The New Jersey Appellate Division on Tuesday, September 12, 2017, revived a putative class action alleging a hairstyling school overcharges for services by its students, ruling that a lower court wrongly found that only the state’s cosmetology regulator, not the courts, has jurisdiction over the case. The three-judge panel’s decision handed a victory to Rosemary Stanley, whose lawsuit against Capri Training Center Inc. was dismissed by a lower court judge after the school argued the case turned on the legal definition of “cost of materials” and therefore the New Jersey Board of Cosmetology and Hairstyling had exclusive jurisdiction over the claims.
The panel cited the Appellate Division’s 1999 decision in Boldt v. Correspondence Management Inc., a class action alleging in part that a defendant medical facility violated the Consumer Fraud Act by overcharging for copies of medical records. The Boldt court rejected the defendants’ argument that the Department of Health had exclusive jurisdiction to issue sanctions for regulatory violations, finding that the plaintiffs sought a remedy not available at the agency level and not expressed in the legislative intent of the agency’s governing statute.
“Even where an agency’s governing statute expressly provides that an agency has exclusive jurisdiction over certain matters, our courts have carefully limited the scope of the agency’s exclusive jurisdiction and permitted the prosecution of claims of common law and statutory claims in court,” the instant opinion said.
The panel also rejected that the complaint was wrongly dismissed on the doctrine of primary jurisdiction, in which a court defers a regulatory question to that authority. The lower court’s order never referred to the doctrine, and lacked “any detailed findings or conclusions of law,” the appeals decision said.
Capri’s four cosmetology schools in New Jersey each have a clinic that provides cosmetology services by unlicensed students to the general public in exchange for a fee, according to the decision. Stanley paid for various cosmetology services at one of the school’s clinics in 2011 and 2012. In her 2016 complaint in Essex County Superior Court, Stanley alleged that the fees she and other putative class members paid defendant prices which exceeded those permitted under the Cosmetology and Hairstyling Act of 1984, which bars a cosmetology school clinics from charging fees beyond the amount required to recoup the costs of the materials used. The complaint asserted claims under New Jersey’s Consumer Fraud Act and the Truth in Consumer Contract Warranty and Notice Act and accused the school of breach of the covenant of good faith and fair dealing and unjust enrichment.
The school moved to have the complaint dismissed for failure to state a claim upon which relief can be granted. Without hearing oral argument, a Superior Court judge issued an order granting the dismissal motion. The order was “untethered to any findings or conclusions of law” other than a notation on the order stating the state cosmetology board has jurisdiction and there is no private cause of action, according to the appeals decision.
An attorney for Stanley, Joseph A. Osefchen of DeNittis Osefchen Prince PC, told Law360 the “clear opinion” that should clarify issues surrounding the concepts of exclusive jurisdiction and primary jurisdiction, given similar litigation pending in the state. Representatives for the school didn’t immediately respond to a request for comment. Appellate Division Judges Mitchel E. Ostrer, George S. Leone and Francis J. Vernoia sat on the panel.
Stanley is represented by DeNittis Osefchen Prince, PC. Over the last couple years, Last year, DeNittis Osefchen Prince have settled q few similar cases in the industry. Jones v. Empire Beauty School – $6.75 million settlement, Krivy v. Jean Madeline – $1.35 million settlement and Christine Valmay, a single location school – $110,000 settlement.