Baskin v. P.C. Richard & Son, LLC

• Decision Date: 05 May 2021
• Docket Number: A-77 September Term 2019,084257
• Parties: Ellen BASKIN, Kathleen O'Shea, and Sandeep Trisal, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. P.C. RICHARD & SON, LLC, d/b/a P.C. Richard & Son, and P.C. Richard & Son, Inc., d/b/a P.C. Richard & Son, Defendants-Respondents.
• Court: New Jersey Supreme Court

246 N.J. 157

249 A.3d 461

Ellen BASKIN, Kathleen O'Shea, and Sandeep Trisal, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,

v.P.C. RICHARD & SON, LLC, d/b/a P.C. Richard & Son, and P.C. Richard & Son, Inc., d/b/a P.C. Richard & Son, Defendants-Respondents.

A-77 September Term 2019

084257

Supreme Court of New Jersey.

Argued January 4, 2021

Decided May 5, 2021

Chant Yedalian, of the California bar, admitted pro hac vice, argued the cause for appellants (Lite DePalma Greenberg and Chant & Company, attorneys; Bruce D. Greenberg, Newark, and Chant Yedalian, on the briefs).

William S. Gyves argued the cause for respondents (Kelley Drye & Warren, attorneys; William S. Gyves, Glenn T. Graham, and Robert N. Ward, Parsippany, on the briefs).

Bruce H. Nagel argued the cause for amicus curiae New Jersey Association for Justice (Nagel Rice, attorneys; Bruce H. Nagel, of counsel and on the brief, and Randee M. Matloff, Roseland, on the brief).

JUSTICE FERNANDEZ-VINA delivered the opinion of the Court.

In this case, the Court considers whether plaintiffs sufficiently pled the class certification requirements to survive a motion to dismiss under Rule 4:6-2(e). Ellen Baskin, Kathleen O'Shea, and Sandeep Trisal (plaintiffs) filed a class action complaint against defendants P.C. Richard & Son, LLC, and P.C. Richard & Son, Inc., alleging defendants violated the Federal Fair and Accurate Credit Transactions Act of 2003 (FACTA) by printing plaintiffs’ credit or debit card expiration dates on their receipts. Although plaintiffs did not suffer identity theft, fraud, or third-party disclosure as a result of the information on the receipts, they allege that defendants’ noncompliance with FACTA has placed them at an increased risk of harm and seek statutory damages.

FACTA prohibits any business that accepts credit or debit cards from "print[ing] more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction." 15 U.S.C. § 1681c(g)(1). FACTA imposes civil liability on businesses that are willfully noncompliant with its terms. Id. § 1681n. If plaintiffs can establish defendants’ willful noncompliance, statutory damages ranging from $100 to $1,000 will be awarded to each plaintiff. Id. § 1681n(a)(1)(A).

Defendants moved to dismiss plaintiffs’ complaint, arguing that plaintiffs could not meet the superiority requirement for class certification because statutory damages available under FACTA were sufficient to incentivize individual actions. The trial court granted the motion, finding: (1) plaintiffs failed to establish numerosity because they did not specify how many members were in the class; (2) predominance was not satisfied because some class members may have suffered actual damages and liability would therefore have to be determined on a case-by-case basis; and (3) superiority was not established because FACTA's statutory award sufficiently incentivized plaintiffs to bring suit individually. The Appellate Division affirmed the dismissal as it pertained to the class action claims and to the individual claims of O'Shea and Trisal; however, the appellate court reversed the dismissal of Baskin's individual claim.

In light of our standard of review at this stage, we disagree with the trial and appellate courts and reverse the grant of defendants’ motion to dismiss. Giving plaintiffs the benefit of all favorable inferences here, we find they sufficiently pled the class certification requirements to survive a motion to dismiss. Specifically, we conclude that: (1) an exact or specific number of class members need not be pled to satisfy numerosity; (2) questions as to whether defendants were willfully noncompliant with FACTA and programmed their equipment to print credit or debit card expiration dates predominated because plaintiffs are seeking only statutory and punitive damages; and (3) the class action vehicle seems to be the superior means of adjudicating plaintiffs’ claims because it is unlikely a plaintiff will have the financial wherewithal to bring these claims individually in small claims court.

However, we are not certifying the class at this time. Instead, we are remanding the matter for class action discovery to be conducted pursuant to Rule 4:32-2(a) so that the trial court may determine whether to certify the class.

I.

A.

