IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
September 27, 2002
LOETTA CANNON, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
CHERRY HILL TOYOTA, INC., DEFENDANT.
The opinion of the court was delivered by: Simandle, District Judge
NOT FOR PUBLICATION
This matter comes before the Court upon motion for partial reconsideration by plaintiff Loetta Cannon ("plaintiff"), on behalf of herself and all others similarly situated (collectively "plaintiff class"), of this Court's August 29, 2001 Opinion and Order granting in part and denying in part both parties' cross-motions for summary judgment, and upon plaintiff's motion for appointment of a special master for purposes of individualizing determinations of actual damages under the Truth in Lending Act and ascertainable losses under the New Jersey Consumer Fraud Act ("NJCFA").
Plaintiff seeks reconsideration only to the extent that the Court entered judgment in favor of Defendant and against the entire Plaintiff Class under NJCFA on the issue of damages. (Pl.'s Br. at 2.) Plaintiff contends that the Court overlooked controlling New Jersey case law regarding proof of damages under the NJCFA, and that the Court drew impermissible inferences regarding representative plaintiff Cannon in favor of defendant in granting defendant's motion as to damages under the NJCFA. Plaintiff also seeks appointment of a special master in accordance with Rule 53, Fed. R. Civ. P., for purposes of individualized determinations of actual damages under the Truth in Lending Act and ascertainable losses under the NJCFA, only "[i]n the event that the Court denies the Motion for Reargument and upholds its conclusion that the causation requirement under the [NJCFA] . . . requires a showing of detrimental reliance." (Pl.'s Br. at 1.) For the reasons discussed herein, plaintiff's motion for reconsideration will be granted in part and denied in part, and plaintiffs' motion for appointment of a special master will be dismissed without prejudice.
The present Opinion incorporates the August 29, 2001 Opinion's recitation of the background of this cause of action, in which plaintiff alleges that defendant Cherry Hill Toyota violated the Federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., and the New Jersey Consumer Fraud Act ("NJCFA"), N.J.S.A. §§ 56:8-2 et seq. See Cannon v. Cherry Hill Toyota, 161 F. Supp. 2d 362, 375 (D.N.J. 2001). In that Opinion and Order, the Court entered summary judgment against defendant as to Counts One and Two, concluding that defendant's conduct violated TILA and NJCFA as a matter of law and that plaintiff is entitled to receive statutory damages under TILA in a sum to be determined after trial, and granted defendant's motion striking plaintiff's demand for actual damages under TILA and plaintiff's entire demand for damages under NJCFA, leaving statutory damages under TILA and Count Three for trial. *fn1 The parties' cross-motions were otherwise denied.
Plaintiff timely filed the instant motion for reconsideration. Plaintiff seeks reconsideration only to the extent that the Court entered judgment in favor of defendant and against the entire plaintiff class on the issue of damages under the NJCFA. This Court struck plaintiff's claim for damages under NJCFA based on the Peters analysis used in TILA claims in determining whether plaintiff class was entitled to damages under the NJCFA. See Cannon, 161 F. Supp. 2d at 375 (utilizing TILA framework in Peters v. Jim Lupient Oldsmobile, 220 F.3d 915 (8th Cir. 2000)). Peters requires that in order to show a TILA violation, a plaintiff must show: "(1) that she read the TILA disclosure statement; (2) that she understood the charges being disclosed; (3) had the disclosure statement been accurate, she would have sought a lower price; and (4) she would have obtained a lower price." Peters, 220 F.3d at 917. The Court concluded that "plaintiff has failed to adduce any evidence tending to show that she suffered an ascertainable loss as a result of defendant's misrepresentation [by] fail[ing] to marshal . . . facts showing that (1) she would have sought a cheaper warranty, and (2) that she would have succeeded in her quest." Cannon, 161 F. Supp. 2d at 375.
Plaintiff subsequently filed the motion for appointment of a special master, and this Court heard oral argument upon both motions. Upon request, both plaintiff and defendant submitted further briefing on the recent cases of Union Ink Co., Inc. v. AT&T Corp., 352 N.J. Super. 617 (App. Div. 2002), and Weinberg v. Sprint Corp., 173 N.J. 233 (2002). The Court, finding that in its previous Opinion, it erroneously applied the dismissal of plaintiff Cannon's damage claim to the entirety of the class action plaintiffs, concludes that plaintiff's motion for reconsideration will be granted in part, thus defendant's motion for partial summary judgment as to the damage claim under the NJCFA will be denied as to the plaintiff class, and plaintiff class's claim for NJCFA damages will proceed to trial. Plaintiff's motion for reconsideration will be denied in part as to plaintiff Loetta Cannon's NJCFA damage claim, and she is not entitled to recover NJCFA damages as a matter of law. Plaintiff's motion for appointment of a special master pursuant to Rule 53, Fed. R. Civ. P., will be dismissed without prejudice.
