Solomon v. Bell Atl. Corp.

• Decision Date: 13 May 2004
• Docket Number: 2949.
• Citation: 2004 NY Slip Op 03926,777 N.Y.S.2d 50,9 A.D.3d 49
• Parties: DAVID SOLOMON et al., Respondents, v. BELL ARLANTIC CORPORATION, Now Known as VERIZON COMMUNICATIONS, INC., et al., Appellants. JAMES CROAK, Respondent, v. BELL ATLANTIC CORPORATION, Now Known as VERIZON COMMUNICATIONS, INC., et al., Appellants. JEROME WEISS et al., Respondents, v. VERIZON COMMUNICATIONS CORPORATION et al., Appellants.
• Court: New York Supreme Court — Appellate Division

9 A.D.3d 49

777 N.Y.S.2d 50

2004 NY Slip Op 03926

DAVID SOLOMON et al., Respondents, v. BELL ARLANTIC CORPORATION, Now Known as VERIZON COMMUNICATIONS, INC., et al., Appellants.

JAMES CROAK, Respondent, v. BELL ATLANTIC CORPORATION, Now Known as VERIZON COMMUNICATIONS, INC., et al., Appellants.

JEROME WEISS et al., Respondents, v. VERIZON COMMUNICATIONS CORPORATION et al., Appellants.

2949.

Appellate Division of the Supreme Court of the State of New York, First Department.

May 13, 2004.

APPEAL from an order of the Supreme Court, New York County (Herman Cahn, J.), entered October 29, 2003. The order granted plaintiffs' motion for class certification and for class representative and class counsel designation in a consumer fraud action.

White & Case LLP (James M. McGuire of counsel), Davis Polk & Wardwell (Guy Miller Struve, Nancy B. Ludmerer and Edmund Polubinski, III, of counsel), Robert Ernst and Richard H. Wagner for appellants.

Abbey Gardy, LLP (Joshua N. Rubin of counsel), Giskan & Solotaroff (Jason L. Solotaroff of counsel), Law Offices of Mark S. Kaufman (Mark S. Kaufman of counsel), Morris & Morris LLC (Karen L. Morris and Patrick F Morris of counsel), and William A. Thomas for respondents.

OPINION OF THE COURT

ELLERIN, J.

The issue before us is whether class certification was proper in this action for damages for defendants' alleged violations of General Business Law §§ 349 and 350 in the marketing of their Digital Subscriber Line (DSL) Internet access service.

Plaintiffs in these three consolidated cases are consumers who subscribed to defendants' DSL service, which makes possible access to the Internet via telephone lines without disrupting telephone service. Defendants have provided DSL service in areas where they provide local telephone service since July 1999 and have marketed it in a wide variety of media, including their Web site. Until August 2000, DSL was described on the Web site as "FAST — High speed Internet access service up to 126x faster than your 56K modem," "DEDICATED — You're always connected — no dialing in and no busy signals, ever!," "CONVENIENT — Allows you to talk on the phone and use the Internet simultaneously — on the same line!," and "SIMPLE — Works on your existing phone line and our self-installation kit can be set up in minutes." Plaintiffs claim that these representations are false and/or misleading and that defendants are in violation of General Business Law §§ 349 and 350.

Plaintiffs assert that, contrary to defendants' representations, DSL does not offer speeds up to 126 times faster than a 56k modem and that in fact "the practical speed of the service rarely, if ever, approaches the high speed of 126 x 56k"; that subscribers are not always connected but in fact "suffer frequent and regular interruptions"; and that the service is not simple and cannot be set up within minutes and that "[a] substantial number of purchasers are unable to use the self-installation kits." They also assert that, contrary to defendants' advertising, their technical support of DSL is "inadequate." Plaintiffs allege that they have been injured by "[paying] for and [being] charged for DSL Service that they are not receiving."

Plaintiffs moved for certification of a general class of all New York State residential consumers who ever subscribed to defendants' DSL service and two subclasses comprised of all subscribers who had complained to defendants about DSL self-installation and all subscribers who had complained about technical support service. The court granted the motion but redefined the general class as "all New York State residential DSL subscribers who experienced slower than advertised Internet download speeds, and who experienced connectivity outages."

We reverse and decertify the general class and its subclasses on the ground that plaintiffs failed to demonstrate that questions common to the class predominate over those affecting only individuals (CPLR 901 [a] [2]; Chimenti v American Express Co., 97 AD2d 351, 352 [1983], appeal dismissed 61 NY2d 669 [1983]). In any event, plaintiffs represent in their brief that they no longer seek certification of the two subclasses; indeed, they abandoned that request in their reply memorandum on the motion.

