`
`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW JERSEY
`
`
`
`JILL CLARK, on behalf of herself and
`others similarly situated,
` Plaintiff,
`
` v.
`SAMSUNG ELECTRONICS AMERICA,
`INC.,
` Defendant.
`
`
`
`Civil Action No.:
`2:20-cv-12969-WJM-MF
`
`
`OPINION
`
`
`
`WILLIAM J. MARTINI, U.S.D.J.:
`Plaintiff Jill Clark (“Plaintiff”) brings this putative class action against Defendant
`Samsung Electronics America, Inc. (“Defendant”). This case was originally filed in the
`United States District Court for the Central District of California (the “California District
`Court”) in a case currently captioned Baclija v. Samsung Electronics America, Inc., Case
`No. 5:16-CV-01953-DMG-KK as part of a broader putative class action, and, pursuant to
`that court’s order, was subsequently transferred to this Court. ECF No. 115. Plaintiff
`alleges, among other things, that through marketing campaigns related to certain of its
`cellular telephone products, Defendant violated both the New Jersey Consumer Fraud Act
`(“NJCFA”), N.J.S.A. § 56:8-1, et seq. and the Magnuson-Moss Warranty Act (“MMWA”),
`15 U.S.C. §§ 2301-2312, and is further liable for common law fraud and unjust enrichment.
`This matter comes before the Court on Defendant’s motion to dismiss the Second Amended
`Complaint (the “Motion”). ECF No.139. For the reasons set forth below, the Motion is
`GRANTED.
`BACKGROUND
`I.
`A. Factual Background1
`Defendant is a manufacturer of electronic products incorporated under the laws of
`New York with a principal place of business in New Jersey. SAC ¶ 6; McBeth Decl. ¶ 2,
`ECF No. 76. Beginning in 2016, Defendant began selling its popular “Galaxy S7” series
`of cellphones.2 SAC ¶ 14. As part of its marketing efforts to promote sales of the Galaxy
`
`1 Unless otherwise indicated, all facts in this section are taken from the Second Amended
`Complaint (the “SAC”), ECF No. 79-1.
`2 The Galaxy S7 series actually consists of three separate devices: the Galaxy S7, the Galaxy S7
`Edge, and the Galaxy S7 Active. The SAC does not differentiate between these products, and
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 2 of 10 PageID: 7182
`
`S7, Defendant engaged in a national advertising campaign highlighting the Galaxy S7’s
`features, including its ability to resist water damage in up to five (5) feet of water for up to
`thirty (30) minutes. Id. ¶ 18. Among these advertisements were television commercials
`featuring people pouring champagne onto a Galaxy S7, dunking a Galaxy S7 in, or spraying
`a Galaxy S7 with, water, and using a Galaxy S7 while engaged in water-based sporting
`activities such as snorkeling, kayaking, and surfing. Id. ¶ 19. Defendant’s website also
`prominently featured the Galaxy S7 and stated that the phones were water-resistant. Id. ¶
`20.
`
`On or about December 27, 2017, after seeing advertisements and promotional
`materials describing its water resistance, Plaintiff purchased a Galaxy S7 from a third-party
`electronics retailer. Id. ¶¶ 32-33. Plaintiff alleges that she would not have purchased a
`Galaxy S7 but-for the phone’s water-resistant features and Defendant’s representations
`with respect thereto. Id. ¶¶ 33-34. Upon purchasing her Galaxy S7, Plaintiff alleges the
`phone was not as water resistant as Defendant advertised, and that it would begin “acting
`strange” whenever it was exposed to water. Id. ¶ 35. For example, Plaintiff alleges that the
`phone would go “‘haywire,’ with a flashing and jumping screen,” whenever Plaintiff used
`her phone while her hand was wet, and that if a single drop of water were on the phone’s
`screen, she would have to shut the phone off completely “dry it off, wait, and restart it.”
`Id. Plaintiff contacted Defendant by phone and complained about these issues but alleges
`that Defendant did not address her concerns, did not follow up on her complaints, and
`refused to provide in-warranty repairs or offer replacement devices. Id. ¶¶ 36-37.