I. Plaintiff's Motion for Reconsideration
A. Reconsideration/Reargument Standard
Local Civil Rule 7.1(g) requires that a motion for reargument shall be served within 10 days of the entry of the order or judgment on which reargument is sought. See L. Civ. R. 7.1(g). Such motions should be accompanied by a "brief setting forth concisely the matters or controlling decisions which counsel believes the Judge or Magistrate has overlooked." Id. "A party seeking reconsideration must show more than a disagreement with the court's decision, and `recapitulation of the cases and arguments considered by the court before rendering its original decision fails to carry the moving party's burden.'" Panna v. Firstrust Sav. Bank, 760 F. Supp. 432, 435 (D.N.J. 1991) (quotation omitted). As this Court has stated, "motions for reargument succeed only where a `dispositive factual matter or controlling decision of law' was presented to the Court but not considered." Damiano v. Sony Music Entm't, 975 F. Supp. 623, 634 (D.N.J. 1996) (JBS) (quoting Pelham v. United States, 661 F. Supp. 1063, 1065 (D.N.J. 1987)), appeal dismissed, 166 F.3d 1204 (1998). Where no facts or cases were overlooked, such a motion will be denied. Egloff v. N.J. Air Nat'l Guard, 684 F. Supp. 1275, 1279 (D.N.J. 1988); Resorts Int'l v. Greate Bay Hotel & Casino, 830 F. Supp. 826, 831 (D.N.J. 1992).
If the record was inadequately developed on a particular issue, the court has discretion to reconsider the matter, Hatco Corp. v. W.R. Grace Corp., 849 F. Supp. 987, 990 (D.N.J. 1994), but not to the extent of considering new evidence that was available but not submitted while the motion was pending. Florham Park Chevron, Inc. v. Chevron, USA, Inc., 680 F. Supp. 159, 162 (D.N.J. 1988). In other words, a "motion for reconsideration is not a vehicle to reargue the motion or to present evidence which should have been raised before." Bermingham v. Sony Corp. of America, Inc., 820 F. Supp. 834, 856-67 (D.N.J. 1992), aff'd, 37 F.3d 1485 (3d Cir. 1994). As the late Chief Judge Gerry noted, "We are in fact bound not to consider such new materials, lest the strictures of our reconsideration rule erode entirely." Resorts Int'l, 830 F. Supp. at 831 n.3. (emphasis in original). Consequently, only when the matters overlooked might reasonably have resulted in a different conclusion if the court had considered them will the court entertain such a motion. Panna, 760 F. Supp. at 435.
Plaintiff argues that this Court erred in awarding summary judgment to defendant against the entire plaintiff class on the issue of damages under the NJCFA. Plaintiff's reconsideration motion is premised upon the argument that the Court overlooked the concept that liability under the NJCFA does not require the element of reliance, unlike the Truth in Lending Act ("TILA").
The NJCFA, which focuses on commercial deception, provides that: Any person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act . . . may bring an action or assert a counterclaim therefor in any court of competent jurisdiction. In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section, including those brought by the Attorney General, the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit. N.J.S.A. 56:8-19.
"[The NJCFA] was designed to prevent deception, fraud or falsity, whether by acts of commission or omission, in connection with the sale and advertisement of merchandise and real estate." Delaney v. Garden State Auto Park, 318 N.J. Super 15, 19 (App. Div.) (citing Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 69 (1985)), certif. denied, 160 N.J. 477 (1999). The NJCFA is liberally construed as remedial legislation in favor of protecting consumers. See Delaney, 318 N.J. Super. at 19-20 (citing Fenwick v. Kay Am. Jeep, Inc., 72 N.J. 372, 376-77 (1977)).
