Decided October 19, 2009.
RUSKIN MOSCOU FALTISCHEK, P.C., By: Adam L. Browser, Esq., Attorneys for Plaintiff Julie Held, Uniondale, New York.
KELLEY DRYE WARREN LLP, By: Jonathan K. Cooperman, Esq., John W. McGuinness, Esq., Attorneys for Defendant Macy's, Inc., New York, New York.
Defendant Macy's, Inc. d/b/a Macy's and Bloomingdale's ("Defendant" or "Macy's") moves, pursuant to CPLR 3211(a)(1), 3211(a)(3) and 3211(a)(7) for an order dismissing the Amended Class Action Complaint and imposing sanctions pursuant to 22 NYCRR § 130-1.1 (Seq. No. 001). Plaintiff, Julie Held, on behalf of herself and all others similarly situated ("Plaintiff" or "Held") opposes the motion and cross-moves for leave to amend the Amended Class Action Complaint (Seq. No. 003).
This class action was instituted by Plaintiff's filing of the Summons and Class Action Complaint on January 7, 2009. Upon receipt of the Class Action Complaint, Macy's (and its counsel) proceeded to advise Plaintiff's counsel of its inadequacies, which, while not resulting in a voluntary discontinuance of the action, did result in Plaintiff's amendment of her complaint, which amended complaint was filed on March 24, 2009.
Accepting the allegations of the Amended Complaint as true, as this Court must in connection with a motion to dismiss, the following is a recitation of the facts underlying this case.
This action arises from Plaintiff's claim that Macy's engages in deceptive business practices through a program it offers to its loyal customers who maintain a Macy's private label credit card (the "Macy's Card") whereby the customers "earn and/or receive savings coupons (hereafter referred to as Reward Certificate' or Rewards Certificates') for future store merchandise purchases" (Affirmation of Jonathan Cooperman dated May 21, 2009 ["Cooperman Aff."], Ex. A ("Amended Complaint") at
¶ 2). The Rewards Certificates may only be used by the Macy's Cardholders on merchandise purchased with their Macy's Card and are alleged to be advertised as being the equivalent of cash (Amended Complaint at ¶¶ 3, 15). Plaintiff alleges that the Macy's Card program is an essential marketing tool for Defendant as it "generates hundreds of thousands of dollars in retail revenue" and "hundreds of thousands of dollars in cost savings in avoided fees . . . that would otherwise be paid to third party credit card companies" ( id. at ¶ 2). Plaintiff claims that while Macy's widely "advertises the cost savings . . . to be gained by . . . [Macy's] card holders if they purchase Defendant's merchandise, Defendant has systematically failed to disclose to customers that the Rewards Certificates they receive . . . are worth significantly less than customers are led to believe" ( id. at ¶ 4). This is because Defendant's "cash registers are intentionally set to generate a receipt that automatically and artificially reduces the value of each individual item by a proportion of the Rewards Certificate used. As a result, if the customer chooses to exercise his or her rights to return any portion of the merchandise at a later date . . . the value of the purchased and subsequently returned merchandise is improperly, unfairly and artificially expropriated away from the loyal customer" ( i.e., "that customers who use a Reward Certificate will have their transaction registered at check-out in a manner that unfairly and deceptively deprives customers of full value of the Reward Certificate as promised") ( id. at ¶¶ 5, 15 [emphasis in original). Thus, "[r]ather than adding up all the purchases and then deducting the Reward Certificate amount from that subtotal, Macy's cash registers artificially reduce each item's value pro rata by proportion of the Reward Certificate" ( id. at ¶ 16). Plaintiff uses the following example to depict Macy's practices:
If a customer purchases three $20 items for a total of $60, [and] uses a $15 Reward Certificate, each of those $20 items is reduced by an amount equal to one-third (1/3) of the $15 Macy's Reward Certificate (i.e., a $5.00 reduction on each item). . . . Accordingly, when a customer chooses to return one $20 item, the customer only receives a refund/credit in the amount of $15.00 rather than the true $20 that the item costs. Thus, as a result of Macy's' deceptive practices, the customer in this example loses 33% of the value earned and/or promised by Defendant ( id. at ¶¶ 17-18).
Plaintiff claims that Defendant does not disclose or inform its customers of this practice and Plaintiff brings this class action "on behalf of Macy's credit card holders who received and used Reward Certificates, but did not receive the full value thereof, for consumer fraud pursuant to Section 349 of the New York General Business Law; false advertising pursuant to Section 350 of the General Business Law; breach of contract; unjust enrichment; and violation of the duty of good faith and fair dealing" ( id. at ¶ 7).
Plaintiff alleges that in December 2008, Plaintiff purchased with her Macy's Card three men's shirts at a Macy's in White Plains, New York and used a $15 Reward Certificate. When Plaintiff returned one of the shirts which had a purchase price of $34.99, "Defendant improperly and deceptively deprived Plaintiff of the full value of the returned merchandise by refunding/crediting her only $29.99 rather than the full purchase price of the shirt of $34.99. As a result of Defendant's artificial and fraudulent manipulation, Plaintiff was deprived of approximately 33% of the value of her Reward Certificate" ( id. at ¶ 22).
Plaintiff seeks to be the class representative of a class of Macy's Cardholders who "at any time since January 2003 . . . used a Macy's Reward Certificate and redeemed the Reward Certificate as part payment for Macy's merchandise and subsequently returned part of such purchase and did not receive value reflecting the full purchase price of the returned merchandise" ( id. at ¶ 24). In addition to damages, Plaintiff seeks to enjoin Defendant "nationwide from engaging in deceptive and otherwise wrongful conduct in the future. . . ." ( id. at ¶ 27).
Plaintiff claims this nationwide injunction is supported by the facts that "Defendant does substantial marketing and business in New York; a significant amount of transactions implicating Defendant's practices are made in New York; a substantial number of Macy's credit card members and customers reside in New York; and Defendant's violations of New York State statutory and common law are applicable to all members of the Class, including those residing outside New York" (Amended Complaint at ¶ 27).
