Opposition Brief — RENT-A-CENTER, INC. v. Perez, 127 S. Ct. 984 (2007) (No. 06-657)
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No. 06-657
In the
Supreme Court of the Bnited States
RENT-A-CENTER, INC.,
Petitioner,
v.
HILDA PEREZ, ON BEHALF OF HERSELF AND ALL
OTHERS SIMILARLY SITUATED,
Respondents.
On Petition for a Writ of Certiorari to the
Supreme Court of New Jersey
BRIEF IN OPPOSITION TO PETITION
FOR A WRIT OF CERTIORARI
MARK R. CUKER SETH R. LESSER
MICHAEL J. QUIRK Counsel of Record
WILLIAMS CUKER BEREZOFSKY LOCKS LAW FIRM
210 LAKE DRIVE EAST, SUITE 101 457 HADDONFIELD ROAD
CHERRY HILL, NJ 08002 CHERRY HILL, NJ 08002
(856) 667-0500 (856) 663-8200
WILLIAM A. RIBACK, ESQ.
527 COOPER STREET, 2"° FLOOR
CAMDEN, NJ 08102
(856) 342-9700
Counsel for Respondents
PRESET EI TEE OCDE OEE LEE NEIL LID ELSA DELLE ELE L EL! LEE LSC
I~ sali
QUESTIONS PRESENTED
(1) Whether the Court has jurisdiction under 28 U.S.C. §
1257(a) to review the New Jersey Supreme Court’s
interlocutory decision below vacating a judgment for Petitioner
Rent-A-Center on purely _state-law grounds, ordering
reinstatement of Respondent Perez’s state-law claims, and
remanding for further proceedings on the merits in the state trial
court, where Rent-A-Center has moved for summary judgment
on state-law grounds.
(2) Whether Rent-A-Center preserved its federal due
process argument raised here when the state courts below never
addressed the argument and when Rent-A-Center made no
argument based on federal law in its state-court briefing prior
to its petition for rehearing in the New Jersey Supreme Court.
(3) | Whether the decision below violated Rent-A-Center’s
right to fair warning under the Fourteenth Amendment’s Due
Process Clause when it construed state consumer protection
statutes exactly as every lower state court did in previous cases,
including several where Rent-A-Center was a losing party and
chose to settle rather than appeal.
TABLE OF CONTENTS
Page(s)
SURFER UPN MEINE EED 6. cv rcvescccveseeceecues i
PPE PURI EPTUPMAUEEED owe ccsccscscccesececess iv
Cee eM ets baesscesceeversececces l
CONSTITUTIONAL AND STATUTORY
8 0 ]
aie a eda cevesevsteveuvevese 3
RPP EERTE GP TPIS CADE 2c. ccc cece ccc s ee eeees 6
1. The Underlying Causes of Action ............. 6
2. The Prior State of Applicable New Jersey Law,
Including Decisions Against Rent-A-Center ..... 6
3. The New Jersey Supreme Court’s Decision .... 10
REASONS FOR DENYING THE PETITION ......... 14
I. The Court Lacks Jurisdiction to Review this
Interlocutory State-Court Decision. ............. 14
A. Because Judgment is Not Final, This Court Lacks
Jurisdiction Under 28 U.S.C. § 1257. .........5.. 14
B. The Cox Broadcasting Exceptions to Section 1257's
ii
Final Judgment Requirement Do Not Apply. ...... 15
I]. Rent-A-Center Waived Its Federal-Law Argument. . 17
A. This Court Will Not Address Federal Claims Not
Properly Raised in the State Courts. ............. 17
B. Rent-A-Center’s Newfound Due Process Argument
SPS bs cckesodebvecesaceusecesi eee 18
III. There is No Split of Authority on the Federal Due
Process Question. ...... bins sedabewenereeys 21
A. The Decision Below is Consistent With This
+ eee oo issu ch aoe eaes 22
1. This Court’s Due Process Decisions Do Not
Compel a Different Result. .......csccceveses 22
2. The Decision Below Does Not Conflict With
This Court’s Dicta in Landgraf............... 24
B. The Decision Below Does Not Conflict With Any
Other Courts’ Decisions. ... 2... cc ccwccccccsess 25
CAVGEY 4 oh cane wardens Goekc us hecree ceeat 27
lil
Table of Authorities
Cases
Adams v. Robertson, 520 U.S. 83 (1997) ........... 17, 20
Board of Directors of Rotary Int'l v. Rotary Club
of Demrte, 461 US. S37 (19ST) ic cc cc ccccvcees 17-18
Bouie v. City of Columbia, 378 U.S. 347 (1964) .. 22, 23, 24
Cox Broadcasting Corp. v. Cohn, 420 U.S. 469
(oR e rene pein Fea app ary nm er cnr ny 15, 16
Fischer v. Canario, 670 A.2d 516 (N.J. 1996) ......... 19
Girard Acceptance Corp. v. Wallace, 388 A.2d 582
(NS. 1976) ..... AE IO Ea ene aoe TORE eT 10
Green v. Continental Rentals, 678 A.2d 759
(NJ. Super. Ct., Ci. Div. F99G) . 0. ccc ccc eves 8,9, 25
Harper v. Virginia Dep't of Taxation, 509 U.S. 86
DRED ilne'o4 05k ban dew eRe ee ee ee ets eos 25, 27
Helton v. Fauver, 930 F.2d 1040 (3d Cir. 1991) ..... 25, 26
In re Suspension of DeMarco, 414 A.2d 1339
Eee SUE Ak ive by week ke Pa eas ko ce eas 19
Jefferson v. City of Tarrant, Ala., 522 U.S. 75
SEES 6b nu cdo ou's Wo we ee Ree ee eee 14
1V
Landgraf v. USI Film Products, 511 U.S. 244
NN ore oe eae ae 24, 25
Marbury v. Madison, 5 U.S. 137 (1803) .............. 27
Marks v. United States, 430 U.S. 188 (1977) .......... 24
Miller v. Colortyme, Inc., 518 N.W.2d 544
(Minn. 1994)...... LPERU RENO DEMS ee TURES 11
Moore v. Wyrick, 766 F.2d 1253 (8" Cir. 1985) ........ 26
People v. Caudillo, 580 P.2d 274 (Cal. 1978) .......... 26
People v. Martinez, 973 P.2d 512 (Cal. 1999) .......... 26
Radio Station WOW, Inc. v. Johnson, 326 U.S. 120
SE oo ep dk oh ig bk Es Rk 15, 18
Reynoldsville Casket Co. v. Hyde, 514 U.S. 749
CEE 5 veh PREP SH EAN RTT ONS E L E 24-5
Robinson v. Thorn Americas, Inc., No. CAM-L-
3697-94 (N.J. Super. Ct., Law Div.) ........ 8-9, 10, 25
Rogers v. Tennessee, 532 U.S. 451 (2001) ......... 23, 24
Saul v. Midlantic National Bank/South, 572 A.2d 650
(N.J. Super. Ct., App. Div. 1990) ........... 4; eto oe
Singer Co. v. Gardner, 323 A.2d 457 (N.J. 1974) ....... a
Sliger v. R.H. Macy & Co., Inc., 283 A.2d 904
eh ob eo ed pee hab ad abe ek ud dara ee 12,13
South Jersey Catholic School Teachers Org. v.
