LOCAL BAKING PRODUCTS INC v. WESTFIELD RENTAL MART INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

LOCAL BAKING PRODUCTS, INC.,

individually and as the

representative of a class of

similarly situated persons,

Plaintiff-Appellant,

v.

WESTFIELD RENTAL MART, INC.,

d/b/a PARTY STOP COSTUME

CORNER, a/k/a, WESTFIELD

RENTAL MART, INC.,

Defendant,

and

FARMERS INSURANCE COMPANY

OF FLEMINGTON,

Defendant/Intervenor-

Respondent.

_______________________________

June 23, 2014

 

 

Before Judges Sapp-Peterson and Lihotz.

 

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4701-09.

 

Andrew T. Fede argued the cause for appellant (Archer & Greiner, P.C., attorneys; Mr. Fede, on the briefs).

 

Paul Piantino, III, argued the cause for respondent (White and Williams, LLP, attorneys; Mr. Piantino, of counsel and on the brief; Geoffrey F. Sasso and Theo Tsakalis, on the brief).

 

PER CURIAM

Plaintiff Local Baking Products, Inc. (Local Baking) filed a class action complaint on its behalf and all others who received unsolicited facsimile transmissions from defendant Westfield Rental Mart (Rental Mart), in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C.A. 227 (the underlying class action litigation). Following the entry of a consent judgment between Local Baking and Rental Mart, Farmers Insurance Company of Flemington (Farmers), Rental Mart's insurer under a Business Owner's Policy, moved to intervene in the underlying class action litigation. The trial court granted Farmers' motion allowing permissive intervention and also decertified the class of plaintiffs relying on this court's opinion in Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., 421 N.J. Super. 268 (App. Div.), certif. denied, 209 N.J. 96 (2011). Thereafter, the judge dismissed Local Baking's complaint.

Local Baking appeals from that order, arguing Farmers' request to intervene was erroneously granted as it was untimely and the final judgment was unjustifiably vacated. Local Baking also challenges the application of the Kosher Bagel holding. After analyzing the unique facts of this matter, we reject Local Baking's arguments and affirm the order granting permissive intervention and decertification of the class. However, we reverse the order dismissing Local Baking's complaint with prejudice.

Before addressing the merits of the issues presented on appeal, we recite the undisputed facts and procedural history surrounding the underlying class action litigation and a related declaratory judgment action initiated by Farmers against its insured, Rental Mart. We will also briefly review Local Baking's claims under the TCPA and our holding in Kosher Bagel.

On June 5, 2009, Local Baking, individually and on behalf of others similarly situated, filed a complaint in the underlying class action litigation in Essex County. Local Baking alleged Rental Mart violated the TCPA and committed conversion when it faxed two unsolicited advertisements on December 20 and 27, 2005 (junk faxes). The TCPA provides a private right of action to recover damages of $500 per violation when junk faxes are sent. Local Baking's complaint alleged junk faxes were sent to more than thirty-nine others and maintained it was the representative of the putative class of plaintiffs.

Rental Mart requested its insurer Farmers to provide a defense under the terms of a Business Owner's Policy in effect from May 22, 2005 to May 22, 2006. By letter dated June 29, 2009, Farmers disclaimed coverage, asserting the policy excluded coverage for the claim, and it was "taking no action to protect [Rental Mart] in this legal matter."

Local Baking's out-of-state counsel submitted a November 9, 2009 demand letter directly to Farmers, seeking tender of the two million dollar policy limits to satisfy the putative plaintiffs' claims. Farmers' counsel responded to the demand letter, advising all written and oral communication must be directed to him, not the client. Emails between the attorneys were exchanged in November 2009, wherein Farmers reaffirmed its prior decision to disclaim coverage. No further communication occurred.

