holding plaintiffs who brought section 349 claim based on their purchase of premium subscription to defendant's website sufficiently alleged that deceptive practices caused their injury because plaintiffs claimed they purchased defendant's services and incurred expenses as a result of having seen misleading statements on defendant's websiteSummary of this case from Stoltz v. Fage Dairy Processing Indus., S.A.
No. 13 Civ. 1605 (JGK).
Joseph Ignatius Marchese, Neal Jamison Deckant, Scott A. Bursor, Yitzchak Kopel, Bursor & Fisher, P.A., New York, NY, for Plaintiffs. Maura Barry Grinalds, Patrick George Rideout, Robert Lynch Dunn, Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendant.
Joseph Ignatius Marchese, Neal Jamison Deckant, Scott A. Bursor, Yitzchak Kopel, Bursor & Fisher, P.A., New York, NY, for Plaintiffs. Maura Barry Grinalds, Patrick George Rideout, Robert Lynch Dunn, Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, for Defendant.
OPINION AND ORDER
JOHN G. KOELTL, District Judge:
This action arises out of the operation and use of a job-matching website, TheLadders.com. The plaintiffs, Barbara Ward, Joseph Garcia, Robin Lynn, Timothy Morris, David Reading, and Philip Wilton, who are former premium-paying users of the website (“premium members”), brought this purported class action against the defendant, TheLadders.com, Inc. (“TheLadders”). The plaintiffs allege that the defendant made false promises and representations regarding, among other things, the quality, specifications, and availability of job postings on the website, and that the defendants induced subscribers to purchase resume rewriting services through false representations.
The plaintiffs allege claims for breach of contract, breach of implied covenant of good faith and fair dealing, rescission of contract, money had and received, common-law fraud, unjust enrichment, and violationsof the New York General Business Law § 349, the Washington Consumer Protection Act, and the California Unfair Competition Law. The plaintiffs assert subject-matter jurisdiction pursuant to the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2), because: there are more than one hundred class members; the aggregate amount in controversy exceeds five million dollars; and there is partial diversity of citizenship in that the defendant is a citizen of New York and at least one plaintiff is a citizen of a different state. The defendant now moves to dismiss the Second Amended Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons explained below, the motion is granted in part and denied in part.
In deciding a motion to dismiss pursuant to Rule 12(b)(6), the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in the plaintiff's favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.2007); Arista Records LLC v. Lime Grp. LLC, 532 F.Supp.2d 556, 566 (S.D.N.Y.2007). The Court's function on a motion to dismiss is “not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). The Court should not dismiss the complaint if the plaintiff has stated “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While the Court should construe the factual allegations in the light most favorable to the plaintiff, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id.
When presented with a motion to dismiss pursuant to Rule 12(b)(6), the Court may consider documents that are referenced in the complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiff's possession or that the plaintiff knew of when bringing suit, or matters of which judicial notice may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002).
The Court accepts the following allegations in the plaintiffs' Second Amended Complaint as true for purposes of this motion to dismiss. Defendant TheLadders, a Delaware corporation with its principal place of business in New York, operated a job-matching website, TheLadders.com (the “website”), which charged a premium subscription fee for members to access job postings on the website. (2d Am. Compl. (“SAC”) ¶¶ 2, 16.) The website provided different subscription options to the members. The “free basic” subscription allowed members to review job listings but did not allow the members to apply for the positions. (SAC ¶ 33.) The “premium” membership, at a cost of $30 per month or $180 per year, allowed members to apply for the positions. (SAC ¶ 33.) The named plaintiffs were premium members of the website at various times from 2003 to around December 2010. (SAC ¶¶ 64, 74, 88, 98, 105, 110.).
The website contained representations about the nature and quality of the jobs as well as the services provided. For example, the website displayed words and slogans representing the website to be “a premium job site for only $100K+ jobs” where “[e]xperts pre-screen all jobs so they're always 100K+” and members would “find hand-selected and pre-screened jobs that are $100K+.” (SAC ¶¶ 20, 24, 25). Each of the named plaintiffs allegedly relied on such representations in signing up for the premium membership. (SAC ¶¶ 66, 76, 90, 100, 107, 112.) TheLadders made similar representations in the TV commercials, advertising the website as a “premium job site for only $100K+ jobs and only $100K+ talent.” (SAC ¶¶ 42, 43.).
