MCPEAK v. S-L DISTRIBUTION COMPANY, INC.

Filing 62

OPINION. Signed by Judge Robert B. Kugler on 9/5/2014. (dmr)

NOT FOR PUBLICATION

(Doc. No. 46)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
___________________________________
:
JOSEPH A. MCPEAK, individually and on :
behalf of all similarly situated individuals, :
:
Plaintiff,
:
:
v.
:
:
S-L DISTRIBUTION COMPANY, INC., :
:
Defendant.
:
___________________________________ :

Civil No. 12-348 (RBK/KMW)
OPINION

KUGLER, United States District Judge:
This matter comes before the Court upon the motion of S-L Distribution Company, Inc.
(“Defendant” or “S-L”) 1 to dismiss and/or strike certain allegations in the Second Amended
Complaint of Joseph A. McPeak (“Plaintiff”). In his putative class action, Plaintiff alleges that
his Distributor Agreement with Defendant constituted a franchise under the meaning of the New
Jersey Franchise Practices Act (“NJFPA”) and that Defendant violated the statute when it
unilaterally terminated the Agreement. This Court previously granted Plaintiff’s motion to file
his Second Amended Complaint. Defendant now seeks to dismiss or strike Plaintiff’s request for
injunctive and declaratory relief, his request for a jury trial, his demand for certain types of
damages, and his class allegations. For the reasons expressed in this Opinion, the motion will be
GRANTED IN PART, DENIED IN PART.

1

S-L Distribution Company is the distribution division of Synder’s-Lance, Incorporated, a maker of snack foods.
Sec. Am. Compl. ¶¶ 1, 15.

I.

BACKGROUND AND PROCEDURAL HISTORY
The factual allegations of this case have been set forth in the Court’s Opinion dated

December 19, 2012 as follows:
On October 27, 2006, Plaintiff contracted with S-L (formerly known as SOH
Distribution Company, Inc.) to obtain the exclusive right to sell and distribute certain
products in a specified geographic region in Southern New Jersey. See Amend. Compl.
¶¶ 1, 22. The contract, entitled “Distributor Agreement,” classified Plaintiff as an
independent contractor and explicitly stated that “nothing herein shall be construed: (i) to
be inconsistent with that relationship; (ii) as constituting Distributor as the franchisee,
partner, agent, or employee of SOH.” Pl. Amend. Compl., Ex. B at 2. The contract
further contained a provision that Plaintiff, the distributor, “understands and
acknowledges that this Agreement is not a franchise agreement. This Agreement does
not provide the Distributor with a franchise to distribute Authorized Products under a
marketing plan or system prescribed by SOH.” Id. at 16. The contract also prohibited
Plaintiff from conducting “his business under SOH’s name, or the trademarks or
tradenames of any of the Authorized Products or Other Products.” Id. at 12. Under the
contract’s terms, Plaintiff could not use S-L’s “name, or the trademarks or tradenames of
any of the Authorized Products or Other Products for any reason, whatsoever, except
upon receiving SOH’s prior written consent.” Id.
The contract required Plaintiff to, among other things, “use his best efforts” to sell
certain products to authorized outlets and retail centers within the designated territory,
comply with the standard operating guidelines, develop new accounts and additional shelf
space for the respective products, and to “establish and to maintain the established, [sic]
reputation and good will of the Authorized Products.” Id. at 4. The contract also
reserved S-L’s right to authorize other persons from time to time to act as SOH’s
wholesaler in an area that included Plaintiff’s territory. Id. at 6.
For several years, Plaintiff invested capital, labor, and “specialized skills” into his
business, leading to an approximate twenty-five percent increase in sales and a two
hundred percent increase in the “market value” of his distributorship. Pl. Opp’n. at 6.
Unfortunately, in November 2011, Plaintiff received notice that S-L was terminating the
distributor agreement. Id. at 5. Plaintiff alleges that after news spread of S-L’s
termination of the distributor agreements, his business became “worthless” because “[n]o
prospective purchaser would agree to purchase a business that would essentially
disappear within days.” Pl. Amend. Compl. ¶¶ 51-54. On January 3, 2012, S-L allegedly
modified Plaintiff’s “exclusive right to sell territory by reducing its size,” leading to an
almost fifty percent reduction in Plaintiff’s sales volume. Id. at ¶ 56. Plaintiff and S-L
executed a revised contract that required Plaintiff to use only advertising supplied or
approved by S-L. Pl. Amend. Compl., Ex. C at 14. The provisions prohibiting Plaintiff’s
use of S-L’s trademarks and explicitly repudiating that Plaintiff was a franchisee were
also contained in the new agreement. See Id. at 3, 14, 21.
2

