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Kalow & Springut, Llp, On Behalf of Itself and All Those Similarly Situated v. Commence Corporation

August 15, 2011

KALOW & SPRINGUT, LLP, ON BEHALF OF ITSELF AND ALL THOSE SIMILARLY SITUATED, PLAINTIFF,
v.
COMMENCE CORPORATION, DEFENDANT.



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

*NOT FOR PUBLICATION

OPINION

Plaintiff Kalow & Springut, LLP ("Plaintiff") moves for partial reconsideration of this Court's prior decision denying Plaintiff's request to certify a single class of all users of networked versions ("All Users Class") of Defendant Commence Corporation's ("Defendant") software, who were allegedly affected by a "time-bomb" placed intentionally by Defendant to disable the software. Previously, the Court found that the putative class had not met Rule 23's predominance requirement because of a lack of choice of law analysis with respect to Plaintiff's New Jersey Consumer Fraud Act claim. In the instant matter, Plaintiff seeks partial certification of the class solely under its Computer Fraud and Abuse Act ("CFAA") claim. For the reasons that follow, the Court certifies the All Users Class only with respect to the CFAA claim.

BACKGROUND

The facts of this case have been recounted by the Court in its previous class certification Opinion. See Opinion dated February 18, 2011, pp. 2-3. As such, the Court will incorporate them herein. As early as 2000, Plaintiff, a law firm, used a version of Defendant's software for customer relationship management, timekeeping, patent docketing, and calendaring. As alleged, on March 20, 2006, all versions of the Software stopped working because the software package included a computer code (referred to as a "time bomb"), which rendered the software inoperable after that date.

Consequently, Plaintiff brought this putative class action suit alleging two separate causes of action: the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 ("CFAA") and the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. ("NJCFA"). In its previous motion, Plaintiff sought to certify a class on behalf of all of the networked users of Defendant's software who suffered damages when the software stopped working on March 20, 2006. Notably, Plaintiff sought certification based upon both claims -- CFAA and NJCFA claims. After extensive briefing, the Court denied certification of the class because Plaintiff did not conduct a choice-oflaw analysis with respect to its NJCFA claim, and therefore, failed to meet the predominance requirement of Rule 23(b). Now, Plaintiff moves the Court to reconsider its ruling only as to partially certifying the class based on the CFAA claim.

At the outset, the Court notes that because Plaintiff previously did not move for partial class certification based on its CFAA claim, the Court will construe this motion as one for partial certification rather than a motion for reconsideration. Thus, an analysis of whether Plaintiff has met the standard for reconsideration is not necessary.

DISCUSSION

Based upon the Court's prior ruling, Plaintiff submits that a partial certification of the All Users Class is appropriate since the Court has found that its CFAA claim has meet all of Rule 23's requirements.*fn1 On the other hand, Defendant argues that while partial class certification may generally be permitted, Plaintiff has failed to make a sufficient showing that a certifying class consisting only of the CFAA cause of action is appropriate here. For support, Defendant relies on the reasoning espoused by the Third Circuit in Hohider v. United Parcel Service, Inc., 574 F.3d 169 (3d Cir. 2009).

In Hohider, Plaintiffs, former employees of the United Parcel Service, moved to certify a class for an action against their former employer. Hohider, 574 F.3d at 172. Specifically, plaintiffs averred that defendant's employment policies were unlawfully discriminatory under the Americans with Disabilities Act ("ADA"). Id. For their claim, plaintiffs sought injunctive and declaratory relief as well as back pay and compensatory and punitive damages for the entire class. Id. at 173. Based on the nature of the ADA claims, the district court derived its analysis of class certification from the Supreme Court's "two-stage evidentiary framework" to adjudicate "pattern-or-practice claims of discrimination under Title VII of the Civil Rights Act . . . ."*fn2 Id. at 173-174. As that court noted, the bifurcation was necessary to first determine if in fact defendant was liable for violating the ADA, and second, to determine the damages each plaintiff suffered if liability was found. Id. at 175-177. Because damages among the class differed, the court found that the claim for damages of the cause of action under the ADA did not meet the requirements of Rule 23(b). Id. at 175. However, finding that the issue of damages could be addressed in the second phase of litigation, the court partially certified the class with respect to the defendant's liability under the ADA. Id.

In reviewing the district court's decision, the Third Circuit held that it was improper for the district court to use the two-phase approach without incorporating the specific elements plaintiffs needed to establish defendant's liability under the ADA.*fn3 Hohider, 574 F.3d at 196-197. Without it, the Third Circuit explained that it would be impossible to determine whether defendant was liable for engaging "in a pattern or practice of unlawful discrimination" in violation of the ADA. Id. at 196.

The Third Circuit also determined that the district court erred in granting partial certification under Rule 23(c)(4). Id. at 199-201. It reasoned that the lower court failed to establish how tabling the claim for compensatory and punitive damages until phase two of the litigation would be proper since it ruled that the damages claim failed to meet the predominance requirement. Id.In addition, the Third Circuit noted several factors outside of Rule 23 which should be considered in order to partially certify based upon an element of a claim under Rule 23(c)(4): a court's decision to exercise its discretion under Rule 23(c)(4), like any other certification determination under Rule 23, must be supported by rigorous analysis. Furthermore, we believe several considerations are relevant to determining "[w]hen [it is] appropriate" for a court to certify a class only "with respect to particular issues," Fed. R. Civ. P. 23(c)(4): the type of claim(s) and issue(s) in question; the overall complexity of the case and the efficiencies to be gained by granting partial certification; the substantive law underlying the claim(s), including any choice-of-law questions it may present; the impact partial certification will have on the constitutional and statutory rights of both the class members and the defendant(s); the potential preclusive effect that resolution of the proposed issues class will have; and so forth.

Hohider, 574 F.3d at 200-202.

Here, relying on those additional factors, Defendant argues that Plaintiff has failed to meet these other "considerations" set forth by the Third Circuit. However, Defendant's reliance on Hohider is misplaced. The entire premise of Hohider focuses on the issue of liability, which is a specific element within the plaintiffs' claim of discrimination under the ADA, and in that regard, ...


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