`Plaintiff further alleges that the structural design of the Galaxy S7 itself suggests
`that, despite its advertisements to the contrary, Defendant knowingly manufactured the
`Galaxy S7 to not be water-resistant. Id. ¶ 38. Specifically, Plaintiff alleges that the internal
`components of a Galaxy S7 feature white moisture-detecting stickers that turn a pinkish
`color upon exposure to any moisture or liquid. Id. Plaintiff claims that these stickers do not
`contribute to the Galaxy S7’s functionality but are merely indicators to repair technicians
`that the device was exposed to moisture or liquid. Id. ¶ 39. In addition, Plaintiff alleges that
`the Galaxy S7’s circuit board is not protected by a “water-repellant coating” and that the
`“gaskets and seals adjoining the [Galaxy S7’s] enclosure deteriorate with ordinary usage”
`rendering the enclosure “incapable of protecting the circuit board from damage caused by
`direct exposure to saltwater or jets of water.” Id. ¶ 40.
`B. Procedural History
`This case has a long and complicated procedural history. As such, the Court will
`briefly recount the posture of this case only to the extent necessary for the resolution of the
`instant Motion.
`On September 9, 2016, this putative class action was commenced by the filing of a
`complaint in the United States District Court for the Central District of California. The
`
`unless otherwise specified, this Opinion refers to these devices collectively as the “Galaxy S7.”
`
`2
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 3 of 10 PageID: 7183
`
`Complaint, and the subsequently filed First Amended Complaint, sought to pursue claims
`on behalf of both a nationwide class and California subclass of individuals who purchased
`Galaxy S7 devices. However, after several motions to dismiss and to compel arbitration,
`Defendant consented to the filing of the Second Amended Complaint pursuant to a
`stipulation with the then-named plaintiffs Dulce Alondra Velasquez-Reyes and Ken
`Shalley (the “Stipulation”), ECF No. 79, which was approved and entered by the California
`District Court on May 18, 2020. ECF No. 82. The Stipulation provided, among other
`things, for the filing of the Second Amended Complaint on the conditions that the plaintiffs
`remove their nationwide class allegations and would not seek leave to further amend the
`Complaint. Stipulation at 3.
`Following entry of the Stipulation, the plaintiffs filed the SAC. The SAC removed
`the nationwide class allegations, removed Ken Shalley as a named plaintiff, and added two
`new named plaintiffs, Martin Baclija and the Plaintiff in this action, Jill Clark.3 Along with
`the addition of Clark as a named plaintiff, the SAC sought to pursue claims on behalf of
`two putative classes: (1) a class comprised of individuals who purchased Galaxy S7 devices
`in California; and (2) a class comprised of individuals who purchased Galaxy S7 devices
`in New Jersey. Following Defendant’s motion to dismiss the SAC, and Plaintiff’s
`unopposed cross motion to transfer venue, the claims of the putative New Jersey class, lead
`by Plaintiff as named representative, were severed from the California action and
`transferred to this Court. Before the Court now is Defendant’s motion to dismiss the SAC.
`LEGAL STANDARD
`II.
`A. Dismissal for Lack of Subject Matter Jurisdiction
`Under Rule 12(b)(1) of the Federal Rules of Civil Procedure (“FRCP”), a case may
`be dismissed “for lack of subject matter jurisdiction.” Fed. R. Civ. P. 12(b)(1). Where, as
`here, the Court’s subject matter jurisdiction is challenged, the party invoking the Court’s
`jurisdiction, here Plaintiff, bears the burden of persuasion. Frederico v. Home Depot, 507
`F.3d 188, 193 (3d Cir. 2007). A challenge to the Court’s subject matter jurisdiction may be
`either “facial” or “factual.” In re Schering Plough Corp. Intron/Temodar Consumer Class
`Action¸678 F.3d 235, 243 (3d Cir. 2012) (citing Mortensen v. First Fed. Sav. & Loan Ass’n,
`549 F.2d 884, 891 (3d Cir. 1977)). A facial attack is one that challenges the legal
`sufficiency of the pleadings and asserts that, on its face, a given claim cannot invoke the
`subject matter jurisdiction of the Court because some jurisdictional defect is present, such
`as the absence of a federal question or any indication of a diversity of citizenship between
`the parties. Constitution Party of Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014). In
`considering a facial attack on its jurisdiction, a Court applies the same standard of review
`as a typical motion to dismiss brought under FRCP 12(b)(6): it “must only consider the
`allegations of the complaint and documents referenced therein and attached thereto, in the
`
`3 Shortly after the filing of the Second Amended Complaint, the parties agreed to the stipulated
`dismissal of Velasquez-Reyes, leaving only Baclija and Clark as the named plaintiffs in the case.