St. Teresa of the Infant Jesus Church
Elementary School, 696 A.2d 709 (N.J. 1997) ........ 20
State v. Churchdale Leasing, Inc., 577 A.2d 277
SU oan a mh eu es wan kee de heeded eka es 19
State v. Feaster, 877 A.2d 229 (N.J. 2005) ......... 20-21
State v. Livingston, 797 A.2d 153 (N.J. 2002) .......... 19
State v. Majors, 237 S.W. 486 (Mo. 1922) ............ 26
Steffenauer v. Mytelka & Rose, Inc., 210 A.2d 88
ae, eee, Ch, CO Bee, SGP occ ccevecs ces 12,13
United States v. Hoctor, 487 F.2d 883 (9" Cir. 1973) .... 26
United States v. Potts, 528 F.2d 883 (9" Cir. 1975) ..... 26
Webb v. Webb, 451 U.S. 493 (1981) .............. 19, 20
Constitutional Provisions
ee I OT sn a eed ee ee bee eos 20
Eb.2e, Re, BUNGE, DREW. occ acs ecenvecveesea i, 18, 2]
Statutes and Legislative Materials
pS ade 8 - ) Syren ny ary passim
Seats Ks FU AR Ee niet bcwardeveswenes Be toae
Pais ee CUE Tee PLUG E eis vcdecavecauewens 1-2, 6, 22
N.J. STAT. ANN. § 17:16C-41 ................ 2-3, 7, 11
Pl. SC FE PRED oi dice cae aeeseeeenes 6
Vii
RESPONDENT?’S BRIEF IN OPPOSITION
JURISDICTION
The New Jersey Supreme Court issued its decision on
March 15, 2006. The decision reversed a lower court judgment
for Petitioner Rent-A-Center and then remanded the case to the
state trial court “for reinstatement of [Respondent Hilda]
Perez’s complaint and for such further proceedings as are
warranted.” 38a. On remand, Rent-A-Center has moved for
summary judgment on state-law grounds. That motion is
pending. Since there is no final state court judgment or decree
for any party, and the parties are now litigating Perez’s state-
law claims in the state trial court, this Court lacks jurisdiction
under 28 U.S.C. § 1257(a). Moreover, the New Jersey Supreme
Court addressed no federal law question because none was
raised until Rent-A-Center petitioned for rehearing in that court.
The decision below thus does not draw into question any matter
of federal law. Accordingly, the Court lacks jurisdiction under
§ 1257(a) to review this interlocutory state court decision
addressing only matters of state law.
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
New Jersey’s Retail Installment Sales Act provides in
relevant part:
“Retail installment contract” means any contract. . .
entered into in this State between a retail seller and a
retail buyer evidencing an agreement to pay the retail
purchase price of goods or services, which are
primarily for personal, family or household purposes,
or any part thereof, in two or more installments over
a period of time. This term includes a security
agreement, chattel mortgage, conditional sales
contract, or any other similar instrument and any
contract for the bailment or leasing of goods by which
the bailee or lessee agrees to pay as compensation a
sum substantially equivalent to or in excess of the
value of the goods, and by which it is agreed that the
bailee or lessee is bound to become, or has the option
of becoming, the owner of such goods upon full
compliance with the terms of such retail installment
contract.
N.J. STAT. ANN. § 17:16C-1(b) (emphasis added to language
omitted from Rent-A-Center’s petition).
A retail seller . . ., under the provisions of this act,
shall have authority to charge, contract for, receive or
collect a time price differential as defined in this act,
on any retail installment contract evidencing the sale
of goods or services in an amount or amounts as
agreed to by the retail seller... andthe buyer...on ~-
all .. . goods and services.
The retail installment contract may provide for an
increase, or may provide for a decrease, or both, in
the time price differential applicable to the contract.
No increase during the entire loan term shall result in
an interest rate of more than 6% per annum over the
rate applicable initially, nor shall the rate be raised
more than 3% per annum during any 12-month
period. The lender shall not be obligated to decrease
the interest rate more than 6% over the term of the
loan, nor more than 3% per annum during any 12-
month period. . . .
N.J. STAT. ANN. § 17:16C-41 (emphasis added to language
omitted from Rent-A-Center’s Petition).
New Jersey’s criminal usury statute provides in relevant
part:
[N]otwithstanding any law of this State which permits
as a maximum interest rate a rate or rates agreed to
by the parties of the transaction, any loan or
forbearance with an interest rate which exceeds 30%
per annum shall not be a rate authorized or permitted
by law...
N.J. STAT. ANN. § 2C:21-19 (emphasis added to language
omitted from Rent-A-Center’s petition).
INTRODUCTION
This case presents an interlocutory decision by a state’s
highest court that construed state statutes and then remanded for
proceedings on the merits of the plaintiff's state-law claims.
