Katy bar the door! A recent decision from the New Jersey appellate court suggests that New Jersey state courts are about to be inundated with consumer class actions.
Daniels v. Hollister is a class action lawsuit filed by consumers against Hollister, a clothing store found in most malls that is popular with young people. Vincent Daniels, the named plaintiff, is bring the suit on behalf of the owners of $3 million worth of unused $25 gift cards that were voided on January 30, 2010 despite not having an expiration date printed on them.
Hollister claims it placed notices in stores about the expiration date, trained its employees to tell customers about the gift cards’ terms, and notified all customers that had contacts in its database about the cards’ expiration.
Hollister contended that they have no way to determine who is in the class since the cards are not directly associated with customer data, and because some customers may have thrown away or lost their cards. Thus, Hollister argued, the New Jersey state courts should adopt the case law on ascertainability currently being developed on the Federal level in the Third Circuit, and throw out the case.
As explained by NJCJI’s Alida Kass in the June 30, 2014 issue of the New Jersey Law Journal, “in order to meet the standard for ascertainability, a plaintiff must demonstrate that his purported method for ascertaining class members is reliable and administratively feasible, and permits a defendant to challenge the evidence to prove class membership.”
To say that the New Jersey Appellate Division did not find Hollister’s arguments compelling is an understatement. The three-judge panel blamed Hollister for not having the data it needs to defend itself, and then went on to trash ascertainability as a defense generally, ultimately holding that it is not the law in New Jersey no matter what the Third Circuit says.
When the concept of ascertainability is applied inflexibly it becomes a device that serves to burden or eliminate nascent class actions without providing any societal benefit. We find this federal doctrine as urged here imposes far too heavy a burden on class certification where the purported injuries on class members are so minimal as to preclude the likelihood that they would be individually asserted. Although we have misgivings about the ascertainability doctrine’s use at the certification stage in any class action, we decline to consider its application in cases other than those involving low value consumer class actions because of the concept’s novelty.
While the federal courts are divided on the Carrera standard for ascertainability, to say it should play no role at all at the class certification stage is a significant departure.
The court also held that the class-action device’s historic mission is caring for the “smaller guy,” so suits like this, where the plaintiffs have low-value claims they are unlikely to enforce individually, should be favored.
Basically every other court in the nation is moving toward adopting ascertainability, rather than away from it, so this decision is going to make New Jersey state courts a magnet for consumer class actions like this one. Ones where it is impossible to know who the class members are, so it is impossible to defendant against weak and/or fraudulent claims. Ones that would be thrown out of other courts. This is not good policy to be adopting as we struggle to improve our state’s business climate and continue to recover from the great recession.
If there is a silver lining in this dark cloud of a decision it is footnote 1, which announces a new appellate court policy governing interlocutory appeal.
Orders granting or denying class certification are not appealable as of right; an aggrieved party must move for leave to appeal pursuant to Rule 2:5-6(a). We recognize, however, that the decision to grant or deny class certification often has a profound effect on the litigation. Accordingly, we will hereafter, as a general matter, liberally indulge applications for leave to appeal: (1) “when a denial of class status effectively ends the case (because, say, the named plaintiff’s claim is not of a sufficient magnitude to warrant the costs of stand-alone litigation)”; (2) “when the grant of class status raises the stakes of the litigation so substantially that the defendant likely will feel irresistible pressure to settle”; and (3) when permitting leave to appeal “will lead to a clarification of a fundamental issue of law.” Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 293 (1st Cir. 2000); see also Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 834-35 (7th Cir. 1999).
NJCJI has been arguing for years that the court should abandon its rule limiting the interlocutory appeal of class certifications, so it is heartening to see the appellate division support review of class certification as appropriate, rather than as of right.
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