On January 19, 2012, Plaintiff filed the instant lawsuit against S-L, asserting a
claim on behalf of himself and other allegedly similarly situated individuals for
declaratory, injunctive, and monetary relief. Pl. Opp’n at 12; Pl. Amend. Compl. ¶ 10.
In his Amended Class Action Complaint, Plaintiff alleges that S-L illegally terminated
his franchise in violation of the NJFPA. Pl. Amend. Compl. ¶¶ 66-88. On March 8,
2012, Plaintiff sold his distributorship back to S-L. Pl. Opp’n at 12.
McPeak v. S-L Distribution Co., Civ. No. 12-348, 2012 WL 6652764, at *1-2 (D.N.J. Dec. 19,
2012) (ECF Doc. No. 29).
Pursuant to its Opinion of December 19, 2012, this Court found that Plaintiff failed to
plead a factual basis for his claim that he owned a franchise within the meaning of the NJFPA.
In order to do so, he was required to plead facts sufficient to support a finding that S-L granted
him a license to use its trade name and that a “community of interest” existed between the
parties. Plaintiff’s allegations that he had the exclusive right to sell and distribute S-L products
within a defined territory were insufficient to arrive at a finding that a license existed. Id. at *5.
Plaintiff’s right to use the S-L name and insignia was similarly insufficient, as were the general
allegations that some retail customers believed that S-L was responsible for the quality of
Plaintiff’s services, believed that they were dealing with S-L itself when dealing with Plaintiff, or
that S-L vouched for the activities of Plaintiff. Id. at *5-6. The Court also rejected an argument
by Defendant that Plaintiff had no standing to pursue his claims because he no longer owned his
distributorship at the time the motion was decided. Id. at *3. 2
Although Defendant’s motion to dismiss was granted, the Court indicated that Plaintiff
could request leave to file a Second Amended Complaint. On January 29, 2014, the Court
granted Plaintiff’s motion for leave to file his Second Amended Complaint. See McPeak v. S-L
2

The Court found, however, that because Plaintiff sold his route, he could not obtain injunctive or declaratory relief,
but could only be awarded monetary relief. McPeak v. S-L Distribution Co., Civ. No. 12-348, 2012 WL 6652764, at
*3 (ECF Doc. No. 29).

3

Distribution Co., Civ. No. 12-348, 2014 WL 320074 (D.N.J. Jan. 29, 2014) (ECF Doc. No. 42).
The Court found that additional allegations set forth by Plaintiff, including an email by an
employee of Defendant that could be interpreted as referring to Plaintiff as a “Snyder’s
salespe[rson],” and specific allegations related to resources provided to Plaintiff by Defendant,
and to the use of Defendant’s trademark on Plaintiff’s clothing and vehicle were sufficient to
plead the existence of a license. Id. at *6-7. This, coupled with Plaintiff’s pleading that a
community of interest existed between the parties, and that he maintained warehouse space in
New Jersey, was sufficient to state a claim under the NJFPA. After Plaintiff filed his Second
Amended Complaint, Defendant filed the instant motion.
II.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss an action for failure

to state a claim upon which relief can be granted. With a motion to dismiss, “‘courts accept all
factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and
determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled
to relief.’” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips v.
Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). In other words, a complaint survives a
motion to dismiss if it contains sufficient factual matter, accepted as true, to “state a claim to
relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).
In making this determination, a court must engage in a two-part analysis. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009); Fowler, 578 F.3d at 210-11. First, the court must separate
factual allegations from legal conclusions. Iqbal, 556 U.S. at 678. “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.
Second, the court must determine whether the factual allegations are sufficient to show that the
4

