NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No. 13

- 4509

_____________
GARY CISER

v. NESTLE WATERS NORTH AMERICA INC. GARY CISER, on behalf of himself and all others similarly situated, Appellant

_______________ On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 2

- 11

- cv - 05031) District Judge: Hon orable William J. Martini

_______________ Argued December 8 , 2014 BEFORE : VAN ASKIE , COWEN and VAN ANTWERPEN , Cir cuit Judges

. (Filed: January 7, 2015 )

J. Burkett McInturff , Esq

. (argued) Steven L. Wittels , Esq. Wittels Law, P.C. 18 Half Mile Road Armonk, New York 10504 Counsel for Appellant2

Jeffrey M . Garrod , Esq. (argued) Craig A. Ollenschleger , Esquire Orloff, Lowen bach, Stifelman & Siegel 101 Eisenhower Parkway Suite 400 Roseland, NJ 07068 Counsel for Appellee Julie Nepveu , Esq

. AARP Foundation Litigation Consumer Action Room B4

- 245 601 E Street, N.W. Washington, DC 20049 Micha el J. Quirk , Esq

. National Ass ociation of Consumer Advocates Williams, Cuker & Berezofsky 1515 Market Street Suite 1300 Philadelphia, PA 19102 Counsel for Petitioner Amicus Appellants

_____________ OPINION *

_____________ VAN ANTWERPEN , Circuit Judge

. Gary Ciser appeal s the final order of the District Court for the District of New Jersey , da ted October 24 , 2013 , granting summary judgment in favor of defendant Nestlé Waters North America, Inc. (“ Nestle ”)

. Ciser v. Nestl é Wate rs North America, Inc. , No. 2:11

– 05031, 2013 WL 5774121 , at *11 ( D. N.J. Oct. 24, 2013 ). For the reasons that follow , we affirm the District Court

.

* This disposition is not an opinion of the full court and pursuant to I.O.P. 5.7 does not constitute binding precedent.3 I. F ACTUAL B ACKGROUND AND P ROCEDURAL H ISTORY Ciser , a small business owner, contracted with Nestle for the delivery of bottled
water to his home office . (App. at 3 a). Over the course of several years, Ciser paid occasional fees for late payments. ( Id

. ) Nestle charged a flat late fee of $15 for each
overdue bill. ( Id. ) Nestle’s website stated that late fees would be “the greater of (i) a late fee not to exceed $20 pe r month, or (ii) interest of 1.5% per month on any unpaid amount from the invoice date until paid .” ( Id. ) Nestle’s invoices stated that “[p]ast due invoices may be assessed a late fee as allowed by law not to exceed $20 per month. Additional third party co llection/attorney expenses may be assessed at a rate not to exceed 100% of the unpaid balance or the maxim um allowed by law.” ( Id. at 3a

– 4a). Ciser’s five $15 late fee assessments relate to invoices ranging from $11.31 to $51.9 6

— a percentage charge of
132. 62% to 28.86%, respectively. ( Id

. at 4a). Ciser filed his initi al complaint on August 31, 2011 and his first amended complaint on November 18, 2011. (App. at 1sa, 56sa). Ciser filed his second amended complaint on March 5, 201 3 , alleging violations of th e New Jersey Consumer Fraud Act (“CFA”) , breach of contract , and unjust enrichment. ( Id. at 21a). The process of the two amendments p roduced a simplified, but essentially unchanged , complai nt

— Nestle’s late payment fees are grossly disproportionate ( i.e. , b earing “no rational relationship” ) to the actual costs incurred by Nestle as a result of the plaintiff’s late payments. ( Second Am. Complaint , at ¶ 32 ). Therefore, Ciser argues that Nestle has engaged in an “unconscionable commercial practice” under the CF A as well as actionable conduct under New Jersey common law.4

Ciser summarizes his complaint in “five reasons , ” stating that Nestle has (1) “less than 25 cents in interest carrying cost” for a 3 0 day consumer delinquency, (2) “virtually
no incremental admi nistrative costs from overdue payments,” (3) a cost of “$1 or less ” to send reminder letters , (4) a tot al cost vastly below the assessed $15 fee, and (5)
conducted no study to determine the actual costs of untimely payment s . (App. at 23a

– 24a). Ciser retain ed a business professor from New York University who conclude d, using the information above, that the $15 fee was “grossly excessive.” ( Id . at 24a). 1 Ciser also compared Nestle’s $15 f ee to fees charged by regional competitors. ( Id . at 33a). Competitors’ f

ees ranged from de minimis charges of $1 or 1.5% to flat fee s of $10 or 10%. (App. at 33a). The District Court dismissed the entirety of Ciser’s complai nt with prejudice.
Ciser , 2013 WL 5774121 , at *6 . First, the District Court found that Ciser had failed to plead sufficient facts to create a plausible claim for relief under the CFA

