MARDIS et al v. JACKSON HEWITT TAX SERVICE INC. et al
OPINION. Signed by Judge John Michael Vazquez on 4/27/2021. (lag, )
Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
WANDA MARDIS, et al., individually and on
behalf of all others similarly situated,
Civil Action No. 16-2115
JACKSON HEWITT TAX SERVICE INC., et
John Michael Vazquez, U.S.D.J.
This putative class action alleges that Defendants paid Plaintiffs less than they should have.
Plaintiffs, tax preparers, assert that Defendants’ promotional program of providing customers with
gift cards resulted in lower commissions for Plaintiffs, in violation of their contractual rights.
Plaintiffs also allege that Defendants were unjustly enriched and violated multiple state wage and
hour laws. Presently before the Court are (1) the motion to deny class certification brought by
Defendants Jackson Hewitt Tax Service Inc. (“JHTSI”), Jackson Hewitt Inc. (“JHI”), and Tax
Services of America, Inc. (“TSA”),1 D.E. 208, and (2) Plaintiffs’ cross-motion for class
Defendants also seek leave to file a brief in excess of the Local Rule 7.2(b) page-limit nunc pro
tunc. D.E. 208. Defendants should have obtained permission to file an overlength brief in advance
rather than request permission after the fact. Although the Court could impose sanctions for
violating L. Civ. R. 7.2(b) (see, e.g., In re Nice Sys., Ltd. Secs. Litig., 135 F. Supp. 2d 551, 558 n.6
(D.N.J. 2001) (denying motion to dismiss without prejudice for failure to comply with L. Civ. R.
7.2(b))), the Court will not do so given the fact that Plaintiffs do not appear to oppose this aspect
of Defendants’ motion. Accordingly, Defendants’ motion for leave to file an overlength brief nunc
pro tunc is granted.
certification, D.E. 211. The Court reviewed the parties’ submissions2 and considered the motions
without oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Local Civil Rule
78.1(b). For the following reasons, Defendants’ motion to deny class certification is GRANTED
and Plaintiffs’ motion for class certification is DENIED without prejudice.
A. Factual Background
The Court included an extensive factual background in its March 23, 2017 Opinion,3
D.E. 44, and provided an additional factual history in its December 26, 2019 Opinion, D.E. 191.
The Court incorporates both by reference here. Defendants provide tax preparation services to
customers under the tradename “Jackson Hewitt.”4 TAC ¶¶ 38-39. TSA is a subsidiary of JHTSI
and/or JHI, and operates approximately 20% of locations operating under the name of “Jackson
Hewitt.” Id. ¶ 39. The remaining locations are franchisees that are “closely supervised and
controlled by JHTSI and/or JHI.” Id. Named Plaintiffs claim that they were previously, or are
currently, employed by Jackson Hewitt as tax preparers. Plaintiffs worked at both TSA and
franchisee locations. Id. ¶¶ 1-20.
In the TAC, Plaintiffs alleged that all tax preparers have compensation plans based, in part,
Defendants’ brief in support of their motion to deny class certification is referred to as “Defs.
Br.,” D.E. 208-1; Plaintiffs’ brief in opposition to Defendants’ motion and in support of their crossmotion is referred to as “Plfs. Br.,” D.E. 212; Defendants’ reply brief in support of their motion
and response in opposition to Plaintiffs’ cross-motion is referred to as “Defs. Reply,” D.E. 210;
and Plaintiffs’ reply in support of their cross-motion is referred to as “Plfs. Reply,” D.E. 209. In
addition, it appears that Plaintiffs filed a second, identical version of their reply brief at D.E. 213.
The Court’s March 23, 2017 Opinion was issued by former Chief Judge Jose Linares. This matter
was reassigned to the undersigned on May 20, 2019. D.E. 186.
The facts are derived from Plaintiffs’ Third Amended Complaint (“TAC”), D.E. 68, and the
exhibits attached to the parties’ briefs, D.E. 208, 209, 210, 212.
on the individual revenues they generate during a tax season. Id. ¶ 75. Now, however, Plaintiffs
concede that not all tax preparers were entitled to receive a commission, that some commissions
were not based on revenues, and other tax preparers might not have even had an employment
contract. Plfs. Br. at 15. Plaintiffs indicate that these tax preparers would not be members of their
proposed classes. For those tax preparers who were entitled to receive incentive pay based on
revenue, Plaintiffs allege that JHI and JHTSI deducted the value of prepaid gift cards that were
provided to customers through a gift card promotion (the “Promotion”) from Plaintiffs’ revenues
when calculating their commissions. TAC ¶¶ 52, 56-57. Plaintiffs contend that this improper
practice caused them to receive lower commission payments. Id.
