Joaquin v. Directv Group Holdings, Inc. et al

BRIEF in Opposition

D.N.J.August 21, 2018

LEWIS BRISBOIS BISGAARD & SMITH LLP Attorneys for Defendants Lonstein Law Office, P.C., Wayne Lonstein and Julie Cohen Lonstein One Riverfront Plaza, Suite 800 Newark, New Jersey 07102 973-577-6260 ANGELA JOAQUIN, on behalf of herself and all others similarly situated, Plaintiff, v. LONSTEIN LAW OFFICES, P.C., a New York Professional Corporation; JULIE COHEN LONSTEIN; WAYNE LONSTEIN; SIGNAL AUDITING, INC. and STEVEN LEVINE, Defendants. : : : : : : : : : : : : : : : : : : : : UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY Civil Action No. 15-8194 (MAS) (DEA) DEFENDANTS LONSTEIN LAW OFFICE, P.C., WAYNE LONSTEIN AND JULIE COHEN LONSTEIN’S MEMORANDUM OF LAW IN SUPPORT OF THEIR OPPOSITION TO PLAINTIFF’S MOTION FOR CLASS CERTIFICATION Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 1 of 35 PageID: 1977 i TABLE OF CONTENTS Page PRELIMINARY STATEMENT .....................................................................................................1 STATEMENT OF FACTS ..............................................................................................................4 ARGUMENT ...................................................................................................................................6 A. LEGAL STANDARD ..............................................................................................6 B. PLAINTIFF LACKS ARTICLE III STANDING ...................................................8 C. PLAINTIFF HAS FAILED TO DEMONSTRATE PREDOMINANCE” AND “COMMONALITY” AS REQUIRED BY RULE 23(B)(2)........................16 a. The alleged conduct cannot constitute predicate acts ................................18 b. The Lonstein Defendants did not engage in a pattern of racketeering activity ...................................................................................22 c. The Class Members did not suffer harm through the imposition of an unlawful debt as there was no debt imposed .........................................23 d. The Class Claims do not Predominate .......................................................24 D. BECAUSE NJ RICO REQUIRES INDIVIDUALIZED PROOFS, CLASS CERTIFICATION IS IMPROPER ........................................................................24 E. THE COURT SHOULD DISREGARD OR STRIKE EXHIBIT A TO THE SECOND AMENDED COMPLAINT .........................................................27 CONCLUSION ..............................................................................................................................28 Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 2 of 35 PageID: 1978 ii TABLE OF AUTHORITIES Cases Agostino v. Quest Diagnostics Inc., 256 F.R.D. 437 (D.N.J. 2009) ...................................................................................... 24, 25, 26 Beauvoir v. Israel, 794 F.3d 244 (2d Cir. 2015)............................................................................................... 11, 24 Bridge v. Pheonix Bond & Indemnity Co., 553 U.S. 639 (2008) ................................................................................................................. 15 Brokerage Concepts v. U.S. Healthcare, 140 F.3d 494 (3d Cir. 1998)..................................................................................................... 22 Chevron Corp. v. Donziger, 833 F.3d 74 (2d Cir. 2016)................................................................................................. 11, 12 Desmond v. Siegel, No. 10-5562, 2012 U.S. Dist. LEXIS 109579 (D.N.J. Aug. 6, 2012) ..................................... 11 Dicuio v. Brother Int’l Corp., No. 11-1447, 2012 U.S. Dist. LEXIS 112047 (D.N.J. Aug. 9, 2012) ..................................... 12 Dippolito v. United States, No. 13-0175, 2015 U.S. Dist. LEXIS 170498 (D.N.J. Dec. 21, 2015) .................................... 10 DirecTV, Inc. v. Cavanaugh, 321 F. Supp.2d 825 (E.D. Mich. 2003) .................................................................................... 23 DirecTV, Inc. v. Karpinsky, 269 F. Supp.2d 918 (E.D. Mich. 2003), vacated in part on other grounds, 274 F. Supp.2d 918 (E.D. Mich. 2003) ................................................................................................ 21 DirecTV, Inc. v. Weikel, No. 03-5300, 2005 U.S. Dist. LEXIS 9902 (D.N.J. May 25, 2005) ........................................ 21 DirecTV, LLC v. Alvarez, No. 1:15-cv-06827, 2017 U.S. Dist. LEXIS 159133 (D.N.J. Sep. 27, 2017) .................... 19, 22 DirecTV, LLC v. Spina, No. 1:15-cv-00104-JMS-TAB, 2016 U.S. Dist. LEXIS 116235 (S.D. Ind. Aug. 30, 2016)............................................................................................. 19, 27, 28 DirecTV, Ltd. Liab. Co. v. Kaser, No. 13-13270, 2014 U.S. Dist. LEXIS 102976 (E.D. Mich. July 29, 2014) ........................... 19 Fagan v. Fischer, No. 14-7013, 2016 U.S. Dist. LEXIS 10042 (D.N.J. Jan. 28, 2016) ................................. 14, 16 Galicki v. New Jersey, No. 14-169, 2016 U.S. Dist. LEXIS 126076 (D.N.J. September 15, 2016) ............................ 23 Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 3 of 35 PageID: 1979 iii General Telephone Co. of Southwest v. Falcon, 457 U.S. 147 (1982) ........................................................................................................... 16, 17 In re Gerber Probiotic Sales Practices Litig., No. 12-835, 2014 U.S. Dist. LEXIS 44810 (D.N.J. Mar. 31, 2014).................................. 12, 13 Gladstone Realtors v. Vill. of Bellwood, 441 U.S. 91 (1979) ..................................................................................................................... 9 Holmes v. Sec. Investor Protection Corp., 503 U.S. 258 (1992) ................................................................................................................. 14 In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008)................................................................................................. 7, 17 I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265 (8th Cir. 1984) ................................................................................................... 21 Interchange State Bank v. Veglia, 286 N.J. Super. 164 (App. Div. 1995) ............................................................................... 14, 16 J&J Sports Prods. v. Gonzalez, No. 12-6313, 2013 U.S. Dist. LEXIS 162250 (E.D. Pa. Nov. 14, 2013) ................................ 19 Joe Hand Promotions, Inc. v. That Place, LLC, No. 11-CV-931, 2012 U.S. Dist. LEXIS 90536 (E.D. Wis. June 29, 2012)............................ 19 Joe Hand Promotions, Inc. v. Zani, No. 11- C-43192013, U.S. Dist. LEXIS 144565, *4 (N.D. Ill. 2013) ..................................... 19 Johnston v. HBO Film Mgmt., Inc., 265 F.3d 178 (3d Cir. 2001)..................................................................................................... 27 Kalow & Springut, LLP v. Commence Corp., 272 F.R.D. 397 (D.N.J. 2011) .................................................................................................... 7 Koronthaly v. L’Oreal USA, Inc., No. 07-CV-5588, 2008 U.S. Dist. LEXIS 59024 (D.N.J. July 29, 2008) .................................. 9 Lewis v. Casey, 518 U.S. 343 (1996) ................................................................................................................... 