. Id . at *3 . In the alternative, the District Court found that the disclosed and contractually agreed late fees were not pro hibite d under the CFA as an “unconscionable commercia l practice” because they did not have th e capacity to “mislead” Ciser. Id . at *5

– 6 . Fi nally, the District Court held that Ciser also failed to present sufficient facts for the common law claims of unenforceable liquidated damages and unjust enrichment. Id

. at *6

. I I

. D ISCUSSION 1

1 The expert’s opinion was never attached to the Second Amended Complaint, as Ciser’s counsel admitted at oral argument.

1 The District Court had jurisdiction under 28 U.S.C. § 1332(d), as amended by the5

1. Standard of Review We exercise plenary review over an order granting a Rule 12(b)(6) motion.
Ma riotti v. Mariotti Bldg. Prod s . , Inc. , 714 F.3d 761, 764

– 65 (3d Cir. 2013). This Circuit is bound by the statutory interpretation s of a state supreme court , Estate of Meriano v.
Comm'r , 142 F.3d 651, 659 (3d Cir. 1998 ), and review s the District Court’s interpretation of state law de novo

. State Farm Fire & Cas. Co. v. Estate of Mehlman , 589 F.3d 105, 110 (3d Cir. 2009).
2

. New Jer

sey Common Law
A. Specific Damages Ciser first argues that Nestle’s late fee violates New Jersey’s public policy against unreasonable specific damages clauses. We reject this argument. S peci fic damage clauses , when unreasonably large, constitute unfair penalties. Wasserman’s Inc. v. Township of Middletown , 645 A.2d 100, 105

– 07 (N.J. 1994 ). Generally, the party challenging the enforcement of a specific damages clause has the burden to prove the fee unreasonable as an affirmative defense against the fee’s enforcement

. Metlife Capital Fin. Corp. v. Washington Ave. Assocs. L.P. , 732 A.2d 493, 499

– 500 (N.J. 1999) ; Wasserman’s Inc. , 645 A.2d at 108 (N.J. 2013)

. Permissible specific damages

— deemed

“ liquidated damages ”

— must be reasonable under the totality of the circumstances. Metlife , 732 A.2d at 499. Th is test includes several non

- exclusive factors, such as the

Class Action Fairness Act of 2005. We have jurisdiction under 28 U.S.C. § 1291 to review the final decision of a district court.6

anticipated or a ctual harm caused by the breach, the diff iculty in proving such loss, the feasibility of alternative remedies , the intention of the part i es, and the bargaining power of the parties

. Id

. at 498

– 99. Ciser’s Second Amended Complaint alleges that Nestle’s fees constitute a penalty under the totality of the circumstances test outlined in Metlife for (1) not having a reasonable relationship to Nestle’s actual costs and (2) being excessive relative to late fees charged by competitors. ( Second Am. Complaint , at ¶ 4 )

. However, w e are aware of

no case

— and Ciser provides no authority

— that allow s a plaintiff to bring a n offensive claim to recover pai d but allegedly un conscionable late fees, as opposed to an affirmative defense to their enforcement. See MetLife , 732 A.2d at 499

– 500 (explaining that liquidated dam a ges provisions between commercial parti e s are presumptively reasonable)

. 2 The absence of s uch cases is in accord with New Jersey’s adherence to the common law voluntary payment doctrine, which prevents the recovery of payments made in the absence of fraud, duress, or similar compulsion. In re Fees of State Bd. of Dentistry , 423 A.2d 640, 643 (N .J. 1980). Ciser cites Green v. Morgan Properties for the proposition that consumers have an affirmative right of action at common law to challenge specific damages clauses. 73 A.3d
478 (N.J. 2013)

. In Green , however, t he New Jersey Supreme Court held th at attorneys ’ fees in a residential lease, which were variable depending on the nature of litigation resulting from breach , constituted an “additional rent term” and not a li quidated damages

2 In Metlife , the defendant argued, as a de fense against enforcement, that the bank’s fixed percentage late fee provision was unreasonable. 732 A.2d 493.7

provision. Id

. at 491

. 3 Likewise, the New Jersey Superior Court did not treat the lease term as a specific damages clause but as a “fee

- shifting provision” for which the liquidated damages framework was “inapt.” Green v. Morgan Props. , No. L