However, the plaintiffs allege that the website simply “scraped” job postings from other websites without authorization and that TheLadders did not review the job listings to ensure that each job listing was a “$100K+” job or that the jobs posted were still open. (SAC ¶¶ 31, 32.) As a result, many of the job listings, including some for which the plaintiffs applied or inquired into, were not open or, even if open, would pay substantially less than $100,000 a year. (SAC ¶¶ 38, 108–09, 113–15.).
In addition, TheLadders allegedly engaged in deceptive conduct with respect to the website's “expert resume critique” service. TheLadders provided to its premium members what it purported to be an “expert resume critique” service. (SAC ¶ 48.) However, TheLadders allegedly did not actually provide bona fide resume critiques when premium members submitted their resumes for review. (SAC ¶ 49.) Instead, the “expert resume critique” service was allegedly a scheme through which TheLadders attempted to sell its resume rewriting service. (SAC ¶ 50.) The purported “experts” who issued the “expert resume critiques” were salespeople with no qualification in the field of resume consulting. (SAC ¶ 51.) The resume critique letters were form letters drafted by salespeople from a crib-sheet regardless of whether the submitted resumes were already well-written, so that members would be induced to purchase resume rewriting service. (SAC ¶¶ 53–55.) Salespeople would earn $10 in commission for each person to whom they sold the resume rewriting service. (SAC ¶ 52.) Allegedly misled by the resume critiques and not knowing that the critiques were form letters created by salespeople,plaintiffs Garcia, Lynn, and Morris purchased the resume rewriting service from TheLadders at costs ranging from $495 to $1,820. (SAC ¶¶ 69–70, 83–84, 92–93.).
The plaintiffs brought this action for breach of contract (Count I), rescission of contract (Count II), breach of implied covenant of good faith and fair dealing (Count III), money had and received (Count IV), common-law fraud (Count V), violations of New York's General Business Law (GBL) § 349 (Count VI), unjust enrichment (Count VII), and violations of consumer protection laws of Washington and California, respectively (Count VIII and IX).
The plaintiffs' first claim is for breach of contract. Under New York law, the elements of a cause of action for breach of contract are: “(1) the existence of a contract, (2) the plaintiff's performance under the contract, (3) the defendant's breach of the contract, and (4) resulting damages.” Palmetto Partners, L.P. v. AJW Qualified Partners, LLC, 83 A.D.3d 804, 921 N.Y.S.2d 260, 264 (2011). “Generally, a party alleging a breach of contract must demonstrate the existence of a contract reflecting the terms and conditions of their purported agreement.” Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 919 N.Y.S.2d 465, 944 N.E.2d 1104, 1110 (2011) (internal quotation marks and citation omitted).
The parties dispute what, if any, terms and conditions the defendant breached by allegedly failing to provide job postings and services meeting the plaintiffs' expectations.
With the exception of Morris, none of the named plaintiffs became or remained members of the website on or after June 30, 2010, when this language was inserted. Thus, plaintiffs Garcia, Lynn, Reading, Ward, and Wilton cannot rely on this language to bring a breach of contract claim, because they were not parties to a contract containing this language. See DeRaffele v. 210–220–230 Owners Corp., 33 A.D.3d 752, 823 N.Y.S.2d 202, 203 (2006) (“[T]he plaintiff was not a party to that agreement so that he could enforce it....”).
The defendant next argues that the language inserted in June 2010 was not an express promise but merely a general description of services. While certain introductory phrases in contracts have been held to be non-determinative of the parties' rights and obligations, see, e.g. Andersen ex rel. Andersen, Weinroth & Co., L.P. v. Weinroth, 48 A.D.3d 121, 849 N.Y.S.2d 210, 219 (2007); cf. Robinson v. Match.com, L.L.C., No. 10 Civ. 2651, 2012 WL 3263992, at *12 (N.D.Tex. Aug. 10, 2012), the contractual language in those cases was far more general than the language in the present case. See Weinroth, 849 N.Y.S.2d at 219 (holding introductory language expressing the company's “desire to recognize the value to the Company of past and present services” to be non-substantive (emphasis omitted)); Robinson, 2012 WL 3263992, at *12 (classifying language describing a website as “the service for single adults to meet each other online” as merely “introductory” language).
