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Kalow & Springut, Llp, On Behalf of v. Commence Corporation

December 7, 2012

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



The opinion of the court was delivered by: Honorable Joseph E. Irenas

OPINION

IRENAS, Senior District Judge:

Presently before the Court is Plaintiff's Renewed Motion to for Class Certification as to Plaintiff's proposed New Jersey Consumer Fraud Act class action claim (Count II of the Amended Complaint). For the reasons stated herein, the Motion will be granted.

I.

On March 20, 2006, across the United States (and allegedly the globe), customers using Defendant Commence Corporation's CRM software experienced the same problem: the "synchronization engine" in the software stopped working.*fn1 The parties agree that this simultaneous failure was caused by a defect in the software code when it was written in the mid-1990s.

Plaintiff, the law firm of Kalow & Springut, LLP, contends that this defect was intentionally inserted into the code to act like a "time bomb," ensuring that on the predetermined date (March 20, 2006) Commence software users would have no choice but to purchase a software fix or upgrade their software to resume normal functioning. Commence Corporation, on the other hand, asserts that the defect was simply a result of a mistake, and that they were not aware of it until the failure occurred.

Plaintiff's Amended Class Action Complaint originally contained three claims: (1) violation of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030; (2) violation of the New Jersey Consumer Fraud Act ("NJCFA"), N.J.S.A. 56:8-1 et seq.; and (3) "Violation of the Consumer Fraud Acts of the States Where Defendant Does Business," (Amend. Compl. Count III, pp. 8-12) which the record indicates is the District of Columbia, Puerto Rico, and every state except Wyoming.

The proposed class is "all of the networked users of Commence software who suffered damages when the software stopped working on March 20, 2006." Kalow & Springut v. Commence Corp., 272 F.R.D. 397, 400-01 (D.N.J. 2011).*fn2 The record indicates that there are 2,122 potential class members dispersed throughout Puerto Rico, Washington, D.C., and every State except Wyoming. (Van Tine Decl. Ex. I)

Prior to this case's recent reassignment to the undersigned, District Judge Wolfson issued three decisions relevant to the instant Motion. First, upon Commence's Motion pursuant to Fed. R. Civ. P. 12(b)(6), Judge Wolfson dismissed the third count of the Amended Complaint, leaving only the CFAA and NJCFA claims. Kalow & Springut v. Commence Corp., No. 07-3442, 2009 WL 44748 (D.N.J. Jan. 6, 2009).

Second, Judge Wolfson granted Kalow & Springut's Motion for Class Certification as to the CFAA claim. Kalow & Springut v. Commence Corp., No. 07-3442, 2011 WL 3625853 (D.N.J. Aug. 15, 2011).

Third, and most directly relevant to the instant Motion, Judge Wolfson denied without prejudice Kalow & Springut's Motion for Class Certification as to the NJCFA claim. Kalow & Springut v. Commence Corp., 272 F.R.D. 397 (D.N.J. 2011). Importantly, the Judge ruled that all of the Fed. R. Civ. P. 23(a) requirements (numerosity, commonality, typicality, and adequacy) were met, and that the superiority requirement of Rule 23(b)(3) was also met.

Id. at 402-06, 411. As to the only remaining requirement-- Rule 23(b)(3)'s predominance requirement-- Judge Wolfson concluded that the issue of whether a common question of law predominated turned on a choice of law analysis which Kalow & Springut only "discussed . . . in a cursory manner." Id. at 410. Judge Wolfson explained further: the lack of a full choice of law analysis, particularly the weighing of the Section 148(2) factors [of the Restatement (Second) of Conflict of Laws], is problematic. These factors are fact-based, and the Court does not have sufficient information on this record to make an informed decision. See In re Hydrogen Peroxide, 552 F.3d at 320 ("The plain text of Rule 23 requires the court to find, not merely assume, the facts favoring class certification.")(citations and internal quotations omitted). It would appear that if New Jersey has the most significant relationship and the NJCFA applies to the class, a finding of predominance in this case would be a more straightforward analysis. However, if, ultimately, the factors weigh in favor of this Court applying the laws of other states' consumer fraud statutes, Plaintiff would be faced with an uphill battle of demonstrating predominance. Indeed, this question cannot be answered on this motion and thus, the Court declines to certify the class.

Id. at 410. Accordingly, Judge Wolfson denied without prejudice the Motion to Certify the NJCFA claim.

After additional discovery, Kalow & Springut presently renews its Motion for Class Action Certification of the NJCFA claim. The parties have also submitted additional briefing on the effect of Sullivan v. DB Investments, Inc., 667 F.3d 273 (3d ...


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