The Supreme Court of New Jersey held that Rent-A-Center’s
“rent-to-own” contracts with consumers for the installment
purchase of household goods were covered by New Jersey’s
Retail Installment Sales Act (“RISA”) and its 30% ceiling on
interest. In so ruling, the court entered no judgment for any
party. Nor did it address any federal law question since none
was raised until Rent-A-Center petitioned the court for
“
P
rehearing. Accordingly, this Court should not grant review to
address Rent-A-Center’s belated federal due process claim here
because (1) the Court lacks jurisdiction to review this
interlocutory state court decision; (2) the federal-law claim is
waived; and, (3) in any event, the decision below implicates no
factually supported federal law question.
Rent-A-Center’s claim that the decision below applying
RISA and its incorporation of the state’s usury ceiling to rent-
to-own sales was so unforeseeable as to violate its due process
right to fair notice is wholly unfounded. At the time this case
was filed in 2002:
@ Every New Jersey court that faced claims like Perez’s
here had ruled, as the New Jersey Supreme Court did
below, that rent-to-own contracts are installment sales
covered by RISA and/or that such sales are covered by
the state’s criminal usury ceiling;
two New Jersey courts had entered summary judgment
against Rent-A-Center itself or companies it owned on
one or both of these issues, whereupon Rent-A-Center
settled those cases instead of appealing the adverse
judgments it received; and
no New Jersey court had ever held that rent-to-own
contracts were exempt from RISA, or that RISA did
not cap interest rates, despite Rent-A-Center’s
contention that this was the settled law.
Viewed against this backdrop, Rent-A-Center’s claim of a due
process violation for lack of fair warning shows an ostrich-like
pretense. Decades of New Jersey law and Rent-A-Center’s own
litigation history belie the company’s assertion that the decision
below enacted a “sea change” by “announcing new and
unforeseeable state-law rules.” Pet. at i.
To the contrary, Rent-A-Center made a conscious business
decision to continue charging New Jersey customers exorbitant
interest rates after having multiple state courts hold these
charges unlawful, and afier paying significant sums to settle
those cases. In light of this state-law backdrop, Rent-A-
Center’s claim of a lack of fair warning creating a due process
violation is unfounded and implausible at best.
If applied to these facts, Rent-A-Center’s due process
theory would revolutionize this Court’s role in supervising
State-court adjudication of state-law matters. The decision
below confirmed New Jersey’s prior statutory and case-law.
Indeed, the only decisions that were reversed were those of the
lower courts in this case. A holding that this decision violated
Rent-A-Center’s due process right to fair notice under these
circumstances would create a federal constitutional question in
every case where a state’s highest court decides a question of
first impression, no matter how consistent that decision is with
statutory and prior lower-court case law. There is no support in
this Court’s or any other court’s precedent for such a sweeping
and seemingly boundless expansion of due process. Thus, there
also is no split of authority on the question presented that would
merit this Court’s review.
STATEMENT OF THE CASE
1. The Underlying Causes of Action
In 2002, Respondent Hilda Perez filed this case in the
Superior Court of New Jersey, Camden County, after Rent-A-
Center had initiated a collection action against her. Pet. App.
8a. Perez alleged that Rent-A-Center’s “rent-to-own” contracts
for installment purchases of household goods violated New
Jersey’s Retail Installment Sales Act (“RISA”), N.J. STAT.
ANN. §§ 17:16C-1, ef seg., and Consumer Fraud Act (“CFA”),
N.J. STAT. ANN. §§ 56:8-1, ef seg., by charging her interest in
excess of the state’s 30% usury ceiling that RISA incorporates.
Pet. App. 8a. She based her claims on the fact that Rent-A-
Center was charging her approximately double the cash price to
purchase these goods over time, representing annual interest
rates of 80% and higher. /d. 5a, 8a. Perez sought relief on
behalf of herself and a class of New Jersey consumers who
entered into these transactions with Rent-A-Center on or after
April 24, 1999. The class dated back to April 24, 1999 because,
as discussed below, that is when Rent-A-Center had finalized
a $60 million settlement of prior cases in which New Jersey
consumers asserted claims identical to those here, and Rent-A-
Center twice had summary judgment entered against it.
2. The Prior State of Applicable New Jersey Law,
Including Decisions Against Rent-A-Center
When Perez initiated this action in 2002, every New Jersey
court that had addressed either or both of the statutory claims
she made against Rent-A-Center agreed with her position that
(i) New Jersey’s RISA applies to rent-to-own contracts; and (ii)
RISA incorporates the state criminal usury statute’s 30% ceiling
on interest charges.
First, in Saul v. Midlantic National Bank/South, 572 A.2d
650 (N.J. Super. Ct. App. Div. 1990), New Jersey’s appellate
division held that the 30% criminal usury ceiling applies to
charges in installment purchase contracts. /d. at 652 n.1, The
court reached this conclusion despite also finding that state’s
lower civil usury limit did not apply to retail installment sales
under RISA (which covers such sales for up to $10,000) or
otherwise. /d. at 654-56.'
The basis for Saul’s distinction between these two usury
rules is found on the face of the applicable statutes. For retail
installment sales, RISA allows parties to contract “in an amount
or amounts as agreed to by the retail seller. . . and the buyer.”
N.J. STAT. ANN. § 17:16C-41. This preempts any application
of the civil usury statute where RISA applies. But New Jersey’s
criminal usury statuté+s-no# preempted because it contains a
savings clause stating that its higher ceiling applies
“notwithstanding any law of this State which permits as a
maximum interest rate a rate or rates agreed to by the parties
of the transaction.” N.J. STAT. ANN. § 2C:21-19(a). These
' Rent-A-Center tries to dismiss the appellate court’s
statement of law as a mere “suggestion in dicta,” (Pet. at 13
n.6), but provides no authority that recognizes a federal due
process right to rely on interpretations of state law that are
directly contrary to a state appellate court’s dicta. At the very
least, this “suggestion in dicta” put Rent-A-Center on notice
that its preferred interpretation of state law was not a sure thing.
7
preemption and savings provisions were simultaneously enacted
into the statutes in 1981. See Pet. App. 28a-32a.