plaintiff has a “plausible claim for relief.” Id. at 679. Determining plausibility is a “contextspecific task” that requires the court to “draw on its judicial experience and common sense.” Id.
A complaint cannot survive where a court can only infer that a claim is merely possible rather
than plausible. See id.
Alternatively, under Rule 12(f), a party may move to strike from a pleading “an
insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” A court
has “considerable discretion” in deciding a Rule 12(f) motion. Tonka Corp. v. Rose Art Indus.,
Inc., 836 F. Supp. 200, 217 (D.N.J. 1993). However, motions to strike are disfavored and
usually will be denied unless “the allegations have no possible relation to the controversy and
may cause prejudice to one of the parties, or if the allegations confuse the issues.” Eisai Co. v.
Teva Pharm. USA, Inc., 629 F. Supp. 2d 416, 425 (D.N.J. 2009) (citing Garlanger v. Verbeke,
223 F. Supp. 2d 596, 609 (D.N.J. 2002)). In connection with class allegations, Federal Rule of
Civil Procedure 23(d)(1)(D) is an additional procedural vehicle, providing that a “court may
issue orders that . . . require that the pleadings be amended to eliminate allegations about
representation of absent persons and that the action proceed accordingly.” Fed. R. Civ. P.
23(d)(1)(D).
In a putative class action suit, a plaintiff is generally entitled to discover information
relevant to Rule 23’s class certification requirements. Thus, a court should grant a motion to
strike class allegations only if the inappropriateness of class treatment is evident from the face of
the complaint and from incontrovertible facts. See Landsman & Funk PC v. Skinder-Strauss
Assocs., 640 F.3d 72, 93 n.30 (3d Cir. 2011) (holding that it is premature for a district court to
decide class certification issues prior to discovery unless the “complaint itself demonstrates that
the requirements for maintaining a class action cannot be met"); John v. Nat’l Sec. Fire and Cas.
5

Co., 501 F.3d 443, 445 (5th Cir. 2007) (“Where it is facially apparent from the pleadings that
there is no ascertainable class, a district court may dismiss the class allegation on the
pleadings”); Advanced Acupunture Clinic, Inc. v. Allstate Ins. Co., Civ. No. 07-4925, 2008 WL
4056244, at *7 (D.N.J. Aug. 26, 2008) (“A defendant may move to strike class allegations prior
to discovery in rare cases where the complaint itself demonstrates that the requirements for
maintaining a class action cannot be met”).
It is only when no amount of discovery or time will allow for plaintiffs to resolve
deficiencies in class definitions under Rule 23, that a motion to strike class allegations should be
granted. Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 949 (6th Cir. 2011). Otherwise,
in order for a district court to engage in the “rigorous analysis” required to determine if
certification is proper, an early motion to strike should be denied so that the court can “probe
behind the pleadings before coming to rest on the certification question,” after discovery has
taken place. Id. (quoting Gen. Tel. Co. v. Falcon, 457 U.S. 147, 160 (1982)). A leading treatise
on class action litigation notes that although a “motion to strike class action allegations may
properly be filed before plaintiffs have filed a motion for class certification . . . [i]f the viability
of a class depends on factual matters that must be developed through discovery, a motion to
strike will be denied pending the full-blown certification motion.” 1 Joseph M. McLaughlin,
McLaughlin on Class Actions § 3.4 (7th ed. 2010).
III.

DISCUSSION

A.

Requests for Injunctive and Declaratory Relief
This Court previously determined that Plaintiff “may only seek monetary relief.” Op. of

Dec. 19, 2012 at 6, ECF Doc. No. 29. The basis for the Court’s ruling was that Plaintiff had sold
his distributor route, and because he no longer maintained any interest in the Distributor
6

Agreement, he could not obtain declaratory or injunctive relief. Id. Although this Court
permitted Plaintiff to file his Second Amended Complaint, the Court observes that his requests
for such relief remain in that pleading.
Plaintiff’s response is that at least one party who intends to seek permissive intervention
in this litigation, as well as some of the putative class members that he hopes to represent, are
entitled to injunctive or declaratory relief because they have not sold their franchises. Pl.’s
Opp’n at 27. Plaintiff clearly cannot maintain allegations for relief that can only be afforded to
persons who he hopes will become parties in the future. Permissive intervention is governed by
Rule 24, which requires that the court grant a motion before the intervention may occur. Further,
a named plaintiff in a putative class action must himself have standing to pursue injunctive relief
to assert such claims on behalf of a putative class. White v. First Am. Registry, 230 F.R.D. 365,
368 (S.D.N.Y. 2005). Because Plaintiff admits that he cannot obtain injunctive relief, and he is
presently the only plaintiff in this action, the Court must strike these allegations.
B. Jury Trial
Defendant moves to strike Plaintiff’s demand for a jury trial, citing language in the
Distributor Agreement the parties entered into waiving the right to a jury trial. Article 25 of the
Distributor Agreement indicates:
Waiver of Jury Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY DISPUTE OR LITIGATION BASED ON
THIS AGREEMENT OR ARISING OUT OF THIS AGREEMENT OR ANY ACTS,
OMISSIONS, TRANSACTIONS OR COURSE OF DEALING HEREUNDER.
Sec. Am. Compl. Ex. B, Art. 25(d).

