As we explained in our case summary, the question in this case is whether deceptive conduct in the sale of a product is “consumer-oriented” only if it is for “personal, family, or household use.” In a 6–1 decision, the Court (Rivera, J.) held that the consumer-oriented inquiry does not hinge on the use to which an item will be put, and so ruled that plaintiffs adequately pleaded consumer-oriented acts. The Court dismissed the plaintiff’s complaint, however, for failure to allege a materially false or misleading statement.
Matthew Bender & Company publishes New York Landlord-Tenant Law, known colloquially as the “Tanbook.” The Tanbook compiles legal material on New York landlord-tenant law, including, in Part III, statutes and regulations applicable to rent-controlled and rent-stabilized apartments in New York City. Plaintiffs—a law firm, a nonprofit involved in housing-court cases, and a tenant advocate—sued Bender under General Business Law § 349, which bars deceptive acts or practices affecting consumer purchases. Plaintiffs claim that Bender deceived them into believing that Part III of the Tanbook purported to contain a complete and accurate compilation of applicable statutes and regulations, when in fact the statutes and regulations it contained were riddled with inaccuracies and omissions.
The majority first concluded that GBL § 349 applies to plaintiffs’ claims because Bender’s alleged deceptive acts were “consumer-oriented.” In doing so, the majority rejected the Appellate Division’s holding and Bender’s argument that conduct is consumer-oriented only if it relates to a product for personal, family, or household use. Starting with the text the majority explained that nothing in § 349 suggests that the consumer-oriented inquiry turns on how the product will be used. The majority also relied on the Court’s decision in Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, which held that conduct is consumer-oriented if it has “a broader impact on consumers at large,” as opposed to, for instance, a “private contract dispute.” The majority reiterated the Court’s holding from last year in Plavin v. Group Health Inc. that conduct may affect consumers at large even if not “directed to all members of the public.” And here, the majority observed, the Tanbook is marketed “to the general public,” especially “persons and businesses working in the legal field,” who “are merely a subclass of consumers.”
The majority nonetheless affirmed dismissal of plaintiffs’ claims. In the majority’s view, Bender had not made any materially misleading statements about the contents of Tanbook Part III. The Tanbook itself warns that the materials it contains are subject to legislative update; the terms and conditions of the Tanbook purchase contracts—which the majority considered as “documentary evidence” under CPLR 3211(a)(1)—say that the Tanbook does not include “updates” unless the buyer pays for them; and Bender, in the parties’ agreement, disclaimed “all warranties” and did “not warrant the accuracy, reliability or currentness of the materials contained in” the Tanbook. Given those facts, the majority held that a reasonable consumer “could not have been materially misled to believe that [Bender] guaranteed that Part III of the Tabook was complete and accurate at any given time.”
Judge Fahey dissented in part. He agreed with the majority that Bender’s practices were consumer-oriented. He disagreed, however, with the majority’s holding that plaintiffs failed to plead a materially misleading statement. In Judge Fahey’s view, the majority improperly considered extra-complaint materials, thereby “treat[ing] defendant’s motion to dismiss as a motion for summary judgment.” Finally, Judge Fahey considered whether plaintiffs pleaded injury—the third element of a § 349 claim and one that the majority did not need to reach. He noted that the Court, in Small v. Lorillard Tobacco Co., held that § 349 plaintiffs cannot plead injury by alleging that they purchased a product “that they would not have purchased, absent a manufacturer’s deceptive commercial practices.” But, Judge Fahey opined, “this broad statement at face value was incorrect,” since it “is unsupported by the text of the statute or its legislative history and purpose.” Judge Fahey would have therefore overruled Small and held that plaintiffs adequately pleaded injury.