On January 7, 2010, Local Baking and Rental Mart entered into a written agreement settling the underlying class action litigation. Rental Mart stipulated it had hired a fax broadcaster, which sent 30,434 unsolicited advertisements to 16,983 persons. The parties agreed to compromise their claims and defenses by consenting to entry of a $14,999,999 judgment against Rental Mart.1 The terms of settlement also included Local Baking's agreement "not to attach, lien or execute against Rental Mart's existing or after-acquired property or assets to satisfy the judgment, except for and other than proceeds from [Rental Mart]'s insurance policies." Accordingly, Rental Mart assigned, "to the Class (represented by [Local Baking] and its attorneys), . . . all of [Rental Mart]'s claims and rights to payments from insurers, including Farmers, under any and all insurance policies issued by Farmers or issued by any other insurers that may cover [Rental Mart]."

The settlement agreement also contained terms enjoining the rights and binding all members of the putative class. Specifically, the agreement stated Local Baking and all members of the class, "and their successors and assigns . . . have covenanted with [Rental Mart] not to execute on the [j]udgment against [Rental Mart], any of its officers, directors, employers, successors, assigns or legal representatives" but to pursue collection only against Rental Mart's insurers.

On or about January 20, 2010, Local Baking moved for preliminary approval of the underlying class action settlement agreement. A February 5, 2010 order granted preliminary approval of the settlement under the terms set forth in the settlement agreement. That order certified the class, appointed Local Baking as the representative of the settlement class, and designated Local Baking's attorney as class counsel. The order also set the deadline for class member objections and a final hearing date. See R. 4:32-1 and -2.2 Farmers was not sent notice of Local Baking's motion or given a copy of the entered order.

Notice was thereafter faxed to putative class members. On April 19, 2010, Local Baking sought to amend the complaint by adding Rental Mart's legal name "Westfield Rental Mart," rather than simply the business's fictitious name as used in the complaint. Final approval of the settlement agreement was granted on April 23, 2010. Further, a final judgment against Rental Mart was entered in the amount of $14,999,999 to be satisfied only through an insurance recovery paid by Rental Mart's insurers. The judgment also approved Rental Mart's assignment of its rights under all insurance policies. Finally, the court retained "continuing exclusive jurisdiction as to all matters relating to the administration, consummation, enforcement, and interpretation of the [settlement] [a]greement, [the final o]rder, and the final judgment . . . and any future recovery for the class against [Rental Mart's] insurers."

On or about March 2, 2010, prior to the entry of the final judgment in the underlying class action litigation, Farmers filed a declaratory judgment action in Hunterdon County under Docket No. HNT-L-137-10 against Rental Mart, its officer Bruce Campbell, Local Baking, and the putative class members. The complaint acknowledged Rental Mart had submitted a demand for coverage and Farmers sought a judicial declaration that under the policy's terms, Farmers had no duty to defend or indemnify Rental Mart for liability resulting from the TCPA claims in the underlying class action litigation. Moreover, the complaint described and attached a copy of the February 5, 2010 preliminary notice for class action approval, which Farmers alleged contained an invalid assignment of Rental Mart's rights under the policy. Finally, Farmers requested Local Baking and any putative class members be bound by the declaratory determination.

Local Baking and Rental Mart moved to change venue of the declaratory judgment action to Essex County, the venue of the underlying class action litigation. Counsel's supporting certification attached pleadings filed in the underlying class action litigation, including the April 23, 2010 final approval of the settlement agreement and judgment. At that time, it was undisputed that class member claims were not processed, paid or resolved and all class members' claims remained pending final determination in the declaratory judgment action.

As the parties engaged in motion practice and discovery in the declaratory judgment action, this court rendered its opinion in Kosher Bagel. In Kosher Bagel, the plaintiff filed a class action suit under the TCPA, after the defendant "had hired an entity known as Business to Business Solutions to transmit a 'blast fax,' advertising [the] defendant's food services to approximately 4649 fax machines." Id. at 271 (footnote omitted). The trial judge granted the defendant's motion to dismiss the class action for failure to state a claim and entered judgment for the plaintiff for $500. Ibid. On appeal, this court considered the legal issue presented: whether class actions can be filed to prosecute private causes of action under the TCPA. Ibid.

