Category: Class Action Defense

New Jersey Supreme Court Holds That Individualized Proof of Damages Is Required Absent a Basis for Presumption of Class-Wide Damages Capable of Reliable Mathematical Calculation

New Jersey Supreme Court Holds That Individualized Proof of Damages Is Required Absent a Basis for Presumption of Class-Wide Damages Capable of Reliable Mathematical Calculation

In Little v. Kia Motors America, Inc., a litigation spanning nearly two decades, the New Jersey Supreme Court held that, although aggregate proof of damages can be appropriate in some settings, individualized proof of damages based on the actual costs incurred by the class members was required in the case before it. Class members had to show they incurred “actual costs” as a result of an alleged defect in order to recover damages. In 2001, plaintiff filed a putative class action asserting breach of warranty and other claims on her behalf and on behalf of other New Jersey owners and lessees of certain Kia models. Plaintiff alleged that the vehicles had a defective brake system which rendered the vehicles’ front brakes susceptible to premature wear. After a four-week trial, the jury returned a verdict in favor of plaintiff and the class on the class-wide warranty claim, awarding zero damages for alleged diminution-in-value but $750 per class member on the out-of-pocket loss theory, which had been premised on an expert’s estimate of the amount of money an average owner would pay for brake repairs over the vehicles’ lives as a result of the alleged defect. On defendant’s motion for a new...

District of New Jersey Denies Class Certification in Product Defect Case Against BMW

District of New Jersey Denies Class Certification in Product Defect Case Against BMW

The District of New Jersey recently denied class certification in a putative class action alleging a product defect in BMW engines. Afzal v. BMW of North America, LLC concerned whether BMW defectively designed its car engine so that a component wears out too quickly and failed to disclose that defect to purchasers. Two Plaintiffs, both California residents who allegedly suffered premature rod bearing wear, filed a putative class action raising various causes of action including violations of several California consumer protection statutes, breach of warranty, and fraud. Plaintiffs sought certification of two classes: (1) the Dealership Class and (2) the Warranty Class. The “Dealership Class” was defined as: “All persons who after November 12, 2011, purchased a model year 2008 to 2013 BMW M3 (the “Class Vehicle”) in California from an authorized BMW dealership, and who resided in California at the time of that purchase, and who as of the date of the Court’s Certification Order, either 1. Currently owns a Class Vehicle with 120,000 miles or less; or 2. Currently or formerly owned a Class Vehicle and, when the Class Vehicle had 120,000 miles or less, incurred out-of-pocket costs to replace the connecting rod bearings in the Class Vehicle.”...

Third Circuit Holds Solicitations to Purchase Products and for Participation in Surveys can be Advertisements Under the TCPA

Third Circuit Holds Solicitations to Purchase Products and for Participation in Surveys can be Advertisements Under the TCPA

On May 15, 2020, the Third Circuit in Fishbein v. Olson Research Group, Inc. held “that solicitations to buy products, goods, or services can be advertisements under the TCPA and that solicitations for participation in . . . surveys in exchange for [money] by the sender were for services within the TCPA” making such solicitations advertisements that fall within the TCPA’s ambit. This opinion comes just one year after the Third Circuit issued its precedential decision in Mauthe v. Optum, Inc., holding that, in order for a fax to be considered an advertisement under the TCPA, “there must be a nexus between the fax and the purchasing decision of an ultimate purchaser whether the recipient of the fax or a third party,” meaning that “the fax must promote goods or services to be bought or sold, and it should have profit as an aim.” The consolidated appeal in Fishbein arose from two District Court decisions, Fishbein v. Olson Research Group, Inc., which involved a fax offering the recipient money in exchange for participating in a medical study, and Mauthe v. ITC, Inc., which involved faxes that offered the recipient money in exchange for completing surveys. After applying the Third Circuit’s...