Plaintiff's First Cause of Action asserts that Defendant's conduct constitutes deceptive acts and practices in violation of New York's General Business Law ("GBL") § 349. The Second Cause of Action alleges that Defendant's conduct constitutes false advertising in violation of New York's GBL § 350 because "Defendant did not disclose that the value of the merchandise for the purchases made wholly or partially through redemption of the Macy's Reward Certificates would be unfairly and artificially reduced so that, if the merchandise is returned, the customer would not get the full benefit of the refund" ( id. at ¶ 34). As her Third Cause of Action, Plaintiff claims that she and other members of the class accepted Defendant's offer to apply and use the Macy's Card and performed their obligations by purchasing merchandise that was charged to their Macy's Card and "Defendant breached its agreements with the Macy's . . . Cardholders each time that a customer redeemed a Macy's Reward Certificate and such customers had the value of their purchase improperly and artificially reduced as a result of Defendant's manipulations of each customer's sales receipt" ( id. at ¶ 41). Plaintiff's Fourth Cause of Action asserts that by entering into the above-referenced contract, Macy's promised customers who applied for and used the Macy's Card and Reward Certificate that they would receive the full benefits earned by being such a Macy's Cardholder and the customers relied on Macy's good faith, but Macy's, through its deceptive conduct, breached the implied duty of good faith and fair dealing that attaches to all agreements ( id. at ¶¶ 45-46). The Fifth Cause of Action asserts a claim that Defendant has been unjustly enriched at the expense of Plaintiff and the other class members based on its inequitable conduct and should be required to pay their damages ( id. at ¶ 50). Finally, Plaintiff's Sixth Cause of Action seeks a "declaratory judgment declaring that Defendant's conduct and practices are deceptive, fraudulent and/or constitute false advertising" ( id. at ¶ 55) and a permanent injunction "enjoin[ing] Defendant from continuing to engage in such conduct" ( id.).
A. Defendant's Motion to Dismiss
In support of its motion to dismiss and for an imposition of sanctions, Defendant submits an affirmation from its counsel, Jonathan K. Cooperman, Esq., Kelley Drye Warren LLP, that attaches Plaintiff's Amended Class Action Complaint, and various documents, including, literature concerning Macy's credit card programs, Macy's Star Rewards Program and a sample Rewards Certificate, a sample transaction involving a Rewards Certificate, a copy of the $15 off $50 minimum purchase coupon used by Plaintiff, and a copy of Plaintiff's purchase and return receipts dated December 2, 2008 for the transaction at issue in this lawsuit.
Defendant's motion to dismiss is premised on what it claims to be two indisputable facts based upon the documentary evidence:
(1) Plaintiff is not and never was eligible to earn a Rewards Certificate. Nor did she ever use a Rewards Certificate. Indeed, her purchase, which is at the heart of the Complaint was not made with an earned Rewards Certificate, but with an ordinary dollars-off coupon. (2) Those customers who, unlike Plaintiff, are actually eligible to earn and use Rewards Certificates do in fact receive back the value of the earned Rewards Certificate in a return transaction (Dft.'s Mem. of Law at 1).
To prove these facts, Defendant submit documents which it contends definitively disprove the factual underpinnings of Plaintiff's Amended Complaint. To begin with, Defendant attaches a copy of Plaintiff's Macy's Card statement showing Plaintiff to be a Red Star Rewards Cardholder (Cooperman Aff., Ex. I). Based on material supplied to Plaintiff by Macy's concerning the Star Reward program (Cooperman Aff., Ex. C), Defendant argues that there are different levels of membership depending upon the cardholder's annual spending and that Plaintiff was a Red Star Rewards level member at the time of her purchase in December 2008, which, based on the literature provided, did not entitle her to Star Reward Certificates (issued in denominations of $10 and $25), but did entitle her to reward coupons.
Defendant contends that the only Macy's Card members entitled to Rewards Certificates are the Gold, Platinum and Elite level cardholders. "For those customers . . . the Rewards Certificates are in fact treated as tender ( i.e., the equivalent of cash). Customers returning an item purchased with Rewards Certificates do not forfeit any part of the value tendered" (Dft.'s Mem. of Law at 6). To prove this, Defendant attaches a sample purchase and return receipt (Cooperman Aff., Ex. D) which shows a purchase of one item for $59.99 and the use of a $25 Rewards Certificate, which brought down the total charged to the credit card to $38.59. When the item was returned, this unknown cardholder received the full amount of the item ($59.99) as a refund on his/her credit card. Accordingly, Defendant argues that Plaintiff's contention that Macy's acted unfairly and deceptively with regard to its Reward Certificate program is contradicted by the documentary evidence (Dft.'s Mem. of Law at 12).
Defendant proceeds to show how the transaction which is the subject of this action did not involve a Reward Certificate and instead, involved a dollars-off coupon in a denomination of $15 (Cooperman Aff., Ex. H). Based on the back of the coupon, Defendant points out that the dollars-off coupons have numerous restrictions attached because they are not earned and are merely give-aways that Macy's disseminates widely through many avenues ( e.g., newspaper ads, circulars, internet promotions and in-store promotions). Defendant asserts that when the merchandise involved in a transaction with these coupons is returned, the customer is refunded the discounted amount paid for the individual item returned ( id.). As such, Defendant argues that the only class members Plaintiff may fairly represent are "those customers who used the same dollars-off coupon she used in transactions in the state of New York and then made a return" ( id. at 9).
Defendant next argues that Plaintiff lacks the necessary standing to represent the class, as defined in the Amended Complaint, because she was ineligible to receive and indeed never used a Reward Certificate and "New York courts do not allow putative class representatives to bring class wide claims for harm they themselves have not suffered" (Dft.'s Mem. of Law at 14).
Defendant also attacks the Plaintiff's claims under the GBL because they seek to assert claims beyond the applicable statute of limitations — i.e., Plaintiff seeks to obtain damages for a six year time period under GBL §§ 349 and 350 whereas the statute of limitations for these actions is three years. And Defendant attacks the nationwide focus of Plaintiff's claims because it violates established precedent. Defendant contends that Plaintiff cannot represent a nationwide class since the New York Court of Appeals, in the case of Goshen v Mutual Life Ins. Co. of New York ( 98 NY2d 314), held that a plaintiff may only pursue claims under GBL §§ 349 and 350 on behalf of consumers who engaged in transactions in New York State because the deceptive practices must have occurred in New York. Therefore, Plaintiff's GBL "claims on behalf of consumers who engage in transactions outside the State of New York should be dismissed as a matter of law" (Dft.'s Mem. of Law at 16).
Defendant also seeks the dismissal of the Amended Complaint based on its "pleading deficiencies" — (1) Plaintiff's claims under GBL §§ 349 and 350 fail because she has not alleged that she was misled by or relied upon any statement or advertisement made by Macy's concerning the Rewards Certificates, especially since the documentary evidence proves that no misrepresentations were made; (2) Plaintiff's claim of breach of contract fails because (a) Macy's Credit Card Agreement makes no mention of Rewards Certificates, (b) to the extent Plaintiff is relying upon any other unspecified contracts or agreements, the claim must be dismissed as Plaintiff's vague and conclusory allegations fail to plead the terms of the agreement either by express reference or by attaching a copy of it ( id. at 19, citing Chrysler Cap. Corp. v Hilltop Egg Farms, Inc. ( 129 AD2d 927 [3d Dept 1987]); (3) Plaintiff's claim that Defendant breached the implied covenant of good faith and fair dealing is duplicative of Plaintiff's defective breach of contract claim and must be dismissed; (4) Plaintiff's claim of unjust enrichment must be dismissed because "[t]he existence of a contract governing a particular subject matter ordinarily precludes recovery in quasi contract for events arising out of the same subject matter" (Dft.'s Mem. of Law at 21); and (5) the Sixth Cause of Action for declaratory and injunctive relief must be dismissed since the causes of action underlying the relief requested are legally insufficient ( id. at 22).
