Strauss v. Long Island Sports, Inc.

• Decision Date: 09 January 1978
• Parties: Mark STRAUSS, Respondent-Appellant, v. LONG ISLAND SPORTS, INC., doing business as the New York Nets, Appellant-Respondent, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 233

401 N.Y.S.2d 233

60 A.D.2d 501

Mark STRAUSS, Respondent-Appellant, v. LONG ISLAND SPORTS, INC., doing business as the New York Nets, Appellant-Respondent, et al., Respondents.

Supreme Court, Appellate Division, Second Department.

Jan. 9, 1978.

Meyer, English, Cianciulli & Peirez, P. C., Mineola (Bernard S. Meyer and Jeffrey G. Stark, Mineola, of counsel), for appellant-respondent.

Mordecai Rosenfeld, New York City, for respondent-appellant.

Before MOLLEN, P. J., and TITONE, RABIN and MARGETT, JJ. MARGETT, Justice.

This action is brought by a disgruntled New York Nets season ticket holder who seeks rescission of the purchase of his tickets because of the Nets' trade of Julius Erving (Dr. J), the team's star, at the beginning of the 1976-1977 professional basketball season. The principal issue is whether Special Term properly determined that the action could be maintained as a class action. Additionally, there is an issue as to whether appellant-respondent's motions to consolidate four pending District Court actions were properly denied.

Plaintiff is the owner of four season tickets for the Nets' 1976-1977 season. He purchased the tickets in the summer of 1976 after the Nets won the 1975-1976 American Basketball Association championship and became a member of the National Basketball Association. During that summer the Nets placed several advertisements in various newspapers by which they solicited purchasers for season tickets. Some of these advertisements included the following language:

"See the fantastic Dr. 'J' in action. Designated league MVP and PRO player of the year. Sport magazine playoff-MVP."

Plaintiff alleges that he purchased his season tickets on the basis of this "publicized presence" of Dr. J. He alleges further, however, that "(a)ll persons who purchased season tickets for the Nets' 1976-1977 season did so in the reasonable expectation that Julius Erving would play unless injured, as the Nets had advertised." The complaint then recites that the Nets sold Dr. J to the Philadelphia 76ers for $3,000,000, and goes on to allege that:

"(a) As a result, all persons who purchased season tickets have been deprived of the principal reason for their purchase.

"(b) In effect, there has been a willful failure on the part of the Nets to provide the consideration that was advertised by the Nets themselves and paid for by all season ticket buyers.

"(c) The implicit contract between the Nets and all persons who purchased season tickets was that Julius Erving would play if possible. The Nets have violated that contract."

Plaintiff instituted his action in October, 1976. At about the same time and subsequent thereto, six other actions were instituted in various District Courts of the County of Nassau by season ticket holders complaining of the trade of Julius Erving. Two of these actions were thereafter discontinued, leaving two small claims actions ¹ and two District Court actions ².

Contemporaneously with the filing of the instant action, the Attorney-General instituted an investigation into the trade of Julius Erving pursuant to the consumer fraud provisions of article 22-A of the General Business Law. That investigation culminated in an agreement between the Attorney-General's office and the Nets (entered into on or about December 10, 1976) whereby season ticket holders could obtain a 10% Rebate of their purchase price. The offer was limited to those ticket holders who executed an affidavit stating that (a) the season tickets were purchased solely on the basis that Julius Erving would play for the Nets during the 1976-1977 season, (b) the tickets were purchased solely for personal use and not for business or resale purposes and (c) the New York Nets would be released from any further claims.

As the various District Court actions were filed against the appellant-respondent, it moved for their consolidation into the instant action pending in the Supreme Court. Plaintiff cross-moved for an order declaring his suit to be a proper class action. In an opinion dated March 14, 1977, Mr. Justice Young sustained plaintiff's cross motion to proceed as a class representative. Before an order could be entered thereon, appellant-respondent moved for reargument (and for consolidation of two more District Court actions which had apparently been commenced subsequent to Mr. Justice Young's opinion). Special Term substantially adhered to its prior determination and the order appealed from was entered on June 1, 1977.