The prerequisites to a class action are:

"1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;

"2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members;

"3. the claims or defenses of the representative parties are typical of the claims or defenses of the class;

"4. the representative parties will fairly and adequately protect the interest of the class; and

"5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy" (CPLR 901 [a]).

It is not disputed that the first prerequisite has been met. Since there is no evidence that plaintiffs are adverse to the class or will not vigorously pursue the action, the fourth prerequisite has also been met (see Super Glue Corp. v Avis Rent A Car Sys., 132 AD2d 604, 607 [1987]). As to the remaining prerequisites, we must examine the elements of a cause of action under General Business Law §§ 349 and 350, which declare deceptive acts and practices and false advertising, respectively, unlawful.

Claims under General Business Law §§ 349 and 350 are available to "an individual consumer who falls victim to misrepresentations made by a seller of consumer goods through false or misleading advertising" (Small v Lorillard Tobacco Co., 94 NY2d 43, 55 [1999]; see also Goshen v Mutual Life Ins. Co., 98 NY2d 314, 324 n 1 [2002]). To state such a claim, a plaintiff must allege that the defendant has engaged "`in an act or practice that is deceptive or misleading in a material way and that plaintiff has been injured by reason thereof'" (id. at 324, quoting Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 [1995]). Deceptive or misleading representations or omissions are defined objectively as those "likely to mislead a reasonable consumer acting reasonably under the circumstances," i.e., the plaintiff's circumstances (Oswego at 26, 27 [summary judgment denied to defendant bank in absence of actual documentation furnished to plaintiff pension fund from which to determine whether a reasonable consumer would have been deceived by bank's conduct]).

A deceptive act or practice is not "the mere invention of a scheme or marketing strategy, but the actual misrepresentation or omission to a consumer" (Goshen at 325), by which the consumer is "caused actual, although not necessarily pecuniary, harm" (Oswego at 26). Thus, to prevail in a cause of action under General Business Law §§ 349 and 350, the plaintiff must prove that the defendant made misrepresentations or omissions that were likely to mislead a reasonable consumer in the plaintiff's circumstances, that the plaintiff was deceived by those misrepresentations or omissions and that as a result the plaintiff suffered injury (Goshen at 325).

In a class action alleging deceptive acts and practices and false advertising, the proof must show that each plaintiff was reasonably deceived by the defendant's misrepresentations or omissions and was injured by reason thereof. Therefore, certification of a class for purposes of an action brought under General Business Law §§ 349 and 350 may be appropriate where the plaintiffs allege that all members of the class were exposed to the same misrepresentations (see e.g. Broder v MBNA Corp., 281 AD2d 369, 371 [2001] ["identical written solicitations"]; Taylor v American Bankers Ins. Group, 267 AD2d 178, 178 [1999] [while presented in a variety of forms and promotions, solicitations "did not differ materially"]).

However, class certification is not appropriate where the "plaintiffs do not point to any specific advertisement or public pronouncement by the [defendants] . . . which was undoubtedly seen by all class members" (Small v Lorillard Tobacco Co., 252 AD2d 1, 9 [1998], affd 94 NY2d 43 [1999]; Gaidon v Guardian Life Ins. Co. of Am., 2 AD3d 130 [2003] ["the varied use of illustrations concerning the `vanishing premium' concept and the extent to which a purchaser might have been influenced by such illustrations, would require individualized proof in the case of each class member, which would in turn raise questions that would overwhelm any issues common to the class"]; Carnegie v H&R Block, 269 AD2d 145, 147 [2000], lv dismissed 95 NY2d 844 [2000] ["questions of whether each individual was exposed to, and influenced by, the advertising would predominate"]).

Plaintiffs have not demonstrated that all members of the class saw the same advertisements. Indeed, the record shows that the individual plaintiffs did not all see the same advertisements; some saw no advertisements at all before deciding to become subscribers. Moreover, the content of defendants' DSL advertising varied widely and not all the advertisements contained the alleged misrepresentations. Thus, questions of individual members' exposure to the allegedly deceptive advertising predominate.

The motion court found that the variety of advertisements in different media using varying language presents no obstacle to class certification because "the various advertisements convey the same substantial message to the consuming public—speed and ease of DSL service." This conclusion overlooks the fact that plaintiffs had already abandoned their claim that defendants misrepresented the ease of DSL service. More importantly, it fails to address the uncontested fact that some subscribers saw none of these advertisements but learned of DSL through word of mouth. As to those subscribers who saw the advertisements, the court's conclusion fails to address plaintiffs' specific allegation that DSL was not up to 126 times...