B. Procedural History
Plaintiffs filed their initial complaint in this matter on April 15, 2016. D.E. 1. On October
4, 2017, Plaintiffs were instructed to file the TAC, D.E. 66, which they filed on November 15,
2017, D.E. 68. In the TAC, Plaintiffs assert the following claims against either JHTSI, JHI, TSA,
and multiple franchisees (the “Franchisee Defendants”): (1) breach of contract (Count One); (2)
unjust enrichment (Count Two); and (3) violations of multiple state wage and hour laws (Counts
Three through Twelve). TAC ¶¶ 253-330.
JHTSI; JHI; and the Franchisee Defendants Lemaire-McCumsey Group, Inc.; KE Farmer
Enterprises, LLC; Taylor Tax & Accounting; and Wing Financial Services, LLC filed motions to
dismiss the TAC. D.E. 165-68. On December 26, 2019, the Court granted the Franchisee
Defendants’ motions to dismiss for lack of personal jurisdiction. D.E. 191-92.
On July 9, 2020, Defendants5 filed their motion to deny class certification and Plaintiffs
None of the remaining Franchisee Defendants joined in Defendants’ motion to deny class
certification, but it appears that none of the remaining Franchisee Defendants have been served.
filed their cross-motion to certify a class. D.E. 208, 211. Through their cross-motion, Plaintiffs
seek to certify the following classes:
1. A nationwide class of persons employed as tax preparers by TSA from
the 2013-2014 tax season until the 2016-2017 tax season whose pay was
lowered by the JH Defendants’ Promotion (for Plaintiffs’ breach of
contract and unjust enrichment claims);
2. A nationwide class of persons employed as tax preparers by franchisees
from the 2013-2014 tax season until the 2016-2017 tax season whose
pay was lowered by the JH Defendants’ Promotion (for Plaintiffs’
breach of contract and unjust enrichment claims);
3. Ten state subclasses of people jointly employed by JHI and the
franchisees in the states of New Jersey, New York, Illinois, Kentucky,
North Carolina, California, Pennsylvania, South Carolina, Oklahoma,
and Washington whose pay was lowered by the JH Defendants’
Promotion (for Plaintiffs’ state law wage and hour claims)
Plfs. Br. at 2, 6, 18; Plfs. Reply at 2.
CLASS CERTIFICATION STANDARD
Federal Rule of Civil Procedure 23 governs class actions. Marcus v. BMW of N. Am., LLC,
687 F.3d 583, 590 (3d Cir. 2012). “[E]very putative class action must satisfy the four requirements
of Rule 23(a) and the requirements of either Rule 23(b)(1), (2), or (3).” Id. at 590 (citing Fed. R.
Civ. P. 23(a)-(b)). Plaintiffs first bear the burden of showing that the proposed classes satisfy the
four requirements of Rule 23(a):
(1) the class is so numerous that joinder of all members is
(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); Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013). These four prongs are
often referred to as numerosity, commonality, typicality, and adequacy. See, e.g., Erie Ins. Exch.
v. Erie Indem. Co., 722 F.3d 154, 165 (3d Cir. 2013).
Plaintiffs also must show that the proposed classes satisfy Rule 23(b)(1), (b)(2), or (b)(3).
Marcus, 687 F.3d at 590. Here, Plaintiffs argue that the putative class meets the requirements of
Rule 23(b)(3). Under Rule 23(b)(3), a plaintiff must establish the following:
[T]he questions of law or fact common to class members
predominate over any questions affecting only individual members,
and that a class action is superior to other available methods for
fairly and efficiently adjudicating the controversy. The matters
pertinent to these findings include: (A) the class members' interests
in individually controlling the prosecution or defense of separate
actions; (B) the extent and nature of any litigation concerning the
controversy already begun by or against class members; (C) the
desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and (D) the likely difficulties in
managing a class action.
Fed. R. Civ. P. 23(b)(3).