`ECF No. 97.
`
`3
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 4 of 10 PageID: 7184
`
`light most favorable to the plaintiff.” Schering Plough, 678 F.3d at 243 (quoting Gould
`Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000)). Assuming such allegations
`to be true, the Court must determine whether Plaintiff has alleged a plausible basis for the
`Court’s jurisdiction. See Schuchardt v. President of the United States, 839 F.3d 336, 344
`(3d Cir. 2016) (noting that in facial challenge to jurisdiction based on lack of standing
`under FRCP 12(b)(1), plaintiff must “allege facts that affirmatively and plausibly suggest
`that [he] has standing to sue”).
`A factual attack on the Court’s jurisdiction, however, is one based on the specific
`jurisdictional facts of the case. In other words, a “factual attack concerns the actual failure
`of a [plaintiff’s] claims to comport [factually] with the jurisdictional prerequisites.” CNA
`v. United States, 535 F.3d 132, 139 (3d Cir. 2008) (alterations in original). In making a
`factual attack on the Court’s subject matter jurisdiction, a defendant can submit proof that
`jurisdiction does not in fact exist, even though it may have been properly pleaded by the
`plaintiff in their complaint. Aichele, 77 F.3d at 358. As such, in considering a factual attack
`on its jurisdiction, the Court is not limited to the pleadings, and may weigh and consider
`outside evidence for itself to determine whether subject matter jurisdiction exists. Gould
`Elecs., Inc. v. United States¸220 F,3d 169, 176-77 (3d Cir. 2000). Importantly, unlike a
`facial attack, no presumption of truthfulness attaches to the plaintiff’s allegations of
`jurisdictional facts in a factual attack. CNA, 535 F.3d at 139.
`B. Dismissal for Failure to State a Claim
`FRCP 12(b)(6) provides for the dismissal of a complaint if the plaintiff fails to state
`a claim upon which relief can be granted. The movant bears the burden of showing that no
`claim has been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In
`deciding a motion to dismiss under FRCP 12(b)(6), “all allegations in the complaint must
`be accepted as true, and the plaintiff must be given the benefit of every favorable inference
`to be drawn therefrom.” Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011). The court
`need not accept as true “legal conclusions,” and “[t]hreadbare recitals of the elements of a
`cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v.
`Iqbal, 556 U.S. 662, 678 (2009).
`To survive a 12(b)(6) motion, “a complaint must contain sufficient factual
`matter . . . to ‘state a claim to relief that is plausible on its face.’” Id. (quoting Bell Atl.
`Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the
`plaintiff pleads factual content that allows the court to draw the reasonable inference that
`the defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not
`akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a
`defendant has acted unlawfully.” Id.
`DISCUSSION
`III.
`Defendant moves to dismiss each of the counts asserted against it in the Second
`Amended Complaint on two separate grounds: (1) the Court lacks subject matter
`jurisdiction to hear the claims; and (2) Plaintiffs have failed to sufficiently state a claim
`upon which relief can be granted. The Court will address each ground for dismissal in turn.
`
`4
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 5 of 10 PageID: 7185
`
`Dismissal for Lack of Subject Matter Jurisdiction
`A.
`The Court’s jurisdiction in this case is premised on the Class Action Fairness Act of
`2005 (“CAFA”), 28 U.S.C. § 1332(d). Under CAFA, federal district courts have original
`jurisdiction over class actions raising state law claims where: “(1) the amount in
`controversy exceeds $5,000,000, as aggregated across all individual claims; (2) any
`member of a class of plaintiffs is a citizen of a state different from any defendant; and (3)
`the class has at least 100 members.” Judon v. Travelers Prop. Cas. Co. of Am., 773 F.3d
`495, 500 (3d Cir. 2014) (citing § 1332(d)(2), (5)(B), (6)). Defendant argues that Plaintiff
`has failed to meet her burden that the jurisdictional prerequisites with respect to minimum
`diversity and the amount-in-controversy under CAFA have been met. Plaintiff responds
`that the allegations in the Complaint, as well as the evidence submitted with her opposition
`brief, are sufficient to establish CAFA jurisdiction. The Court agrees with Defendant.