The defendant's heavy reliance on Robinson is misplaced additionally because the website in that case made no representation that it would perform the actions that it allegedly failed to perform. The only contractual language in that case concerning the website's actions provided that the website “reserve[d] the right” to investigate and terminate a user's membership in case of user misconduct. Robinson, 2012 WL 3263992, at *8, *9 (emphasis omitted). As the Robinson court explained, “the Agreement does not require Match.com to undertake the actions alleged but instead merely provides that Match.com may undertake such actions in its sole discretion and judgment.” Id. at *10.
The same reasoning applies to the defendant's contention that to “review [and] ensure [that a job listing] meets the criteria of a $100K+ position” was not a promise that each job posting would be an actual and open position and would pay more than $100,000 per year. The language was at least ambiguous: the disagreement between the parties is essentially whether a job that “meets the criteria of a $100K+ position” meant a job opening that paid more $100,000 per year, as the plaintiffs argue, or merely a job whose description suggested that it belonged to the type that tends to pay more than $100,000. It is not necessary to resolve this ambiguity on this motion, because the plaintiffs' allegation appears to be that the defendant made no good-faith efforts at all to review or prescreen the jobs. (SAC ¶ 31.) To the extent that any ambiguity is implicated, the plaintiffs' construction prevails for purposes of this motion. See Subaru Distributors Corp. v. Subaru of Am., Inc., 425 F.3d 119, 122 (2d Cir.2005) (On a motion to dismiss, a court “should resolve any contractual ambiguities in favor of the plaintiff.”).
ALL OF THE INFORMATION AND MATERIALS CONTAINED ON THE WEBSITE ... ARE PROVIDED ON AN “AS IS” AND “AS AVAILABLE” BASIS, WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED .... THELADDERS MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, REGARDING ... ANY OF THE SERVICES OR INFORMATION PROVIDED THEREIN IN TERMS OF ITS AVAILABILITY, ACCURACY, ADEQUACY, CORRECTNESS, PRECISION, TIMELINESS, COMPLETENESS, THOROUGHNESS, RELIABILITY OR OTHERWISE.
NO WARRANTY OF ANY KIND, WHETHER IMPLIED, EXPRESSED OR STATUTORY, INCLUDING ... MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND FREEDOM FROM DEFECT ... IS GIVEN IN CONJUNCTION WITH ANY OF THE INFORMATION, MATERIALS OR SERVICES PROVIDED BY THELADDERS. WE MAKE NO WARRANTY THAT THE WEBSITE OR THE SERVICES THEREON WILL MEET USERS' REQUIREMENTS.
Under the doctrine of contra proferentem, “[i]t is a basic principle of contract law that a written document is to be construed against the party who prepared it where there are contradictory provisions,” Westfield Family Physicians, P.C. v. Healthnow New York, Inc., 59 A.D.3d 1014, 873 N.Y.S.2d 793, 795 (2009) (collecting cases); accord Natt v. White Sands Condo., 95 A.D.3d 848, 943 N.Y.S.2d 231, 232 (2012), unless the other party also negotiated the terms of the contract. Westfield Family Physicians, 873 N.Y.S.2d at 795; Am. Prop. Consultants, Ltd. v. Zamias Servs., Inc., 294 A.D.2d 217, 741 N.Y.S.2d 852 (2002). The doctrine is particularly applicable in cases like this one, in which a consumer agreed to a form contract that the consumer neither drafted nor negotiated. See A & Z Appliances, Inc. v. Elec. Burglar Alarm Co., 90 A.D.2d 802, 455 N.Y.S.2d 674, 675 (1982); see also Westchester Resco Co., L.P. v. New England Reinsurance Corp., 818 F.2d 2, 3 (2d Cir.1987) (per curiam).
The result here is the common-law equivalent of the principle under the Uniform Commercial Code which holds that a general disclaimer is ineffective if the disclaimer is inconsistent with an “express undertaking” promised in the contract. See Norwest Fin. Leasing, Inc. v. Parish of St. Augustine, 251 A.D.2d 125, 674 N.Y.S.2d 312, 313 (1998) (citing N.Y. U.C.C. Law § 2–316(1)) (holding that “the general disclaimer of warranties was inconsistent with the express undertaking to service and repair the leased equipment, and is therefore ineffective”); Wintel Serv. Corp. v. MSW Electronics Corp., 161 A.D.2d 764, 556 N.Y.S.2d 359, 360 (1990) (general disclaimer ineffective if inconsistent with express warranty); see alsoN.Y. U.C.C. Law § 2–313, cmt. 1 (McKinney 2013) (“ ‘Express' warranties rest on ‘dickered’ aspects of the individual bargain, and go so clearly to the essence of that bargain that words of disclaimer in a form are repugnant to the basic dickered terms.”).