New Jersey courts have held that liability attaches upon a finding of a violation under the NJCFA. See Varacallo v. Mass. Mutual Life Ins. Co., 332 N.J. Super. 31, 43, 48-49 (App. Div. 2000) (quoting N.J.S.A. 56:18-9). "To violate the Act, a person must commit an `unlawful practice' as defined in the legislation." Cox v. Sears Roebuck & Co., 138 N.J. 2, 17 (1994) (noting three general categories of unlawful practices: affirmative acts, knowing omissions and regulation violations). Furthermore, the Varacallo court held that "if the plaintiffs establish the core issue of liability, they will be entitled to a presumption of reliance and/or causation." Varacallo, 332 N.J. Super. at 51. This presumption of reliance and causation arises from proof of non-disclosure of a material fact under the NJCFA. Id. at 50-51. This is because the NJCFA, unlike TILA, has adopted the rebuttable presumption that a consumer is presumed to be harmed by the defendant's omission of a material fact; due to the materiality of the omission giving rise to the "unlawful practice" under the NJCFA, it is presumed that the consumer relied upon the omission and was caused to suffer detriment. Id. at 49-51. So strong is this presumption, under the NJCFA, that the Appellate Division held that the lower court erred in denying class certification on the ground that individualized issues of causation and reliance predominated. Id. at 34, 41-52.
In this case, the Court previously held that defendant violated the NJCFA by "failing to state completely the price term of the MBP [mechanical breakdown protection] warranty." Cannon, 161 F. Supp. 2d at 375. Plaintiff class, due to defendant's violation, was therefore entitled to a presumption of causation or reliance. As to whether plaintiff suffered an ascertainable loss, the Court applied the factors for determining damages under the Truth in Lending Act ("TILA"). See id. at 375. The Court stated that
[P]laintiff has failed to adduce any evidence tending to show that she suffered an ascertainable loss as a result of defendant's misrepresentation. As the Court noted in connection with the TILA claim, plaintiff has failed her burden of marshaling facts showing (1) she would have sought a cheaper warranty, and (2) that she would have succeeded in her quest. Id.
This analysis was borrowed from the Eighth Circuit's framework for a plaintiff to prove damages under TILA, which requires: (1) that she read the TILA disclosure statement; (2) that she understood the charges being disclosed; (3) had the disclosure statement been accurate, she would have sought a lower price; and (4) she would have obtained a lower price. See id. at 369 (quoting Peters, 220 F.3d at 917). The Court thus denied plaintiff damages under NJCFA due to her failure to demonstrate the required showing of reliance on defendant's misrepresentation.
Plaintiff first advances the argument that the Court overlooked the case law establishing the nature of the causal link required to recover ascertainable losses, citing to Varacallo, supra, 332 N.J. Super. 31 (App. Div. 2000), and Roberts v. Cowgill, 316 N.J. Super. 33, 40 (App. Div. 1998). This Court notes that its finding of defendant's liability under the NJCFA was not based, correctly, on any showing of reliance. Indeed, the Varacallo case supports that the element of reliance is not required in order to prove a violation under the NJCFA, in contrast to common law fraud:
The Supreme Court has taken pains to point out that this claim is a significant distinction from the requirement of reliance in a common law fraud claim. A defendant who violates the Act because of an unlawful "method, act, or practice" that results from an omission of a material fact with the "intent that others rely upon such concealment, suppression or omission," N.J.S.A. 56:8-2, is "liable for [such] misrepresentations whether `any person has in fact been misled, deceived or damaged thereby.' Id. at 49 (quoting Gennari v. Weichert Co. Realtors, 148 N.J. 582, 607-08 (1997)) (emphasis added); see Gennari, 148 N.J. at 607 ("liability arisi[ing] from the Act . . . does not require proof of reliance").
Plaintiff relies on Cox v. Sears Roebuck, supra, in arguing that the class has adequately met its burden in showing an ascertainable loss under NJCFA. A private plaintiff victimized by an unlawful practice under the NJCFA "is entitled to `threefold the damages sustained' by way of `any ascertainable loss of moneys or property, real or personal." Cox, 132 N.J. at 21 (quoting N.J.S.A. 56:8-19). A plaintiff must demonstrate a causal nexus between the amount of damages and defendant's concealment, suppression, or omission of a material fact that is declared unlawful. See Varacallo, 332 N.J. Super. at 43, 48-49 (quoting N.J.S.A. 56:8-19); see also Roberts, 316 N.J. Super. at 40 (analyzing under N.J.S.A. 56:8-19 whether defendant committed an unlawful practice under the Act and whether plaintiff suffered an ascertainable loss in order for entitlement to treble damages and attorney's fees to attach). Once a causal link is established between plaintiff's ascertainable loss and defendant's consumer fraud, that plaintiff is entitled to treble damages and attorney's fees. See Roberts, 316 N.J. Super. at 40 (quoting Cox, 138 N.J. at 21) ("A private plaintiff victimized by any unlawful practice under the Act is entitled to `threefold the damages sustained' by way of any ascertainable loss of moneys or property, real or personal . . . .").
