November 20, 2025|Franchise Frontlines
November 20, 2025 | U.S. District Court for the District of New Jersey, Camden Vicinage | Unpublished Opinion
Executive Summary
In an unpublished decision, Chief Judge Renée Marie Bumb granted in part and denied in part a motion to dismiss consolidated claims against The UPS Store, Inc. (“TUPSS”) and several New Jersey franchisees involving allegations that notary fees exceeded the maximum amount permitted by state law. According to the opinion, the plaintiffs alleged that they were charged notary fees above statutory limits and that TUPSS and certain franchisees engaged in conduct that violated the New Jersey Consumer Fraud Act (CFA), the Truth-in-Consumer Contract, Warranty, and Notice Act (TCCWNA), and equitable principles of unjust enrichment. The Court sustained the CFA and unjust enrichment claims, dismissed the TCCWNA claim without prejudice, and declined to strike class allegations. The Court also determined that, taking the plaintiffs’ allegations as true at the pleading stage, plaintiffs had plausibly alleged an agency relationship sufficient to allow their vicarious liability theory to proceed. The Court emphasized, however, that its conclusions were based on allegations accepted solely for purposes of Rule 12, and that the issue of whether TUPSS exercised day-to-day control over notary pricing or operations remained a fact-specific inquiry reserved for later stages of the case.
Relevant Background
According to the opinion, the plaintiffs alleged that they were charged notary fees in excess of the maximum amounts allowed under New Jersey statute. One plaintiff alleged she paid ten dollars for two acknowledgments when the fee cap at the time was $2.50 per acknowledgment. Another plaintiff alleged that he paid fifteen dollars for notary services, including a “Notary Convenience Fee,” even though New Jersey law capped the fee at $2.50. The opinion explains that these transactions took place at two different New Jersey franchise locations operating under The UPS Store brand.
The plaintiffs alleged that TUPSS requires New Jersey franchisees to offer notary services, mandates the number of notaries available during operating hours, requires franchisees to use a standardized point-of-sale system with TUPSS-approved SKU codes, provides extensive training on notary services, and monitors transactional data including the amounts charged for notary services. The plaintiffs further alleged that TUPSS oversees advertising and marketing for notary services and maintains a customer-service department that sometimes issues refunds directly to customers regarding notary-service charges.
The Court observed that the plaintiffs submitted receipts for the challenged transactions. The opinion notes that the consolidated amended complaint was extensive and included detailed allegations about TUPSS’s system-wide guidance, notary-training materials, and communications with franchisees. Although the plaintiffs referenced numerous materials that painted a broad picture of TUPSS’s involvement in franchise operations, the Court reiterated that the case remained at the pleading stage and that the factual record had not been developed.
TUPSS moved to dismiss the consolidated complaint. TUPSS argued that the CFA claim failed to meet Rule 9(b)’s particularity requirement; that the TCCWNA claim lacked allegations of a required writing; that unjust enrichment was unavailable because the plaintiffs voluntarily paid disclosed fees; and that TUPSS could not be held vicariously liable because the plaintiffs did not plausibly allege day-to-day control over franchisees. Defendants also moved to strike class allegations, arguing that individual questions regarding statements made during transactions would predominate over common issues.
Decision
The Court denied dismissal of the CFA claim. The Court determined that, taking the allegations as true and drawing reasonable inferences in the plaintiffs’ favor, the complaint described the dates, locations, conduct at issue, and specific amounts charged, and the receipts attached to the complaint substantiated those assertions. The Court held that overcharging notary fees in violation of statute could constitute unlawful conduct within the meaning of the CFA when viewed in conjunction with the allegations about the public nature of notary services and the statutory limitations on fees. The Court emphasized that this ruling was narrow and tied to the allegations in the complaint, and it expressly declined to hold that a statutory violation automatically constitutes a CFA violation. Instead, the Court stated that the combination of detailed factual allegations and fee caps that regulate services associated with public officers allowed the claim to proceed at this early stage.
The Court dismissed the TCCWNA claim without prejudice. The Court explained that the statute requires a contract, notice, warranty, or sign containing a provision that violates a clearly established consumer right, and that receipts memorializing completed transactions do not qualify as such writings. The amended complaint did not identify any written notice or sign displayed before or during the transaction; therefore, the Court concluded that plaintiffs had not sufficiently alleged the writing element.
The Court denied dismissal of the unjust enrichment claim, stating that plaintiffs plausibly alleged that defendants received payments above what the law allowed for a service performed by a public officer. The Court noted that unjust enrichment can arise outside the typical quasi-contractual setting when charges exceed statutory limits and that the voluntary-payment rule did not apply at the pleading stage because the complaint did not establish whether plaintiffs knowingly paid the allegedly unlawful fees.
The Court also denied TUPSS’s motion to dismiss the vicarious liability allegations. The Court emphasized that whether TUPSS exercised the requisite day-to-day control over notary operations was a fact-dependent question that could not be resolved on a motion to dismiss. The opinion noted that the plaintiffs alleged more detailed involvement by TUPSS than is typical in franchisor–franchisee disputes, including a requirement to offer notary services, mandatory staffing levels, required use of uniform POS systems that track notary transactions, and TUPSS’s training and communications about notary compliance. The Court clarified that franchise agreements often include brand-protection and quality-control requirements that do not create an agency relationship. Nevertheless, at the pleading stage, the Court held that it was required to accept the plaintiffs’ allegations that TUPSS retained the right to influence aspects of notary operations. The Court stressed that nothing in its opinion constituted a finding that TUPSS in fact exercised such control, but only that plaintiffs had met the plausibility threshold under Rule 12.
Finally, the Court declined to strike the class allegations. The Court noted that motions to strike class allegations at the pleading stage are rarely granted because class determination typically requires discovery. The Court held that nothing in the complaint itself foreclosed the possibility of class certification and that the issue should be addressed at a later stage.
Looking Forward
This decision illustrates several points relevant to franchisors while remaining grounded in the specific allegations and limited record before the Court. The Court’s analysis underscores that the question of whether a franchisor may be held vicariously liable for actions of a franchisee remains highly dependent on the factual record developed through discovery. Under different facts or in other jurisdictions, courts may evaluate agency allegations differently. The opinion emphasizes that requirements tied to brand protection, uniform systems, or quality standards do not necessarily establish day-to-day control. The Court’s statements reflect the early stage of the proceedings and the limited scope of Rule 12 review.
The ruling also highlights that consumer protection claims may proceed when grounded in detailed allegations specific to the transactions at issue, particularly when statutory provisions regulate maximum charges for services associated with public officers. While this case addresses notary-fee statutes unique to New Jersey, the decision reflects the importance of clear franchisee training and compliance mechanisms when state laws impose fee restrictions. The opinion does not impose new obligations on franchisors, but it illustrates that plaintiffs may attempt to characterize certain operational strategies as control for purposes of pleading. Franchisors may wish to review how their contractual materials and support systems are described and implemented to ensure that brand-support functions remain aligned with franchisee independence and consistent with existing legal frameworks.
Finally, the Court’s decision to allow class allegations to proceed past the pleading stage demonstrates the importance of discovery strategy in class cases involving franchise systems. Whether a class can be certified under Rule 23 will depend on the development of a factual record that addresses uniformity of conduct, the role of franchisees in setting prices, and how consumers were informed of fees. These issues remain to be addressed in later stages, and the opinion underscores that courts generally defer class questions until a more complete record exists.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
