Burns v. Volkswagen of America, Inc.

• Decision Date: 23 October 1982
• Parties: Richard H. BURNS, and all others similarly situated, Plaintiffs, v. VOLKSWAGEN OF AMERICA, INC. and World-Wide Volkswagen Corp., Defendants.
• Court: New York Supreme Court

Page 410

460 N.Y.S.2d 410

118 Misc.2d 289

Richard H. BURNS, and all others similarly situated, Plaintiffs, v. VOLKSWAGEN OF AMERICA, INC. and World-Wide Volkswagen Corp.,

Defendants.

Supreme Court, Monroe County.

Oct. 23, 1982.

Shoolman & Shoolman, Rochester, N.Y. (Carl Shoolman, Rochester, N.Y., of counsel), for plaintiffs.

Harter, Secrest & Emery, Rochester, N.Y. (Anthony R. Palermo, Rochester, N.Y., of counsel), for defendants, Volkswagenwerk AG, & Volkswagen of America, Inc.

Herzfeld & Rubin, P.C., New York City, for defendant, World-Wide Volkswagen Corp.

MEMORANDUM DECISION

ANDREW V. SIRACUSE, Justice:

The defendants have submitted this joint motion to dismiss the complaint for failure to state a cause of action. The complaint, which contains seven causes of action, seeks money damages and injunctive relief for the injury sustained by plaintiff due to the malfunctioning of his automobile. Plaintiff is the owner of a 1978 gas-fueled Volkswagen Rabbit which was purchased on or about December 10, 1977 jointly with his wife. Plaintiff claims that sometime between June and December 1979, after the vehicle had been driven approximately 27,000 miles, the oil consumption began to increase. The problem was corrected sometime after January 1980 by an amateur mechanic for about $85.00. The car's oil consumption has been satisfactory since that time and has not created any other damage to the engine, as, for example, engine seizure. Plaintiff has brought this action as a class action. Since class certification has not yet been granted, this motion and decision are addressed to the sufficiency of the individual plaintiff's pleading only.

Plaintiff's first, second, third, fifth, sixth, and seventh causes of action are asserted pursuant to General Business Law Sections 349(h) and 350-d(3). Both of these subsections were added on June 19, 1980 to create a right of action by private citizens. Prior to the amendments only the attorney general had the right to redress grievances under General Business Law Sections 349 and 350. See 19 McKinney's General Business Law §§ 349(h) and 350-d(3) (1981-1982 Pocket Supplement). Under these amendments an aggrieved individual may enjoin the unlawful act or practice and may collect his actual damages or fifty dollars, whichever is greater. The Court, in its discretion, may also treble the actual damages to a maximum recovery of one thousand dollars if there is a finding that the defendant willfully or knowingly violated the section. ¹

Plaintiff sets forth individual causes of action pursuant to General Business Law § 349(h) and § 350 at the second, third, sixth and seventh causes of action. As noted, the substantive right of action under which plaintiff seeks to proceed did not come into existence until June 19, 1980. It is well-settled that "statutes are not to be given retroactive effect or construed to change the status of claims fixed in accordance with earlier provisions unless the legislative purpose so to do plainly appears." Andrello v. Nationwide Mutual Fire Insurance Co., 29 A.D.2d 489, 492-493, 289 N.Y.S.2d 293 (4th Dep't.1968) quoting United States v. Magnolia Co., 276 U.S. 160, 162-163, 48 S.Ct. 236, 237, 72 L.Ed.2d 509 (1928) and Brewster v. Gage, 280 U.S. 327, 337, 50 S.Ct. 115, 117, 74 L.Ed. 457 (1930); see generally 2 Sutherland, Statutory Construction, §§ 3101, 3102; 1 McKinney's Statutes, § 52 at 102 (1971). Neither statute contains language evidencing an intention to give General Business Law §§ 349(h) and 350-d(3) retroactive effect. Indeed, both amendments clearly provide that they were not effective until June 19, 1980.