Defendant notes that "there is no injunctive' cause of action under New York or federal law . . . A party seeking such relief must demonstrate breach of an independent substantive cause of action that makes an injunction an appropriate remedy'" (Dft.'s Mem. of Law at 23).
Finally, Macy's requests that sanctions pursuant to 22 NYCRR § 130.1 (c)(1) be imposed because prior to Plaintiff's initiation of this action, Macy's counsel sent to Plaintiff's counsel the same documentary evidence provided in this motion, which demonstrates that the allegations in the Amended Complaint are materially false ( id. at 23; see Cooperman Aff., Exs. J-L).
B. Plaintiff's Opposition
In opposition and in support of her cross-motion for leave to amend, Plaintiff submits an affidavit and a memorandum of law. With regard to her affirmative relief, Plaintiff attaches a second amended complaint which she contends ameliorates some of the deficiencies outlined by Defendant, namely, "(a) it substitutes the term Reward Coupon' for Reward Certificate'; (b) it affirmatively alleges that defendant's conduct materially misled [Plaintiff] as part of [her] General Business Law § 349 cause of action; and (c) it affirmatively alleges that [she] relied on defendant's deceptive advertising and its lack of disclosure when [she] paid for (and later returned) clothing using a Reward Coupon defendant had sent [her]" (Affidavit of Julie Held, sworn to July 1, 2009 ["Held Aff."] at ¶ 5). Plaintiff contends that whatever the piece of paper that she used is called "defendant did not give [her] the full credit it promised even though [she] complied with all of the stated conditions of the coupon . . . [D]efendant promised to reduce [her] purchase by $15 if [she] purchased at least $50 of merchandise, using defendant's credit card to pay the balance. [Plaintiff] spent more that $50 purchasing three shirts, but defendant only gave [her] a $10 credit, rather than the $15 it promised, presumably because [she] returned one of the shirts. Even with the return, however, [she] still spent more than $50.00 — which was the purchase requirement on the coupon" (Held Aff. at ¶ 7). Plaintiff attaches the front and the back of the $15 coupon that she used, which she contends does not disclose that a customer would not receive the coupon's full value if the customer returned some part of the merchandise purchased ( id. at ¶ 8). To show Defendant's post-remedial measures, Plaintiff submits a copy of a new dollars-off coupon Macy's disseminated, which Plaintiff contends shows how Defendant has since changed its practice and now discloses on these coupons that "[r]eturns reduce your savings by the amount allocated to each returned item, which will be forfeited" ( id. at ¶ 9, Held Aff., Ex. E). Plaintiff contends that had Defendant disclosed this fact in connection with her purchase, she would "have structured her transaction differently" by using the coupon to pay for items she knew she would not return ( id. at ¶ 11).
In her memorandum of law, Plaintiff argues that Defendant's motion is focused on nomenclature and that while what Plaintiff used was not a Reward Certificate, her Amended Complaint defines the Reward Certificate to include the piece of paper she used in her transaction — i.e., "savings coupons that defendant sends to its credit card customers as part of its customer-marketing program" (Pltf.'s Mem. of Law at 1, citing Amended Complaint at ¶ 2). Further, Defendant's documentary evidence supports Plaintiff's claim that Defendant failed to disclose "that merchandise purchased using a Reward Coupon cannot be returned without losing a portion of its value" ( id. at 2). Plaintiff refutes Defendant's portrayal of the coupons as give aways and contends that the $15 coupon is earned because the only way to get the benefit of it is to use her Macy's Card and spend $50 ( id. at 12). And Plaintiff's allegations that only Macy's credit cardholders receive Rewards Coupons must be presumed to be true at this stage of the proceedings ( id.).
Plaintiff points out that "[n]either (i) the credit card application brochure, (ii) the Red Visa New Card Fulfillment Kit, (iii) the purchase transaction receipt or (iv) the monthly statement disclose the fact that defendant would not credit a customer's account in full if he or she returned merchandise purchased (in part) with a coupon" (Pltf.'s Mem. of Law at 11, citing Cooperman Aff., Exs. B, C, H, and I).
Likewise, Plaintiff contends that Defendant's submission of the sample Rewards Certificate transaction is a red herring because: (1) the transaction occurred in January 2009 shortly after this lawsuit was filed so there is no way of knowing if that was Macy's past practice; (2) it involved only the purchase and return of one item and the improper conduct alleged by Plaintiff only happens when more than one item is purchased; and (3) the transaction may have been staged for this litigation because the return was made only two minutes after the purchase was made (Pltf.'s Mem. of Law at 13-14).
Rebutting Defendant's challenge to Plaintiff's standing, Plaintiff claims that based on the definition of Rewards Certificates as set forth in the Amended Complaint, which would include the coupon used by Plaintiff, she is representative of the class for whom she seeks to represent ( id. at 14). Further, Plaintiff claims to have been injured because she lost 33% of the value of the coupon. On the statute of limitations issue, Plaintiff concedes that her GBL claims must be measured from January 7, 2006 (three years before her filing of this action). ( id. at 15). With regard to the Defendant's argument that Plaintiff may not assert claims that are not based on New York transactions, Plaintiff argues that she has claims other than the GBL claims that are not limited to New York transactions and, further, that her GBL claims may be asserted on behalf of non-New York residents so long as the transaction occurred in New York. As such, Plaintiff is entitled to obtain nationwide class action status in this action.
With regard to the sufficiency of her GBL § 349 claim, Plaintiff argues that it is sufficiently alleged because she has adequately pleaded Defendant's deceptive act against consumers by its deducting a portion of the value of the reward coupon when customers return merchandise and by its failure to disclose this practice. And Plaintiff has alleged that she was injured by her purchase. Plaintiff asserts nowhere in the statute is there a requirement that she was misled in a material way when she enrolled in Defendant's reward program. To the extent she was required to plead that she was materially mislead, it is "reasonably inferable that she was materially misled by Defendant's conduct" ( id. at 18). With regard to the sufficiency of her GBL § 350 claim, she argues that the cases are inconsistent with the requirement that plaintiff must allege reliance upon the false and/or misleading advertisement. To the extent this Court deems reliance to be a necessary element, Plaintiff seeks leave to serve her proposed Second Amended Complaint, which includes an allegation that she specifically relied upon Defendant's false advertising ( id. at 19).