– 4158

– 10, 2011 WL 5212388 at *6 (N.J. Super. Ct. 2011)

. Any extension of Green ’ s recognition of an affirmative cause of action into consumer law is unwarranted based upon the New Jersey Supreme Court’s recognition of the unique nature of both landlor d

- tenant law and the rules of professional conduct for attorneys

. Id . at 486, 492

. Effectively, C iser attempts to combine the CFA’s statutory cause of action against unconscionable practices with t he MetLife affirmative defense , but the claims remain distinct. Accordingly, Ciser has not plead a cognizable common law claim. Ultimately, ho wever, our decision rests upon the insufficiency of Ciser’s pleading

. E ven assuming a cognizable claim at common law , Ciser has failed to state a plausible claim for relief , as discussed below in S ection Four

.

B. Unjust Enrichment Ciser brings a claim of unjust enrichment. “ A cause of action for unjust enrichment requires proof that defendants received a benefit and that retention of that benefit without paying would be unjust. ” Goldsmith v. Camden C nty
. Surrogate’s Office , 975 A.2d 459, 462 (N.J. Super . Ct. 2009). “Unjust enrichment is not an independent theory of liability, but is the basis for a claim of quasi

- contractual liability.” Id . at 463.
T he District Court dismissed Ciser’s unjust enrichment claim for failure to plead

3 The Green court specifically recognized that bringing a class action complaint to affirmatively recover unreasonable attorneys’ fees was atyp ical. Id . at 489

– 90.8

sufficient facts to state a plausible claim for relief. We agree that Ciser has failed to plead a plausible unjust enrichmen t claim, as discussed below in S ection Four

. 3

. New Jersey Consumer Fraud Act As already noted, Ciser brings a claim for unconscionable business practices under the CFA. The CFA provides consumers and small businesses a private right of action to challenge unfair commercial practices. N.J.S.A. 56:8

– 1 et seq
. ; Hundred East Credit Corp. v. Eric Schuster Corp ., 515 A.2d 246 , 248 ( N.J. App. Div. 1986). A succes sful plaintiff receives treble damages, reasonable attorneys’ fees, filing fees, and costs. N.J.S.A. 56:8

– 19. A CFA plaintiff must prove thre e elements for a successful claim: (1) unlawful conduct by defendant, (2) ascertainable loss, and (3) a causal rela tionship between the unlawful conduct and the ascertainable loss. Zaman v. Felton , 98 A.3d 503,
516 (N.J. 2014)

. When the alleged violation consists of an affirmative act, the plaintiff need not prove that the defendant intended to commit an unlawful act. Cox v. Sears Roebuck & Co. , 647 A.2d 454 , 462 ( N.J. 1994). The only issue in this case is whether Nestle’s late fee billing practices are prohibited by the CFA as unlawful conduct

. The Act defines an “unlawful practice” to
include: any unconscionable co mmercial practice , deception, fraud, false pretense , false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection wit h the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby.9

N.J.S.A. 56:8

– 2 (emphasis added ); D’Agostino v. Maldonado , 78 A.3d 527 , 537 ( N.J. 2013)

. However, the Act does not define “unconscionable commercial practice.” T he New Jersey Supreme Court has instructed courts to “pour content” into the term on a

case - by

- case basis. Kugler v. Romain , 279 A.2d 640, 651 ( N.J. 1971). The parties in this

case offer two competing interpretations of “unconscionable commercial practice

. ” Ciser advocates a broad reading of the term whereby plaintiffs have a cause of action to challenge any and all business conduct

— regardless of whether the challenged activity is deceptive. Nestle maintains that deception is a necessary element of an unconscionable commercial practice

. The District Court agreed with Nestle ’s interpretation , holding that the alleged unconscionable practice must ev ince a capacity to mislead and that a fully disclosed late fee did not evince such a capacity

. Ciser , 2013 WL 5774121 , at *5

– 6

. Though a n unconscionable commercial practice “ is an amorphous concept obviously designed to e stablish a broad business ethic, ” the term is not without limits.
Cox , 647 A.2d at 462

. The standard of conduct that the term ‘ unconscionable ’ implies is lack of “good faith, honesty in fact and observance of fair dealing.” Id

. (internal citations omitted). 4 Most importantly, the New Jer sey Supreme Court has instructed that “[t]he capacity to mislead is the prime ingredient of all types of consumer fraud.” Id

. (quoting Fenwick v. Kay Am. Jeep, Inc. , 72 N.J. 372, 378 (1977) (emphasis added)). Accordingly, plaintiffs may not repurpos e a bre ach of contract claim into an “unconscionable