These amendments did not merely expand the form of remedies but created two wholly new causes of action with greater liability. Prior to the 1980 amendment, General Business Law § 349 allowed the attorney general to obtain only "restitution of any moneys or property." General Business Law § 349(B). Under pre-amendment General Business Law § 350, the attorney general could recover a maximum penalty of $500. General Business Law § 350-c. The 1980 amendments now give individuals the right to recover actual damages or a minimum of $50, injunctive relief, and discretionary treble damages to a maximum of $1000. General Business Law § 349(h) and § 350-d(3). Such an expansion of remedial rights can be given prospective application only. See Jacobus v. Colgate, 217 N.Y. 235, 111 N.E. 837 (1916); Isola v. Weber, 147 N.Y. 329, 41 N.E. 704 (1895); O'Reilly v. Utah N. & Co. Storage Co., 87 Hun. 406 (1895); Campbell v. New York Evening Post, 245 N.Y. 230, 232-234, 157 N.E. 153 (1927); 1 McKinney's Statutes § 53 at 104.

Having established that June 19, 1980 is the effective date for the creation of the statutory right of action which plaintiff seeks to assert, the Court must now decide whether plaintiff's causes of action accrued after that date. General Business Law §§ 349 and 350 creates causes of action for deceptive acts and practices and false advertising, respectively. A necessary element of any acti based upon deception is reliance by the plaintiff upon the alleged misrepresentations to his detriment and it is this reliance which marks accrual of any cause of action. Strauss v. Long Is. Sports, 60 A.D.2d 501, 506, 401 N.Y.S.2d 233 (2d Dep't.1978). Any detrimental reliance by plaintiff would have occurred when his vehicle was purchased. Fazio v. Ford Motor Corp., 69 A.D.2d 896, 415 N.Y.S.2d 889 (2d Dep't.1979); Murphy v. General Motors Corp., 55 A.D.2d 486, 391 N.Y.S.2d 24 (3rd Dep't.1977). Richard Burns purchased his Rabbitt on or about December 10, 1972. Thus, any misrepresentations would have been made to him before the statutory amendment creating the private right to action became effective. Since plaintiff's injury occurred before the 1980 amendment he is precluded from asserting a private cause of action and must seek redress through the attorney general under General Business Law § 349(b) and § 350-c. Defendants' motion to dismiss the second, third, sixth and seventh causes of action is granted.

Next to be considered is whether plaintiff's first and fifth causes of action, which seek to maintain class actions pursuant to General Business Law sections 349(h) and 350-d(3), can be allowed. While both subsections provide that the action may be brought by the injured individual in his own name, this Court does not feel that this language is dispositive of the issue. The language of CPLR 901(b) clearly sets forth the conditions under which a class action may be maintained:

Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action.

As noted, both General Business Law § 349(h) and § 350-d(3) set a minimum recovery of $50 and provide for a discretionary punitive award of treble damages up to one thousand dollars. Pursuant to CPLR 901, class actions cannot be maintained under General Business Law § 349(h) and § 350-d(3) for recovery of minimum or punitive damages because those sections do not contain specific authorizing language. See Carter v. Frito Lay, 74 A.D.2d 550, 425 N.Y.S.2d 115, aff'd 52 N.Y.2d 994, 438 N.Y.S.2d 80, 419 N.E.2d 1079 (1981). As to actual damages, however, CPLR 901(b) would not bar a class action. McLaughlin, Practice Commentary, C 901:7, p. 328; Hyde v. General Motors Corp., N.Y.L.J., Oct. 30, 1981, p. 5, col. 3 (J. Helman, N.Y.Co.) Thus, class actions for actual damages rather than the $50 minimum or the punitive treble damages can be maintained under General Business Law § 349(h) and § 350-d(3). Authority for this interpretation is found in numerous items of correspondence to the Governor's office concerning the amendments. May 29, 1980 letter of Assemblyman Jose E. Serrano, Chairman of Assembly Committee on Consumer Affairs and Protection; June 13, 1980 letter of Gene DeSantis, Counsel to Committee on Consumer Affairs and Protection; June 9, 1980 Memorandum from Senator James J. Lack; June 20, 1980 letter from Sanford H. Bolz, Sr. Vice-President and General Manager, State Chamber of Commerce; May 20, 1980 Memorandum from Paul Goldman, Counsel to State Consumer Protection Board.

The first and fifth causes of action are framed as requests for actual damages only and initially appear to be permissible. An action for actual damages...