9 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) ............................................................................................................... 7, 8 Maio v Aetna, 221 F.3d 472 (3d Cir. 2000)..................................................................................................... 10 Marcus v. BMW of N. Am., LLC, 687 F.3d 583 (3d Cir. 2012)....................................................................................................... 7 McCray v. Fid. Nat’l Title Ins. Co., 682 F.3d 229 (3d Cir. 2012)....................................................................................................... 8 McNair v. Synapse Group, Inc., 672 F.3d 213 (3d Cir. 2012)..................................................................................................... 12 Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 4 of 35 PageID: 1980 iv Medley v. Johnson & Johnson, No. 10-cv-02291, 2011 U.S. Dist. LEXIS 4627 (D.N.J. Jan. 18, 2011) .................................... 9 National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900 (6th Cir. 2001) ................................................................................................... 20 Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154 (3d Cir. 2001)................................................................................................. 8, 17 Peterson v. Phila. Stock Exch., 717 F. Supp. 332 (E.D. Pa. 1989) ............................................................................................ 21 Polanco v. Omnicell, Inc., 988 F.Supp.2d 451 (D.N.J. 2013) .............................................................................................. 8 Prudential Ins. Co. of Am. v. Bank of Am., 14 F. Supp.3d 591 (D.N.J. 2014) ............................................................................................. 10 Reyes v. Netdeposit, LLC, 802 F.3d 469 (3d Cir. 2015)............................................................................................... 17, 18 Sarpolis v. Tereshko, 26 F. Supp. 3d 407 (E.D. Pa. 2014) ......................................................................................... 10 In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012)..................................................................................................... 10 Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985) ................................................................................................................. 13 Sosa v. DIRECTV, Inc., 437 F.3d 923 (9th Cir. 2006) ............................................................................................. 20, 21 Southward v. Elizabeth Bd. of Educ., No. 15-3699, 2017 U.S. Dist. LEXIS 163196 (D.N.J. Oct. 2, 2017) ...................................... 14 State v. Ball, 141 N.J. 142 (1995) ........................................................................................................... 10, 23 State v. Cagno, 211 N.J. 488 (2012) ................................................................................................................. 10 Stoneback v. ArtsQuest, No. 12-cv-03287, 2013 U.S. Dist. LEXIS 86457 (E.D. Pa. June 19, 2013) ............................ 15 Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181 (3d Cir. 2006)....................................................................................................... 8 Toll Bros., Inc. v. Twp. of Readington, 555 F.3d 131 (3d Cir. 2009)....................................................................................................... 8 United States v. Boyer, 694 F.2d 58, 60 (3d Cir.1982).................................................................................................. 24 United States v. Pearlstein, 576 F.2d 531 (3d Cir.1978)...................................................................................................... 24 Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 5 of 35 PageID: 1981 v United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir.2002) ...................................................................................... 21 United States v. Vastola, 670 F. Supp. 1244 (D.N.J. 1987) ............................................................................................. 22 Va. Sur. Co. v. Macedo, No. 08-5586, 2009 U.S. Dist. LEXIS 90603 (D.N.J. Sep. 30, 2009) ...................................... 20 Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011) ..................................................................................................... 6, 7, 16 Walter v. Palisades Collection, LLC, 480 F. Supp. 2d 797 (E.D. Pa. 2007) ....................................................................................... 10 Winsome Shoppe, Inc. v. Cynwyd Inv., No. 91-7013, 1992 U.S. Dist. LEXIS 16715 (E.D. Pa. Nov. 3, 1992) .................................... 21 Winters v. De Rosa, No. 04-736(JBS), 2005 U.S. Dist. LEXIS 46020 (D.N.J. Mar. 18, 2005) ........................ 20, 28 Zimmerman v. HBO Affiliate Grp., 834 F.2d 1163 (3d Cir. 1987)............................................................................................. 11, 24 Statutes 18 U.S.C. § 1964(c) ...................................................................................................................... 13 47 U.S.C. § 605 ......................................................................................................................... 6, 19 47 U.S.C. § 605(e)(3)(C)(i)(II) ..................................................................................................... 22 N.J.S.A. 2C:20-5 ........................................................................................................................... 20 N.J.S.A. 2C:41-2(a) ........................................................................................................................ 1 N.J.S.A. 2C:41-4(c) .................................................................................................................. 9, 13 Rules Rule 12(f) ...................................................................................................................................... 27 Rule 23(a).............................................................................................................................. 6, 7, 17 Rule 23(b) ....................................................................................................................................... 7 Rule 23(b)(3) ................................................................................................................................. 17 Constitutional Provisions U.S. Const.art. III, § 2 ..................................................................................................................... 