Baskin v. P.C. Richard Son, LLC

SYLLABUS

This syllabus is not part of the Court’s opinion. It has been prepared by the Office of the
Clerk for the convenience of the reader. It has been neither reviewed nor approved by the
Court. In the interest of brevity, portions of an opinion may not have been summarized.

            Ellen Baskin v. P.C. Richard & Son, LLC (A-77-19) (084257)

Argued January 4, 2021 -- Decided May 5, 2021

FERNANDEZ-VINA, J., writing for the Court.

       In this case, the Court considers whether plaintiffs, who suffered no actual harm
and are seeking statutory damages, sufficiently pled a class action against defendants for
noncompliance with the Fair and Accurate Credit Transactions Act of 2003 (FACTA)
such that their complaint should have survived a motion to dismiss under Rule 4:6-2(e).

        Plaintiffs filed a putative class action on behalf of themselves and “[a]ll consumers
to whom [d]efendants, after November 17, 2013, provided an electronically printed
receipt” listing the expiration date of the consumer’s credit or debit card in violation of
FACTA. Plaintiffs’ only alleged injury was exposure to an increased risk of identity theft
and credit/debit card fraud. The complaint alleged that “there are, at a minimum,
thousands (i.e., two thousand or more) of members that comprise the Class.” The
complaint also noted that common questions -- including whether defendants’ receipts
violated FACTA, whether defendants’ conduct was willful, and whether the class is
entitled to damages -- predominated over any individual questions. It further alleged that
a class action is superior to other means of adjudicating these claims because the
prospective damages are too small to incentivize individual litigation and because
numerous small claims give rise to inconsistent results, redundancy, and delay. The
complaint sought an order certifying the class, as well as statutory and punitive damages
and costs and attorney’s fees.

        The trial court granted defendants’ motion to dismiss plaintiffs’ complaint based
on its determination that plaintiffs could not satisfy Rule 4:32-1’s numerosity,
predominance, or superiority requirements for class certification. The Appellate Division
affirmed the dismissal as it pertained to the class action claims.  462 N.J. Super. 594, 619
(App. Div. 2020). The Court granted plaintiffs’ petition for certification pertaining to the
class certification issues.  242 N.J. 503 (2020).

HELD: Plaintiffs sufficiently pled the class certification requirements to survive a
motion to dismiss. The Court remands the matter for class action discovery to be
conducted pursuant to Rule 4:32-2(a) so that the trial court may determine whether to
certify the class.

                                             1
1. A class action allows one or more individuals to act as plaintiff or plaintiffs in
representing the interests of a larger group of persons with similar claims. A class action
can create an incentive for individuals to band together when their claims in isolation are
too small to warrant recourse to litigation. The policy goals of judicial economy,
consistent treatment of class members, and protection of defendants from inconsistent
results are furthered through the class action device. Rule 4:32-1(a) requires a putative
class to satisfy four general prerequisites: (1) the class is so numerous that joinder of all
members is impracticable, (2) there are questions of law or fact common to the class, (3)
the claims or defenses of the representative parties are typical of the claims or defenses of
the class, and (4) the representative parties will fairly and adequately protect the interests
of the class. Plaintiffs pursuing class certification must also satisfy one of the three
requirements of Rule 4:32-1(b). Of importance to this case are the subsection (b)(3)
requirements, pursuant to which the court must “find[] that the questions of law or fact
common to the members of the class predominate over any questions affecting only
individual members, and that a class action is superior to other available methods for the
fair and efficient adjudication of the controversy.” (pp. 14-17)

2. Rule 4:32-1 does not specify a minimum number of class members necessary to
satisfy the numerosity requirement of subsection (a). New Jersey courts frequently
describe that requirement without numerical precision. To determine predominance
under Rule 4:32-1(b)(3), the court decides whether the proposed class is sufficiently
cohesive to warrant adjudication by representation. That determination requires an
assessment of various factors, including: the significance of the common questions;
whether the benefit of resolving common and presumably some individual questions
through a class action outweighs doing so through individual actions; and whether a class
action presents a common nucleus of operative facts. Whether a class action is superior
to individual actions or some other alternative procedure involves considerations of
fairness to the putative class members and the defendant, and the efficiency of one
adjudicative method over another. One factor that should be considered is whether any
one individual who has suffered a wrong will have the financial wherewithal or incentive
to prosecute a claim that might cost more than its worth. (pp. 17-21)

3. When FACTA was enacted in 2003, one of its purposes was to prevent criminals from
obtaining access to consumers’ private financial and credit information in order to reduce
identity theft and credit card fraud. FACTA prohibits any business that accepts credit or
debit cards from “print[ing] . . . the expiration date upon any receipt provided to the
cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1). FACTA
imposes civil liability on persons or businesses that are negligently or willfully
noncompliant with its terms. If willfully noncompliant, as plaintiffs allege here, a
business will be subject to civil liability for “any actual damages sustained by the
consumer” or statutory damages ranging from $100 to $1,000; “punitive damages as the
court may allow”; and “the costs of the action together with reasonable attorney’s fees as
determined by the court.” 15 U.S.C. § 1681n(a)(1)(A), (a)(2), (a)(3). (pp. 22-23)

                                              2
4. The Court applies the principles of Rule 4:32-1 to the FACTA claim alleged in
plaintiffs’ complaint while searching the complaint with liberality and giving plaintiffs
the benefit of every reasonable inference of fact therein. The Court finds plaintiffs’
allegation that there are a minimum of two thousand members of the class sufficient to
survive a motion to dismiss with respect to Rule 4:32-1(a)’s numerosity requirement.
That estimate is supported by the class period pled, which spanned two years and nine
months. In that time period, it is reasonable that the class could contain at minimum two
thousand members, given that anyone who received a noncompliant receipt from one of
defendants’ stores would be an eligible member. Absent discovery of defendants’ sales
records, plaintiffs have no way to know how many credit and debit card transactions
defendants conducted during the relevant period. (pp. 23-25)

