Lewis Tree Service, Inc. v. Lucent Technologies

• Citation: 239 F.Supp.2d 322
• Decision Date: 12 November 2002
• Docket Number: No. 99 CIV. 8556(JGK).,99 CIV. 8556(JGK).
• Parties: LEWIS TREE SERVICE, INC., et al., Plaintiffs, v. LUCENT TECHNOLOGIES INC., et al., Defendants.
• Court: United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York

239 F.Supp.2d 322

LEWIS TREE SERVICE, INC., et al., Plaintiffs, v. LUCENT TECHNOLOGIES INC., et al., Defendants.

No. 99 CIV. 8556(JGK).

United States District Court, S.D. New York.

November 12, 2002.

Russel H. Beatle, Jr., Beatie & Osborn, New York City, for Lewis Tree Service, Inc.

Christopher H. Harris, James E. Tyrell, Jr., Hugh L. Burns, Latham & Watkins, New York City, Joseph E. Hopkins, Scott Louis Weber, Latham & Watkins, Newark, NJ, for Lucent Technologies, Inc., AT&T Corp.

OPINION AND ORDER

KOELTL, District Judge.

This is a purported class action brought by the plaintiff, Lewis Tree Service, Inc. ("Lewis Tree"), against the AT & T Corporation ("AT & T") and AT & T's Successor, Lucent Technologies, Inc. ("Lucent") (collectively the "defendants") on behalf of purchasers of certain telecommunications equipment sold by the defendants.¹

Lewis Tree, in a Third Amended Complaint (the "Complaint"), alleges that the telecommunications products sold by the defendants were "Y2K defective" because they could not recognize and process information that contained dates after December 31, 1999. These defects, the plaintiff alleges, rendered these-products inoperable and ineffective, and were known to the defendants at the time they sold such products to Lewis Tree. The plaintiff alleged six causes of action in the Complaint including (1) a claim under the New Jersey Consumer Fraud Act ("NJCFA") N.J.S.A. 56:8-1 et seq.; (2) breach of implied warranties of merchantability and fitness for a particular purpose; (3) breach of contract; (4) breach of express warranty; (5) fraud; and (6) breach of duty of good faith and fair dealing.

The defendants have moved for partial summary judgment on all of the plaintiffs causes of action except the plaintiffs first cause of action, the NJCFA claim.² The defendants argue, among other things, that the purchase agreement governing the sale of equipment to the plaintiff specifically disclaimed any express or implied warranties, and also that any contract-related claims and common law fraud claims are barred by the statute of limitations contained in the contract governing the sale. The plaintiff counters that the contract governing the sale was a contract of adhesion and its disclaimers cannot be enforced in the face of fraudulent and misleading representations, and that the statute of limitations should be tolled.

I.

The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Gallo v. Prudential Residential Servs. Ltd. Partnership, 22 F.3d 1219, 1223 (2d Cir.1994). "The trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224. The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrated] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The substantive law governing the case will identify those facts that are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)); see also Gallo, 22 F.3d at 1223. Summary judgment is improper if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir.1994). If the moving party meets its burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed. R.Civ.P. 56(e). The nonmoving party must produce evidence in the record and "may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible." Ying Jing Can v. City of New York, 996 F.2d 522, 532 (2d Cir.1993); see also Scotto v. Almenas, 143 F.3d 105, 114-15 (2d Cir. 1998) (collecting cases).

II.

The defendants have filed a statement of undisputed facts as required by Local Civil Rule 56.1(a) and the plaintiff filed a statement of undisputed facts; however the plaintiffs statement fails to either admit or deny any of the facts the defendants set forth as being undisputed, as required by Local Civil Rule 56.1(b). The plaintiffs statement appears to be directed to class wide allegations in connection with its motion for class certification and does not respond at all to the allegations of undisputed facts asserted by the defendants with respect to Lewis Tree. The plaintiffs failure to respond or contest the facts set forth by the defendants in their 56.1 statement as being undisputed constitutes an admission of those facts, and those facts are accepted as being undisputed. See Local Civil Rule 56.1(c); Gubitosi v. Kapica, 154 F.3d 30, 31 n. 1 (2d Cir.1998); United States v. All Right, Title and Interest in Real Property and Appurtenances, 77 F.3d 648, 657-58 (2d Cir.1996); John Street Leasehold LLC v. Capital Mgmt. Res., LP., 154 F.Supp.2d 527, 534 (S.D.N.Y.2001), affd 283 F.3d 73 (2d Cir. 2002).

