Debra Dugan v. TGI Friday’s, Inc. (077567) Ernest Bozzi v. OSI Restaurant Partners, LLC (077567) (Burlington County and Statewide)
171 A.3d 620
N.J.2017Background
- Two consolidated putative class actions challenged New Jersey restaurant chains’ practice of not listing beverage prices on menus (Dugan v. TGI Fridays) and allegedly shifting prices during a single visit (Bozzi v. OSI/Bloomin’ Brands).
- Plaintiffs asserted claims under the Consumer Fraud Act (CFA) (N.J.S.A. 56:8‑1 et seq.) seeking damages (treble), fees, and injunctive relief, and under the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA) seeking statutory penalties and other relief.
- Dugan plaintiffs proposed classwide proof of ascertainable loss by relying on TGIF’s own market research showing an average per‑visit spending differential of $1.72 when beverage prices were omitted, i.e., a price‑inflation theory.
- Bozzi’s theory primarily alleged a discrete “price‑shifting” practice: some customers were charged different prices for the same beverage within one visit; claimant‑specific receipts purportedly document the disparities.
- Both trial courts certified broad classes. The Appellate Division reversed certification in Dugan; denied leave to appeal in Bozzi. The Supreme Court granted leave and reviewed predominance under Rule 4:32‑1(b)(3).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a CFA class based on a market‑research “price‑inflation” model (Dugan) satisfies predominance (ascertainable loss & causation) | Dugan: TGIF’s study shows a uniform average loss ($1.72/visit); common proof can establish classwide ascertainable loss and causation | TGIF: CFA requires claimant‑specific proof of ascertainable loss/causal link; price‑inflation is speculative and insufficient for millions of individual transactions | Court: Rejected price‑inflation theory for CFA class certification; common issues do not predominate. Dugan class certification as to CFA claims reversed and remanded for individual claims. |
| Whether a CFA class limited to customers charged different prices for the same beverage during one visit (Bozzi) satisfies predominance | Bozzi: Receipts and records identify claimants who paid disparate prices within the same visit; classwide adjudication of that discrete practice is manageable | OSI: Plaintiffs must prove ascertainable loss/causation for each claimant; heterogeneity defeats predominance | Court: If class is narrowed to customers who were charged higher prices for a second/subsequent identical beverage during the same visit, Rule 4:32‑1 requirements are met; certify limited CFA class and remand. |
| Whether TCCWNA claims in both cases may be adjudicated on a classwide basis | Plaintiffs: Omitting prices from menus violates a clearly established consumer right under N.J.S.A. 56:8‑2.5; class treatment appropriate | Defendants: TCCWNA liability turns on whether each consumer actually received and was affected by the offending written notice/menu; individualized inquiries dominate | Court: TCCWNA class certification reversed in both cases — plaintiffs failed to satisfy predominance because (1) “aggrieved consumer” status depends on individualized proof of receipt/interaction with the menu and (2) it is not clearly established that N.J.S.A. 56:8‑2.5 uniformly applied to restaurant menus across the class period. |
| Whether injunctive relief requiring menu pricing should remain (Bozzi injunction) | Bozzi: Injunctive relief appropriate to compel compliance | OSI: Injunction improper without a properly defined class and adjudicated liability | Court: Vacate the broad injunction entered with the uncertified class; trial court may reconsider injunctive relief after certification of the narrowed class. |
Key Cases Cited
- Kaufman v. i‑Stat Corp., 165 N.J. 94 (2000) (rejects fraud‑on‑the‑market theory as classwide substitute for individualized reliance proof outside federal securities context)
- Int’l Union of Operating Eng’rs Local No. 68 Welfare Fund v. Merck & Co., Inc., 192 N.J. 372 (2007) (rejects price‑inflation theory as classwide proof of ascertainable loss and causation under the CFA)
- D’Agostino v. Maldonado, 216 N.J. 168 (2013) (describes CFA remedies and role of private plaintiffs)
- Harnish v. Widener Univ. Sch. of Law, 833 F.3d 298 (3d Cir. 2016) (rejects price‑inflation theory for consumer‑fraud class claims; distinguishes from securities fraud)
- Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. _ (2016) (permitting representative sampling for damages in FLSA context — discussed by Court and dissent on applicability to consumer fraud/class proof)