SLEBODNIK et al v. THE REYNOLDS AND REYNOLDS COMPANY
Filing
14
OPINION filed. Signed by Judge Freda L. Wolfson on 11/20/2014. (kas, )
* NOT FOR PUBLICATION *
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
____________________________________
:
MICHAEL SLEBODNIK, DAVID
:
YOUSHOCK, AND CLAUDIA
:
METCALF, ON BEHALF OF
:
THEMSELVES AND THE PUTATIVE
:
CLASS,
:
: Civ. Action No. 3:14-CV-03772 (FLW)
Plaintiffs,
:
:
OPINION
v.
:
:
THE REYNOLDS AND REYNOLDS
:
COMPANY,
:
:
Defendant.
:
____________________________________:
WOLFSON, United States District Judge:
Presently before the Court is a motion filed by The Reynolds and Reynolds
Company (“Reynolds” or “Defendant”) to dismiss, and in the alternative, a motion to strike
all class action allegations in the Complaint filed by plaintiffs Michael Slebodnik
(“Slebodnik”), David Youshock (“Youshock”), and Claudia Metcalf (“Metcalf”) on behalf
of themselves and the putative class (collectively, “Plaintiffs”). Plaintiffs originally filed
their Complaint in the Hunterdon County Superior Court of New Jersey, but Defendant
removed the putative class action to this Court under the Class Action Fairness Act
(“CAFA”). The instant matter arises out of Plaintiffs’ allegation that Defendant, a national
automotive dealer support company, sells license plate frames that are not compliant with
New Jersey motor vehicle laws, as well as some other states. In the motion to dismiss,
Defendant argues that Plaintiffs fail to state a claim under the New Jersey Consumer Fraud
Act (“NJCFA”) and New Jersey’s implied warranty of merchantability. In the motion to
strike, Defendant, alternatively, argues that Plaintiffs cannot allege a permissible
nationwide class. Plaintiffs oppose both motions. After carefully considering the
submissions of the parties, the Court GRANTS Defendant’s motion to dismiss, and
Defendant’s motion to strike is DENIED as moot.
BACKGROUND AND PROCEDURAL HISTORY
The named Plaintiffs are all citizens of New Jersey. Id. at ¶¶ 4, 7, 10. In their
Complaint, Plaintiffs allege that they purchased or leased their vehicles from the New
Jersey based Flemington Car and Truck Company Family of Dealerships (“Flemington
Dealerships”). See id. at ¶¶ 5, 8, 11. Specifically, Slebodnik purchased a Jeep Grand
Cherokee. Id. at ¶ 5. Youshock leased a Nissan Murano. Id. at ¶ 8. And, Metcalf purchased
a Buick Enclave. Id. at ¶ 11. Plaintiffs also allege that the Flemington Dealerships installed
a Reynolds’ front and rear license plate frame – made by Reynolds – on Plaintiffs’ vehicles.
See id. at ¶¶ 6, 9, 12. In 2011, Youshock and Metcalf were each issued a citation for
“unclear plates” by municipal police officers. 1 See id. at ¶¶ 28, 30. From the Complaint, it
does not appear that Slebodnik received a citation in connection with the Reynolds’ license
plate frames.
1
The relevant statute states that “[a]ll identification marks shall be kept clear and
distinct and free from grease, dust, or other blurring matter, so as to be plainly visible at all
times of the day and night.” N.J.S.A. 39:3-33. In addition, the statute also states, in
pertinent part, that:
No person shall drive a motor vehicle which has a license plate
frame or identification marker holder that conceals or otherwise
obscures any part of any marking imprinted upon the vehicle’s
registration plate or any part of any insert which the director, as
hereinafter provided, issues to be inserted in and attached to that
registration plate marker.
Id.
2
The Flemington Dealerships are located in New Jersey, and they operate multiple
motor vehicle dealership locations, which sell new, certified pre-owned, and used vehicles.
Id. at ¶¶ 17-18. In total, the Flemington Dealerships sell seventeen different brands of
vehicles, both domestic and foreign. Id. In the past six years, Plaintiffs allege that the
Flemington Dealerships have sold and leased hundreds of thousands of new, certified preowned, and used vehicles. See id. at ¶¶ 24-25.
Reynolds, located in Ohio, Id. at ¶ 13, is a national automobile dealer support
company. See id. at ¶ 14. Reynolds designs, manufactures, markets, advertises, and sells
dealership software, business forms and supplies, and importantly, license plate frames. Id.