Plaintiff claims that in any event, her proposed Second Amended Complaint includes an allegation that she was materially misled by Defendant's conduct (Pltf.'s Mem. of Law at 19, n7).
In further support of her breach of contract claim, Plaintiff argues that while she cannot cite to a specific contractual provision other than the promise to be provided $15 off which Defendant "breached because no provision exists that covers returns. On the other hand, defendant cannot cite any written agreement, or provision of an agreement, that entitles it to do what it did. Thus, its conduct is a breach" ( id. at 21). And Plaintiff argues that even if the reward coupons were independent of the credit card program, she still has a breach of contract claim because the coupon was an offer that the customer accepted by using the coupon and Defendant breached the contract by failing to give the consumer the full value of the coupon.
Plaintiff contends that her breach of the implied duty of good faith and fair dealing may stand because she is using it as an alternative theory to her breach of contract claim because "there is no express provision governing returns in either the credit card agreement or the Rewards Coupon" yet Defendant has an "implicit obligation to act in good faith when processing merchandise returns" ( id. at 21-22). Plaintiff argues that her unjust enrichment claim should not be dismissed because "the presence of a contract does not preclude an unjust enrichment claim where the contract does not cover the dispute in issue" ( id. at 22). Plaintiff then almost concedes Defendant's position regarding the viability of Plaintiff's breach of contract claim by stating that if the facts as are Defendant states ( i.e., that the credit card agreement makes no mention of Rewards Certificates) and Defendant gives these coupons away, then there is no basis for a breach of contract action. Therefore, Plaintiff's claim of unjust enrichment is viable and she may plead alternative theories ( id. at 22). Finally, Plaintiff asserts that the Sixth Cause of Action should not be dismissed because there is a justiciable controversy based on her claims that are not subject to dismissal and which give rise to the declaratory and injunctive relief sought.
In opposition to Defendant's request for sanctions, Plaintiff argues that it should be denied as Defendant has not demonstrated that Plaintiff initiated this action to delay, harass or maliciously injure Defendant. Further, none of the documentary evidence submitted vitiates Plaintiff's claims and Defendant has not established that material factual statements made in her Amended Complaint were false.
Finally, while not admitting that the Amended Complaint is deficient, Plaintiff seeks leave of Court to amend her Amended Complaint, and attaches her proposed amendment. She claims that since no prejudice will occur through the amendment, the cross-motion to amend should be granted ( id. at 23).
C. Defendant's Reply
Defendant begins by stating that Plaintiff's analysis improperly combines the purchase and the return transactions into one transaction when, indeed they are separate and must be treated as such. As to her purchase transaction, Plaintiff obtained exactly what was represented on the coupon — a promise to give her $15 off her purchase. And as to the return transaction, a review of the statement on the back of her receipt provides that "[w]ith valid proof of purchase, you may exchange or credit your purchase at the original purchase price" which is again, exactly what Plaintiff received. Defendant explains how Plaintiff's theory — that these "give away coupons" are the equivalent of cash and that she is entitled to that cash on her return is ludicrous since "[i]f it were true, every person who received a free give-away coupon, whether in the mail or clipped from a Sunday newspaper circular, could return items purchased with the coupon and demand back the cash equivalent of the coupon" (Reply Mem. of Law at 2). In addition, the theory is expressly prohibited by the terms of the coupon which provide "[m]ay not be used as payment or credit on any Macy's account'" and Plaintiff is seeking to have her Macy's credit card account credited with the $5 of the coupon allocated to her returned item ( id. at 2-3). And should Plaintiff's class action somehow survive, Plaintiff's class representation should be limited to members with her circumstance — i.e., Macy's customers who purchased merchandise in a New York Macy's who used the same $15 off coupon and returned merchandise ( id. at 5).
With regard to Plaintiff's breach of contract claim, Defendant points out that Plaintiff still has not identified the contract upon which she is relying (which is necessarily fatal to her claim), but to the extent she is relying on the Credit Card Agreement or the coupon, Macy's fully complied with the terms of both ( id. at 5-6). Likewise, Plaintiff's inability to cite to a specific agreement Defendant is alleged to have breached is also fatal to Plaintiff's breach of the covenant of good faith and fair dealing claim ( id. at 7).
Defendant contends that Plaintiff cites to irrelevant cases in support of her unjust enrichment claim since they involved cases where Plaintiff was alleging an oral contract and Defendant was disputing its existence whereas here, Plaintiff has not alleged an oral contract and, indeed, specifically relies upon Defendant's breach of contract in her claim of unjust enrichment ( id. at 8-9). Further, Defendant argues that the documentary evidence refutes her claim of unjust enrichment because Plaintiff received everything to which she was entitled.
Defendant rebuts Plaintiff's contention that while she may not represent a nationwide class in the GBL claims, she may represent a class on her common law claims by arguing that courts frequently deny nationwide class actions involving common law claims because the laws vary from state to state and, accordingly, the common legal and factual claims do not predominate ( id. at 9). Thus, Defendant argues that to the extent this Court were to find that the common law claims state valid causes of action, any putative class action should be limited to the GBL claims involving New York transactions.
Responding to Plaintiff's position that her GBL claims state viable causes of action based on Defendant's failure to disclose its deceptive practice, Defendant contends that GBL §§ 349 and 350 require affirmative mistatements and courts have rejected claims based on a failure to disclose ( id. at 11). Defendant argues that Plaintiff's GBL § 350 claim is also deficient because Plaintiff has failed to allege (even in her second amended complaint) that she relied on any particular information or advertisement when she enrolled in the program ( id. at 13), which is probably caused by the fact that the documentary evidence shows that no misrepresentations were made ( i.e., Plaintiff was not entitled to Rewards Certificates and even if she could state a valid cause of action with the coupons, the terms of the coupon and the return policy on the receipt belie Plaintiff's ability to allege reliance). And Plaintiff cannot allege reliance since she "had a reasonable opportunity to discover the facts about the transaction beforehand by using ordinary intelligence" ( id. at 13).
Finally, Defendant opposes Plaintiff's request for leave to amend because "leave to amend should be denied where the proposed pleading fails to state a cause of action, or is palpably insufficient as a matter of law'" ( id. at 14). The only proposed changes in the Second Amended Complaint are (1) a change of the term Reward Certificate to Reward Coupon, and (2) the combining of the breach of the implied covenant of good faith and fair dealing into the breach of contract claim. Defendant argues these amendments do not remedy the above-noted legal deficiencies, and, as such, Plaintiff's application for leave to amend should be denied.
