Dunham v. The Sherwin-Williams Co.
| Decision Date | 24 October 2022 |
| Docket Number | 1:22-CV-300 |
| Parties | MAUREEN E. DUNHAM, Plaintiff, v. THE SHERWIN-WILLIAMS COMPANY, Defendant. |
| Court | United States District Courts. 2nd Circuit. United States District Court of Northern District of New York |
SHAMIS & GENTILE, P.A. ANDREW J. SHAMIS, ESQ. Attorneys for Plaintiff
KALIEL GOLD PLLC JEFFREY D. KALIEL, ESQ. Attorneys for Plaintiff
NEMATZADEH PLLC JUSTIN S. NEMATZADEH, ESQ. Attorneys for Plaintiff
KALIEL GOLD PLLC SOPHIA GOREN GOLD, ESQ. Attorneys for Plaintiff
JONES DAY LAW FIRM SHARYL A. REISMAN, ESQ. Attorneys for Defendant
JONES DAY LAW FIRM CALLAND FERRARO, ESQ., LOUIS CHAITEN, ESQ. Attorneys for Defendant
On March 30, 2022, named plaintiffs Maureen Dunham (“Dunham” or “plaintiff') and Frank Novak (“Novak”), brought this action on behalf of themselves and others similarly situated, alleging that defendant, The Sherwin-Williams Company (“Sherwin-Williams” or “defendant”), engaged in a deceptive bait-and-switch scheme of covertly tacking on a hidden 4% “Supply Chain Charge” to every sales transaction. Dkt. No. 1. The complaint asserted four claims: (1) deceptive acts or practices in violation of the New York General Business Law § 349; (2) violation of the Michigan Consumer Protection Act; (3) breach of contract; and (4) unjust enrichment. Id.
On May 31, 2022, Sherwin-Williams moved to dismiss the complaint under Rules 12(b)(6) and 12(b)(2) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted and lack of personal jurisdiction. Dkt. No. 12.
On June 21, 2022, in lieu of an opposition, Dunham filed a First Amended Complaint. Dkt. No. 21. The amended pleading removes Novak as a named plaintiff and no longer asserts a violation of the Michigan Consumer Protection Act. Id. Accordingly, plaintiffs operative complaint now asserts three claims: (1) deceptive acts or practices in violation of the New York General Business Law § 349; (2) breach of contract; and (3) unjust enrichment. Id.
On July 5, 2022, Sherwin-Williams moved under Rule 12(b)(6) to dismiss the First Amended Complaint. Dkt. No. 22. The motion has been fully briefed and will be considered on the basis of the submissions without oral argument.
On September 28, 2021, Sherwin-Williams' Chairman, President, and Chief Executive Officer, John G. Morikis, made a public statement to Sherwin-Williams investors that manufacturing costs were rising due to a limited availability of raw materials. First Am. Compl. ¶ 14. In response to the rise in costs, defendant began imposing a 4% “Supply Chain Charge” to all items purchased by customers. Id. ¶ 16.
On November 9, 2021, Dunham, in reliance “upon price tags and displays provided in-store,” purchased two gallons of paint for $119.59 at a Sherwin-Williams store located in Amsterdam, New York. First Am. Compl. ¶¶ 3738. As part of this transaction, plaintiff was charged a 4% “Supply Chain Charge” for each gallon of paint, amounting to $4.65. Id. ¶ 39. According to plaintiff, she did not realize that Sherwin-Williams would affix a price increase on her transaction and was first made aware of the surcharge upon examining her purchase receipt. Id. ¶¶ 41-42. Plaintiff asserts that “[h]ad [she] known that the surcharge would be assessed on her purchase, she would not have purchased her paint from Sherwin-Williams.” Id. ¶ 43.
To survive a Rule 12(b)(6) motion to dismiss, the complaint's factual allegations must be enough to elevate the plaintiff's right to relief above the level of speculation. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). So while legal conclusions can provide a framework for the complaint, they must be supported with meaningful allegations of fact. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). In short, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.
To assess this plausibility requirement, the court must accept as true all of the factual allegations contained in the complaint and draw all reasonable inferences in the non-movant's favor. Erickson v. Pardus, 551 U.S. 89, 94 (2007). In doing so, the court generally confines itself to the facts alleged in the pleading, any documents attached to the complaint or incorporated into it by reference, and matters of which judicial notice may be taken. Goel v. Bunge, Ltd., 820 F.3d 554, 559 (2d Cir. 2016).
Dunham's three-count amended complaint alleges: (1) deceptive acts or practices in violation of New York General Business Law § 349; (2) breach of contract; and (3) unjust enrichment. First Am. Compl. ¶¶ 54-74.