Moreover, the “Limitation of Liability” section provided that
THELADDERS' MAXIMUM TOTAL, AGGREGATE LIABILITY ARISING OUT OF OR IN CONNECTION WITH THE WEBSITE AND ANY INFORMATION OR SERVICES PROVIDED THEREIN, REGARDLESS OF THE CAUSE OF ACTION (WHETHER IN CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE ), WILL IN NO EVENT EXCEED THE TOTAL AMOUNT CUSTOMER HAS PAID TO THELADDERS WITHIN THE TWELVE (12) MONTH PERIOD PRECEDING THE DATE THE CLAIM FIRST AROSE.
It is well established under New York law that “[t]he doctrine of incorporation by reference requires that the paper to be incorporated into the written instrument by reference must be so described in the instrument that the paper may be identified ‘beyond all reasonable doubt.’ ” Kenner v. Avis Rent A Car Sys., Inc., 254 A.D.2d 704, 678 N.Y.S.2d 213, 214 (1998) (quoting In re Bd. of Comm'rs of Washington Park, 7 Sickels (52 N.Y.) 131, 134 (1873)); accord PaineWebber Inc. v. Bybyk, 81 F.3d 1193, 1201 (2d Cir.1996) (holding the same in affirming grant of motion to dismiss); Cornhusker Farms, Inc. v. Hunts Point Co-op. Mkt., Inc., 2 A.D.3d 201, 769 N.Y.S.2d 228, 231 (2003). Courts have emphasized that incorporation by reference must meet an “exacting standard”; vague references to documents not specifically identified do not suffice. Shark Info. Servs. Corp. v. Crum & Forster Commercial Ins., 222 A.D.2d 251, 634 N.Y.S.2d 700, 701 (1995); see also Ryan, Beck & Co., LLC. v. Fakih, 268 F.Supp.2d 210, 223 (E.D.N.Y.2003).
Here, the Additional Terms section merely stated that the website “ may contain other terms and conditions”. (SAC ¶ 22 (emphasis added).) Without more, this language did not identify what specific documents or writings were to be incorporated by reference. Although the plaintiffs concede that this language could not possibly mean that all of the contents of the website were incorporated by reference, they also did not proffer any ground on which a clear and unambiguous incorporation by reference can be established. Therefore, the language was nothing more than a “vague allusion to general classes of documents” that may or may not be identifiable let alone be incorporated, and was thus legally insufficient to effectuate a valid incorporation by reference. See 4Connections LLC v. Optical Commc'ns Grp., Inc., 618 F.Supp.2d 178, 183 (E.D.N.Y.2009); see also Intesa Sanpaolo, S.p.A. v. Credit Agricole Corporate & Inv. Bank, No. 12 Civ. 2683, 2013 WL 4856199, at *4 (S.D.N.Y. Sept. 10, 2013) (granting motion to dismiss and holding that the non-specific phrase “other relevant agreement(s) setting forth the terms of the Reference Obligation” insufficient to constitute incorporation by reference); Sea Trade Co. Ltd. v. FleetBoston Fin. Corp., No. 03 Civ. 10254, 2007 WL 1288592, at *4 (S.D.N.Y. May 1, 2007) (holding that “the general reference ... to the Bank's ‘rules' and ‘regulations' is insufficient as a matter of law to incorporate the Terms and Conditions”).
The plaintiffs also bring a claim for breach of the implied covenant of good faith and fair dealing. Under New York law, to state a claim for breach of the implied covenant, “the plaintiff must allege facts which tend to show that the defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff.” Aventine Inv. Mgmt., Inc. v. Canadian Imperial Bank of Commerce, 265 A.D.2d 513, 697 N.Y.S.2d 128, 130 (1999). A claim for breach of the implied covenant of good faith is redundant if it “arose from the same facts and sought identical damages” as the breach of contract claim. Havell Capital Enhanced Mun. Income Fund, L.P. v. Citibank, N.A., 84 A.D.3d 588, 923 N.Y.S.2d 479, 481 (2011).
Accordingly, the defendant's motion to dismiss the plaintiffs' claim for breach of the implied covenant of good faith and fair dealing (Count III) is granted and the claim is dismissed in its entirety.
