GBL 349 and 350, Contractual Privity and The Warranty of Merchantability

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Posted on: Sep 16 2024

In Murray v. Samsung Elecs. Am., Inc., 2024 N.Y. Slip Op. 51257(U) (Sup. Ct. Monroe County Sept. 12, 2024) (here), the court was asked to consider the viability of claims for violations of General Business Law §§ 349 and 350, breach of contract, and breach of the warranty of merchantability. As discussed below, the motion court held that plaintiff failed to satisfy the elements of the claims asserted.

In particular, the motion court held that plaintiff failed to allege facts showing that the statements claimed to be false were not likely to mislead a reasonable consumer acting reasonably under the circumstances as required under GBL §§ 349 or 350. The motion court also held that plaintiff’s breach of contract claim was deficient because she failed to allege contractual privity with defendant. Finally, the motion court held that plaintiff failed to allege any facts that would support a claim for the breach of implied warranty (of either fitness or merchantability).

Summary of Allegations in the Complaint

Plaintiff alleged that she purchased a Samsung Galaxy S22 Ultra smartphone in 2021 or 2022 from a cell phone carrier and/or consumer electronics store. She expected that the smartphone would come with a “charging block”; instead the smartphone only came with a charging cord. Plaintiff claimed that the only notice provided to consumers was a statement on the back of the smartphone’s box stating: “Packaging Contains: Samsung Galaxy S22 Ultra, S Pen, Sim Card, Ejection Pin, USB-C to USB-C Cable, Quick Start Guide/Terms & Conditions.” The box in which the plaintiff’s smartphone was packaged for sale, however, also contained a disclaimer, in bolded lettering, stating: “Wall charger and headphones sold separately.…”

Plaintiff alleged that without the charging block purchasers are unable to use the smartphone as intended, and the purchase of a charging block is required. Had plaintiff known that the S22 Ultra did not come with a charging block, she would not have paid the asking price or would not have purchased the smartphone.

Plaintiff alleged violations of GBL §§ 349 and 350, breach of contract, and breach of implied warranty of merchantability/ fitness for a particular purpose.

Defendant moved to dismiss. The motion court granted the motion.

The GBL Claims

To state a claim under GBL §§ 349 and 350, “a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct, that is (2) materially misleading, and that (3) the plaintiff suffered injury as a result of the allegedly deceptive act or practice.[1] A claim under these statutes does not lie when the plaintiff alleges only “a private contract dispute over policy coverage and the processing of a claim which is unique to the[] parties, not conduct which affects the consuming public at large.”[2] Thus, a plaintiff claiming the benefit of either Section 349 or Section 350 “must charge conduct of the defendant that is consumer-oriented” or, stated differently, “demonstrate that the acts or practices have a broader impact on consumers at large.”[3]

Notably, the deceptive practice does not have to rise to “the level of common-law fraud to be actionable under section 349.”[4] In fact, “[a]lthough General Business Law § 349 claims have been aptly characterized as similar to fraud claims, they are critically different.”[5] For example, while reliance is an element of a fraud claim, it is not an element of a GBL § 349 claim.[6]

Nevertheless, a plaintiff must allege the existence of a materially misleading act or advertisement to state a cause of action under GBL §§ 349 and 350.[7] The test for both a deceptive act or deceptive advertisement is whether the act or advertisement is “likely to mislead a reasonable consumer acting reasonably under the circumstances.”[8] Whether a particular act or advertisement is materially misleading may be made by a reviewing court as a matter of law.[9]

In addition, a plaintiff must prove “actual” injury to recover under the statutes, though not necessarily pecuniary harm.[10] And, the plaintiff must prove the deceptive act caused the injury.[11]

The motion court concluded, “as a matter of law, that the statements contained on the packaging box for the S22 Ultra purchased by plaintiff were not likely to mislead a reasonable consumer acting reasonably under the circumstances.”[12]

First, noted the motion court, “the box clearly identified the contents, stating that it contained: ‘Samsung Galaxy S22 Ultra, S Pen, Sim Card, Ejection Pin, USB-C to USB-C Cable, Quick Start Guide/Terms & Conditions.’”[13] “Notably absent from the list of contents,” said the motion court, was “a wall charger (‘charging block’).”[14] From this list, concluded the motion court, “[a] reasonable consumer acting reasonably would thus be aware that the purchase of the smartphone did not include a wall charger.”[15]

Second, said the motion court, “the packaging box specifically stated that the wall charger was not included. Thus, Samsung specifically disclaimed the inclusion of a wall charger.”[16] Under New York law, “[a] disclaimer may not bar a General Business Law § 349 claim at the pleading stage unless it utterly refutes plaintiff’s allegations, and thus establishes a defense as a matter of law.”[17] The motion court found that the disclaimer at issue – that no wall charger was included in the packaging – “eliminate[d] any possibility that a consumer would be misled into believing a wall charger was included.”[18] Since defendant did more than disclaim liability generally but, rather specifically disclaimed the allegedly deceptive conduct, “so as to eliminate any possibility that a reasonable consumer would be misled,”[19] the motion court dismissed the GBL §§ 349 and 350 causes of action.

