct. 740, 753 (2012).
This Court therefore has subject matter jurisdiction over these
claims.

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IV.

AFFIRMATIVE DEFENSES
A.

Standard

A complaint may be dismissed under Rule 12(b)(6) on the
basis of an affirmative defense when the defense appears on the
face of the complaint.

Leveto v. Lapina, 258 F.3d 156, 161 (3d

Cir. 2001); Bethel v. Jendoco Constr. Corp., 570 F.2d 1168, 1174
n. 10 (3d Cir. 1978).

The statute of limitations and the entire

controversy doctrine are both affirmative defenses based on the
content of the Complaint’s pleadings, and so the Court must
simply determine whether Defendants’ legal contentions are
correct.
B.

Statute of Limitations
1.

Class Action Tolling Generally

In American Pipe & Const. Co. v. Utah, 414 U.S. 538 (1974),
the Supreme Court considered whether a statute of limitations is
tolled for members of a pending class action for the period from
initiation of that action until class certification is denied.
The Supreme Court was concerned that letting the statute run
would require potential class members to safeguard their rights
by intervening or filing separate actions even while the
potential class action was pending, undermining the efficiency
goals of the class action procedural vehicle.

Id. at 554; Crown,

Cork & Seal Co., Inc. v. Parker, 462 U.S. 345 (1983).
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Weighing against this concern for protecting the efficiency
of class actions is the policy interest behind statutes of
limitations.

However, the Supreme Court reasoned that the goals

of the statute of limitations were met in the context of class
action tolling because defendants are notified “not only of the
substantive claims being brought against them, but also of the
number and generic identities of the potential plaintiffs who may
participate in the judgment.”

American Pipe, 414 U.S. at 555;

Crown, Cork & Seal Co., 462 U.S. at 353.

Because of the

initiation of the earlier action, “The defendant will be aware of
the need to preserve evidence and witnesses respecting the claims
of all the members of the class.

Tolling the statute of

limitations thus creates no potential for unfair surprise.”
Crown, Cork & Seal Co., 462 U.S. at 353.

American Pipe therefore

holds that “the commencement of the original class suit tolls the
running of the statute for all purported members of the class who
make timely motions to intervene after the court has found the
suit inappropriate for class action status.”

American Pipe, 414

U.S. at 553.
The Supreme Court has expanded the class action tolling
doctrine to hold that commencement of a class action suspends the
applicable statute of limitations as to all asserted members of
the class who would have been parties had the suit been permitted
to continue as a class action, that the statutory period remains

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tolled for all members of the putative class until class
certification is denied, and that class members may choose to
file their own suits or to intervene as plaintiffs in the pending
action.

Crown, Cork & Seal Co., 462 U.S. at 353-54.

In the Third Circuit, American Pipe tolling applies so long
as the prior class action never materialized for reasons
“unrelated to the appropriateness of the substantive claims for
certification” (e.g., commonality of the claims as distinct from
adequacy of the representative or numerosity).

McKowan Lowe &

Co., Ltd. v. Jasmine, Ltd., 295 F.3d 380, 389 (3d Cir. 2002).
And the doctrine applies not only to subsequent intervention or
the filing of separate suits, but also to subsequent class action
relief sought by the unnamed class members.

Yang v. Odom, 392

F.3d 97 (3d Cir. 2004).
Generally speaking, there is a sufficient connection between
the actions when the claims brought in a subsequent suit share a
common factual and legal nexus with those brought in the prior
class action sufficient to notify the defendants and thereby
satisfy the policy goals of the statute of limitations.

Cf. In

re Community Bank of Northern Virginia, 622 F.3d 275 (3d Cir.
2010) (acknowledging the persuasiveness of this view of the
doctrine without deciding a more specific issue).

When those

conditions are satisfied, “there is no persuasive reason for
refusing to apply class action tolling, as the defendant will

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already have received adequate notice of the substantive nature
of the claims against it and likely would rely on the same
evidence and witnesses in mounting a defense.”

Id. (citing

Crown, Cork & Seal, 462 U.S. at 355 (Powell, J., concurring)).
Indeed, class action tolling applies even when the named
plaintiff in the earlier putative class lacked standing to bring
the tolled claims.

Haas v. Pittsburgh National Bank, 526 F.2d

1083 (3d Cir. 1975).

2.

Application of American Pipe to Defendants

The grounds raised by Defendants for distinguishing American
Pipe are unpersuasive.

First, Defendants contend that because

the class claims in the G. Winter’s Sailing Center, Inc. action
were not pursued until nearly two years into the state action,
and then denied as untimely, that action should not toll the
claims of the putative class members.2

However, there is no

requirement that the underlying action be anything more than a
complaint pleaded as a class action.

Additional requirements

would defeat the purpose of the tolling rule, which applies to
situations in which a putative class action never materializes.