Second, following the 1981 amendments to these statutes,
in Green v. Continental Rentals, 678 A.2d 759 (N.J. Super. Ct.,
Law Div. 1994), the court held both that RISA applies
specifically to rent-to-own contracts and that it incorporates the
state’s 30% criminal usury ceiling. Green held that RISA was
enacted as remedial legislation meant to “protect consumers
from over-reaching by others” and “protect them from over-
extending their resources.” /d. at 764. As such, RISA required
the court “to look beyond form to identify the substance of the
transaction,” so that the customer’s ability to acquire ownership
meant that the transaction met RISA’s definition of an
installment sale. /d. Having found that these rent-to-own
transactions are in fact installment sales, the court held that the
difference between an item’s cash and installment price was
interest that was governed, as in Saul, by- the state’s 30% usury
ceiling on interest charges. /d. at 766.’
Third, following Green, similar lawsuits were filed against
several rent-to-own companies in New Jersey alleging, among
other things, that these transactions were subject to RISA and
violated the 30% interest-rate cap. In Robinson v. Thorn
? Rent-A-Center tries to dismiss Green in footnotes as
having “swam against the tide” of New Jersey law. (Pet. 10
n.4). Even if this were true (which it is not), that is no answer
to whether the existence of this published opinion deciding both
of these issues against a rent-to-own company gave Rent-A-
Center yet further notice that its preferred interpretation of these
laws could be wrong.
Americas, Inc., No. CAM-L-3697-94 (N.J. Super. Ct., Law
Div.), the court followed Green in granting summary judgment
for consumers and against Rent-A-Center (which owned the
defendant company) on RISA‘s application. See Pet. App. 87a-
91a. Robinson held, like Green, tixat rent-to-own transactions
are installment sales covered by RISA, id., and entered
judgment against Rent-A-Center for RISA violations that
resulted in over $100 million in damages. See Rent-A-Center,
Inc. Form 10-K405/A (April 28, 1999) at 13 (available at
http://edgar-online.com/1999/04/28/15/0000950134-99-
003298/Section19.asp). Rather than obtaining appellate review
of this judgment against it, Rent-A-Center chose to settle these
class claims for $48.5 million. Jd.
At the same time it settled Robinson, Rent-A-Center
settled, for an additional $11.5 million, two other New Jersey
cases where consumers raised identical claims against rent-to-
own companies it acquired. /d. at 15-16. In one of these cases,
Gallagher v. Crown Leasing Corp. (cited in Robinson, Pet.
App. at 86a, 88a), the New Jersey court held, as in Green, that
the rent-to-own transactions violated RISA and the applicable
usury cap. Rent-A-Center Form 10-K at 15. Gallagher also
granted the plaintiffs summary judgment as to liability on their
claim that rent-to-own transactions were subject to the 30%
usury limitation. /d. Rent-A-Center chose not to appeal these
adverse judgments. Instead, it made a business decision to
settle all of these cases at a cost of $60 million and to continue
making these high-interest sales in New Jersey despite the state
laws that were consistently being held to prohibit them?
> Rent-A-Center’s April 1999 Form 10-K disclosed in
all capital letters, to the company’s investors that pending
9
In sum, at the time Perez filed this action, multiple New
Jersey courts had held that rent-to-own transactions (including
those involving Rent-A-Center) are retail installment sales
governed by RISA and its usury cap on interest charges.
3. The New Jersey Supreme Court’s Decision
The New Jersey Supreme Court’s decision below echoed
these earlier rulings. In holding that RISA applies to rent-to-
own transactions, the court focused on the Act’s text, history,
and underlying purposes. The court found that RISA was
enacted in 1960 as “‘part of a package of laws designed to
protect consumers from overreaching by others, to protect
consumers from overextending their own resources and also to
promote the availability of financing to purchase various goods
and services.” Pet. App. 18a (quoting Girard Acceptance Corp.
v. Wallace, 388 A.2d 582 (N.J. 1978)).
As to RISA’s coverage, the court highlighted the Act’s
broad definition of “Retail installment contract” to “include[]
a security agreement, chattel mortgage. conditional sales
contract, or other similar instrument and any contract for the
bailment or leasing of goods,” where the bailee/lessee “is bound
to become, or has the option of becoming, the owner of such
goods.” Pet. App. 19a-22a (emphasis added). The court found
lawsuits in New Jersey and elsewhere, including Robinson and
Gallagher, “COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR FINANCIAL CONDITION AND OUR
BUSINESS OPERATIONS.” /d. at 10. Thus, Rent-A-Center
must have had notice of possible liability under RISA for usury
violations since it disclosed that very risk to its investors.
10
99 66
that the phrases “conditional sales,” “similar instruments,” and
“has the option of becoming the owner” were fully descriptive
of Rent-A-Center’s transactions. /d. 21a-22a, 24a-26a.* Citing
multiple prior New Jersey decisions, the court also found that
Rent-A-Center’s contracts were “similar in form to transactions
that had been judicially recognized as conditional sales” prior
to RISA’s enactment, and that RISA encompassed through its
statutory definition both a “conditional sale” and “any other
similar instrument.” Jd. 25a, 26a.
The court further held that any uncertainty should be
resolved to find coverage because of the Act’s broad remedial
purposes. /d. 22a-24a. In thus rejecting Rent-A-Center’s
primary argument that a customer’s right to cancel brought
these transactions outside the Act’s coverage, the court noted
that the Minnesota Supreme Court rejected this very argument
with regard to that state’s retail installment sales statute. Jd.
26a-27a (quoting Miller v. Colortyme, Inc., 518 N.W.2d 544,
549 (Minn. 1994) (case involving Rent-A-Center subsidiary)).
In finding the state’s 30% interest ceiling in its criminal
usury statute applicable under RISA, the New Jersey Supreme
Court again focused on the plain language and history of these
statutes. The court found that its “point of departure is the
language of the Act,” which uses the terms “interest” and “time
price differential” interchangeably, as did the court’s own
precedent. Pet. App. 28a (citing N.J. STA’. ANN. § 17:16C-41;
Singer Co. v. Gardner, 323 A.2d 457, 461 (N.J. 1974)). The
* Despite the court’s reliance on this exact statutory
language, Rent-A-Center chose to omit much of it from its
petition to this Court. Compare Pet. at 2, with Opp. at 2.