The order provides: (1) The instant action is declared to be a class action. (2) The class is defined to include all persons who (a) purchased season tickets for the Nets' 1976-1977 season subsequent to the first-advertised presence of Julius Erving but prior to the first public announcement that Erving had been traded, (b) have not accepted the Attorney-General's proposed settlement and (c) "bought their tickets, at least in part, because of their expectation that Mr. Julius Erving would be playing for the Nets if not injured". (3) Notice of pendency of the action would be mailed to all potential class members. (4) The cost of printing and mailing the notice of pendency is to be divided equally between the parties. (5) The form of the notice of pendency is to be substantially the same as that proposed by the plaintiff. (6) Appellant-respondent's motions for consolidation are denied.

On appeal appellant-respondent raises several grounds as to why class action status should not lie. The most important of these grounds and the one which is central to a proper resolution of the class action issue is that questions of law or fact affecting only individual members predominate over questions common to the class (see CPLR 901, subd. a, par. 2). It is argued that questions of reliance and damages predominate and that these questions are more a matter of individual proof. We agree essentially that insofar as plaintiff's complaint states a cognizable cause of action, individual questions of reliance do predominate. Accordingly, we reverse and deny plaintiff's cross motion for an order declaring his action to be a class action.

It is elementary that in any action based upon representations in advertising whether the action sounds in fraud or in warranty the plaintiff must prove knowledge of, and reliance upon, the representations alleged (Randy Knitwear v. American Cyanamid Co., 11 N.Y.2d 5, 12, 226 N.Y.S.2d 363, 367, 181 N.E.2d 399, 402; Kuelling v. Lean Mfg. Co., 183 N.Y. 78, 85, 75 N.E. 1098, 1100; Friedman v. Medtronic, Inc., 42 A.D.2d 185, 190, 345 N.Y.S.2d 637, 643; Funk v. Kaiser-Frazer Sales Corp., 23 A.D.2d 771, 258 N.Y.S.2d 553; 24 N.Y.Jur., Fraud and Deceit, §§ 157-160; 47 N.Y.Jur., Products Liability, §§ 82-83). It is true that the language of CPLR 901 (subd. a, par. 2), which requires that questions of law or fact common to the class must predominate over "any questions affecting only individual members", clearly indicates an intent that the mere existence of individual questions should not defeat the granting of class status (see 2 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 901.08, p. 9-31). We are fully aware of the courts' power to sever certain issues while permitting others to be tried as class actions (CPLR 906) and are cognizant of the fact that some commentators have suggested that questions of reliance particularly in fraud cases be so severed (see 2 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 901.08, p. 9-33; see, also, 3B Moore's Federal Practice, P 23.45(2), pp. 23-762-763). The basic theory behind such severance is that judicial economy might be served by trying common questions in one action (2 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 901.08, p. 9-33).

While laudable in theory, the practicality of such severan has been questioned where individual reliance would not be "substantially established by the very nature of the proofs on the issue of liability" (Morris v. Burchard, 51 F.R.D. 530, 536 (S.D.N.Y., 1971); see, also, Tober v. Charnita, Inc., 58 F.R.D. 74, 84-85 (M.D.Pa., 1973); Hoffman v. Charnita, Inc., 58 F.R.D. 86, 91 (M.D.Pa., 1973)). Certainly, in a case where common exposure to or reliance upon alleged misleading advertising cannot be readily inferred, there is no advantage to be gained from permitting the action to proceed as a class action since the proceeding is likely to "splinter into individual trials" (Comment, Litigating the Antitrust Conspiracy Under Amended Rule 23, 54 Va.L.Rev. 314, 318 (1968)).

The papers in the record indicate that prior to June 30, 1976, over 2,622 Nets season tickets had been sold. These represented over half of the tickets sold for the entire season. Yet prior to June 30, 1976, newspaper advertising had been published only between June 18 and June 23. The only other advertising before September 19, 1976 was on one day, July 18, 1976. Between July 18, 1976 and September 19, 1976, a period during which there was no newspaper advertising for the Nets' tickets, 761 tickets were sold. On September 21, 1976 Erving first announced that he would not appear at training camp. Thereafter, another 276 tickets were sold.

Obviously, different factors were at work in each of those periods affecting the motivation of ticket purchasers. Ticket purchasers may have been motivated by the fact that the Nets had won the American Basketball Association championship, or by the fact that they had been admitted to the National Basketball Association and would be playing all of the established teams. Business reasons may have been the dominant motive for the purchases, or the geographical location of the team may have figured into the decision (pro basketball enthusiasts in Nassau County might have been inclined to buy season tickets to the Nets games rather than travel to Manhatten to see the Knickerbockers). In short, by no stretch of the imagination may one comfortably presume that a majority of season ticket holders purchased in reliance on the...