After expressing "doubts as to whether [Local Baking] could meet the commonality and typicality requirements of Rule 4:32-1(a)," we concluded it could not "meet 'the more demanding criteria' of predominance and superiority." Id. at 280 (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. __, 131 S. Ct. 2541, 2565, 180 L. Ed. 2d 374, 405 (2011) (Ginsburg, J., dissenting)). In doing so, we reasoned first, the statutory award under the TCPA was "considerably in excess of any real or sustained damages," as well as "[t]he cost of litigating for an individual." Id. at 280-81. Second, we concluded the TCPA's design and New Jersey's procedures were very conducive to bringing such claims on an individual basis. Ibid. Highlighting the ease of such litigation, we noted "the same facts required to prevail on an individual TCPA claim an unsolicited fax was received from a sender with whom the recipient had no prior business relationship are identical to the facts that would have to be proven to merely identify a single class member." Id. at 281. Accordingly, we held a class action could not be maintained for claims under the TCPA. Id. at 271.

On February 15, 2012, armed with the Kosher Bagel opinion, counsel for Farmers moved to intervene in the underlying class action litigation and requested an order decertifying the class and dismissing Local Baking's case. Local Baking opposed the motion, arguing final judgment had been entered nearly two years earlier, which Farmers was well aware of but chose not to challenge. Accordingly, it urged denial of the motion as untimely.

On March 16, 2012, without benefit of oral argument, the trial judge issued an order denying Farmers' motion to intervene as of right, but he granted permissive intervention. Farmers' substantive application was also granted. The judge decertified the class and dismissed the complaint, with prejudice.

Local Baking appealed from that order. We summarily reversed as the trial judge's order contained no statement of reasons supporting his conclusions. Local Baking Prods., Inc. v. Westfield Rental-Mart, Inc., No. A-4494-11 (February 28, 2013) (slip op. at 14-15). See R. 1:7-4 (mandating the trial judge "shall [] by an opinion or written memorandum decision, either written or oral, find the facts and state its conclusions of law" on every motion it has decided by a written order appealable as of right). Remanding the matter to the trial court "to reconsider Farmer[s'] motion and make findings and conclusions as required by Rule 1:7-4[,]" we stated:

We also have concerns about the parties' strategies and actions in this case, including [Local Baking] not formally placing [Farmers] on notice of the January 20, 2010 motion to preliminarily approve the settlement, Farmers filing a separate declaratory judgment action in another county in March 2010[,] rather than moving to intervene in the class action litigation, and Farmers' significant delay in filing the motion for intervention and class decertification. The trial court had to consider these issues and make specific factual findings in order to analyze and balance the elements of permissive intervention, as well as analyze the law and policy considerations of decertifying the class and dismissing [Local Baking's] complaint in total. In the absence of oral argument or any explanation for the judge's order, we have no idea what, if any, facts or law were considered by the judge in making his determination.

 

[Id. at 14.]

 

On remand and without further proceedings, the trial judge issued a written letter opinion, dated March 20, 2013, in which he stated:

[T]he [c]ourt first determined that Farmers had a right to permissive intervention pursuant to . . . Rule 4:33-2. Second, the original action and the declaratory judgment action had issues of both law and fact in question. Third, the [c]ourt determined that the motion was timely because neither matter would be ultimately resolved until either the decertification and/or declaratory judgment actions were resolved. Fourth, the [c]ourt determined that additional discovery was not necessary.

 

. . . .

 

In light of the [c]ourt's holding and reasoning in [Kosher Bagel], it would be unjust to allow a class action to stand. Therefore, the class is decertified. A review of the terms of the settlement makes it obvious that any recovery by [Local Baking] would not be from [Rental Mart], but would be from [Farmers]. Not allowing [Farmers] to intervene would be inequitable and would allow [Local Baking] to pursue [its] policy without giving [Farmers] an opportunity to defend such an outcome, which would be unjust. Therefore, [Farmers] is allowed to intervene and the claim for conversion is dismissed.