Pursuant to Rule 23(c)(1)(A), a court “must determine by order whether to certify the action
as a class action.” Fed. R. Civ. P. 23(c)(1)(A). The decision to certify a class or classes is left to
the discretion of the court. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 310 (3d Cir.
2008), as amended (Jan. 16, 2009). “The requirements set out in Rule 23 are not mere pleading
rules.” Marcus, 687 F.3d at 591 (citing Hydrogen Peroxide, 552 F.3d at 316). “The party seeking
certification bears the burden of establishing each element of Rule 23 by a preponderance of the
evidence.” Id. (citing Hydrogen Peroxide, 552 F.3d at 307). “A party’s assurance to the court that
it intends or plans to meet the requirements is insufficient.” Hydrogen Peroxide, 552 F.3d at 318.
The Third Circuit emphasizes that “actual, not presumed, conformance with Rule 23
requirements is essential.” Marcus, 687 F.3d at 591 (citing Gen. Tel. Co. of Sw. v. Falcon, 457
U.S. 147, 160 (1982)) (internal quotations omitted). “To determine whether there is actual
conformance with Rule 23, a district court must conduct a ‘rigorous analysis’ of the evidence and
arguments put forth.” Id. (quoting Falcon, 457 U.S. at 161). This “rigorous analysis” requires a
district court to “resolve all factual or legal disputes relevant to class certification, even if they
overlap with the merits – including disputes touching on elements of the cause of action.” Id.
Therefore, a district court “may delve beyond the pleadings to determine whether the requirements
for class certification are satisfied.” Hydrogen Peroxide, 552 F.3d at 320.
A. Rule 23(a) Requirements
“No single magic number exists” to meet the numerosity requirement. Summerfield v.
Equifax Info. Servs. LLC, 264 F.R.D. 133, 139 (D.N.J. 2009). Yet, “the Third Circuit has
previously held that the numerosity requirement will generally be satisfied ‘if the named plaintiff
demonstrates that the potential number of plaintiffs exceeds 40.’”
Id. (quoting Stewart v.
Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001)). But “[m]ere speculation as to the number of class
members—even if such speculation is ‘a bet worth making’—cannot support a finding of
numerosity.” Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 357 (3d Cir. 2013) (citing Marcus,
687 F.3d at 596).
Plaintiffs “submit that the Class includes thousands of individuals throughout the country.”
Plfs. Br. at 9. Plaintiffs provide no factual support for this assertion in their initial brief. In their
reply brief, however, Plaintiffs demonstrate that more than 13,000 tax preparers prepared at least
one tax return for each year at issue at a franchisee location, and approximately 5,000 tax preparers
prepared a return for each year at issue for TSA location. Plfs. Reply at 9-10; Id., Exs. 2, 3. For
the proposed subclasses, Plaintiffs argue that each state subclass will consist of more than forty
individuals per state, as each state at issue had more than forty individual franchisee storefronts or
kiosks operating as Jackson Hewitt. Plfs. Br. at 9, Ex. 1. Plaintiffs continue that it is reasonable
to assume that at least one tax preparer worked at each location, such that the “Court could properly
use its ‘common sense’” to determine that Plaintiffs “far exceed any minimal numerosity
requirement.” Plfs. Reply at 9.
Plaintiffs fail to meet their burden as to numerosity. “Where a putative class is some subset
of a larger pool, the trial court may not infer numerosity from the number in the larger pool alone.”
Hayes, 725 F.3d at 358; see also Mielo v. Steak ‘n Shake Operations, Inc., 897 F.3d 467, 484 (3d
Cir. 2018) (explaining that to determine numerosity, “a court must be presented with evidence that
would enable the court to do so without resorting to mere speculation”). In Hayes, for example,
the defendant provided data regarding a total number of transactions, and the class consisted of
consumers related to some, but not all, of these transactions. The trial court concluded that even
if 5% of the transactions were for an item within the class definition, numerosity would be satisfied.
Hayes, 725 F.3d at 353. On appeal, the Third Circuit determined that the plaintiff “premised his
argument for numerosity on improper speculation.” Id. at 357. The Circuit explained that the only
concrete evidence provided by the plaintiff was the maximum amount and that the plaintiff failed
to provide facts demonstrating how this amount would be lowered. The Circuit stated as follows:
In short, the only conclusion that can be drawn from the evidence
presented to the trial court is that the number of class members
would be equal-to-or-less-than 3,500 and equal-to-or-greater than
zero. Within that range, we can only speculate as to the number of
Id. at 357-58. Accordingly, the Mielo court found that the plaintiff’s evidence was insufficient to
establish numerosity. Id. at 358.