7

“In Suits at common law,” the Seventh Amendment guarantees that “the right of trial by
jury shall be preserved.” U.S. Const., amend VII. 3 In diversity cases, “the right to a jury trial . .
. is to be determined as a matter of federal law.” Simler v. Conner, 372 U.S. 221, 222 (1963).
However, “a private litigant may waive the right to a jury trial in a civil case.” Tracinda Corp. v.
DaimlerChrysler AG, 502 F.3d 212, 222 (3d Cir. 2007). In order to be deemed valid, such a
waiver “must be made knowingly and voluntarily based on the facts of the case.” Id. A waiver
will be found to be knowing and voluntary by a court “when the facts show that (1) there was no
gross disparity in bargaining power between the parties, (2) the parties are sophisticated business
entities, (3) the parties had an opportunity to negotiate the contract terms, and (4) the waiver
provision was conspicuous.” First Union Nat'l Bank v. United States, 164 F. Supp. 2d 660, 663
(E.D. Pa. 2001).
There is some uncertainty over who bears the burden of showing whether a waiver was
made knowingly and voluntarily or not. Some courts within the Third Circuit’s jurisdiction have
held that the party seeking to enforce the waiver bears this burden. See Brown & Brown, Inc. v.
Cola, Civ. No. 10-3898, 2011 WL 4380445, at *4 (E.D. Pa. Sept. 20, 2011); DaimlerChrysler
Fin. Servs. Americas, LLC v. Woodbridge Dodge, Inc., Civ. No. 06-5225, 2009 WL 2152083, at
*7 (D.N.J. July 14, 2009); First Union Nat’l Bank v. United States, 164 F. Supp. 2d 660, 663
(E.D. Pa. 2001). Others have observed that the Third Circuit has not addressed this issue, and

3

The parties have not briefed the issue of whether a suit under the NJFPA is a suit “at common law.” In
determining whether the Seventh Amendment applies to a suit, courts typically consider (1) the nature of the action;
and (2) the remedy sought. Tull v. United States, 481 U.S. 412, 417 (1987). The action at issue is compared to
“18th-century actions brought in the courts of England prior to the merger of the courts of law and equity.” Id. If
the action resembles those brought in English law courts, it is tried by a jury, while if it is more analogous to 18thcentury cases tried in courts of equity or admiralty, the Seventh Amendment does not require a jury trial. Id. Courts
should also “examine the remedy sought and determine whether it is legal or equitable in nature.” Id. at 417-18. In
the case of statutory cases of action, an analogous connection to claims historically tried at law will suffice. See
Curtis v. Loether, 415 U.S. 189, 195-96 (1974). This Court will not, on its own, engage in a lengthy analysis of
whether the Seventh Amendment applies to claims under the NJFPA, and assumes, as the parties have, that it does.

8

“the other Circuit Courts are split on the issue.” Kennedy Funding, Inc. v. Lion’s Gate Dev.,
LLC, Civ. No. 05-4741, 2006 WL 2038496, at *4 n.2 (D.N.J. July 19, 2006). See also Nat’l
Equip. Rental, Ltd. v. Hendrix, 565 F.2d 255, 258 (2d Cir. 1977) (finding that the burden is on
the party seeking enforcement of the waiver); K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 758
(6th Cir. 1985) (finding that the party objecting to the jury waiver bears the burden of
demonstrating that its own consent was not knowing and voluntary). However, the Court is not
aware of any district courts bound by Third Circuit precedent that have actually concluded, as the
Sixth Circuit has, that the party seeking to void the waiver bears the burden of demonstrating that
he did not knowingly and voluntarily waive his right to a jury.
Whether a jury waiver was entered into knowingly and voluntarily depends “on the facts
of the case,” which clearly may fall outside the pleadings of the underlying claim. Tracinda
Corp., 502 F.3d at 222. Thus, although the parties here each set forth arguments as to why the
knowing and voluntary factors weigh in their respective favor, courts that have applied these
factors typically rely upon a more developed record than exists at the pleading stage. For
example, in finding whether a gross disparity existed in bargaining power, courts have looked to
whether both parties were represented by attorneys at the time the contract was executed. See
Joseph Oat Holdings, Inc. v. RCM Digesters, Inc., Civ. No. 06-4449, 2007 WL 2473832, at *4
(D.N.J. Aug. 24, 2007); Allyn v. Western United Life Assur. Co., 347 F. Supp. 2d 1246, 1254
(M.D. Fla. 2004). In determining the sophistication of the entities, courts have discussed factors
such as the educational background and business experience of the parties. See Oglesbee v.
Indymac Fin. Servs., Inc., 675 F. Supp. 2d 1155, 1158 (S.D. Fla. 2009) (manager with four years
of college education was sufficiently sophisticated to waive a jury trial); Cottman Transmission
Sys. v. McEneany, Civ. No. 05-6768, 2007 WL 119956, at *3 (E.D. Pa. Jan. 4, 2007) (franchisee
9

