Wenger v. Cardo Windows, Inc., 2012 WL 280254 (App. Div. Feb. 1, 2012). Plaintiffs in this consumer class action sought injunctive relief and statutory civil penalties against defendants in connection with the sale of residential windows. In a lengthy and scholarly per curiam opinion, the Appellate Division (Judges Fuentes, Ashrafi and Nugent) affirmed the decision of the Law Division to certify the class. [Disclosures: I have had professional and personal relationships with counsel on both sides of this case. I am co-counsel in cases with plaintiffs’ counsel, and have represented (and am currently representing) plaintiffs’ counsel in matters involving their right to attorneys’ fees for their work, including the recent Supreme Court of New Jersey case of Walker v. Giuffre. Counsel for defendants in this case was my partner at Greenbaum Rowe when we were both at that firm. Both counsel are my friends.]
The claims in this case did not stem from the actual window purchase transactions, but from violations of statutes such as the Truth in Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 to -18, and a federal regulation. Those violations related to defects in the transaction documents or defendants’ “sales pitch” and created alleged violations. The named plaintiffs did not ultimately buy windows from defendants, but the class included persons who did purchase windows, but who (like the named plaintiffs) also signed the documents in question.
Plaintiffs sought class certification under Rule 4:32-1(a) and (b)(3). Those Rules contain a number of discrete requirements, and defendants challenged plaintiffs on virtually every one of those requirements. The panel recognized that class certification decisions are committed to the discretion of the Law Division, and that reversal can occur only where “the trial court’s decision rests upon clearly erroneous findings of fact, an errant conclusion of law or an improper application of law to fact.”
At the threshold, defendants contended that In re Schering-Plough Corp. ERISA Litig., 589 F.3d 585 (3d Cir. 2009), which was decided under the federal analog to Rule 4:32 after the Law Division ruled, “set a new standard for deciding class certification motions” in New Jersey state courts. [Disclosure: My firm, Lite DePalma Greenberg, LLC, represented plaintiffs in Schering-Plough]. The panel disagreed, noting that Schering-Plough had relied on prior cases, some going back as far as 1982, in reaching its decision. The “rigorous analysis” standard on which defendants relied here was enunciated by the Appellate Division as far back as Carroll v. Cellco Partnership, 313 N.J. Super. 488 (App. Div. 1998). Nor was Schering-Plough‘s statement that courts should “delve beyond the pleadings” in ruling on class certification a new idea. In Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 107 (2007), our Supreme Court had said the same thing.
The Appellate Division was correct about Schering-Plough. But the panel might have gone further. Our Supreme Court and Appellate Division have often interpreted Rule 4:32 more favorably to class certification than federal courts have construed Fed. R. Civ. P. 23, the analogous federal rule. Even if Schering-Plough had offered anything new, the panel was not obligated to follow that federal decision.
The panel rejected defendants’ challenge to the numerosity criterion of Rule 4:32. The allegedly improper standard form documents were concededly used with 1,000-20,000 customers. The panel cited cases in which as few as 29 or 81 class members sufficed for numerosity. Defendants’ attack on plaintiffs’ typicality of the class and adequacy as class representatives, which was based on the argument that plaintiffs had not bought windows and therefore were differently situated than class members who had purchased windows, also failed. An actual purchase was not an element of the claims in this case, which were limited to the use of the allegedly improper documents in violation of statutes and regulation. Though defendants argued that window purchasers had an interest in the continued financial viability of defendants (for example, so that defendants could honor their warranties) while the non-purchasing class representatives did not, the panel ruled that there was no evidence to support defendants’ “self-serving and unsustainable” assertion that the case might drive them out of business.
The Appellate Division also rebuffed defendants’ claims that there were no common questions of law or fact and that any common issues did not predominate over individual questions. “[T]he record shows that the claims of the potential class members would all be based on their signing the same or similar standardized forms, provided by defendants in violation of various statutory provisions. The alleged statutory violations are the same as to all plaintiffs.” Defendants argued that there were “myriad individual legal and factual issues” but did not identify any such issues that would override the predominant common questions.
Finally, defendants contested the superiority of a class action, arguing that small individual cases were a better way to adjudicate this dispute. The panel did not find that persuasive.
The opinion addressed other issues as well and is well worth reading by anyone who handles either side of class action cases. In fact, the opinion is deserving of publication, since it addresses issues that recur in class action practice. Perhaps the panel will reconsider and designate the opinion for publication.