Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. N.Y.: Class certification granted in action over dating service fraud, (May 15, 2014)

By Linda O’Brien, J.D., LL.M.

A national class of clients of It’s Just Lunch International (IJL) was certified by the federal district court in New York City to pursue fraud claims against the matchmaking and dating service provider. However, the court denied class certification to the national class for purposes of unjust enrichment claims (Rodriguez v. It’s Just Lunch, International, May 14, 2014, Stein, S.).

Christine Rodriguez and several other consumers entered into contracts with IJL for dating services. The consumers filed a class action suit against IJL and its franchisees, Harry and Sally, Inc. and IJL New York City Franchise, alleging fraud and deceptive business practices in violation of the New York General Business Law. Specifically, the plaintiffs alleged that IJL fraudulently induced them to enter into contracts by representing the customers would receive multiple matches for dates, did not deliver the promised services, and were unjustly enriched by their conduct. The plaintiffs moved for class certification.

National class. In granting the plaintiffs’ motion in part, the court certified a class of persons who were or are clients of IJL who signed a contract with IJL. To justify class certification, the plaintiffs’ proposed class was sufficiently numerous to make joinder impractical based on the plaintiffs’ estimate that more than 10,000 individuals purchased the defendants’ services annually during the proposed class period, according to the court. Also, the plaintiffs’ claims that IJL and its franchises deceived by using a uniform sales script during customer intake interviews raised common questions of law or fact. Further, the class was ascertainable through IJL’s records, and the representative parties and counsel would fairly and adequately represent the class, the court noted.

Fraud. The plaintiffs provided substantial evidence that IJL employees’ misrepresentations about multiple matches were materially uniform to all class members. They demonstrated that they could prove reliance through common evidence since the multiple match misrepresentations were essential in inducing customers to sign a contract. Moreover, a class action was superior to other methods in adjudicating the plaintiffs’ fraud claims and variations in state laws regarding fraud did not preclude a finding of predominance on common issues.

Unjust enrichment. However, the variations in state unjust enrichment laws precluded a finding that issues common to their unjust enrichment claims predominated over individual issues, the court determined. The variations in state laws also caused difficulties in managing a class action. Thus, a class action was not a superior means of adjudicating the unjust enrichment claims of the proposed national class.

State class. The court also certified a class of persons who became clients of IJL and Harry and Sally, Inc. in New York and paid more than $1,000 for services for a year. The proposed state class was sufficiently numerous to make joinder impractical based on the plaintiffs’ estimate that more than 3,600 individuals paid more than $1,000 for his or her membership in IJL. The plaintiffs provided evidence that New York franchises routinely charged clients $1,500 for one year of services by urging them to simultaneously execute two separate six-month agreements for $1,000 and $500, respectively. Moreover, it was undisputed that the defendants entered into a settlement with the state attorney general for violations of the New York General Business Law over its offer to consumers of the two consecutive six-month memberships.

The plaintiffs also demonstrated that common questions of law or fact predominate over any questions affecting only individual members regarding the state fraud and unjust enrichment claims, according to the court. The defendants’ policy of charging more than $1,000 for one year of service was per se illegal, and therefore, deceptive as a matter of law. The fact that some prospective class members may have received credits or refunds did not preclude class certification. Finally, because IJL’s policy was both uniform and illegal, the issue of equity and restitution could be demonstrated on a class-wide basis, the court concluded.

The case is No. 07- Civ. 9227.

Attorneys: John Balestriere (Balestriere Fariello) for Christine Rodriquez. John J. Doody (Lewis Brisbois Bisgaard & Smith LLP) for It's Just Lunch Intl., It's Just Lunch, Inc., and Harry and Sally, Inc. Arthur J. Margulies (Jones Day) for Riverside Company, and IJL New York City Franchise.

Companies: It’s Just Lunch, International; It’s Just Lunch, Inc.; Harry and Sally, Inc.; IJL New York City Franchise

Cases: StateUnfairTradePractices NewYorkNews