In April 2018, plaintiffs Kathleen O'Shea and Sandeep Trisal, New York residents, joined New Jersey resident Ellen Baskin to file this putative class action in New Jersey state court on behalf of themselves and "[a]ll consumers to whom [d]efendants, after November 17, 2013, provided an electronically printed receipt" listing the expiration date of the consumer's credit or debit card in violation of FACTA.¹ Baskin alleged that on May 24, 2016, she received a receipt containing her card's expiration date from one of defendant's retail stores in Brick, New Jersey. Plaintiffs’ only alleged injury was exposure to an increased risk of identity theft and credit/debit card fraud.

The complaint alleged that "there are, at a minimum, thousands (i.e., two thousand or more) of members that comprise the Class," and that "[t]he exact size of the Class and identities of individual members thereof are ascertainable through [d]efendants’ records." The complaint also noted that common questions -- including whether defendants’ receipts violated FACTA, whether defendants’ conduct was willful, and whether the class is entitled to damages -- predominated over any individual questions. It further alleged that a class action is superior to other means of adjudicating these claims because the prospective damages are too small to incentivize individual litigation and because numerous small claims give rise to inconsistent results, redundancy, and delay. The complaint sought an order certifying the class, as well as statutory and punitive damages and costs and attorney's fees.

In September 2018, defendants filed a motion to dismiss for failure to state a claim upon which relief could be granted, arguing that plaintiffs had not alleged they "sustained any ascertainable harm"; defendants also contended that plaintiffs’ FACTA claims should not be litigated as a class action because plaintiffs could not satisfy the superiority prong of Rule 4:32-1(b)(3). Defendants argued, finally, that New Jersey courts lack personal jurisdiction over O'Shea and Trisal's New York-based claims. Plaintiffs opposed the motion.

After hearing oral argument, the trial court issued a written opinion granting defendants’ motion to dismiss based on its determination that plaintiffs could not satisfy Rule 4:32-1's numerosity, predominance, or superiority requirements.

The trial court concluded that the numerosity requirement was not satisfied because plaintiffs failed to allege a potential number of class members "except to contend that there could be ‘thousands of people whose credit card information was exposed on improper receipts.’ "

The trial court held that predominance was not established because plaintiffs’ failure to claim they suffered actual damages from identity theft or credit/debit card fraud put their "claims at odds with the legislative purpose of FACTA" and indicates "an overall lack of demonstrable damages" as to these particular plaintiffs. Therefore, because other consumers who fall into the proposed class may have actually been victims of identity theft or fraud, "[t]he potential[ly] disparate nature of damages ... require[s] courts to adjudicate [d]efendants’ liability on a case-by-case basis," which "cuts directly against the purpose of Rule 4:32-1's class certification predominance and superiority prongs."

The court determined that superiority was not established because prevailing New Jersey law dictates that "adjudication of claims on an individual basis in small claims court is ‘a far superior method to vindication of any rights and protection of the public than any certification or class action’ in situations where a statutory damage award incentivizes a party to act in his or her interest." (quoting Local Baking Prods., Inc. v. Kosher Bagel Munch, Inc., 421 N.J. Super. 268, 272, 23 A.3d 469 (App. Div. 2011) ). The court then detailed the process of filing an individual claim pro se in small claims court.

The court dismissed plaintiffs’ complaint for failure to satisfy the requirements of class certification. The court also concluded that it did not have personal jurisdiction over O'Shea and Trisal's claims.

B.

The Appellate Division, in a published opinion, affirmed the trial court's denial of class certification and dismissal of the complaint as it pertained to O'Shea and Trisal, but it reversed the dismissal of Baskin's claim, remanding it to be reinstated as an individual action. Baskin v. P.C. Richard & Son, LLC, 462 N.J. Super. 594, 619, 228 A.3d 860 (App. Div. 2020).

The Appellate Division concluded that numerosity had not been satisfied because plaintiffs "failed to sufficiently articulate the size of the class" because they did not "name the number of potential class members, and only vaguely stated that there could be ‘thousands of people whose credit card information was exposed on improper receipts.’ " Id. at 607-08, 228 A.3d 860.

The court likewise held that plaintiffs failed to allege facts sufficient to establish predominance, noting that "the sheer amount of uncertainties in respect of the amount of potential FACTA claims against defendants, and any harm that arose from such violations, renders it difficult to determine a common nucleus of operative facts." Id. at 615, 228 A.3d 860.

Regarding superiority, the court determined plaintiffs failed to make a prima facie showing that a class action was superior to individual actions in small claims court. Id. at 601, 608-13, 228 A.3d 860. The Appellate Division relied upon the reasoning of Local Baking and the dismissal of O'Shea and Trisal's New York action when assessing...