`Defendant Raises a Facial Challenge to Jurisdiction
`1.
`In resolving a challenge to its subject matter jurisdiction over any claim, the Court
`must first determine whether the party challenging jurisdiction raises a “facial” or a
`“factual” attack “because that distinction determines how the pleadings must be reviewed.”
`Schering Plough, 678 F.3d at 243. Here, there appears to be some disagreement or
`confusion over the nature of Defendant’s jurisdictional challenge in this case and the
`governing standard. Defendant argues that Plaintiff has failed to sufficiently plead the
`necessary elements for jurisdiction under CAFA in the SAC and has further failed to show,
`by a preponderance of the evidence, that CAFA jurisdiction exists. In essence, Defendant
`appears to be making both a facial attack on the sufficiency of the SAC as well as a factual
`attack on jurisdiction. Plaintiff, meanwhile, argues that at this stage of the litigation,
`Defendant may only properly raise a facial attack, not a factual attack, and that, under any
`standard, jurisdiction exists in this case.
`Though stylized as both a facial and factual challenge to the Court’s jurisdiction,
`the Court finds that Defendant has raised a purely facial challenge to CAFA jurisdiction.
`Rather than raise any particular factual disputes, Defendant’s arguments rest almost
`entirely on the sufficiency of Plaintiff’s allegations in the SAC. Red Hawk Fire & Sec.,
`LLC v. Siemens Indus. Inc., 449 F. Supp. 3d 449, 458 (D.N.J. 2020); see, e.g., Mot. at 9-13
`(arguing that Plaintiff has not alleged any facts that support CAFA jurisdiction); Reply at
`7 n.6 (“Clark’s SAC failed to allege any facts showing jurisdiction, leaving Samsung with
`no specific facts to contest.”). Moreover, Defendant has not filed any answer to the SAC
`or controverted any of the factual allegations therein. Aichele, 757 F.3d at 358.4
`
`
`4 Defendant suggests that its prior answer to the original complaint suffices for purposes of
`bringing a factual attack to jurisdiction. The Court disagrees. First, Defendant’s prior answer did
`not relate at all to the New Jersey-based allegations raised by Plaintiff, who was not yet a party to
`the action. Second, as noted above, the clear thrust of Defendant’s argument focuses on the
`sufficiency of Plaintiff’s allegations, which, by definition, is a facial attack on jurisdiction.
`
`5
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 6 of 10 PageID: 7186
`
`Accordingly, the Court concludes Defendant’s challenge must be reviewed as a facial
`attack.
`
`Plaintiff Has Failed to Plausibly Allege CAFA Jurisdiction
`2.
`As noted above, in a facial attack on its subject matter jurisdiction, the Court must
`only consider the allegations in the SAC and any documents referenced therein or attached
`thereto. Schering Plough, 678 F.3d at 243. The Court is not permitted to look beyond the
`pleadings at this stage and weigh the evidence for itself.5 See Schuchardt, 839 F.3d at 343;
`see also Donovan v. Public Policy Ctr. of N.J., No. 05-1181 (MLC), 2006 WL 1373230,
`at *3 (D.N.J. May 17, 2006). In evaluating the sufficiency of the jurisdictional allegations
`in the SAC, the Court applies the same standard as in a motion to dismiss under FRCP
`12(b)(6): the Court assumes the well-pleaded factual allegations in the SAC, viewed in the
`light most favorable to Plaintiff, to be true and asks whether such allegations establish a
`plausible basis for invoking the Court’s jurisdiction under CAFA. Schuchardt, 839 F.3d at
`343. In so doing, the Court need not consider “mere conclusory statements,” and
`“speculative or conjectural assertions” will not suffice. Finkelman v. Nat’l Football
`League, 810 F.3d 187, 194 (3d Cir. 2016). Accordingly, the Court considers whether the
`SAC plausibly alleges each of the three necessary elements for jurisdiction under CAFA.
`Numerosity
`i.
`CAFA only confers jurisdiction over class actions in which there are at least one
`hundred (100) class members. The SAC alleges that the “Classes consist of thousands of
`consumers who purchased [Galaxy] S7 phones.” SAC ¶ 44. Though not explicit, a
`reasonable inference from this allegation is that there are at least one hundred (100)
`members of the putative New Jersey class. See Allen v. Quicken Loans, Inc., No. 17-12352
`(ES) (MAH), 2018 WL 5874088, at *12 (D.N.J. Nov. 9, 2018).