5. The Court finds plaintiffs pled sufficient facts to withstand a motion to dismiss on the
issue of predominance at this stage because the class is seeking statutory damages. In
order to prove that defendants violated FACTA, plaintiffs must demonstrate that
defendants willfully printed receipts containing credit or debit card expiration dates. See
15 U.S.C. §§ 1681c(g)(1), 1681n. The common nucleus of operative facts is, as plaintiffs
pled, whether defendants programmed their equipment to print the expiration dates of
customers’ credit/debit cards on receipts; the answer to that question will apply to all
class members. If plaintiffs are successful in establishing defendants’ willful
noncompliance with FACTA, then statutory damages are available to all class members
uniformly. (pp. 25-26)

6. The Court concludes plaintiffs sufficiently pled superiority to survive a motion to
dismiss. Plaintiffs sufficiently addressed in their complaint considerations of fairness to
the parties and judicial efficiency, as well as of class members’ financial wherewithal or
incentive to pursue a claim that might cost more than its worth. FACTA’s willfulness
requirement makes it more difficult for an individual plaintiff to bring a FACTA claim
for statutory damages because it is unlikely a plaintiff appearing pro se in small claims
court will know how to demonstrate willfulness. Moreover, individual damages are
likely to be small and, as a result, individual class members are unlikely to have the
financial wherewithal or incentive to bring a claim. Additionally, if forced to proceed
individually, there is nothing stopping one attorney from bringing numerous plaintiffs
into small claims court and trying each claim one at a time. Such an approach would not
foster judicial efficiency; nor would it be fair to defendants, who could be exposed to
inconsistent results. Given those considerations, and at this stage of litigation before
discovery has been conducted, plaintiffs alleged sufficient facts to survive a motion to
dismiss on the question of superiority. (pp. 26-30)

       REVERSED and REMANDED for further proceedings.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON,
SOLOMON, and PIERRE-LOUIS join in JUSTICE FERNANDEZ-VINA’s opinion.

                                             3
       SUPREME COURT OF NEW JERSEY
             A-
77 September Term 2019
                       084257


           Ellen Baskin, Kathleen O’Shea,
            and Sandeep Trisal, on behalf
             of themselves and all others
                  similarly situated,

                Plaintiffs-Appellants,

                          v.

             P.C. Richard & Son, LLC,
              d/b/a P.C. Richard & Son,
            and P.C. Richard & Son, Inc.,
              d/b/a P.C. Richard & Son,

              Defendants-Respondents.

       On certification to the Superior Court,
   Appellate Division, whose opinion is reported at
        462 N.J. Super. 594 (App. Div. 2020).

       Argued                      Decided
   January 4, 2021                May 5, 2021


Chant Yedalian, of the California bar, admitted pro hac
vice, argued the cause for appellants (Lite DePalma
Greenberg and Chant & Company, attorneys; Bruce D.
Greenberg, and Chant Yedalian, on the briefs).

William S. Gyves argued the cause for respondents
(Kelley Drye & Warren, attorneys; William S. Gyves,
Glenn T. Graham, and Robert N. Ward, on the briefs).



                          1
             Bruce H. Nagel argued the cause for amicus curiae New
             Jersey Association for Justice (Nagel Rice, attorneys;
             Bruce H. Nagel, of counsel and on the brief, and Randee
             M. Matloff, on the brief).


      JUSTICE FERNANDEZ-VINA delivered the opinion of the Court.


      In this case, the Court considers whether plaintiffs sufficiently pled the

class certification requirements to survive a motion to dismiss under Rule 4:6-

2(e). Ellen Baskin, Kathleen O’Shea, and Sandeep Trisal (plaintiffs) filed a

class action complaint against defendants P.C. Richard & Son, LLC, and P.C.

Richard & Son, Inc., alleging defendants violated the Federal Fair and

Accurate Credit Transactions Act of 2003 (FACTA) by printing plaintiffs’

credit or debit card expiration dates on their receipts. Although plaintiffs did

not suffer identity theft, fraud, or third-party disclosure as a result of the

information on the receipts, they allege that defendants’ noncompliance with

FACTA has placed them at an increased risk of harm and seek statutory

damages.

      FACTA prohibits any business that accepts credit or debit cards from

“print[ing] more than the last 5 digits of the card number or the expiration date

upon any receipt provided to the cardholder at the point of the sale or

transaction.” 15 U.S.C. § 1681c(g)(1). FACTA imposes civil liability on

businesses that are willfully noncompliant with its terms. Id. § 1681n. If

                                          2
plaintiffs can establish defendants’ willful noncompliance, statutory damages

ranging from $100 to $1,000 will be awarded to each plaintiff. Id.

§ 1681n(a)(1)(A).

      Defendants moved to dismiss plaintiffs’ complaint, arguing that

plaintiffs could not meet the superiority requirement for class certification

because statutory damages available under FACTA were sufficient to

incentivize individual actions. The trial court granted the motion, finding: (1)

plaintiffs failed to establish numerosity because they did not specify how many

members were in the class; (2) predominance was not satisfied because some

class members may have suffered actual damages and liability would therefore

have to be determined on a case-by-case basis; and (3) superiority was not

established because FACTA’s statutory award sufficiently incentivized

plaintiffs to bring suit individually. The Appellate Division affirmed the

dismissal as it pertained to the class action claims and to the individual claims

of O’Shea and Trisal; however, the appellate court reversed the dismissal of

Baskin’s individual claim.