Defendant also responds to Plaintiff's claim that the transaction involving the Rewards Certificate on January 19, 2009 was staged for the purposes of this litigation by supplying an Affidavit from Michael J. Bacha, Vice President of Loyalty Marketing/Point of Sale Systems for Macy's, who avers that his "office gathered the receipts for these transactions . . . [and] provided these receipts to counsel for Macy's, Catherine E. Sison" (Affidavit of Michael J. Bacha, sworn to July 21, 2009 at ¶ 3). He further "certif[ies] that the January 19, 2009 purchase and return transaction receipts . . . constitute bona fide' transactions. The purchase and subsequent return actually occurred and the receipts . . . were generated as a result of those transactions" ( id.).
THE LEGAL STANDARDS ON A MOTION TO DISMISS
The legal standards to be applied in evaluating a motion to dismiss are well-settled. In determining whether a complaint is sufficient to withstand a motion to dismiss pursuant to CPLR 3211(a)(7), the sole criterion is whether the pleading states a cause of action ( Cooper v 620 Prop. Assoc., 242 AD2d 359 [2d Dept 1997], citing Weiss v Cuddy Feder, 200 AD2d 665 [2d Dept 1994]). If from the four corners of the complaint factual allegations are discerned which, taken together, manifest any cause of action cognizable at law, a motion to dismiss will fail ( 511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152; Cooper, supra, 242 AD2d at 360). The court's function is to "accept . . . each and every allegation forwarded by the plaintiff without expressing any opinion as to the plaintiff's ability ultimately to establish the truth of these averments before the trier of the facts'" ( id., quoting 219 Broadway Corp. v Alexander's, Inc., 46 NY2d 506, 509). The pleading is to be liberally construed and the pleader afforded the benefit of every possible favorable inference ( 511 West 232nd Owners Corp., supra).
Where, as here, the plaintiff submits evidentiary material, the Court is required to determine whether the proponent of the pleading has a cause of action, not whether he or she has stated one ( Leon v Martinez, 84 NY2d 83; Simmons v Edelstein , 32 AD3d 464 [2d Dept 2006]; Hartman v Morganstern , 28 AD3d 423 [2d Dept 2006]; Meyer v Guinta, 262 AD2d 463 [2d Dept 1999]). Affidavits may be used to preserve in artfully pleaded, but potentially meritorious claims; however, absent conversion of the motion to a motion for summary judgment, affidavits are not to be examined in order to determine whether there is evidentiary support for the pleading ( Rovello, supra; Pace v Perk, 81 AD2d 444, 449-450 [2d Dept 1981]; see Kempf,, supra; Tsimerman v Janoff , 40 AD3d 242 [1st Dept 2007]). Affidavits may be properly considered where they conclusively establish that the plaintiff has no cause of action ( Taylor v Pulvers, Pulvers, Thompson Kuttner, P.C. , 1 AD3d 128 [1st Dept 2003]; M L Provisions, Inc. v Dominick's Italian Delights, Inc., 141 AD2d 616 [2d Dept 1988]; Fields v Leeponis, 95 AD2d 822 [2d Dept 1983]).
On the other hand, a plaintiff may rest upon the matter asserted within the four corners of the complaint and need not make an evidentiary showing by submitting affidavits in support of the complaint. A plaintiff is at liberty to stand on the pleading alone and, if the allegations are sufficient to state all of the necessary elements of a cognizable cause of action, will not be penalized for not making an evidentiary showing in support of the complaint ( Kempf v Magida , 37 AD3d 763 [2d Dept 2007]; see also Rovello v Orofino Realty Co., 40 NY2d 633, 635-636 ).
To the extent that Plaintiff's claims turn on a contract, the actual provisions of the contract — rather than Plaintiff's characterization of the terms in her pleading — are controlling ( see 805 Third Ave. Co. v M.W. Realty Assoc., 58 NY2d 447, 451; Marosu Realty Corp. v Community Preserv. Corp. , 26 AD3d 74 , 82 [1st Dept 2005]). Therefore, "[w]here a written contract . . . unambiguously contradicts the allegations supporting the breach of contract, the contract itself constitutes the documentary evidence warranting the dismissal of the complaint under CPLR 3211(a)(1)" ( 159 Broadway NY Assocs. L.P. v Bodner , 14 AD3d 1 [1st Dept 2004]; see also Taussig v Clipper Group, L.P. , 13 AD3d 166 , 167 [1st Dept 2004], lv denied 4 NY3d 707 [on a CPLR 3211(a)(1) motion to dismiss, "[t]he interpretation of an unambiguous contract is a question of law for the court, and the provisions of a contract addressing the rights of the parties will prevail over the allegations in a complaint"]).
To succeed on a motion to dismiss pursuant to CPLR 3211(a)(1), the documentary evidence that forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim ( AG Cap. Funding Partners, L.P. v State Street Bank and Trust Co. , 5 NY3d 582 , 590-591; 511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152; Held v Kaufman, 91 NY2d 425, 430-431; Leon v Martinez, 84 NY2d 83, 88; Cohen v Nassau Educators Fed. Credit Union , 37 AD3d 751 [2d Dept 2007]; Sheridan v Town of Orangetown , 21 AD3d 365 [2d Dept 2005]; Teitler v Max J. Pollack Sons, 288 AD2d 302 [2d Dept 2001]; Museum Trading Co. v Bantry, 281 AD2d 524 [2d Dept 2001]; Jaslow v Pep Boys — Manny, Moe Jack, 279 AD2d 611 [2d Dept 2001]; Brunot v Joe Eisenberger Co., 266 AD2d 421 [2d Dept 1999]).
If the documentary evidence disproves an essential allegation of the complaint, dismissal is warranted even if the allegations, standing alone, could withstand a motion to dismiss for failure to state a cause of action ( Snyder v Voris, Martini Moore, LLC , 52 AD3d 811 [2d Dept 2008]; Peter F. Gaito Architecture, LLC v Simone Dev. Corp. , 46 AD3d 530 [2d Dept 2007]).
A. Plaintiff's Claims Under GBL § 349 and GBL § 350
As an initial matter, Plaintiff has conceded that if this Court finds that she has viable claims under GBL §§ 349 and 350, her claims are limited to those arising on or after January 7, 2006 and that she may only represent members of a class nationwide who used the Macy's Reward Coupons or Certificates to purchase their merchandise from one of the numerous Macy's stores located in New York State. Because the Court is finding that Plaintiff's GBL claims are fatally defective, the Court need not address Plaintiff's concessions to narrow the claims period and class representation.
GBL § 349(a) makes unlawful "deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in the state. . . ." GBL § 350 prohibits "[f]alse advertising in the conduct of any business, trade or commerce. . . ."