Defendant markets its promotional license plate frames to dealerships in order to create
word-of-mouth advertising for the dealership. Id. at ¶ 41. Reynolds offers black and white
plastic frames in twenty-seven different sizes and styles. Id. at ¶ 42. For example, Plaintiffs
allege that Metcalf’s license plate frame most closely resembled Reynolds’ item number
LPF-50, which has a top panel of a half an inch and a bottom panel of three-quarters of an
inch. Id. at ¶ 45. In the past six years, Plaintiffs allege that Reynolds “represent[ed] and
warrant[ed] that its products are in compliance with all applicable Motor Vehicle
Regulations, Statutes, and Laws in those other States.” Id. at ¶ 27.
To support a putative class, Plaintiffs cite certain statistics: 2 according to the
National Automotive Dealers Association (“NADA”), (i) the United States has 17,635
franchised new vehicle dealerships, which sold 15,500,000 new vehicles in 2013, Id. at ¶¶
20-21; (ii) 9,400,000 used vehicles were sold in 2012, Id. at ¶ 22; and (iii) New Jersey
2
In some instances, Plaintiffs cite statistics from multiple years; however, the Court
has only highlighted the most recent statistics.
3
registered 512,551 new vehicles in 2012. Id. at ¶ 23. Plaintiffs further allege that, according
to the New Jersey Administrative Office of the Courts, polices officers issued 81,910
tickets for “unclear plates” in 2013. Id. at ¶ 39; see N.J.S.A. 39:3-33. Armed with these
facts, “Plaintiff [sic] reasonably estimates that there are hundreds of thousands of class
members in the Nationwide Class and tens of thousands of members in the Sub-Class of
Persons Receiving Tickets or Summons.” Id. at ¶ 53. 3
On May 8, 2014, Plaintiffs filed their two-count Complaint in the Hunterdon
County Superior Court of New Jersey, Law Division. In Count I, Plaintiffs assert that
Defendant violated the NJCFA. In Count II, Plaintiffs assert that Defendant breached its
implied warranty of merchantability. On June 12, 2014, Defendant removed the putative
class action to this Court under the CAFA. Plaintiffs did not object to the removal. On July
3, 2014, Defendant filed the instant motion to dismiss, and in the alternative, the motion to
strike all class allegations.
DISCUSSION
I. Standard of Review
In reviewing a motion to dismiss on the pleadings, the court “accept[s] all factual
allegations as true, construe[s] the complaint in the light most favorable to the plaintiff,
and determine[s] whether, under any reasonable reading of the complaint, the plaintiff may
be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)
(citation and quotations omitted). As such, a motion to dismiss for failure to state a claim
upon which relief can be granted does not attack the merits of the action but merely tests
3
In their Complaint, Plaintiffs define a Nationwide Class and a Sub-Class of Persons
Receiving Tickets or Summons. See id. at ¶ 50.
4
the legal sufficiency of the complaint. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d
Cir. 2009); see also Fed. R. Civ. P. 8(a)(2) (“[a] pleading that states a claim for relief ...
must contain a short and plain statement of the claim showing the pleader is entitled to
relief”). In other words, to survive a Fed. R. Civ. P. 12(b)(6) motion to dismiss for failure
to state a claim, “a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’ ” Id. (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
However, “the tenet that a court must accept as true all the allegations contained in
the complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing
Twombly, 550 U.S. at 555). A plaintiff must show that there is “more than a sheer
possibility that the defendant has act unlawfully.” Id. (citing Twombly, 550 U.S. at 556).
This plausibility determination is a “context-specific task that requires the reviewing court
to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009). In other words, for the plaintiff to prevail, the “complaint must do more than
allege the plaintiff's entitlement to relief;” it must “ ‘show’ such an entitlement with its
facts.” Fowler, 578 F.3d at 211 (citing Phillips, 515 F.3d at 234–35).
The Third Circuit has cautioned, however, that Twombly and Iqbal “do not provide
a panacea for defendants,” rather, “they merely require that plaintiff raise a ‘plausible claim
for relief.’ ” Covington v. Int'l Ass'n of Approved Basketball Officials, 710 F.3d 114, 118
(3d Cir.2013) (quoting Iqbal, 556 U.S. at 679). Thus, factual allegations must be more than
speculative, but the pleading standard “is not akin to a ‘probability requirement.’ ” Id.
(quoting Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 556).