8 Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 6 of 35 PageID: 1982 1 PRELIMINARY STATEMENT Defendants Julie Cohen Lonstein, Wayne Lonstein and Lonstein Law Office, P.C. (“LLO”) (collectively the “Lonstein Defendants”), by their attorneys Lewis Brisbois Bisgaard & Smith LLP, respectfully submit this memorandum of law in opposition to Plaintiff’s Motion for Class Certification. Plaintiff filed this putative class action against the Lonstein Defendants, as well as the co-defendants, Signal Auditing, Inc. (“SAI”) and Steven Levine (the “Signal Defendants”), asserting a claim under the New Jersey Racketeer Influenced and Corrupt Organizations Act, N.J.S.A. 2C:41-2(a) (“NJ RICO”). Fact discovery has now been completed. In her pleading, Plaintiff sought certification of a class, defined as: All owners of New Jersey businesses who, at any time on or after September 9, 2010, were sent correspondence by the Lonstein Defendants regarding allegedly unauthorized use by the business of residential or non-commercial DirecTV satellite television services, and whose DirecTV service was installed at the business location and authorized for a residential or non-commercial account. (2 A.C. ¶ 49.) Plaintiff’s motion for class certification proffers an amended class definition and she now seeks certification of a more limited class: All owners of New Jersey businesses who, at any time on or after September 9, 2010, were sent correspondence by the Lonstein Defendants regarding allegedly unauthorized use by the business of residential or non-commercial DirecTV satellite television services, and whose DirecTV service was installed at the business location and authorized for a residential or non-commercial Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 7 of 35 PageID: 1983 2 account, and who did not pay any amounts in resolution, remuneration, or settlement. (Dkt. No. 101-1, pg. 4-5) (emphasis in original.) Despite Plaintiff being afforded a full opportunity to develop a factual record that would lend support to her motion for class certification, she has been unable to do so. The Court should deny class certification here for three independently dispositive reasons: First, Plaintiff lacks Article III standing. To support standing, a plaintiff must have suffered a distinct and palpable injury that would likely be redressable if the requested relief were granted, and under NJ RICO, must show that the defendant’s conduct proximately caused the alleged injury. After complete discovery, the record is devoid of any actual injury suffered by Plaintiff that was proximately caused by the Lonstein Defendants’ alleged NJ RICO violations. Plaintiff did not give in and pay the sums demanded by the Lonstein Defendants’ letter, did not incur an unlawful debt as alleged, and suffered no other consequences from her dealings with defendants. Specifically, as developed below, to the extent Plaintiff alleges harm, there is no nexus between the Lonstein Defendants conduct and any supposed damage. She therefore, she cannot satisfy the standing requirement. Second, Plaintiff cannot satisfy the commonality or predominance requirement for class certification. Plaintiff’s motion lists three questions of law and fact supposedly common as to all class members: 1) whether the defendants alleged Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 8 of 35 PageID: 1984 3 conduct constituted a predicate unlawful act (such as fraud, extortion, or mail fraud), 2) whether the defendants have engaged in a pattern of racketeering activity, and 3) whether the “imposition of unlawful debt” in sufficient harm to support their NJ RICO claims. As demonstrated below, all three questions are in fact not common to all class members. As to each point: 1) The demand letters sent to Plaintiff claiming that she was using residential cable services in her commercial establishment were truthful and thus can not be fraudulent. Besides, NJ RICO does not contemplate that asserting a potential legal cause of action or attempting to settle a claim could be construed as constituting a predicate act. Because there was no unlawful predicate act, there can be no common question as to this point; 2) The Lonstein Defendants sending two letters addressing the same issue concerning Plaintiff’s unauthorized commercial exhibition of DirecTV programming cannot be construed as two discrete acts for purposes of the statute. Thus, without a pattern of racketeering, there can be no common question; and 3) The threat of litigation and a demand for money derived from the target’s violation of a statute is not the equivalent of an unlawful debt, and is insufficient to support a NJ RICO action. Third, NJ RICO is particularly ill-suited for class certification given that generally, individualized proofs predominate. The Court would be forced to look at Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 9 of 35 PageID: 1985 4 each class members’ individual transaction, including their independent communications and interactions with DirecTV, Verizon, or some other unknown company that the putative class member obtained services from as well as each of the defendants. To do so, the Court would need to hold mini-trials as to each class member’s dealings with the parties, which would overwhelm any common issues. In sum, this case presents insurmountable legal and practical obstacles to class certification. Accordingly, Plaintiff’s motion should be denied.1 STATEMENT OF FACTS2 Plaintiff filed a putative class action Second Amended Complaint (“2 A.C.”) against the Lonstein Defendants, as well the “Signal Defendants, asserting a claim under NJ RICO3. Plaintiffs' NJ RICO claims are based on the allegation that the Lonstein Defendants, who are attorneys that represent DirecTV, conspired with the 1 The Lonstein Defendants incorporate herein all arguments set forth in support of their Motion for Summary Judgment filed concurrently with this opposition to class certification, and respectfully refer the Court to that briefing at Dkt. No. 105. The Lonstein Defendants also incorporate herein all arguments set forth in support of the Signal Defendants’ Motion for Summary Judgment and Opposition to Class Certification, and respectfully refer the Court to those briefings filed contemporaneously with this motion. 2 A complete statement of underlying facts can be found in the Lonstein Defendants’ Rule 56.1 Statement and the Declaration of Julie Lonstein, in support of Summary Judgment, filed contemporaneously to this opposition, at Dkt. Nos. 107 and 105-10. 3 The Second Amended Complaint also pleaded a claim under the New Jersey Consumer Fraud Act, which was dismissed without prejudice. (Dkt. No. 80.) Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 10 of 35 PageID: 1986 5 Signal Defendants to identify and investigate business are displaying DirecTV with a non-commercial subscription, in order to demand monetary settlements through the use of demand letters accusing the business of violating the Federal Communications Act, demanding payments or threatening litigation/prosecution. (2 A.C. ¶ 19.) According to the Second Amended Complaint, the defendants schemed to improperly threaten Plaintiff and others similarly situated with prosecution or litigation for the purported unauthorized use of satellite cable television services from DirecTV. (Id. ¶ 78.) Plaintiff alleges that these acts constituted extortion, and/or mail fraud, and that they are therefore “racketeering activities” in violation of NJ RICO. (Id.) Plaintiff alleges that many, if not most, of the businesses that were identified as having DirecTV with non-commercial subscriptions were authorized to receive DirecTV at the business establishment using a non-commercial subscription. (Id. ¶ 20.) Further, many, if not most, of the businesses that were identified as having DirecTV with a non-commercial subscription allegedly ordered DirecTV (either through DirecTV or an affiliate seller, such as Verizon), and then a DirecTV authorized agent came to the business establishment, installed the DirecTV dish, receiver, and other equipment, and activated and thus authorized the receiver for a non-commercial subscription, knowing it was being used at the business establishment where it was being installed. (Id. at ¶ 21.) Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 11 of 35 PageID: 1987 6 In the instant case, Plaintiff maintains a beauty salon that was a DirecTV subscriber under a residential classification which prohibited her from broadcasting DirecTV satellite television services within her commercial establishment to commercial customers. (Id. at ¶ 28; Joaquin Dep. at 8:23-25, 26:23-27:21; PL80)4. On June 1, 2015, SAI, on behalf of their client, DirecTV, independently conducted an audit whereby an auditor visited Plaintiff’s establishment and observed DirecTV services being broadcast within their establishment to commercial customers. (PL21.) Thereafter, On August 6 and 17, 2015, the Lonstein Defendants mailed letters to Plaintiff informing her of DirecTV’s claim for misuse, seeking to avoid litigation by amicably resolving the claim. (2 A.C. ¶¶ 41, 44.) The August 17 letter specifically demands no more than $10,000, which is the strict liability penalty under 47 U.S.C. §605. (D-7.) Plaintiff did not pay any money to settle with DirecTV. (Joaquin Dep. at 68:6-9.) ARGUMENT A. LEGAL STANDARD To certify a class action, a plaintiff bears the burden of demonstrating the four elements of Rule 23(a): (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. Wal-Mart Stores v. Dukes, 131 S. Ct. 2541, 2551 (2011). 4 All documents referenced herein are attached as exhibits to the Declaration of Jeffrey Spiegel in support of Summary Judgment, filed contemporaneously to this opposition at Dkt. No 105-1. Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 12 of 35 PageID: 1988 7 If the action meets the prerequisites of Rule 23(a), the court must consider whether the class is maintainable under Rule 23(b). Id. at 2549; Kalow & Springut, LLP v. Commence Corp., 272 F.R.D. 397, 401 (D.N.J. 2011). Rule 23 is not a mere pleading standard; rather, a party seeking class certification must prove that each element is met. Wal-Mart, 131 S.Ct. at 2551; Kalow & Springut, 272 F.R.D. at 401. Furthermore, the named plaintiff must have Article III standing in order for the Court to have subject matter jurisdiction over the case. Article III standing requires an “injury-in-fact,” a causal connection between the injury and the conduct complained of, and likelihood that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). An injury-in-fact is “an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.” Id... (internal quotation marks omitted). The Court should only grant class certification when it is satisfied, after a “rigorous analysis” that the prerequisites of Rule 23 are met by a preponderance of the evidence. In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305, 309 (3d Cir. 2008). The Court must resolve all factual and legal disputes relevant to class certification, even if they overlap with the merits, including disputes regarding the elements of the cause of action. Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 591 (3d Cir. 2012). “A class certification decision requires a thorough examination of the factual and legal allegations.” In re Hydrogen Peroxide, 552 F.3d at 309. In addition, Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 13 of 35 PageID: 1989 8 if proof of the essential elements of the cause of action requires individual treatment, then class certification is unsuitable. Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 172 (3d Cir. 2001). B. PLAINTIFF LACKS ARTICLE III STANDING Article III of the United States Constitution restricts the judicial power of federal courts to deciding actual cases and controversies. U.S. Const., art. III, § 2; Lujan, 504 U.S. at 560. Without Article III standing, a federal court must dismiss a plaintiff’s claims because it lacks subject matter jurisdiction. Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006). Article III standing requires: (1) an “injury-in-fact” – an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical; (2) a causal connection between the injury and the conduct complained of; and (3) it must be likely, as opposed to merely speculative, that the injury is redressable by a favorable decision. Lujan, 504 U.S. at 560-61 (citations omitted). Although all three elements must be met, the injury-in-fact element is often determinative. Toll Bros., Inc. v. Twp. of Readington, 555 F.3d 131, 138 (3d Cir. 2009). In addition, merely asserting violations of certain statutes is insufficient to establish an injury-in-fact for Article III standing. Polanco v. Omnicell, Inc., 988 F.Supp.2d 451, 469 (D.N.J. 2013). “In the context of class actions, Article III standing “is determined vis-a-vis the named parties.”“ McCray v. Fid. Nat'l Title Ins. Co., 682 F.3d 229, 243 (3d Cir. 2012) Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 14 of 35 PageID: 1990 9 (citations omitted). The named plaintiff “must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.” Lewis v. Casey, 518 U.S. 343, 357 (1996) (citations omitted). A plaintiff must have suffered a distinct and palpable injury to herself that is likely redressable if the requested relief is granted. Gladstone Realtors v. Vill. of Bellwood, 441 U.S. 91, 100 (1979). Where a plaintiff fails to allege any present injury, she fails to satisfy the injury-in-fact requirement. Koronthaly v. L'Oreal USA, Inc., No. 07-CV-5588, 2008 U.S. Dist. LEXIS 59024, *14 (D.N.J. July 29, 2008); Medley v. Johnson & Johnson, No. 10-cv-02291, 2011 U.S. Dist. LEXIS 4627, *6-7 (D.N.J. Jan. 18, 2011). Here, Plaintiff lacks Article III standing because she has not suffered an injury- in-fact that is redressable by a favorable ruling. The statute makes clear that a claim lies only if the plaintiff has been damaged: “Any person damaged in his business or property by reason of a violation of [NJ RICO] may sue therefor in any appropriate court and shall recover threefold any damages he sustains and the costs of the suit . . .” N.J.S.A.2C:41-4(c). Plaintiff alleges that the Lonstein Defendants demanded monetary settlements through the use of letters accusing her of violating the Federal Communications Act, demanding payments or threatening litigation or prosecution. (2 A.C. ¶ 19.) Plaintiff, and her purported class as defined by the motion, concede she did not pay any money Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 15 of 35 PageID: 1991 10 or give in to the alleged threats by making payment to DirecTV or the Lonstein Defendants, which is critical. (Joaquin Dep. at 67:24-68:9). Any damage to Plaintiff based on purported threats that did not materialize is entirely theoretical and does not furnish a basis for recovery. See Maio v Aetna, 221 F.3d 472, 495 (3d Cir. 2000)(when speculation as to future events is required, there is no RICO injury).5 Further, Plaintiff has admittedly never paid any money to her attorneys’ in legal fees. (Joaquin Dep. at 70:21-71:9). To the extent Plaintiff claims she might be responsible to her attorneys for a contingency fee, RICO liability cannot attach to future contingent damages. Walter v. Palisades Collection, LLC, 480 F. Supp. 2d 797, 804 (E.D. Pa. 2007); see also Maio, 221 F.3d at 495; Sarpolis v. Tereshko, 26 F. Supp. 3d 407, 424 (E.D. Pa. 2014); Dippolito v. United States, No. 13-0175, 2015 U.S. Dist. LEXIS 170498, at *18 (D.N.J. Dec. 21, 2015). Plaintiff argues that although she did not pay the settlement, her damages stem from the unlawful demand, which constitutes an “actionable unlawful debt under the NJ RICO”. (Dkt. No. 101-1, pg. 2.) This, however, cannot furnish the basis for standing because the threat of litigation and a demand for money derived from 5 It is appropriate to seek guidance concerning NJ RICO in case law under the federal RICO statute as to areas in which the two statutes are consistent. In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 245 (3d Cir. 2012); State v. Cagno, 211 N.J. 488, 508 (2012); Prudential Ins. Co. of Am. v. Bank of Am., 14 F. Supp.3d 591, 614 (D.N.J. 2014). New Jersey courts heed federal case law in construing NJ RICO. State v. Ball, 141 N.J. 142, 156 (1995). Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 16 of 35 PageID: 1992 11 violation of a statute is not the equivalent of a “wrongful debt” and is insufficient to establish a claim under RICO. Beauvoir v. Israel, 794 F.3d 244, 247 (2d Cir. 2015); Zimmerman v. HBO Affiliate Grp., 834 F.2d 1163, 1168 (3d Cir. 1987), (“[N]othing in the statute or the legislative history leads us to believe that Congress intended to equate asserted tort liability with asserted consumer debt.”). Plaintiff relies upon two decisions, Desmond v. Siegel, No. 10-5562, 2012 U.S. Dist. LEXIS 109579 at *7 (D.N.J. Aug. 6, 2012) and Chevron Corp. v. Donziger, 833 F.3d 74 (2d Cir. 2016), to support her position. The Court should reject Plaintiff’s effort to liken this case to either of those decisions. In Desmond, defendant Siegel, a well-known rogue, had extorted plaintiff in violation of the Hobbs Act and New Jersey law by accusing him in correspondence of a “multimillion dollar theft” and of “immoral and unethical business practice” while likening him to a rapist due to his “financial rape” as well as “copyright theft”, and threatening public disclosures of the supposed misdeeds. 2012 U.S. Dist. LEXIS 109579 at *11. It is hardly surprising that such reprehensible conduct was deemed to be an attempt to extort that supported a RICO claim, particularly in light of Siegel’s subsequent campaign of harassment by creating a public website to air negative information about plaintiff. By contrast, the Lonstein Defendants’ correspondence – which consisted of a temperate recitation of the basis for their clients’ rights and efforts to achieve an early Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 17 of 35 PageID: 1993 12 resolution – contained nothing that would support the characterization of an “attempt[] to extort money . . . through fear.” Id. at *32. Chevron is similarly inapposite. The Chevron defendants promised an Ecuadorian judge a portion of the proceeds if he ruled in their favor, which he did, resulting in a $8.646 billion judgment debt against the plaintiff. The Court ruled that the judgment was a debt, and “[t]he imposition of a wrongful debt constitutes an injury to one’s business or property.” Id. at 135. Here, there is no lawsuit, no judgment, and no bribery. It is evident that a garden variety attorney letter advising of a legal violation and soliciting a settlement is not comparable to the unlawful conduct that was presented to the Second Circuit in Chevron. In addition, Plaintiff lacks standing to seek injunctive relief. When prospective relief is sought, a plaintiff must demonstrate that she is likely to suffer future injury from the defendant’s conduct. McNair v. Synapse Group, Inc., 672 F.3d 213, 223 (3d Cir. 2012). “The threat of injury must be ‘sufficiently real and immediate,’ and, as a result of the immediacy requirement, ‘past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief... if unaccompanied by any continuing, present adverse effects[.]’” Id. (citations omitted); Dicuio v. Brother Int'l Corp., No. 11-1447, 2012 U.S. Dist. LEXIS 112047, at *48 (D.N.J. Aug. 9, 2012); In re Gerber Probiotic Sales Practices Litig., No. 12-835, 2014 U.S. Dist. LEXIS 44810, at *5 (D.N.J. Mar. 31, 2014). Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 18 of 35 PageID: 1994 13 Here, DirecTV did not file a lawsuit against Plaintiff for the supposed unauthorized use of its services. The record is devoid of any other communications or demand letters sent by the Lonstein Defendants after August 17, 2015. (Id. 70:16-20.) And there would be no reason to suspect there would be any further threats or suits, given that Plaintiff is no longer a DirecTV subscriber. Hence, it is highly unlikely she would suffer future injury or harm. She would not be able to recover injunctive relief. (Joaquin Dep. 41:21-42:6.) Based on the foregoing, Plaintiff cannot properly represent a class as she does not have Article III standing because she has not sustained an injury-in-fact that is likely redressable if the requested relief is granted. In fact, as she defines the class by this motion, it consists only of DirecTV customers who, like her, did not pay anything to settle DirecTV’s claims based on their unlawful conduct. Thus, it is confirmed that all class members share Plaintiff’s disability and none of them can possibly recover herein. Further, “[f]or a civil RICO plaintiff to have standing he must … ultimately prove an injury to his ‘business or property’ proximately caused ‘by the conduct constituting the violation.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985); accord 18 U.S.C. § 1964(c); N.J.S.A. 2C:41-4(c); Weiss v. First Unum Life Ins., No. 02-4249 (GEB), 2003 U.S. Dist. LEXIS 27863, at *1 (D.N.J. Aug. 27, 2003); Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 19 of 35 PageID: 1995 14 Fagan v. Fischer, No. 14-7013, 2016 U.S. Dist. LEXIS 10042, *46 (D.N.J. Jan. 28, 2016). Under NJ RICO: In order to establish standing to institute a civil action under NJRICO, it must be shown that ‘plaintiff's harm was proximately caused by the NJRICO predicate acts alleged, i.e., that there was a direct relationship between plaintiff's injury and defendant's conduct.’” This requires a showing not only that the offender's alleged NJRICO violation was the ‘but for’ cause of the plaintiff's injury, but also that the violation was the proximate cause. [citing Holmes v. Sec. Investor Protection Corp., 503 U.S. 258, 265, 268, 269-70 (1992) (requiring a showing of direct injury to demonstrate standing in light of the difficulty of ascertaining damages where the cause is indirect)]. Interchange State Bank v. Veglia, 286 N.J. Super. 164, 178 (App. Div. 1995), certif. denied, 144 N.J. 377 (1996). Courts in this Circuit have routinely held that a NJ RICO violation must have proximately cause the plaintiff’s injuries. See, e.g., Southward v. Elizabeth Bd. of Educ., No. 15-3699, 2017 U.S. Dist. LEXIS 163196, at *36 (D.N.J. Oct. 2, 2017) (“it must be shown that plaintiffs’ harm was proximately caused by the NJRICO predicate acts alleged, i.e. that there was a direct relationship between plaintiffs injury and defendant's conduct.”) citing Interchange, 286 N.J. Super. at 668; Fagan, 2016 U.S. Dist. LEXIS 10042 at *46 (same). “A plaintiff is not required to prove he relied on a defendant's misrepresentations in order to assert a claim under RICO. However, a plaintiff still must prove that he suffered an injury to his business or property that was proximately Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 20 of 35 PageID: 1996 15 caused by the racketeering activity.” Stoneback v. ArtsQuest, No. 12-cv-03287, 2013 U.S. Dist. LEXIS 86457, at *45-46 (E.D. Pa. June 19, 2013); Bridge v. Pheonix Bond & Indemnity Co., 553 U.S. 639, 641 (2008). “Thus, in order to establish an injury, a plaintiff who alleges an injury “by reason of” a pattern of mail fraud must show that someone relied on the defendant's misrepresentations.” Stoneback, 2013 U.S. Dist. LEXIS 86457, at *46 (denying class certification on the ground that reliance was required to