Here, the nationwide franchisee class and the state subclasses both suffer from the same
shortcomings. Plaintiffs admit that some franchisees did not pay incentives or bonuses, others
paid bonuses based purely on the number of returns filed, and some franchisees may not have
entered into contracts with their tax preparers. Thus, Plaintiffs concede “[t]hose franchisee taxpreparers simply are not class members.” Plfs. Br. at 15. But Plaintiffs provide no information as
to which or how many franchisees might not be included in the nationwide franchisee class or any
of the subclasses. Like in Hayes, Plaintiffs’ lack of concrete information means that the Court
would have to speculate as to the number of members in the proposed classes. Accordingly,
Plaintiffs fail to establish numerosity for the nationwide franchisee and state subclasses. Because
Plaintiffs do not establish numerosity, the Court cannot certify these classes. See Marcus, 687
F.3d at 591 (“The party seeking certification bears the burden of establishing each element of Rule
23 by a preponderance of the evidence.” (citing Hydrogen Peroxide, 552 F.3d at 307)).
Consequently, Defendants’ motion is granted on these grounds and Plaintiffs’ cross-motion is
Turning to the nationwide TSA class, Plaintiffs provide sufficient evidence of the number
of tax returns prepared at a TSA location for the years at issue. Plfs. Reply, Ex. 3. Moreover,
Plaintiffs plead that all TSA tax preparers were presented with a commission-based compensation
plan. TAC ¶ 75. Although Defendants maintain that the plans were not identical, they do not
challenge the contention that all TSA employees had contracts that provided for some form of
commission-based incentive. Thus, unlike for the franchisee classes, Plaintiffs are not asking the
Court to speculate as to the number of class members. Plaintiffs, therefore, establish numerosity
for the nationwide TSA class. The Court turns to the remaining Rule 23(a) factors for the
nationwide TSA class only.
“Rule 23(a)(2) requires Plaintiffs to demonstrate that ‘there are questions of law or fact
common to the class.’” Mielo, 897 F.3d at 487 (quoting Fed. R. Civ. P. 23(a)(2)). However, Rule
23(a)(2)’s “language is easy to misread, since any competently crafted class complaint literally
raises common questions.” Id. at 487 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349
(2011) (internal quotation omitted)). “A complaint’s mere recital of questions that happen to be
shared by class members” is insufficient; instead, “‘[c]ommonality requires the plaintiff to
demonstrate that the class members have suffered the same injury.’” Id. (alterations in original)
(quoting Dukes, 564 U.S. at 349-50) (internal quotation omitted). “What matters . . . is not the
raising of common ‘questions’ . . . but, rather the capacity of a classwide proceeding to generate
common answers apt to drive the resolution of the litigation.” Dukes, 564 U.S. at 350 (citation
omitted). In other words, Plaintiffs’ claims “must depend upon a common contention” whereby
“determination of its truth or falsity will resolve an issue that is central to the validity of each one
of the claims in one stroke.” Id. In analyzing commonality, a court must focus on whether a
defendant’s conduct is common as to all class members. Reyes v. Netdeposit, LLC, 802 F. 3d 469,
486 (3d Cir. 2015).
Plaintiffs maintain that this matter presents two “simple common questions: . . . did the
Promotion lower tax preparers pay?” and “did the tax-preparer’s contract provide that such a
deduction could be made?” Plfs. Br. at 10. Defendants counter that the lack of an identical contract
among putative class members defeats commonality. Defs. Reply at 29. “As long as all putative
class members were subjected to the same harmful conduct by the defendant, Rule 23(a) will
endure many legal and factual differences among the putative class members.” In re Community
Bank of N. Va. Mortg. Lending Practices Litig., PNC Bank NA, 795 F.3d 380, 397 (3d Cir. 2015).
