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King's Choice Neckwear, Inc. v. Pitney Bowes

December 24, 2009

KING'S CHOICE NECKWEAR, INC., ON BEHALF OF ITSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
PITNEY BOWES, INC., PITNEY BOWES CREDIT CORPORATION, AND PITNEY BOWES GLOBAL FINANCIAL SERVICES, LLC, DEFENDANTS.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION & ORDER

The plaintiff terminated its lease of equipment from the defendants and was charged an equipment return fee of $100 pursuant to a lease agreement. In this putative class action, the plaintiff claims the return fee was excessive and therefore constituted an unfair trade practice and breach of contract.

For the following reasons, the defendants' motion to dismiss this action is granted.

BACKGROUND

The following facts are drawn from the November 4, 2009 second amended complaint ("SAC") and are assumed to be true for the purposes of deciding the motion to dismiss. Kings Choice Neckwear, Inc. ("Kings Choice") is a necktie manufacturing company that has stopped making neckties and is closing.*fn1

Defendants Pitney Bowes, Inc., Pitney Bowes Credit Corporation, and Pitney Bowes Global Financial Services, LLC (collectively, "Pitney Bowes" or "defendants") manufacture and lease, inter alia, postage meters.

On January 24, 2002, Pitney Bowes executed an agreement to lease a postage meter to Kings Choice ("Lease Agreement") for fifty-one months. The Lease Agreement includes a paragraph entitled "Return of Equipment," which provides

After completion of your payment and performance obligations under this Lease and expiration of the Lease... or cancellation of the Lease, you shall, at our option, either make the Equipment immediately available to us, or return the Equipment to us as soon as possible at the location we designate, in its original condition, reasonable wear and tear excepted. Unless we otherwise direct, the Equipment must be properly crated, insured and shipped, freight prepaid. You shall pay us our then applicable Equipment return fee. (Emphasis supplied). After the Lease Agreement expired in April 2006, Kings Choice continued to lease the postage meter on a month-to-month basis under the original lease terms.

On December 10, 2008, Kings Choice called Pitney Bowes to terminate its lease. That day, a Pitney Bowes employee emailed Kings Choice instructions for returning the postage meter. The email said "Your lease agreement as indicated above will be fulfilled upon receipt of the equipment returned in good working order. Please disregard any further lease invoices." On December 17, 2008, Kings Choice used a box and a prepaid self-addressed UPS label provided by Pitney Bowes to ship the postage meter back to Pitney Bowes. The cost of mailing the postage meter to Pitney Bowes, according to the UPS website, was approximately $11.90. On January 6, 2009, Pitney Bowes sent Kings Choice an "Equipment Return invoice" for $100, stating that this was the cost incurred by Pitney Bowes to "recover" its postage equipment.*fn2 Kings Choice did not pay this fee.

On April 22, 2009, Kings Choice filed this putative class action on behalf of all other similarly situated Pitney Bowes customers, alleging a violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. §§ 42-110a -- 42-110q, a breach of contract, a breach of the covenant of good faith and fair dealing, and unjust enrichment. Kings Choice claims that its contract with Pitney Bowes limited the equipment return fee to the cost of mailing the postage meter back to Pitney Bowes. Kings Choice alleges that the $100 fee was "grossly disproportionate" because it "far exceeds the actual cost of mailing or returning the equipment to Pitney Bowes."

Pitney Bowes moved to dismiss the complaint on June 15, 2009. Kings Choice filed its opposition on August 3, and it attached an amended complaint to that submission. In this opposition, Kings Choice also requested a further opportunity to amend its complaint. In a conference with the Court on October 28, Kings Choice was advised that it would be given a final opportunity to amend. Kings Choice submitted its proposed second amended complaint ("SAC") dated November 4, and by Order dated November 16, the SAC was accepted for filing.*fn3 The parties' supplemental briefing in connection with Pitney Bowes' motion to dismiss the SAC became fully submitted on December 4.

DISCUSSION

A. Subject Matter Jurisdiction

The plaintiff asserts that this action is properly filed in federal court pursuant to 28 U.S.C. § 1332. Under 28 U.S.C. § 1332, "[d]iversity jurisdiction exists over civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States." Hallingby v. Hallingby, 574 F.3d 51, 56 (2d Cir. 2009) (citation omitted). Recognizing that its "loss" of $100 does not meet the amount-in-controversy threshold, the plaintiff brings this suit as a putative class action.

Under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d), a district court has jurisdiction over a class action premised on state law claims -- with limited exceptions that are not at issue here -- if there is diversity between any member of the class of plaintiffs and any defendant, and the amount in controversy exceeds $5,000,000. Id. at § 1332(d)(2). CAFA permits aggregation of the claims of individual class members to reach this amount. Id. at § 1332(d)(6) ("In any class action, the claims of the individual class members ...


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