The Breach of Contract Cause of Action

The motion court held that the “breach of contract cause of action must be dismissed as the plaintiff failed to plead the existence of a valid contract and contractual privity between the plaintiff and the defendant.”[20]

The motion court found that “there [were] no facts alleged in the complaint supporting the existence of a valid contract (implied or otherwise).”[21] The motion court explained that plaintiff failed to allege mutual assent between her and defendant: “The essence of the plaintiff’s breach of contract claim is that the terms of the contract were that Samsung agreed to provide a wall charger. However, the documentary evidence (the photograph included by plaintiff in her complaint) establishes that Samsung specifically stated a wall charger was not included in the sale of the smartphone.”[22]

Notably, the motion court found that plaintiff failed to allege contractual privity with defendant: “Plaintiff alleges she purchased the smartphone from a vendor, not from Samsung directly and thus the complaint fails to establish contractual privity between the Samsung and the plaintiff.”[23]

Accordingly, the motion court dismissed the breach of contract cause of action.

The Warranty of Merchantability Claim

“The implied warranty of merchantability is a guarantee by the seller that its goods are fit for the intended purpose for which they are used and that they will pass in the trade without objection.”[24] To establish that a product is defective for purposes of a breach of implied warranty of merchantability claim, a plaintiff must show that the product was not “reasonably fit for [its] intended purpose,”[25] an inquiry that “focuses on the expectations for the performance of the product when used in the customary, usual and reasonably foreseeable manners.”[26]

The motion court held that plaintiff “fail[ed] to allege any facts that would support a breach of implied warranty claim (of either fitness or merchantability).”[27] For instance, the motion court noted that plaintiff failed “to allege an inability to charge the smartphone (as the plaintiff concede[d] the smartphone included a charging cord allowing it to be charged through other methods).”[28]

Additionally, the motion court rejected “plaintiff’s allegation that Samsung’s smartphone was ‘not fit for the ordinary purpose for which it was intended and did not conform to the promises or affirmations of fact made on the packaging, container or label, because it was marketed as if it would be sold with the essential parts to render it functional.’”[29] That allegation, said the motion court, was “specifically rebutted by the documentary evidence showing Samsung disclaimed inclusion of a wall charger but did include a charging cord allowing it to be charged through any compatible charging port.”[30]

The motion court also held that plaintiff “failed to allege that the alternative methods to charge the phone are unavailable to the standard consumer or unreasonable.”[31] “Although the plaintiff prefers charging the smartphone with a charging block,” explained the motion court, “that is not the exclusive method of charging the phone.”[32] “Absent this allegation,” concluded the motion court, “the smartphone cannot be said to be not fit for the ordinary purpose it was intended.”[33]

Finally, the motion court dismissed the implied warranty claim because there was “no privity of contract between Samsung.”[34] As noted, “[p]laintiff asserted in the complaint [that] she purchased the smartphone from a third party and was claiming only economic loss.”[35]

_______________________

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] Koch v. Acker, Merrall & Condit Co., 18 N.Y.3d 940, 941 (2012); Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 324 n.1 (2002).

[2] New York Univ. v Continental Ins. Co., 87 N.Y.2d 308, 321 (1995) (internal quotation marks omitted).

[3] Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 (1995).

[4] Boule v. Hutton, 328 F.3d 84, 94 (2d Cir. 2003) (citing Gaidon v. Guardian Life Ins. Co., 94 N.Y.2d 330, 343 (1999)).

[5] Gaidon, 94 N.Y.2d at 343.

[6] Stutman v. Chemical Bank, 95 N.Y.2d 24, 29 (2000); Small v. Lorillard Tobacco Co., 94 N.Y.2d 43, 55-56 (1999).

[7] See Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc., 37 N.Y.3d 169, 176 (2021); Andre Strishak & Assocs., P.C. v. Hewlett Packard Co., 300 A.D.2d 608, 609 (2d Dept. 2002).

[8] Oswego, 85 N.Y.2d at 26. See also Andre Strishak, 300 A.D.2d at 609; Himmelstein, 37 N.Y.3d at 178.

[9] Id.

[10] Stuntman, 95 N.Y.2d at 29; Oswego, 85 N.Y.2d at 26.

[11] Id.; Oswego, 85 N.Y.2d at 26.

[12] Slip Op. at *2.

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Goshen, 98 N.Y.2d at 326; Fink v. Time Warner Cable, 714 F.3d 739, 742 (2d Cir. 2013).

[18] Slip Op. at *2.

[19] Gaidon, 94 N.Y.2d at 345; Himmelstein, 37 N.Y.3d at 180.

[20] Slip Op. at *2.

[21] Id. at *2-*3.

[22] Id. at *3.

[23] Id. (citing Collyer v. LaVigne, 202 A.D.3d 1335 (3d Dept. 2022), lv. dismissed, 39 N.Y.3d 925 (2022)).

[24] Saratoga Spa & Bath v. Beeche Sys. Corp., 230 A.D.2d 326, 330 (3d 1997), lv. dismissed, 90 N.Y.2d 979 (1997) (citation omitted).

[25] Id. at 330; see U.C.C. 2—314(2)(c).

[26] Denny v. Ford Motor Co., 87 N.Y.2d 248, 258-259 (1995). See also Wojcik v. Empire Forklift, Inc., 14 A.D.3d 63 (3d Dept. 2004).

[27] Slip Op. at *3.

[28] Id.

[29] Id.

[30] Id.

[31] Id.

[32] Id.

[33] Id.

[34] Id.

[35] Id. (citing Ofsowitz v. Georgie Boy Mfg., Inc., 231 A.D.2d 858, 859 (4th Dept. 1996)).