of an auto repair business with prior business ownership experience had enough sophistication to
understand a conspicuous jury waiver provision written in plain English); Tara Woods Ltd.
P’ship v. Fannie Mae, Civ. No. 09-832, 2010 WL 1529459, at *1-3 (D. Colo. Apr. 1, 2010)
(citing the “highly educated” background of a litigant with M.D. and M.B.A. degrees in finding
that a jury waiver was knowing and voluntary). Here, there is no indication in the Second
Amended Complaint as to the extent of Plaintiff’s educational background. Further, although he
evidently engaged in business on his own account after entering the Distributor Agreement, it is
unclear what business experience he had at the time he signed the Agreement. It is also unclear
whether he was represented by counsel at the time he entered into the Agreement with
Defendant.
The lack of evidence germane to the relevant factors suggests that it is premature for the
Court to rule on the issue of the jury waiver clause. This is especially so considering the lack of
settled law as to the burden of proof, as the party with that burden would suffer the most from the
lack of a developed record if this issue were to be decided now. Thus, the Court will deny
Defendant’s request to strike the jury demand without prejudice to Defendant’s right to raise this
issue again after the record is developed to include additional relevant facts.
C. Demands for Consequential, Incidental, Special and Punitive Damages
The Distributor Agreement also provided for a waiver of certain types of damages:
Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, IN NO EVENT SHALL
[S-L] BE LIABLE TO DISTRIBUTOR FOR CONSEQUENTIAL,
INCIDENTAL, INDIRECT OR SPECIAL DAMAGES, INCLUDING, BUT
NOT LIMITED TO, LOST PROFITS AND PUNITIVE DAMAGES.
Sec. Am. Compl. Ex. B, Art. 25(g). Defendant seeks to strike Plaintiff’s demand for such
damages, on the basis that these damages have been contractually waived by Plaintiff. Plaintiff
10

indicates that he does not address this issue because he does not intend to seek any of these
damages at trial. Pl.’s Opp’n at 2 n.1. Therefore, the motion to dismiss will be granted as to
Plaintiff’s request for Consequential, Incidental, Special and Punitive damages.
D. Class Allegations
Defendant argues that striking the class action allegations is appropriate at the pleading
stage because “the complaint itself demonstrates that the requirements for maintaining a class
action cannot be met.” Def.’s Br. at 17 (citing Clark v. McDonald’s Corp., 213 F.R.D. 198, 205
n.3 (D.N.J. 2003)). In response, Plaintiff argues that Defendant’s motion is premature because
district courts frequently deny motions to strike class allegations before the plaintiff moves for
class certification. Further, Plaintiff asserts that he should be entitled to discovery before the
Court rules on the merits of the class allegations.
It is true that motions to strike class allegations are only granted “in rare cases.” Goode
v. Lexisnexis Risk & Info. Analytics Grp., Inc., 284 F.R.D. 238, 246 (E.D. Pa. 2012). Normally,
a putative class representative is afforded an opportunity to engage in discovery before testing
the merits of his class claims. See Ehrhart v. Synthes (USA), Civ. No. 07-1237, 2007 WL
4591276, at *4 (D.N.J. Dec. 28, 2007) (denying motion to strike class allegations as premature
because it would deny the plaintiffs the ability to fully develop their case through discovery);
Andrews v. Home Depot U.S.A., Inc., Civ. No. 03-5200, 2005 WL 1490474 (D.N.J. June 23,
2005) (denying motion to strike class allegations as premature because the court could not
conclude beyond doubt that no set of facts could support class treatment). However, class
allegations have been dismissed or stricken when it is clear from the face of the complaint that
the requirements for maintaining a class action cannot be met. See, e.g., Barabin v. Aramark
Corp., 210 F.R.D. 152, 162 (E.D. Pa. 2002), aff'd, 2003 WL 355417 (3d Cir. Jan. 24, 2003)
11

(granting motion to strike class allegations where it was apparent from the complaint that Rule
23 could not be satisfied). Thus, the Court does not subscribe to Plaintiff’s suggestion that courts
should never grant motions to strike class allegations, or that the timing of this motion is
dispositive on its own.
The Court must determine whether it is clear from the face of the operative complaint
that plaintiff cannot meet Rule 23’s requirements for a class action. Rule 23(a) provides that
class certification is proper 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.
Fed. R. Civ. P. 23(a).
In addition, Rule 23 mandates that parties seeking class certification satisfy the
requirements of one of the three subsections in Rule 23(b). Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 614-15 (1997). To satisfy Rule 23(b)(3), which is applicable here, 4 a party
seeking certification must meet two requirements. Id. First, common questions must
“predominate over any questions affecting only individual members.” Id. Second, class
resolution must be “superior to other available methods for the fair and efficient adjudication of
the controversy.” Id.
4

