Romero v. Gold Star Distribution, LLC

• Decision Date: 24 June 2021
• Docket Number: DOCKET NO. A-0379-20
• Citation: 468 N.J.Super. 274,257 A.3d 1192
• Parties: Yoel ROMERO, Plaintiff-Respondent, v. GOLD STAR DISTRIBUTION, LLC, d/b/a Goldstar Performance Products, a business entity, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

468 N.J.Super. 274

257 A.3d 1192

Yoel ROMERO, Plaintiff-Respondent,

v.GOLD STAR DISTRIBUTION, LLC, d/b/a Goldstar Performance Products, a business entity, Defendant-Appellant.

DOCKET NO. A-0379-20

Superior Court of New Jersey, Appellate Division.

Argued April 28, 2021

Decided June 24, 2021

Desiree L. Wilfong argued the cause for appellant (Lucas & Cavalier, LLC, attorneys; Desiree L. Wilfong and Robert M. Cavalier, of counsel and on the briefs).

Jeffrey S. Craig, Woodbury, and Howard Jacobs (Law Offices of Howard Jacobs) of the California bar, admitted pro hac vice, argued the cause for respondent (Craig, Annin & Baxter, LLP, attorneys; Jeffrey S. Craig and Howard Jacobs on the briefs).

Before Judges Whipple, Rose and Firko.

The opinion of the court was delivered by

FIRKO, J.A.D.

Defendant Gold Star Distribution, LLC, d/b/a Goldstar Performance Products, appeals from an August 25, 2020 Law Division order denying its motion to vacate final judgment by default. In this opinion, we reiterate well-settled principles set forth in Rule 4:50-1 and the standard for calculating damages under the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -226. We affirm in part, and reverse and remand in part, on the issue of damages.

I.

The following facts are derived from the record on appeal. Plaintiff, a resident of Miami, Florida, is a professional mixed martial arts (MMA) athlete who competed in the Ultimate Fighting Championship (UFC), the highest level of competition in MMA. He is also a former world champion freestyle wrestler who earned a silver medal at the 2000 Olympic Games.

Defendant is a dietary supplement company, doing business as Goldstar Performance Products, having a principal place of business in New Jersey. The president of Gold Star Distribution, LLC is Steven Hankin. According to plaintiff, he consumed one of defendant's products called "SHED RX," relying upon defendant's representation that the product it manufactured, marketed, and sold, was free of any substances banned by the World Anti-Doping Agency (WADA). SHED RX is marketed as a fast-acting, maximum strength diuretic water weight loss muscle definition formula and is sold in capsule form. The SHED RX label states it "uses natural ingredients" and that defendant adheres to "strict GC/MS and HPLC testing procedures."¹

In order to ensure compliance with WADA regulations, plaintiff conducted his own research to confirm SHED RX did not contain any banned substances, including ibutamoren,² in order to avoid being disqualified from competitions. Plaintiff also read the SHED RX label and discussed ingesting the product with his colleagues to ensure its compliance with WADA's regulations. Being satisfied SHED RX was safe and not contraindicated by WADA, plaintiff started taking the product. To his surprise, when a random urine sample required by the United States Anti-Doping Agency (USADA) was collected on December 16, 2015, plaintiff tested positive for ibutamoren. The urine sample was tested by the Sports Medicine Research and Testing Laboratory (SMRTL) in Salt Lake City, Utah, which is accredited by WADA.

This was the first time plaintiff ever tested positive for a banned substance in his athletic career. Because of his positive test result, plaintiff was suspended by the UFC for a period of six months, commencing on January 12, 2016. According to plaintiff, he was a "lead contender" for the UFC middleweight title at the time and was denied the opportunity to fight. Plaintiff also claims he was denied other promising career opportunities and was characterized as a "doper" by the press and the public.

The USADA was provided with a capsule from the bottle of SHED RX used by plaintiff and sent it to SMRTL for testing. Several capsules from an independently purchased SHED RX bottle were also tested by SMRTL and contained ibutamoren—twelve micrograms per capsule. Ibutamoren was not listed as an ingredient on the SHED RX label for the bottles examined, which were sold throughout stores in the United States and online.

On December 11, 2017, plaintiff filed a complaint in the Law Division against defendant alleging negligence (count one), products liability (count two), breach of implied warranties (count three), intentional misrepresentation (count four), negligent misrepresentation (count five), violations of the CFA (count six), and punitive damages (count seven). Specifically, plaintiff alleged defendant failed to exercise ordinary care by carelessly and negligently maintaining the production facility where SHED RX was contaminated with ibutamoren; negligently sold SHED RX to competitive athletes and the general public; failed to design a safe manufacturing process to eliminate cross-contamination with other products; failed to adhere to government regulations; and failed to disclose known dangers inherent in the consumption of SHED RX.