The plaintiffs have also brought claims for rescission of contract, money had and received, and unjust enrichment/restitution. In their papers, the plaintiffs have not addressed the claim for money had and received but have instead treated it as a claim for unjust enrichment/restitution. Therefore, the claim for money had and received is deemed abandoned, and only the claims for rescission and unjust enrichment/restitution are analyzed here.
Rescission is an “extraordinary” remedy and is not available when there is an adequate remedy at law. Ellington v. Sony/ATV Music Publ'g LLC, 85 A.D.3d 438, 925 N.Y.S.2d 20, 22 (2011). “The effect of rescission is to declare the contract void from its inception and to put or restore the parties to status quo.” Cnty. of Orange v. Grier, 30 A.D.3d 556, 817 N.Y.S.2d 146, 147 (2006) (internal quotation marks and citation omitted). In this case, the plaintiffs concede that there is no longer any contract to rescind. (Tr. of Oral Argument on Feb. 19, 2014 (“Tr.”) at 19.) To the extent that the plaintiffs seek reimbursement for any fees paid while the contracts were in force, damages would be an adequate remedy if the plaintiffs had stated any claim for breach of contract. Therefore, the rescission claim must be dismissed.
Accordingly, the defendant's motion to dismiss the claims for rescission, money had and received, and unjust enrichment/restitution (Counts II, IV, and VII) is granted.
Plaintiffs Garcia, Lynn, and Morris (the “resume plaintiffs”) have asserted a claim for fraud based on the defendant's resume services. Under New York law, to state a claim for fraud, “the complaint must contain allegations of a representation of material fact, falsity, scienter, reliance and injury.” Small v. Lorillard Tobacco Co., 94 N.Y.2d 43, 698 N.Y.S.2d 615, 720 N.E.2d 892, 898 (1999). Moreover, as an element of the claim, “[the] Plaintiff must show [that the] reliance was reasonable.” Stuart Silver Assocs., Inc. v. Baco Dev. Corp., 245 A.D.2d 96, 665 N.Y.S.2d 415, 417 (1997) (citation omitted); see also Vill. On Canon v. Bankers Trust Co., 920 F.Supp. 520, 530 (S.D.N.Y.1996).
In addition, “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Fed.R.Civ.P. 9(b). Because the plaintiffs' fraud claim is legally insufficient, it is unnecessary to analyze the sufficiency of the pleading under Rule 9(b).
The resume plaintiffs allege that they purchased resume rewriting services from the defendant after being misled by the resume critiques that they received. These critiques were provided to the plaintiffs as part of their premium membership benefits and were advertised as “expert resume critiques.” The plaintiffs allege that these critiques were not bona fide comments but were form letters containing incorrect or unwarranted criticisms aimed at inducing the members to purchase the defendant's resume rewriting service. (SAC ¶¶ 53–55.) In their papers, the resume plaintiffs represent that they were not misled by the advertisements representing the critiques as “expert resume critiques,” but by the critique letters, (Pls.' Mem. at 27 n. 13, 28), which did not contain representations that the letters were drafted by resume experts. (Addonizio Decl. Exs. 9, 10, 11.).
The defendant argues that the resume plaintiffs cannot demonstrate reasonable reliance on the critiques because such critiques were obviously sales pitches that consumers were free to accept or reject. Under New York law, although reasonable reliance is often a “fact-intensive” question, DDJ Mgmt., LLC v. Rhone Grp. L.L.C., 15 N.Y.3d 147, 905 N.Y.S.2d 118, 931 N.E.2d 87, 91–92 (2010), it “is a condition which cannot be met where ... a party has the means to discover the true nature of the transaction by the exercise of ordinary intelligence, and fails to make use of those means.” Arfa v. Zamir, 76 A.D.3d 56, 905 N.Y.S.2d 77, 79 (2010) (affirming grant of motion to dismiss a fraud claim for failing to show reasonable reliance), aff'd, 17 N.Y.3d 737, 929 N.Y.S.2d 11, 952 N.E.2d 1003 (2011); accord Orlando v. Kukielka, 40 A.D.3d 829, 836 N.Y.S.2d 252, 255 (2007); Crigger v. Fahnestock & Co., 443 F.3d 230, 234 (2d Cir.2006). Thus, a plaintiff “must show ‘minimal diligence’ or care that ‘negat[es] its own recklessness.’ ” Amusement Indus., Inc. v. Buchanan Ingersoll & Rooney, P.C., No. 11 Civ. 4416, 2013 WL 628533, at *12 (S.D.N.Y. Feb. 15, 2013) (quoting Banque Franco–Hellenique de Commerce Int'l et Mar., S.A. v. Christophides, 106 F.3d 22, 27 (2d Cir.1997)) (alteration in original). “Only when matters are held to be peculiarly within defendant's knowledge is it said that plaintiff may rely without prosecuting an investigation,” because the plaintiff would have “no independent means of ascertaining the truth.” Crigger, 443 F.3d at 234 (internal quotation marks, citation, and alterations omitted); accord Orlando, 836 N.Y.S.2d at 255. In other words, the analysis of reasonable reliance under New York law must take into account “the degree to which the truth was accessible.” Christophides, 106 F.3d at 27.