The elements of a cause of action under GBL § 349 "are (1) a deceptive consumer-oriented act or practice which is misleading in a material respect, and (2) injury resulting from such act" ( Andre Strishak Assoc., P.C. v Hewlett Packard Co., 300 AD2d 608, 609 [2d Dept 2002]). As the Second Department put it more recently, to state a cause of action under Section 349, a plaintiff must plead: "first that the challenged act or practice was consumer-oriented; second, that it was misleading in a material way; and third, that the plaintiff suffered injury as a result of the deceptive act'" ( Lonner v Simon Prop. Group, Inc., 57 AD3d 100, 110 [2d Dept 2008], quoting Singh v Queens Ledger Newspaper Group , 2 AD3d 703 , 704 [2d Dept 2003], quoting Stuman v Chemical Bank, 95 NY2d 24, 29). It is clear that omissions, as well as acts or misrepresentations, may form the basis of a deceptive practices claim ( Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, N.A., 85 NY2d 20, 26). In determining whether a representation or an omission is a deceptive act, "the test is whether such act is likely to mislead a reasonable consumer acting reasonably under the circumstances'" ( Andre Strishak Assoc., P.C., supra, 300 AD2d at 609, quoting Oswego Laborers' Local 214 Pension Fund, supra, 85 NY2d at 25).
Even the case Defendant cites as standing for the proposition that only acts and representations suffice for a GBL § 349 claim recognized that omissions as well as representations may form the basis for a deceptive acts or practices claim ( Andre Strishak Assoc., supra, 300 AD2d at 609). In that case, the Appellate Division, Second Department held that "defendant did not engage in a deceptive act by representing that the cartridges were included with the purchase of each printer without disclosing that they were economy-size cartridges" ( id. at 610).
For a claim under GBL § 350, "[a] plaintiff must demonstrate that the advertisement (1) had an impact on consumers at large, (2) was deceptive or misleading in a material way, and (3) resulted in injury" ( Andre Strishak Associates, P.C., supra, 300 AD2d at 609). The "test is whether the advertisement is likely to mislead a reasonable consumer acting reasonably under the circumstances'" ( id., quoting Oswego Laborers' Local 214 Pension Fund, supra, 85 NY2d at 26).
While there is no requirement that the Plaintiff allege reliance on Defendant's deceptive practices in a GBL § 349 claim ( Stutman v Chemical Bank, 95 NY2d 24, 29; Small v Lorillard Tobacco Co., 252 AD2d 1, 7 [1st Dept 1998], affd 94 NY2d 43), to state a claim under GBL § 350, Plaintiff must allege reliance on the false advertisement ( Andre Strishak Assoc., P.C., 300 AD2d at 610).
It is undisputed that Plaintiff is a holder of a Red Star Rewards Card, and, as such, was advised in Macy's literature that she was not eligible to receive Red Star Rewards Certificates (Cooperman Aff., Ex. B). While Plaintiff attempts in her opposition to broaden her claim so that the meaning of Reward Certificate is to refer to all promotional savings, savings coupons and certificates Macy's delivers to its credit card customers, this does not change the fact that the essence of Plaintiff's deceptive practice and fraudulent advertising claims is premised upon Plaintiff's allegation that Macy's advertises its Rewards Certificates "as being the functional equivalent of cash" (Amended Complaint at ¶¶ 3, 16). However, it is undisputed that Plaintiff did not hold or redeem a Reward Certificate. Rather, she had and utilized a dollars-off Reward Coupon.
The only other deceptive act is Defendant's failure to disclose to Plaintiff that she would lose some of the value of the Reward Coupon if she returned merchandise ( id. at ¶¶ 6, 15, 30, 34). Although the Court is not hung up on the nomenclature used, the Court cannot lose sight of the fact that it is these assertions that form the basis of Plaintiff's deceptive acts and fraudulent advertising claims.
Because Defendant has effectively refuted the factual underpinnings of Plaintiff's claims with indisputable documentary evidence, Plaintiff's claims under GBL §§ 349 and 350 cannot stand. Plaintiff does not dispute that the documents establish that she was a Red Star Rewards member and that based on the literature Macy's disseminated to her, she was not entitled to Rewards Certificates. Further, Plaintiff concedes that she used a coupon rather than a Rewards Certificate and that the coupon was never promoted as the functional equivalent of cash. Indeed, the language of the coupon at issue makes clear that it was a typical store coupon — akin to the free discount coupons disseminated to the general public in store flyers — and not the functional equivalent of cash.
The front of the coupon states "$15 off your next Macy's Card purchase of $50 or more" and its back states "Discount will be deducted from the regular, sale or clearance price as applicable. Cannot be combined with any savings pass/coupon. . . . May not be used as payment or credit on any Macy's credit account" (Cooperman Aff., Ex. F [emphasis added]).
Nowhere on the coupon is it suggested that the $15 off could be used for anything other than a discount on merchandise purchased (not returned) totaling $50 or more. Furthermore, the coupon contained a clear disclaimer that the coupon holder could not use the coupon "as payment or credit on any Macy's credit account."
While it is true that the coupon did not specifically address what would happen in the event of a return of some or all of the merchandise purchased, what was made clear is that no matter what happened, the consumer was not going to get a credit on his/her credit card.
A reasonable construction might support a view that the returning consumer might, in the event of a return, be entitled to get the coupon back or have the same discount applied to a new purchase. But that is not the relief that Plaintiff seeks. Plaintiff urges, in essence, if she had returned all three shirts she purchased, she would end up with a $15 credit on her Macy's card for having done nothing other than purchase three shirts at a discount and return them. No reasonable consumer acting reasonably would construe the $15 off coupon as entitling him/her to obtain a $15 credit on his/her credit card in the event the merchandise purchased were returned. As it is, Plaintiff is essentially complaining that having purchased three shirts at a discounted price, and having returned one of them, she is entitled to make a profit on the deal by having the discount attributable to the returned shirt paid to her in the form of a credit on her credit card.
That Plaintiff only returned one item does not change the equation. The only way to effectuate Plaintiff's desires (apply a prorated portion of the $15 coupon, generated by the returned item to the price of items she retained) would be to give her a monetary credit on her credit card — something she was told Macy's would not do — or to give her money damages in this action — something that this Court does not see a legal basis for doing.
Because Plaintiff has failed to show that a reasonable consumer acting reasonably under the circumstances would have been misled into believing that a $15 off $50 purchase coupon would allow the Macy's Cardholder, upon his/her return of some or all of the merchandise purchased, to receive some or all of the value of that coupon refunded to his/her credit card account, Plaintiff's GBL §§ 349 and 350 are deficient as a matter of law and shall be dismissed.
The present case is a far cry from Lonner v Simon Prop. Group, Inc. ( 57 AD3d 100 [2d Dept 2008]) where the plaintiff therein was held to have stated causes of action arising from the lack of clarity and conspicuousness of the disclosure made by defendant as to the dormancy fees it charged on its store-issued, pre-paid gift cards. In Lonner, the plaintiff's allegations that the type size used by defendant was impermissibly small, that defendant failed to clearly and conspicuously disclose the existence of the dormancy fees and the circumstances under which they would be imposed, and that he was injured thereby were held sufficient to state a cause of action under GBL § 349. Here, Plaintiff does not claim that the coupon's warning that the customer could not use the coupon as a payment or credit on a Macy's credit card was inconspicuous or misleading.