5
II. Motion to Dismiss
A. Count I – New Jersey Consumer Fraud Act
In support of their motion, Defendant generally argues that Plaintiffs fail to state a
claim under the NJCFA because the Complaint does not satisfy the heightened pleading
requirements of Fed. R. Civ. P. 9(b). In response, Plaintiffs contends that the Complaint
plausibly sets forth the requirements of a NJCFA claim, even under the heightened
pleading requirements. Based on the following reasons, the Court finds that Plaintiffs do
not state a claim under the NJCFA.
Both Plaintiffs and Defendant do not dispute that New Jersey law applies. 4 Under
New Jersey law, 5 the NJCFA is to be liberally construed in favor of the consumer. Cox v.
Dears Roebuck & Co., 138 N.J. 2, 14-15 (1994). It is to be “applied broadly in order to
accomplish its remedial purpose, namely, to root out consumer fraud.” Gonzalez v.
Wilshire Credit Corp., 207 N.J. 557, 576 (2011) (internal citations and quotations omitted).
The NJCFA was designed to cover “sharp practices and dealings in the marketing of
merchandise and real estate whereby the consumer could be victimized by being lured into
a purchase through fraudulent, deceptive or other similar kind of selling or advertising
practice.” Daaleman v. Elizabethtown Gas Co., 77 N.J. 267, 271 (1978). To state a claim,
a plaintiff must demonstrate: “(1) unlawful conduct by the defendant; (2) an ascertainable
4
If a dispute arises, however, a federal district court must apply the choice of law
rules of the forum in which the court sits. Arcand v. Brother Intern. Corp., 673 F. Supp. 2d
282, 293 (D.N.J. 2009).
5
In a diversity case, the Court “must interpret substantive state law in accordance
with rulings of the state’s highest court.” Mickens v. Ford Motor Co., 900 F. Supp. 2d 427,
435 (D.N.J. 2012). Without specific guidance, the Court must “predict how the state court
would resolve the issue.” Id. (citing Hunt v. U.S. Tobacco Co., 538 F.3d 217, 220-21 (3d
Cir. 2008)).
6
loss by the plaintiff; and (3) a causal connection between the unlawful conduct and the
ascertainable loss.” Green v. Morgan Properties, 215 N.J. 431, 453 (N.J. 2013) (citation
omitted).
In addition, “[i]t is well-established that NJCFA claims must meet the heightened
pleading requirements of Fed. R. Civ. P. 9(b).” Lieberson v. Johnson & Johnson Consumer
Companies, Inc., 865 F. Supp. 2d 529, 538 (D.N.J. 2011); see Frederico v. Home Depot,
507 F.3d 188, 202-03 (3d Cir. 2007); see also Smajlaj v. Campbell Soup Co., 782 F. Supp.
2d. 84, 98 (D.N.J. 2011) (“Rule 9(b) of the Federal Rules of Civil Procedure applies to
claims under the Consumer Fraud Act”). Pursuant to Fed. R. Civ. P. 9(b), “a plaintiff
alleging fraud must state the circumstances of the alleged fraud with sufficient particularity
to place the defendant on notice” of the specific misconduct. Frederico, 507 F.3d at 200.
To satisfy the heightened standard, “the plaintiff must plead or allege the date, time and
place of the alleged fraud or otherwise inject precision or some measure of substantiation
into a fraud allegation.” Id. Furthermore, each individual plaintiff in a class action must
independently satisfy the heightened pleading requirements of Fed. R. Civ. P. 9(b). Crozier
v. Johnson & Johnson Consumer Companies, Inc. 901 F. Supp. 2d. 494, 506 (D.N.J. 2012).
i. Unlawful Conduct
In the instant matter, Plaintiffs assert two theories of unlawful conduct under the
NJCFA. First, Plaintiffs argue that Defendant engaged in unconscionable commercial
practices because Defendant knew that the license plates did not comply with some state
laws, but it continued to sell the license plate frames to dealerships. 6 Second, Plaintiffs also
6
In their moving papers, Defendant argues that Plaintiffs originally asserted a theory
of an affirmative misrepresentation in their Complaint, but now Plaintiffs have shifted to
the theory of unconscionable commercial practice.
7
argue that Defendant made a knowing omission because Defendant deliberately omitted
material information regarding the defective nature of the license plate frames. In response,
Defendant argues that Plaintiffs do not sufficiently allege that Defendant engaged in any
unlawful conduct under the NJCFA.
