Class Decertified Where Vast Majority of Members Sustained No Ascertainable Loss

Adrienne C. Rogove

In another blow to plaintiffs suing under New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”), the United States District Court for the District of New Jersey in Martinez-Santiago v. Public Storage, 2019 WL 1418118 (D.N.J. March 29, 2019), decertified a class of 160,000 members alleging that lease agreements with the Defendant Public Storage violated TCCWNA. Following the New Jersey Supreme Court’s decision last year finding that a consumer who is a party to a contract that fails to comply with New Jersey law, but who does not suffer any adverse consequences from the noncompliance, has failed to state a TCCWNA claim, United States District Judge Jerome Simandle decertified the class. The decision was based on an analysis of the Rule 23 requirements, where the Court held that the requirements of “typicality,” “predominance,” and “numerosity” under Rule 23 could not be met.

With respect to the typicality requirement, the Court found that the named plaintiff was one of “relatively few” customers who actually suffered an adverse consequence due to the form lease contract entered into with Public Storage. Since the vast majority of class members did not suffer an adverse consequence, the claims of the named plaintiff were not typical of the class members, and therefore the typicality requirement was not met.

The Court also found that the “predominance” requirement could not be met because questions of fact common to class members no longer predominated over questions affecting only individual claims. Finally, because discovery revealed that only 29 class members might be able to assert a viable claim under TCCWNA, the “numerosity” requirement of Rule 23 likewise could not be met.

The decision of the Court in Martinez-Santiago left only the named plaintiff with potentially viable claims, thereby continuing to chip away at the prospect of successful class action suits against corporate entities, and large attorneys’ fee awards to class action counsel, in suits where the class cannot meet the requirements of Federal Rule of Civil Procedure 23.

Successful Federal Court Practice

Blank Rome Partner David C. Kistler will be a panelist at the New Jersey Institute for Continuing Legal Education’s “Successful Federal Court Practice” program on Wednesday, October 11, 2017, from 9:00 a.m. to 1:00 p.m. EDT, at the New Jersey Law Center in New Brunswick, NJ. Continue reading “Successful Federal Court Practice”

District Court of New Jersey Holds No Duty Under FDCPA to Warn of Tax Consequences for Debt Settlement

Jonathan M. Robbin and Kyle E. Vellutato

In a case of first impression in the Third Circuit, Vincent Carieri v. Midland Credit Management, Inc., No. 17-0009 (D.N.J. June 26, 2017), the District Court of New Jersey held that that a debt collector does not have a duty to notify a debtor of potential tax consequences for settling a debt at a discount under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”).

Continue reading “District Court of New Jersey Holds No Duty Under FDCPA to Warn of Tax Consequences for Debt Settlement”

New Jersey Federal Court Rules In Favor Of Blank Rome Client In Mutual Fund Fee Trial

Jonathan M. Korn

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On August 25, 2016, after a 25-day non-jury trial, Judge Peter Sheridan of the United States District Court of New Jersey issued a 159-page opinion in favor of Blank Rome’s client AXA Equitable Funds Management Group and AXA Equitable Insurance Company (“AXA”) dismissing with prejudice all of Plaintiffs’ claims under the §36(b) of the Investment Company Act of 1940. Blank Rome served as co-counsel with Milbank, Tweed, Hadley & McCloy LLP.

Plaintiffs brought this action on behalf of mutual fund investors who are contract holders to variable annuity products with AXA. Plaintiffs alleged that the Board of Trustees, who was charged with overseeing the mutual funds, breached its fiduciary duty by approving service contracts that charged excessive management and administrative fees. Plaintiffs’ damage claim was in excess of $550 million and a finding in favor of Plaintiffs would have resulted in a complete alteration of AXA’s fee structure. The case was closely watched within the mutual fund industry, due in part to Plaintiffs’ challenge to AXA’s use of “manager of managers” structure, which is common throughout the industry and the subject of a number of other pending lawsuits. The Court held that Plaintiffs failed to meet their burden to demonstrate that AXA breached their fiduciary duty or show any actual damages.

The Blank Rome team was led by Jonathan Korn with assistance from Jaime Nucifora. A copy of the decision can be reviewed here.