Consequently, the lack of an identical contract is not detrimental here. Even with differences in
class members’ contracts, common questions exist. For example, whether the Promotion lowered
class members’ pay and whether this lowered pay was in violation of class members’ employment
contracts? Defendants do not point to any evidence as to why this inquiry cannot be answered on
a classwide basis. Consequently, the Court concludes that Plaintiffs sufficiently demonstrate
“[T]ypicality demands that ‘the claims or defenses of the representative parties are typical
of the claims or defenses of the class.’” Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
259 F.3d 154, 185 (3d Cir. 2001), as amended (Oct. 16, 2001) (quoting Fed. R. Civ. P. 23(a)(3)).
In other words, a lead plaintiff’s claims must be “comparably central” to the claims of the absent
parties. Id. at 183. This ensures that “the interests of the class and the class representatives are
aligned ‘so that the latter will work to benefit the entire class through the pursuit of their own
goals.’” Id. at 182-83 (quoting Barnes v. Am. Tobacco Co., 161 F.3d 127, 141 (3d Cir. 1998)).
The typicality requirement is “intended to preclude certification of those cases where the
legal theories of the named plaintiffs potentially conflict with those of the absentees.” Id. at 183.
However, all class members are not required to share identical factual circumstances – the
requirement only mandates that a named plaintiff’s individual circumstances cannot be “markedly
different” from the other class members. Id. “If the claims of the named plaintiffs and putative
class members involve the same conduct by the defendant, typicality is established regardless of
factual differences.” Id. at 183-84. For example, “a claim framed as a violative practice can
support a class action embracing a variety of injuries so long as those injuries can all be linked to
the practice.” Id. at 184 (citing Baby Neal ex rel. Kanter v. Casey, 43 F.3d 48, 63 (3d Cir. 1994)).
The Third Circuit has reasoned that the typicality requirement “does not mandate that all putative
class members share identical claims, because even relatively pronounced factual differences will
generally not preclude a finding of typicality where there is a strong similarity of legal theories or
where the claim arises from the same practice or course of conduct.” Id. (internal quotations and
For those Plaintiffs who were employed by TSA, their claims are typical of other putative
TSA tax preparers class members. Plaintiffs have TSA contracts that provided for incentive-based
compensation and contend that Defendants’ Promotion lowered their incentive pay and unjustly
enriched Defendants. Moreover, Defendants fail to identify any unique defenses or issues that
would make Plaintiffs’ claim atypical from other TSA tax preparer class members. Although the
contracts will be different, this is not fatal to Plaintiffs’ typicality argument because the ultimate
inquiry is if the Promotion adversely impacted class members’ incentive pay. Critically, Plaintiffs
allege that all contracts included a revenue-based incentive plan, and Defendants do not identify
any markedly different terms amongst the TSA contracts. See, e.g., Beck v. Maximus, Inc., 457
F.3d 291, 296 (3d Cir. 2006) (“Factual differences will not render a claim atypical if the claim
arises from the same event or practice or course of conduct that gives rise to the claims of the class
members, and if it is based on the same legal theory.”). Therefore, the Court concludes that
Plaintiffs establish typicality.
In reviewing the adequacy element, a court must decide whether the class representative
“has the ability and the incentive to represent the claims of the class vigorously, that he or she has
obtained adequate counsel, and that there is no conflict between the individual’s claims and those
asserted on behalf of the class.” Sapir v. Averback, No. 14-07331, 2015 WL 858283, at *3 (D.N.J.
Feb. 26, 2015) (citing Falcon, 457 U.S. at 157 n.13). “Adequate representation depends on two
factors: (a) the plaintiff’s attorney must be qualified, experienced, and generally able to conduct
the proposed litigation, and (b) the plaintiff must not have interests antagonistic to those of the
class.” Wetzel v. Liberty Mut. Ins. Co., 508 F.2d 239, 247 (3d Cir. 1975). The “linchpin of the
adequacy requirement is the alignment of interests and incentives between the representative
plaintiffs and the rest of the class.” Dewey v. Volkswagen Aktiengesellschaft, 681 F. 3d 170, 183
(3d Cir. 2015). Adequacy functions as a “catch-all requirement” that “tend[s] to merge with the
commonality and typicality criteria of Rule 23(a).” Newton, 259 F.3d at 185 (citing Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997)). “Whether a party adequately represents a class
depends on all the circumstances of the particular case.” Wetzel, 508 F.2d 247.
