Dugan v. TGI Fridays, Inc.

• Decision Date: 04 October 2017
• Docket Number: A–92 Sept. Term 2015,077567,077556,A–93 Sept. Term 2015
• Citation: 171 A.3d 620,231 N.J. 24
• Court: New Jersey Supreme Court
• Parties: Debra DUGAN, Alan Fox, and Robert Cameron On Behalf of Themselves and All Others Similarly Situated, Plaintiffs–Appellants, v. TGI FRIDAYS, INC., Carlson Restaurants Worldwide, Inc., on behalf of themselves and all others similarly situated, Defendants–Respondents. Ernest Bozzi, on behalf of himself and all others similarly situated, Plaintiff–Respondent, v. Osi Restaurant Partners, LLC, t/a Carrabba's Italian Grill, et al., Defendants–Appellants.

231 N.J. 24

171 A.3d 620

Debra DUGAN, Alan Fox, and Robert Cameron On Behalf of Themselves and All Others Similarly Situated, Plaintiffs–Appellants,

v.TGI FRIDAYS, INC., Carlson Restaurants Worldwide, Inc., on behalf of themselves and all others similarly situated, Defendants–Respondents.

Ernest Bozzi, on behalf of himself and all others similarly situated, Plaintiff–Respondent,

v.Osi Restaurant Partners, LLC, t/a Carrabba's Italian Grill, et al., Defendants–Appellants.

A–92 Sept. Term 2015

A–93 Sept. Term 2015

077567

077556

Supreme Court of New Jersey.

Argued April 4, 2017

Decided October 4, 2017

Sander D. Friedman argued the cause for appellants in Dugan v. TGI Fridays, Inc., (A–92–15) (Law Office of Sander D. Friedman, attorneys; Sander D. Friedman and Wesley G. Hanna, on the briefs).

Stephen M. Orlofsky argued the cause for respondents in Dugan v. TGI Fridays, Inc., (A–92–15) (Blank Rome and LeClair Ryan, attorneys; Stephen M. Orlofsky, David C. Kistler, Jeffrey L. O'Hara, and Matthew S. Schultz, of counsel and on the briefs).

David G. McMillin argued the cause for amicus curiae Legal Services of New Jersey in Dugan v. TGI Fridays, Inc. (A–92–15) (Legal Services of New Jersey, attorneys; Melville D. Miller, Jr. and David G. McMillin on the brief).

Michael A. Galpern argued the cause for amicus curiae New Jersey Association for Justice in Dugan v. TGI Fridays, Inc. (A–92–15) (Locks Law Firm, attorneys; Michael A. Galpern, Andrew P. Bell, and James A. Barry on the brief).

Jeffrey S. Jacobson argued the cause for amicus curiae New Jersey Civil Justice Institute in Dugan v. TGI Fridays, Inc., (A–92–15) (Lowenstein Sandler and Kelley Drye & Warren, attorneys; Jeffrey S. Jacobson and Gavin J. Rooney on the brief).

Stephen M. Orlofsky argued the cause for appellants in Bozzi v. OSI Restaurant Partners, LLC (A–93–15) (Blank Rome and Briggs Law Office, attorneys; Stephen M. Orlofsky, David C. Kistler, Michael A. Iannucci, Norman W. Briggs, and Adrienne Chapman, of counsel and on the briefs).

Donald M. Doherty, Jr. argued the cause for respondent in Bozzi v. OSI Restaurant Partners, LLC (A–93–15) (Law Office of Donald M. Doherty, attorneys; Donald M. Doherty, Jr. on the brief).

Jonathan Romberg argued the cause for amicus curiae Seton Hall University School of Law Center for Social Justice in Dugan v. TGI Fridays, Inc. (A–92–15) and Bozzi v. OSI Restaurant Partners, LLC (A–93–15) (Seton Hall University School of Law Center for Social Justice, attorneys; Jonathan Romberg on the briefs).

David R. Kott argued the cause for amicus curiae New Jersey Business & Industry Association in Dugan v. TGI Fridays, Inc. (A–92–15) and Bozzi v. OSI Restaurant Partners, LLC (A–93–15) (McCarter & English, attorneys; David R. Kott, Edward J. Fanning, Zane C. Riester, and Elizabeth K. Monahan, of counsel and on the briefs).

JUSTICE PATTERSON delivered the opinion of the Court.

In these consolidated appeals, the plaintiffs allege that the defendant operators of New Jersey restaurants engaged in unlawful practices with respect to the disclosure of prices charged to customers for alcoholic and non-alcoholic beverages. Based upon different theories of ascertainable loss and causation, plaintiffs in the two actions demand damages and other relief against defendants under the Consumer Fraud Act (CFA), N.J.S.A. 56:8–1 to –206. They also seek damages, civil penalties, and other relief under the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12–14 to –18.

In each case, the trial court certified the action as a class action pursuant to Rules 4:32–1 and 4:32–2. In Dugan v. TGI Fridays, Inc., 445 N.J.Super. 59, 135 A. 3d 1003 (App. Div. 2016), an Appellate Division panel reversed the trial court's certification of a class. The Appellate Division denied the defendant's motion for leave to appeal in Bozzi v. OSI Restaurant Partners, LLC. We granted leave to appeal in both actions.