`ii. Minimal Diversity
`In addition to the one hundred-class member numerosity requirement, CAFA
`requires that at least one such class member be diverse from the defendant. 28 U.S.C. §
`1332(d)(2). Here, Defendant argues that the SAC fails to sufficiently allege minimal
`diversity because it does not identify or specifically allege the existence of any diverse
`party. Mot. at 9. Plaintiff responds by (1) pointing to her definition of the proposed New
`Jersey class as those who “purchased Galaxy S7 phones in,” rather than those who are
`“citizens of,” New Jersey; and (2) asking the Court to “infer” from this definition and U.S.
`census data that at least one person purchased a phone in New Jersey but, by the time the
`SAC was filed, was a citizen of another state. Opp. at 13-17.
`The Court agrees with Defendant and finds that Plaintiff has not adequately alleged
`minimal diversity. The “inferences” Plaintiff asks the Court to draw are not logical
`
`
`5 Thus, the Court will not consider the declarations and evidence submitted in connection with
`Plaintiff’s opposition to the Motion.
`
`6
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 7 of 10 PageID: 7187
`
`inferences derived from well-pleaded factual allegations in the SAC but are rather
`assumptions and speculations needed to fill the gaps therein. However likely it is that a
`member of the putative New Jersey class was a citizen of another state at the time the SAC
`was filed, such an allegation is simply not in the SAC and the Court will not premise its
`own jurisdiction on such assumptions. That is not to say that Plaintiff was required to trace
`the citizenship of every putative class member and specifically identify one diverse party.
`But Plaintiff was required to plead the existence of one such diverse class member. That
`Plaintiff failed to do.6
`iii. Amount-in-Controversy Requirement
`With respect to the amount-in-controversy requirement, the SAC is devoid of any
`specific allegations that would entitle the putative New Jersey class to the requisite
`$5,000,000 in damages. At no point in the SAC does Plaintiff attempt to quantify either
`her own damages or those of any putative class members by, for example, pleading the
`purchase price of Galaxy S7 devices, repair costs for water damage, or market prices for
`non-water-resistant phones. The sole reference in the SAC to the potential damages of the
`New Jersey class occurs in the context of a “threadbare recital” of the elements of CAFA
`jurisdiction. See SAC ¶ 11 (“[T]he combined claims of class members exceed $5,000,000,
`exclusive of interest, attorneys’ fees, and costs . . . .”). This assertion is no more than a
`mere conclusory statement that “is insufficient to establish subject matter jurisdiction
`without accompanying allegations of the underlying jurisdictional facts.” Sunshine v.
`Reassure Am. Life Ins. Co., No. 10-01030, 2011 WL 666054, at *2 (E.D. Pa. Feb. 22,
`2011); see also Allen, 2018 WL 5874088, at *12. Moreover, even if this assertion were
`sufficient, the SAC purports to assert claims on behalf of two distinct classes – a class of
`California purchasers as well as a class of New Jersey purchasers – yet does not
`differentiate between the claims of these separate classes (which are now being litigated in
`two different fora) for purposes of establishing jurisdiction. As such, even crediting
`Plaintiff’s assertion that the combined claims of “class members” exceeds the $5,000,000
`threshold, the Court is left with no basis to conclude or infer that the combined claims of
`members of the putative New Jersey class alone exceed that amount.
`Plaintiff points to the $569.99 price of a Galaxy S7 device advertised on
`Defendant’s web site, which is cited in the SAC for its references to the Galaxy S7’s water-
`resistant features, as support for her argument that “thousands of phones multiplied by all
`
`
`6 Plaintiff’s reliance on Gallagher v. Johnson & Johnson Consumer Cos., 169 F. Supp. 3d 598
`(D.N.J. 2016) for the proposition that the proposed definition of a putative class can resolve
`questions of minimal diversity in CAFA actions is misplaced. That case concerned the inverse
`situation as presented here: jurisdiction in federal district court under CAFA was challenged
`because a plaintiff had specifically limited the putative class to people who were citizens of a
`particular state. Id. at 603-04. The court did not conclude that the inverse was also true – that a
`plaintiff who defines a putative consumer class by “purchasers” rather than “citizens” is entitled
`to an assumption that the class includes citizens of different states.