      In light of our standard of review at this stage, we disagree with the trial

and appellate courts and reverse the grant of defendants’ motion to dismiss.

Giving plaintiffs the benefit of all favorable inferences here, we find they

sufficiently pled the class certification requirements to survive a motion to

                                        3
dismiss. Specifically, we conclude that: (1) an exact or specific number of

class members need not be pled to satisfy numerosity; (2) questions as to

whether defendants were willfully noncompliant with FACTA and

programmed their equipment to print credit or debit card expiration dates

predominated because plaintiffs are seeking only statutory and punitive

damages; and (3) the class action vehicle seems to be the superior means of

adjudicating plaintiffs’ claims because it is unlikely a plaintiff will have the

financial wherewithal to bring these claims individually in small claims court.

         However, we are not certifying the class at this time. Instead, we are

remanding the matter for class action discovery to be conducted pursuant to

Rule 4:32-2(a) so that the trial court may determine whether to certify the

class.

                                          I.
                                         A.
         In April 2018, plaintiffs Kathleen O’Shea and Sandeep Trisal, New York

residents, joined New Jersey resident Ellen Baskin to file this putative class

action in New Jersey state court on behalf of themselves and “[a]ll consumers

to whom [d]efendants, after November 17, 2013, provided an electronically

printed receipt” listing the expiration date of the consumer’s credit or debit




                                          4
card in violation of FACTA. 1 Baskin alleged that on May 24, 2016, she

received a receipt containing her card’s expiration date from one of

defendant’s retail stores in Brick, New Jersey. Plaintiffs’ only alleged injury

was exposure to an increased risk of identity theft and credit/debit card fraud.

      The complaint alleged that “there are, at a minimum, thousands (i.e., two

thousand or more) of members that comprise the Class,” and that “[t]he exact

size of the Class and identities of individual members thereof are ascertainable

through [d]efendants’ records.” The complaint also noted that common

questions -- including whether defendants’ receipts violated FACTA, whether

defendants’ conduct was willful, and whether the class is entitled to

damages -- predominated over any individual questions. It further alleged that

a class action is superior to other means of adjudicating these claims because

the prospective damages are too small to incentivize individual litigation and

because numerous small claims give rise to inconsistent results, redundancy,



 1 In 2016, O’Shea and Trisal filed a similar class action complaint against
defendants in the Southern District of New York. O’Shea v. P.C. Richard &
Son, LLC, No.  15 Civ. 9069, 2 017 U.S. Dist. LEXIS 122424, at *3-*6
(S.D.N.Y. Aug. 3, 2017). As part of that matter, O’Shea and Trisal alleged
defendants were aware of their noncompliance because, in 2015, O’Shea had
(a) served defendants with a cease-and-desist letter demanding defendants
update their printing practices to comply with FACTA and (b) attached a draft
complaint to the letter. Id. at *3-*4. Ultimately, the court granted defendants’
motion to dismiss because plaintiffs could not establish Article III standing.
Id. at *18.
                                        5
and delay. The complaint sought an order certifying the class, as well as

statutory and punitive damages and costs and attorney’s fees.

      In September 2018, defendants filed a motion to dismiss for failure to

state a claim upon which relief could be granted, arguing that plaintiffs had not

alleged they “sustained any ascertainable harm”; defendants also contended

that plaintiffs’ FACTA claims should not be litigated as a class action because

plaintiffs could not satisfy the superiority prong of Rule 4:32-1(b)(3).

Defendants argued, finally, that New Jersey courts lack personal jurisdiction

over O’Shea and Trisal’s New York-based claims. Plaintiffs opposed the

motion.

      After hearing oral argument, the trial court issued a written opinion

granting defendants’ motion to dismiss based on its determination that

plaintiffs could not satisfy Rule 4:32-1’s numerosity, predominance, or

superiority requirements.

      The trial court concluded that the numerosity requirement was not

satisfied because plaintiffs failed to allege a potential number of class

members “except to contend that there could be 'thousands of people whose

credit card information was exposed on improper receipts.’”

      The trial court held that predominance was not established because

plaintiffs’ failure to claim they suffered actual damages from identity theft or

                                        6
credit/debit card fraud put their “claims at odds with the legislative purpose of

FACTA” and indicates “an overall lack of demonstrable damages” as to these

particular plaintiffs. Therefore, because other consumers who fall into the

proposed class may have actually been victims of identity theft or fraud, “[t]he

potential[ly] disparate nature of damages . . . require[s] courts to adjudicate

[d]efendants’ liability on a case-by-case basis,” which “cuts directly against

the purpose of Rule 4:32-1’s class certification predominance and superiority

prongs.”

      The court determined that superiority was not established because

prevailing New Jersey law dictates that “adjudication of claims on an

individual basis in small claims court is 'a far superior method to vindication

of any rights and protection of the public than any certification or class action’

in situations where a statutory damage award incentivizes a party to act in his

or her interest.” (quoting Local Baking Prods., Inc. v. Kosher Bagel Munch,

Inc.,  421 N.J. Super. 268, 272 (App. Div. 2011)). The court then detailed the

process of filing an individual claim pro se in small claims court.

      The court dismissed plaintiffs’ complaint for failure to satisfy the

requirements of class certification. The court also concluded that it did not

have personal jurisdiction over O’Shea and Trisal’s claims.