In this case, the Second Amended Complaint contains only one allegation for each resume plaintiff stating that they “would not have contracted with TheLadders for its resume rewriting services” if they had known the true nature of the critique letters they received. (SAC ¶¶ 70, 84, 93.) No allegation, however, gives rise to an inference of reasonable reliance. The resume critiques offered by the defendant were followed immediately in the same document by advertisements, which made it abundantly clear that, in offering the critiques, the defendant was attempting to sell its resume rewriting services. (Addonizio Decl. Exs. 9, 10, 11.) Therefore, the critique letters on which the resume plaintiffs claim to have relied, viewed as a whole, were more than sufficient to put an ordinary person on alert regarding the content and purpose of these letters.
Moreover, the plaintiffs claim that they were misled by the critiques, not by the advertisements representing the critiques to be “expert resume critiques.” (Pls.' Mem. at 27 n. 13, 28.) The critiques allegedly misrepresented the quality of the plaintiffs' resumes. (SAC ¶¶ 53–55.) However, the plaintiffs cannot plausibly argue that the real quality of their resumes was a “matter peculiarly within [the] defendant's knowledge,” and therefore, they may not reasonably rely on such critiques “without prosecuting an investigation.” See Crigger, 443 F.3d at 234. A premium member, having received criticisms that were accompanied by advertisements of resume rewriting services, certainly had other easily available, independent means to know whether the resumewas in fact well-written in order to make an informed decision as to whether or not to purchase the services. With all these factors taken together, the plaintiffs cannot plausibly show reasonable reliance on the critiques. See Colasacco v. Robert E. Lawrence Real Estate, 68 A.D.3d 706, 890 N.Y.S.2d 114, 117 (2009) (reversing denial of motion to dismiss and holding that the plaintiffs' reliance on the real estate agent's representations was unreasonable because the subject matter was not within the exclusive knowledge of the agent and were ascertainable through ordinary means); Gomez–Jimenez v. N.Y. Law Sch., 36 Misc.3d 230, 943 N.Y.S.2d 834, 853 (Sup.Ct.2012) (holding that the plaintiffs failed to plead reasonable reliance given that they had ample opportunity to discover the truth from other sources), aff'd, 103 A.D.3d 13, 956 N.Y.S.2d 54 (2012), leave to appeal denied, 20 N.Y.3d 1093, 965 N.Y.S.2d 78, 987 N.E.2d 639 (2013).
Accordingly, the resume plaintiffs' claim for fraud fails to satisfy the essential element of reasonable reliance, and the Court need not reach the additional grounds such as representation, falsity, scienter, or particularity under Rule 9(b). The defendant's motion to dismiss the resume plaintiffs' claim for fraud (Count V) is granted.
The plaintiffs have brought a claim under GBL § 349, a New York statute prohibiting “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” N.Y. Gen. Bus. Law § 349(a). The plaintiffs concede in their papers that Lynn's GBL § 349 claim is untimely under the three-year statute of limitations applicable to this cause of action, seeN.Y. C.P.L.R. § 214(2); (Pls.' Mem. at 19 n. 6), leaving only the claims of plaintiffs Garcia, Morris, Reading, Ward, and Wilton (the “out-of-state plaintiffs”), none of whom resided in New York at the time the claim arose.