 

Following the motion judge's retirement, a different Law Division judge entered an order on May 6, 2013, memorializing the conclusions reached by the motion judge in his opinion. This appeal ensued.

Local Baking seeks reversal of the order allowing Farmers to intervene in the underlying class action litigation, arguing the decision was erroneous. Local Baking maintains Farmers' request was not timely and argues our holding in Kosher Bagel cannot be imposed retroactively. Alternatively, Local Baking seeks reversal of the order of dismissal, arguing the analysis in Kosher Bagel was wrong. Farmers maintains the motion judge's reasoned exercise of discretion must be upheld, contending intervention was warranted because all requirements for permissive intervention were met. Farmers also asserts Kosher Bagel did not change any rule of law, it merely applied the law as it exists.3

The fact sensitive nature of a decision to grant or deny permissive intervention pursuant to Rule 4:33-2 "vests considerable discretion in the trial court." Evesham Twp. Zoning Bd. of Adjustment v. Evesham Twp. Council, 86 N.J. 295, 299 (1981). Accordingly, a trial court's determination of the appropriateness of permissive intervention and whether the requirements of the rule are met lies within the sound discretion of the trial judge and will not be disturbed absent a clear abuse of discretion. City of Asbury Park v. Asbury Park Towers, 388 N.J. Super. 1, 3-4, 12 (App. Div. 2006) (upholding the trial court's denial of a redeveloper's request for permissive intervention in a condemnation proceeding where the "potential for undue delay or prejudice to the rights" of the plaintiff would result were intervention permitted).

In defining judicial discretion we have said:

"[J]udicial discretion" is the option which a judge may exercise between the doing and the not doing of a thing which cannot be demanded as an absolute legal right, guided by the spirit, principles and analogies of the law, and founded upon the reason and conscience of the judge, to a just result in the light of the particular circumstances of the case.

 

[Smith v. Smith, 17 N.J. Super.128, 132 (App. Div. 1951), (citations omitted), certif. denied, 9 N.J.178 (1952).]

 

An abuse of discretion occurs when "'the determination could not reasonably have been reached on sufficient credible evidence present in the record[,]' or the judge 'failed to consider all of the controlling legal principles[.]'" Clark v. Clark, 429 N.J. Super.61, 72 (App. Div. 2012) (quoting Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340, 354 (App. Div. 2009)).

Here, the motion judge recognized an application for permissive intervention must be viewed liberally. Zirger v. Gen. Accident Ins. Co., 144 N.J. 327, 341 (1996); State by Bontempo v. Lanza, 39 N.J. 595, 600 (1963), cert. denied, 375 U.S. 451, 84 S. Ct. 525, 11 L. Ed. 2d 477 (1964). He also considered the requirements of Rule 4:33-2, which states in pertinent part:

Upon timely application anyone may be permitted to intervene in an action if the claim or defense and the main action have a question of law or fact in common . . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.

 

Under the rule, permissive intervention should be allowed when a movant demonstrates a common issue of law or fact is presented and that granting the request will not unduly delay the action. Consideration must evaluate the promptness of the application, the prejudice to the responding parties, and whether granting the request will eliminate the possibility of further litigation or the extent to which granting the motion may further complicate litigation which is already complex. See State Farm v. Zurich Am. Ins. Co., 62 N.J. 155, 165 (1973); Grober v. Kahn, 88 N.J. Super. 343, 361-62 (App. Div. 1965), rev'd on other grds, 47 N.J. 135 (1966).