demonstrate proximate cause under RICO, holding that individualized questions predominated.) Here, Plaintiff is unable to show that the Lonstein Defendants’ conduct was the cause of any alleged injury suffered by her or that she relied on the Lonstein Defendants’ alleged representations. As Plaintiff testified , she never gave in and paid the sums demanded by the Lonstein Defendants’ letter and she suffered no other consequences. (Joaquin Dep. at 67:24-68:9.) If Plaintiff was exposed to any liability and damages to DirecTV under the Federal Communications Act or otherwise, that exposure results from her own conduct in violation of the Federal Communications Act when she decided to purchase a residential bundle from DirecTV, which she allegedly did in reliance on the representations of the salespeople who visited her business, not due to any act of the Lonstein Defendants. (Joaquin Dep. at 55:10-17). Because those salespeople allegedly made the representations well before any involvement by the Lonstein Defendants, it is patent that there is no nexus between Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 21 of 35 PageID: 1997 16 Plaintiff’s conduct and the Lonstein Defendants’ subsequent activity. The Lonstein Defendants’ conduct - occurring well after the fact - could not have proximately caused Plaintiff to infringe or to be liable for any supposed damages. Fagan, 2016 U.S. Dist. LEXIS 10042, at *51 (dismissing common law fraud claim as to defendants who were not alleged to have had any involvement with the initial, allegedly fraudulent activities giving rise to the claim). Thus, class certification should be denied based on the absence of the required direct causal nexus between the Lonstein Defendants’ alleged conduct and any conceivable injury sustained by Plaintiff or her fellow class members. Interchange State Bank, 286 N.J. Super. at 178-183. C. PLAINTIFF HAS FAILED TO DEMONSTRATE PREDOMINANCE” AND “COMMONALITY” AS REQUIRED BY RULE 23(B)(2) The Supreme Court requires that Plaintiff “to have demonstrate that the class members ‘have suffered the same injury.’” Wal-Mart, 131 S.Ct. at 2551. “Their claims must depend upon a common contention...which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. The Court has highlighted the importance of examining the merits of the plaintiff’s individual claims as part of its evaluation of whether Rule 23 is satisfied: “sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question.” General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 160 (1982). The class determination typically involves considerations tangled in the factual and legal issues comprising the cause of Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 22 of 35 PageID: 1998 17 action. Id.; Hydrogen Peroxide, 552 F.3d at 309-10. In this case, examining the factual bases behind Plaintiff’s claims compels the conclusion that the commonality requirement is not satisfied: “It is often appropriate to discuss commonality and predominance together because the commonality inquiry is subsumed into the predominance inquiry.” Reyes v. Netdeposit, LLC, 802 F.3d 469, 486 (3d Cir. 2015). The predominance inquiry focuses on whether “the questions of law or fact common to class members predominate over questions affecting only individual members[.]” Fed. R. Civ. P. 23(b)(3). “Predominance tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation[.]”In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 310-11. This standard is “'far more demanding' than the commonality requirement of Rule 23(a),” id., and requires “more than a common claim.” Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 187 (3d Cir. 2001). “Reading the District Court's commonality and predominance analyses together . . . is appropriate in [the RICO] context[.]” “Reyes, 802 F.3d at 486. However, in the interest of clarity, the Court should analyze each separately. With respect to commonality, Plaintiff lists three questions of law and fact purportedly common to all class members: 1) whether the defendants’ alleged conduct constituted a predicate unlawful act (such as fraud, extortion, or mail fraud) to support the putative class members’ NJ RICO claim, 2) whether the defendants engaged in a pattern of racketeering activity to support the NJ RICO claims, and 3) whether the Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 23 of 35 PageID: 1999 18 putative class members suffered sufficient harm through “imposition of unlawful debt” to support their NJ RICO claims. (Dkt. No. 101-1, pg. 8.) Commonality fails as to each allegedly common question, as explained below. a. The alleged conduct cannot constitute predicate acts Plaintiff cannot raise a common issue of fact or law as to the Lonstein Defendants’ alleged conduct as she fails to identify any criminal conduct that qualifies as a predicate act under NJ RICO. To the extent Plaintiff alleges mail fraud because the Lonstein Defendants’ letters were mailed, the claim fails because there is nothing fraudulent about the letters. They are attorney demand letters which cite to Plaintiff’s unauthorized use of satellite television in violation of the Federal Communications Act. (D-6 and D-7.) The letters were accurate in that Plaintiff was using residential services at her commercial establishment apparently without authorization. (Id.; Joaquin Dep. at 26:23-27:10; 2 A.C. ¶ 31;.) Since at least November 26, 2012, Plaintiff had been made aware via Verizon correspondence and invoices that she was receiving residential services at her commercial establishment. (PL82-164.) Specifically, on November 26, 2012, Plaintiff received a letter from Verizon stating: “Verizon Freedom Essentials is for residential customers. Offer is for residential voice use only. It is not for business customers.” (Id. at PL82.) From December 2012 to March 2015, each of Plaintiff’s subsequent invoices included a line item entitled “Verizon Freedom Essentials”. (Id. Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 24 of 35 PageID: 2000 19 at PL84-164.) Further, on November 19, 2013, DirecTV sent Plaintiff a letter which informed her on its reverse side that she is “a current residential DirecTV customer….” (Id. at PL24.) Thus, that for at least several years before the Lonstein Defendants’ involvement, Plaintiff was on notice that she was receiving residential services at her commercial establishment. Importantly, the Federal Communications Act, 47 U.S.C. § 605 et seq., provides strict liability remedies for the unauthorized use of services. DirecTV, LLC v. Alvarez, No. 1:15-cv-06827, 2017 U.S. Dist. LEXIS 159133, at *5 (D.N.J. Sep. 27, 2017); J&J Sports Prods. v. Gonzalez, No. 12-6313, 2013 U.S. Dist. LEXIS 162250, at *7 (E.D. Pa. Nov. 14, 2013). Plaintiff’s reception and display of residential services at her commercial establishment make her liable for damages - regardless of defendants’ intent or motive. See DirecTV, Ltd. Liab. Co. v. Kaser, No. 13-13270, 2014 U.S. Dist. LEXIS 102976, at *2 (E.D. Mich. July 29, 2014) (DirecTV installer’s advice to defendant that it could pay the lower residential rate because it was a small business was irrelevant to the issue of defendant’s statutory liability); DirecTV, LLC v. Spina, No. 1:15-cv-00104-JMS-TAB, 2016 U.S. Dist. LEXIS 116235, at *58-59 (S.D. Ind. Aug. 30, 2016) (same); Joe Hand Promotions, Inc. v. Zani, No. 11- C-43192013, U.S. Dist. LEXIS 144565, *4 (N.D. Ill. 2013) (defendants held liable for § 605 violation where DirecTV mistakenly set up residential account for commercial