Leon v. Rite Aid Corp.Leon v. Rite Aid Corp.
- Reporters:
- ,
- Before:
- Ciancia J.A.D., Kestin, Alley
Plaintiff Maritza Leon‘s consumer fraud complaint was dismissed with prejudice for failure to state a claim upon which relief could be granted.
As detailed subsequently, plaintiff‘s complaint alleged that defendants Rite Aid Corporation and Ritе Aid of New Jersey, Inc. (collectively Rite Aid), violated the New Jersey Consumer Fraud Act. Rite Aid advertised that its merchandise, including prescription drugs, was sold at the lowest and best prices when, in fact, different prices were charged to different customers for the same prescription drugs and Rite Aid‘s own list pricеs were increased for certain kinds of transactions.
Initially, we emphasize the indulgent standard under which a plaintiff‘s complaint is evaluated when it is contended that a cause of action has not been stated:
We approach our review of the judgment below mindful of the test for determining the adequacy of a pleading: whether a cause of action is `suggested’ by the facts. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192, 536 A.2d 237 (1988). In reviewing a complaint dismissed under
Rule 4:6-2(e) our inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint. Rieder v. Department of Transp., 221 N.J.Super. 547, 552, 535 A.2d 512 (App.Div.1987). However, a reviewing court `searches the complaint in depth and with liberality to ascertain whether the fundаment of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary.’ Di Cristofaro v. Laurel Grove Memorial Park, 43 N.J.Super. 244, 252, 128 A.2d 281 (App.Div.1957). At this preliminary stage of the litigation the Court is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint. Somers Constr. Co. v. Board of Educ., 198 F.Supp. 732, 734 (D.N.J.1961). Fоr purposes of analysis plaintiffs are entitled to every reasonable inference of fact. Independent Dairy Workers Union v. Milk Drivers Local 680, 23 N.J. 85, 89, 127 A.2d 869 (1956). The examination of a complaint‘s allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitаble approach.[Printing Mart-Morristown v. Sharp Electronics Corp., 116 N.J. 739, 746, 563 A.2d 31 (1989).]
The continuing viability of these precepts is not open to question. F.G. v. MacDonell, 150 N.J. 550, 556, 696 A.2d 697 (1997).
Plaintiff‘s complaint, read generously, sets forth the following facts, among others. Rite Aid prominently advertised that it had “the lowest and best prices” on pharmaceuticals. It also actively promoted a best-price guarantee, whereby it would “meet or beat” competitors’ prescription prices. Rite Aid pharmacists were encouraged to, and did, charge more than Rite Aid‘s stated retail price to uninsured customers and other pharmacy customers who were unlikely to challenge its рrices. Rite Aid directed its pharmacists to overcharge uninsured pharmacy customers, as well as those who were purchasing “emergency-type” drugs, or drugs designed to remedy an acute condition.
We believe it clear that these allegations constitute a cause of action under the Consumer Fraud Act,
Some types of false advertising, although not all, are expressly prohibited by the regulations implementing the Act. See e.g.,
But when an advertisement is not covered by a specific rule or regulation, it must be determined through adjudication `whether the ad itself is misleading to the average consumer.’ Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 69, 494 A.2d 804 (1985); see also Kugler v. Romain, 58 N.J. 522, 279 A.2d 640 (1971); D‘Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 25-32, 501 A.2d 990 (App.Div.1985). Although there may be some circumstances in which an advertisement is so patently deceptive that a violation of the Consumer Fraud Act may be found as a matter of law, the determination whether an advertisement is misleading is ordinarily for the trier of fact—here the jury—to decide. Indeed, a jury would appear especially well suited to determine the impact of an advertisement upon `an average consumer.’
The relevant portion of the Consumer Fraud Act reads as follows:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement or any merchandise ... is declared to be an unlawful practice....
[
N.J.S.A. 56:8-2 .]
This statutory scheme distinguishes between wrongs committed by affirmative acts and wrongs committed by a failure to act. Cox v. Sears Roebuck & Co., supra, 138 N.J. at 17, 647 A.2d 454. As to those violations committed by omission, a plaintiff must demonstrate a defendant‘s knowledge and intent. In Fenwick, the Court sаid, in the context of the above-quoted statutory language, “the requirement that knowledge and intent be shown is limited to the concealment, suppression or omission of any material fact.” Fenwick, supra, 72 N.J. at 377, 371 A.2d 13. Implicit therein is that a plaintiff must also show that the omitted information related to a material fact.