The defendant first argues that the out-of-state plaintiffs do not have standing to assert a claim under GBL § 349, which prohibits “[d]eceptive acts or practices ... in this state.” N.Y. Gen. Bus. Law § 349(a) (emphasis added). In Goshen v. Mut. Life Ins. Co. of N.Y., 98 N.Y.2d 314, 746 N.Y.S.2d 858, 774 N.E.2d 1190 (2002), the New York Court of Appeals interpreted this language in GBL § 349 as “evinc[ing] a legislative intent to address commercial misconduct occurring within New York.” Id., 746 N.Y.S.2d 858, 774 N.E.2d at 1195. Thus, a territorial test is embedded in GBL § 349: to state a claim under the statute, “the deception of a consumer must occur in New York.” Id. ; see also Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 123 (2d Cir.2013). In Cruz, the Second Circuit Court of Appeals held that this territorial test is satisfied if the deceptive transaction occurred in New York, thus allowing out-of-state plaintiffs to sue under the statute. 720 F.3d at 123.
The Cruz court recognized that, after Goshen was decided, a split of authority had developed over what the territorial test precisely is, namely, whether the statute requires that the deceptive transaction occur in New York or that the victim be deceived while located in New York.Cruz, 720 F.3d at 123. The Cruz court endorsed the “transaction-based” approach. Id.
The Cruz court found that the pleading of a GBL § 349 claim satisfied the territorial requirement because (1) the defendant was allegedly paid in New York, (2) the defendant allegedly required that all customer communications be directed to a New York location, and (3) its agreement with the consumers contained choice-of-law and forum-selection clauses selecting New York law and New York courts for litigation arising out of the agreement. Id. at 123–24. The court found these allegations sufficient to support an inference that a deceptive transaction occurred in New York. Id.
The allegations in this case are substantially similar. The defendant operated a website in New York and maintained its bank account in New York. (Tr. at 11.) Many of the relevant communications and transactions with the defendant, including the registration, cancellation, review of website materials, and various monetary transactions, apparently occurred on or through the website itself, which is equivalent to communicating or transacting directly with a New York address. Thus, the plaintiffs allege more than “ ‘hatching a scheme’ or originating a marketing campaign in New York” without any deceptive transactions happening in New York.Cf. Goshen, 746 N.Y.S.2d 858, 774 N.E.2d at 1195. Therefore, at this stage of the litigation, the out-of-state plaintiffs have pleaded sufficient facts that, at the very least, give rise to a plausible inference that the allegedly deceptive transaction occurred in New York and that the defendant's conduct fell within the ambit of the “legislative intent to address commercial misconduct occurring within New York.” Goshen, 746 N.Y.S.2d 858, 774 N.E.2d at 1195. Hence, these out-of-state plaintiffs have standing to assert a claim under GBL § 349. See Cruz, 720 F.3d at 123–24.
Under New York law, “[a] plaintiff under section 349 must prove three elements: 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.” Stutman v. Chem. Bank, 95 N.Y.2d 24, 709 N.Y.S.2d 892, 731 N.E.2d 608, 611 (2000). “A deceptive practice ... need not reach the level of common-law fraud to be actionable under section 349.” Id., 709 N.Y.S.2d 892, 731 N.E.2d at 612. Moreover, scienter and reliance, which are elements of common-law fraud, are not elements of a claim under GBL § 349. Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 623 N.Y.S.2d 529, 647 N.E.2d 741, 745 (1995).
The New York Court of Appeals specifically addressed this scenario in Goshen, in which a defendant DSL service provider made certain representations regarding the quality of its internet service but also made disclaimers in its service agreement stating that “the service is provided on an ‘as is' or ‘as available’ basis.” 746 N.Y.S.2d 858, 774 N.E.2d at 1194. The court held that these disclaimers in the service agreement were not sufficient to establish a defense as a matter of law, because the service was allegedly “defective due to malfunctions largely or wholly within defendants' control” and the defendants allegedly “knew this to be the case and [the] promotional representations were therefore knowingly deceptive.” Id., 746 N.Y.S.2d 858, 774 N.E.2d at 1197.
The defendant relies on Fink v. Time Warner Cable, 837 F.Supp.2d 279 (S.D.N.Y.2011), aff'd, 714 F.3d 739 (2d Cir.2013), to argue that the defendant's slogans were “non-actionable puffery.” However, the language held to be puffery was limited to two phrases touting the Internet service to be “blazing fast” and “fastest, easiest way to get online.” Id. at 283; see also Fink v. Time Warner Cable, 810 F.Supp.2d 633, 644 (S.D.N.Y.2011). These are clearly puffery in contrast to statements regarding more specific and ascertainable matters, such as the ones at issue in this case.
As noted above, the plaintiffs do not argue that they relied on these advertisements such as those representing the resume critique to be “expert resume critique” service. However, this concession is immaterial for purposes of the GBL § 349 claim because reliance is not an element of this claim. Oswego, 623 N.Y.S.2d 529, 647 N.E.2d at 745.