Plaintiff does not indicate in his brief under which section of 23(b) he will proceed, but the court conducts its
analysis under Rule 23(b)(3). Rule 23(b)(1) governs classes “in which separate actions by or against individual
class members would risk establishing incompatible standards of conduct for the party opposing the class,” or those
that would affect the interests of nonparty class members. Amchem Prods, Inc. v. Windsor, 521 U.S. 591, 614
(1997) (citations omitted). Rule 23(b)(2) governs class actions seeking injunctive or declaratory relief. Id. It is not
apparent to the Court that Plaintiff could represent a class under Rule 23(b)(1) or 23(b)(2).

12

The Court will address the provisions of Rule 23 that are contested by Defendant, which
are that Plaintiff’s NJFPA claim is unsuitable for class treatment because: (1) it lacks
“commonality” and fails the predominance requirement; (2) the class is not ascertainable through
objective criteria; and (3) Plaintiff’s proposed class includes persons without Article III standing.
1. Commonality / Predominance
Where an action proceeds under Rule 23(b)(3), as here, “the commonality requirement ‘is
subsumed by the predominance requirement’” set forth in Rule 23(b)(3). Danvers Motor Co. v.
Ford Motor Co., 543 F.3d 141, 148 (3d Cir. 2008) (quoting Amchem Prods., 521 U.S. at 627).
To certify a class under Rule 23(b)(3), “questions of law or fact common to class
members” must “predominate over any questions affecting only individual members.” Rule
23(b)(3)’s predominance requirement is “far more demanding” than the commonality
requirement set forth in Rule 23(a). Amchem Prods., 521 U.S. at 623-24. An inquiry into
predominance “tests whether proposed classes are sufficiently cohesive to warrant adjudication
by representation.” Id. at 623. Further, the inquiry into predominance assesses whether a class
action “would achieve economies of time, effort, and expense, and promote uniformity of
decision as to persons similarly situated.” Sullivan v. DB Inv., Inc., 667 F.3d 273, 297 (3d Cir.
2011) (quoting Fed. R. Civ. P. 23(b)(3) advisory committee’s note to 1966 amendment).
Defendant argues that Plaintiff’s claim fails the commonality and predominance test on
its face. A claim under the NJFPA requires a plaintiff to prove that he or she meets the statutory
definition of a franchisee, which was disclaimed by the contractual agreement between
Defendant and each potential class member. Thus, Defendant argues, each individual member of
the putative class will have to prove that he or she owned a franchise through evidence individual
to that person. Def.’s Br. at 21. The Court has already determined that merely being a party to
13

S-L’s Distributor Agreement is insufficient to establish the existence of a franchise under the
meaning of the NJFPA. See Opinion of December 19, 2012 at 8-10 (ECF Doc. No. 29). Under
New Jersey law, a franchisor must grant the franchisee “a license to use a trade name, trade
mark, service mark, or related characteristics,” and the parties must also have an arrangement “in
which there is a community of interest in the marketing of goods or services at wholesale, retail,
by lease agreement, or otherwise.” N.J.S.A. 56:10-3(a). In turn, the existence of a license can be
demonstrated when the alleged franchisor “vouches, as it were, for the activity” of the alleged
franchisee. Instructional Sys., Inc. v. Computer Curriculum Corp., 130 N.J. 324, 352 (1992).
Defendant further points out that Plaintiff was only able to state a claim under the NJFPA
by introducing allegations that Defendant provided him with clothing and business cards bearing
its trademarks and logos, maintained telephone numbers and voice mailboxes on his behalf,
permitted the display of S-L trademarks on his vehicle at Defendant’s expense, and referred to
Plaintiff and other distributors as “Snyder’s Salespeople.” See Opinion of January 29, 2014 at
10-11 (ECF Doc. No. 42). These facts were deemed sufficient to allege that Defendant
“vouched” for his activities.
It is true that some of Plaintiff’s allegations related to the license requirement were
individual to himself. However, it does not automatically follow that no facts could possibly be
developed through discovery that could satisfy the license requirement on a classwide basis. The
Third Circuit has specifically cautioned against striking class allegations prior to discovery on
the basis of lack of predominance, because “[p]articularly when a court considers predominance,
it may have to venture into the territory of a claim’s merits and evaluate the nature of the
evidence.” Landsman & Funk PC v. Skinder-Strauss Assocs., 640 F.3d 72, 93 (3d Cir. 2011)
(citing In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 310-11 (3d Cir. 2008)). The
14