Plaintiffs argue that their interests and incentives align with the putative class members,
and that they have obtained adequate class counsel in this matter. Plfs. Br. at 12-13. Defendants
fail to meaningfully challenge Plaintiffs’ arguments. Further, the Court cannot identify any reason
why the named Plaintiffs or class counsel are inadequate. Therefore, the Court determines that
Plaintiffs appropriately demonstrate adequacy.
In sum, Plaintiffs satisfies the Rule 23(a) requirements for the nationwide TSA class.
B. Rule 23(b) Requirements
As discussed, Plaintiffs seek to certify their nationwide TSA tax preparers class pursuant
to Rule 23(b)(3). The requirements for Rule 23(b)(3) class certification are that “the questions of
law or fact common to class members predominate over any questions affecting only individual
members, and that a class action is superior to other available methods for fairly and efficiently
adjudicating the controversy.” Dukes, 564 U.S. at 362 (emphases added) (citing Fed. R. Civ. P.
23(b)(3)). These are commonly referred to as the “predominance” and “superiority” requirements.
Id. The Third Circuit has also recognized that “[a] plaintiff seeking certification of a Rule 23(b)(3)
class must prove by a preponderance of the evidence that the class is ascertainable.” Byrd v.
Aaron’s Inc., 784 F.3d 154, 163 (3d Cir. 2015), as amended (Apr. 28, 2015).
In conducting a predominance and superiority inquiry, the following factors are relevant:
(A) the class members’ interests in individually controlling the
prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the
controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation
of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3)(A)-(D).
The predominance requirement is “a ‘far more demanding’ standard than the commonality
requirement of Rule 23(a).” Gonzalez v. Corning, 885 F.3d 186, 195 (3d Cir. 2018) (quoting
Amchem Prods., 521 U.S. at 624). It “asks whether the common, aggregation-enabling, issues in
the case are more prevalent or important than the non-common, aggregation-defeating, individual
issues.” Ferreras v. Am. Airlines, Inc., 946 F.3d 178, 185 (3d Cir. 2019) (quoting Tyson Foods,
Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016)). “Predominance turns on the ‘nature of the
evidence’ and whether ‘proof of the essential elements of the cause of action requires individual
treatment.’” Williams v. Jani-King of Phila. Inc., 837 F.3d 314, 319 (3d Cir. 2016) (quoting
Hydrogen Peroxide, 552 F.3d at 311).
“At the class certification stage, the predominance requirement is met only if the district
court is convinced that ‘the essential elements of the claims brought by a putative class are capable
of proof at trial through evidence that is common to the class rather than individual to its
members.’” Reinig v. RBS Citizens, N.A., 912 F.3d 115, 127 (3d Cir. 2018) (quoting Gonzalez,
885 F.3d at 195). To assess this requirement, district courts “must look first to the elements of the
plaintiffs’ underlying claims and then, ‘through the prism’ of Rule 23, undertake a ‘rigorous
assessment of the available evidence and the method or methods by which [the] plaintiffs propose
to use the evidence to prove’ those elements.” Id. at 128 (emphasis added) (quoting Marcus, 687
F.3d at 600). As noted, Plaintiffs assert the following claims for the nationwide TSA tax preparers
class: (1) breach of contract; and (2) unjust enrichment. The Court reviews each claim separately.
a. Breach of Contract
Defendants focus on the predominance inquiry. Defendants stress that there is not a
common contract, which will lead to numerous individualized issues such as whether a class
member had a contract, whether the contract provided for incentive pay, whether the class member
was entitled to incentive pay based on his or her performance, and whether incentive pay was
improperly calculated. Defendants contend that these individual issues predominate. Defs. Br. at
20-25. Unlike the franchisee classes, Plaintiffs plead that every TSA tax preparer had a contract
that provided for a commission based on revenues. TAC ¶ 75. Although Defendants establish
that the terms of these contracts varied, the difference appears to be the amount of commission
that the tax preparer may have been entitled to receive. Ream. Decl. ¶¶ 6-9, D.E. 208-3. Critically,
Defendants do not contest Plaintiffs’ allegation that every TSA tax preparer had a contract and do
not argue that TSA provided anything other than commission-based incentive pay. Accordingly,
it appears that many of Defendants’ hypothetical individualized issues are not supported by the
Plaintiffs, however, do not explain which state’s law applies to their breach of contract
claim. And it appears that numerous states’ laws are implicated. For this reason, Plaintiffs fail to
meet their burden of establishing predominance for the TSA nationwide class. See Gray v. Bayer
Corp., No. 08-4716, 2011 WL 2975768, at *7 (D.N.J. July 21, 2011) (emphasis added) (explaining
that it is the “plaintiff’s burden to ‘credibly demonstrate, through an extensive analysis of state
law variances, that class certification does not present insuperable obstacles.’” (quoting Amchem
Prods., 521 U.S. at 623)). This is the same shortcoming that the Court reviews as to Plaintiffs’
claim for unjust enrichment.