Third Circuit Reverses Class Certification in In re Lamictal Direct Purchaser & Antitrust Consumer Litig.; Next up, In re Suboxone

Third Circuit Reverses Class Certification in In re Lamictal Direct Purchaser & Antitrust Consumer Litig.; Next up, In re Suboxone

On April 22, 2020, the Third Circuit in In re Lamictal Direct Purchaser & Antitrust Consumer Litig., reversed class certification, concluding that the evidence did not establish that common proofs could be used to prove class-wide injury. The circuit court faulted the district court’s predominance analysis for failing to resolve factual disputes, weigh competing expert evidence, and make a prediction as to how these issues would play out at trial. Central to the ruling was the issue of antitrust impact. After brand and generic pharmaceutical manufacturers of the prescription drug Lamictal, or generic lamotrigine, settled a patent litigation, direct purchasers of these drugs sued claiming the settlement violated the antitrust laws as an impermissible “reverse payment agreement.” The brand manufacturer was alleged to have “paid” the generic to stay out of the market by promising not to launch an authorized generic (“AG”). The direct payor plaintiffs argued that they paid more for the drugs than they would have otherwise based on the theory that, on average, the price of a generic is lower when there are two generics rather than just one. The Third Circuit granted the manufacturer-defendants’ petition for leave to appeal under Rule 23(f). First, the Third Circuit...

Appellate Division Enforces Provision Prohibiting Class Arbitration

Appellate Division Enforces Provision Prohibiting Class Arbitration

In Curiale v. Hyundai Capital America Inc., the New Jersey Appellate Division reversed an order denying a motion to compel arbitration by Hyundai’s financing company (“HCA”), based on an arbitration clause in a motor vehicle retail order. The Appellate Division rejected the trial court’s finding that the arbitration clause was ambiguous because it stated that the parties must arbitrate any claims and then explicitly stated that the provision bars “class action arbitration.” The Arbitration clause provided: AGREEMENT TO ARBITRATE ANY CLAIMS. READ THE FOLLOWING ARBITRATION PROVISION CAREFULLY, IT LIMITS YOUR RIGHTS, INCLUDING THE RIGHT TO MAINTAIN A COURT ACTION. The parties to this agreement agree to arbitrate any claim, dispute, or controversy, including all statutory claims and any state or federal claims, that may arise out of or relating to the sale or lease identified in this agreement. By agreeing to arbitration, the parties understand and agree that they are waiving their rights to maintain other available resolution processes, such as a court action or administrative proceeding, to settle their disputes. … The parties also agree to waive any right (i) to pursue any claims arising under this agreement including statutory, state or federal claims, as a class action arbitration,...

District of New Jersey Further Clarifies TCPA’s Reach For Text-Marketing Campaigns

District of New Jersey Further Clarifies TCPA’s Reach For Text-Marketing Campaigns

In a recent decision, Chief Judge Freda L. Wolfson of the District of New Jersey further clarified the reach of the Telephone Consumer Protection Act (TCPA) as it relates to certain text marketing campaigns by businesses. In Eisenband v. Pine Belt Automotive d/b/a Pine Belt Nissan, Eisenband filed a putative class action lawsuit against an automotive dealership, Pine Belt, claiming that Pine Belt had violated the TCPA by using an Automated Telephone Dialing System (ATDS), otherwise known as an autodialer, to send a text message to his cell phone. Eisenband had telephoned Pine Belt in 2017 requesting information about the cost of leasing a specific vehicle and instructed Pine Belt to call him back on his cell phone with the requested pricing information. Pine Belt’s sales representative obtained the cost estimate data and returned the call, as requested, but Eisenband decided not to enter into a lease for the vehicle. A few days later, Pine Belt sent Eisenband a promotional text message concerning lease options on other vehicles, which prompted him, about one week later, to file a class action lawsuit seeking statutory damages of up to $1,500 per text message, for himself and for every person in the putative...

Guidance for Consumer Product Manufacturers, Distributors, and Sellers

Guidance for Consumer Product Manufacturers, Distributors, and Sellers

Wide-ranging issues are arising in the aftermath of the COVID-19 crisis and will continue to impact our clients in a growing number of ways. The Gibbons Consumer Class Action Defense Team is here to help and can work with you to address these critical concerns. Communication with consumers is critically important for consumer product manufacturers, distributors, and sellers, whether in the form of product labeling, advertising, or direct communications through telephone, text, and email. These communications are fraught with class action hazards that should be addressed in advance. Particularly in our present environment, product statements or advertising that, for example, promote the ability to stave off infection, increase the body’s immune system functions, or disinfect surfaces, may become subject to challenge in class action lawsuits by entrepreneurial class action attorneys. Sellers that contact their customers using text messaging platforms or dialing systems need to be particularly wary given the proliferation of TCPA class actions which cause great harm to small and large business alike. Also, companies seeking to recoup losses may over-aggressively promote their own products in a manner that is illegal and anti-competitive. Franchisors and franchisees may be faced with economic circumstances that make their current arrangements impractical. If...