establishment); Joe Hand Promotions, Inc. v. That Place, LLC, No. 11-CV-931, 2012 Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 25 of 35 PageID: 2001 20 U.S. Dist. LEXIS 90536, at *4 (E.D. Wis. June 29, 2012) (even if “there was no unauthorized 'interception' because [defendant] was authorized to receive the Broadcast, the defendants have still violated the Act because they were not authorized to 'divulge or publish' the Broadcast to the patrons of a commercial establishment....”); National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 916 (6th Cir. 2001) (same). The Lonstein Defendants did not act fraudulently in that they merely advised Plaintiff of her potential liability to their client DirecTV and proposed a resolution, without pressing further. Additionally, the Lonstein Defendants’ demand letters cannot be fraudulent because they contain only statements of law and statements of fact within the knowledge of Plaintiff. Statements of law are not actionable as fraud. “It is well established . . . that misrepresentations of the law are not actionable as fraud, including under the mail and wire fraud statutes, because statements of the law are considered merely opinions and may not be relied upon absent special circumstances.” Va. Sur. Co. v. Macedo, No. 08-5586, 2009 U.S. Dist. LEXIS 90603, at *23 (D.N.J. Sep. 30, 2009) quoting Sosa, 437 F.3d at 940. Similarly, the Lonstein Defendants did not engage in theft by extortion. The statute requires a defendant to have actually obtained property6 and Plaintiff 6 See N.J. Stat. § 2C:20-5; Winters v. De Rosa, No. 04-736 (JBS), 2005 U.S. Dist. LEXIS 46020, at *27 (D.N.J. Mar. 18, 2005). Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 26 of 35 PageID: 2002 21 admittedly paid no money to the Lonstein Defendants (Joaquin Dep. at 68:6-9), and she cannot identify any interference with her property. Further, the alleged threat of litigation via demand letter is legally insufficient to support a claim of extortion and is therefore not a predicate act. DirecTV, Inc. v. Weikel, No. 03-5300, 2005 U.S. Dist. LEXIS 9902, at *15 (D.N.J. May 25, 2005) (“RICO statute does not contemplate that asserting a potential legal cause of action or settling potential or existing litigation could be construed as constituting a predicate act.”); DirecTV, Inc. v. Karpinsky, 269 F. Supp.2d 918, 929-930 (E.D. Mich. 2003), vacated in part on other grounds, 274 F. Supp.2d 918 (E.D. Mich. 2003); Sosa v. DIRECTV, Inc., 437 F.3d 923, 939–940 (9th Cir. 2006)(“we do not believe the Hobbs Act imposes liability for threats of litigation where the asserted claims do not rise to the level of a sham.”); United States v. Pendergraft, 297 F.3d 1198, 1208 (11th Cir.2002)(“threat to file litigation…even if made in bad faith…was not “wrongful” within the meaning of the Hobbs Act…[t]hus the allegations for conspiracy to commit extortion and … extortion fail as a matter of law.”); I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267 (8th Cir. 1984) (holding that groundless threats of litigation cannot constitute extortion under the Hobbs Act); Winsome Shoppe, Inc. v. Cynwyd Inv., No. 91-7013, 1992 U.S. Dist. LEXIS 16715, at *12 (E.D. Pa. Nov. 3, 1992) (same); Peterson v. Phila. Stock Exch., 717 F. Supp. 332, 336 (E.D. Pa. 1989)(“The ordinary resort to legal process does not rise to the level of a “wrongful use” of force or fear.”). Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 27 of 35 PageID: 2003 22 Further, the letters cannot be construed as furthering an extortion scheme as they did nothing more than demand $10,000, which is the amount of the damages DirecTV is entitled to under this strict liability statute. 47 U.S.C. § 605(e)(3)(C)(i)(II); Alvarez, 2017 U.S. Dist. LEXIS 159133, at *5 n.5. As the Third Circuit instructs, it is not the case that every business dispute can be turned into a RICO case simply by invoking the mail fraud statute. Brokerage Concepts v. U.S. Healthcare, 140 F.3d 494, 529 (3d Cir. 1998) (“[D]efendant’s heavy- handed business tactics . . . cannot be made to fit within the statutory and doctrinal constraints of the mail and wire fraud statutes.”). Plaintiff’s inability to identify any actual fraudulent conduct confirms that NJ RICO has no application to the fact pattern that underlies this case. The Lonstein Defendants’ routine attorney correspondence on behalf of their client is not improper and is not a predicate act for RICO purposes, and therefore cannot support the putative class members’ NJ RICO claim. b. The Lonstein Defendants did not engage in a pattern of racketeering activity Certification is also inappropriate because Plaintiff cannot prove a pattern of racketeering activity since she cannot identify two separate predicate acts by the Lonstein Defendants. United States v. Vastola, 670 F. Supp. 1244, 1257 (D.N.J. 1987) (RICO pattern requires two separate events). Plaintiff’s allegation that Lonstein Defendants committed mail fraud by sending two letters addressing the same issue concerning her unauthorized commercial exhibition of DirecTV programming are not Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 28 of 35 PageID: 2004 23 two discrete acts for purposes of the statute - even assuming such letter was a predicate act in the first place. DirecTV, Inc. v. Cavanaugh, 321 F. Supp.2d 825, 839 (E.D. Mich. 2003) (dismissing RICO claim based on DirecTV’s having sent two letters seeking to enforce its rights). Plaintiff only received two letters, and the Lonstein Defendants never filed any lawsuit against her. Thus, the alleged short lived scheme is insufficient to support a claim under the statute. See Ball, 141 N.J. at 168 (the pattern of racketeering activity “should be, or threaten to be, ongoing” and that “some degree of continuity, or threat of continuity, is required and is inherent”); see also Galicki v. New Jersey, No. 14-169, 2016 U.S. Dist. LEXIS 126076, *1 (D.N.J. September 15, 2016) (dismissing class action NJ RICO claim, with prejudice, on the same grounds as Ball). Accordingly, Plaintiff cannot support her claim that the Lonstein Defendants engaged in a pattern of racketeering activity to support a NJ RICO claim. c. The Class Members did not suffer harm through the imposition of an unlawful debt as there was no debt imposed As the final basis of her common question of fact and law, Plaintiff contends that the Lonstein Defendant imposed an unlawful debt by mailing the August 6 and 17, 2015 demand letters informing Plaintiff of DirecTV’s claim for misuse of programming, seeking to avoid litigation by amicably resolving the claim. However, the threat of litigation and a demand for money derived from violation of a statute is Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 29 of 35 PageID: 2005 24 not the equivalent of an unlawful debt. Beauvoir, 794 F.3d at 247; Zimmerman, 834 F.2d at 1168 Therefore, this common question also fails. d. The Class Claims do not Predominate Plaintiff claims that “the factual and legal basis for their claims are nearly identical…” (Dkt No. 101-1, pg. 14.) In support of predominance, Plaintiff purports that the class consists of consumers who had their service installed, and thus “authorized” by a DirecTV agent to receive services, and were threatened with costly lawsuits if they did not pay the amount demanded. Id (emphasis added). However, this definition is different than that of the defined class, which was specifically narrowed to include only those members that were “sent correspondence by the Lonstein Defendants