Challenges to Drink Pricing at TGI Fridays and Carrabba’s Get Mixed Results

Plaintiffs in two consumer class action lawsuits against TGI Fridays and Carrabba’s restaurants received mixed results this week from a consolidated appeal to the New Jersey Supreme Court.

In a majority opinion by Justice Anne M. Patterson, the court upheld decisions by lower appeals courts denying the plaintiffs’ motions for Class certification.

However, the court reversed the denial of Class certification against defendant OSI Restaurant Partners LLC, the owners and operators of Carrabba’s restaurants, where plaintiffs allege they were charged different prices for identical beverages.

Plaintiffs in both consumer class action lawsuits respectively allege that TGI Fridays and Carrabba’s restaurants violate New Jersey consumer protection laws in the way they present their drink pricing to customers.

In the TGI Fridays action, plaintiffs Debra Dugan and Alan Fox take issue with the chain’s failure to disclose their drink prices on their menus. Carrabba’s restaurants, according to plaintiff Ernest Bozzi, make a practice of charging different prices for the same beverage at different times.

Both sets of plaintiffs argue that the restaurants’ pricing practices are in violation of the New Jersey Consumer Fraud Act and the Truth in Consumer Contract, Warranty and Notice Act. In both cases, the trial courts granted certification for the plaintiffs’ proposed Classes. Those grants were then reversed on appeal, and the plaintiffs appealed those reversals to the Supreme Court.

Justice Patterson rejected Dugan and Fox’s Class certification arguments based on their theory of how to determine damages.

In the course of litigation, market research disclosed by TGI Fridays allegedly showed a finding that customers paid an average of $1.72 less when they were informed of beverage prices. Dugan and Fox sought to use that research as the basis for their assertion that each proposed Class Member suffered an ascertainable loss of $1.72.

But Justice Patterson determined this theory is a “price inflation” theory that does not meet the requirements for Class certification under the CFA.

Other court decisions have found that theories like price inflation or “fraud on the market,” which calculate damages based on broad market research, are “no substitute for proof of the actual claimants’ ascertainable loss and causation.” Therefore Dugan and Fox failed to establish that Class-wide issues predominate over individualized issues with respect to their CFA claim.

Bozzi’s proposed Class, on the other hand, focused Carrabba’s customers who were charged different prices for the same beverage during a single visit. Justice Patterson found that Class definition met all the requirements for certification and reversed the appeals court’s denial.

But neither Bozzi nor Dugan and Fox could establish predominance to support their TCCWNA class action claims, according to Justice Patterson. The plaintiffs argued that TGI Friday’s and Carrabba’s violated that statute by failing to disclose their drink prices on a menu. But Justice Patterson held that while the TCCWNA applies to contracts, warranties, notices and signs, it does not apply to cases in which a defendant fails to provide a required writing.

A dissenting opinion by Justice Barry T. Albin countered that Dugan and Fox’s theory of damages is adequate, as it reveals “an ascertainable loss per person causally related to TGIF’s unlawful practice of not disclosing prices.”

Justice Albin also disagreed that the plaintiffs failed to state a claim under the TCCWNA. He said the court’s decision will make it more difficult for large Classes of consumers to seek a common remedy against corporate defendants.

Dugan and Fox are represented by attorneys Sander D. Friedman and Wesley Hanna of Law Office of Sander D. Friedman LLC. Bozzi is represented by Sander D. Friedman and Donald M. Doherty, Jr.

The TGI Fridays and Carrabba’s Drink Pricing Class Action Lawsuits are Dugan, et al. v. TGI Fridays Inc., et al., Case No. 077567, and Bozzi v. OSI Restaurant Partners LLC, Case No. 077556, both in the New Jersey Supreme Court.