divided NY court finds incomplete legal compilation wouldn’t mislead reasonable consumers

Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP
v Matthew Bender & Co., 2021 NY Slip Op 03485, — N.E.3d —-  37 N.Y.3d 169 (Jun. 3, 2021)

The plaintiffs were a law firm that handles landlord-tenant
actions, a non-profit corporation that assists pro se litigants in housing
court matters, and a tenant advocate and organizer. They bought the annual
edition of a legal resource manual, New York Landlord-Tenant Law (the Tanbook),
which was published by Matthew Bender. They alleged Matthew Bender violated GBL
§ 349, based on its alleged misrepresentations about the completeness of the
laws reproduced in one section of its publication. The court found that the
alleged misrepresentations were consumer-oriented because they were “contained
in a manual that was then marketed to and available for purchase by consumers,”
nonetheless “a consumer acting reasonably under the circumstances here would
not have believed that defendant represented that the section at issue,
containing rent control statutes and regulations, was current and accurate for
its one-year shelf life.”

Plaintiffs contended that omissions and inaccuracies
rendered the Tanbook of no value to its users and that, after receiving
complaints, Matthew Bender included the previously omitted statutes and
regulations in the 2017 edition, which, although published late in the calendar
year, was sold to plaintiffs and other subscribers at full price.

Plaintiffs alleged that Matthew Bender deceptively implied
that Part III of the book contained a complete compilation of the rent control
and stabilization laws and regulations applicable to New York City. The book’s
“Overview” section described other sections as consisting of
“selected” laws and regulations or “excerpts.” By contrast,
the Overview describes Part III as containing “the laws and regulations
covering rent stabilization,” despite omitting significant portions thereof.
Matthew Bender argued that the omissions were an unfortunate mistake but not
actionable misconduct; among other things, the sales contracts expressly
disclaimed the accuracy, reliability, and currentness of the Tanbook.

The Supreme Court (that is, the appellate court) reasoned
that GBL § 349 was inapplicable because the Tanbook wasn’t directed at
consumers at large for personal, family, or household use, but rather to legal
professionals. That was error. “[A]ny such narrowing of the term ‘consumer’
would be contrary to the legislative intent to protect the public against all
forms of deceptive business practices.” Consumer-oriented conduct distinguishes
conduct with a broader impact on consumers at large from “[p]rivate contract
disputes, unique to the parties,” but does not depend on the use to be made of
the product. The Tanbook was advertised and available for sale to the general
public, including through Matthew Bender’s website and a public, online
shopping service. “Consumer-oriented conduct” need not “be directed to all
members of the public,” and Matthew Bender’s “As even plaintiffs concede, the
legal materials contained in Part III are subject to legislative amendment at
any time, seriously undermining plaintiffs’ contention that yearly publication
was a representation that the Tanbook was complete and accurate.” And the
misrepresentations weren’t materially misleading “under all the circumstances,
including defendant’s disclaimer.” The contract specifically didn’t guarantee
updates and provided for invoices for any supplements if and when they became
available. “It is therefore clear to a consumer that the Tanbook is not a
completely accurate compilation of the law.”

What about the express disclaimer? “A disclaimer may not bar
a GBL § 349 claim at the pleading stage unless it utterly refutes plaintiff’s
allegations, and thus establishes a defense as a matter of law. The defendant
must do more than disclaim liability generally; instead, a disclaimer must
address the alleged deceptive conduct precisely, so as to eliminate any possibility
that a reasonable consumer would be misled.” Moreover, an overall misleading
impression can’t be saved by a disclaimer.

The disclaimer here was: “WE DISCLAIM ALL WARRANTIES WITH
PUBLICATIONS.” Here, “[t]he Tanbook’s susceptibility to revision at any time,
coupled with the fact that the disclaimer addresses the precise deception
alleged in plaintiffs’ complaint, leaves no possibility that a reasonable
consumer would have been misled about the contents of the Tanbook.” The
question of whether the Tanbook was worthless without completeness “goes to
whether defendant is offering an item worth buying, not whether defendant has
deceived consumers about the nature of its product.”

A partial dissent would have allowed the claim to continue.
The dissent noted that plaintiffs alleged both that Matthew Bender’s statements
would lead a reasonable consumer to believe that the Tanbook contained all the
updated laws regarding rent regulation and stabilization, and that “the fact
that the Tanbook is updated and purchased by customers annually would lead a
reasonable consumer to believe that the Tanbook was updated on an annual basis
with the changes to the law that were made the previous year, i.e., that
consumers were not merely purchasing another copy of the same book each year.”
The plaintiffs didn’t plead that consumers would assume that the print copy
automatically updated for new rules enacted during the year, but rather the
more reasonable theory that consumers would believe that the print copy was
complete when it was printed. But the 2016 edition of the Tanbook allegedly
failed to include legislative amendments to statutes contained within the text
even though those amendments had taken place years, even a decade, earlier.

The dissent would have let the second theory go forward, at
least. Disclaimers shouldn’t “allow routine disclaimers to render the consumer
protections, codified by the statute, meaningless.”

The dissent went on to address a third issue: the cost of a
product the consumer would not otherwise have purchased is a cognizable injury.
“The use of deception to induce a consumer to buy a product is precisely the
kind of conduct the legislature sought to prohibit with GBL § 349.” To the
extent that some courts were interpreting previous Court of Appeals decisions
to bar that theory, the Court or legislature should clarify the matter.

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