Third Circuit further observed that “[i]n most cases, some level of discovery is essential to such
an evaluation.” Id. Landsman involved claims that the defendants sent fax advertisements to the
plaintiffs without their consent, in violation of the Telephone Consumer Protection Act. Id. at
73. The district court struck class allegations, finding that there were too many “crucial factual
determinations to be made with respect to claims and defenses that will vary from party to
party.” Id. at 93. In reversing the district court, the Third Circuit found that “delving into the
propriety of class certification was the wrong focus at that early stage of the proceeding.” Id. at
92. Discovery was necessary to determine the “factual issues regarding class members’ business
relationships with defendants.” Id. at 93.
This Court will decline to follow the path that the Third Circuit cautioned against in
Landsman. Plaintiff should be entitled to develop information as to the business relationships
between Defendant and its New Jersey distributors in an attempt to show through common proof
that it had a franchise relationship with each of these potential class members under the statutory
definition. In order to certify a class, Plaintiff will have to show that every S-L distributor
possessed a franchise as defined by New Jersey law “through evidence common to the class, as
opposed to individualized evidence.” In re Hydrogen Peroxide, 552 F.3d at 312. While it may
be difficult for Plaintiff to establish each necessary element through such common evidence, the
Court cannot conclude from the complaint that no such evidence could ever be produced.
2. Ascertainability
Before certifying a class, a court must determine whether it is objectively ascertainable.
Carrera v. Bayer Corp., 727 F.3d 300, 305 (3d Cir. 2013). Classes are not ascertainable when
“class members are impossible to identify without extensive and individualized fact-finding or
‘mini-trials.’” Id. at 303-04 (citing Marcus v BMW of N. Am., LLC, 687 F.3d 583, 593 (3d Cir.
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2012)). Rather, “the class must be currently and readily ascertainable based on objective
criteria.” Marcus, 687 F.3d at 593.
Ascertainability must be established “so that it will be clear later on whose rights are
merged into the judgment,” as otherwise, “satellite litigation will be invited over who was in the
class in the first place.” Marcus, 687 F.3d at 593 (internal citations omitted). Thus, testing a
putative class action for ascertainability “serves several important objectives:” (1) it eliminates
administrative burdens that would run counter to the intended efficiency of class actions in
general; (2) it serves to protect absent class members by ensuring that “the best notice
practicable” can be provided to class members; and (3) it protects defendants by clearly
identifying those who will be bound by the final judgment. Id.
Plaintiff defines the class as “all individuals or entities that operated out of a warehouse
in the State of New Jersey who were party to a Distributor Agreement with Snyder’s-Lance
Distribution, Inc. on November 1, 2011.” Sec. Am. Compl. ¶ 66. The Court observes nothing
on the face of the operative complaint that would allow it to conclude that all persons who meet
this definition could not be ascertained through objective methods, such as through Defendant’s
records of its Distributor Agreements. Defendant’s argument that Plaintiff cannot ascertain all
class members relates, not to Plaintiff’s actual proposed class definition, but to the additional
factors that Defendant believes are necessary in order to advance a viable NJFPA claim. Def.’s
Br. at 32. Defendant argues that “each potential class member would . . . need to present proof
as to each element required to establish a franchise under the NJFPA.” Id. The Court observes
no substantive difference between this objection and the one discussed in the previous section in
connection with predominance. Defendant’s expected lack of proof as to each element of an
NJFPA claim would be more properly addressed through a summary judgment motion, and any
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lack of common evidence should be addressed at the class certification stage under the analysis
related to commonality and predominance, as discussed in the previous section.
3. Article III Standing
The threshold question in every federal case is determining whether the court can
entertain the suit. Warth v. Seldin, 422 U.S. 490, 498 (1975)). Whether the court can entertain
the suit depends on Article III standing, or “whether the plaintiff has made out a ‘case or
controversy’ between himself and the defendant within the meaning of Article III.” Id. In order
to have Article III standing, a plaintiff must “have suffered an ‘injury in fact’ that is ‘distinct and
palpable’; the injury must be fairly traceable to the challenged action; and the injury must be
likely redressable by a favorable decision.” Denney v. Deutsche Bank AG, 443 F.3d 253, 263
(2d Cir. 2006) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–561 (1992)). In a
class action, each member of the class need not submit evidence of personal standing. Id.
However, “no class may be certified that contains members lacking Article III standing.” Id. at
264.
Defendant’s argument against standing is essentially the same one that it already
advanced in connection with predominance and ascertainability. Defendant argues that “absent
from the . . . proposed class definition is any reference to purported facts to establish that there
was, at a minimum, a license and a community of interest sufficient to establish the existence of
a franchise for all purported class members.” Def.’s Br. at 33. While Defendant characterizes
this as a standing argument, Defendant actually appears to challenge whether the injuries
allegedly suffered by putative class members are redressable under New Jersey franchise law.
The Court will thus not revisit this issue under the framework of a standing analysis. It is true
that “a named plaintiff cannot represent a class of persons who lack the ability to bring a suit
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themselves.” Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010). However, a
determination as to whether the class definition encompasses persons who have no viable cause
of action should be made with the benefit of a full record. Defendant has not cited any case
where a court struck class allegations at the pleading stage on the basis of lack of standing by
potential absent class members. If all persons with a Distributor Agreement with S-L and
warehouse space in New Jersey were franchisees under the meaning of the NJFPA, then they
would each appear to have standing. Whether or not this is the case will turn upon whether
Plaintiff can produce adequate relevant evidence, common to the class. As the Court has
discussed, Plaintiff is entitled to seek to develop such evidence through discovery. Accordingly,
Defendant’s motion to strike the class action allegations must be denied as premature.
E. Rent Allegations
Finally, Defendant moves to strike an allegation in the Second Amended Complaint that
Plaintiff and members of the putative class “pay a $35 per week fee to S-L for, inter alia,
warehouse rent.” Sec. Am. Compl. ¶ 87. 5 Defendant argues that this allegation is contradicted
by an exhibit attached to the Second Amended Complaint, which is a copy of Defendant’s
“Standard Operating Guidelines.” That document provides for a $35 “Weekly Administrative
Service Charge for services, supplies and use of computer system.” Standard Operating
Guidelines at 2, Sec. Am. Compl. Ex. B. Because the document does not indicate that any part
of the $35 is for “rent,” Defendant believes the allegation should be stricken from the pleading.
The Court observes first that Rule 12(f) only allows a Court to strike material that is
“redundant, immaterial, impertinent, or scandalous matter.” Defendant cites no authority that