Dunham first asserts that Sherwin-Williams committed deceptive acts or practices in violation of New York General Business Law § 349 by “failing to disclose to customers the existence of the 4% Surcharge applied to all purchases made at Sherwin-Williams stores.” First Am. Compl. ¶ 57.
New York General Business Law § 349 is a “consumer protection measure.” Dimond v. Darden Rests., Inc., 2014 WL 3377105, at *4 (S.D.N.Y. July 9, 2014). It prohibits “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” N.Y. GEN BUS. Law § 349(a). The purpose of the statute is “to empower customers, especially the disadvantaged, and to even the playing field of their disputes with better funded and superiorly situated fraudulent businesses.” Mendez v. Bank of Am. Home Loans Servicing, LP, 840 F.Supp.2d 639, 657 (E.D.N.Y. 2012) (cleaned up). The statute's reach is broad “in order to ‘provide [the] needed authority to cope with the numerous, ever-changing types of false and deceptive business practices which plague customers in [New York] State.'” Dimond, 2014 WL 3377105, at *4 (citation omitted).
“To establish a violation of Section 349, the plaintiff must prove the defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result.” Chery v. Conduent Educ. Servs., LLC, 581 F.Supp.3d 436, 449 (N.D.N.Y. 2022) (citation omitted). For purposes of this motion to dismiss, Dunham has plausibly alleged that Sherwin-Williams violated Section 349.
First, Dunham has adequately alleged that Sherwin-Williams' application of a 4% surcharge to all purchases made at its stores amounts to consumer-oriented conduct.
“Section 349 on its ‘face appl[ies] to virtually all economic activity, and [its] application has been correspondingly broad.'” Chery, 581 F.Supp.3d at 449 (citation omitted). As such, the consumer-orientated element merely requires a plaintiff to demonstrate “that the [defendant's] acts or practices have a broad impact on consumers at large.” Oswego Laborers'Loc. 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 26 (1995). This threshold is met “where the misconduct ‘potentially affects similarly situated consumers.'” Chery, 581 F.Supp.3d at 450 (citation omitted).
Dunham has made a plausible showing that Sherwin-Williams' conduct meets this threshold by alleging that defendant imposed a 4% surcharge to all items purchased by customers at each of their Sherwin-Williams stores across the country. First Am. Compl. ¶ 16. Accordingly, plaintiff has adequately alleged that defendant engaged in consumer-oriented conduct within the broad reach of Section 349.
Next, Dunham has plausibly alleged that Sherwin-Williams engaged in materially misleading conduct. According to plaintiff, defendant engaged in three acts of deception: “first, touting in-store prices that are false; second, misdescribing its in-store price inflation as a ‘Supply Chain Charge'; and third, never reasonably disclosing the ‘Supply Chain Charge' until after a purchase is complete . . . .” First Am. Compl. ¶ 8.
To determine whether conduct is materially misleading, courts apply an objective standard. Dimond, 2014 WL 3377105, at *4 (citation omitted). This standard asks whether the representation or omission is “likely to mislead a reasonable consumer acting reasonably under the circumstances.” Buonasera v. Honest Co., Inc., 208 F.Supp.3d 555, 566 (S.D.N.Y. 2016) (citations omitted). A plaintiff alleging a deceptive act based on an omission, as Dunham does here, must allege that “the business alone possesses material information relevant to the consumer and fails to provide this information.” Oswego Laborers'Loc. 214 Pension Fund, 85 N.Y.2d at 26.
First, Dunham has adequately alleged that Sherwin-Williams omitted “material information” within the reach of Section 349. Material information is information that is “important to consumers and likely to affect their choice of product.” Braynina v. TJX Companies, Inc., 2016 WL 5374134, at *5 (S.D.N.Y. Sept. 26, 2016). “An omission is materially misleading, for example, where the plaintiff would have acted differently had the defendant disclosed the information in its possession.” Id. (citations omitted).
As relevant here, courts have held that the existence of a surcharge is information a consumer would reasonably consider important in determining where to shop. See Chiste v Hotels.com L.P., 756 F.Supp.2d 382, 406 (S.D.N.Y. 2010) ( that defendant's addition of an undisclosed fee was material information to a consumer seeking the lowest price). Moreover, a consumer may not necessarily expect that a store such as Sherwin-Williams will impose a surcharge in addition to advertised prices. See id. In fact, plaintiff references numerous complaints from defendant's customers who were surprised by the surcharge. First Am. Compl. ¶¶ 30-36. Thus, it is plausible...
To continue reading
Request your trial