In Cox, the plaintiff had contracted with defendant Sears for home improvement services to renovate plaintiff's kitchen. The New Jersey Supreme Court stated,
Traditionally, to demonstrate an ascertainable loss, a victim must simply supply an estimate of damages, calculated within a reasonable degree of certainty. The victim is not required actually to spend the money for the repairs before becoming entitled to press a claim. Id. at 23.
The jury found that defendant, in the course of rendering services, had failed to comply with home improvement regulations, resulting in faulty wiring and leaving inadequate certain aspects of the microwave hood and vent, the cabinets, and vinyl flooring. In Cox, the court concluded that the victim's ascertainable loss had amounted to the cost of repairing the kitchen as determined by the jury, even though plaintiff had not actually spent money for repairs after defendant's work had been done. The court stated that the contract price was not the correct measure of consumer fraud damages because the consumer fraud occurred in the course of the performance, not the actual contracting for the home improvement work.
Plaintiff contends that Cox supports the argument that ascertainable losses are measured by the amount of the contract where the violation occurs in the making of the contract or creation of the debt. This contention is flawed. The New Jersey Supreme Court in Cox indeed stated that "an improper debt or lien against a consumer-fraud plaintiff may constitute a loss under the Act, because the consumer is not obligated to pay an indebtedness arising out of conduct that violates the Act." Cox, 138 N.J. at 23. The court made this statement, however, in distinguishing such a situation from its ultimate conclusion that plaintiff in that case did not incur his unrelated debt and lien as a result of the consumer fraud that took place.
Cox, on the other hand, exemplifies the proposition that the correct measure of ascertainable loss is measured by what the consumer had bargained for; in the case of home improvement services, the ascertainable losses constitute the difference between the performance bargained for and what he or she ultimately received. Cox bargained for a renovated kitchen in compliance with the building codes constructed in a workmanlike manner. Cox received a substandard renovation of the kitchen. The estimated cost of restoring what Cox had bargained for was the ascertainable loss and hence the measure of NJCFA damages.
A recent decision by the New Jersey Appellate Division further confirms this determination. See Union Ink Co., Inc. v. AT&T Corp., 352 N.J. Super. 617, 639 (App. Div. 2002). Union Ink involved a class action brought by cellular telephone users against a service provider alleging violations under NJCFA. The central issue was whether plaintiffs' claims were preempted by the Federal Communications Act. Id. at 624-25. The Appellate Division reversed the trial court's ruling that the claims were preempted, reaffirming that the jury's measure of damages would not constitute impermissible rate regulation. In this context, the Appellate Division clarified that "[t]he measure of damages in a consumer fraud case is the difference between the value of what was promised and what was received, that is, what the customer would have received had the defendants' representations been accurate." Id. at 639 (citing Chattin v. Cape May Greene, Inc. (II), 243 N.J. Super. 590, 605 (App. Div. 1990), aff'd, 124 N.J. 520 (1991)) (emphasis added).
Plaintiff argues that this Court overlooked Delaney v. Garden State Auto Park, 318 N.J. Super. 15 (App. Div.), certif. denied, 160 N.J. 477 (1999), in rejecting the misrepresented profit as the proper measure of the ascertainable loss. Delaney, however, only reaffirms the measure of ascertainable losses as determined by Union Ink. In Delaney, an automotive consumer sued a car dealership for consumer fraud. The plaintiff's retail installment sales agreement disclosed that his installments would cost plaintiff an amount $2,200 more than the $5,783 he had agreed to pay. After determining that defendant had violated an NJCFA regulation by failing to itemize pre-delivery services, the court found the amount overcharged, $2,200, to constitute the amount of the ascertainable losses. The ascertainable loss, as in Cox, Chattin, and Union Ink, amounted to the difference between the value of what was promised and what was received, excluding the amount of the undisclosed services.