Applying the class action certification standard of Rule 4:32–1 to the CFA claim asserted in Dugan v. TGI Fridays, Inc., we hold that plaintiffs have failed to show that common questions of law and fact predominate over individual issues, as Rule 4:32–1 requires. As an alternative to presenting proof of ascertainable loss and causation as to each member of the class, the Dugan plaintiffs propose to demonstrate, for a class numbering in the millions, that TGIF charged each member of the class $1.72 more than the "fair" or "reasonable" prices that it would have charged had it disclosed its beverage prices on the menu. Because our CFA class action jurisprudence rejects "price-inflation" theories, such as the theory presented by the Dugan plaintiffs, as incompatible with the CFA's terms, we conclude that the Dugan plaintiffs have not established predominance with respect to their CFA claims. We accordingly modify and affirm the Appellate Division's determination that the Dugan class was improperly certified for purposes of the CFA claims asserted in that action and remand for a determination of the individual plaintiffs' CFA claims.

We reach a different conclusion with respect to the CFA claims asserted by plaintiff Ernest Bozzi in Bozzi v. OSI Restaurant Partners, LLC. Although Bozzi asserts general claims that the defendant restaurants failed to disclose prices, his allegations focus primarily on a specific pricing practice. He alleges that the defendant restaurants violated the CFA by increasing the price charged to a customer for the same brand, type, and volume of beverage in the course of the customer's visit to the restaurant, without notifying the customer of the change. Bozzi's counsel represents that this price-shifting claim is supported by claimant-specific receipts showing that each customer making this claim was charged different prices for the same brand, type, and volume of beverage in the course of a single visit to one of the defendant's restaurants.

We hold that if the Bozzi class is redefined to include only customers who make that specific CFA claim, and the claim is limited accordingly, plaintiff Bozzi has met the requirements of Rule 4:32–1 and may attempt to prove that claim on behalf of the class. We modify and affirm the trial court's determination as to the CFA claim in Bozzi and remand for the certification of a class that is limited accordingly.

With respect to the claims based on the TCCWNA in both appeals, we conclude that plaintiffs have failed to satisfy the predominance requirement of Rule 4:32–1. We therefore reverse the trial courts' class certification determinations in both cases with respect to those claims and remand for a determination of plaintiffs' individual TCCWNA claims.

I.

We base our summary of the factual allegations and procedural history of each action on the complaints and the class certification record presented to the trial court in each case.

A.

In the first of the two putative class actions, Dugan v. TGI Fridays, Inc., plaintiffs Debra Dugan and Alan Fox (Dugan plaintiffs) assert claims against defendants TGI Fridays, Inc. and Carlson Restaurants, Inc.,¹ (collectively, TGIF), owners and operators of TGIF restaurants in New Jersey.

The Dugan plaintiffs claim that TGIF maintained a practice of offering certain beverages in New Jersey TGIF restaurants' menus without listing the prices of those beverages.² They allege that TGIF violated the CFA by engaging in unconscionable commercial practices contrary to N.J.S.A. 56:8–2. They also assert, among other claims, that TGIF violated a regulatory provision, N.J.S.A. 56:8–2.5, by selling, attempting to sell, or offering for sale "merchandise that is not price marked at the point of purchase." The Dugan plaintiffs premise their claim under the TCCWNA on the allegation that TGIF violated a "clearly established legal right of a consumer or responsibility of a seller" by offering beverages for sale "without notifying the consumer of the total selling price at the point of purchase." (citing N.J.S.A. 56:12–15 ; N.J.S.A. 56:8–2.5 ). The Dugan plaintiffs demand damages, civil penalties, and other relief under the TCCWNA.

In the Dugan plaintiffs' original complaint, Dugan was the sole plaintiff and representative of the putative class. Dugan asserted that, during visits to a company-owned TGIF restaurant in Mount Laurel, she purchased "unpriced soft drinks, mixed drinks, and beer off Defendants' otherwise comprehensively priced menus." Dugan alleged that on each visit she was not made aware of the prices charged for the beverages until TGIF staff presented her with a check. In her original complaint, she claimed that during a visit to a TGIF restaurant she was charged $2.00 for a beer at the bar and later charged $3.59 for the same brand of beer after moving to a table.

Dugan alleged that her claims were typical of the claims of the class and asserted that she met all of the requirements for class certification under Rule 4:32–1. She sought certification of a class consisting of "all customers of New Jersey TGI Friday's who purchased items from the menu that did not have a disclosed price."

TGIF moved before the trial court to dismiss Dugan's complaint for failure to state a claim pursuant to Rule 4:6–2(e). The trial court denied the motion to dismiss. An Appellate Division panel denied TGIF's motion for leave to appeal. We granted TGIF's motion for leave to appeal and summarily remanded the matter to an Appellate Division panel for consideration of the merits of the appeal. In an unpublished opinion, the panel concluded that Dugan had adequately pled her CFA and TCCWNA claims and affirmed the trial court's determination. Dugan then filed a first amended complaint, expanding her allegations regarding her visits to the TGIF restaurant in Mount Laurel.

The parties conducted class certification discovery. In her deposition, Dugan admitted that during the 2008 visit to a TGIF restaurant in which she paid different prices for two orders of identical beverages at the bar and at the table, she did...