Local Baking maintains Farmers' request was untimely. It asserts that even if Farmers has a valid interest in the underlying class action litigation its decision to wait nearly two years to assert that interest, despite actual notice of the final judgment and ample opportunity to act, requires Farmers' motion be denied. In this light, Local Baking argues the trial judge's decision to allow intervention represented an abuse of discretion.

Rule 4:33-2 starts with the words, "[u]pon timely application," making promptness in asserting the request to intervene essential. See Twp. of Hanover v. Town of Morristown, 118 N.J. Super. 136, 143 (Ch. Div.) ("An essential prerequisite to intervention is timeliness, which should be equated with diligence and promptness."), aff'd, 121 N.J. Super. 536 (App. Div. 1972), certif. denied, 62 N.J. 427 (1973). Whether a motion to intervene is timely is not exclusively a question of the amount of time that has elapsed since the action began. When examining the application, a court should consider the conduct of the proposed intervener along with "the purpose for which intervention is sought[,]" Warner Co. v. Sutton, 270 N.J. Super. 658, 663 (App. Div. 1994) (internal quotation marks and citation omitted). Also important is any resultant prejudice to the parties involved in the litigation. See Zirger, supra, 144 N.J. at 341 (holding permissive intervention requires a trial court to determine "whether intervention will unduly delay or prejudice the adjudication of the rights of the original parties").

Local Baking argues the motion judge abused his discretion in granting Farmers' application to intervene two years after entry of final judgment, which it contends cannot be permitted. This argument draws on the fundamental principle "'[t]he settlement of litigation ranks high in our public policy.'" Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008) (quoting Jannarone v. W.T. Co., 65 N.J. Super. 472, 476 (App. Div.), certif denied, 35 N.J. 61 (1961)) (alteration in original). Further, Local Baking asserts allowing intervention after a proposed settlement has been reached would render worthless all of the parties' painstaking negotiations.

Protecting the integrity of final judgments is a compelling consideration supporting Local Baking's position for reversal. Rule 4:50-1 requires a court to scrutinize applications to set aside judgments, enumerating very discrete instances permitting such extraordinary relief. Only subpart (f) applies to these facts. R. 4:5-1(f). That provision permits entry of an order to set aside a judgment for "any other reason justifying relief from the operation of the judgment or order." Ibid. For the reasons we will outline, we conclude the totality of the unique facts presented here warrant the relief granted.

Initially, we reject the proposition that permissive intervention may not be granted following entry of final judgment. Although "[i]n the post-judgment setting, motions for intervention have received mixed treatment by our courts[,] [g]enerally, intervention after judgment is allowed if necessary 'to preserve some right which cannot otherwise be protected.'" Warner Co., supra, 270 N.J. Super. at 662 (quoting Chesterbrooke Ltd. P'ship v. Planning Bd. of Twp. of Chester, 237 N.J. Super. 118, 123 (App. Div.), certif. denied, 118 N.J. 234 (1989)). In such instances, timeliness is "'an essential prerequisite to intervention'" and it must be "'equated with diligence and promptness. One who is interested in pending litigation should not be permitted to stand on the sidelines, watch the proceedings and express . . . disagreement only when the results of the battle are in[.]'" Id. at 663 (quoting Twp. of Hanover, supra, 237 N.J. Super. at 143).

Farmers defends the timing of its challenge, arguing the delay was caused by other events. We have considered the respective arguments and the applicable law. We conclude under the circumstances presented, Farmers' application to intervene was not untimely.

First, after Farmers disclaimed coverage it had no justifiable interest in the underlying class action litigation. So long as Rental Mart defended the suit, Farmers could not intervene merely to assert there was no coverage as the result of intentional conduct by Rental Mart, its insured.

Rental Mart did not file a declaratory judgment action. Rather, it determined it was in its best interests to accept the proposed settlement of the underlying class litigation without regard to its obligations under the insurance contract with Farmers. Essentially, by agreeing to assign its insurance coverage in exchange for protection of its existing and future income and assets, Rental Mart could forego the need to defend the class action without financial penalty. Rental Mart had no risks: it did not need to challenge Farmers' denial of coverage or defend Local Baking's claim in the litigation because it would owe nothing, even if there was no insurance coverage or if coverage was voided by its assignment. Once the settlement employing the Farmers policy as the vehicle to fund class recovery was approved, Farmers' interest in whether the claims under the policy were valid solidified.