regarding allegedly unauthorized use by the business of residential or non-commercial DirecTV satellite television services. . . .” Either way, as there is no evidence that the correspondence or supposed threats were uniform in each of the class members, class certification must be denied. D. BECAUSE NJ RICO REQUIRES INDIVIDUALIZED PROOFS, CLASS CERTIFICATION IS IMPROPER “[T]o successfully prosecute a RICO claim, it is well settled that a plaintiff must make a showing regarding scienter.” Agostino v. Quest Diagnostics Inc., 256 F.R.D. 437, 457 (D.N.J. 2009); See United States v. Boyer, 694 F.2d 58, 60 (3d Cir.1982); United States v. Pearlstein, 576 F.2d 531, 537 (3d Cir.1978) (in prosecution for mail fraud government must prove willful participation in fraudulent Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 30 of 35 PageID: 2006 25 scheme with knowledge of its falsity). “A plaintiff must show that the defendant had the specific intent to defraud, which can be shown through actual knowledge or “may be found from a material misstatement of fact made with reckless disregard for the truth”…A court may deny certification where proof of an essential element of a cause of action requires individualized inquiry into the facts underlying the plaintiff's claim.” “Agostino, 256 F.R.D. at 457 (internal citations omitted). Here, to succeed on their NJ RICO claim, each class member would need to show that: 1) they received initial service and installation of programming equipment by DirecTV or Verizon, 2) they did not authorize residential services be provided to their commercial establishment, 3) that the class member’s business underwent a similar auditing by SAI to determine the type of programming being displayed to commercial customers, 4) that DirecTV determined that the purported class members were unauthorized to receive the residential services, and in that, retained the services of LLO, 5) the class members received correspondence from LLO seeking to resolve their claims of misuse, and 6) that the correspondence made an actual demand for monetary damages to resolve the claim. The factual circumstances, alleged damages, questions of liability, and Plaintiff’s burden of proving scienter necessitates individualized analysis precluding class certification. In Agostino v. Quest Diagnostics Inc., this Court refused to grant class certification because a transaction by transaction inquiry into each class member Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 31 of 35 PageID: 2007 26 would have been required. No. 04-4362, 2010 U.S. Dist. LEXIS 135310, at *13-14 (D.N.J. Dec. 22, 2010). In Agostino, the plaintiffs alleged that a laboratory service billed certain customers in excess of their insurers’ determination of their financial responsibility, expressed in a form known as an Explanation of Benefits (“EOB”). Denying class certification, the Court concluded that: A hypothetical judgment in favor of Plaintiffs on the RICO claim would not illuminate class membership in the slightest. A transaction by transaction inquiry would still need to be performed as to all customers who paid Quest more than the EOB amount to determine whether a customer had been defrauded, that is, whether Quest acted with scienter as to him or her. Id. at *50 (emphasis added). So too here, Plaintiff is required to show scienter with regard to each class member’s transaction. Plaintiff cannot do so, since her claims reflect only her own interactions with DirecTV, Verizon, and the Lonstein Defendants and may not reflect the varied interactions had by other members of the putative class. If class certification was granted, the Court would need to hold evidentiary hearings as to each class member’s dealings with the parties, including, but not limited to, how they first received DirecTV programming, their interactions with the installer technicians who serviced their establishment, and their consent, or lack thereof, to receive non- commercial services, as well as whether each establishment was visited by SAI to conduct an audit, and the results thereof. Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 32 of 35 PageID: 2008 27 Clearly, individual questions of injury and causation would overwhelm any common issues, which would require the Court to make possibly 245 judicial determinations to answer Plaintiff’s common questions. This alone supports the Court denying class certification. See Johnston v. HBO Film Mgmt., Inc., 265 F.3d 178, 189 (3d Cir. 2001) (RICO certification denied because scienter required individualized treatment). E. THE COURT SHOULD DISREGARD OR STRIKE EXHIBIT A TO THE SECOND AMENDED COMPLAINT In support of her motion, Plaintiff seeks to buttress her insupportable claims by relying on the proffered declaration of Craig Spencer (the “Spencer Dec.”), attached to her Second Amended Complaint. (Dkt. No. 59, Ex. A.)7. The Spencer Dec. was submitted in an unrelated action DirecTV successfully prosecuted against an Indiana business for violation of the Federal Communications Act. Spina, 2016 U.S. Dist. LEXIS 116235. The Spencer Dec. should be disregarded or stricken under Rule 12(f) for three separate reasons. First, Mr. Spencer’s assertions about conduct by DirecTV and Lonstein Defendants in connection with an Indiana business have no bearing on alleged conduct involving Plaintiff or other New Jersey consumers. Second, Mr. Spencer does not identify any conduct by any of the Lonstein Defendants that would 7 Plaintiff appears to incorrectly refers to the Spencer Dec. as an “exhibit deposition testimony and other filings in a previous action.” (Dkt No. 101-1, pg. 4.) Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 33 of 35 PageID: 2009 28 even remotely support Plaintiff’s claims herein. In fact, Mr. Spencer explained that he communicated with Ms. Lonstein only after she was retained to represent DirecTV in a litigation it brought against a customer. This underscores that Ms. Lonstein there, as here, acted solely as an attorney and would not have caused any damages claimed by the customer based on any alleged conduct of DirecTV in contracting for services. Third, in Spina, the court actually granted summary judgment in favor of DirecTV and declined to consider the Spencer Dec. Thus, the Spencer Dec. does not present any basis to grant class certification. CONCLUSION For the foregoing reasons, the Court should deny Plaintiff’s motion for class certification and it should instead grant the Lonstein Defendants’ Rule 56 motion and dismiss this action with prejudice. LEWIS BRISBOIS BISGAARD & SMITH LLP By:/s/ Jeffrey Spiegel Jeffrey Spiegel Peter Shapiro Attorneys for Defendants Lonstein Law Office, P.C., Julie Cohen Lonstein, and Wayne Lonstein One Riverfront Plaza Newark, New Jersey 07102 973-577-6260 Jeffrey.spiegel@lewisbrisbois.com Peter.shapiro@lewisbrisbois.com Dated: August 21, 2018 Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 34 of 35 PageID: 2010 29 CERTIFICATE OF SERVICE Jeffrey Spiegel, an attorney duly admitted to practice before this Court, certifies that on August 21, 2018, he caused to be served and filed via ECF Defendants Lonstein Law Office, P.C., Wayne Lonstein and Julie Cohen Lonstein’s Memorandum of Law in Support of Their Opposition to Plaintiff’s Motion for Class Certification. I am aware that if any of the foregoing statements made by me are willfully false, I am subject to punishment. /s/ Jeffrey Spiegel Jeffrey Spiegel Case 3:15-cv-08194-MAS-DEA Document 108 Filed 08/21/18 Page 35 of 35 PageID: 2011