1] .
court noted that RISA was originally enacted in 1960 with a
10% limitation on the time price differential that could be
charged in retail installment sales. Pet. App. 28a. The court
also emphasized that when the New Jersey legislature repealed
this limitation in 1981, it did not do so in a vacuum. /d. 29a.
Rather, the legislature simultaneously (1) amended RISA to
replace the 10% time-price cap with the current provision
allowing interest “in an amount or amounts as agreed to by the
retail seller . . . and the buyer;” and (2) amended the state’s
criminal usury provision to make it applicable “notwithstanding
any law of this State which permits as a maximum interest rate
a rate or rates agreed to by the parties of the transaction.” /d.
29a-30a. Noting that RISA is one of several laws amended on
the same day to allow interest rates agreed to by parties, the
court held it is subject to the 30% usury ceiling. /d. 31a-32a.°
Finally, the New Jersey Supreme Court rejected Rent-A-
Center’s argument that prior New Jersey cases compelled it to
differentiate between time price differentials under RISA and
interest rates under the criminal usury statute. The court found
the pre-1981 cases of Sliger v. R.H. Macy & Co., Inc.,283 A.2d
904 (N.J. 1971), and Steffenauer v. Mytelka & Rose, Inc., 210
A.2d 88 (N.J. Super. Ct., Ch. Div. 1965), inapplicable because
they addressed the state’s civil usury statute and its application
to non-RISA contracts. Pet. App. 34a; see also Sliger, 283
> The New Jersey Supreme Court’s careful analysis of
RISA’s and the usury statute’s text and amendment history
should put to rest Rent-A-Center’s repeated and increasingly
shrill accusations that the court “announced two new rules of
law,” engaged in “outlandish judicial manipulation,” and
“radically changed the law of New Jersey.” Pet. at 3, 4, 14.
12
A.2d at 906 (finding civil usury statute inapplicable to
revolving credit account, which then fell outside RISA);
Steffenauer, 210 A.2d at 94 (finding civil usury statute
inapplicable to non-RISA commercial sale).° The court thus
did not overrule these cases, but found them inapposite. The
court also noted that Saul v. Midlantic Nat'l Bank, the only case
Rent-A-Center cited that post-dates the 1981 statutory
amendments at issue here, “actually holds that the criminal
usury statute is applicable to retail installment sales.” Pet. App.
34a (citing Saul, 572 A.2d at 652 n.1).
Having determined, purely as a matter of state law, that the
state’s RISA, Consumer Fraud Act, and 30% usury ceiling
apply to Remt-A-Center’s rent-to-own contracts, the New Jersey
Supreme Court vacated the Appellate Division’s judgment for
Rent-A-Center and remanded the case to the state trial court
“for reinstatement of Perez’s complaint and for such further
proceedings as are warranted.” /d. 38a.’
° Moreover, contrary to Rent-A-Center’s representation
that these cases represented a “tide” (Pet. at 10 n.4) of case law
on the application of New Jersey’s time-price doctrine,
Steffenauer itself recognized both that this doctrine could be
abrogated by the legislature and that this is precisely what the
legislature did in enacting RISA. 210 A.2d at 93-94.
” The court subsequently denied Rent-A-Center’s
motion for reconsideration. In granting the parties’ motions for
clarification, the court held that its judgment applied to Perez
and anyone who is part of a certified plaintiff class on remand,
but is otherwise prospective. Pet. App. 42a, 43a.
13
REASONS FOR DENYING THE PETITION
I. The Court Lacks Jurisdiction to Review this
Interlocutory State-Court Decision.
A. Because Judgment is Not Final, This Court Lacks
Jurisdiction Under 28 U.S.C. § 1257.
The Court lacks jurisdiction over Rent-a-Center’s petition.
This Court has jurisdiction to review “[flinal judgments or
decrees rendered by the highest court of a State in which a
decision could be had...” 28 U.S.C. § 1257(a). The decision
below is not a final judgment or decree. The New Jersey
Supreme Court reversed a grant of judgment for Rent-A-Center
and remanded the case “for reinstatement of Perez’s complaint
and for such further proceedings as are warranted.” Pet. App.
38a. Rent-A-Center now has moved the state trial court for
summary judgment against Perez on state-law grounds, arguing
that the New Jersey Supreme Court’s decision “merely
reinstated Plaintiff's complaint and left open on remand any
and all defenses to tiability that RAC may have.” Rent-A-
Center Memorandum to N.J. Superior Court, Camden County,
dated Sept. 22, 2006, at 3. Perez has moved for certification of
a plaintiff class. Both contested motions are pending in the
State trial court, and would be subject to later appeal. Since the
decision below reinstating Perez’s claims is interlocutory, this
Court does not have jurisdiction to review it.
Section 1257(a) establishes a “firm final judgment rule.”
Jefferson v. City of Tarrant, Ala., 522 U.S. 75, 81 (1997). This
means that a state court’s decision must be “final as an effective
determination of the litigation and not merely of interlocutory
14
or intermediate steps therein.” /d. Section 1257's requirement
of finality “‘is not one of those technicalities to be easily
scorned. It is an important factor in the smooth working of our
federal system.’” Jd. (quoting Radio Station WOW, Inc. v.
Johnson, 326 U.S. 120, 124 (1945)). The New Jersey Supreme
Court’s decision imposed no liability on Rent-A-Center (and
thus deprived it ofno property interest). Indeed, Rent-A-Center
is now arguing to the state trial court that it is entitled to
summary judgment. The decision below is thus interlocutory
and non-appealable under § 1257(a).
B. The Cox Broadcasting Exceptions to Section 1257's
Final Judgment Requirement Do Not Apply.
In Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 (1974),
the Court recognized four circumstances that permit review
absent a final judgment. The first involves cases where “there
are further proceedings . . . yet to occur in the state courts but
where for one reason or another the federal issue is conclusive
or the outcome of further proceedings preordained.” /d. at 479.
