In a win for class-action plaintiffs, a New Jersey judge has ruled that defendants can’t try to thin the herd by making selective offers of judgment.
Middlesex County Assignment Judge Travis Francis said permitting such offers would “undercut the salutary purposes of the class action procedure and make it significantly more difficult for members of the public to enforce remedial statutes,” such as the state’s Consumer Fraud Act.
Francis held in Gambrell v. Hess that “from this point forward no offers of judgment may be tendered in class actions, whether putative or certified, for reasons of public policy.”
One of the plaintiffs’ attorneys, Andrew Wolf of the Wolf Law Firm in North Brunswick, says the Oct. 31 ruling “advances the New Jersey Legislature’s approach to protecting consumers” and will “help level the playing field.”
The lead plaintiffs, Doris and Eugene Gambrell and Falguni Patel, allege that Hess Inc. mislabeled diesel fuel as regular gasoline, which damaged their cars’ engines, and improperly substituted one grade of gasoline for another.
Their suit includes counts of violations of the CFA, the Truth-in-Consumer Contract, Warranty and Notice Act and the New Jersey Motor Vehicle Fuel Retail Sales Act.
They seek monetary damages, a requirement that Hess notify all possible members of the class, and an injunction against further violations of the statutes and state regulations.
Hess, in June, made $20,000 offers of judgment to the Gambrells and to Patel under N.J. Court Rule 4:58, which encourages fair offers of monetary settlement and imposes consequences on parties who unwisely reject them and insist on trial.
Wolf demanded that the offers be withdrawn. He cited the rule’s prohibitions against such offers unless the only relief sought is monetary. Here, injunctive relief is also sought.
Francis agreed, and also accepted Wolf’s argument that allowing a defendant to make offers of judgment in class actions would allow them to “pick off” particular plaintiffs and, in the process, undercut the viability of the class action.
“Allowing defendants to engage in the judicial equivalent of “Whack-A-Mole’ by tendering offers of judgment on successive names representatives of a putative class action undermines the CFA and similar remedial statutes enacted by the Legislature because it gives rise to conflicts of interest between the representatives and the class they represent,” Francis said.
He cited Gay v. Workers’ & Dairy Lunchmen’s Union, 86 F.R.D. 500 (N.D. Cal. 1980). In that case, the court rejected an offer of judgment to one plaintiff in a class action because allowing the plaintiff to consider it would be “tinged” by his self-interest against the interests of the other plaintiffs.
Francis also cited In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768 (3d Cir. 1985. In that case, the U.S. Court of Appeals for the Third Circuit rejected offers of judgment in a class action after finding that they were being used to “pick off” plaintiffs and undermine the objectives of class actions – the aggregation of similar and often small claims.
Francis rejected Hess’ argument that the offers of judgment should stand because of the state’s public policy favoring quick settlement of litigation.
“While the Court recognizes that the settlement of litigation and the conservation of limited judicial resources rank high in this State’s public policy … the Court also must remember that the Legislature enacted the CFA to eradicate the ever-growing menace of consumer fraud,” he added.
Hess’ attorney, Brian Molloy, of Woodbridge’s Wilentz, Goldman & Spitzer, did not return a telephone call.
Francis rejected plaintiffs’ request for counsel fees and costs, saying that while Hess’ offers of judgment were improper, they were not made in bad faith.