New Jersey courts have intentionally left the definition of unlawful conduct “openended, in order to capture the myriad schemes that human ingenuity may engender.”
Mickens v. Ford Motor Co., 900 F. Supp. 2d 427, 436 (D.N.J. 2012). In addition, the
NJCFA does not require a direct relationship, whether it is called privity or not, between
the plaintiff and the defendant. See Zafarana v. Pfizer, Inc., 724 F. Supp. 2d 545, 556 (E.D.
Pa. 2010) (stating that “the plaintiff need not be in privity with the defendant in order to
bring a claim” under the NJCFA); see also Katz v. Schachter, 251 N.J. Super. 467, 474
(App. Div. 1991) (stating that “privity is not a condition precedent to recovery under the
[NJCFA]”). Pursuant to the NJCFA, an unlawful practice is defined as:
[t]he act, use or employment by any person of an unconscionable
commercial practice, deception, fraud, false pretense, false promise,
misrepresentation, or the knowing concealment, suppression, or omission
of any material fact with the intent that others rely upon such concealment,
suppression or omission, in connection with the sale or advertisement of
any merchandise or real estate, or with the subsequent performance of such
person as aforesaid, whether or not any person has in fact been misled,
deceived or damaged thereby, is declared to be an unlawful practice.
An affirmative misrepresentation that violates the NJCFA “is ‘one which is material
to the transaction and which is a statement of fact, found to be false, made to induce the
buyer to make the purchase.’ ” Viking Yacht Co. v. Composite One LLC, 385 Fed. App’x
195, 200 (3d Cir. 2010) (quoting Ji v. Palmer, 333 N.J. Super. 451, 462 (App. Div. 2000))
(emphasis in the original).
Even if Plaintiffs made an affirmative misrepresentation argument, the Court finds
that Plaintiffs’ affirmative misrepresentation argument fails because Plaintiffs do not
satisfy the heightened pleading requirements of Fed. R. Civ. P. 9(b).
8
N.J.S.A. § 56:8-2. 7 In accordance with the NJCFA, the requirement of unlawful conduct
falls into three general categories: affirmative acts, knowing omissions, and violations of
regulations. 8 Smajlaj, 782 F. Supp. 2d at 97. If one of the three general categories is proven,
then unlawful conduct is established. See Francis E. Parker Mem’l Home, Inc. v.
Georgia_Pac. LLC, 945 F. Supp. 2d 543, 560 (D.N.J. 2013).
First, “there are six types of affirmative acts that are deemed unlawful:
unconscionable commercial practices, acts of deception, fraud, false pretenses, false
promises, and affirmative misrepresentation.” Viking Yacht Co. v. Composite One LLC,
385 Fed. App’x 195, 200 (3d Cir. 2010) (citing N.J.S.A. § 56:8-2). Here, Plaintiffs contend
that Defendant engaged in unconscionable commercial practices. Specifically, Plaintiffs
allege “that Defendant knew the license plate frames were illegal and yet continued to sell
them for installation on vehicles purchased or leased by Plaintiffs and the putative class.”
Pls.’ Br. in Opp. at pg. 9; see Pls.’ Compl. ¶¶ 72-73.
The New Jersey Supreme Court has reasoned “that unconscionability is ‘an
amorphous concept obviously designed to establish a broad business ethic.’ ” Cox, 138
7
“The term ‘person’ as used in the NJCFA includes, inter alia, natural persons,
partnerships, corporations, companies, trusts, business entities and associations.”
Lieberson, 865 F. Supp. 2d at 538 (citing N.J.S.A. § 56:8-1(d)). The term “advertisement”
is defined as “the attempt… to induce directly or indirectly any person to enter or not enter
into an obligation or acquire any title or interest in any merchandise or increase the
consumption thereof or to make any loan.” N.J.S.A. § 56:8-1(a). And, the term
“merchandise” is defined as “goods, commodities, services or anything offered, directly or
indirectly to the public for sale.” N.J.S.A. § 56:8-1(c).
8
As to the third category, it “incorporates and creates a cause of action for violations
of regulations promulgated under” the NJCFA. Mickens, 900 F. Supp. 2d at 436. “Such
regulations may incorporate, and define as unlawful practices, violations of other statutes
and regulations that were designed to protect consumers.” Id. Here, Plaintiffs do not allege
that Defendant violated any of the regulations promulgated under the NJCFA. Accordingly,
the Court will not address the third category of unlawful conduct.