Second are cases in which “the federa! issue, finally decided by
the highest court in the State, will survive and require decision
regardless of the outcome of future state-court proceedings.”
Id. at 480. Third are cases where “the federal claim has been
finally decided, with further proceedings on the merits in the
state courts to come, but in which later review of the federal
issue cannot be had, whatever the ultimate outcome of the
case.” Jd. at 481. The final exception arises where (1) “the
federal issue has been finally decided in the state courts . . . and
where reversal of the state court on the federal issue would be
preclusive of any further litigation on the relevant cause of
action;” and (2) “a refusal immediately to review the state-court
15
decision might seriously erode federal policy.” /d. at 482-83.
None of these circumstances is present here.
The first three Cox Broadcasting exceptions do not apply
because there are still disputed issues concerning liability and
damages before the state trial court on which either party could
prevail, and on which a losing party could appeal. On remand,
Rent-A-Center is arguing that it is entitled to judgment on state-
law grounds because Perez allegedly did not pay interest in
excess of the applicable usury limit. Since the due process
question raised here is not “conclusive” in these state court
proceedings, and their outcome is not “preordained,” id. at 479,
the first Cox exception does not apply. Nor does the second
exception apply since, if Rent-A-Center prevails on its pending
state-law defenses, the federal-law claim would not “survive
and require decision.” /d. at 480. Likewise, the third Cox
exception does not apply because there exists no state-law bar
to a later appeal by either party, as there is in many criminal
cases, id. at 481, in the event of an adverse judgment.
Finally, the fourth Cox exception is inapplicable here for
two reasons. First, a reversal of the state court on Rent-A-
Center’s federal due process claim would not be preclusive of
all further litigation, id. at 482-83, because Perez asserts claims
for injunctive relief that implicate the prospective application
of the decision below, which Rent-A-Center’s due process
claim does not challenge. Second, and more fundamentally,
this is not a case where “a refusal immediately to review the
state-court decision might sertously erode federal policy.” /d.
at 483. Cox applied this exception where a pending damages
judgment involving an unresolved First Amendment question
could deter the present exercise of constitutionally protected
16
speech rights. /d. at 485-86. Here, requiring a final state-court
judgment poses no such threat to any federal policy. Under the
decision below, there is at present no injunction against any
conduct by Rent-A-Center. Nor has any liability been imposed
against Rent-A-Center that would deprive it of property with or
without due process. Moreover, the possibility of a later
damages judgment does not affect any present exercise of
federally-protected rights because Rent-A-Center’s federal-law
argument does not challenge the decision’s prospective
application. Nor could it, since there is no constitutional right
to charge consumers exorbitant interest rates.
In sum, there is no basis in this case to depart from Section
1257’s imposition of a “firm final judgment rule.” The Court
thus lacks jurisdiction, and the petition should be denied.
Il. Rent-A-Center Waived Its Federal-Law Argument.
A. This Court Will Not Address Federal Claims Not
Properly Raised in the State Courts.
In reviewing state court judgments under 28 U.S.C. §
1257, this Court adheres to the general rule that it “will not
consider a petitioner’s federal claim unless it was either
addressed by, or properly presented to, the state court that
rendered the decision” under review. Adams v. Robertson, 520
U.S. 83, 86 (1997). Where a petitioner failed to raise its federal
law claim until its petition for rehearing to the state supreme
court, the claim is waived. As the Court explained in Adams,
“we have generally refused to consider issues raised clearly for
the first time in a petition for rehearing when the state court is
silent on the question.” /d. at 89; see alse Board of Directors
17
of Rotary Int'l v. Rotary Club of Duarte, 481 U.S. 537, 550
(1987) (“Appellants did not present the issues squarely to the
state courts until they filed their petition for rehearing with the
Court of Appeal.”); Radio Staton WOW, 326 U.S. at 128
(“Questions first presented to the highest State court on a
petition for rehearing come too late for consideration here. . .”).
Since this is precisely what Rent-A-Center did in-the state court
proceedings below, its belated federal due process argument
comes “too late for consideration here.”
B. Rent-A-Center’s Newfound Due Process Argument
is Waived.
Rent-A-Center first argued that a judgment against it
would violate the Fourteenth Amendment’s Due Process Clause
in its petition for rehearing to the New Jersey Supreme Court.
Prior to that, its only reference to “due process” was a single
sentence in a brief that gave no citation to federal law, and
relied exclusively on state-court authority that itself identified
no federal law. Because Rerit-A-Center did not give the state
courts below the required opportunity to consider its federal due
process argument raised here, the argument is waived.
Rent-A-Center’s federal due process argument was neither
addressed by nor properly presented to the New Jersey courts.
Nowhere in their opinions or orders did these courts address
any due process argument. Where the state’s highest court is
silent, “the aggrieved party bears the burden of .
demonstrating that the state court had ‘a fair opportunity to
address the federal question that is sought to be presented
18
here.’” Jd. at 87 (quoting Webb v. Webb, 451 U.S. 493, 501
(1981)). Rent-A-Center cannot carry this burden.*
Prior to its rehearing petition, Rent-A-Center’s only
mention of “due process” to the New Jersey Supreme Court or
Appellate Division (which address the same briefs) was the
following:
Because it is a criminal statute, any ambiguities in
N.J.S.A. 2C:21-19 must be construed strictly in favor
of those accused of violating the law. State v.
Livingston, [797 A.2d 153, 158 (NJ. 2002)).
Otherwise, due process rights are violated. State v.
Churchdale Leasing, Inc., {557 A.2d 277, 287 (N.J.
1989)].
Pet. App. 93a-94a. Neither Rent-A-Center nor the state court
cases it cited in making this argument anywhere identify the
U.S. Constitution’s Due Process Clause or cases applying it.
See, e.g., Churchdale Leasing, 557 A.2d at 287 (“At the heart
of the rule requiring strict construction of criminal statutes is
the principle of due process. /n re Suspension of DeMarco,
{414 A.2d 1339, 1345 (N.J. 1980)]” (which likewise identifies
no federal law)).