                                        7
                                         B.

      The Appellate Division, in a published opinion, affirmed the trial court’s

denial of class certification and dismissal of the complaint as it pertained to

O’Shea and Trisal, but it reversed the dismissal of Baskin’s claim, remanding

it to be reinstated as an individual action. Baskin v. P.C. Richard & Son, LLC,

 462 N.J. Super. 594, 619 (App. Div. 2020).

      The Appellate Division concluded that numerosity had not been satisfied

because plaintiffs “failed to sufficiently articulate the size of the class”

because they did not “name the number of potential class members, and only

vaguely stated that there could be 'thousands of people whose credit card

information was exposed on improper receipts.’” Id. at 607-08.

      The court likewise held that plaintiffs failed to allege facts sufficient to

establish predominance, noting that “the sheer amount of uncertainties in

respect of the amount of potential FACTA claims against defendants, and any

harm that arose from such violations, renders it difficult to determine a

common nucleus of operative facts.” Id. at 615.

      Regarding superiority, the court determined plaintiffs failed to make a

prima facie showing that a class action was superior to individual actions in

small claims court. Id. at 601, 608-13. The Appellate Division relied upon the

reasoning of Local Baking and the dismissal of O’Shea and Trisal’s New York

                                         8
action when assessing whether plaintiffs met the superiority requirement. Id.

at 608-13.

      We granted plaintiffs’ petition for certification pertaining to the class

certification issues.  242 N.J. 503 (2020). We also granted the New Jersey

Association for Justice’s (NJAJ) motion to appear as amicus curiae.

                                         II.

                                         A.

      Plaintiffs assert the trial and appellate courts imposed three barriers to

class certification at the pleading stage, each of which on its own has the effect

of precluding class action lawsuits in this State. Those barriers concern the

numerosity, predominance, and superiority requirements of Rule 4:32-1.

      Plaintiffs submit that they more than adequately pled numerosity in their

complaint by alleging “that there are, at a minimum, thousands (i.e., two

thousand or more) of members that comprise the class” given that the class

period pled was a span of two years and nine months. Plaintiffs argue that by

refusing to certify the class because plaintiffs failed to state the size of the

proposed class with specificity, the trial and appellate courts created a new

pleading requirement that contravenes this Court’s decision in Lee v. Carter-

Reed Co., L.L.C.,  203 N.J. 496, 505 (2010).




                                          9
      Next, plaintiffs note that predominance was also determined sua sponte

by the trial and appellate courts. They argue this case is ideal for class

treatment because the major question that predominates is whether defendants

programmed their equipment to print expiration dates on customer receipts ,

willfully or not -- a question whose answer will not vary from one class

member to the next. Relying on Delgozzo v. Kenny,  266 N.J. Super. 169, 190

(App. Div. 1993), plaintiffs assert that class certification can still be

appropriate even if individual damages need to be calculated as long as

“common questions as to liability predominate.” They add that potential class

members who may have incurred actual damages as a result of defendants’

actions can opt out of the class.

      Regarding superiority, plaintiffs take issue with the trial and appellate

courts’ conclusion that because statutory damages are recoverable in small

claims court, a class action cannot be a superior method of enforcement.

Plaintiffs argue that the trial and appellate courts’ and defendants’ reliance on

Local Baking for that proposition is misplaced because that case dealt with a

narrow issue involving the Telephone Consumer Protection Act (TCPA) of

1991, 47 U.S.C. § 227. Plaintiffs distinguish the TCPA claims in Local

Baking from the FACTA claims here, pointing to the differences between the




                                         10
elements of the respective claims and between the legislative histories of both

Acts.

        Additionally, plaintiffs rely on United Consumer Financial Services Co.

v. Carbo,  410 N.J. Super. 280, 295 (App. Div. 2009), to support their position

that a class action is superior here because, although there are numerous

claims, any individual’s recovery would likely be small. Plaintiffs also note

the Carbo court specifically addressed and rejected defendants’ argument

regarding superiority and statutory violations for which a statutory civil

penalty is available.

        Plaintiffs further argue that small claims court is not an appropriate or

superior method of adjudicating FACTA claims because it does not allow the

extensive discovery needed to prove a willful violation and because successful

plaintiffs may be entitled to damages and attorneys’ fees that exceed the

$3,000 jurisdictional limit of small claims court.

                                         B.

        Amicus NJAJ aligns itself with plaintiffs and emphasizes that “the class

action rule should be liberally construed.” Applying traditional principles of

liberal construction, NJAJ argues, a motion court is required to meticulously

search the pleadings to find even a suggested cause of action when a motion to

dismiss on the pleadings is filed; if a suggested cause of action cannot be

                                         11
found, NJAJ adds, then leave to amend should be granted. NJAJ reiterates

plaintiffs’ arguments that the trial and appellate courts effectively ended

plaintiffs’ class action claims when they sua sponte “expanded the grounds of

dismissal to include pleading deficiencies on the issues of numerosity and

predominance.”

                                        C.

      Defendants contend that, because numerosity was not at issue in Lee,

plaintiffs’ argument that the Appellate Division’s holding on numerosity is in

conflict with that decision cannot be correct. With respect to predominance,

defendants argue plaintiffs mischaracterize the holding in Delgozzo and rely

on dicta. Specifically, defendants note the predominance issue in Delgozzo

involved conflict-of-law considerations that are not present here; thus, in

defendants’ view, there is no intersection between Delgozzo and the holdings

in this case.

      Defendants’ main argument concerns superiority. They argue that,

contrary to plaintiffs’ claims, the trial and appellate decisions here did not

have the broad effect of barring class actions for claims involving statutory

damages. Relying on Local Baking, defendants argue that FACTA provides

for a statutory remedy that is sufficient to incentivize an individual to act in his

or her own interest. Defendants also argue plaintiffs misread Carbo because

                                        12
the argument rejected there is not the same as the argument defendants make

here -- that FACTA’s statutory remedy sufficiently incentivizes an aggrieved

consumer to bring a claim individually.