9
N.J. at 18 (quoting Kugler v. Romain, 58 N.J. 522, 543 (1971)). In that connection, an
unconscionable commercial practice generally “implies [a] lack of ‘good faith, honesty in
fact and observance of fair dealing.’ ” Id. (quoting Kugler, 58 N.J. at 544). Critically, an
unconscionable commercial practice “must be misleading and stand outside the norm of
reasonable business practice in that it will victimize the average customer.” Smajlaj, 782
F. Supp. 2d. at 98; see Cox, 138 N.J. at 18 (“The capacity to mislead is the prime ingredient
of all types of consumer frauds”). New Jersey courts, however, “have been careful to
constrain the [NJCFA] to ‘fraudulent, deceptive or other similar kinds of selling or
advertising practices.’ ” D’Agostino v. Maldonado, 216 N.J. 168, 189 (2013) (citing
Daaleman, 77 N.J. at 271).
In the instant matter, Defendant designs, manufactures, markets, advertises, and
sells twenty-seven different types of promotional license plate frames, which vary in size.
Defendant exclusively sells its promotional license plate frames to dealerships as a form of
advertising for the dealership. Plaintiffs allege that Defendant knew that the license plate
frames were illegal, and thus, Defendant engaged in unconscionable commercial
practices. 9 In their Complaint, Plaintiffs attached Defendant’s brochure to dealerships,
which provides ample information about the license plate frames sold to dealerships, such
as the dimensions of all twenty-seven license plate frames. 10 See Pls.’ Compl., Ex. F. In
9
Plaintiffs generally contend that Defendant’s license plate frames were illegal at the
time of sale, specifically in New Jersey. Under N.J.S.A. 39:3-33, however, the motor
vehicle statute prohibits driver conduct, not manufacturer conduct. As such, Defendant did
not violate the aforementioned motor vehicle statute by selling their license plate frames
within the state of New Jersey.
10
The Court can consider this brochure on a motion to dismiss because it is attached
to the Complaint. Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d
1192, 1196 (3d Cir. 1993).
10
addition, the brochure also states, “Check with your state legislature on license plate
display laws.” See id. In short, Defendant provided prospective customers, i.e., the
dealerships, with dimensions of the license plate frames, and Defendant expressly notified
the dealers that the license plate frames may not comply with the motor vehicle statutes of
some states. Therefore, based on the face of the Complaint and the documents attached,
Plaintiffs cannot allege an affirmative act that Defendant engaged in conduct that was
misleading or standing outside the norm of reasonable business practice. See Smajlaj, 782
F. Supp. 2d. at 98.
Second, Plaintiffs allege that Defendant “knowingly concealed, suppressed and/or
omitted significant or important facts, namely that the license plate frames were not in
compliance with New Jersey law, N.J.S.A. 39:3-33, and the laws of other States, purposely
or with the intent that Plaintiffs and [putative class members] would rely on that
concealment, suppression and/or omission so that Reynolds could generate millions in
revenue by selling the license plate frames” to dealerships. 11 Pls.’ Compl. ¶ 75. Plainly
stated, Plaintiffs allege that Defendant engaged in a knowing omission because Defendant
did not inform Plaintiffs that the license plate frame may or may not comply with New
Jersey state law.
In the context of an omission, the heightened pleading requirements are relaxed,
and a plaintiff may generally allege the essential elements of the omission under the
NJCFA. See Harnish v. Widener Univ. Sch. of Law, 931 F. Supp. 2d 641, 652 (D.N.J.
11
The Court notes that Plaintiffs’ allegations of a knowing omission mirror Plaintiffs’
allegations of unconscionable commercial practices, insofar as Plaintiffs allege that
Defendant withheld information concerning the license plate frames from the Flemington
Dealerships, and consequently, Plaintiffs.
11
2013). “While the heightened pleading standard of Rule 9(b) allows essential elements of
the omission under the NJCFA, such as intent, to be alleged generally, such elements still
need to be alleged.” Maniscalco v. Brother Intern. Corp., 627 F. Supp. 2d 494, 500 (2010)
A knowing omission “occurs where the defendant (1) knowingly concealed (2) a
material fact (3) with the intention that the consumer rely upon the concealment.” Mickens,
900 F. Supp. 2d at 441 (citing Arcand, 673 F. Supp. 2d at 297). A knowing omission “must
be made ‘in connection’ with the sale or advertisement of a product or service.” Arcand,
673 F. Supp. 2d at 296-97 (citing Castro v. NYT Television, 370 N.J. Super. 282, 294
(App. Div. 2004)). Further, “a plaintiff must show that the defendant acted with knowledge,
thereby making intent an essential element of the fraud.” Maniscalco, 627 F. Supp. 2d at
499 (citation and quotations omitted) (emphasis in the original).
