September 24, 2010
NEW JERSEY STATE LEAGUE OF MASTER PLUMBERS, INC., AND GARY ITALIANO, NEW JERSEY LICENSED PLUMBER, PLAINTIFFS-APPELLANTS,
NEW JERSEY NATURAL GAS COMPANY AND ITS AFFILIATE NEW JERSEY RESOURCES CORPORATION; NJR HOLDINGS CORPORATION; NJR HOME SERVICES COMPANY; NJR PLUMBING SERVICES, INC., DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-2103-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 14, 2010
Before Judges Carchman and Waugh.
Plaintiffs New Jersey State League of Master Plumbers, Inc. (League), and Gary Italiano appeal the dismissal with prejudice of their suit against defendants New Jersey Resources Corporation (NJR), and its subsidiary or related entities New Jersey Natural Gas Company (NJNGC), NJR Holdings Corporation, NJR Home Services Company, and NJR Plumbing Services, Inc. We affirm.
We discern the following factual and procedural background from the record.
The League is a non-profit trade association made up of master plumbers licensed in New Jersey pursuant to the State Plumbing License Law of 1968 (Plumbing Law), N.J.S.A. 45:14C-1 to -33. Italiano, who resides in Ocean County, is a member of the League and a licensed master plumber in New Jersey.
NJR is a publicly traded corporation that provides natural gas in certain areas of New Jersey through its subsidiary NJNGC, which is regulated by the New Jersey Board of Public Utilities (BPU). NJR and NJNGC provide plumbing related services to their natural gas customers and others through the affiliated defendant entities. The League contends that defendants' advertising and billing practices with respect to those activities were criticized in an audit report submitted to the BPU. It further contends that the BPU ordered one or more of them to take certain corrective action as a result of the audit report.
In June 2009, the League and Italiano filed a complaint in the Law Division against NJR, NJNGC, and their related companies. The complaint alleges that defendants have (1) engaged in unauthorized plumbing activities in violation of the Plumbing Law; (2) circulated improper plumbing advertisements in violation of N.J.S.A. 45:14C-2(h) and -12.3 and their implementing regulations; and (3) violated the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -184. Plaintiffs seek injunctive relief and damages, as well as counsel fees.
In July 2009, defendants filed a motion to dismiss pursuant to Rule 4:6-2(e), arguing that the League and Italiano lacked standing to sue and that, in any event, they failed to state a claim upon which relief could be granted. Plaintiffs opposed the motion, which was argued on September 25, 2009.
The judge explained his reasons for granting the motion in a letter opinion dated September 28, 2009. With respect to the first two counts, he determined that, although the League and Italiano would probably have standing, there is no private cause of action to enforce the provisions of the Plumbing Law, because the Legislature conferred enforcement power solely on the State Board of Examiners of Master Plumbers (Board), the Director of the Division of Consumer Affairs, and the Attorney General. See N.J.S.A. 45:1-25. He also concluded that plaintiffs could not sue under the CFA because they could not demonstrate an "ascertainable loss." See N.J.S.A. 56:8-19. Consequently, he dismissed the complaint with prejudice in an order of the same date.*fn1 This appeal followed.
On appeal, the League and Italiano argue that (1) they have standing; (2) that there is a private cause of action under the legislative scheme creating the professional and occupational licensing laws; (3) they have suffered an ascertainable loss; and (4) they should have been permitted to amend the CFA count to clarify their claim to an ascertainable loss and "issues of third-party beneficiaries." Defendants argue, in response, that the motion judge correctly decided the legal issues before him and that any amendment of the complaint would have been futile.
In reviewing the dismissal of a complaint for failure to state a claim on which relief can be granted, Rule 4:6-2(e), we are bound by the same standard that governed the motion judge.