2

Defendant does not contend, and it does not appear to the
Court that the fact that the prior class action suit was filed in
state court is relevant to the application of American Pipe. No
rule or policy prohibits cross-jurisdictional tolling. Sawyer v.
Atlas Heating and Sheet Metal Works, Inc., 642 F.3d 560, 562 (7th
Cir. 2011) (applying American Pipe tolling in federal court based
on putative state class action).
8

See Sawyer v. Atlas Heating and Sheet Metal Works, Inc., 642 F.3d
560, 563 (7th Cir. 2011) (explaining that fact that first judge
never ruled on class action status does not defeat tolling); see
also McKowan Lowe & Co., Ltd. v. Jasmine, Ltd., 295 F.3d 380 (3d
Cir. 2002) (explaining that so long as first putative class
action ends for reasons other than definitive rejection of the
class mechanism for the claim, tolling applies).
As the Seventh Circuit Court of Appeals has explained, the
statute is tolled “until the day the suit is conclusively not a
class action.”

Sawyer, 642 F.3d at 562; see also Aguilera v.

Pirelli Armstrong Tire Corp., 223 F.3d 1010, 1019 (9th Cir. 2000)
(holding that when class certification is never sought, tolling
ceases “once the deadline for seeking class certification
pass[es].”).

The suit can cease to be a class action because of

an adverse ruling, voluntary withdrawal, or “perhaps because the
defendant buys off the original plaintiff as soon as the statute
of limitations runs, hoping to extinguish the class members'
claims.”

Id.

Tolling applies in these situations because “[t]he

Court's goal of enabling members of a putative class to rely on a
pending action to protect their interests can be achieved only if
the way in which the first suit ends — denial of class
certification by the judge, abandonment by the plaintiff, or any
other fashion — is irrelevant.”

Id.; Accord Culver v. City of

Milwaukee, 277 F.3d 908, 914 (7th Cir. 2002).

9

It may be the case that Plaintiff and the putative class
should not benefit from the full two years of tolling, since it
should have been clear at some earlier point that a motion for
class certification would have been untimely.

See Aguilera, 223

F.3d at 1019 (holding that tolling ceases once the deadline for
certification passes).

But nothing in the pleadings or motion

indicate that the date on which this became clear was earlier
than fourteen months into the state court action.

New Jersey law

only requires that “the court shall, at an early practicable
time, determine by order whether to certify the action as a class
action.”

N.J. Ct. R. 4:32-2(a).

Court often do not solicit such

a motion until after the completion of basic discovery.

See

Riley v. New Rapids Carpet Center, 294 A.2d 7 (N.J. 1972) (noting
that often class certification should be delayed until after
discovery).

In order for their claims to be timely, class

members would need to toll the statute for a period equal to
March 29, 2010 through May 10, 2011, which is a little over a
year and a month.

On this 12(b)(6) motion, nothing before the

Court suggests that the class could not have been timely
certified as late as that period of time into the state court
action, which is all that is necessary to sufficiently toll the
statute of limitations to make this case timely.3

3

In discussing the adequacy of the proposed class,
Defendants contend that plaintiffs bringing Telephone Consumer
Protection Act claims cannot proceed as a class under New Jersey
10

Second, Defendants contend that Plaintiff and the putative
class members in this action are not the kind of plaintiffs who
should benefit from class action tolling.

They argue that these

class members were not notified of the state action, and so no
one was actually refraining from filing suit in light of the
state suit.

But the Supreme Court directly addressed this issue,

noting that “We think no different a standard should apply to
those members of the class who did not rely upon the commencement
of the class action (or who were even unaware that such a suit
existed) and thus cannot claim that they refrained from bringing
timely motions for individual intervention or joinder because of
a belief that their interests would be represented in the class
suit.”

American Pipe, 414 U.S. at 551-52.

Similarly, Defendants contend that each potential plaintiff
was on notice of his or her injury before the state action was
ever filed, and therefore could have filed suit before any class
action brought the wrongdoing to their attention.

But this

argument also misunderstands the justifications for and nature of

law according to Local Baking Products, Inc. v. Kosher Bagel
Munch, Inc., 23 A.3d 469 (N.J. Super. Ct. App. Div. 2011).
They correctly make no attempt to apply this reasoning to the
whether American Pipe tolling applies, because Local Baking was
decided on July 19, 2011. While it is at least arguable that the
class claims should not be tolled beyond that date since a
reasonably diligent class member would conclude that
certification of the class action under New Jersey procedural law
would be denied, the case provides no basis for rejecting the
period of tolling prior to the Appellate Division’s July 19
decision.
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class action tolling.

The justification for class action tolling

is to prevent obliging parties to file separate suits to preserve
their individual claims in the event the class suit is
subsequently denied; the fact that the class members were aware
of their injuries only underscores the need to permit them to sit
on their rights until they know whether they will be part of a
pending class action.
Finally, Defendants contend that no class was “properly
declared and identified” in the state court action.
Br. 3.

Defs.’ Reply

Defendants are incorrect to state that no class was

identified: the state court pleadings identify a class of those
companies who received the particular offending fax in a
particular time period without having solicited it.

Whether this

is a sufficiently defined class to be certified or not, this is a
sufficiently defined class for the general purpose of determining
potential unnamed members and putting Defendants on notice of the
claims against them and the evidence they needed to preserve
(i.e., preserving evidence about to whom they sent faxes and
whether such faxes were solicited).