In connection with its allegation of knowing omission, Plaintiffs must allege the
essential element of knowledge. See id. In other words, Plaintiffs must allege that
Defendant knowingly concealed the fact that its license plate frames did not comply with
New Jersey state motor vehicle laws. Based on their own pleadings, Plaintiffs cannot allege
such a fact. Defendant’s brochure clearly states, “Check with your state legislature on
license plate display laws.” Pls.’ Compl., Ex. F. In addition, Defendant provided the
dimensions of all twenty-seven license plate frames in their brochure. Id. As such, because
all the pertinent information were provided in the brochure, including the warning
regarding statutory compliance, the Court finds that Plaintiffs cannot allege any wrongful
knowing omission on Defendant’s part.
ii. Ascertainable Loss
12
Assuming that Plaintiffs sufficiently alleged unlawful conduct, the Court must still
determine whether Plaintiffs have alleged an ascertainable loss. The NJCFA “does not
define ‘ascertainable loss’ and there is no relevant legislative history.” Smajlaj, 782 F.
Supp. 2d at 99 (citing Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 247
(2005)). However, a claim of an ascertainable loss is a prerequisite in the plain language
of the NJCFA. Perez v. Professionally Green, LLC, 215 N.J. 388, 401 (2013). “An
‘ascertainable loss’ is ‘either an out-of-pocket loss or a demonstration of loss in value’ that
is ‘quantifiable or measureable.’ ” Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 606
(3d Cir. 2012) (quoting Thiedemann, 183 N.J. at 249); see Lieberson , 865 F. Supp. 2d at
541.
In the instant matter, Plaintiffs allege that they suffered “an ascertainable loss with
respect to the replacement cost of the illegal license plate frames, statutory fines, interest,
attorney’s fees and increased insurance charges.” Pls.’ Compl., ¶ 76. Essentially, Plaintiffs
assert the out-of-pocket loss theory. See Dicuio v. Brother Intern. Corp., 2012 WL
3278917, at *7 (D.N.J. Aug. 9, 2012) (“The out-of-pocket rule applies when a plaintiff can
demonstrate that he paid money, and is now, out-of-pocket”). Generally, Plaintiffs do not
need to “plead ascertainable loss with pinpoint specificity.” Mickens, 900 F. Supp. 2d at
446. However, Plaintiffs cannot assert “unsupported conclusions concerning [his or her]
alleged loss.” Lieberson, 865 F. Supp. 2d at 541.
With that said, Plaintiffs do not allege with any degree of particularity their claims
of ascertainable loss relating to the cost of interest, attorney’s fees, and increased insurance
charges. Plaintiffs also do not allege that they paid for the license plate frames. See id.
(“Plaintiff has not alleged the price she paid for the Products in either 2008 or 2010, nor
13
has she alleged the price of the Products generally”). In that connection, Plaintiffs have not
alleged the cost of any other replacement license plate frames, see id. (“Plaintiff has not
alleged the identity or cost of any allegedly comparable products”), or even allege that the
purchase price of their vehicles included the cost of the license plate frames. However,
that being said, I do find that plaintiffs Youshock and Metcalf have sufficiently alleged
ascertainable loss because they allege that they paid a statutory fine as a result of having
Defendant’s license plate frames installed on their vehicles. As to plaintiff Slebodnik, who
has not alleged that he paid a find, no ascertainable loss has been pled with particularity.
iii. Causal Connection
Assuming, arguendo, that Plaintiffs sufficiently alleged an unlawful conduct and
an ascertainable loss, the Court must determine whether a causal connection exists.
Plaintiffs argue that the Complaint plausibly alleges the causal connection requirement. In
response, Defendant contends that Plaintiffs cannot satisfy the heightened pleading
requirement.
To state a claim under NJCFA, a plaintiff must allege a causal relationship between
a defendant’s unlawful conduct and a plaintiff’s ascertainable loss. Arcand, 673 F. Supp.
