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Margaret Korrow, On Behalf of Herself and Others Similarly Situated v. Aaron‟S

August 25, 2011


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



Before the Court is Defendant Aaron‟s, Inc.‟s motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff Margaret Korrow opposes the motion. For the following reasons, the motion to dismiss will be denied.


Plaintiff commenced this action by filing a Class Action Complaint and Jury Demand (the "Complaint") in the Superior Court of New Jersey, Middlesex County, Law Division on October 26, 2010. According to the Complaint, Plaintiff entered into a rent-to-own contract with Defendant for a bedroom set on July 23, 2009. Plaintiff alleges that Defendant‟s rent-to-own contract included usurious terms, omitted necessary disclosures, and imposed extraneous fees in violation of the New Jersey Retail Installment Sales Act ("RISA"), N.J.S.A. 17:16C-1, et seq., the New Jersey Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1, et seq., and the New Jersey Truth-in-Consumer Contract, Warranty, and Notice Act ("TCCWNA"), N.J.S.A. 56:12-15, et seq. Alternatively, Plaintiff restates her claims under the Uniform Commercial Code ("UCC"), N.J.S.A. 12A:2A-101, et seq. Plaintiff also claims to bring her action on behalf of all persons who entered into a rent-to-own contract with Defendant since March 16, 2006.

Defendant received a copy of the Complaint on November 5, 2010 and removed the case to this Court on December 6, 2010.*fn1 On February 1, 2011, Defendant filed the instant motion seeking to dismiss the Complaint. Defendant‟s primary ground for dismissal posits that Plaintiff is attempting to "bootstrap" claims under RISA, which provides no private right of enforcement, onto CFA and TCCWNA claims. Defendant also submits that the terms in the contract at issue do not violate RISA, are not unlawful, and did not cause any ascertainable loss.


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. The Supreme Court set forth the standard for addressing a motion to dismiss under Rule 12(b)(6) in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007). The Twombly Court stated 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 entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (internal citations omitted). Therefore, for a complaint to withstand a motion to dismiss under Rule 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)." Id. (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 and "[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. (quoting Twombly, 550 U.S. 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." Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (citations omitted).


Defendant claims in its motion to dismiss that RISA, the statute on which Plaintiff‟s claims are based, provides no private right of action and, therefore, Plaintiff‟s claims constitute a faulty attempt to "bootstrap" RISA claims onto other statutory claims under the CFA and TCCWNA, which do provide for private actions. Plaintiff responds that New Jersey state court decisions support her interpretation that CFA claims and TCCWNA claims may be asserted for underlying RISA claims. The Court agrees with Plaintiff.

RISA provides: "The penalties provided for by this act shall be sued for and recovered by and in the name of the commissioner and shall be collected and enforced by summary proceedings pursuant to the Penalty Enforcement Law (N.J.S. 2A:58-1 et seq.)."*fn2 N.J.S.A. 17:16C-56. It is apparent that the "commissioner," or the Commissioner of Banking of New Jersey, see N.J.S.A. 17:16C-1, was the intended enforcer of RISA; indeed, the statute was enacted to "give sufficient authority to the commissioner to properly protect the interest of the buying public." Sponsor‟s Statement to S. 59 of 1960, enacted as L.1960, c. 40 (N.J. 1960). Accordingly, there is no private right of action under RISA.

The CFA, however, does provide a private right of action for any unconscionable commercial practice or fraud in connection with the sale of any merchandise. N.J.S.A. 56:8-2, 56:8-2.11. The statute also instructs that it should be applied in conjunction with other statutes or common law: "The rights, remedies and prohibitions accorded by the provisions of this act are hereby declared to be in addition to and cumulative of any other right, remedy or prohibition accorded by the common law or statutes of this State." N.J.S.A. 56:8-2.13. The Supreme Court of New Jersey clearly interpreted this as allowing RISA claims to be asserted under the CFA in Perez v. Rent-A-Center, Inc., 186 N.J. 188, 892 A.2d 1255 (2006).

In Perez, the appellate court had thrown out the plaintiff‟s CFA claims automatically when it dismissed her RISA claims. See id. at 220. The Supreme Court of New Jersey rejected this automatic dismissal. Citing earlier precedent, the court noted that "to overcome the presumption that the CFA applies to a covered activity, a court must be satisfied . . . that a direct and unavoidable conflict exists between application of the CFA and application of the other regulatory scheme or schemes." Id. at 219-20 (quoting Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255, 270, 696 A.2d 546 (1997)) (omission in original). In Perez, the court found: "[The defendant] has not suggested, even obliquely, any conflict between the CFA and RISA, let alone one of a direct and unavoidable nature, nor do we perceive one." Id. at 220.*fn3 Accordingly, when the court reinstated the RISA claims, it also reinstated the CFA claims, holding that "the acts must be construed in context with each other and [the defendant‟s] ...

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