Indep. Dairy Workers Union v. Milk Drivers Local 680, 23 N.J. 85, 89 (1956). We are obligated to accept the allegations of the complaint as true and afford plaintiff all reasonable factual inferences. Ibid. The complaint must be "searched in depth and with liberality to determine whether a cause of action can be gleaned even from an obscure statement." Seidenberg v. Summit Bank, 348 N.J. Super. 243, 250 (App. Div. 2002) (citing Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). "If a generous reading of the allegations merely suggests a cause of action, the complaint will withstand the motion." F.G. v. MacDonell, 150 N.J. 550, 556 (1997). A motion to dismiss should be granted "'in only the rarest of instances.'" NCP Litig. Trust v. KPMG LLP, 187 N.J. 353, 365 (2006) (quoting Printing Mart, supra, 116 N.J. at 772). See also County of Warren v. State, 409 N.J. Super. 495, 503 (App. Div. 2009), certif. denied, 201 N.J. 153, cert. denied, ___ U.S. ___, 130 S.Ct. 3508, ___ L.Ed. 2d ___ (2010).
Under our standard of review, therefore, we must assume the truth of plaintiffs' allegations that one or more of the defendants (1) have engaged in unauthorized plumbing activities and (2) have engaged in advertising or business practices that violate either the Plumbing Law and its implementing regulations or the CFA and its implementing regulations, or both. The questions before us are whether there is a private cause of action to enforce the Plumbing Law and whether plaintiffs have stated a claim under the CFA.
We turn first to the issue of whether there can be a private cause of action concerning violations of the Plumbing Law and its implementing regulations, or whether such enforcement is limited to actions brought by the Board, the Consumer Affairs Director, or the Attorney General under the statutory scheme for regulating professional and occupational activities, including plumbing.
The Plumbing Law established a comprehensive scheme for the regulation of plumbing in New Jersey, including plumbing contractors. See In re Pub. Serv. Elec. & Gas Co., 325 N.J. Super. 477, 482-83 (App. Div. 1999). As we observed in Public Service, under N.J.S.A. 45:14C-12.3b and -2(h), a person or entity is prohibited from "engag[ing] in the business of plumbing contracting or advertis[ing] in any manner as a plumbing contractor" if not licensed or owned 10% by a licensed plumber. Thus, an unlicensed plumber, or entity not owned 10% by a licensed plumber, cannot operate a plumbing business and cannot advertise that business. [Id. at 484-85.]
In enacting the Plumbing Law, however, the Legislature did not include a specific provision governing enforcement.
Instead, the Legislature allocated the enforcement provisions for the Plumbing Law, as well as other professional-and-occupational statutes, to the Uniform Enforcement Act (UEA), N.J.S.A. 45:1-14 to -27. The UEA was enacted because the Legislature determined that "effective implementation of consumer protection laws and the administration of laws pertaining to the professional and occupational boards... require uniform investigative and enforcement powers and procedures and uniform standards for license revocation, suspension and other disciplinary proceedings by such boards." N.J.S.A. 45:1-14.
The UEA specifically authorizes the Consumer Affairs Director, the various boards and commissions, and the Attorney General to take enforcement action. Available remedies include revocation or suspension of licenses, orders to cease and desist from engaging in unlicensed or improper activities, and the imposition of fines and related costs. See N.J.S.A. 45:1-21 and -22 (suspension or revocation of licensure and other remedies with respect to licensees); N.J.S.A. 45:1-23 (injunctive relief and civil penalties for unlicensed practice).
In January 2010, after finding that "[t]he regulation of certain professions or occupations... is necessary to protect the health, safety and welfare of the residents of this State" and that "[t]he unauthorized practice of a regulated profession or occupation inures to the detriment of the public," the Legislature acted "to protect the health, safety and welfare of the residents of this State" by conferring on the Director, the boards and commissions, and the Attorney General "additional investigative and enforcement powers and enhanced procedures to more effectively deter individuals from engaging in the unauthorized practice of a regulated profession or occupation." N.J.S.A. 45:1-18.1.