2d at 303; see Mickens, 900 F. Supp. 2d at 437 (stating that the statute requires that the
claimed loss have occurred as a result of the unlawful conduct). Relatedly, “the alleged
unlawful practice must be a proximate cause of the plaintiff’s ascertainable loss.” Marcus,
687 F.3d at 606. However, “the NJCFA does not require that an allegedly unlawful conduct
serve as the lone cause of Plaintiffs’ loss, but merely that it be a cause.” Arcand, 673 F.
Supp. 2d at 304. In addition, a plaintiff is not required to prove reliance. Marcus, 687 F.3d
at 606. Since reliance is not required, the NJCFA “does not require proof that a consumer
14
would not have purchased a product absent the alleged unlawful practice or even proof that
the unlawful practice played a substantial part in his or her decisionmaking.” Id.
To properly plead a causal connection, a plaintiff “must allege facts establishing a
causal [connection] with the particularity required by Rule 9(b).” Arcand, 673 F. Supp. 2d
at 303; see Frederico, 507 F.3d at 200. For illustration, in Dewey v. Volkswagen, the
district court concluded that the plaintiff did not sufficiently plead a causal connection
between the defendant’s alleged affirmative acts and plaintiff’s ascertainable loss because
plaintiff’s allegations were in “the most general and conclusory terms.” Dewey v.
Volkswagen, 558 F. Supp. 2d 505, 526 (D.N.J. 2008); see Glass v. BMW of N. Am., LLC,
2011 WL 6887721, at * 12 (D.N.J. Dec. 29, 2011) (holding that “Plaintiff has failed to
plead a causal [connection] between her injuries and [defendant’s] unlawful conduct with
the particularity required by Rule 9(b)”).
In the instant matter, Plaintiffs allege that “[t]he unlawful and unconscionable
commercial practice, deception, fraud, false promises, and misrepresentations by Reynolds
as well as its knowing concealments, suppression and/or omission of significant or
important facts, contrary to the New Jersey CFA, have caused Plaintiffs and the Classes to
suffer an ascertainable loss… because the license plate frames… sold by Reynolds” did
not comply with some states’ motor vehicle statutes and regulations. Pls.’ Compl., ¶ 76.
However, Plaintiffs plead a causal connection in only general and vague terms. See Dewey,
558 F. Supp. 2d at 526. Critically, Plaintiffs do not allege any facts that connect
Defendant’s alleged unlawful conduct – selling license plate frames that are not in
compliance with some state motor vehicle laws – and Plaintiffs’ alleged ascertainable loss.
For example, Plaintiffs do not allege that Plaintiffs have even seen or read Defendant’s
15
advertising on license plate frames. See id. at 526-27 (reasoning that plaintiffs “[did] not
allege when the statements were made or at what point – if ever – each Plaintiff was
exposed to one or more of the statements”); see also Crozier, 901 F. Supp 2d at 507-08.
Indeed, based on the language of Defendant’s brochure, the marketing material was
directed only towards car dealerships, not to individual customers. Plaintiffs have not
alleged that there were any other brochures or advertisements that induced them to
purchase Defendant’s license plate frames. Even more compelling, Plaintiffs did not
directly purchase the license plate frames, but rather, the Flemington Dealerships
purchased and installed the license plate frames. In that regard, Plaintiffs do not allege how
the marketing materials sent to the car dealership have any bearing on Plainiffs’ decision
to purchase the license plate frames vis-à-vis the automobile. Accordingly, the Court finds
that Plaintiffs do not allege a causal connection with sufficient particularity required by
Rule 9(b). 12 See Arcand, 673 F. Supp. 2d at 303; see Frederico, 507 F.3d at 200.
B. Count II – Implied Warranty of Merchantability
In their Complaint, Plaintiffs generally allege that Defendant breached the implied
warranty of merchantability because Defendant sold license plate frames that were not fit
for the ordinary purpose for which they were manufactured. See Pls.’ Compl. ¶ 78. In
particular, Plaintiffs argue that Defendant “breached the implied warranty of
merchantability as the defective license plate frames were illegal and not in compliance”
with some state motor vehicle laws, including New Jersey. Id. at ¶ 80. In their motion to
12
In the moving papers, Defendant argued that Plaintiffs do not sufficiently allege the
causal connection because Defendant did not direct any conduct at Plaintiffs, and thus, no
causal connection exists between Defendant and Plaintiffs. In response, Plaintiffs argued
that direct conduct is not required under the NJCFA. Since Plaintiffs fail to meet the
requirements of 9(b), the Court does not need to address this argument.