`
`7
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 8 of 10 PageID: 7188
`
`or most of the $500+ purchase price” satisfies the amount in controversy requirement. This
`price, however, is insufficient on its own to plausibly suggest that the aggregate value of
`the claims of putative New Jersey class members exceeds $5,000,000. Plaintiff does not
`allege that either she or any putative class members actually paid this price, or any other,
`for their Galaxy S7 device, and, even assuming all such putative class members did pay
`$569.99 for their Galaxy S7, Plaintiff has not alleged any plausible basis for further
`assuming that “all or most” of that purchase price should be included in calculating the
`amount-in-controversy or that “thousands of phones” were indeed purchased by members
`of the putative New Jersey class (as opposed to the California putative class). These
`allegations are simply not in the SAC. Thus, the SAC does not provide the Court with any
`way to estimate the value of the claims of members of the putative New Jersey class.
`Accordingly, the Court concludes that Plaintiff has not sufficiently alleged a
`plausible basis for invoking the Court’s jurisdiction under CAFA.
`Dismissal for Failure to State a Claim
`B.
`Because the Court has determined that Plaintiff has not alleged facts sufficient to
`invoke this Court’s jurisdiction under CAFA such that dismissal is warranted under FRCP
`12(b)(1), it does not address whether dismissal of any of the claims in the SAC is also
`warranted for failure to state a claim upon which relief can be granted under FRCP
`12(b)(6). See Steel Co. v. Citizens for a Better Env’t¸523 U.S. 83, 93 (1998).
`Leave to Amend
`C.
`Perhaps the most significant issue in this case is whether Plaintiff ought to be
`allowed to seek further amendment of the SAC to correct the jurisdictional deficiencies
`identified above. Ordinarily, the Court would conclude that such amendment would be
`appropriate in this case because it seems likely that Plaintiff could properly allege sufficient
`facts to invoke the Court’s subject matter jurisdiction under CAFA. Complicating the
`matter, however, is the existence of the Stipulation between Defendant and the prior named
`plaintiffs entered into while this action was still pending before the California District
`Court. Defendant argues that the Stipulation should bind Plaintiff because it was necessary
`to secure the consent of Defendant to allow Plaintiff, and thus the New Jersey purchaser
`class allegations, to be added to the litigation in the first place. Plaintiff responds that she
`was not a party to the litigation at the time the Stipulation was entered into, did not sign
`the Stipulation, and that the order entered by the California District Court approving the
`Stipulation does not bind or otherwise limit the “broad inherent powers” of this Court to
`control its own docket and permit amendment of the SAC. The Court again agrees with
`Defendant.
`
`Plaintiff is Bound by the Terms of the Stipulation
`1.
`Although Plaintiff herself was not a signatory to the Stipulation, she was a clear,
`intended beneficiary thereof and should be bound thereby. “A consensual stipulation of the
`parties is ‘to be interpreted according to the general principles of contract construction.’”
`USX Corp. v. Penn Cent. Corp., 130 F.3d 562, 566 (3d Cir. 1997) (quoting Pittsburgh
`
`8
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 9 of 10 PageID: 7189
`
`Terminal Corp. v. Balt. & Ohio R.R. Co., 834 F.2d 249, 254 (3d Cir. 1987)). A third party
`may be treated as a third-party beneficiary of a contract where “the contracting parties
`intended that a third party should receive a benefit which might be enforced in the courts.”
`Atlas Commc’ns Tech., Inc. v. DXC Tech. Servs., LLC, No. 3:19-cv-19033-BRM-DEA,
`2020 WL 5105197, at *3 (D.N.J. Aug. 31, 2020) (quotations omitted).
`Here, it is clear that the Stipulation conferred a benefit on Plaintiff, enforced by the
`California District Court’s order approving the Stipulation, which allowed her to join this
`action and bring new claims on behalf of herself and the putative New Jersey class. The
`Stipulation mentions in both the introduction and the Recitals that the parties stipulated and
`agreed to allow the then-named plaintiffs to file the SAC to, among other things,
`specifically add Plaintiff as a party. Stipulation at 2-3. Moreover, Plaintiff is represented
`by the same counsel as had represented the then-named plaintiffs in the California District
`Court and who negotiated the terms of the Stipulation allowing Plaintiff to be added as a
`party. In other words, Plaintiff is not simply late to the party such that it would be unduly
`prejudicial or unfair to bind her to the terms of the Stipulation. Rather, her participation
`was anticipated by, and a direct result of, the terms of the Stipulation which were negotiated
`by her own attorneys and approved by the California District Court. Accordingly, Plaintiff
`was an intended beneficiary of the Stipulation and ought to be to bound thereby.
