There was a disappointing unpublished decision out of the appellate division this week in Sutton v. Hoffman LaRoche, Inc., the City of Clifton, the Township of Nutley, and Deluxe Corporation. 

The appellate division panel of Judges Fisher, Accurso and Gilson upheld the trial judge’s class certification order, which granted certification of a class of all residential property owners within 200 feet of a contaminated site in Nutley.

Plaintiffs had conceded there were no health or safety concerns related to the contamination. Rather, the alleged injury is tied to the Classification Exception Area (CEA) notice sent to homes near contamination, which designates groundwater sources as unfit for certain uses. 

The notice does not suggest residents are at risk of harm, and all residents draw water from city sources unrelated to the affected aquifer.  The alleged injury instead turns on a possible diminution in property value that might result from disclosure of CEA notice.  The complaint includes a bare assertion that all class members have in fact suffered a diminution in property values.

NJCJI appeared as amicus in the appeal to defend the rigorous inquiry New Jersey courts have consistently required to determine the existence of a bona fide class.  As underscored by the NJ Supreme Court in Dugan v. TGI Fridays, Inc., plaintiffs must be able to prove the essential elements of their claims, including injury, with evidence common to the class.

Unfortunately, the appellate division panel made same mistake as trial judge, conflating the existence of injury with proof of the quantum of damages.  The court wrote that “individualized proof of damages is the norm for class actions.”  And offered that “if plaintiffs cannot establish a reliable method to calculate damages on a class-wide basis, then they will have to prove individual damages, which, as already noted, is often the norm in class actions.”

The analysis falls short of the standard of scrutiny explained most recently in Dugan, which emphasized that a post-verdict claims process is not an appropriate forum for determining an element that is essential to liability. Rather, plaintiffs have the burden to prove those elements at trial.

NJCJI would like to thank Gavin J. Rooney, Joseph Fischetti, and Justin Corbalis at Lowenstein Sandler for their excellent work on the brief and at the virtual oral argument.  We appreciate Gavin’s longstanding efforts to ensure rigorous standards for class certifications, including the outstanding amicus work in the Dugan case, referenced above.