Like the Plumbing Law itself, the UEA does not specifically provide for a private enforcement action. Plaintiffs acknowledge that fact, but argue that there is an implied right to bring such a private action. As the Supreme Court observed in R.J. Gaydos Ins. Agency, Inc. v. Nat'l Consumer Ins. Co., 168 N.J. 255, 271 (2001), however, "New Jersey courts have been reluctant to infer a statutory private right of action where the Legislature has not expressly provided for such action."
Borrowing from standards articulated by the United States Supreme Court, our courts apply the following test in deciding whether there is an implied private right of action.
To determine if a statute confers an implied private right of action, courts consider whether: (1) plaintiff is a member of the class for whose special benefit the statute was enacted; (2) there is any evidence that the Legislature intended to create a private right of action under the statute; and (3) it is consistent with the underlying purposes of the legislative scheme to infer the existence of such a remedy. Those factors were established by the United States Supreme Court in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed. 2d 26 (1975) and adopted by our Court in In re State Comm'n of Investigation, 108 N.J. 35, 41 (1987). Although courts give varying weight to each one of those factors, "the primary goal has almost invariably been a search for the underlying legislative intent." Jalowiecki v. Leuc, 182 N.J. Super. 22, 30 (App. Div. 1981). [Gaydos, supra, 168 N.J. at 272-73.]
With respect to the first factor, we conclude that the League, as a representative of licensed plumbers, and Italiano, as a licensed plumber, are not "member[s] of the class for whose special benefit the statute was enacted." The purpose of the Plumbing Law is not to limit competition for the benefit of plumbing licensees, but rather to protect members of the public from unskilled practitioners and unscrupulous practices. See N.J.S.A. 45:1-18.1 ("The regulation of certain professions or occupations... is necessary to protect the health, safety and welfare of the residents of this State.").
Plaintiffs also assert that Italiano, in his capacity as a New Jersey resident and consumer, is a member of the class for whose benefit the statute was enacted. We will assume solely for the purpose of our analysis that he is a member of the class in his personal capacity.
With respect to the second factor, we find nothing in the language or history of the applicable statutes that would support a finding that the Legislature "intended to create a private right of action." Certainly, it would have been easy for the Legislature to have said so.
For example, in Miller v. Zoby, 250 N.J. Super. 568, 576 (App. Div.), certif. denied, 127 N.J. 553 (1991), [we] ruled that the Legislature did not intend to confer a private cause of action in enacting the Casino Control Act (CCA). [We] determined that the Legislature did not confer a private cause of action permitting players to seek damages based on a casino's violation of the extension of credit provisions of the CCA because "[i]f the Legislature had so intended, we think that it specifically would have created the right to sue expressly in the [Casino Control] Act [and]... not leave the matter to the happenstance of future judicial construction." Id. at 577. [We] added that "when [the Legislature] wanted members of the public to have access to the civil courts for violations of remedial statutes," id. at 576, the Legislature has expressly conferred a private cause of action. To support that proposition, [we] cited N.J.S.A. 56:9-12a (Antitrust Act of 1970), N.J.S.A. 56:8-19 (Consumer Fraud Act of 1971), N.J.S.A. 13:1K-13a (Environmental Cleanup Responsibility Act of 1983), N.J.S.A. 2A:35A-4a (Environmental Rights Act of 1974), and N.J.S.A. 55:13B-21 (Rooming and Boarding House Act of 1979) as examples of statutes in which the Legislature expressly provided for private causes of action. See Campione v. Adamar of New Jersey, Inc., 155 N.J. 245, 266 (1998) (declining to imply cause of action for money damages for plaintiff because Casino Control Act contains elaborate regulatory scheme and no such cause of action existed at common law). [Gaydos, supra, 168 N.J. at 274-75.]