`There is No Basis for the Court to Set Aside the Stipulation
`2.
`Having determined that Plaintiff is bound by the terms of the Stipulation, the Court
`must next decide whether to set aside the terms of the Stipulation to permit Plaintiff to seek
`leave to amend the SAC. In the context of stipulations to facts prior to trials, the Third
`Circuit has held that stipulations entered into by the parties should not be set aside or
`modified unless enforcing the stipulation would result in “manifest injustice.” Waldorf v.
`Shuta, 142 F.3d 601, 618 (3d Cir. 1998). In determining whether there would be such
`manifest injustice, the Third Circuit considered “(1) the effect of the stipulation on the party
`seeking to withdraw the stipulation; (2) the effect on the other parties to the litigation; (3)
`the occurrence of intervening events since the parties agreed to the Stipulation; and (4)
`whether evidence contrary to the stipulation is substantial.” Id. at 617-18. Though not
`precisely analogous to the Stipulation at issue in this case, the Court finds the Third
`Circuit’s reasoning helpful.
`Here, Plaintiff has not shown that enforcing the Stipulation’s prohibition against
`further amendments to the SAC would result in “manifest injustice” such that she should
`be free from its terms. First, as noted above, Plaintiff’s participation in this case is itself a
`direct consequence of the Stipulation. That the Stipulation may require dismissal rather
`than amendment of the SAC does not change the fact that Plaintiff has already received the
`benefit of the Stipulation. Plaintiff should not be able to retain the benefits of the Stipulation
`by participating in this litigation and asserting a whole new set of class claims while
`remaining free of the negotiated burdens thereof. See id. at 618-19 (“[A] party may not be
`freed of the burdens of a stipulation while maintaining its benefits.”).
`
`9
`
`
`
`Case 2:20-cv-12969-WJM-MF Document 148 Filed 01/29/21 Page 10 of 10 PageID: 7190
`
`Likewise, Plaintiff was the only named representative pursuing the New Jersey-
`based class allegations. None of the other plaintiffs in this action had any connection to
`New Jersey, and neither the original Complaint nor the First Amended Complaint
`contained any allegations on behalf of a putative New Jersey class. Plaintiff therefore not
`only had the opportunity to make specific, well-pleaded factual allegations to support
`jurisdiction under CAFA with respect to the New Jersey claims in the SAC, but also had a
`clear need to do so. That Plaintiff failed to adequately plead the elements of this Court’s
`jurisdiction is not itself a reason to ignore the terms of a Stipulation barring further
`amendment of the SAC.
`Indeed, permitting amendment in this case would likely result in manifest injustice
`towards Defendant. Defendant negotiated the Stipulation permitting the filing of the SAC
`on clear, unambiguous conditions, including that no further amendments be sought.
`Allowing yet another amendment of the Complaint at this stage of the litigation would be
`essentially punishing Defendant for consenting to the filing of the SAC in the first place.
`Nor does the subsequent severance and transfer of the New Jersey class claims to
`this Court warrant a different result. The pleading deficiencies with respect to the Court’s
`jurisdiction over the New Jersey claims would have been present regardless of whether the
`claims were transferred or remained in the California District Court.
`Finally, the Court notes the importance of stipulations and parties’ confidence
`therein to the integrity of the judicial system and the efficient use of judicial resources. Id.
`at 616. The decision to set aside or modify a stipulation should not be made lightly, and
`the Court concludes that the circumstances of this case do not warrant such a result.
`Accordingly, the Court denies Plaintiff’s request for leave to amend the SAC, and
`concludes that dismissal without prejudice is warranted.
`CONCLUSION
`IV.
`For the reasons set forth above, Defendant’s Motion is GRANTED. An appropriate
`order follows.
`
`
`
`
`
`
`
`
`
`
`Date: January 29, 2021
`
`
`
`
`
`
`
`
`
`
`
`/s/ William J. Martini
`WILLIAM J. MARTINI, U.S.D.J.
`
`
`
`
`
`10
`
`