      Defendants assert that extensive discovery is not needed here because

willfulness under FACTA does not require proof of defendants’ subjective bad

faith or intent; rather, claims for statutory damages under FACTA require only

that plaintiffs present the court with a noncompliant receipt and prove

defendants had some knowledge of FACTA to receive statutory damages.

Thus, defendants assert, plaintiffs’ FACTA claims are not so complex that they

cannot be addressed in small claims court.

      Lastly, defendants contend that the small claims court’s $3,000

jurisdictional cap would cover any damages and attorneys’ fees, adding that,

should the cap be surpassed, plaintiffs could then file, in or seek to be removed

to, the Law Division.

                                       III.

      The issue presented by this appeal is whether plaintiffs, who suffered no

actual harm and are seeking statutory damages, sufficiently pled a class action

against defendants for noncompliance with FACTA such that their complaint

should have survived a motion to dismiss under Rule 4:6-2(e).




                                       13
      Rule 4:6-2(e) motions to dismiss for failure to state a claim upon which

relief can be granted are reviewed de novo. Dimitrakopoulos v. Borrus,

Goldin, Foley, Vignuolo, Hyman & Stahl, P.C.,  237 N.J. 91, 108 (2019). A

reviewing court must examine “the legal sufficiency of the facts alleged on the

face of the complaint,” giving the plaintiff the benefit of “every reasonable

inference of fact.” Id. at 107 (quoting Printing Mart-Morristown v. Sharp

Elecs. Corp.,  116 N.J. 739, 746 (1989)). The complaint must be searched

thoroughly “and with liberality to ascertain whether the fundament of a cause

of action may be gleaned even from an obscure statement of claim, opportunity

being given to amend if necessary.” Printing Mart,  116 N.J. at 746 (quoting Di

Cristofaro v. Laurel Grove Mem’l Park,  43 N.J. Super. 244, 252 (App. Div.

1957)). “Nonetheless, if the complaint states no claim that supports relief, and

discovery will not give rise to such a claim, the action should be dismissed.”

Dimitrakopoulos,  237 N.J. at 107.

                                       IV.

                                        A.

      With that standard in mind, we turn to the principles of class

certification. A class action allows “one or more individuals to act as plaintiff

or plaintiffs in representing the interests of a larger group of persons with

similar claims.” Lee,  203 N.J. at 517. A class action can create an incentive

                                        14
for a large number of individuals who may have similar valid claims to “band

together” when “those claims in isolation are 'too small . . . to warrant

recourse to litigation.’” Ibid. (omission in original) (quoting In re Cadillac

V8-6-4 Class Action,  93 N.J. 412, 435 (1983)). That is especially true when

the alleged perpetrator of the wrong is a “corporate entity that wields

enormous economic power”; by allowing plaintiffs to “band together,” class

actions can level the playing field and “thus provid[e] 'a procedure to remedy

a wrong that might otherwise go unredressed.’” Id. at 517-18 (quoting In re

Cadillac,  93 N.J. at 424). Put simply, the class action device permits “'an

otherwise vulnerable class’ of diverse individuals with small claims access to

the courthouse.” Id. at 518 (quoting Iliadis v. Wal-Mart Stores, Inc.,  191 N.J.
 88, 120 (2007)).

      Additionally, the policy goals of “judicial economy,” “consistent

treatment of class members,” and “protection of defendants from inconsistent

[results]” are furthered through the class action device. Ibid. (alteration in

original) (quoting Iliadis,  191 N.J. at 104). Accordingly, “a court should be

slow to hold that a suit may not proceed as a class action” and should rarely

deny a class action based on the face of the complaint. Riley v. New Rapids

Carpet Ctr.,  61 N.J. 218, 228 (1972). That said, pre-discovery dismissal of a

class action is permitted if the court determines that discovery would not

                                        15
provide a basis for relief. See Myska v. N.J. Mfrs. Ins. Co.,  440 N.J. Super.
 458, 473-81 (App. Div. 2015) (affirming pre-discovery dismissal because the

plaintiffs’ claims depended on non-uniform contracts between each plaintiff

and the defendant, as well as on steps taken by each plaintiff leading up to the

defendant’s alleged breach).

      Rules 4:32-1 and -2 govern class actions in New Jersey. Rule 4:32-1

sets forth the requirements for maintaining a class action. Subsection (a) of

that rule requires a putative class to satisfy four general prerequisites in order

to sue as a class:

             (1) the class is so numerous that joinder of all members
             is impracticable, (2) there are questions of law or fact
             common to the class, (3) the claims or defenses of the
             representative parties are typical of the claims or
             defenses of the class, and (4) the representative parties
             will fairly and adequately protect the interests of the
             class.

             [R. 4:32-1(a).]

Those prerequisites are “frequently termed 'numerosity, commonality,

typicality and adequacy of representation.’” Dugan v. TGI Fridays, Inc.,  231 N.J. 24, 47 (2017) (quoting Lee,  203 N.J. at 519).

      In addition to the prerequisites of subsection (a), plaintiffs pursuing class

certification must also satisfy one of the three requirements of subsection (b).




                                        16
Of importance to this case are the subsection (b)(3) requirements, pursuant to

which the court must

            find[] that the questions of law or fact common to the
            members of the class predominate over any questions
            affecting only individual members, and that a class
            action is superior to other available methods for the fair
            and efficient adjudication of the controversy. The
            factors pertinent to the findings include:

                   (A) the interest of members of the class in
                   individually controlling the prosecution or
                   defense of separate actions;

                   (B) the extent and nature of any litigation
                   concerning the controversy already commenced
                   by or against members of the class;

                   (C) the desirability or undesirability in
                   concentrating the litigation of the claims in the
                   particular forum; and

                   (D) the difficulties likely to be encountered in the
                   management of a class action.