5

This allegation appears to be relevant because the NJFPA only applies to a franchise “which contemplates or
requires the franchisee to establish or maintain a place of business within the State of New Jersey.” N.J.S.A. 56:104.

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material may be stricken because it is incorrect. Of course, Plaintiff will have to demonstrate
through admissible evidence that he paid rent if he wishes to establish this to defeat a motion for
summary judgment or to satisfy an element of his claim. However, disputed issues of fact are
not addressed by courts through motions to strike. Eisai Co. v. Teva Pharm. USA, Inc., 629 F.
Supp. 2d 416, 425 (D.N.J. 2009). Courts do not grant motions to strike individual allegations
from a pleading “unless the moving party shows that ‘the allegations have no possible relation to
the controversy and may cause prejudice to one of the parties, or if the allegations confuse the
issues.’” Id. (citing Garlanger v. Verbeke, 223 F. Supp. 2d 596, 609 (D.N.J. 2002)). Defendant
cites no law where a court has granted a similar motion to strike, and this Court finds that it
would not be proper to make conclusions about the evidence supporting Plaintiff’s allegations at
this stage.
Further, Plaintiff did not plead that the Standard Operating Guidelines provided for the
payment of rent. He merely pleaded that he paid $35 per week, and that the $35 in part,
constituted warehouse rent. Sec. Am. Compl. ¶ 87. Thus, the document that Defendant points to
that appears to indicate that Plaintiff was required to pay $35 for non-rent purposes does not
directly disprove his allegation. The Court will deny the motion to strike Plaintiff’s allegation
referring to rent.
IV.

CONCLUSION
For the foregoing reasons, Defendant’s motion will be GRANTED IN PART, DENIED

IN PART. The motion will be granted as to Plaintiff’s demands for declaratory and injunctive
relief, and these demands will be stricken from the Second Amended Complaint. Plaintiff’s
demands for consequential, incidental, special and punitive damages will be dismissed. The
motion will be denied as to Plaintiff’s class action allegations and allegations pertaining to rent,
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and denied without prejudice as to Plaintiff’s jury demand. An accompanying Order shall issue
today.

Dated: 9/5/2014

s/ Robert B. Kugler
ROBERT B. KUGLER
United States District Judge

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