27 Gibbons Commercial & Criminal Litigation Department Attorneys Selected to 2020 New Jersey Super Lawyers and Rising Stars

27 Gibbons Commercial & Criminal Litigation Department Attorneys Selected to 2020 New Jersey Super Lawyers and Rising Stars

Attorneys from the Gibbons Commercial & Criminal Litigation Department were featured in New Jersey Super Lawyers and New Jersey Super Lawyers Rising Stars, with 18 Department attorneys on the 2020 Super Lawyers list and nine on the 2020 Rising Stars list. These attorneys were listed in a wide range of categories, including Antitrust, Business Litigation, Class Action, Communications, Construction Litigation, Criminal Defense, Criminal Defense: White Collar, Insurance Coverage, and Media/Advertising. Highlights of this year’s New Jersey Super Lawyers list include the top-tier rankings earned by two Department attorneys: Top 10 Attorneys in New Jersey Lawrence S. Lustberg, Co-Chair, Commercial & Criminal Litigation Department Top 100 Attorneys in New Jersey Michael R. Griffinger, Director, Commercial & Criminal Litigation Department Lawrence S. Lustberg, Co-Chair, Commercial & Criminal Litigation Department The Gibbons attorneys listed in the 2020 issue of New Jersey Super Lawyers are: Frederick W. Alworth Guy V. Amoresano Robert C. Brady Thomas J. Cafferty Patrick C. Dunican Jr. Michael R. Griffinger Jennifer A. Hradil Bruce A. Levy Lawrence S. Lustberg Robert J. MacPherson Michael R. McDonald Brian J. McMahon Mary Frances Palisano Damian V. Santomauro Peter J. Torcicollo Thomas R. Valen Christopher Walsh John T. Wolak Those listed in the 2020...

Appellate Division Creates Split on Learned-Professionals Exception to New Jersey Consumer Fraud Act

Appellate Division Creates Split on Learned-Professionals Exception to New Jersey Consumer Fraud Act

In a recent opinion, Shaw v. Shand, the Appellate Division held that home inspectors are not “learned professionals” exempt from liability under the New Jersey Consumer Fraud Act (CFA). Instead, the court held that only professionals who have historically been recognized as “learned” based on the requirement of extensive learning or erudition are exempt under the CFA. In Shaw, the plaintiffs hired the defendant, a licensed home inspector, to examine a home for defects. The defendant wrote a report concluding that the property was built with professional workmanship, was made of quality materials, and would only require typical maintenance and upgrades. The plaintiffs purchased the property in reliance on that report. Soon after the plaintiffs made the purchase, however, the property’s front porch collapsed. Plaintiffs then learned that the roof, windows, and sliding glass doors all leaked and required complete replacement and that the driveway would need to be replaced as well. They then discovered that the house had a significant mold problem. At the time the Appellate Division decided Shaw, the plaintiffs had spent tens of thousands of dollars repairing those conditions, and expected to spend tens of thousands more. Defendant’s inspection of plaintiffs’ home was his first as...

Third Circuit Establishes Framework for Determining Third-Party Based Liability under the TCPA

Third Circuit Establishes Framework for Determining Third-Party Based Liability under the TCPA

In a recent precedential decision, the Third Circuit held that an unsolicited fax seeking information does not constitute an unlawful advertisement under the Telephone Consumer Protection Act (TCPA). Now, to “establish third-party based liability under the TCPA, a plaintiff must show that the fax: (1) sought to promote or enhance the quality or quantity of a product or services being sold commercially; (2) was reasonably calculated to increase the profits of the sender; and (3) directly or indirectly encouraged the recipient to influence the purchasing decisions of a third party.” In Robert W. Mauthe, M.D., P.C. v. Optum, Inc., the plaintiff claimed that it received unsolicited faxes from Defendants in violation of the TCPA. Defendants maintain a national database of healthcare providers, containing providers’ contact information, demographics, specialties, education, and related data. Defendants market, sell, and license the database typically to healthcare, insurance, and pharmaceutical companies, who use it to update their provider directories, identify potential providers to fill gaps in their network of providers, and validate information when processing insurance claims. To maintain the accuracy of the database, Defendants send unsolicited faxes to healthcare providers listed in the database, requesting them to respond and correct any outdated or inaccurate...