            [R. 4:32-1(b)(3).]

                                        1.

      Rule 4:32-1 does not specify a minimum number of class members

necessary to satisfy the numerosity requirement of subsection (a). Federal

courts deciding class certification issues governed by Federal Rule of Civil

Procedure 23(a), the Federal Class Action Rule -- which served as the model

for Rule 4:32-1, see In re Cadillac,  93 N.J. at 424-25 -- have stated that

                                        17
“[t]here is no set numerical cutoff used to determine whether a class is

sufficiently numerous; courts must examine the specific facts of each case to

evaluate whether the requirement has been satisfied.” In re Toys “R” Us,  300 F.R.D. 347, 367 (C.D. Cal. 2013). However, “[a]s a general rule . . . classes of

20 are too small, classes of 20-40 may or may not be big enough depending on

the circumstances of each case, and classes of 40 or more are numerous

enough.” Id. at 367-68 (quoting Ikonen v. Hartz Mountain Corp.,  122 F.R.D. 258, 262 (S.D. Cal. 1988)).

      New Jersey courts frequently describe the numerosity requirement

without numerical precision. See Dugan,  231 N.J. at 64-65 & n.12

(concluding that the proposed class of 263,000 “clearly includes numerous

claimants”); Lee,  203 N.J. at 512 (determining that the trial court described the

class as sufficiently numerous because it included “well over 10,000

members”); In re Cadillac,  93 N.J. at 425 (affirming the trial court’s finding

that “[a] class of approximately 7,500 plaintiffs is sufficiently numerous”).

                                       2.

      “To determine predominance under Rule 4:32-1(b)(3), the court decides

'whether the proposed class is “sufficiently cohesive to warrant adjudication

by representation.”’” Dugan,  231 N.J. at 48 (quoting Iliadis,  191 N.J. at 108).

That determination requires

                                       18
            a court [to] conduct a “pragmatic assessment” of
            various factors. One inquiry is the significance of the
            common questions. That inquiry involves a qualitative
            assessment of the common and individual questions
            rather than a mere mathematical quantification of
            whether there are more of one than the other. The
            second inquiry is whether the “benefit” of resolving
            common and presumably some individual questions
            through a class action outweighs doing so through
            “individual actions.” A third inquiry is whether a class
            action presents a “common nucleus of operative facts.”

            [Lee,  203 N.J. at 519-20 (citations omitted) (quoting
            Iliadis,  191 N.J. at 108).]

The predominance prong is “'far more demanding’ than Rule 4:32-1(a)(2)’s

requirement that there be questions of law or fact common to the class.”

Dugan,  231 N.J. at 48 (quoting Castro v. NYT Television,  384 N.J. Super. 601,

608 (App. Div. 2006)). “Significantly,” however, “to establish predominance,

plaintiff does not have to show that there is an 'absence of individual issues or

that the common issues dispose of the entire dispute,’ or 'that all issues [are]

identical among class members or that each class member [is] affected in

precisely the same manner.’” Lee,  203 N.J. at 520 (alterations in original)

(quoting Iliadis,  191 N.J. at 108-09).

      Class certification is not necessarily precluded when individual class

members’ degree of damages will require individualized proof. See Delgozzo,

 266 N.J. Super. at 181 (“[I]t is clear that New Jersey courts will permit class

certification even though individual questions, such as the degree of damages
                                         19
due a particular class member, . . . may remain following resolution of the

common questions.” (citing In re Cadillac,  93 N.J. at 429-30)). Additionally,

a proposed class may limit how individualized questions about the type or

extent of harm suffered by individual class members will factor into the

predominance and superiority assessments by limiting the relief sought to a

type that will not be affected by the resolution of individualized questions.

See id. at 187 (“[P]laintiffs assert that they seek only economic damages,

correctly noting that class members who have also suffered personal injuries as

a result of using defendants’ product may, if warranted, opt out and proceed

independently on those issues. In re Cadillac lends support to the position that

a class may be certified where individual members of the class may have

suffered personal injury.”).

                                        3.

      “A class action plaintiff must also demonstrate that 'a class action is

superior to other available methods for the fair and efficient adjudication of the

controversy.’” Dugan,  231 N.J. at 49 (quoting R. 4:32-1(b)(3)). “By

definition, 'superior’ implies a comparison with alternative procedures such as

a test case or joinder of claims.” In re Cadillac,  93 N.J. at 436. “Whether a

class action is superior to thousands of minor, individual actions or some other

'alternative procedure[]’ involves considerations of fairness to the putative

                                       20
class members and the defendant, and the 'efficiency’ of one adjudicative

method over another.” Lee,  203 N.J. at 520 (alteration in original) (quoting In

re Cadillac,  93 N.J. at 436).

      One factor that should be considered in a fairness determination is

“whether any one individual who has suffered a wrong will have the financial

wherewithal or incentive to prosecute a claim that might cost more than its

worth.” Ibid.; accord Int’l Union of Operating Eng’rs Local No. 68 Welfare

Fund v. Merck & Co., Inc.,  192 N.J. 372, 384 (2007) (“[I]n Iliadis, we

identified as important to the superiority analysis a consideration of the class

members’ lack of financial wherewithal. In such circumstances, we have

expressed a concern that, absent a class, the individual class members would

not pursue their claims at all, thus demonstrating superiority of the class action

mechanism.” (citations and internal quotation marks omitted)); see also In re

Cadillac,  93 N.J. at 436-37 (affirming the trial court’s determination that a

class action was superior to a test case in that matter because resolution of

issues common to the class would “require substantial discovery, expert

testimony, and trial time, all of which would render uneconomical an

individual suit by a single disgruntled customer”).