Here, this Court previously found that defendant violated the NJCFA by "failing to state completely the price term of the MBP [mechanical breakdown protection] warranty." Cannon, 161 F. Supp. 2d at 375. Plaintiff purchased an MBP warranty that carried a hidden charge larger than the cost of the warranty itself, which was retained as a commission by defendant. The total warranty price, however, was no different than the price plaintiff agreed to pay for the warranty, and the amount financed was also no different. In this case, this Court thus previously noted that plaintiff Cannon's testimony failed to indicate that she received something other than what she had bargained for when negotiating her warranty. Unlike Delaney, the price Cannon agreed to for the warranty was the price she paid; she received no more and no less than what she bargained for, as her deposition testimony reveals:
Q: Before you saw your attorney, did you have any problem with the extended warranty?
Q: Okay. Besides what your lawyer told you, why do you believe you were charged the wrong amount?
A: I have no idea.
Q: Were you charged the wrong amount for the purchase price of the vehicle?
A: I have no idea. Cannon Dep. at 35-36.
Q: What is wrong with the amount they charged you?
A: I believe that's not the right amount.
Q: Why not?
A: It just seems awful high to charge someone that amount of price for a warranty.
Q: Is that what they told you it was going to cost?
Q: Did you agree to that price?
A: Yes. Id. at 40.
Q: Besides the fact that you think the cost of the extended warranty is high, why else do you believe that you were cheated?
A: Are you just talking about the warranty?
A: Just by me going over it. Just by me looking at it. It just seems like a higher price to me.
Q: Besides that, is there any other reason why you believe you were cheated?
Q: And you agreed to that price when you signed the contract?
A: Yes. Id. at 42.
As the testimony above shows, there is no indication whatsoever that Ms. Cannon received less than what she bargained for; she paid the contract price that defendant had represented to her as the cost of the warranty. Unlike Cox where plaintiff had bargained for a renovated kitchen and received one with faulty wiring and substandard improvements according to the contract and home improvement regulations, plaintiff Cannon here did not receive less than what she had paid for. Her agreement to pay the price of the warranty did not include discussion or negotiation of any included charges, or that defendant would or would not receive and retain a sales commission. While defendant's misstatement that the entire price for the warranty was being paid to the third-party provider is enough for liability under the Act, it is insufficient to allow an award of treble damages where plaintiff cannot prove a causal nexus between this consumer fraud and any ascertainable loss.
Plaintiff argues that the Court, in relying on such deposition testimony, drew impermissible inferences in defendant's favor, maintaining that plaintiff and plaintiff class were entitled to the presumption that they had paid the entire undisclosed discharge as a result of defendant's violation, citing Varacallo and Roberts. Rather than requiring direct proof of reliance, a requirement to maintain a common law fraud claim, see Barsotti v. Merced, 346 N.J. Super. 504, 513 (App. Div. 2002), the court in Varacallo afforded the presumption of reliance to the entire class for purposes of certifying the consumer fraud class action, and extended the similar presumption of causation in certifying the class action alleging NJCFA violations. See Varacallo, 332 N.J. Super. at 48-50. The Varacallo court's discussion regarding the presumption afforded to common law and statutory consumer fraud cases in certifying a class action fails to extend to this situation where plaintiff seeks the presumption in the context of its demand for classwide damages, which must be determined on an individualized basis.
Furthermore, while it is true that the Court must extend any favorable inference to the non-moving party in a summary judgment motion, plaintiff Cannon has failed to adduce any evidence that demonstrates a genuine issue as to any material fact. It is this lack of evidence, either favorable or otherwise, that convinces this Court that a reasonable jury would be unable to find for plaintiff Cannon at trial. No reasonable jury could view plaintiff's evidence as sufficient to meet her burden of proving that she received a lesser warranty than she had bargained for. At most, her evidence, as reflected in the expert report of David Stivers, demonstrates that warranties were available on the market for a price lower than what she agreed to pay Cherry Hill Toyota. Cannon does not allege that Cherry Hill Toyota misrepresented that this was the lowest price of any extended warranty in the relevant market. That Ms. Cannon could have obtained a cheaper warranty if she had shopped around does not mean that she received less of a warranty than she had bargained for. Her testimony confirms that she agreed to pay the price that appeared in the disclosure statement, and that she received a satisfactory warranty. Indeed, she received warranty coverage when she presented her vehicle for repairs at a later date. Plaintiff's argument in this regard thus fails.