Second, Local Baking and Rental Mart chose not to notice Farmers of the motion, which resulted in the February 5, 2010 order granting preliminary approval of the settlement under the terms set forth in the settlement agreement. This was done even though the Farmers policy was the lynchpin for class member recovery. Importantly, as noted above, Rental Mart's decision to rely on the insurance recovery was made without any concern for whether the policy in fact covered the asserted conduct or whether its planned assignment to Local Baking, without Farmers' consent, was permissible or valid based upon the policy terms.

We cannot conclude Farmers stood on the sidelines awaiting the results of the underlying class action. When Farmers became aware of the proposed settlement agreement, it filed its declaratory judgment action. In that matter, Local Baking moved for a change of venue in October 2010 and produced the April 23, 2010 final approval of the settlement agreement and judgment in the underlying class action litigation. This was the first time Farmers was provided with the judgment and, therefore, was on notice its insured implicated the policy by assigning it to Local Baking. This represents the first date Farmers' had a colorable basis to intervene.

Strategically, Farmers believed the declaratory judgment action would be concluded swiftly. Local Baking certainly understood the determination of the scope of the policy's coverage was a prerequisite for implementation of the terms of the proposed settlement agreement. However, neither Rental Mart nor Local Baking diligently participated in that matter. Orders were entered compelling Local Baking and Rental Mart to comply with discovery and at one point an order was entered striking Rental Mart and Local Baking's answer for non-compliance with the court's orders. In this regard, we cannot criticize Farmers for separately seeking the coverage determination and do not consider Farmers' actions dilatory or obfuscating. Yet, Farmers could have informed the judge overseeing the underlying class action matter that the intertwined coverage question was being addressed in the separate litigation.

Third, Farmers maintains the pending decision in Kosher Bagel was necessary prior to seeking intervention. Because Local Baking was aware of the pending Kosher Bagel matter and understood its significance in respect of this matter, we agree the case's finalization was an important consideration. We are persuaded Farmers' request to intervene, made prior to appellate review of Kosher Bagel, would have been considered premature.

Local Baking was the plaintiff-putative class representative in Kosher Bagel, Docket No. ESX-L-4695-09, and was represented by the same trial attorneys who appeared in the underlying class action litigation. Kosher Bagel, supra, 421 N.J. Super. at 269. Also, the trial judge in Kosher Bagel was in the same vicinage of the Law Division as the instant matter.

In Kosher Bagel, the judge examined Local Bagel's identical class action, alleging the very same legal theory to vindicate junk fax claims arising under the TCPA against a different defendant. Id. at 270. He concluded Local Baking could not bring a class action to enforce private causes of action under the TCPA. Id. at 271. Judgment of dismissal of the class action in Kosher Bagel was entered on March 16, 2010, before final judgment was entered in this case. Nevertheless, Local Baking forged ahead with certification of the class and sought approval of the settlement in this matter, without disclosing the Kosher Bagel decision specifically rejected the viability of such a class action as a matter of law.4

Local Baking appealed from the adverse trial determination. Id. at 271. This court affirmed the trial judge's holding that a class action could not be filed to address individual claims under the TCPA. Ibid. Local Baking sought certification. Once the Supreme Court denied the application for certification, the Kosher Bagel analysis conclusively determined a plaintiff's use of a class action to advance TCPA claims was not permitted. Id. at 281.