      In Carbo, the Appellate Division considered a challenge to class

certification after the class was awarded a civil penalty of $100 for each

                                        21
member, attorney’s fees, and costs under the Truth-in-Consumer Contract,

Warranty and Notice Act (TCCWNA).  410 N.J. Super. at 292. The court

rejected the defendants’ argument that a class action is not superior to

individual actions when plaintiffs are seeking statutory damages. Id. at 308.

The court affirmed class certification, noting that “Rule 4:32-1 must be

liberally construed, and a class action is the favored means of adjudicating

numerous claims involving a common nucleus of facts for which each

individual’s recovery will be small.” Id. at 295.

                                        B.

      When FACTA was enacted in 2003, one of its purposes was “to prevent

criminals from obtaining access to consumers’ private financial and credit

information in order to reduce identity theft and credit card fraud.” Credit and

Debit Card Receipt Clarification Act of 2007, Pub. L. No. 110-241, § 2(a)(1),

 121 Stat. 1565 (2008). As noted, FACTA prohibits any business that accepts

credit or debit cards from “print[ing] more than the last 5 digits of the card

number or the expiration date upon any receipt provided to the cardholder at

the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1).

      FACTA imposes civil liability on persons or businesses that are

negligently or willfully noncompliant with its terms. See 15 U.S.C. §§ 1681n,

1681o. If negligently noncompliant, a business will be subject to civil liability

                                        22
to the consumer for actual damages, costs, and attorney’s fees. 15 U.S.C.

§ 1681o(a). If willfully noncompliant, as plaintiffs allege here, a business will

be subject to civil liability for “any actual damages sustained by the consumer

as a result of the failure or damages of not less than $100 and not more than

$1,000”; “punitive damages as the court may allow”; and “the costs of the

action together with reasonable attorney’s fees as determined by the court.” 15

U.S.C. § 1681n(a)(1)(A), (a)(2), (a)(3).

                                        V.

      We now apply the principles of Rule 4:32-1 to the FACTA claim alleged

in plaintiffs’ complaint while searching the complaint with liberality “to

ascertain whether the fundament of a cause of action may be gleaned,” Printing

Mart,  116 N.J. at 746 (quoting Di Cristofaro,  43 N.J. Super. at 252), and

giving plaintiffs the benefit of “every reasonable inference of fact” therein,

Dimitrakopoulos,  237 N.J. at 107 (quoting Printing Mart,  116 N.J. at 746).

The Appellate Division affirmed the trial court’s grant of defendants’ motion

to dismiss based on plaintiffs’ alleged failure to satisfy the numerosity,

predominance, and superiority requirements. We disagree and find that

plaintiffs sufficiently pled those requirements to survive a motion to dismiss.




                                        23
                                        A.

      Both the trial court and the Appellate Division concluded plaintiffs did

not satisfy the numerosity requirement of Rule 4:32-1(a) because they failed to

specify the number of class members except for saying that there “could be”

thousands. However, that misstates plaintiffs’ allegations in their complaint.

Plaintiffs did not allege that there “could be” thousands of members, rather

they alleged that “there are, at a minimum, thousands (i.e., two thousand or

more) of members that compromise the Class”; plaintiffs also stated that “[t]he

exact size of the Class and identities of individual members thereof are

ascertainable through [d]efendants’ records.” (emphasis added). The trial and

appellate courts’ determination that the class was not pled with specificity is

inconsistent with our standard of review, which requires us to give plaintiffs

the benefit of “every reasonable inference of fact.” Dimitrakopoulos,  237 N.J.

at 107 (quoting Printing Mart,  116 N.J. at 746).

      Giving the plaintiffs that benefit here requires us to accept as true

plaintiffs’ allegation that there are a minimum of two thousand members of the

class. That estimate is also supported by the class period pled, which spanned

two years and nine months. In that time period, it is reasonable that the class

could contain at minimum two thousand members, given that anyone who

received a noncompliant receipt from one of defendants’ stores would be an

                                        24
eligible member. Additionally, absent discovery of defendants’ sales records,

plaintiffs have no way to know how many credit and debit card transactions

defendants conducted during the relevant period.

      Therefore, because plaintiffs have not had the benefit of discovery, we

find that their allegation that “there are, at a minimum, thousands (i.e., two

thousand or more)” of class members is sufficient to survive a motion to

dismiss with respect to Rule 4:32-1(a)’s numerosity requirement.

                                        B.

      The trial court and Appellate Division determined that plaintiffs failed to

satisfy the predominance requirement of Rule 4:32-1(b)(3) because there were

too many uncertainties regarding the number of claims and the harm suffered;

thus, it was “difficult to determine a common nucleus of operative facts.” We

disagree and find plaintiffs pled sufficient facts to withstand a motion to

dismiss on the issue of predominance at this stage because the class is seeking

statutory damages.

      In order to prove that defendants violated FACTA, plaintiffs must

demonstrate that defendants willfully printed receipts containing credit or debit

card expiration dates. See 15 U.S.C. §§ 1681c(g)(1), 1681n. Accordingly, the

common nucleus of operative facts is, as plaintiffs pled, whether defendants

programmed their equipment to print the expiration dates of customers’

                                        25
credit/debit cards on receipts; the answer to that question will apply to all class

members. Put differently, if plaintiffs are successful in establishing

defendants’ willful noncompliance with FACTA, then statutory damages are

available to all class members uniformly.