Plaintiff asserts that it was defendant's burden to present "dissociative proofs" in rebutting the presumption that the entire undisclosed charge resulted from the violation or else such damages must be trebled under Roberts v. Cowgill, 316 N.J. Super. 33 (App. Div. 1998). Much like the home improvements contract in Cox, the Roberts case involved a contract for the construction of an addition to plaintiff's home. In Roberts, the court determined that due to defendant's unlawful billing of plaintiff prior to receiving a certificate of occupancy in violation of state regulation in addition to defendant's other violations, plaintiff incurred repairs and costs of compliance that constituted ascertainable losses under the NJCFA. Because plaintiff offered no particularized testimony regarding the cost of associated repairs, relying solely on an expert estimate, the court stated that "it becomes the defendant's responsibility to isolate particular losses which do not have the required causal connection." Id. at 44. Defendant having failed to do so, the court awarded plaintiff treble damages based on the expert's estimated amount.
Roberts is inapplicable here where plaintiff has not proven that she incurred an ascertainable loss directly related to defendant's omission under the NJCFA. As discussed above, the Appellate Division's recent clarification in Union Ink informs us that the measure of the ascertainable loss is the difference between what plaintiff had bargained for and what she had received. Though defendant's nondisclosure violated the NJCFA, plaintiff nevertheless received the warranty at the price she had bargained for, and thus no ascertainable loss can be attributed to the nondisclosure. Plaintiff's reconsideration motion will be denied as to plaintiff Loetta Cannon's damage claim under the NJCFA.
The Court had previously stricken the NJCFA damage claim as to the entire plaintiff class based upon the proofs offered on behalf of plaintiff Cannon. Although plaintiff Cannon cannot demonstrate an ascertainable loss attributable to defendant's omission regarding its retention of a portion of the warranty cost, it is possible that other plaintiffs in the class may be able to demonstrate such losses. No individual class member's damage claim has been determined under NJCFA. To this extent, the Court's Order was erroneous in striking the entire class's demand for NJCFA damages. As a result, the Court will grant plaintiff's motion for reconsideration as to the NJCFA damage claims of the entire plaintiff class, excluding plaintiff Cannon. These claims will be reinstated, and will proceed in this case.
In a different vein, the Court again notes that Cannon, who has proved Cherry Hill Toyota is liable for violating the NJCFA, will be entitled to recover her reasonable costs and attorney's fees even though she is unable to prove an ascertainable loss. A recent New Jersey Supreme Court decision provides further support for a plaintiff's ability to recover attorney's fees and costs under the NJCFA despite her inability to demonstrate an ascertainable loss. See Weinberg v. Sprint Corp., 173 N.J. 233 (2002). The Supreme Court in Weinberg held that a plaintiff who cannot survive a motion for summary judgment on the issue of ascertainable loss may not proceed with remaining claims for injunctive relief and attorney's fees under the NJCFA. In that case, operation of the filed rate doctrine, which bars money damages from telecommunications carriers where the damage claims are premised on consumer fraud principles, see id. at 243, precluded plaintiff from any claim to monetary damages. Notably, however, the Supreme Court distinguished that situation from one where a claim for damages is available, despite a plaintiff being ultimately unable to prove such a claim, drawing upon its previous statements in Cox:
[W]e further observed that even if the plaintiff is not successful in proving to the factfinder the existence of ascertainable loss, and thus is unable to recover treble damages, the plaintiff can recover reasonable attorneys' fees and costs if he can prove that the defendant committed an unlawful practice. Weinberg, 173 N.J. at 252-53 (citing Cox, 138 N.J. at 24-25).
The New Jersey Supreme Court further stated:
Thus, in Cox, we suggested that a plaintiff who reaches the factfinder on a claim of ascertainable loss and succeeds in proving an unlawful practice but does not succeed in proving damages, should be eligible nonetheless to recover attorneys' fees for bringing the action. Weinberg, 173 N.J. at 253.
In accordance with Weinberg, this Court again determines that plaintiff Cannon, who may not proceed with her claim for damages under the NJCFA, may nonetheless recover reasonable attorney's fees and costs.