Plaintiff points to the legislative mandate that the UEA be given a "liberal construction" because it is "remedial" legislation, N.J.S.A. 45:1-14, and argues that the liberal-construction provision evidences the required intent that there be a private cause of action. We find that argument unpersuasive because the language upon which they rely is found in the section of the UEA in which the Legislature stated that "effective implementation of consumer protection laws and the administration of laws pertaining to the professional and occupational boards... require uniform investigative and enforcement powers and procedures and uniform standards for license revocation, suspension and other disciplinary proceedings by such boards." Ibid. (Emphasis added).
The language just quoted implicates the third factor outlined in Gaydos, which is whether a private cause of action would be "consistent with the underlying purposes of the legislative scheme." Gaydos, supra, 168 N.J. at 272. The UEA's structure calls for a "uniform" approach to investigation and enforcement through the regulatory process it establishes. In addition, the UEA allows the Attorney General, but not individuals, to commence actions in the Superior Court for injunctive relief and the imposition of penalties with respect to unlicensed activities. It is clear to us that private causes of action would be patently inconsistent with the approach embodied in the UEA.
Even if Italiano in his personal capacity is viewed as someone protected by the Plumbing Law, the second and third factors outlined in Gaydos preclude our finding any "implied private cause of action." Ibid. Consequently, we affirm the dismissal of the first and second counts of the complaint.
We now turn to the third count of the complaint, which sought to state a claim under the CFA. Here, it is clear that, in addition to enforcement by the Attorney General pursuant to N.J.S.A. 56:8-3 to -18, the right to bring a private action is limited because the plaintiff must be a "person who suffers any ascertainable loss of moneys or property, real or personal." Ibid.; Weinberg v. Sprint Corp., 173 N.J. 233, 249-50 (2002) (noting that a private plaintiff cannot bring an action for purely injunctive relief and that the right to sue is limited to those who have suffered an ascertainable loss).
The motion judge concluded that neither plaintiff set forth a sufficient basis to support their assertion that they suffered an "ascertainable loss" and dismissed the third count of their complaint. On appeal, the League and Italiano argue that the League's members and Italiano have suffered such a loss because of business lost through the unlicensed and improper plumbing activity conducted by defendants.
We note first that the CFA is intended to protect "consumers," although consumers can be individuals and or entities, such as corporations. See City Check Cashing, Inc. v. The Nat'l State Bank, 244 N.J. Super. 304, 309 (App. Div.), certif. denied, 122 N.J. 389 (1990). In Papergraphics Int'l, Inc. v. Correa, 389 N.J. Super. 8, 13 (App. Div. 2006), we held that, "notwithstanding a broad and liberal reading of the statute, the CFA does not cover every sale in the marketplace" and that "CFA applicability hinges on the nature of a transaction, requiring a case by case analysis."
In this case, there has been no "transaction" between plaintiffs and defendants, other than the coincidental fact that Italiano is apparently a natural gas customer of NJNGC.
Plaintiffs fail to identify any transaction with any defendant involving the provision of plumbing services, but only assert that Italiano and other League members have lost business because of defendants' activities. They seek damages arising from allegedly unfair competition, not from a consumer transaction to which they were a party. We hold that that they fail to state a claim under the CFA.
In addition, as determined by the motion judge, plaintiffs are unable to point to any set of facts, including disputed facts, that could be interpreted as "an ascertainable loss." Such a loss must be "a definite, certain and measurable loss, rather than one that is merely theoretical." Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 558 (2009)(citing Thiedemann v. Mercedes-Benz U.S., LLC, 183 N.J. 234, 248 (2005)). Their general allegations of income lost through unfair competition are too theoretical to qualify as an "ascertainable" loss for the purposes of the CFA.
Consequently, we affirm the motion judge's dismissal of the third count of the complaint.
In summary, we have concluded that the motion judge correctly dismissed the complaint for failure to state a claim under Rule 4:6-2(e). We find no merit and need not comment further on plaintiffs' argument that it should have been permitted to amend the complaint. R. 2:11-3(e)(1)(E).