Howevеr, when a plaintiff‘s claim is that there was an affirmative act such as fraud or deception, it is not necessary that plaintiff show either defendant‘s knowledge or intent or that the misrepresentation was of a material fact. In the present case, the trial court was critical of plaintiff‘s complaint because there was no showing of a false statement of material fact and therefore, in its view, “there could be no violation of ... [the] consumer fraud act.” The court relied upon Rodio v. Smith, 123 N.J. 345, 587 A.2d 621 (1991), for that proposition. In our view, the trial court misconstrued Rodio and thereby reached an erroneous intеrpretation of the statute.
In Rodio, the Court was concerned in part with whether defendant‘s use of the slogan, “[y]ou‘re in good hands with Allstate,” constituted either common law fraud or a violation of the Consumer Fraud Act. The Court found that the challenged language did not rise to the level of common law fraud because the slogan was not a statement of material fact. The slogan was also not a violation of the Consumer Fraud Act because it was mere “puffery” and therefore not false, deceptive, misrepresentative, or “any other unlawful
We do not read Rodio for the proposition that a plaintiff must prove a misstatement of material fact when claiming an affirmative act of misrepresentation, although the abbreviated manner in which the Court therein quoted the statute might lead to such a conclusion. Grammatically, “material fact” is within the second part of a compound subject describing that which the stаtute declares to be an unlawful practice. The statutory elements are in the disjunctive. D‘Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 22, 501 A.2d 990 (App.Div.1985). In Fenwick, the Court stated that, “[t]he capacity to mislead is the prime ingredient of deception or an unconscionable commercial practice.” Fenwick, supra, 72 N.J. at 378, 371 A.2d 13; accord In re Shack, 177 N.J.Super. 358, 363, 426 A.2d 1031 (App. Div.), certif. denied, 87 N.J. 352, 434 A.2d 95 (1981). A false statement of fact is not, however, an еssential ingredient of a plaintiff‘s cause of action based on affirmative wrongdoing. The trial court‘s statement that, “absent a finding of false statement of material fact, there could be no violation of a consumer fraud act ...” in our view is a misreading of Rodio.
To the extent plaintiff‘s complaint may be сonstruable as alleging that the phrase “lowest and best” price offends the Consumer Fraud Act because defendant failed to explain the actual import of the slogan, then “material fact” would be an ingredient of that claim of omission. Plaintiff‘s detailed complaint, however, is more than sufficiеnt to withstand attack under
Here, defendant allegedly advertised that it sells merchandise, including its pharmaceuticals, for the lowest and best price. At the same time, defendant allegedly had a two-tier pricing system for its own customers that was not only undisclosed, but was actively covered up. That pricing system allegedly distinguished between customers with and without insurance and among customers with certain kinds of prescriptions. The implication is that defendant‘s policy, which may be ongoing, adversely affects those least likely to exercise a choice of vendors—e.g., those who come with prescriptions from an emergency room and those who need to refill a prescription for an antibiotic. According to the complaint, defendant had a set of prices that was increased for certain customers. It also had a policy of rounding prices up by a designated amount. While these practices may not be illegal in and of themselves, when they are held up to the “best and lowest” price advertising, they could very well constitute a violation of the Consumer Fraud Act in the eyes of a jury.
We believe the trial court erred in its approach to both
Whether the advertising is, in fact, deceptive should not be determined as a matter of law on a
The parties have expended a good deal of effort discussing the import of decisions from other jurisdictions, most of which involved failed attacks on Rite Aid‘s pricing policies. We are satisfied that in this instance the law in New Jersey provides answers to the issues raised and we need not survey other jurisdictions. Additionally, we note that the allegations or causes of action in many of the out-of-state cases cited to us do not mirror those raised in plaintiff‘s complaint.
Finally, at this stage of the proceedings, we can find no basis for the trial сourt‘s concern that plaintiff has not shown a specific ascertainable loss or that plaintiff‘s claim for unjust enrichment is unsupported by the allegations of the complaint.
Accordingly, the dismissal of plaintiff‘s cause of action is reversed and her complaint is reinstated in its entirety.
Reversed and remanded.