There is no genuine dispute as to the following facts. On December 19, 1994, Lewis Tree purchased from AT & T a Merlin Legend Telephone System with Integrated Solutions III software for a total price of $41,532.00. (Defts' Rule 56.1 Stmt, ¶ 7; Purchase Agreement attached as Exh. 20 to decl. of Amy George ("George Decl.") dated June 27, 2002 at 1.) The purchase and sale of this telephone system was made pursuant to a "Business Product Purchase Agreement" (the "Purchase Agreement") which was signed by Diane Faville, a Lewis Tree representative, and Joe Loboldt, an AT & T representative. (Defts' Rule 56.1 Stmt, ¶¶ 9-10; Purchase Agreement at 1.) The Purchase Agreement governing the sale of the Merlin System was Contract No. BP-1-584605. (Defts' Rule 56.1 Stmt. ¶ 12; Purchase Agreement at 1.) On December 19, 1994, Lewis Tree also entered into a Custom Service Protection Plan, under which AT & T was to provide four years of maintenance for the Merlin System. (Defts' Rule 56.1 Stmt. ¶ 14.)

The Purchase Agreement contained various standard terms and provisions through which AT & T, among other things, explicitly limited the express and implied warranties and disclaimed any warranties of merchantability or fitness for a particular purpose. (Defts' Rule 56.1 Stmt, ¶¶ 17,19,21; Purchase Agreement at 2.) The Purchase Agreement also contained a provision limiting AT & T's legal liability to claims filed within twelve (12) months of the cause of action accruing. (Defts' Rule 56.1 Stmt. ¶ 23; Purchase Agreement at 2.) Ms. Faville, who signed the Purchase Agreement on behalf of Lewis Tree, read and understood these provisions when she purchased the Merlin System. (Defts' Rule 56.1 Stmt. ¶¶ 25, 26, 28-29; Purchase Agreement at 1.)

III.

The original complaint named the law firm of Beatie, King & Abate as the plaintiff and was filed in New York State Court in January, 1999. After the case was removed to federal court, pursuant to 15 U.S.C. § 6614(c)(1) (the "Y2K act"), Beatie, King & Abate was replaced by other named plaintiffs, of which only Lewis Tree now remains. Supra n. I.³

There is a threshold question of whether federal or state choice of law rules govern the determination of which state's substantive law is to be applied to the plaintiffs various common law causes of action.⁴ In the Y2K Act, Congress did not create a separate federal cause of action, but merely provided that federal district courts would have original jurisdiction over Y2K class actions, and that federal courts, with limited exception, were to apply state substantive law to those claims. See 15 U.S.C. § 6603(b), (e). In vesting the district courts with such original jurisdiction, Congress found that significant federal interests were vindicated by having Y2K class action lawsuits proceed in federal courts. With respect to other federal statutes, where such federal interests are present, federal choice of law provisions have been applied, notwithstanding the absence of a federal cause of action. See, e.g., Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 795 (2d Cir.1980) (applying federal choice of law rules to cases in federal court pursuant to the Edge Act). However, it is far from clear that the mere presence of federal question jurisdiction, where state law provides the rule of decision, requires application of federal choice of law provisions. See In re Gaston & Snow, 243 F.3d 599, 605 (2d Cir.2001) (noting that "prior cases dealing with ... federal statutes that provide a federal forum for claims that hinge upon state law do not provide clear guidance" as to which choice of law rules are to be applied by federal district court), cert denied ___ U.S. ___, 122 S.Ct. 618, 151 L.Ed.2d 540 (2001).

In Gaston & Snow, the Court of Appeals declined to require the use of federal choice of law rules,...