4 In Cox , the court held that , because the CFA clauses are disjunctive, a plaintiff need not prove that a prohibited act also be unconscionable. Id . at 462. However, the court has never decided the inverse of the issue in Cox

— whether conduct challenged as unconscionable must also include the capacity to mislead the plaintiff.10

co mmercial practice” claim under the CFA

. Id

. T he Kugler court also instructed that “‘unconscionability’ parallels that employed in developing the definition of fraud.” Kugler , 279 A.2d at 651 n.4. 5 The CFA’ s p rimary remedial purpose is to “root out consumer fraud.” Lemelledo v. Beneficial Mgmt. Corp. of Am., 696 A.2d 546, 551 (N.J. 1997). Ciser unpersuasively suggests that the CFA allows a plaintiff to bring a claim challenging late fee assessments without all eging any deception or misleading contractual provisions. We read no binding New Jersey authority as suggesting the same. Ciser cites only two cases

—

both unreported

— that provide direct support for his reading of the term

. In New York Career Guidance Servic es, Inc. v. Wells Fargo Financial Leasing, Inc. , the New Jersey superior court allowed a CFA plaintiff to survive a motion for summary

5 In Kugler , the court emphasized the close relationship between fraud and unconscionability by quoting the following excerpt from a treatise on fraud:

The Court s have always avoided hampering themselves by defining or laying down as a general proposition what shall be held to constitute fraud. Fraud is infinite in variety. The fertility of man's invention in devising new schemes of fraud is so great, that the Cou rts have always declined to define it, or to define undue influence, which is one of its many varieties, reserving to themselves the liberty to deal with it under whatever form it may present itself. Fraud, in the contemplation of a Civil Court of Justice, may be said to include properly all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed, and are injurious to another, or by which an undue or unconscientious advantage is taken of anoth er. All surprise, trick, cunning, dissembling and other unfair way that is used to cheat any one is considered as fraud. Id . (quoting Kerr, Fraud and Mistake, 1 (7th ed. (1952)).11

judgment by arguing that a delinquent lessee of office equipment was charged an unconscionable penalty of fifty dollars f or each late payment. No. BER

- L

- 1705

- 03, 2005 WL 1252315 , at *1 (N.J. Super. Ct. May 2, 2005)

. In that case, a fee of 10% “or up to $50.00” was fully disclosed in the lease agreement. Id . The monthly lease payment was $53.64. Id . Though the court found tha t there was “an utter vacuum of ambiguity and no capacity for being mislead [sic],” the court permitted the CFA claim

. Id . at *6, *12. In King’s Choice Neckwear v. Fedex Corp ., the plaintiff’s CFA class action to recover a collection agency fee of $40 ( cov ering attorney’s fees, interest, and court costs) survived a motion to dismiss because the court found that the defendant’s nearly 40 % fee violated New Jersey public po licy regarding unfair penalties. No. 7

– 275, 2007 WL 4554220, at
*7

– 8 (D. N.J. , Dec. 21, 2007) (citing Wasserman’s Inc. , 645 A.2d at 108 ).
W e agree with the District Court that New York Career Guidance Services and King’s Choice a re not persuasive. T he two opinions attempt to import Wasserman’s and Metlife into an offensive CFA claim for unc onscionability. Until the New Jersey Supreme Court decides otherwise, we read precedent as suggesting that the CFA requires some element of deceptive conduct, explicit or implicit, to be actionable as an unconscionable practice. The capacity to deceive is conceptually distinct from a showing of fraud or deception in fact. The CFA does not require actual deception or an intent to deceive. Cox , 647 A.2d at 462

. At oral argument, Ciser argued that exorbitant late fee charges are deceptive because they inheren tly purport to cover a certain level of actual damages. We reserve judgment on whether a late fee can be so large relative to actual costs so as to be intrinsically misleading. Ultimately, our holding rests upon Ciser’s failure to plead12

sufficient facts to state a plausible claim for relief under any theory

— common law or the
CFA. Further, as indirect support, Ciser argues that Katz v. Ticketmaster allows a plaintiff to bring a CFA claim for excessive fees. No. 09

- 3740 (MLC), 2010 WL 2539686 (D. N.J. 2010). In Katz , also an unreported case, t he defendant imposed mandatory “parking fees” without regard to individuals’ mode of transportation, “ticket fees” without explanation of resulting services, and “charity fees” without identifying any
intended beneficiar y. Id . Taking the practices together, the court found a deceptive scheme to mislead consumers about the value of a ticket and thus arbitrarily inflate ticket prices. Id. at *6