In the underlying class action litigation, the judge conducting the hearing on the fairness of the proposed settlement was not advised of the pending challenge to the legal sufficiency of the class action vehicle he was being asked to approve. Certainly, this information bears on a determination of whether the proposed settlement was "fair and reasonable" and would counterbalance the value often accorded to the resolution of disputes. Were the judge inclined to approve the class, despite the contrary decision in Kosher Bagel, he would have examined whether fairness and full disclosure required members of the class be informed of this event prior to finalizing a decision to opt in or out.

In reaching our conclusion we also consider the questions of whether prejudice to the participating parties existed and whether Farmers shares an interest in the matter and a need to protect its rights regarding that interest. After all, "if intervention will neither prejudice the rights of existing parties to the litigation nor substantially interfere with the orderly processes of the court, 'the mere fact that judgment has already been entered should not by itself require an application for intervention to be denied.'" Vicendese v. J-Fad, Inc., 160 N.J. Super. 373, 380 (Ch. Div. 1978) (quoting 7A Wright & Miller, Federal Practice and Procedure 1916 at 582).5

Local Baking suggests Farmers has "at best . . . a contingent interest" in the enforcement of the underlying class action litigation judgment and argues Farmers' principal interest is whether there is a coverage obligation, which is a concern absolutely protected in the declaratory judgment action. Local Baking's attempt to minimize the extent of Farmers' interest ignores the significant legal question presented in the underlying class action litigation: whether TCPA claims can be legally sustainable in a class action.

We also cannot ignore Local Baking was the plaintiff in Kosher Bagel and was fully aware the use of a class action to seek recovery of personal TCPA claims was rejected as a matter of law by the trial court. The holding in Kosher Bagel, therefore, raises a concern of whether the proposed settlement in the underlying class action litigation is illusory because the class action vehicle is legally invalid, making the judgment providing for payment unenforceable. Because Farmers is the party from whom actual payment is sought, we agree with the trial judge that Farmers has demonstrated a common legal interest in the underlying class action litigation, which may not necessarily be protected in the declaratory judgment litigation.

Farmers moved to intervene soon after the legal issue in Kosher Bagel was finalized. Based on the nature of the legal issue presented in that matter, fully known to Local Baking, and considering class members were unaware of the Kosher Bagel decision and the unresolved coverage question arising from the assignment provision of the settlement, we conclude the legal interest was not ripe until certification was denied in the Kosher Bagel matter.

We cannot agree the putative class was prejudiced by the order. First, claims were never determined. Second, whether the class action was legally sustainable was not disclosed and Local Baking was not diligently pursuing the coverage case, both of which directly impacted class members. Finally, we determine putative members were actually protected by the order under review because each claimant retains the right to pursue an individual TCPA claim against Rental Mart. See Chattin v. Cape May Greene, 216 N.J. Super. 618, 627-28 (App. Div.) ("The evident purpose of these requirements is to protect class members from a settlement which is not in their best interests."), certif. denied, 107 N.J. 148 (1987).

We distinguish the authorities relied upon by Local Baking to challenge Farmers' action as untimely. Both Sutter v. Horizon Blue Cross Shield of N.J., 406 N.J. Super. 86, 107 (App. Div. 2009) (upholding the denial of intervention filed after settlement of four-year old litigation involving numerous parties) and Twp. of Hanover v. Township of Morristown, 121 N.J. Super. 536, 538 (App. Div. 1972) (considering a request for intervention filed over one year after the conclusion of a twelve-day trial), involved lengthy litigation. The denial of intervention in these matters focused on a consideration that "intervention after a proposed settlement has been reached, would render worthless all of the parties' painstaking negotiations." Sutter, supra, 406 N.J. Super. at 107. However, in this matter, consideration is absent. The complaint was filed on June 5, 2009 and proposed settlement was submitted on January 20, 2010. Further, Rental Mart's agreement to settle did not result after lengthy discovery or heavy expenditures in conducting the litigation. Rather, Rental Mart jumped on the opportunity to rid itself of the burden of litigation accepting a financial result that essentially caused it to experience no financial impact. The fast pace at which this class action proceeded, without objection from Rental Mart to entry of an almost $15,000,000 settlement against it, suggests an almost collusive result. Moreover, Local Baking's desire to quickly enter final judgment certainly appears prompted by its specific knowledge that use of a class action was found impermissible in Kosher Bagel.