The defendant next argues that the plaintiff fails to plead that the allegedly deceptive practices caused the alleged injury, because there is no allegation identifying which advertisements the plaintiffs saw and because the TV advertisements were aired after the plaintiffs became premium members. See Gale v. Int'l Bus. Machines Corp., 9 A.D.3d 446, 781 N.Y.S.2d 45, 47 (2004) (holding that the plaintiff failed to show causation because he did not allege that he saw any of the allegedly deceptive statements). However, the plaintiffs allege that they became premium members or signed up for resume rewriting service as a result of seeing the defendant's representations on the website, ( e.g. SAC ¶¶ 66, 76, 90, 100, 107, 112), and such allegations are sufficient to support the element of actual injury at this stage. See Wilner v. Allstate Ins. Co., 71 A.D.3d 155, 893 N.Y.S.2d 208, 218 (2010) (finding sufficient support for actual injury based on the allegation that “as a result of the defendant's conduct, [the plaintiffs] were forced to ‘incur the costs and expense of hiring an attorney’ ”).
Accordingly, the out-of-state plaintiffs have stated a claim under GBL § 349, and the defendant's motion to dismiss this claim is denied with respect to these plaintiffs, but granted with respect to plaintiff Lynn. In addition, the plaintiffs agreed at oral argument to withdraw the claims under the Washington Consumer Protection Act and the California Unfair Competition Law (Counts VIII and IX) in the event that the GBL claim remains. (Tr. at 20.) Therefore, the claims in Counts VIII and IX are dismissed.
The plaintiffs seek leave to replead if any of the claims is dismissed. Rule 15(a) provides that leave to file an amended complaint should be granted “freely ... when justice so requires.” Fed.R.Civ.P. 15(a)(2); see also Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) (“Rule 15(a) declares that leave to amend ‘shall be freely given when justice so requires'; this mandate is to be heeded.” (citation omitted)). However, the “futility of amendment” is a valid basis for denying leave to amend. See Foman, 371 U.S. at 182, 83 S.Ct. 227; Williams v. Citigroup, 659 F.3d 208, 214 (2d Cir.2011). In this case, the claims on which the defendant's motion to dismiss is granted are insufficient as a matter of law, and the plaintiffs have not shown how the legal deficiencies can be cured after having amended the complaint twice. See Goodrich v. Long Island R.R. Co., 654 F.3d 190, 200 (2d Cir.2011) ( “[W]ithout any showing that the deficiencies in the complaint could be cured, we must conclude that repleading would be futile.”). Accordingly, the plaintiffs' request for leave to replead is denied.
The Court has considered all of the arguments raised by the parties. To the extent not specifically addressed, the arguments are either moot or without merit. For the foregoing reasons, the defendant's motion to dismiss is granted in part and denied in part. The plaintiffs' request for leave to replead is denied. The Clerk is directed to close Docket No. 35.
MEMORANDUM OPINION AND ORDER
The defendant moves for reconsideration of this Court's Opinion and Order on March 12, 2014, which granted in part and denied in part the defendant's motion to dismiss. The defendant has failed to show that there were any issues of fact or law that the Court overlooked. While the defendant disagrees with the Court's decision, that is not a basis for reconsideration. See, e.g., R.F.M.A.S., Inc. v. Mimi So, 640 F.Supp.2d 506, 512 (S.D.N.Y.2009).
Nothing in the motion for reconsideration suggests that the Court's decision was incorrect. The defendant essentially attempts to hold a claim under New York General Business Law § 349 to the same standard applicable to a common-law fraud claim by demanding that the plaintiff specifically show reliance on a statement. This argument has been rejected by the Court in the March 12 Opinion and is precisely what the New York Court of Appeals cautioned against in Stutman v. Chem. Bank, 95 N.Y.2d 24, 709 N.Y.S.2d 892, 731 N.E.2d 608, 611–12 (2000) (holding that a deceptive practice “need not reach the level of common-law fraud to be actionable under section 349” and that the lower court erred in making reliance an element of the claim by focusing on whether the alleged failure to disclose “had any effect on plaintiffs' decision to [choose the defendant's service] in the first place” (internal quotation marks omitted)). Therefore, the defendant's argument is without merit.
Accordingly, the motion for reconsideration is denied. The Clerk is directed to close Docket No. 47.