Spector v Toys "R" Us, Inc. (Sup Ct Nassau County Index No. 16479/03) is factually distinguishable since it involved an awards program whereby Toys "R" Us credit cardholders were provided credits to their accounts upon the purchase of merchandise and that once sufficient credits were earned, the cardholder was entitled to rewards entitled "Geoffrey Rewards Coupons" or "Geoffrey Dollars" in $10.00 denominations. Thus, the practice was akin to the Reward Certificate described herein, but not used by Plaintiff. In that case, under the Toys "R" Us program, when a reward coupon was used to obtain a discount, the customer received a receipt reflecting only the cash paid and, upon a return, the value of the coupon was lost. While these facts are recounted in Justice Leonard Austin's Decision and Order dated March 22, 2004, the Decision involved a motion by the store to join Chase Manhattan Bank, the credit card issuer. Justice Austin did not pass on the legal sufficiency of the complaint as against Toys "R" Us. Nor does the Decision and Order indicate whether the store there, like the store here, published a disclaimer indicating that a customer could not use the Geoffrey Dollars to obtain payment or credit on the store credit card.
Because the Court has determined that Plaintiff has not adequately alleged violations of GBL §§ 349 and 350, this Court need not address Defendant's alternative grounds for dismissing these claims — i.e., (1) that Plaintiff lacks standing to pursue these claims on behalf of the Class, and (2) that the Class must be limited to consumers who purchased goods using these coupons in Macy's' stores in New York State and not on a national basis.
B. Plaintiff's Common Law Claims 1. Plaintiff's Breach of Contract Claim
In her Third Cause of Action, Plaintiff claims that she accepted Defendant's offer to apply for and use the Macy's Card and she performed in accordance with the terms of the Macy's Card by purchasing merchandise to be charged to the card. She further alleges that Defendant "breached its contracts with Plaintiff . . . in that Defendant failed to honor its promise to provide Reward Certificates that possessed the stated terms and agreed-to values as set forth in the terms of the program rules" since Defendant had the value of Plaintiff's purchase improperly and artificially reduced as a result of Defendant's manipulations of" Plaintiff's sales receipt (Amended Complaint at ¶ 42). Defendant argues that Plaintiff has failed to state a cause of action because she has not affirmatively "set forth the terms of the agreement upon which liability is predicated, either by express reference or by attaching a copy of the contract" ( Chrysler Cap. Corp. v Hilltop Egg Farms, Inc., 129 AD2d 927 [3d Dept 1987]; Clifden Futures, LLC v Man Fin., Inc. , 20 Misc 3d 638 [Sup Ct NY County 2008]).
The elements of a claim for breach of contract are (1) the existence of a contract, (2) due performance of the contract by plaintiff, (3) breach of the contract by defendant, and (4) damages resulting from the breach ( Coastal Aviation, Inc. v Commander Aircraft Co., 937 F Supp 1051, 1060 [SD NY 1996], affd 108 F3d 1369 [2d Cir 1997]). Based on the foregoing elements, the Court finds that Plaintiff has not alleged a claim of breach of contract. First, it is unclear the piece of paper upon which Plaintiff is relying to establish a contract — i.e., whether it is the Macy's Card Agreement, the literature disseminated concerning Macy's Rewards Program, or the coupon at issue in this case. Second, while Plaintiff has alleged her due performance through her purchase of merchandise on December 2, 2008 in accordance with Defendant's requirements, she has not alleged how Macy's breached the contract since she has not alleged specific provisions under which Defendant failed to comply. Thus, Plaintiff cites to no language in any of the documents that could possibly be construed as the contract at issue that Defendant would honor the coupon at issue in this case as the functional equivalent of cash or that Plaintiff would be allowed to obtain the value of the coupon in the event of a return. Instead, all of the documentary evidence points to the opposite conclusion. Accordingly, Plaintiff has not alleged a breach of contract cause of action and Plaintiff's Third Cause of Action shall be dismissed.
2. Plaintiff's Breach of the Implied Covenant of Good Faith and Fair Dealing
Within every contract is an implied covenant of good faith and fair dealing ( 511 West 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Dalton v Educational Testing Service, 87 NY2d 384; Rowe v Great Atl. Pac. Tea Co., 46 NY2d 62; Aventine Inv. Mgt., Inc. v Canadian Imperial Bank of Commerce, 265 AD2d 513 [2d Dept 1999]; Components Direct, Inc. v European American Bank and Trust Co., 175 AD2d 227 [2d Dept 1991]; La Barte v Seneca Resources Corp., 285 AD2d 974 [4th Dept 2001]; Tapps of Nassau Supermarkets, Inc. v Linden Blvd., L.P., 269 AD2d 306 [1st Dept 2000]). The covenant is breached when a party acts in a manner that deprives the other party of the right to receive benefits under their agreement ( 511 West 232nd Owners Corp., supra; Aventine Inv. Mgt., Inc., supra). The covenant encompasses any promises which a reasonable person in the position of the promisee would be justified in understanding were included ( 511 West 232nd Owners Corp., supra) .
In order to survive a motion to dismiss, the plaintiff must allege facts that tend to show that the defendant sought to prevent performance of the agreement or to withhold its benefits from the plaintiff ( see Aventine Inv. Mgt. Inc., supra, 265 AD2d at 514; Jaffe v Paramount Communications, Inc., 222 AD2d 17 [1st Dept 1996]; Dvoskin v Prinz, 205 AD2d 661, 662 [2d Dept 1994]). A breach of the implied covenant of good faith claim can survive a motion to dismiss "only if it is based on allegations different than those underlying the accompanying breach of contract claim" ( Siradas v Chase Lincoln First Bank, N.A., 1999 WL 787658 at * 6 [SD NY 1999]). When the relief sought by the plaintiff in the claim for a breach of the implied covenant of good faith is "intrinsically tied to the damages allegedly resulting from [the] breach of contract," there is no separate and distinct wrong that would give rise to an independent claim ( see Canstar v J.A. Jones Constr. Co., 212 AD2d 452 [1st Dept 1995]; Casalino Interior Demolition Corp. v Custom Design Data, Inc., 235 AD2d 514 [2d Dept 1997], lv dismissed 89 NY2d 1085; Alter v Bogoricin, 1997 WL 691332 [SD NY 1997]).