– 7. In Katz , the court found that the deceptive scheme evinced Ticketmaster’s dis tinct capacity to mislead consumers

— this finding is qualitatively different than the fully disclosed late fee in Nestle’s consumer contract with Ciser

. Therefore, we find Katz distinguishable from the case at issue and consistent with a requirement to show a cap acity to mislead under the CFA. Ultimately, however, our decision rests upon the insufficiency of Ciser’s pleading. Even assuming a cognizable CFA claim , Ciser has failed to state a plausible claim for relief, as discussed below.
4

. Failure to Stat e Plausible Claims Notwithstanding the viability , vel non, of a common law or CFA cl aim, Ciser has failed to plead sufficient facts to create a plausible claim for relief under either potential cause of action

. 6 “[T]o survive a motion to dismiss, a compla int must contain sufficient

6 As elaborated in Cox , because the intent to deceive or actual deception is not required for a CFA claim, a heightened pleading standard under FRCP Rule 9 is not13

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007) ). Plausibility requires “more than a sheer possibility that a defendant has acted unlawfully.” Id . In evaluating a complaint for sufficiency, we (1) outline the elements a plaintiff must plead to state a claim for relief, (2) disregard allegations that are no more than conclusion s, and (3) look for well

- pled factual allegations and, assuming their truth, determine whether they plausibly give rise to an entitlement to relief. Bistrian v. Levi , 696 F.3d 352, 365 (3d Cir. 2012). Notwithstanding our outline of the claims above, Cise r’s Second Amended
C omplaint is threadbare. We must disregard his conclusory allegations stating that Nestle’s scheme is “oppressive , ” “exorbitant and illegal ,” and “ stratospheric

. ” (Second Am. Complaint , at ¶¶ 1

– 2). Similarly, we must disregard Ciser’s e xpert

— without providing a report with additional facts, he has only proffered a conclusory opinion. What remains of the Complaint is insufficient. Ciser asserts that the only two components of Nestle ’ s “actual costs” incurred from late payment are (1) lost interest on the overdue balance , a nd (2) the incremental administrative costs to send letters to customers ( Id . at ¶¶ 5, 30). From this, C iser infers that Nestle’s late fee is grossly disproportionate because
the maximum cost Nestle would have incurred as a result of a late payments is $1.14 ( Id

. at ¶ 34). However, the dearth of factual information does not result in a plausible claim that Nestle’s only i ncurred costs are $1.14

.
warranted. 647 A.2d at 462; s ee also Katz , 2010 WL 2539686 at *5 (citing Dewey v. Volkswagen AG , 558 F.Supp.2d 505, 525 (D. N.J. 2008)).14

Attempts to shoehorn Metlife into the CFA framework also fail to nudge Ciser ’s claim s to plausibility. Prior to Metlife , no reported New Jersey case directly addressed the validity of a fixed percentage late charge. Metlife , 732 A.2d at 501. The defendant in Metlife challenged a 5% liquidated damages provision negotiated at arms

- l ength between sophisticated parties as part of a loan for commercial property worth $1.5 million. Id

. at 495. The percentage was well within the industry standard. Id

. at 496. Ciser attempts to argue that Metlife ’s 5% standard necessarily proh ibits Nestle’ s late fee, but its holding “applies only to commercial loan transactions and does not address the issue of enforceability of liquidated damage clauses in consumer contracts or in residential mortgages

. ” Id . at 502, n. 2. Ciser pleads that one late fee amou nted to 132% of the underlying bill. ( Second Am. Complaint at ¶ 2 ) . However, relying solely on a percentage standard is impractical as applied to small value consumer contracts such as Ciser’s. Under that standard, a ny business offering goods and services of nominal value would be prevented from assessing any meaningful late fee. Indeed, the Metlife court noted that attributing administrative costs t o a single consumer “underestimates the difficulties and impracticalities involved in determining the actual damages incurred in dealing with delinquent borrowers.” Metlife , 732 A.2d at 493. Thus, Ciser’s claim s amount to unsupported legal conclusion s based upon unwarranted inferences. Without more information, a $15 late f ee on its face does not
p lausibly sugg est an unfair penalty or an unconscionable practice

— especially when competitive with an industry standard. Ciser has further failed to provide any information that would suggest a dimension of deception permitting a challenge under the CFA

.15

Consistent with the foregoing, Ciser has likewise failed to plead facts sufficient to show that Nestle’s retention of a benefit from Ciser

— the late fee payments

— would result in an injustice

. III. C ONCLUSION For the foregoing reasons , we affirm the decision of the Distr ict Court

.