Himmelstein v. Matthew Bender & Co.

• Decision Date: 03 June 2021
• Docket Number: No. 39,39
• Citation: 37 N.Y.3d 169,171 N.E.3d 1192,150 N.Y.S.3d 79
• Parties: HIMMELSTEIN, MCCONNELL, GRIBBEN, DONOGHUE & JOSEPH, LLP, et al., Appellants, v. MATTHEW BENDER & COMPANY, INC., a Member of LexisNexis Group, Inc., Respondent.
• Court: New York Court of Appeals Court of Appeals

37 N.Y.3d 169

171 N.E.3d 1192

150 N.Y.S.3d 79

HIMMELSTEIN, MCCONNELL, GRIBBEN, DONOGHUE & JOSEPH, LLP, et al., Appellants,

v.MATTHEW BENDER & COMPANY, INC., a Member of LexisNexis Group, Inc., Respondent.

No. 39

Court of Appeals of New York.

June 3, 2021

Fishmanlaw, PC, New York City (James B. Fishman of counsel), and Anderson Kill P.C., New York City (Jeffrey E. Glen of counsel), for appellants.

Skadden, Arps, Slate, Meagher & Flom LLP, New York City (Anthony J. Dreyer, Susan L. Saltzstein and Jordan A. Feirman of counsel), for respondent.

Letitia James, Attorney General, New York City (Mark S. Grube, Barbara D. Underwood and Steven C. Wu of counsel), for State of New York, amicus curiae.

OPINION OF THE COURT

RIVERA, J.

For several consecutive years, plaintiffs bought the annual edition of a legal resource manual published and sold by defendant. The main issue on this appeal is whether plaintiffs’ complaint adequately pleaded a deceptive act or practice prohibited by General Business Law § 349, based on defendant's alleged misrepresentations about the completeness of the laws reproduced in one section of its publication. Although defendant's acts are consumer-oriented—as the alleged misrepresentations are contained in a manual that was then marketed to and available for purchase by consumers—defendant's acts were not materially misleading. Contrary to plaintiffs’ argument, a consumer acting reasonably under the circumstances here would not have believed that defendant represented that the section at issue, containing rent control statutes and regulations, was current and accurate for its one-year shelf life.

I.

Plaintiffs Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP, Housing Court Answers, Inc., and Michael McKee are, respectively, a law firm that handles landlord-tenant actions, a non-profit corporation that assists pro se litigants in housing court matters, and a tenant advocate and organizer. Plaintiffs brought this action on behalf of themselves and a putative class of purchasers of certain annual editions of New York Landlord–Tenant Law (the Tanbook), a compilation of New York legal materials on landlord-tenant law, against defendant Michael Bender & Company Inc. (defendant), the publisher of the Tanbook. The amended complaint alleges, inter alia, that defendant engaged in deceptive business practices in violation of General Business Law (GBL) § 349 in its marketing and sale of the 2016 and prior editions of the Tanbook. Specifically, plaintiffs claim that defendant materially misrepresented that Part III of the Tanbook contained a complete and accurate compilation of the statutes and regulations applicable to rent-controlled and rent-stabilized apartments in New York City, when, in fact, key portions were omitted or inaccurately presented. Plaintiffs contend that these omissions and inaccuracies rendered the Tanbook of no value to its users. Plaintiffs further allege that, after receiving complaints, defendant included the omitted statutes and regulations in the 2017 edition, which, although published late in the calendar year, was sold to plaintiffs and other subscribers at full price.

Defendant moved to dismiss the amended complaint under CPLR 3211(a). Among other assertions, defendant argued that plaintiffs failed to plead the necessary elements of a GBL § 349 cause of action. In support, defendants submitted the affidavit of an Operations Director of LexisNexis, a division of one of defendant's affiliates. The Operations Director provided a general overview of the Tanbook's contents and described the standard practices and contractual terms governing its sale and purchase. The Operations Director also described plaintiffs’ respective purchases of the Tanbook and the lack of any complaints from them regarding the manual's contents. The Agreement and Order Forms for each plaintiff's purchase of the Tanbook were attached to the affidavit.

Plaintiffs opposed the motion and responded, in part, that they had adequately alleged the elements of a GBL § 349 claim, specifically arguing that their pleading established that the sale of the Tanbook was "consumer oriented" under the Court's precedents, that the purported representations of completeness in the Tanbook were materially misleading, and that they were harmed by that deception because they received a product that was seriously diminished in value. Supreme Court granted defendant's motion and dismissed the complaint in its entirety.

The Appellate Division affirmed the order of dismissal, in part on different grounds ( 172 A.D.3d 405, 100 N.Y.S.3d 227 [2019] ). We granted plaintiffs leave to appeal ( 34 N.Y.3d 908, 2020 WL 205529 [2020] ).