* Rent-A-Center suggests (Pet. at 14) that the New
Jersey Supreme Court implicitly addressed its due process
argument by making the ruling prospective as to other parties.
Under New Jersey law, however, prospective application of a
cuurt’s ruling is a matter of discretion that “is not answered by
any constitutional mandate.” Fischer v. Canario, 670 A.2d
516, 521 (NJ. 1996).
19
Rent-A-Center’s passing invocation of “due process”
without citing any federal law did not preserve the argument
raised here. As the Court found in Adams v. Robertson:
(T]he passing invocations of ‘due process’ . . . fail to
cite the Federal Constitution or any cases relying on
the Fourteenth Amendment, but could have just as
easily referred to the due process guarantee of the
Alabama Constitution, see Ala. Const., § 13 (1901),
and thus they did not meet our minimal requirement
that it must be clear that a federal claim was
presented.
520 U.S. at 89 n.3 (citations omitted) (emphasis in original); see
also Rotary Int'l, 481 U.S. at 550 n.9 (“This casual reference to
a federal case, in the midst of an unrelated a:gument, is
insufficient to inform a state court that it has been presented
with a claim subject to our appellate jurisdiction . . .”); Webb v.
Webb, 451 U.S. 493 (1981) (lower court brief referencing “full
faith and credit” in one sentence without citation “would not
suffice to establish that petitioner’s claim was based on the
Federal Constitution.”).’
” The New Jersey courts impose the same requirement
of substantive argument to preserve an issue. South Jersey
Catholic School Teachers Org. v. St. Teresa of the Infant Jesus
Church Elementary School, 696 A.2d 709, 721 (N.J. 1997)
(“Issues that are raised but are not supported with arguments are
deemed waived.”). Moreover, although the New Jersey
Constitution does not contain an express due process clause,
“the right to due process is implicit in [its] Article L-Paragraph
I,” recognizing “Natural and unalienable rights.” State v.
20
Because Rent-A-Center did not timely present its federal
due process argument for the New Jersey courts to consider, the
argument is waived and the petition should be denied.
Ili. There is No Split of Authority on the Federal Due
Process Question.
Rent-A-Center’s argument (Pet. 16-28) that the decision
below conflicts with decisions by this and other appellate courts
applying the Fourteenth Amendment’s Due Process Clause is
based on the erroneous assertion that the New Jersey Supreme
Court announced “new and unforeseeable rules.” The state of
the law in New Jersey when this case was filed in 2002
demonstrates that this assertion is baseless. As discussed
above, the New Jersey Supreme Court reached its holding that
RISA and the state’s 30% usury ceiling apply to rent-to-own
contracts by construing a 25-year old statutory scheme in light
of its text, legislative history, and underlying remedial purposes.
In doing so, the court overruled no precedent. Instead, it
echoed the holdings of every lower state court case that
previously had addressed these questions. Rent-A-Center itself
was a party in interest-in~several of those cases and,
notwithstanding those rulings, made a conscious business
decision in 1999 to continue making high-interest rent-to-own
_ Sales in New Jersey, including those at issue here. This
backdrop demonstrates why Rent-A-Center’s claim of a lack of
fair warning giving rise to a split of authority on a federal due
process question utterly fails.
Feaster, 877 A.2d 229, 238 n.3 (N.J. 2005).
21
A. The Decision Below is Consistent With This Court’s
Cases.
1. This Court’s Due Process Decisions Do Not
Compel a Different Result.
First, the decision below does not conflict with Bouie v.
City of Columbia, 378 U.S. 347 (1964). Bouie held that a state
court’s construction of a criminal trespass statute in affirming
a conviction violated the defendant’s due process right of fair
warning where this interpretation was “clearly at variance with
the statutory language,” and “has not the slightest support in
prior South Carolina decisions.” /d. at 356. Bouie first found
that the state trespass statute’s prohibition of “[e]ntry on lands
of another after notice prohibiting same,” id. at 349 n.1, was
“admirably narrow and precise.” /d. at 351. But Bouie then
found that the state court’s interpretation of the statute to apply
to the act of remaining on lands after being asked to leave
violated the criminal defendants’ due process right to fair
warning because, in the 95 years since it was enacted, “the
South Carolina cases construing the statute uniformly
emphasized the notice-before-entry requirement, and gave not
the slightest indication that that requirement could be satisfied
by proof of the different act of remaining on the land after being
told to leave.” Jd. at 356-57.
The state of the law in New Jersey prior to the decision
below was diametrically opposite that in Bouie. New Jersey’s
civil consumer protection statute governing retai! installment
sales is worded broadly to apply to “a security agreement,
chattel mortgage, conditional sales contract, or any other
similar instrument,” N.J. STAT. ANN. § 17:16C-1(b) (emphasis
22
added), Rent-A-Center’s omission of this language from its
petition notwithstanding. ‘ This statute’s provision allowing
charges in amounts agreed to by the parties was enacted in
tandem with a provision making the state’s criminal usury
ceiling appiicable “notwithstanding any law of this State which
permits as 2 maximum interest rate a rate or rates agreed to by
the parties of the transaction.” N.J. STAT. ANN. § 2C:21-19.
Moreover, unlike in Bouie, Rent-A-Center had ample
notice that these statutes applied to its rent-to-own contracts
because at least four New Jersey courts previously held that
these are retail installment sales and/or that the criminal usury
ceiling governs such sales. Moreover, as detailed above at 8-9,
Rent-A-Center was a party in interest in several of these cases,
each of which it chose to settle at a considerable cost rather than
appeal. This case thus would only be akin to Bouie if Mr.
Bouie had twice before been charged with trespass for identical
conduct, lost and paid fines to settle both of these cases under
precedent addressing identical conduct, and only then on the
third time around tried to challenge these laws for failing to
give him fair notice.
For the same reasons, the decision below does not conflict
with Rogers v. Tennessee, 532 U.S. 451 (2001). Rogers upheld
a state court’s admittedly retroactive change to a state-law rule
imposing criminal liability, and rejected a strict application of
ex post facto rules to the due process limits on state courts as
“unworkable.” /d. at 461. Instead, Rogers held that Bouie was
limited to cases involving “interpretations of criminal statutes
... that are ‘unexpected and indefensible by reference to the
law which had been expressed prior to the conduct in issue.’”
