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Clover Pool Supply Co., Inc. v. Central NY News

November 17, 2006

CLOVER POOL SUPPLY CO., INC., PLAINTIFF,
v.
CENTRAL NY NEWS, INC., DEFENDANT.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION and ORDER

INTRODUCTION

Plaintiff, Clover Pool Supply, Inc., ("plaintiff" or "Clover Pool") brings this action pursuant to New York General Business Law § 349 ("GBL § 349") against Central NY News, Inc. ("defendant" or "Central NY News") alleging breach of contract and damages. Defendant moves to dismiss the Second Claim of the Amended Complaint alleging a violation of GBL § 349 pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that it fails to state a claim as a matter of law. For the reasons set forth below, the Second Claim against defendant claiming a violation of GBL § 349 is dismissed.

BACKGROUND

I. Procedural History

On July 15, 2005, plaintiff filed suit against Clear Channel Broadcasting alleging breach of contract and damages pursuant to GBL § 349. On September 12, 2005, Clear Channel Broadcasting moved to dismiss the action pursuant to Federal Rule of Civil Procedure 12(b)(6) arguing that plaintiff had sued the wrong party.*fn1 On September 27, 2005, in response to defendant's motion, plaintiff moved to amend the summons and complaint by changing the named defendant from Clear Channel Broadcasting to Central NY News pursuant to Federal Rules of Civil Procedure 4(a), 15(a) and 15(c). By Order dated January 19, 2006, the complaint against Clear Channel Broadcasting was dismissed. Further, I granted plaintiff's motion to amend the summons and complaint and directed that plaintiff serve both the amended summons and complaint upon the proper defendant.

II. Factual History

In 1998, Clover Pools, a local pool equipment supply company in the business of selling swimming pools, spas, patio furniture and home leisure products, through its advertising agency*fn2 entered into an agreement to purchase advertising on TV-13. The contracting arrangements between Clover Pools and Central NY News for these commercials consisted of a series of quarterly agreements. Plaintiff alleges that under the terms of the contracts, Central NY News agreed to run advertising on TV-13 in designated time periods with varying lengths to be run during various days of the week, which would result in a specified number of rating points for each time period, based on the actual Nielson ratings book for Rochester. However, post-analysis reports revealed shortcomings in undelivered rating points.

In response to the shortfall, plaintiff maintains that Central NY News committed to run additional advertising during subsequent time periods in order to compensate Clover Pools, to work off the undelivered rating points, and as inducement to continue contracting for additional advertising, known as cash buys. However, plaintiff contends that in the summer of 2002 defendant did not run the cash buys or "make-up" advertising for which it had committed. According to plaintiff, Group 1 protested defendant's non-performance and in August 2002 cancelled the cash buy advertising with Central NY News for the last quarter of 2002. Plaintiff maintains that this course of dealing between the parties continued until December of 2004 when defendant refused to run any more cash buy advertising and refused to run make-up advertising. Plaintiff contends that as a result of Central NY News' breach of contract and violations of GBL § 349, it has incurred damages, consisting of millions of dollars of lost sales and lost profits.

DISCUSSION

Defendant moves to dismiss plaintiff's second claim in its Amended Complaint brought under GBL § 349 which permits recovery for "deceptive acts and practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state...." See N.Y. Gen. Bus. L. 349. To state a claim for deceptive practices under § 349, a plaintiff must show: (1) that the act or practice was consumer-oriented; (2) that the act or practice was misleading in a material respect; and (3) that the plaintiff was injured as a result of the deceptive practice or act. See Champion Home Builders Co. v. ADT Sec. Serv., Inc., 179 F.Supp.2d 16 (N.D.N.Y. 2001); BlueCross and BlueShield of NJ v. Philip Morris USA Inc., 3 N.Y.3d 200, 205 (2004). The standard for whether an act or practice is misleading is objective, requiring a showing that a reasonable consumer would have been misled by the defendant's conduct. See Boule v. Hutton, 320 F.Supp.2d 132, 137 (S.D.N.Y. 2004).

I. Threshold Requirement of Consumer-Oriented Conduct

In order to invoke § 349, plaintiff must, as a threshold matter, "charge conduct that is consumer oriented." See EUA Cogenex Corp. v. North Rockland Cent. Sch. Dist., 124 F.Supp.2d 861 (S.D.N.Y. 2000); Verizon Dir. Corp. v. Yellow Book USA, Inc., 338 F.Supp.2d 422 (E.D.N.Y. 2004); see also New York Univ. v. Cont'l Ins. Co., 87 N.Y.2d 308, 320 (1995); Cruz v. NYNEX Info. Resources, 263 A.D.2d 285, 290 (1st Dept. 2000) (Consumer-oriented conduct is a threshold pleading requirement that courts require "in order to assure the statute is applied in accordance with the legislative intent regardless of the particular parties and circumstances presented"). Moreover, plaintiff must allege facts sufficient to show that the challenged conduct has a "broader impact on consumers at large," in that it "potentially affects similarly situated consumers" in New York. See S.Q.K.F.C. v. Bell Atl. Tricon Leasing Corp., 84 F.3d 629, 636 (2d Cir. 1996) (citation omitted); Oswego Laborers' Local 214 Pension Fd. v. Marine Midland Bank, 85 N.Y.2d 20, 25 (1995).

Clover Pools has failed to plead the critical threshold requirement of consumer-oriented conduct before it may invoke ยง 349 of the GBL. See Cruz, 263 A.D.2d at 290. In this case, Clover Pools does not make any claims concerning Central NY News' general advertising, sales, or marketing materials or practices. Nowhere in the Amended Complaint does Clover Pool make any allegations regarding defendant's conduct toward any party other than plaintiff. Specifically, paragraph 44 of the Amended Complaint alleges, among other things that defendant: (a) offered to run advertising for Clover Pool without the ability or inventory to do so; (b) over sold its inventory such that it could not and did not meet its contractual commitments to Clover Pool; (c) preempted advertising promised to Clover Pool and (d) induced Clover Pool to continue to purchase advertising when it lacked either the ability or intention to honor its ...


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