      Accepting as true plaintiffs’ allegations that defendants’ noncompliance

was a consistent result of how their receipt-printing equipment was

programmed, the significant questions of defendants’ conduct and willfulness

present a common nucleus of operative facts. See Iliadis,  191 N.J. at 108.

Resolving those questions as a class offers the benefit of consistency. See Lee,

 203 N.J. at 520.

      Therefore, we disagree with the trial court and Appellate Division’s

conclusion that there are too many “uncertainties” to “determine a common

nucleus of operative facts.” We instead find that plaintiffs pled sufficient facts

to survive a motion to dismiss on the question of predominance.

                                        C.

      The trial court and Appellate Division, relying on Local Baking, found

plaintiffs did not satisfy the superiority requirement of Rule 4:32-1(b)(3) and

that filing individual claims in small claims court would be a superior method

of adjudicating plaintiffs’ FACTA claims. We disagree and find this reliance

on Local Baking misplaced. Giving plaintiffs the benefit of every inference of

                                        26
fact, we conclude they sufficiently pled superiority to survive a motion to

dismiss.

      Determining superiority necessarily involves a comparison of alternative

procedures. In re Cadillac,  93 N.J. at 436. That comparison involves

considerations of fairness to the parties and judicial efficiency , as well as of

class members’ financial wherewithal or incentive to pursue “a claim that

might cost more than its worth.” Lee,  203 N.J. at 520. Plaintiffs sufficiently

addressed those considerations in their complaint. See Dugan,  231 N.J. at 49

(noting that class action plaintiffs bear the burden to “demonstrate that 'a class

action is superior to other available methods for the fair and efficient

adjudication of the controversy’” (quoting R. 4:32-1(b)(3))).

      Plaintiffs alleged in their complaint that a class action is superior

because individual statutory damages will be relatively small; thus, “the

expense and burden of individual litigation makes it economically infeasible

and procedurally impracticable for each [class member] to individually seek

redress for the wrongs done to them.” They further allege it is unlikely that

individual class members will bring FACTA claims and that, even if individual

litigation were brought, the class action is still superior because individual

claims would “present the potential for varying, inconsistent or contradictory

judgments and would increase the delay and expense to all parties and the

                                         27
court system resulting from multiple trials of the same factual issues.” Th ose

allegations are sufficient to establish superiority at the pre-discovery motion to

dismiss stage. See Carbo,  410 N.J. Super. at 295 (“Rule 4:32-1 must be

liberally construed, and a class action is the favored means of adjudicating

numerous claims involving a common nucleus of facts for which each

individual’s recovery will be small.”).

      The trial court and Appellate Division, relying on Local Baking,

determined that superiority was not established because, like the statutory

award of $500 in TCPA claims, FACTA’s statutory penalty of $100 to $1 ,000

sufficiently incentivized individual plaintiffs to bring claims. However, the

reliance on Local Baking is misplaced because of the differences in

establishing a statutory violation under the TCPA and establishing a statutory

violation under FACTA. For example, pursuant to the TCPA, “[a] person or

entity may . . . bring in an appropriate court of that State -- an action . . . to

receive $500 in damages for each such violation.” 47 U.S.C. § 227(b)(3)(B).

Pursuant to FACTA, statutory damages ranging from $100 to $1,000 will be

awarded if plaintiffs can establish defendants’ noncompliance with FACTA

was willful or negligent. See 15 U.S.C. §§ 1681n, 1681o. The significant

difference between the two Acts is FACTA’s willfulness requirement. The

imposition of the willfulness requirement makes it more difficult for an

                                          28
individual plaintiff to bring a FACTA claim for statutory damages because it is

unlikely a plaintiff appearing pro se in small claims court will know how to

demonstrate willfulness.

      Moreover, as plaintiffs pled, individual damages are likely to be small

and, as a result, individual class members are unlikely to have the financial

wherewithal or incentive to bring a claim. See Int’l Union of Operating Eng’rs

Local No. 68 Welfare Fund,  192 N.J. at 384 (noting the concern that, when

class members lack the financial wherewithal to bring a claim, “absent a class,

the individual class members would not pursue their claims at all, thus

demonstrating superiority of the class action mechanism”).

      Additionally, trying these cases individually could result in inconsistent

verdicts. In fact, if forced to proceed individually, there is nothing stopping

one attorney from bringing numerous plaintiffs into small claims court and

trying each claim one at a time. Such an approach would not foster judicial

efficiency; nor would it be fair to defendants, who could be exposed to

inconsistent results.

      Rule 4:32-2(a) provides that,

             [w]hen a person sues or is sued as a representative of a
             class, the court shall, at an early practicable time,
             determine by order whether to certify the action as a
             class action. An order certifying a class action shall
             define the class and the class claims, issues or defenses,
             and shall appoint class counsel in accordance with
                                        29
             paragraph (g) of this rule. The order may be altered or
             amended prior to the entry of final judgment.

Class action discovery must be undertaken so that the court has the

information necessary to allow it to determine whether the class should be

certified.

      Given those considerations, and at this stage of litigation before

discovery has been conducted, plaintiffs alleged sufficient facts to survive a

motion to dismiss on the question of superiority.

                                       VI.

      In sum, we reverse the judgment of the Appellate Division and hold that

plaintiffs sufficiently pled facts regarding Rule 4:32-1’s numerosity,

predominance, and superiority requirements to survive a motion to dismiss.

However, we are not certifying the class. We remand the matter for the parties

to conduct discovery related to class action certification.




    CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN,
PATTERSON, SOLOMON, and PIERRE-LOUIS join in JUSTICE
FERNANDEZ-VINA’s opinion.




                                        30