II. Plaintiff's Motion for Appointment of a Special Master
In the event that the Court denies the motion for reargument and upholds its conclusion that causation under the NJCFA requires reliance, plaintiff seeks appointment of a special master pursuant to Rule 53, Fed. R. Civ. P., for purposes of determining individual damages, for assessment of costs, and notice to the class. Plaintiff seeks appointment of a special master so that individualized detrimental reliance and damages determinations can be made under both the TILA and NJCFA. Second, plaintiff submits that the costs of the special master and claims administration process should be assessed against defendant. Lastly, plaintiff asserts that notice to class should issue to the class members pursuant to Rule 23(d), Fed. R. Civ. P., to inform them of the liability determination and of the claims process before the special master.
Here, plaintiff is correct in stating that the Court's Opinion filed August 29, 2001, limited the scope of issues resolved to plaintiff Cannon's individual claims, although the Court's Order erroneously dismissed the entire plaintiff class's damage claim under the NJCFA. To the extent that this Court today denies reconsideration only as to plaintiff Loetta Cannon, and grants reconsideration as to the remaining plaintiffs in the class, thereby reinstating the class members' claims for damages under the NJCFA, plaintiffs' motion for appointment of a special master will be considered within this context. *fn2
Rule 53, Fed. R. Civ. P., governs the appointments of special masters, providing that "[t]he court in which any action is pending may appoint a special master therein." Fed. R. Civ. P. 53(a). Subsection (b) provides:
A reference to a master shall be the exception and not the rule. In actions to be tried by a jury, a reference shall be made only when the issues are complicated; in actions to be tried without a jury, save in matters of account and of difficult computation of damages, a reference shall be made only upon a showing that some exceptional condition requires it. Upon the consent of the parties, a magistrate judge may be designated to serve as a special master without regard to the provisions of this subdivision. Fed. R. Civ. P. 53(b).
The Third Circuit has explicated the standard to be met when reference to a special master can be made pursuant to Rule 53(b). See Prudential Ins. Co. of America v. United States Gypsum Co., 991 F.2d 1080 (3d Cir. 1993). The Third Circuit stated that "if the case is to be tried before a jury, the issues involved must be `complicated' before a special master may be appointed. If, however, there is to be a non-jury trial, an `exceptional condition' is required before a special master may be authorized." Id. at 1084 (finding that the non-jury standard of "exceptional condition" under Rule 53 applied). "The `complicated' standard of Rule 53(b) was conceived to provide assistance to juries and for no other reason." Id. at 1085. Because the action before this case is to be tried to a jury, the "complicated" standard governs this motion. Rule 53 "enables a judge to appoint a special master to `assist the jury in those exceptional cases where the legal issues are too complicated for the jury to handle alone.'" Id. (quoting Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478 (1962)). As the Third Circuit noted, the Supreme Court in Dairy Queen cautioned that "[e]ven this limited inroad upon the right to a jury should seldom be made and if at all only when unusual circumstances exist." Prudential, 991 F.2d at 1084 (quoting Dairy Queen, 369 U.S. at 478 n.18).
Although Prudential analyzed the district court's appointment of a special master under the non-jury standard of Rule 53, *fn3 its reasons for issuing its writ of mandamus vacating the district court's appointment of a special master guides this Court. The Third Circuit stated that
[R]ather than utilizing the special master to perform some specialized matters of account or difficult computation of damages, see Fed. R. Civ. P. 53(b), or some other time consuming or detailed tasks that the district court judge or a magistrate judge would be less efficient in accomplishing, the district court in this case merely appears to have substituted a master for the magistrate judge, who had been managing the case for five years with the approval of all parties. Prudential, 991 F.2d at 1085.
Plaintiff seeks appointment of a special master for the difficult calculation of damages for plaintiff class's TILA claims and NJCFA claims.
Plaintiff raises Allapattah Svcs., Inc. v. Exxon Corp., 157 F. Supp. 2d 1291 (S.D. Fla. 2001), as primary support for appointment of a special master in this case. In Allapattah, after a jury verdict in favor of plaintiff class dealers who had contracted with defendant oil refiner, the court instituted a claims administration process that consisted of notice, a claims period, a process verification of claims, and entry of final judgment. As part of that claims administration process, the court appointed a special master to review and determine set-offs, coupled with compensatory damages and prejudgment interest, for individual claims.