We reject Local Baking's claim the judge impermissibly opened the judgment by relying on a newly announced legal standard. Here, Local Baking was intimately involved in the Kosher Bagel matter, which had initially been decided by a trial court before the final judgment in this case was entered. As the plaintiff in Kosher Bagel, Local Baking knew its use of a class action was found legally unsustainable. These facts differ from an attempt to set aside a judgment based on the results in a new unrelated court decision. See e.g., Hartford Ins. Co. v. All State Ins. Co., 68 N.J. 430, 435 (1997) (denying request for rehearing when law was altered by holding in an unrelated case). That this court upheld the legal sufficiency of the trial court's opinion in Kosher Bagel cannot accord Local Baking a claim of surprise or prejudice resulting from a new development in the law.

Had Local Baking revealed the result in the companion Kosher Bagel class action and were the parties and the trial judge given the opportunity to make an informed decision, the outcome may have differed. Here, the strategy to remain mute hoping for a different result on appeal cannot be overlooked, especially when the legal issue was pivotal to a class member's consideration to stay in the class or opt out.

Finally, we reject Local Baking's position that Kosher Bagel was incorrectly decided. The Supreme Court's denial of certification suggests otherwise.

In summary, we emphasize the decision we have reached results from the unique facts presented in this matter. We conclude the trial judge did not abuse his discretion in granting Farmers' motion for permissive intervention. Further, the accompanying decertification of the class action was appropriate in light of Kosher Bagel. See In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 800 (3d Cir. 1995) ("[A] class action whether certified for settlement or litigation purposes must meet the class requisites enunciated in [Fed. R. Civ. Pro.] 23."). See also Delgozzo v. Kenny, 266 N.J. Super. 169, 188 (App. Div. 1993) ("[W]hile New Jersey courts, in construing our class action rule, are not bound by the interpretations given the federal rule, our courts have consistently looked to the interpretations given the federal counterpart for guidance.").

We do agree, however, that Local Baking's individual claims against Rental Mart should not have been dismissed with prejudice. The judge's opinion failed to analyze the sufficiency of these claims, and that portion of the order must be reversed.

Affirmed in part, reversed in part and remanded for further proceedings.

 

1 Deducted from any award or judgment were: counsel fees, stipulated as one-third of any recovery; $9500 paid to Local Baking as an incentive award for representing the class; $15,000 for Local Baking's expert; and $1,018.98 representing the cost to disseminate notice of settlement to the class.

2 The record contains only the notice of motion and order; no supporting pleadings or transcript have been provided.

3 We do not consider Farmers' additional contention that it satisfied the requisites for intervention as of right pursuant to Rule 4:33-1, because it has not filed a cross appeal. R. 2:3-4. In the absence of a cross-appeal, relief from that portion of the order may not be considered. Walrond v. Cnty. of Somerset, 382 N.J. Super. 227, 231 n. 2 (App. Div. 2006).

4 Rule 3.3(a) of the Rules of Professional Conduct requires a lawyer act with candor to the tribunal. This ethical obligation is "not limited to affirmative misstatements of fact or law by an attorney." Brundage v. Estate of Carambio, 195 N.J. 575, 591 (2008). However, our courts have recognized that the decision of one trial court is not binding on another, such that the ethical obligation as defined by the rule is not triggered. Id. at 593. The Court in Brundage did not find the failure to disclose an adverse decision by a trial judge on the same issue pending before a different judge to be an ethical lapse, but found the practice was disfavored. Id. at 605-06.

5 We observe Rule 4:33-2 mirrors Federal Rule of Civil Procedure 24(b), allowing consideration of federal authority to aid our review.