Id. (quoting Bouie, 378 U.S. at 354). That is not what occurred
23
here. The decision below reflects the plain language of the state
statutes at issue and echoes the nearly-unanimous view of lower
state courts in applying these statutes. Indeed, the only opinions
that were overturned were those of the lower courts in this case.
Rent-A-Center’s invocation of Rogers and Bouie thus misses
the mark far and wide.
Similarly, Marks v. United States, 430 U.S. 188 (1977),
addressed a change to First Amendment precedent that
“undeniably relaxes” the standards limiting criminal obscenity
prosecutions. Marks held that this expansion of criminal
liability could not be applied retroactively given the “special
care” for providing fair warning in the regulation of expression
that implicates the First Amendment. /d. at 195-96. Here, there
was no change in controlling precedent. The New Jersey
Supreme Court distinguished all of the prior state court cases
Rent-A-Center cites here, without overruling any of them.
Moreover, Rent-A-Center’s high-interest sales here do not
implicate any of the First Amendment concerns that warranted
“special care” in Marks. These decisions thus do not conflict.
2. The Decision Below Does Not Conflict With
This Court’s Dicta in Landgraf.
In Landgraf v. USI Film Products, 511 U.S. 244 (1994),
the only case Rent-A-Center cites that involves civil liability,
the Court merely recognized a presumption against retroactivity
in construing ambiguous statutes. /a. at272. At the same time,
Landgraf found that “the constitutional impediments to
retroactive civil legislation are now modest.” /d. (emphasis in
original). This is even more true of state court adjudication.
See, e.g., Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 753
24
(1995) (a party’s claim of reliance, “often present when prior
law is overruled - -is the very sort that this Court {has] found
insufficient to deny retroactive application of a new legal
rule.”); Harper v. Virginia Dep’t of Taxation, 509 U.S. 86, 100
(1993) (noting the “freedom state courts may enjoy to limit the
retroactive operation of their own interpretations of state law.”).
In any event, Landgraf cannot possibly conflict with the
decision below because the New Jersey Supreme Court did not
announce any new or unforeseeable rule of law.
The decision below thus does not conflict with any of this
Court’s due process decisions.
B. The Decision Below Does Not Conflict With Any
Other Courts’ Decisions.
The decision below likewise does not conflict with the
lower court cases Rent-A-Center cites. In Helton v. Fauver,
930 F.2d 1040 (3d Cir. 1991), the court on habeas corpus
review addressed a state high court’s ex post facto construction
of a statute that expanded criminal liability for juveniles after
all lower state court cases had rejected this expansion. /d. at
1048. Helton found this “unforeseeable departure from
precedent” to violate due process. J/d.; see also id. at 1047 (“In
short, the language of the statute, together with the line of cases
interpreting it in the New Jersey state courts, could not have put
Helton on notice of, or made reasonably foreseeable, the shift
in direction and the change in the law effected by the New
Jersey Supreme Court.”’). Here, in stark contrast, the decision
below is consistent with the repeated decisions of the lower
New Jersey courts in the Saul, Green, Robinson, and Gallagher
cases discussed herein. In light of these cases, the decision
25
below can hardly be called “unforeseeable,” and thus does not
conflict with Helton.
The remaining cases Rent-A-Center cites all involve
explicit reversals of precedent that expand the scope of criminal
liability. See Moore v. Wyrick, 766 F.2d 1253, 1257 (8 Cir.
1985) (“Answering this question in the affirmative, the
Missouri Supreme Court explicitly overruled its prior decision
in [State v. Majors 237 S.W. 486 (Mo. 1922)]}); United States
v. Potts, 528 F.2d 883, 886 (9" Cir. 1975) (“Our decision today,
overruling [United States v. Hoctor, 487 F.2d 270 (9" Cir.
1973)], undoubtedly expands the scope of potential criminal
liability . . .”); People v. Martinez, 973 P.2d 512, 521 (Cal.
1999) (“Our overruling of [People v. Caudillo, 580 P.2d 274
(Cal. 1978)] raises the further question whether today’s holding
may be applied retroactively to defendant.”). Here, by contrast,
the New Jersey Supreme Court imposed no criminal liability on
Rent-A-Center and overturned none of its own precedent. This
decision thus did not deprive Rent-A-Center of fair warning as
to its potential civil liability to New Jersey consumers, and does
not conflict with any of the cases cited in Rent-A-Center’s
petition.
That there is no conflict of authority on the due process
question presented is hardly surprising. Rent-A-Center’s claim
of a lack of fair warning from a state supreme court decision ©
that overturns no precedent and follows every prior lower state
court case addressing the precise questions before it would
create a bottomless expansion of the concept of due process. A
finding that the decision below violates the Fourteenth
Amendment would compel the same result in every case where
a state court decides a question of first impression. This would
26
force every state court facing an allegedly novel question of law
to issue a prospective advisory opinion, a practice the
Constitution arguably prohibits for federal courts. See Harper,
509 U.S. at 107-08 (Scalia, J. concurring) (it is “‘the province
and duty of the judicial department to say what the law is,’ not
what the law shall be.”) (quoting Marbury v. Madison, 5 U.S.
137 (1803)). There is no split of authority because the question
presented lacks any basis in fact.
CONCLUSION
For all of the foregoing reasons, the petition for a writ of
certiorari should be denied.
Respectfully submitted,
MARK R. CUKER SETH R. LESSER ~
MICHAEL J. QUIRK Counsel of Record
WILLIAMS CUKER BEREZOFSKY LOCKS LAW FIRM
210 LAKE DRIVE EAST, SUITE 101 457 HADDONFIELD ROAD
CHERRY HILL, NJ 08002 CHERRY HILL, NJ 08002
(856) 663-8200
WILLIAM A. RIBACK, Esq.
527 COOPER STREET, 2”° FLOOR
CAMDEN, NJ 08102
Counsel for Respondent
December 8, 2006
27
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.