The TGI Friday’s in the Taft Hotel in Times Square.



A divided New Jersey Supreme Court on Wednesday blocked one class action lawsuit alleging a fraudulent drink pricing scheme against one restaurant chain, but allowed a similar class action to move forward.

In a 5-1 ruling, the court rejected class action status for a group of plaintiffs suing TGI Friday’s, with the majority holding, among other things, that the plaintiffs failed to state a common claim.

The court will allow another group of customers to pursue their claims against OSI Restaurant Partners, the parent company of defendant Carrabba’s. OSI Restaurant Partners is now a subsidiary of Bloomin’ Brands Inc. of Tampa, while TGI Friday’s is a unit of Sentinel Capital Partners of New York.

Plaintiffs in both lawsuits alleged that the defendants violated the state’s Consumer Fraud Act and the Truth in Consumer Contract, Warranty and Notice Act.

The plaintiffs in the first case, Dugan v. TGI Friday’s alleged that they were defrauded because the restaurant failed to list its drink prices on its menus. Market research, they said, showed that customers spent about $1.72 more on drinks with unlisted prices than they would have on drinks with listed prices.

The plaintiffs in the second case, Bozzi v. OSI, said customers were charged different prices for the same drinks as the hours of the day changed, and as the customers moved from one area of the restaurant to another.

Justice Anne Patterson, writing for the majority, said the claims in Dugan had to be rejected because the state’s CFA jurisprudence traditionally has rejected “price-inflation” theories, and added that there were no proofs that the chain artificially hiked its prices.

But in Bozzi, Patterson said the class could attempt to prove that OSI was engaged in a scheme that allowed for artificial price hikes on customers once they were inside the restaurant.

In a dissent, Justice Barry Albin said there was enough evidence to allow the Dugan plaintiffs to proceed, and added that the majority ruling will make it more difficult for class action plaintiffs to bring viable claims in the future.

Chief Justice Stuart Rabner, and Justices Jaynee LaVecchia, Faustino Fernandez-Vina and Walter Timpone, joined in the majority ruling. Justice Lee Solomon did not participate.

“This was just a form of bait-and-switch,” said West Berlin solo Donald Doherty Jr., the attorney for the plaintiffs in Bozzi.

West Berlin solo Sander Friedman, the attorney for the plaintiffs in Dugan, was away from his office and unavailable for comment.

Stephen Orlofsky of the Princeton office of Blank Rome, a former U.S. district judge, declined to comment other than to say he was pleased with the result.

In the TGI Friday’s case, lead plaintiff Debra Dugan claimed she was charged $2 for a beer at the bar of the chain’s location in Mount Laurel, then paid $3.59 for the same beer at a table in the restaurant. It was after she received the check that she realized the menu did not list drink prices, her suit claims. Burlington County Superior Court Judge Marc Baldwin granted a motion for class certification, and TGI Friday’s appealed. In a published decision in March 2016, the appeals court found that the plaintiffs couldn’t demonstrate that common fact questions predominate over individual ones in determining ascertainable loss, a necessary element to a Consumer Fraud Act claim.

In the Carrabba’s case, plaintiff Ernest Bozzi, a patron at a Maple Shade location of the restaurant, was charged two prices for beer depending on the time of purchase, and claimed he was given no notice of a happy hour discount. Burlington County Superior Court Judge Karen Suter granted class certification, and the Appellate Division declined to disturb the ruling.

During arguments in April, Friedman said TGI Friday’s was engaged in “a price-gouging scheme” after doing an internal study of its outlets. The company, he said, did a survey of its restaurants that listed its drink prices and those that didn’t, and found that customers at the restaurants that listed drink prices spent $1.72 less.

“This was an unconscionable commercial practice,” Friedman told the court in April. “They were making big profits on widespread, but minimal, fraud.”

Orlofsky had urged the court to reject class action status for both lawsuits.

“This is not about price gouging,” said Orlofsky at the arguments. In the case of TGI Friday’s, there is no evidence that the restaurant used its internal study of menus with prices and menus without prices to determine its menu-pricing policies.

“It’s not even clear that these folks even saw the menu,” Orlofsky said.

Doherty argued the lawsuits should both be allowed to continue.

“[Bozzi] was cheated by a cheater,” Doherty told the court in April. “There’s no reason not to put a price on a menu.”

Contact the reporter at mbooth@alm.com.