Goldstar Performance Products was named as defendant in the caption based on the packaging and advertising materials of the SHED RX product, as well as the LinkedIn profile of Hankin and the email address he actively used, shankin@goldstarperformanceproducts.com. Goldstar Performance Products is the trade name for Gold Star Distribution, LLC and the entity that SHED RX was marketed under.

On December 12, 2017, a summons was issued to defendant, and plaintiff's counsel enlisted a private process server to serve the summons and complaint on defendant. Because defendant and its president, Hankin, evaded service of process, service was not achieved, and the matter was scheduled on the court's administrative dismissal list. On June 6, 2018, plaintiff filed a motion to remove the complaint from the administrative dismissal list and to allow substituted service of the summons and complaint upon defendant by mail pursuant to Rule 4:4-5(a)(2) or by publication pursuant to Rule 4:4-5(a)(3).

Three affidavits prepared by the process server were submitted in support of plaintiff's motion attesting to attempts to serve defendant and Hankin at two different addresses in East Hanover and one address in Randolph Township. The addresses in East Hanover were defunct; the address in Randolph Township was Hankin's home. Five unsuccessful attempts were made by the process server to effectuate process on Hankin at his home. On one occasion, the process server attested in an affidavit that Hankin's wife was "pulling out of the driveway and she told me her husband was away and will be expected back tomorrow." The process server made four more attempts to serve Hankin without success, noting "there is a[n] SUV visible in the garage and no one will answer the door."

On June 22, 2018, the court granted plaintiff's motion for substituted service pursuant to Rule 1:13-7(c)(4) and removed the case from the dismissal list. In his affidavit of service dated June 20, 2018, counsel for plaintiff confirmed the summons and complaint were served on June 5, 2018, by way of certified mail, return receipt requested (RRR), and regular mail at the Randolph Township address. Attached to counsel's affidavit of service was a certified mail green card with Hankin's signature dated June 7, 2018. Defendant has not contested the genuineness of Hankin's signature.

Defendant did not answer or otherwise move with respect to the summons and complaint served upon Hankin. Defendant claims that since Gold Star Distribution, LLC was not named as a defendant and was not served with process, Hankin was not obligated to answer or otherwise move with respect to the complaint. Pursuant to Rule 4:43-1, plaintiff requested the clerk enter default against defendant on August 23, 2018, which was granted.

On September 5, 2018, Hankin sent an email to his insurance agent, Erik Bloom, of The Mallory Agency, entitled "lawsuit" regarding potential exposure and coverage for a possible claim. The email address used by Hankin was shankin@goldstarperformanceproducts.com. Hankin did not retain counsel or follow up with defendant's insurance company relative to defending the allegations set forth in the complaint. Consequently, on November 14, 2018, plaintiff moved for entry of default judgment under Rule 4:43-2(b) on the issue of liability and requested that a proof hearing be scheduled by the court on the issue of damages. The notice of motion was sent to Hankin, on behalf of defendant, at his Randolph home address via certified mail RRR. The motion was unopposed.

On December 7, 2018, the motion court granted plaintiff's motion for final judgment by default as to liability against defendant and directed the civil assignment office to schedule the matter for a proof hearing pursuant to Rule 4:43-2(b). The memorializing order also provided that counsel for plaintiff was directed to serve a copy of the order "notifying [d]efendant Goldstar of the proof hearing date by [c]ertified RRR and [r]egular [m]ail at least [twenty] days prior to the proof hearing."

On March 22, 2019, counsel for plaintiff sent Hankin, on behalf of defendant, a letter certified mail RRR and regular mail, enclosing a copy of the order granting default judgment and advising him of the proof hearing scheduled for April 30, 2019. Neither Hankin nor anyone on behalf of defendant responded. Because of a scheduling conflict and the need for a Spanish interpreter, the proof hearing was adjourned to May 28, 2019. Plaintiff sent a confirming letter to the court and copied Hankin on the letter, which was sent certified mail RRR and regular mail, advising of the new date. No response was made by Hankin or anyone on behalf of defendant.

The proof hearing proceeded on May 28, 2019 before a different trial court.³ No one appeared on behalf of defendant. After hearing unrefuted testimony from plaintiff, and his manager, Abraham Kawa, and considering evidence as to economic and other damages, the trial court awarded the following amounts to plaintiff: $3,150,000 for lost wages and income; $3,000,000 for reputational damages; and $3,000,000 for...