Allegedly No Goodness to be Thankful for at TGI Friday’s for Drink Consumers, But Class Certification Gets Reversed

Dugan v. TGI Fridays, Inc., 445 N.J. Super. 59 (App. Div. 2016).  This putative consumer class action has a long procedural history, including a previous appeal to the Appellate Division, but its facts are relatively simple.  Plaintiffs bought drinks at TGI Friday’s (“TGIF”) restaurants.  As summarized in today’s opinion by Judge Yannotti, plaintiffs alleged that TGIF violated the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (“CFA”), and the Truth in Consumer Contract, Warranty, and Notice Act, N.J.S.A. 56:12-14 et seq. (“TCCWNA”), “by: (1) failing to list prices for beer, mixed drinks, and soft drinks on its restaurant menus; and (2) engaging in an unconscionable commercial practice by charging different prices for the same beverage, depending on where in the restaurant the beverage was served.”

Plaintiff Dugan alleged that she was charged $2.00 for a beer at the bar and $3.59 for the same beer when she moved to a table, and that on other occasions she bought mixed drinks whose price was not shown on the menu.  A second plaintiff likewise alleged that he had bought unpriced mixed drinks.  Plaintiffs alleged that TGIF engaged in “menu engineering” to “exploit consumer psychology and manipulate consumer perceptions” by failing to list drink prices on menus.

The Law Division granted plaintiffs’ motion for class certification and denied a motion for summary judgment by TGIF.  The class consisted of all persons who visited TGIF-owned TGI Friday’s restaurants in New Jersey during a given period and “who purchased an offered but unpriced soda, beer or mixed drink.”

TGIF sought leave to appeal the grant of class certification and the denial of its subsequent motion to decertify the class.  Plaintiffs cross-appealed, seeking to expand the class.  Today, the Appellate Division reversed the class certification, dismissed plaintiffs’ cross-appeal, and remanded the case for further proceedings on plaintiffs’ individual claims.

Judge Yannotti rightly began with some general principles applicable to consideration of class certification appeals.  Decisions on class certification are within the sound discretion of the trial court, which is obligated to “accept as true the allegations in the complaint and cannot decide the ultimate factual issues underlying the plaintiff’s cause of action.”  Appellate review is for abuse of discretion only, though the de novo standard of review applies to an evaluation of the trial court’s rulings on issues of law.

The panel held that class certification foundered on the requirement of Rule 4:32-1(b)(3), the class action rule, that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.”  As to the CFA claim, the problem was with causation.  There might have been class members who did not look at TGIF’s unpriced menu, or who asked the price of a drink before buying it, or who had previously patronized TGIF and thus knew the prices.  In short, “a patron may have chosen to purchase a particular beverage on a specific date for any number of reasons that have nothing to do with the lack of menu pricing.” The commonality of TGIF’s conduct was but “a small piece of the required proofs” and did not outweigh the individual issues that the panel perceived.

The TCCWNA claim also was wrongly certified.  TGIF argued that each class member had to show that he or she was given a menu that did not show prices.  Plaintiffs alleged that TGIF instructs servers “to hand opened menus to all patrons.”  But if that were so, those instructions might not always have been followed, if, for example, the server forgot or a patron said that he or she did not need a menu.  As with the CFA claim, “[i]ndividualized inquiries would be required to determine whether each class member was handed a menu that lacked beverage pricing.”  And claims for actual damages under the TCCWNA would necessarily involve an individual evaluation as to whether a particular class member had sustained actual damages.

The panel’s decision is questionable.  The Supreme Court of New Jersey has long recognized in CFA cases that causation is a “remainder individual issue” that does not outweigh common issues, such as the common conduct of TGIF, the propriety or impropriety of which should have been seen as the predominant issue in the case.  It is always possible for creative defendants to conjure up multiple reasons why consumers made a purchase, so as to manufacture an “individual issue of causation,” as was found here.  Despite that, the Supreme Court has held that a class action is the superior means of adjudicating a CFA case, and that a class action should lie unless clearly infeasible.

The panel also appeared to speculate about what the evidence might show, rather than accepting as true plaintiffs’ allegations that, for example, TGIF had a policy of giving customers unpriced drink menus.  Moreover, whatever the individual issues might be as to any claim of actual damages under the TCCWNA, that statute also affords statutory damages that are independent of the need to show actual damages.  The panel’s opinion did not address that type of damage.

It is sometimes too easy to view cases like this as simply a minor, unhappy incident of life in the twenty-first century and unworthy of courts’ time and effort.  But class actions are designed precisely for such cases, where no one would sue (and no lawyer would handle) a matter involving just a few dollars per person.  The result here was an unfortunate one.