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Shelton v. Inc.

June 15, 2010


The opinion of the court was delivered by: Pisano, District Judge.


Plaintiffs Shelton and Bohus have brought this putative class action against Defendant claiming Defendant's gift certificates are in violation of New Jersey law, specifically the New Jersey Gift Card Act, Consumer Fraud Act and Truth-in-Consumer Contract, Warranty and Notice Act. This Court has original jurisdiction to hear this dispute pursuant to 28 U.S.C. § 1332(d) because the suit is a class action, minimal diversity exists, and the aggregate value of the controversy arguably exceeds $5,000,000.

Presently before the Court is a motion to dismiss filed by the Defendant. The Court decides this matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth herein, the Court grants the Defendant's motion to dismiss.

I. Background

Defendant is a Delaware corporation which markets, advertises, and sells gift certificates redeemable in exchange for food and beverages throughout the United States including New Jersey. Complaint, ¶¶ 8-9. sells gift certificates in various amounts for local restaurants at a substantial discount off the face value through their internet website. Id. ¶ 11. Potential customers pay on-line for the discounted gift certificate and then receive an electronic link to an internet page where the gift certificate can be printed. Id. ¶ 12. Defendant's certificates provide on their face the value of the certificate, name and address of the restaurant, limitations imposed on the redemption of the certificate by the restaurant and Defendant's standard provisions. Id. ¶ 13.

From December 2007 through September 2009, Plaintiff Shelton purchased ten $25 gift certificates from Defendant for various restaurants. Id. ¶ 15. On October 14, 2009, Plaintiff Bohus purchased one $10 gift certificate from Defendant. Id. ¶ 17. Both Plaintiffs' certificates contained the following standard provisions: (1) "Expires one (1) year from date of issue, except in California and where otherwise provided by law" and (2) "Void to the extent prohibited by law." Id. ¶¶ 19, 20. Since April 4, 2006, all or substantially all of Defendant's gift certificates sold to New Jersey residents and redeemable at New Jersey restaurants contained these provisions. Id. ¶¶ 21, 25.

On January 6, 2010, Plaintiffs filed a two-count complaint in the Superior Court of New Jersey, Law Division, Middlesex County, claiming violations of the New Jersey Gift Certificate statute under the Consumer Fraud Act and the Truth-in-Consumer Contract, Warranty and Notice Act. On February 17, 2010, the case was removed to the United States District Court pursuant to 28 U.S.C. § 1441(a) on the grounds of diversity jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d).

II. Discussion

a. Motion to Dismiss Standard of Review

Under Federal Rule of Civil Procedure 12(b)(6), a court may grant a motion to dismiss if the complaint fails to state a claim upon which relief can be granted. Refashioning the appropriate standard, the United States Supreme Court found that, "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations,... a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]" Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007) (internal citations omitted); see also Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (stating that standard of review for motion to dismiss does not require courts to accept as true "unsupported conclusions and unwarranted inferences" or "legal conclusion[s] couched as factual allegation[s]" (internal quotation marks omitted)). Therefore, for a complaint to withstand a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the "[f]actual allegations must be enough to raise a right to relief above the speculative level,... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)...." Twombly, 127 S.Ct. at 1965 (internal citations and footnote omitted).

More recently, the Supreme Court has emphasized that, when assessing the sufficiency of a civil complaint, a court must distinguish factual contentions from "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). A complaint will be dismissed unless it "contain[s] sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. at 1949 (quoting Twombly, 127 S.Ct. at 570.) This "plausibility" determination will be "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950. If, however, the well-pleaded facts only allow the court to infer a mere possibility of misconduct, the complaint has not demonstrated that the pleader is entitled to relief. Id.

b. Legal Analysis

i. New Jersey Consumer Fraud Act & Gift Certificate Act

Plaintiffs allege violations of the New Jersey Consumer Fraud Act and Gift Certificate Act based on the alleged inappropriate disclosures and language on the face of Defendant's certificates. The New Jersey Consumer Fraud Act ("CFA") permits a private cause of action where an individual uses or employs "any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact with the intent that others rely upon such concealment, suppression or omission in connection with the sale or advertisement of any merchandise...." N.J. Stat. Ann. ยง 56:8-2. To sustain a claim under the CFA, a party must show 1) unlawful conduct by the defendants, 2) an ascertainable loss on the part of ...

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