Plaintiffs contend that as to the various contracts at issue, there are only “minor variances
with regard to specific terms,” Plfs. Br. at 16, (i.e., the amount of the incentive pay) but that these
differences do not create individualized issues that defeat predominance. Plaintiffs also contend
that these “minor variances” largely impact damages, and individualized damages issues do not
defeat predominance. Plfs. Br. at 16. Although individualized damages issues do not necessarily
defeat predominance, there must still be common questions as to liability. See In re Suboxone
(Buprehorphine Hydrochlorine & Naloxone) Antitrust Litig., 967 F.3d 264, 272 (3d Cir. 2020).
At a minimum, Plaintiffs have not sufficiently demonstrated that the differences are limited
to damages. For example, in some of the sample TSA plans for 2014, there is apparently no
express guidance as to how the Promotion was factored into the revenues used calculate tax
preparers’ commissions. See, e.g., Plfs. Br., Ex. 2 at 2. For these contracts, it is not clear how, or
to what extent, the Promotion impacted the commission calculation. The 2015 and 2016 sample
plans and another 2014 plan provide that “[t]he Company plans to utilize the following guidelines
when calculating the amount of incentive compensation” and that “Net Revenues are generally
calculated by taking the total fees received by TSA from your preparation” but that “discounts
(including the $50 Gift Program)” would be subtracted. Id. at 7, 9, 11 (emphases added).
Plaintiffs do not adequately explain how this issue can be resolved on a classwide basis. And this
inquiry will likely implicate the first deficiency – the application of the law from various states.
See Agostino v. Quest Diagnostics Inc., 256 F.R.D. 437, 468 (D.N.J. 2009) (noting that “state
common law breach of contract claims vary with respect to statutes of limitations, parol evidence
and burdens of proof” and that these differences defeated predominance).
Consequently, Plaintiffs fail to establish predominance for the TSA nationwide class.
b. Unjust Enrichment
Defendants argue that variations in state law defeat predominance for Plaintiffs’ unjust
enrichment claim. See Defs. Reply at 17-18. Plaintiffs counter that there is no significant
difference in unjust enrichment law from state to state and that “[i]t is a very simple, universal
claim that is easy to apply.” Plfs. Br. at 18. “[V]ariations in the rights and remedies available to
injured class members under the various laws of the fifty states [does] not defeat commonality and
predominance.” Sullivan v. DB Invs., Inc., 667 F.3d 273, 301 (3d Cir. 2011). When a court is
presented with a nationwide class, however, the different state laws must fall “into a limited
number of predictable patterns.” Id. To determine if that is the case, a court must examine the
elements of the underlying causes of action. Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353,
370 (3d Cir. 2015). Again, it is the “plaintiff’s burden to ‘credibly demonstrate, through an
extensive analysis of state law variances, that class certification does not present insuperable
obstacles.’” Gray, 2011 WL 2975768, at *7 (emphasis added) (quoting Amchem Prods., 521 U.S.
at 623). Plaintiffs’ cursory argument that their unjust enrichment claim is easy to apply is
insufficient to meet their burden. Consequently, Plaintiffs’ fail to establish that common issue
predominate for their unjust enrichment claim.
In sum, Plaintiffs do not meet their burden of establishing predominance for the breach of
contract and unjust enrichment claims.
2. Superiority and Ascertainability
Because Plaintiffs do not meet their burden as to predominance, the Court need not address
superiority or ascertainability, and the Court will not certify the nationwide TSA tax preparers
For the reasons stated above, and for good cause shown, Defendants’ motion to deny class
certification, D.E. 208, is GRANTED and Plaintiffs’ cross-motion for class certification, D.E.
211, is DENIED without prejudice. An appropriate Order accompanies this Opinion.
Dated: April 27, 2021
John Michael Vazquez, U.S.D.J.
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