16
dismiss, Defendant argues that its license plate frames are fit for their ordinary purpose,
and thus, Defendant did not breach the implied warranty of merchantability. For the
following reasons, Plaintiffs fail to state a claim for breach of implied warranty of
merchantability.
Under New Jersey law, the state “implies a warranty of merchantability in every
contract for the sale of goods.” Montich v. Miele USA, Inc., 849 F. Supp. 2d 439, 454
(D.N.J. 2012). The implied warranty “provides for a minimum level of quality.” Lieberson,
865 F. Supp. 2d at 542 (citation and quotations omitted). The purpose of the implied
warranty is “to protect buyers from loss where the goods purchased are below commercial
standards or are unfit for the buyer’s purpose.” Reese v. Ford Motor Co., 499 Fed. App’x
163, 166 (3d Cir. 2012). Plainly stated, the implied warranty “simply means that the thing
sold is reasonably fit for the general purpose for which it is manufactured and sold.”
Lieberson, 865 F. Supp. 2d at 542 (citation and quotations omitted) (emphasis in the
original). In addition, “New Jersey does not require privity between a plaintiff and
defendant for such claims.” Montich, 849 F. Supp. 2d at 454.
New Jersey courts typically find the product to be unfit for its ordinary purpose in
three general types of defects: “manufacturing defects, design defects, and failure to give
the buyer proper instruction with respect to the goods.” 13 Lieberson, 865 F. Supp. 2d at
542 (citation and quotations omitted). Here, Plaintiffs allege that the license plate frames
are unfit for their ordinary purpose because of a design defect, not a manufacturing defect
or a failure to give proper instruction. See Pls.’ Compl. ¶ 80. Under New Jersey law, a
13
A manufacturing defect is a manufacturing glitch that renders some of the goods
unfit for their ordinary purpose; conversely, a design defect is a defect that renders all of
the goods unfit for their ordinary purpose. See Lieberson, 865 F. Supp. 2d at 543.
17
plaintiff asserting a design defect theory must show: “(1) the product was defective; (2) the
defect existed when the product left the manufacturer’s control; and (3) the defect caused
injury to a reasonably foreseeable user or victim.” Id. at 543. As such, “the ultimate inquiry
is whether the manufacturer acted in a reasonably prudent fashion in designing and
fabricating the product.” Id. (citation and quotations omitted).
At the outset, the Court finds it appropriate to consider the general purpose of
license plate frames. See id. Plaintiffs acknowledge that the general purpose of a license
plate frame is to create word-of-mouth advertising for dealerships. See Pls.’ Compl. ¶ 41.
Here, the Flemington Dealerships purchased the license plate frames as an advertising tool.
Plaintiffs did not directly purchase the license plate frames. Rather, Plaintiffs purchased or
leased vehicles that happened to have a promotional license plate frame on it. With that
said, the core contention of Plaintiffs is that Defendant sold license plate frames that were
illegal, and thus, the license plate frames were defectively designed. See id. at ¶ 80. Under
N.J.S.A. 39:3-33, however, the motor vehicle statute prohibits driver conduct, not
manufacturer conduct. As such, Defendant did not violate the aforementioned motor
vehicle statute by selling its license plate frames within the state of New Jersey. Since
Plaintiffs have failed to show that the license plate frames were illegal to sell, Defendant’s
license plate frames were not defectively designed. Moreover, Defendant offers twentyseven different sizes and styles, and it warns prospective customers that their product may
not comply with some state motor vehicle laws, thus leaving it to the dealerships to
determine which frames to purchase. Since the license plate frames did not suffer a design
defect, the Court finds that Plaintiffs have failed to state a claim for breach of the implied
warranty of merchantability because Defendant’s license plate frames are reasonably fit
18
for the general purpose for which they are manufactured and sold. Lieberson, 865 F. Supp.
2d at 542-43.
CONCLUSION
In sum, the Court finds that Plaintiffs neither state a claim for a violation of the
NJCFA nor a claim for breach of the implied warranty of merchantability. Since Plaintiffs
do not state a claim on either counts, the Court need not address Defendant’s alternative
motion to strike class allegations. Accordingly, the Court GRANTS Defendant’s motion
to dismiss and DENIES Defendant’s motion to strike as moot.
DATED:
November 20, 2014
/s/ Freda L. Wolfson
Freda L. Wolfson
United States District Judge
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