In this case, plaintiff asserts that the proposed use of a special master to make individual damage determinations for TILA statutory damages and ascertainable losses under the NJCFA is appropriate because "it enables the individual issues necessarily implicated in a detrimental reliance standard to be resolved without unnecessary expenditure of judicial resources [and] it is more cost effective than 2,300 mini-trials." Pl.'s Br. at 5. The Court has allowed plaintiff class's demand for statutory damages under TILA to go forward. For class actions under TILA, Congress placed a ceiling on the total statutory damages to be awarded, allowing the lesser amount of $500,000 or 1% of the defendant's net worth. See 15 U.S.C. § 1640(a)(2)(B). Assessing the division of statutory damages among the approximate 2,300 plaintiffs in the class may prove extremely tedious and time-consuming. The assistance of a special master in computing these calculations may save unnecessary consumption of considerable judicial resources. On the other hand, it is unclear that any individualized determination of TILA statutory damages needs to be made for each class member. Since defendant has been held liable to the entire class for TILA statutory damages, and each class member financed their purchase under the same misrepresentation as to the warranty fee, it may be possible to have a jury determine the total liability figure under § 1640(a)(2)(B), supra, which is then simply divided among the 2,300 class members. The Court will shortly convene a conference with counsel to address this procedure.
As for plaintiff class's claim of damages under NJCFA, unlike Allapattah, the case has not reached a post-verdict stage, nor has there been a determination that classwide damages are appropriate. Thus a claims administration process and notice to the class are unnecessary at the moment. This Court determines, in today's Opinion, that the class, excepting plaintiff Cannon, may proceed with its damage claim under the NJCFA, which has yet to be adjudicated. While appointment of a special master may be appropriate when and if it is determined that individual damages under NJCFA should be awarded, this case has not reached such a stage of litigation, and appointing a special master to determine individual damages on this issue would undoubtedly be premature. It is true that the difficulty of computation of damages under the NJCFA likely reaches the level of "complicated" matters under Rule 53(b), as the Third Circuit in Prudential appears to indicate that appointment of a special master is appropriate to determine "specialized matters of account or difficult computation of damages." Prudential, 991 F.2d at 1085.
Due to dismissal of Cannon's individual claim for NJCFA damages, while the class members retain such claims, the question arises of whether Cannon is a suitable class representative for these individual claims, and whether a new representative needs to be chosen and substituted. Before proceeding further, the Court wishes to confer with all counsel on this point and also the prospect of sending the class members a suitable information notice to update them on these developments under Rule 23(d), Fed. R. Civ. P. *fn4
Accordingly, for the reasons mentioned above, plaintiff's motion for appointment of a special master will be dismissed without prejudice to plaintiff's right to refile such motion after the NJCFA class representative status and suitability of a classwide NJCFA damages trial have been determined. *fn5
For the reasons discussed above, plaintiff's motion for reconsideration will be granted in part as to the plaintiff class's damage claims under the NJCFA, and the Court's Opinion and Order of August 29, 2001 will be modified such that defendant's motion for partial summary judgment will be denied, and the classwide claim for damages under the NJCFA will be reinstated and shall proceed to trial; the motion for reconsideration will otherwise be denied in part as to plaintiff Loetta Cannon. Plaintiff's motion for appointment of a special master under Rule 53 will be dismissed without prejudice. The accompanying Order will be entered.
JEROME B. SIMANDLE United States District Judge
THIS MATTER having come before the Court upon motion for reconsideration of this Court's Order and Opinion of August 29, 2001, and upon motion for appointment of a special master for purposes of individualized determinations of actual damages under the Truth in Lending Act and ascertainable losses under the New Jersey Consumer Fraud Act, by plaintiff Loetta Cannon on behalf of herself and all others similarly situated; and the Court having considered the parties' submissions; and the Court having heard oral argument on December 3, 2001; and for the reasons stated in the Opinion of today's date; and for good cause shown;
IT IS on this 27th day of September, 2002, hereby
ORDERED that plaintiff's motion for reconsideration [Docket Item 125-1] shall be, and hereby is, GRANTED in part as to the plaintiff class, and the Court's Opinion and Order of August 29, 2001, will be modified regarding defendant's motion for partial summary judgment, which shall be, and hereby is, DENIED as to the classwide NJCFA damage claim, and the classwide NJCFA damage claim will proceed; the motion is DENIED in part as to plaintiff Loetta Cannon, and her NJCFA damage claim is DISMISSED; and
IT IS FURTHER ORDERED that plaintiff's motion for appointment of a special master [Docket Item 127-1] shall be, and hereby is, DISMISSED without prejudice.
JEROME B. SIMANDLE United States District Court