II.

On a motion to dismiss a complaint pursuant to CPLR 3211, we must liberally construe the pleading and "accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" ( Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ; Connaughton v. Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 141, 53 N.Y.S.3d 598, 75 N.E.3d 1159 [2017] ). When, as here, a defendant moves for dismissal of a cause of action under CPLR 3211(a)(1), their documentary evidence must "utterly refute[ ] the plaintiff's factual allegations, conclusively establishing a defense as a matter of law" ( Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002] ). Dismissal under CPLR 3211(a)(7) "is warranted if the plaintiff fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery" ( Connaughton, 29 N.Y.3d at 142, 53 N.Y.S.3d 598, 75 N.E.3d 1159 ).

Plaintiffs allege that defendant's characterization of the Tanbook's contents deceptively indicated that Part III contained a complete compilation of the rent control and stabilization laws and regulations applicable to New York City. Specifically, plaintiffs contrast the description of the Tanbook's contents in the book's "Overview" section, which, in describing other sections of the book, indicates that those sections consisted of "selected" laws and regulations or were merely "excerpts" thereof. In contrast, the Overview describes Part III of the Tanbook as containing "the laws and regulations covering rent stabilization" (emphasis added). As conceded by defendant, Part III omitted significant portions of the relevant laws and regulations. Plaintiffs claim that lawyers practicing landlord tenant law in New York City and the Housing Court judiciary use the Tanbook as a primary reference for the rent regulation laws and rules. They further claim that defendant's conduct is a classic "bait and switch" and that they would not have purchased the Tanbook absent defendant's alleged misrepresentation of Part III's completeness. Defendant responds that the omissions were an unfortunate mistake but not actionable misconduct. Defendant asserts that plaintiffs have failed to make out the elements of a GBL § 349 claim, in part because plaintiffs cannot plausibly argue that a reasonable consumer would have been misled by the alleged misrepresentation, given the nature of the misrepresentation, the product involved, and because the sales contracts expressly disclaimed the accuracy, reliability, and currentness of the Tanbook.

GBL § 349(a) declares unlawful all "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state." Section 349, "on its face, applies to virtually all economic activity" ( Karlin v. IVF Am., 93 N.Y.2d 282, 290, 690 N.Y.S.2d 495, 712 N.E.2d 662 [1999] ). Because the legislature was concerned with the impact of deceptive conduct on consumer purchases, GBL § 349 prohibits deceptive acts and practices that misrepresent the nature or quality of products and services (see Teller v. Bill Hayes, Ltd., 213 A.D.2d 141, 146, 630 N.Y.S.2d 769 [2d Dept. 1995] ). Put simply, "[t]he statute seeks to secure ‘an honest marketplace’ where ‘trust,’ and not deception, prevails" ( Goshen v. Mut. Life Ins. Co. of N.Y., 98 N.Y.2d 314, 324, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002], citing Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25, 623 N.Y.S.2d 529, 647 N.E.2d 741 [1995] ). To ensure the broadest enforcement of the statute, the legislature added a private right of action for injunctive and monetary relief ( GBL § 349[h] ). Thus, in addition to the Attorney General, individuals and businesses may bring an action under GBL § 349 (id. ).

The requisite elements of the cause of action are well established. A plaintiff must allege that: (1) the defendant's conduct was consumer-oriented; (2) the defendant's act or practice was deceptive or misleading in a material way; and (3) the plaintiff suffered an injury as a result of the deception ( GBL § 349[h] ; Plavin v. Group Health Inc., 35 N.Y.3d 1, 10, 124 N.Y.S.3d 5, 146 N.E.3d 1164 [2020] ). Thus, to avoid dismissal, plaintiffs must adequately plead each of these elements.

Supreme Court determined that plaintiffs failed to demonstrate that the allegedly deceptive conduct was consumer oriented. The court relied on First Department caselaw holding that consumers are those "who purchase goods and services for personal, family, or household use" ( 2018 NY Slip Op 30294[U], *15, 2018 WL 984850, at *5 [Sup Ct, NY County 2018], quoting Med. Socy. v. Oxford Health Plans, Inc., 15 A.D.3d 206, 207, 790 N.Y.S.2d 79 [1st Dept. 2005] ), and that GBL § 349 does not apply to a business's purchase of "a widely sold service that can only be used by businesses" ( id., quoting Cruz v. NYNEX Info. Resources, 263 A.D.2d 285, 286, 290, 703 N.Y.S.2d 103 [1st Dept. 2000] ). Thus, the court determined that GBL § 349 is inapplicable to defendant's marketing and...