As Defendant correctly points out, a claim for breach of the implied covenant of good faith and fair dealing does not provide a separate cause of action from a breach of contract claim and must be dismissed as a matter of law as duplicative ( see Deer Park Enter., LLC v Ail Sys., Inc. , 57 AD3d 711 [2d Dept 2008]; R.I. Island House, LLC v North Town Phase II Houses, Inc. , 51 AD3d 890 [2d Dept 2008]; Hall v EarthLink Network, Inc., 396 F3d 500 [2d Cir 2005]; Canstar v J.A. Jones Constr. Co., supra; Computech Intl., Inc., v Compaq Computer Corp., 2002 WL 31398933 [SD NY 2002]).
For the same reasons that Plaintiff's breach of contract claim must be dismissed, Plaintiff's claim that Defendant breached the implied covenant of good faith and fair dealing must also be dismissed. Plaintiff has failed to specify the contractual provisions under which Defendant denied her the realization of the benefits envisioned by the contract. And even if Plaintiff had sufficiently alleged a breach of contract claim, Plaintiff's breach of the implied covenant of good faith and fair dealing is premised on the same conduct that gives rise to her breach of contract claim and is "intrinsically tied to the damages resulting from" the alleged breach of contract ( The Hawthorne Group, LLC v RRE Ventures , 7 AD3d 320 [1st Dept 2004]). Accordingly, Plaintiff's Fourth Cause of Action shall be dismissed.
3. Plaintiff's Claim for Unjust Enrichment
"To prevail on a claim of unjust enrichment, a party must show that (1) the defendant was enriched (2) at the plaintiff's expense, and (3) that it is against equity and good conscience to permit [the defendant] to retain what is sought to be recovered ( Citibank, N.A. v Walker , 12 AD3d 480 , 481 [2d Dept 2004]). However, it is well settled that a claim of unjust enrichment must be dismissed where there is no dispute that a written contract exists covering the subject matter of the action ( Clark-Fitzpatrick, Inc. v Long Island R.R. Co., 70 NY2d 382, 388). Thus, it is only in cases where there is a bona fide dispute as to the existence of a contract may plaintiff plead alternative theories of recovery (contract and quasi contract) ( see Hochman v LaRea , 14 AD3d 653 [2d Dept 2005]; Zuccarini v Ziff-Davis Media, Inc., 306 AD2d 404 [2d Dept 2003]). Because there is no dispute that Plaintiff's receipt of the coupon at issue in this litigation was obtained in connection with the express agreement entered into between the parties concerning Plaintiff's membership in Macy's Rewards Program as a result of her applying for and using her Macy's Card, there is no dispute that there exists a written contract covering the subject matter of this action and Plaintiff's Fifth Cause of Action shall be dismissed ( Shovak v Long Island Commercial Bank , 50 AD3d 1118 , 1120 [2d Dept 2008], lv dismissed in part, denied in part 11 NY3d 762).
4. Plaintiff's Claim for Injunctive and Declaratory Relief
Because this Court has dismissed all of Plaintiff's substantive causes of action that provide the basis for an award of declaratory and injunctive relief, the Court shall dismiss Plaintiff's Sixth Cause of Action for Declaratory and Injunctive Relief as they are not independent causes of action.
C. Plaintiff's Application for Leave to Amend
The Court declines to grant leave to Plaintiff to amend her Amended Complaint as provided in the proposed Second Amended Complaint annexed to Plaintiff's moving papers. The Court notes that Plaintiff did not seek a pre-motion conference prior to interposing the cross-motion. While ordinarily this Court would enforce Rule 24 of the Commercial Division, the Court will, in this instance, ignore the violation since it is readily apparent that there is no reasonable likelihood that a pre-motion conference would have avoided any of the issues presented by the cross-motion.
Defendant was exempt from a pre-motion conference because its motion was made simultaneously with its filing of an RJI.
It is well settled law that leave to amend or supplement pleadings should be freely granted unless the amendment sought is palpably improper or insufficient as a matter of law, or unless prejudice and surprise directly result from the delay in seeking the amendment ( McCaskey, Davies Assoc. v New York City Health Hosp. Corp., 59 NY2d 755, 757, citing CPLR 3025, subd [b]). The proposed amendments — (1) substituting Reward Coupon for Reward Certificate, (2) affirmatively alleging that the Defendant's conduct misled her, and (3) affirmatively alleging that Plaintiff relied on Defendant's deceptive advertising and its lack of disclosure when Plaintiff purchased and returned part of the merchandise — do nothing to salvage the insufficiency of Plaintiff's claims. Further, the Court would not overlook the fact that Plaintiff has already had two bites at the apple.
Accordingly, because the proposed amendments are insufficient as a matter of law, the Court exercises its discretion and denies Plaintiff's application.
D. Defendant's Application for Sanctions
The Court declines to exercise its discretion to award sanctions against Plaintiff because it cannot find that Plaintiff's act in instituting this action was in bad faith within the meaning of 22 NYCRR § 130-1.1.
The Court has considered the following papers in connection with this motion:
1)Defendant's Notice of Motion for Summary Judgment dated May 21, 2009; Affirmation of Jonathan K. Cooperman, Esq. dated May 21, 2009 and the exhibits annexed thereto;
2)Memorandum of Law in Support of Defendant's Motion to Dismiss and for Sanctions dated May 21, 2009;
3)Plaintiff's Notice of Cross-Motion dated July 2, 2009; Affidavit in Opposition of Julie Held, sworn to July 1, 2009 and the exhibits annexed hereto;
4)Memorandum of Law in Opposition to Defendant's Motion to Dismiss and for Sanctions and in Support of Cross-Motion for Leave to Amend dated July 2, 2009;
5)Reply Affidavit of Michael H. Bacha, sworn to July 21, 2009; and
6)Defendant's Reply Memorandum of Law dated July 23, 2009;
Based upon the foregoing papers, and for the reasons set forth above, it is hereby
ORDERED that the motion by Defendant Macy's Inc. d/b/a Macy's and Bloomingdales to dismiss the Amended Complaint CPLR 3211(a) (1), CPLR 3211(a)(3) and CPLR 3211(a) (7) (Seq. 001) and for the imposition of sanctions pursuant to 22 NYCRR 130-1.1 is granted in part and denied in part; and it is further
ORDERED that the branch of the motion of Defendant Macy's Inc. d/b/a Macy's and Bloomingdales as is to dismiss the complaint CPLR 3211(a) (1), CPLR 3211(a)(3) and CPLR 3211(a)(7) is granted and the Amended Complaint is hereby dismissed; and it is further
ORDERED that the branch of the motion by Defendant Macy's Inc. d/b/a Macy's and Bloomingdales as is for the imposition of sanctions pursuant to 22 NYCRR § 130-1.1 is denied; and it is further
ORDERED that the cross-motion by Plaintiff Julie Held to amend her First Amended Complaint (Seq. 003) is denied.
The foregoing constitutes the Decision and Order of this Court.