Cf. Crown, Cork & Seal, 462

U.S. at 355 (Powell, J., concurring) (discussing the necessary
contiguity of the two actions).
In sum, the Court holds that during at least the first
fourteen months of the Superior Court action, before it was clear
that it would not become a class action, claims on behalf of

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unnamed alleged recipients of the unsolicited fax were tolled
under American Pipe.

The facts that no class was formally

identified and no motion for certification was ever filed, and
that class members knew of their injuries but were not on notice
of the putative class action, do not mean that the unnamed
members are not entitled to tolling.4
C.

Entire Controversy Doctrine

The Entire Controversy Doctrine is a New Jersey state law
doctrine that is a form of claim preclusion with a slightly
broader scope, but the same basic elements as traditional claim
preclusion.

See generally Rycoline Products, Inc. v. C & W

Unlimited, 109 F.3d 883 (3d Cir. 1997).

The only relevant

difference is that, unlike ordinary claim preclusion in which the

4

Although Defendant Raymond Miley III was not initially a
defendant in the state court matter, the plaintiff in the state
court matter evidently sought to add Miley during the pendency of
that action. Defs.’ Br. 4 n.2. It is not clear to the Court
from the cited matter whether Miley was ever added and served, or
what notice Miley had of the efforts to add him to the state
court action. Defendant does not present this as a reason for
Miley to be treated differently from Defendant David Randall
Associates, Inc. Ordinarily the plaintiff bears the burden of
proving that a statute of limitations should be tolled, but in
this case, Plaintiff asserted the basis for tolling in the
Complaint, and Defendant did not argue that the outcome should be
any different from Miley. Without Plaintiff having been given
notice of the relevance of the issue, and without any argument
from either side, the Court will not resolve the matter in
today’s Opinion. Should Miley decide to contend that Plaintiff
is not entitled to tolling with respect to claims against him by
virtue of his lack of involvement in the state court matter, then
he may file a summary judgment motion urging that relief,
accompanied by appropriate documentation.
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unit of analysis is those claims that should have been brought in
a single “cause of action,” under the Entire Controversy
doctrine, the unit of analysis is a “controversy”: thus, “a party
cannot withhold part of a controversy for later litigation even
when the withheld component is a separate and independently
cognizable cause of action.”

In re Mullarkey, 536 F.3d 215, 229

(3d Cir. 2008).
If Plaintiff was a party to the state court action, then
there would be a colorable argument for application of the entire
controversy doctrine.

But under controlling law, unnamed class

members in a prior putative class action are not considered
parties to it unless the class was certified.

See Smith v. Bayer

Corp., 131 S.Ct. 2368, 2379-80 (2011) (explaining that unnamed
members of a class that was not certified are not parties); see
also Collins v. E.I. DuPont de Nemours & Co., 34 F.3d 172, 179
(3d Cir. 1994) (noting that an uncertified class action has no
preclusive effect on putative members).

Therefore, the entire

controversy doctrine does not apply.

V.

SUFFICIENCY OF CLASS ALLEGATIONS
Defendants raise several arguments addressed to the adequacy

of Plaintiff’s proposed class and the ability to bring a class
action under these circumstances, including: that paragraph 14 of
the Complaint contains an apparent error, stating “Defendants

14

sent the same form facsimile to more than [sic.] Here,
Defendants' advertisements were successfully sent 44,832 without
error to 29,113 unique fax numbers during the period March 29,
2006 through May 16, 2006.”

Compl. ¶ 14; that the class cannot

satisfy Rule 23 of the Federal Rules of Civil Procedure; and that
New Jersey law forbids class action Telephone Consumer Protection
Act claims.

To the extent these contentions are relevant to this

action, they are arguments relevant to class certification; they
form no basis for dismissal of the Complaint pursuant to Rule
12(b), Fed. R. Civ. P.
In the Court’s Letter Order of October 4, 2011, the Court
stayed the motion for class certification until the motion
presently under consideration was decided.

The Court will lift

the stay, and require that Defendant’s opposition to that motion
be due fourteen days from the date of this Opinion and Order, and
Plaintiff may file a reply seven days after that.

Defendants may

include their class certification arguments in their opposition
to class certification, to the extent they remain colorable
arguments in light of today’s Opinion and Mims v. Arrow Financial
Services, LLC, 132 S.Ct. 740, 753 (2012).
VI.

CONCLUSION
This Court has subject matter jurisdiction for the reasons

set forth in Mims v. Arrow Financial Services, LLC, 132 S.Ct.
740, 753 (2012).

At least based on the face of the Complaint,
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the claims against Defendants are not time barred, since the
statute of limitations was tolled during at least the first
fourteen months of the state court class action, which was not
dismissed on grounds related to the appropriateness of the
substantive claims for certification.

The entire controversy

doctrine does not apply to unnamed members of a class that was
never certified, and the rest of Defendants’ arguments go to
class certification, not dismissal on jurisdictional or
limitations grounds.
The accompanying Order will be entered.

February 7, 2012
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge

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